LuLaRoe files $1 billion countersuit accusing ex-supplier of fraud and 'disturbingly inappropriate personal attacks'
- LuLaRoe has filed a countersuit against its former chief supplier, Providence Industries, seeking at least $1 billion in damages.
- LuLaRoe claims in the suit that Providence "engaged in a systematic, years-long scheme to defraud [LuLaRoe] LLR by intentionally under-delivering and overcharging LLR for products causing LLR to suffer hundreds of million of dollars in damages."
- A spokesperson for Providence called the claims in the countersuit "outrageous" and said, "We will continue to vigorously fight this in court."
- Providence, which also does business under the name MyDyer, filed a $49 million lawsuit against LuLaRoe 12 months ago, claiming that the clothing company failed to pay its bills for seven months.
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LuLaRoe has accused its former chief supplier, Providence Industries, of fraud, unfair business practices, and breach of contract in a countersuit seeking more than $1 billion in damages.
The multi-level marketing company, known for its colorful leggings, claims in the suit that Providence "engaged in a systematic, years-long scheme to defraud [LuLaRoe] by intentionally under-delivering and overcharging LLR for products causing LLR to suffer hundreds of million of dollars in damages."
The countersuit, filed on November 15 in a California court, also accuses Providence of pursuing "scorched-earth litigation tactics and disturbingly inappropriate personal attacks against LLR and its founders," according to a copy of the suit obtained by Business Insider.
A spokesperson for Providence called the claims in the countersuit "outrageous."
"We will continue to vigorously fight this in court," the spokesperson told Business Insider.
LuLaRoe did not respond to requests for comment.
Providence, which also does business under the name MyDyer, filed a $49 million lawsuit against LuLaRoe 12 months ago claiming that the clothing company failed to pay its bills for seven months. Providence's lawsuit also accused LuLaRoe's founders, Mark and DeAnne Stidham, of hiding assets in "shell" companies to fund a"lavish lifestyle."
The companies have been engaged in litigation over those claims for the last year.
In its countersuit, LuLaRoe claims that Providence's lawsuit and accompanying legal actions were an attempt to "blindside LLR and cut off its production line (which was at the time dominated by MyDyer)."
The suit further claims that Providence made false statements about its investments in overseas manufacturing facilities and other matters, which "induced" LuLaRoe into entering a sourcing agreement with the company.
The suit says that Providence "systematically under-delivered products that LLR ordered and paid for," unfairly charged LuLaRoe for $5 million in storage costs, and failed to defend LuLaRoe against class-action lawsuits claiming that its products were defective.
"LLR has incurred and is continuing to incur millions of dollars in defending itself against these third-party consumer claims," the lawsuit states. "To date, [Providence] has refused to reimburse these costs that LLR has incurred."
The suit also claims that Providence delivered a $4.3 million batch of defective black leggings to LuLaRoe, which LuLaRoe was unable to sell to its retailers.