SFVBJ.COM SAN FERNANDO VALLEY BUSINESS JOURNAL Vol. 26, No. 3 THE COMMUNITY OF BUSINESS™ February 1 – 14, 2021 • $4.00 Did Talk Too Much in Coty Deal? Busy Times for : Trade secret metics, owned by model and social media megastar Kylie Jenner, made headlines when Funeral Homes complaint from manufacturer. it struck a deal to sell a 51 percent stake to French cosmetics corporation Coty Inc. for SERVICE: COVID complicates By ANDREW FOERCH Staff Reporter $600 million. The transaction would grant Coty the rights to make, advertise and sell workflow, family gatherings. A celebrity makeup label and its contract Kylie products, according to a press release manufacturer are clashing over a transaction from Coty. By AMY STULICK Staff Reporter the manufacturer claims broke the parties’ Seed Beauty, a white-label operation in agreement and revealed to a Oxnard that has developed, manufactured, The coronavirus has created a floodtide of major competitor. business for Valley funeral homes, but has lim- In 2019, Woodland Hills-based Kylie Cos- Please see COSMETICS page 35 Makeup Marketer: Kylie Jenner. ited options for customers as regulations prohibit large gatherings and travel for family members. “We’re beginning to ration what we can do,” Bill Hawkins, owner of Angeleno Mortuaries in Van Nuys, told the Business Journal.

REAL ESTATE QUARTERLY Please see SERVICE page 4 Valley Exodus Heads to Texas RELOCATION: Are company exits part of larger trend?

By MICHAEL AUSHENKER Staff Reporter

The list of companies leaving the Valley is long. In the few years, home-selling company Rex, staffing company ASGN Inc., chocolatier Nestle USA and aerospace manufacturer Incora have exited to either Texas or Virginia. But the fact that corporate giants outside the

Please see RELOCATION page 34 Coming Soon: Avion Burbank construction site. SPECIAL REPORT BLACK ENTREPRENEURS MONTH

In this issue and next, the Business Journal AIRPORT ADJACENT profiles local African American entre- Properties near Valley airfields command premium prices. preneurs who are helping to make the By MICHAEL AUSHENKER trial deals in their environs, two epitomize class A industrial space driven by large Valley area’s economy Staff Reporter the trend. Overton Moore Properties and entertainment and content firms and their vibrant. Here’s one Invesco Real Estate’s Avion Burbank supply chains,” said Matt Hargrove of takeaway: For many, he San Fernando Valley’s industri- development on 60 acres will add 18 CBRE Group, the leasing agent for Avion this a terrific era for al real estate market has flourished buildings with 1.25 million square feet to Burbank. “The market is really hungry Black entrepreneurs T during the coronavirus pandemic – the East Valley’s inventory. And Rexford for this type of smart, integrated facility “There have been especially for properties near airports. Industrial Realty Inc. purchased a solution.” more open doors and opportunities for me to grow While the Valley’s two major airfields, 19-building portfolio in Van Nuys for than ever before,” said Jessica Huling, owner of Les Hollywood Burbank Airport and Van nearly $155 million. Please see REAL ESTATE QUARTERLY Sisters Southern Kitchen in Chatsworth. Nuys Airport, have seen numerous indus- “There is unprecedented demand for SPECIAL REPORT page 22 BEGINNING ON PAGE 9 PHOTO BY THOMAS WASPER

LIST River Cruiser Prepares to Sail THE Its ships are in port, but AmaWaterways plans to p. christen the AmaDahlia, right, for Nile River trips. 3 BUSINESS IMPROVEMENT DISTRICTS Ranked by 2021 budget Travel Districts Grapple With Pandemic See page 20 Tourism Business Improvement Districts face p. 5 revenue shortfalls from hotel occupancy declines. 20 The San Fernando Valley Business Journal is proud to announce the 2021 Commercial Real Estate Awards. COMMERCIAL REAL ESTATE AWARDS Final nomination deadline Friday, February 5 To nominate, please visit sfvbj.com/bizevents

