Dolce & Gabbana US Arm Cleared in NFT Lawsuit Dismissal

Federal Judge Dismisses Class-Action Lawsuit Against Dolce & Gabbana USA

The US subsidiary of luxury fashion house Dolce & Gabbana has successfully avoided a proposed class-action lawsuit related to its parent company's alleged abandonment of a high-profile NFT project. In a significant legal victory, New York federal court judge Naomi Reice Buchwald ruled in favor of Dolce & Gabbana USA Inc. on Friday, dismissing the lawsuit on grounds that the US entity was not an "alter ego" of its Italy-based parent company, Dolce & Gabbana SRL.

Background of the NFT Lawsuit

The legal dispute centers around allegations made by a group of NFT buyers who filed their initial lawsuit in May 2024, with subsequent updates in September. The plaintiffs claimed that Dolce & Gabbana and its US arm operated as "effectively the same company" and failed to deliver promised benefits from their "DGFamily" NFT project launched in 2022. The lawsuit alleged that the fashion giant retained over $25 million from the NFT sales without fulfilling their commitments.

Future of Legal Proceedings Uncertain

The dismissal of Dolce & Gabbana USA as a defendant creates significant uncertainty for the lawsuit's future, as the US subsidiary was the sole American-based defendant in the case. Other named defendants include Dubai-based NFT marketplace UNXD Inc. and Italy-based Bluebear Italia SRL, the creator of an NFT collection called "inBetweeners." However, the court noted that these international defendants were not properly served with the complaint.

Claims Against the DGFamily NFT Project

According to the lawsuit, Dolce & Gabbana collaborated with UNXD to create and promote the DGFamily NFT collection, which promised buyers "high value" benefits to be delivered quarterly over a two-year period. The alleged promised perks included digital outfits for the Decentraland metaverse, physical clothing items, and exclusive live events for NFT holders.

Plaintiffs argued that Dolce & Gabbana "failed to provide the complete set of benefits they promised" while retaining millions of dollars from NFT sales, effectively abandoning the project and leaving buyers without their expected rewards.

Dolce & Gabbana USA Defense Strategy

In January, Dolce & Gabbana USA filed a motion to dismiss the lawsuit, arguing that it operated as a separate legal entity that could not be held responsible for the actions of its Italian parent company. The US subsidiary maintained that it had no involvement in NFT-related activities.

The company stated in its defense: "D&G USA has not entered into any joint venture with UNXD, or any other entity, to sell, advertise, or promote any NFTs." The firm argued that the complaint's evidence clearly showed the NFT project originated from the Italian parent company and that insufficient evidence existed to establish meaningful ties between the US and Italian entities.

Judge's Ruling on Corporate Separation

Judge Buchwald determined that the lawsuit was "plainly insufficient to withstand D&G USA's motion to dismiss" due to fundamental flaws in how the plaintiffs presented their case. The judge noted that the complaint consistently referred to both the US and Italian companies simply as "Dolce & Gabbana" and attributed all alleged misconduct to this shared name without differentiating the specific actions of each entity.

While the amended lawsuit detailed overlapping ownership structures, officers, directors, and personnel between the two firms, including shared executives such as a CEO, operating chief, and IT and marketing executives, the court found these details insufficient.

Insufficient Evidence of Corporate Domination

The judge emphasized that the lawsuit failed to "provide specific examples" of how the shared executives were actually involved in the NFT project. Judge Buchwald stated: "The Court finds that plaintiff has not adequately alleged that D&G S.R.L. completely dominated D&G USA even if D&G S.R.L. allegedly shared some employees and office space with D&G USA."

This ruling highlights the importance of establishing clear corporate liability and the challenges of pursuing legal action against multinational corporations with complex subsidiary structures.

Implications for NFT Industry Legal Precedent

This case represents a significant development in the evolving legal landscape surrounding NFT projects and corporate responsibility. The dismissal demonstrates the challenges faced by investors seeking recourse when NFT projects fail to deliver promised benefits, particularly when dealing with international corporate structures.

The ruling may influence how future NFT-related lawsuits are structured and prosecuted, emphasizing the need for plaintiffs to clearly establish corporate liability and provide specific evidence of wrongdoing by individual entities rather than relying on general corporate relationships.

Conclusion

The dismissal of Dolce & Gabbana USA from the NFT lawsuit represents a notable victory for the fashion house's US operations while highlighting the complex legal challenges surrounding international NFT projects. With the primary US defendant removed from the case, the future of the lawsuit remains uncertain, particularly given the service issues with the remaining international defendants.

This case serves as a reminder for both NFT creators and investors about the importance of clear legal structures and the challenges of pursuing cross-border litigation in the rapidly evolving digital asset space.