Dolce & Gabbana USA Dismisses NFT Lawsuit Over Separate Entity Status

The US arm of Dolce & Gabbana has successfully evaded a proposed class-action lawsuit over its parent company’s alleged abandonment of a non-fungible token (NFT) project. In a significant ruling on Friday, New York federal court judge Naomi Reice Buchwald sided with Dolce & Gabbana USA Inc., dismissing the lawsuit on the grounds that it was not an “alter ego” of its Italy-based parent, Dolce & Gabbana SRL.

A group of NFT buyers had filed a lawsuit in May 2024, updated in September, claiming that Dolce & Gabbana and its US arm were effectively the same company. The plaintiffs alleged that the company failed to deliver on its “DGFamily” NFT project, launched in 2022, and kept over $25 million from it. The future of the suit is now in doubt as Dolce & Gabbana USA was the sole US-based defendant. The Dubai-based NFT marketplace UNXD Inc. and the Italy-based Bluebear Italia SRL, also named as defendants, were not served with the complaint, further complicating the legal proceedings.

The lawsuit claimed that Dolce & Gabbana and UNXD jointly created and promoted the DGFamily NFT project, which promised buyers high-value benefits to be delivered over two years. These benefits included digital outfits for the Decentraland metaverse, physical clothing, and live events for NFT holders. However, the plaintiffs alleged that Dolce & Gabbana failed to provide the complete set of benefits promised and kept millions of dollars from selling the NFTs.

Dolce & Gabbana USA argued that it was a separate entity and had not entered into any joint venture with UNXD or any other entity to sell, advertise, or promote any NFTs. The firm maintained that the NFT project originated from its parent company in Italy and that the complaint had not sufficiently alleged ties between the US and Italian firms.

Judge Buchwald agreed with Dolce & Gabbana USA's arguments, stating that the lawsuit was "plainly insufficient to withstand D&G USA’s motion to dismiss." The judge noted that the complaint referred to both the US and Italian companies as "Dolce & Gabbana" and attributed all misconduct to this shared moniker without differentiating what each entity did. The amended lawsuit detailed an overlap in ownership, officers, directors, and personnel between the two firms, including sharing a CEO, operating chief, and IT and marketing executives. However, the suit failed to provide specific examples of how those executives were involved in the NFT project.

The judge concluded that the plaintiff had not adequately alleged that Dolce & Gabbana SRL completely dominated Dolce & Gabbana USA, even if the Italian firm allegedly shared some employees and office space with the US arm. This ruling underscores the importance of clearly distinguishing between separate legal entities in corporate litigation, particularly in cases involving complex international operations and digital assets. The decision highlights the challenges in holding multinational corporations accountable for the actions of their subsidiaries, especially in the rapidly evolving world of digital assets and NFTs.