Popular Seven jeans brand target of multiple lawsuits. (Up Front).

The Seven jeans line is adding up to nothing but legal troubles.

The L.A.-based label has been torn apart as three different business entities are fighting over the brand, which has pulled in $73 million in sales over the past two years.

The cast of characters includes some of the city's most seasoned apparel makers, each claiming a piece of the firm.

"Isn't this the nastiest little tale you've ever heard?" said Lonnie Kane, a long-time apparel manufacturer who is president of Karen Kane Inc., a women's sportswear line based in Vernon.

The problems started nearly three years ago when two apparel business veterans, Michael Glasser and Jerome Dahan, approached Peter Koral, owner of 20-year-old Vernon sportswear company, L'Koral Industries. They wanted to start a jeans line that would be well made, comfortable and fashionable. But they also would be expensive, selling for $100 to $160 a pair.

A venture was formed in April 2000 to create the Seven jeans line, now called Seven For All Mankind. They soon made their way to tony stores like Barneys. New York, Fred Segal Santa Monica and Neiman Marcus.

Koral has one of the largest knitting factories in the area. Known by business contacts as a shrewd businessman and risk taker, he is not, however, comfortable with the marketing and design side of the business.

That's where Glasser and Dahan came in.

Dahan is known for his creativity and designing prowess. After a nine-year stint with Lucky Brand Dungarees, he left to team up with Glasser on the Seven venture.

Glasser is the salesman of the three. A New York native, he started an apparel company in 1990 called Democracy before later having a falling out with his partner, Marty Brander.

Glasser said they hit upon the name Seven because his son was born 7/17/87 and weighed seven pounds, seven ounces. Koral's son, a high school football player at the time, wore the number seven on his jersey.

According to court documents, an oral agreement was made that Koral would finance the operation, having a 50 percent stake. Dahan and Glasser would provide the expertise for the other 50 percent of the business, working out of Koral's facilities rent-free in Vernon.

Spinoff claimed

The three agreed that once Seven jeans generated $12 million in revenue, Koral would put up another $4 million for the operation to be spun off into a separate company with separate facilities, according to court papers.

The line was launched in September 2000. By 2001 the partners sold $13 million in blue jeans and other related items such as jean jackets, tops and denim skirts, Glasser said.

As 2002 waned, the popular and sexy jeans were being worn by Cameron Diaz, Tyra Banks and Kate Hudson. Glasser and Dahan claimed in court papers that the line had generated $20 million in profits.

They also contend that when asked for their share, Koral said it wasn't available. He claimed Seven lost $1.5 million in 2001 and that the 2002 profits were plowed back into the business, according to court papers.

Glasser and Dahan filed suit in Los Angeles Superior Court in September, accusing Koral of using the profits to finance his moderate sportswear line, which they claim wasn't making money. They also accuse him of spending money on personal expenses, the documents said, and are asking for $20 million in damages.

Koral was out of town when contacted last week. His assistant, Lynne Hosken, said her boss would have no comment on the lawsuit and allegations.

"The complaint is utterly without merit," said attorney Lisa Jacobsen, whose law firm of Buchalter Nemer Fields & Younger represents Koral and his company.

Glasser and Dahan have pulled up their stakes, moving out of Koral's facilities in Vernon and into office space they are sharing with one of their apparel contractors. But they still consider themselves partners with Koral in the Seven venture, Glasser said.

Meanwhile, the two jeans makers are developing a line they plan to call Citizens of Humanity. "We will launch in February in New York and are already taking orders from stores in Europe, Canada and Japan," Glasser said, adding that they are talking to an entertainment industry entrepreneur to provide the financial backing.

But the Seven tale of litigation doesn't end there.

Gerard Guez, chairman of L.A.-based Tarrant Apparel Group, one of L.A.'s largest clothing manufacturers, is embroiled in a legal dispute with Koral and his partners. Guez owns Seven Licensing Co., which acquired the rights to a French jeans label that has existed for decades called Seven7.

French apparel manufacturer Maurice Ohayon acquired the licensing rights to the line in 1998 and started shipping the denims that sell for $100 to $300 to the United States.

Cease and desist 

After seeing Koral's Seven label in U.S. stores, Ohayon sent several cease and desist documents to Koral and his partners informing them they were violating the Frenchman's Seven7 trademark and asked them to stop manufacturing under the Seven label, according to court documents. But nothing happened.

After Guez acquired the U.S. rights last June, Ohayon and Guez talked with the manufacturers of Seven For All Mankind about resolving the name issue but nothing came out of it.

A month later, the three Koral partners filed suit in federal court against Ohayon and Guez, claiming they were trying to unfairly capitalize on their success using false trademark claims.

Ohayon and Guez countersued in December saying that Seven For All Mankind infringed on their trademark. They are asking for $10 million in statutory damages and $20 million in punitive damages.

"This is a story that lawyers love," Kane said. "They're about the only people who are going to make money on this."