## Facts

- Jones Apparel Group, Inc. and Jones Investment Co., Inc. (together, Jones) design, manufacture, and market apparel sold under multiple brand names.
- Polo Ralph Lauren Corporation and related entities (together, Polo) own and license the Ralph Lauren-related trademarks and business.
- In 1995, Jones and Polo entered into four agreements granting Jones exclusive rights in the United States and Canada to produce certain “Lauren”-labeled clothing (the Lauren Agreements): two license agreements (U.S. and Canada) and two design-services agreements (U.S. and Canada).
- Each Lauren Agreement allowed Polo to terminate upon Jones’s default and included cross-default/cross-expiration terms tying the license and design-services agreements together.
- The Lauren Agreements also linked the U.S. and Canadian arrangements in one direction: a default or expiration under the U.S. agreements triggered a default or expiration under the Canadian agreements, but not the reverse.
- The parties later entered additional license and design-services agreements for a younger clothing line (the Ralph Agreements), which similarly contained cross-default/cross-expiration provisions.
- To compensate Jones for taking on the risk of launching the Ralph line, the parties executed a separate Cross-Default and Term-Extension Agreement that added two years to the Lauren Agreements and addressed certain cross-default relationships among the agreements.
- The Ralph line was unsuccessful, and events surrounding that failure triggered termination/default consequences under the Ralph Agreements. Polo asserted that these events also triggered cross-default/cross-expiration of the Lauren Agreements, causing all agreements to end together and the licensed rights to revert to Polo at the same time.
- Jones rejected Polo’s reading and maintained that the term-extension/cross-default agreement did not make termination of the Ralph Agreements automatically terminate the Lauren Agreements.
- In related litigation, Jackwyn (Jackie) Nemerov, a former Jones executive who left to work for Polo, was sued by Jones. Nemerov relied on an arbitration clause in her Jones employment agreement and sought to compel arbitration and stay the court claims against her.
- Polo separately sought declaratory relief that the Ralph and Lauren Agreements terminated together; Jones sought summary judgment dismissing that declaratory-judgment complaint.

## Issues

1. Whether Jones’s claims against Nemerov were covered by the arbitration clause in her employment agreement, requiring arbitration and a stay of the court action as to her.
2. Whether the Ralph Agreements and the Cross-Default and Term-Extension Agreement caused the Lauren Agreements to terminate or expire automatically when the Ralph Agreements terminated or went into default.
3. Whether either side was entitled to summary judgment on the declaratory-judgment claims concerning the duration and cross-default effects among the agreements.

## Decision

- The court granted Nemerov’s motion to compel arbitration of Jones’s claims against her and stayed the action as to those claims pending arbitration.
- The court declined to grant Polo complete dismissal relief in Jones’s action based on documentary evidence and pleading arguments, and addressed stays only to the extent warranted by overlap with the arbitrable dispute.
- In the declaratory-judgment action, the court granted Jones’s motion for summary judgment dismissing Polo’s complaint and denied Polo’s cross-motion for summary judgment.
- The court held that the agreements’ text did not support Polo’s contention that termination/default under the Ralph Agreements automatically triggered termination/expiration of the Lauren Agreements, particularly in light of the negotiated two-year extension of the Lauren Agreements.

## Legal Principles

- A court compels arbitration where the parties agreed to arbitrate and the asserted claims fall within the clause’s scope; broad “arising out of or relating to” language is read to cover disputes tied to the employment agreement and its post-employment obligations.
- Where contract language is unambiguous, interpretation is a question of law, and the court enforces the contract according to its plain meaning without resort to extrinsic evidence.
- Cross-default and cross-expiration provisions are enforced as written; courts do not treat them as creating broader, automatic termination consequences beyond the connections the parties expressly stated.
- Directional cross-default drafting (for example, U.S. agreements affecting Canada, but not Canada affecting the U.S.) may confirm that cross-default effects were intentionally limited.
- Summary judgment is appropriate when the governing agreements can be construed from their text as a matter of law and no material factual dispute is needed to resolve the parties’ competing readings.

## Conclusion

The Supreme Court, New York County compelled arbitration of Jones’s claims against former executive Jackwyn Nemerov under her employment agreement and, in the related declaratory-judgment dispute, ruled as a matter of law that defaults or termination under the later Ralph Agreements did not automatically terminate the earlier Lauren Agreements, granting Jones summary judgment and dismissing Polo’s complaint.


Jones Apparel Group, Inc. v. Polo Ralph Lauren Corp., 3 Misc. 3d 1107(A) (2004)