Lululemon Lawsuit: Athletic Clothier Catches A Break

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Lululemon Athletica has suffered a lot of bad press over the past year. Scarcely over a year ago, complaints started cropping up about the quality of their black Luon yoga pants. Namely, the pants became embarrassingly sheer when worn.

The company issued a recall. Unfortunately, to return the pants, some customers reported being asked to put their pair on and bend over in front of Lululemon employees to demonstrate the material's sheerness. Consumers balked at the humiliation.

Amid the recall crisis, founder Chip Wilson only dug the company in deeper. In an interview with Bloomberg, Wilson blamed the sheerness and pilling on "the rubbing through the thighs" and said "sometimes this material does not work for certain people's bodies." Customers were offended by the implication.

Some unsavory info about Wilson supporting child labor and finding amusement in Japanese people trying to pronounce "Lululemon" also surfaced, adding extra fuel to the fire.

Lululemon was having a public image crisis that would quickly affect their profits to the tune of two billion dollars. Company shareholders filed a lawsuit against Lululemon in 2013. They charged that Lululemon misrepresented the quality of its products by hiding defects in the Luon material, costing the company millions in inferior yoga pants. Investors claimed that if the product had been properly tested on real people before mass production and distribution, the recall would never have happened.

Luckily for Lululemon, that lawsuit was dismissed Friday, according to Reuters. U.S. District Judge Katherine Forrest reasoned that "if Lululemon secretly knew that the (alleged) fix for its quality issues was simply to employ more people to wear its yoga pants and exercise, it would have done so-rather than the alternative of losing two billion in market capitalization." Although Judge Forrest is still reviewing shareholders' objections, she said she was not inclined to change her mind on the matter.

In other news, Wilson is leaving his non-executive chairman position and Laurent Potdevin is replacing Christine Day as chief executive officer. Vindicated and under new leadership, it looks like Lululemon might have a chance to turn its luck around in 2014.

Image via Wikimedia Commons

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