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Ruling Allows Cashmere Case To Proceed

The following article appeared in the Boston Globe, April 5, 2002:

Ruling allows cashmere case to proceed
Appeals court says mislabeled blazers deceived consumers
By Bruce Mohl, Globe Staff

A federal appeals court has allowed a false-advertising suit to proceed against Saks Fifth Avenue, Harve Benard Ltd., and Filene's Basement, saying the three companies deceived consumers by mislabeling the cashmere content of popular women's blazers.

In an opinion issued on Monday, the US Appeals Court, First Circuit, overruled an earlier district court ruling and sent the case back for trial. The appeals court opinion sided with the plaintiffs, the Cashmere & Camel Hair Manufacturers Institute of Boston and L.W. Packard & Co. of Ashland, N.H., a manufacturer of cashmere and cashmere-blend fabrics that claims its business was hurt by the false advertising.

"We've passed a major legal hurdle," said Karl Spilhaus, president of the manufacturers institute, which originally filed suit in 1996. "Now we're facing a relatively easy factual test at trial."

An attorney representing Harve Benard, and two of its retail customers, Saks and Filene's Basement, declined comment.

Harve Benard has been manufacturing a popular line of women's blazers since 1993 that were labeled as containing 70 percent wool, 20 percent nylon, and 10 percent cashmere.

The labels and accompanying advertising portrayed the blazers as containing "a luxurious blend of cashmere and wool" or "a cashmere blend."

Spilhaus estimated tens of thousands of these jackets were sold in the United States.

During the course of the lawsuit, Harve Benard, Saks, and Filene's Basement were forced to acknowledge that the coats did not contain virgin cashmere but poorer-quality recycled cashmere.

Experts hired by the institute and Packard went further, claiming the coats did not even contain recycled cashmere. At most, the experts said, the coats contained only trace levels of cashmere.

Despite evidence of at least some misrepresentations, the US District Court for the Commonwealth of Massachusetts dismissed the false-advertising claims on the basis that consumers were not deceived by them and that Packard, which alleged that its sales were undercut by the falsely advertised coats, could not prove it had been financially harmed.

But the appeals court found just the opposite. It held that consumers are deceived when a manufacturer misrepresents a fact that relates to the inherent quality of the article being sold.

The appeals court also held that "a rational factfinder could reasonably infer that the substantial cost savings Harve Benard enjoyed from using noncashmere or recycled cashmere fabric allowed Harve Benard to lower the price of its blazers, thereby preventing Packard's customers from competing in the market."

In its decision, the appeals court noted two damaging pieces of evidence that emerged during discovery. In one instance, Harve Benard's president, Bernard Holtzman, received a letter disclosing that a mill in Italy making the blazers was using recycled cashmere fiber. The letter was dated Jan. 13, 1995, but Harve Benard took no steps to disclose that its garments contained recycled fiber until months after the suit was filed.

Robert J. Kaler, the attorney representing Packard and the institute, said Harve Benard coats now disclose the recycled cashmere content in tiny type on the clothing tag attached to the garment. He said the disclosure is not on the garment label and that in-store advertising still promotes the garments as containing cashmere.

The court also took note of the fact that Saks, one of Harve Benard's largest customers, told the manufacturer in January 1996 that it did not want to sell garments with recycled cashmere. Nevertheless, Saks has continued to sell the blazers over the years.

© 2002 Globe Newspaper Company