Figs Fights Lawsuit Over Scrubs Ads

Careismatic Brands, a leader in medical apparel with brands of scrubs like Cherokee and Dickies, has pursued litigation against Figs since 2019, saying the smaller company has misled health-care workers with boasts about how its products help keep them safe.

Figs’s advertising and social-media presence look more like those of a fashion brand than a medical-apparel maker, including sometimes irreverent videos and images of people wearing Figs while getting out of helicopters, skiing and skateboarding. Its online-sales model, aimed at selling directly to medical professionals, contrasts with Careismatic’s heavy reliance on bricks-and-mortar retailers.

Careismatic, previously known as Strategic Partners Inc., has asked a federal judge in Riverside, Calif., to issue an injunction requiring Figs to publicly renounce some marketing claims, including that its scrubs kill bacteria and infection on contact, repel liquids and reduce hospital-acquired infections by 66%.

In interviews with executives and court records, Figs stands by its marketing and says that Careismatic has used the litigation to harass the company with a fishing expedition. Figs says Careismatic has hired private investigators, subpoenaed more than 100 Figs investors and business and charity partners—as well as ex-boyfriends of the founders—and sent 900 requests for documents and other information.

In filings Friday in federal court in Southern California, Figs lays out internal Careismatic emails it says show the company doesn’t face any actual legal harm and is instead looking to slow down an upstart competitor.

In one May 2016 email to two colleagues—sent after someone circulated an article reporting Figs had raised $5 million and noted, “They’re already targeting every one of our brands hard”—Careismatic Chief Executive Officer Mike Singer wrote, “How do we attack them?”

A year later, according to the filing, Mr. Singer sent an email about Figs’s marketing videos saying, “We are getting our asses kicked. Where are our brand and product videos for us and our retailers to share about product and fit?”

Sanford Michelman, an attorney for Careismatic, said the emails show his client was intrigued by Figs’s rise, until discovering the allegedly misleading marketing claims.

“What we found out is that they’re lying and cheating,” Mr. Michelman said, adding that their distrust of Figs is the reason why Careismatic sought information from so many people.

Startups increasingly have to prepare for legal challenges from the industry they are trying to disrupt, said Arun Sundararajan, a business professor at New York University. Starting with the rise of Uber and Airbnb, “The incumbents chose regulation and litigation to try to push them back,” he said, a strategy that has been replicated.

Los Angeles-based Careismatic, founded in 1995, sells some products directly to consumers but also relies on partnerships with thousands of retail stores, many independently owned. Emails included in Figs’s latest filings show several retail partners emailing Careismatic executives with concerns about Figs’s business model and products.

“We need ‘Figs-like’ material as fast as you can create it,” wrote one Kentucky retailer in February 2018, the filings show.

The global medical-uniform market is worth an estimated $66 billion annually, with $11 billion in the U.S., according to a recent report on Figs from investment bank Piper Sandler. Citing estimates from Forbes, the report put Careismatic’s annual revenue at $700 million and Figs’s at $250 million.

Since filing its first lawsuit in February 2019, Careismatic has amended its claims a number of times and filed similar actions in state and federal court. In addition to challenging the marketing claims, it questions whether Figs donated a pair of scrubs for every pair sold, as it purported to do for many years.

Figs has since removed some of the marketing statements from its website, though it says none were inaccurate, and in 2017 stopped claiming it made one-for-one donations. Court filings show Figs has donated 610,000 pairs of scrubs world-wide.

Careismatic also accuses Figs co-founder Trina Spear of stealing confidential information about the company when she worked as a marketing associate at Blackstone Group Inc., citing media interviews in which she references a medical-apparel deal she did while at the private-equity giant and a related 300-page report about the industry she shared with her co-founder, Heather Hasson.

Ms. Spear said in an interview that she has never had any confidential information about Careismatic and that Figs set out to have an entirely different business model.

“We were warned when we started, ‘If you build a successful, innovative company, there will be those who copy it and those who try to crush you,’” Ms. Spear said. “This company is clearly trying to do both.”

Ms. Spear said she and Ms. Hasson, who has a background in fashion, started Figs because they saw a staid industry with room for innovation. Most health-care professionals have to buy their own uniforms, and most options were boxy, scratchy scrubs sold at medical-supply stores alongside wheelchairs and bedpans, Ms. Spear said. Figs developed a slimmer-fitting version in a range of colors using an antimicrobial fabric, costing about twice as much as some competitors’ scrubs.

Careismatic alleges, “Figs has profited off of unsuspecting consumers who have been and continue to be deceived into believing that Figs scrubs possess special qualities.”

Figs has sometimes come under fire for pushing its marketing too far: One video posted last year showed a female physician in pink scrubs reading from an upside-down book titled “Medical Terminology for Dummies.” Ms. Spear said the video was a mistake and that better controls have been put in place before such content is posted.

Figs has raised $75 million since launching in 2013. It recently brought on a new chief financial officer, formerly with Domino’s Pizza, and Ms. Spear said its plans could include an initial public offering in the next year or two.

Write to Sara Randazzo at [email protected]