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CCMI in the News
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Ruling allows cashmere case to proceed
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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.
© Copyright 2002 Globe Newspaper Company
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