CANADA: Gildan Fights Fruit of the Loom Lawsuit

By just-style.com | 12 April 2001

Gildan Activewear, a Montreal-based maker of sportswear, announced today that, having had the opportunity to review the lawsuit brought against it by Fruit of the Loom, it will defend the lawsuit vigorously and expects to be vindicated.

Gildan Activewear also said that it does not anticipate the lawsuit will have a material adverse effect on the company's business or its financial condition.

Gildan Activewear added that, on the advice of its counsel, it would not comment at this time on the allegations pending but will respond in the US courts.

Fruit of the Loom filed suit against Gildan last week alleging theft of trade secrets to grab a competitive leg-up in the apparel business.

"This case is about industrial espionage at the highest corporate level and the lengths to which predatory competitors will go to obtain commercial advantage," Fruit of the Loom alleged in its lawsuit, filed in US District Court last week.

Fruit of the Loom is asking for unspecified damages and a court order stopping Gildan from using production and sales forecasts allegedly obtained in November, the Associated Press reported earlier this week.

On April 5, US District Judge Joan Gottschall issued a temporary restraining order against Gildan.

Fruit of the Loom alleges that a former manager, Elizabeth Walton, passed documents to her ex-employer, David Cherry, one of five Fruit of the Loom executives who left the company in recent years when it was in bankruptcy protection.

Currently an executive vice-president at Gildan, Cherry is alleged to have asked Walton to "get my hands on a Fruit of the Loom forecast report and a sew plan report." Walton sent the reports.

Fruit of the Loom said the reports include production goals for plants in El Salvador, Honduras and Mexico that would allow Gildan to estimate production costs. The reports detail sales to specific customers, trends in demand and budget information.

Gildan's A class shares closed down 40 cents at $24.05 on Wednesday.

Companies: Gildan, Fruit of the Loom