Most Recent Articles On Fashion FeaturesPARIS — LVMH Moët Hennessy Louis Vuitton may be parading couture on the runways this week — but it’s airing a bitter grievance in a Paris courtroom, too.
This afternoon, judges at commercial court here will convene to receive first submissions regarding LVMH’s $100 million lawsuit against investment firm Morgan Stanley, alleging bias in its research and conflict of interest. Morgan Stanley’s investment bankers advise Gucci Group, and LVMH alleges they influence the ratings of the bank’s chief luxury analyst, Claire Kent.
The 2 p.m. session is likely to be quick and dry, little more than an exchange of documents by lawyers for the two parties. The court is expected to set another date, likely a month from now, for Morgan Stanley’s counsel to respond to LVMH’s charges and evidence.
In other words, it’s the first salvo in yet another fashion battle pitting LVMH against archrival Gucci.
"I’m afraid it could be the beginning of a very long-term court war," said Philippe Metais, a partner at White & Case, a business law firm in Paris. He said the case could easily drag on for a year or more, depending on the workload of the courts and the pace at which the parties wish to proceed.
The case is believed to have no direct legal precedents in France. But Metais noted that it arrives at a time when criminal and civil cases are multiplying over the publicizing of false or misleading financial information. He said several large financial-information firms here have recently been ordered to pay damages in the tens of thousands of dollars for publishing errors about a company’s fortunes. He also mentioned investigations into financial corruption at European corporations such as Vivendi, which ousted chairman Jean-Marie Messier last year.
LVMH is suing Morgan Stanley under French tort law, specifically statute 1382 of the civil code. Metais explained that the law states that even when there is no written contract between two parties, there is an obligation of impartiality and care in business dealings.
LVMH declined to discuss what evidence it has to support its claim that Morgan Stanley has a bias against it.
Metais speculated that e-mails, correspondence or phone records could be among the evidence submitted in such a case. He noted, however, that all submissions and exhibits would be disclosed only at the discretion of the parties.