Rent the Runway Sued by Competitor FashionPass

Rent the Runway was started in 2009 by two East Coast women who hit upon the idea of renting out clothes to a broad range of women who like to mix up their wardrobe but may not have the money to buy a full closet of clothes.

In 2016, a similar online service called FashionPass was launched by Brittany Johnson and Joel Avery in Los Angeles, offering a monthly subscription service to rent clothing and accessories to women primarily in their 20s and 30s.

On March 26, FashionPass sued Rent the Runway in Los Angeles County Superior Court claiming that Rent the Runway was strong-arming a long list of clothing companies to not sell merchandise to FashionPass. The lawsuit said this has cost FashionPass at least $3 million in revenues.

The lawsuit claims unfair competition in addition to intentional interference with contracts and prospective business. “Since its founding in 2016, FashionPass has achieved strong and steady growth and has become a showcase retailer in the fashion-rental business,” the lawsuit claimed. “Rent the Runway is exerting its superior market power and financial capabilities to coerce FashionPass’s top suppliers to refuse to sell merchandise to FashionPass and is thereby attempting to eliminate competition from FashionPass.”

Rent the Runway did not immediately respond to a request for comment about the lawsuit.

Johnson said the problem began last October when sales representatives with whom she had been working told her they could no longer sell to her because they were in an exclusive agreement with Rent the Runway.

“We have a wide array of vendors, but the real problem is that customers come to us for these specific brands, and this is how we built the business,” she said. “Not being able to carry those brands makes it so that customers don’t find as much value in our service. We just want to be able to compete fairly.”

This is, in many ways, a David-versus-Goliath case. Rent the Runway is valued at about $1 billion. FashionPass is valued in the low millions.

FashionPass said it had been doing business for some time with at least 20 apparel manufacturers when the rental-clothing company learned that these companies were asked not to sell to it and instead sell to Rent the Runway.

The apparel companies listed in the lawsuit include The Jetset Diaries, Show Me Your Mumu, ASTR the Label, Dress the Population, Finders Keepers, Yumi Kim, AGolde, Citizens of Humanity, Fifth Label, Cleobella, Sanctuary Clothing and Fame and Partners.

FashionPass said that three of these labels are part of the company’s top-five revenue-generating brands. The Los Angeles company is seeking damages in excess of $6 million.