Burlington Coat Factory will pay $10 million to settle counterfeit-goods fight with Fendi

A corporate memory lapse is costing discount retailer Burlington Coat Factory Warehouse Corp. $10 million.

That's how much the Burlington County company has agreed to pay to settle a long-running legal fight with Fendi, the Italian maker of luxury goods, over the sale of counterfeit handbags, wallets, and other items, Fendi said Wednesday.

Fendi handbags are priced online at Nordstrom for between $460 and $4,600. Neither Fendi nor Burlington Coat Factory, which says it has not sold Fendi products since 2006, provided examples of prices at Burlington, which claims to offer discounts up to 60 percent.

Fendi has long been at odds with Burlington Coat Factory, which was taken private by Bain Capital Partners L.L.C. in 2006 for $1.9 billion.

In the 1980s, Burlington allegedly sold counterfeit Fendi handbags. A 1987 injunction prohibited the company from selling anything with the Fendi trademark without Fendi's written permission.

For 15 years after that, Burlington Coat Factory sold no Fendi goods. But in 2002, they showed up again, prompting Burlington's in-house lawyer, Stacy J. Haigney, to admonish the buyer to ensure that the goods were authentic.

Haigney, working at an outside firm in the 1980s, was one of the lawyers in court for Burlington Coat Factory when the 1986 settlement was detailed by Sonia Sotomayor, now a U.S. Supreme Court justice, who represented Fendi at the time.

Why didn't Haigney follow the 1987 injunction?

"The simple truth is that I had long forgotten them by 2002," Haigney said in a court document, referring to Sotomayor's words.

That memory lapse - shared for a time by Fendi's attorneys, according to Haigney - landed Burlington Coat Factory back in U.S. District Court in New York in 2006, with Fendi asking a federal judge to find the retailer in contempt of the injunction.

Burlington lost in court in 2007 and in February, when a federal judge ordered it to pay $4.7 million for failure to abide by the 1987 injunction.

An additional payment of $5.7 million, announced Wednesday, was for damages, attorneys' fees, and costs for willful counterfeiting, Fendi, a unit of LVMH Moet Hennessy Louis Vuitton, said in a news release.

In recent years, Fendi also has won counterfeiting settlements against Wal-Mart and Filene's Basement.

Burlington Coat said it did not agree with the court's rulings.

"Burlington Coat Factory agreed to settle the matter with Fendi so that current management will not have to spend time in appeals on matters that happened under prior management, many years ago," the company said in an e-mailed statement.

At July's end, Burlington operated 447 stores, including 15 MJM Designer Shoes outlets, two Cohoes Fashions stores, and one Super Baby Depot.