DALLAS — Closeout retailer Tuesday Morning Corp., which is facing a $30 million lawsuit from Liz Claiborne Inc. for allegedly selling counterfeit costume jewelry, has quietly settled at least two other trademark-related cases brought by other design companies in recent years.
Dallas-based Tuesday Morning, which resells surplus brand-name goods at deeply discounted prices, denies Claiborne's charges and suggests that the merchandise might be old but not counterfeit. Still, Tuesday Morning's stock has plunged nearly 12 percent since the suit was filed earlier this month.
"The filing of a lawsuit has an impact on your stock price, and if you lose, it's more," said Dan Howard, a marketing professor at Southern Methodist University who has testified as an expert witness in similar cases.
In two previous lawsuits charging trademark infringement, Tuesday Morning settled without paying monetary damages, according to the companies involved.
In 2002, a McAllen, Texas, company called Sweet Dreams Inc. charged that Tuesday Morning began selling cheap knockoffs of its pricey animal-themed footstools. The case was settled out of court two months later, and some details of the settlement were sealed.
The owner of Sweet Dreams said that Tuesday Morning agreed to stop selling the animal footstools and donate its stock of the Chinese-made imitations to charities.
"They knew exactly what they were doing," said Sweet Dreams' attorney, Tim Headley of Dallas. "I was under the impression that the public thought Tuesday Morning just bought extras from manufacturers."
Two years before the Sweet Dreams case, Tuesday Morning had been sued for copyright infringement by Fitz and Floyd Inc., a Lewisville, Texas, company that makes ceramic tableware.
According to court documents, Tuesday Morning agreed to stop selling items similar to the Fitz and Floyd products and pledged not to buy goods from a Chinese manufacturer that made the knockoffs.
John B. Walker Jr., chief financial officer at Fitz and Floyd, said Tuesday Morning reacted quickly and pulled some items after his company filed the lawsuit, complaining that some of the stores' products were too similar to their trademark goods.
"They've been a good partner to us. They buy from us now," he said.
Neither Sweet Dreams nor Fitz and Floyd said they received a financial settlement.
In the current lawsuit, New York-based Claiborne has asked the federal district court in Dallas for $30 million in damages against Tuesday Morning over sales of several million pieces of Monet costume jewelry that cost less than $5 each. The company's lawyer, Harley I. Lewin, said his client sued after talks to settle the dispute out-of-court stalled.
Claiborne also sued a distributor used by Tuesday Morning and three printing firms, all based in Illinois.
Tuesday Morning representatives did not return calls for comment Monday. In court documents, the retailer said its "hard-won reputation for selling first-quality genuine merchandise at discounted prices is being seriously compromised" by the Claiborne lawsuit.
Tuesday Morning also suggested that the goods in question might have been manufactured by Monet before Claiborne bought the brand out of bankruptcy in 2000. But Lewin, the Claiborne lawyer, said he found a former Monet Group employee who determined that the jewelry is not old Monet merchandise.
"We think this is a slam dunk," Lewin said. "The idea that this stuff was genuine is just nonsense."