Dolce & Gabbana USA Wins Dismissal of NFT Lawsuit

The US arm of Dolce & Gabbana has been cleared of allegations in a proposed class-action lawsuit over its parent company’s alleged abandonment of a non-fungible token (NFT) project. In a significant legal development, New York federal court Judge Naomi Reice Buchwald ruled in favor of 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 the lawsuit in May 2024, updating it 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 lawsuit 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, the creator of an NFT collection called “inBetweeners,” were also named as defendants but were not served with the complaint.

The complaint alleged that Dolce & Gabbana and UNXD together made and promoted DGFamily, which promised buyers “high value” benefits to be delivered over two years at a rate of once per quarter. Some of the allegedly promised perks included digital outfits for the Decentraland metaverse, physical clothing, and live events for NFT holders. However, the lawsuit claimed that Dolce & Gabbana “failed to provide the complete set of benefits they promised” and kept millions of dollars from selling the NFTs.

Dolce & Gabbana USA filed to dismiss the suit in January, arguing that it was a separate entity that couldn’t be tied to the actions of its Italian parent company. The firm contended that it had not entered into any joint venture with UNXD or any other entity to sell, advertise, or promote any NFTs. The company asserted 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 ruled that the lawsuit was “plainly insufficient to withstand D&G USA’s motion to dismiss” as it referred to both the US and Italian company “as ‘Dolce & Gabbana’ and attributes 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, such as 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 Court finds that plaintiff has not adequately alleged that D&G S.R.L. completely dominated D&G USA even if D&G S.R.L. allegedly shared some employees and office space with D&G USA,” Buchwald said. This ruling underscores the complexities involved in regulating the NFT market and the challenges faced by plaintiffs in proving deceptive practices. The future of the lawsuit remains uncertain, but the implications of this ruling are likely to be felt throughout the NFT market, highlighting the need for a clearer legal framework for digital assets.