The lawsuit filed in California seeks to take on the ultra-fast fashion giant in a manner similar to how the U.S. government fought the mob, under RICO.
Attorneys Jeffrey S. Gluck, David Alden Erikson and Antoinette Waller recently filed a lawsuit against SHEIN on behalf of designers Krista Perry, Larissa Martinez and Jay Baron after finding that their products were plagiarized and sold by the fast fashion retailer. This constitutes a violation of the Racketeer Influenced and Corrupt Organizations Act, or RICO, a law instituted in 1970 to combat criminal organizations.
Today, RICO is used to bring charges against slippery groups that cannot be targeted individually, as is the case with SHEIN. The Chinese company has fragmented its corporate structure into a multitude of semi-related shell companies, affiliated conglomerates and international groups, creating a “labyrinthine corporate structure” in order to reduce the tax burden and evade liability for its actions. Despite the numerous allegations against it, SHEIN has managed to maintain its impunity thanks to the lack of information about its founder, Chris Xu, and its complex corporate structure.
In addition to tax evasion, the company has other serious allegations such as labor exploitation, greenwashing and design imitation. The latest lawsuit points out that while publicly traded companies like Nike can be held liable for any mistakes, SHEIN manages to avoid any form of liability due to its ambiguous corporate structure. “It turns out that avoiding direct blame is another key aspect of SHEIN’s business model,” the complaint continues. “Its decentralized structure allows it to plausibly deflect blame to third parties as if they were independent, when in fact they are closely controlled by SHEIN.”
Although this lawsuit is only on behalf of the trio of artists, a RICO-based victory could signify an important precedent and undermine the fast-fashion giant.
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