Lawyers for Kohl's Department Stores have turned the tables on their client by filing a lawsuit against the national retailer, demanding more than $600,000 in attorney fees after settling a lawsuit with actress Zooey Deschanel for $100,000.
Deschanel, star of the Fox show, "New Girl," had filed a lawsuit in December 2010, claiming she had an oral contract with the shoemaker Steve Madden to use her name and likeness for a "Zooey" line of shoes. She claims the shoemaker repudiated the contract with her agent but it was later discovered that Steve Madden had an agreement with shoemaker Candie's to distribute "Candie's Zooey shoes" at Kohl's.
The actress said she was never paid for the endorsement deal.
Kohl's retained the law firm, Sheppard, Mullin, Richter & Hampton LLP, in August 2011, replacing prior counsel because Sheppard Mullin "would be better qualified to handle" the prospect of depositions of senior executives, "substantial exposure to additional lawsuits for the similar use of celebrity names, such as Cher and Madonna, for Kohl's shoe lines," among other issues, the suit claims.
Unfortunately, the lawyers didn't learn from their own lawsuit and proceeded without a written agreement from Kohl's.
"Due to these pending issues at the time of Sheppard Mullin's substitution, immediate action was necessary and there was no time to wait to act until after obtaining a written engagement agreement," the suit states. But Sheppard Mullin claims they sent their hourly rates to Kohl's in a letter, and that the rates were "discussed and orally agreed to by Kohl's."
The law firm filed a lawsuit against Kohl's in Los Angeles Superior Court on Monday, claiming Kohl's isn't paying up as they orally promised and suing Kohl's for breach of contract among other complaints.
Kohl's and Sheppard Mullin did not immediately return a request for comment.
Kohl's refused to pay Sheppard Mullins "on the grounds that the fees incurred were disproportionate to the value of the case, which Kohl's valued based on the amount of the settlement, ignoring the facts that [Deschanel] demanded $1.7 million in damages, that a loss in the case would mean significant exposure to additional similar lawsuits, and that Kohl's faced potential sanctions."
In early October 2011, Deschanel demanded $1.7 million "and it did not appear that settlement would be possible," the suit claims.
"Through Sheppard Mullin's diligent efforts in October 2011, particularly in resolving discovery battles and identifying experts, the tide turned in Kohl's favor," the lawsuit claims.
At the end of October 2011, Deschanel agreed to settle with Kohl's for $100,000 in damages, according to the court filing.
Meanwhile, the law firm racked up $608,694.67 in legal fees from August to November 2011.
Kohl's rejected the invoices submitted by Sheppard Mullin and disputed the amount of fees owed, the suit states. The retailer "criticized Sheppard Mullin for preparing for trial and undertaking tasks it thought its prior counsel was doing," the suit states.
On May 16, 2012, the law firm sent Kohl's a formal demand of $628,589.59 which includes interest of 10 percent per year.