Irvine’s C & C; Cos. and San Diego-based R…And Everything Else Inc., owner of the Rusty brand of surf-inspired clothes, are getting back together,but not in a good way.
The two companies are set to meet in Orange County Superior Court in Santa Ana on Oct. 15 to set a trial date in a dispute over the right to make Rusty clothes.
C & C; is suing R And Everything for canceling its Rusty licensing contract.
The company, which runs factories making clothes under license, alleges that its right to make Rusty clothes was unfairly terminated.
Last December, it filed a breach of contract suit against R And Everything, its parent company Vegas Enterprises of Australia and individual owners Geoff Backshall, Phillip Clifford and Rod Hart. C & C; charges the companies and owners with interfering with its Rusty license.
C & C; is seeking damages, according to its lawyer, Gregory Bodell of Los Angeles-based Kozberg & Bodell LLP.
R And Everything believes it ended C & C;’s contract legally and defends the move, according to the company’s lawyer Paul Gale of Washington, D.C.-based Ross Dixon & Bell LLP’s Irvine office.
The suit comes about a year after Rusty founder, surfboard shaper Rusty Preisendorfer, sold his controlling stake in the company and the rights to the Rusty name to Vegas, which had made Rusty clothes under license in Australia.
Vegas now controls the direction of the Rusty brand and which companies are awarded licenses.
Recently, R And Everything gave the Rusty license to another Irvine-based clothing factory operator, La Jolla Group Inc., which makes clothes and accessories for the O’Neill and Lost surfwear brands.
The licensee shift is part of a strategy to revamp the Rusty brand, which has fizzled over the years as rivals such as Huntington Beach-based Quiksilver Inc. and Costa Mesa-based Volcom Inc. have come to dominate sales of surf-inspired clothes.
The loss of the license was a blow to C & C.; It laid off about 60 people, C & C; principal Dac Clark said in an earlier interview.
The company still holds a license for Sanuk Footwear and is getting ready to finalize a pact with an undisclosed wakeboard company, according to Clark.
C & C; had held the Rusty license since 1988. The company contends it made a deal with Preisendorfer that authorized it to make and sell clothing with the Rusty symbol anywhere in the world until 2028.
C & C; alleges that R…And Everything didn’t give proper notice when it terminated its licensing contract. C & C; lawyer Bodell said the company has documents, including letters from R And Everything, to back up its allegations.
“It’s all written in the contracts,” Bodell said. “Documents tell the story, and they’re unbiased. People’s testimonies and perceptions are ever changing. But fortunately for us this case is based entirely on documents.”
C & C;’s biggest challenge is to prove how much it’s entitled to in damages, Bodell said. The Rusty license is estimated at more than $10 million, he said.
Lawyers for R And Everything see it differently.
“We intend to defend our position,” Gale said. “We were entitled to terminate the license agreement. We have the evidence to prove it and will introduce it when the case goes to trial.”
The case has just started to brew and it’s unclear when or if a trial might begin. The companies still could settle out of court.
C & C; and R And Everything’s lawyers have had settlement talks but couldn’t reach an agreement, they said.
Barring a settlement, a trial could start some time next spring or summer, according to Bodell.
