Used by permission.
The Seattle Times [http://seattletimes.com/html/home/index.html]
August 31, 1996, Saturday, Final Edition
SECTION: BUSINESS; Pg. C1
LENGTH: 298 words
HEADLINE: PRICECOSTCO REJECTS CONTEMPT RULING — HAIR-CARE PRODUCTS FIRM WANTS STORE TO STOP SALES
BYLINE: BY CHRISTOPHER SOLOMON; SEATTLE TIMES BUSINESS REPORTER BODY:
A California court has found PriceCostco in contempt on at least eight counts for refusing to comply with an order to stop selling a company’s salon hair-care products.
Sebastian International, a Woodland Hills, Calif.-based maker of hair-care products exclusively for salons, sued PriceCostco last October. The company claims that the chain of warehouse discount stores bought and sold its repackaged products, damaging Sebastian International’s reputation and its profits. It is seeking damages of at least $ 1 million. The case is pending.
A California Superior Court judge issued an injunction against PriceCostco in January, but the Issaquah-based company continued to sell Sebastian products, the court ruled Wednesday.
James Sinegal, PriceCostco’s president and chief executive officer, has been ordered to appear in court for a sentencing hearing Oct. 1, according to court documents.
A lawyer for PriceCostco said the company had appealed the injunction, and that it will likely appeal the contempt ruling, too.
“PriceCostco is not doing anything wrong,” said attorney David Makous. “We think this injunction is illegible, it’s incomprehensible.” Makous said that, if there was any diversion of the product from its intended market, it happened prior to PriceCostco’s involvement.
In April, the U.S. Supreme Court refused to exempt the owner of Price Club stores from a lawsuit claiming the company hid bad financial news before a 1992 drop in its stock price. Price and Costco Wholesale merged in 1993.
In June, the company was sued by Calvin Klein Jeanswear, which claimed that the retailer sold counterfeit clothing. The suit in U.S. District Court is pending, though a judge denied Calvin Klein’s request for an injunction to halt sale of the clothes.