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Carter, the contract attorney, said the vast Continued from page 1 majority of contract disputes never make it to court – “trials happen in maybe 2 or 3 percent packaged and distributed Kylie products since of these suits,” he said. Kylie’s inception in 2016, has a problem with “The system is designed to get people to that. resolve their disputes,” he added. “After some Seed argues the acquisition shouldn’t be discovery happens, maybe some negotiations allowed based on its existing contracts with or mediation … the lawyers can make a deal.” Kylie Cosmetics and claims Jenner or other Seed’s lawsuits remain open in California company representatives have already shared State Court, but that hasn’t stopped Coty from elements of Seed’s business model and finan- finalizing its transactions with the most popular cial structure – which it categorizes as trade familyyy on reality television – Coty’s investment secrets largely responsible for Kylie Cosmetics’ iinn KKW Beauty officially closed last month. meteoric rise in the industry – with Coty, there- by eliminating Seed’s market advantage. CContractontract best prpracticesa Seed filed a civil suit in June against Kylie’s CCarter’sarter’s advice fforo businesses entering parent company King Kylie LLC and Coty, ccontractontract agreemeagreementsn is simple: “Get a claiming business tort and breach of contract. nnon-disclosureon-disclosure aagreement.g … They’re The suit asks the court to grant injunctive relief enenforcedforced aallll tthehe time.” preventing Coty from using or keeping record Aggrieved: Seed Beauty in Oxnard. ““YouYou can explain the conse- quences of wwhath happens if it does of Seed’s trade secrets. PHOTO BY MIKE BAKER “This action is to stop Coty’s theft of Seed’s ggetet (violate(violated).d In some instances, pioneering and proprietary digital-first business business process.” with Seed to you coucouldl call for liquid dam- model that has revolutionized the cosmetics Warren Bleeker, a partner at intellectual manufactureure ages.ages.”” industry,” the suit states. property law firm Lewis Roca Rothgerber makeup aandnd AAlso, he added, Attorneys representing all parties did not Christie in Glendale, agreed. other coloroloor “d“don’td show all the respond to the Business Journal’s requests for “The traditional trade secret would be a for- cosmetics sincesinnce ffamily jewels,” refer- comment, nor did the companies themselves. mula or a recipe, but really trade secrets can be its inceptiontion in rring to sharing trade broader than that. It has to be some sort of data 2017. secrets with other Redacted documents or information that is valuable to a company Last June,une, in ththee entities. Nanci Carr, an attorney and business because it is confidential,” he said. “That can weeks afterter KyKylie’slie’s deal Bleeker, the Glen- law professor at California State University – be marketing and pricing policies, cost strate- with Cotyy closed, KKKKWW ddale attorney, said Northridge, said several shadowy details make gies, sourcing agreements.” announcedd iitstts owownn ssaleale ooff a sosometimeso disagree- the situation difficult to analyze. For a judge to recognize such information 20 percentt sstaketake to Coty foforr mementsen happen where For one, because the lawsuits contain details as a trade secret, Bleeker said, the company $200 million,ion, giving the cocom-m- nneithereithe party was acting in of Seed’s purported trade secrets, many para- must prove it is proprietary and that it took pany a valuationuation of $1 billion. badbad faitfaith.h If a contract’s terms graphs have been redacted in the public docu- specific measures to keep the information con- Seed respondedsponded by filing a lawsuit are vaguevague oro open-ended, dis- ments, including the specific information Seed fidential. that monthh againstgainst KKW. Soon after, Se Seeded putes can result oover what they mean wants to keep hidden from Coty. Also, since Claremont-based contract attorney Tom claims in its most recent suit against KKylie,ylie, oror how they should be interpreted.inte Seed hasn’t made public the exact nature of Carter added celebrity-run businesses are par- it learned KKW hhad d already l d revealed l d ““confi- fi “Sometimes“S ti contracts t t are worded poorly. its relationship or con- ticularly prone to these types of disputes. dential documents containing trade secret and Sometimes companies don’t even get attorneys tracts with Kylie, it “Any time it has to do with talent or cre- proprietary information” to Coty. The suit goes involved (when signing),” he said. isn’t clear what part of ative branding, emotion gets involved,” he on to say Seed was subsequently informed that Furthermore, signatories may not consider the operation beyond said. Kylie similarly disclosed confidential informa- all the potential pitfalls that could arise down marketing is owned by And celebrity branding, Carr said, is a tanta- tion to Coty. the line. Kylie. lizingly lucrative asset. Seed’s suit against Kylie states: “Coty, “At the time, what they agree to makes “Was this a contract “You have to wonder from a strategy stand- through its improper acquisition of Seed sense. Then years later, things happen they for services? Was this a point, is Seed really worried about disclosure Beauty Trade Secrets, is poised to capitalize didn’t anticipate.” partnership? Who owns of its trade secrets? Again, this is Coty, a big on Seed’s confidential and proprietary trade He said businesses entering a contract the intellectual proper- cosmetics company. They already know how secret information and better understand Seed’s agreement would do well to make sure its lan- ty – the formula for the to do this. Is that really what Seed is concerned unique business model and partnership struc- guage is thorough, even to the point of redun- Kardashian West or whatever it about, or is that just what they’re asserting ture. … Seed’s business operates in a highly dancy, so as to be clearly understood by both is?” she posited. “We they’re concerned about because they don’t competitive market and will continue to suf- parties. don’t know if she breached because we don’t want to lose the deal with Kylie?” she said. fer irreparable harm unless and until Coty is And to avoid expensive litigation later on, know what the contract said.” enjoined by order of this court.” “you can try to negotiate an alternate dispute With that in mind, she said it’s relatively Sibling saga Kylie and Coty have expressed they want resolution, whether it’s arbitration, some sort common for a company to claim a business Seed isn’t just upset with Jenner’s company to settle the disagreement out of court. The two of mandatory mediation or a notice and cure model or methodology as a trade secret. – it also has a bone to pick with that of Jenner’s filed separate motions to compel arbitration. provision,” he added. “That’s the key to the success of a company older half-sister, West. Coty’s motion argues a jury trial is out of Carr, the CSUN professor, said, “Read – we can do something no one else can do. … Kardashian West’s Woodland Hills-based the question, citing an arbitration clause in everything. Don’t just read but understand. It could certainly be an organizational style or a KKW Beauty Inc., like Kylie, held contracts Kylie’s contract with Seed. That’s where things go wrong.” BUSINESS MARKETPLACE

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