… so apparently, I am a primo target for press releases when somebody in the craft yarn industry sues someone else. That’s it. Is that it?
I received an e-mail from a PR agency with an interesting subject line and a PDF attachment. I downloaded the attachment and read it.
(Uh… so apparently, I am stupid enough to download attachments sent from an unknown source called “Communications Specialists”, simply because I am led to believe the subject matter is interesting. Why yes, this computer is running Windows. Why did you ask?)
Actually, when I read the subject line — “Knitting Fever Sued in Federal Court” — I thought, wow, if that’s about the cashmere, that’s old news, kind of. The public part of the tiff started so long ago, and seemed to have died off, that the general public has probably lost interest except for dropping a random comment in a yarn shop about whether one’s yarn contains the percentage of cashmere indicated on the label, followed by a vague explanation that there was a dispute aired publicly between some company and Knitting Fever about Debbie Bliss Cashmerino and how somebody had a lab test done showing that the yarn didn’t contain the claimed cashmere, and how somebody else had a lab test done showing that the yarn did, and each side claimed that the other’s tests were flawed and that Cascade Yarns (who contaced yarn shops with information about Cashmerino content) was just jealous because Knitting Fever’s Ella Rae line was barging into Cascade 220′s market space and that James Casale, co-owner of The Knit With (a yarn shop in Pennsylvania) who also took up the dispute was just bitter because KFI and his shop weren’t doing business anymore.
And I never posted about it. I started to, mind you, but I draft posts like I knit sweaters: I start lots of them, and never finish because I get distracted by something else. I found a couple of drafts, and they’re not in great shape. For now: The Knit With’s “Yarn Recall” page, with many PDFs. Carol’s (love ya) names changed to protect (against) the litigious. Eleven pages of speculation at Knitter’s Review. Two other pages from Knitter’s Review, in which it appears Cascade launched a salvo.
(By the way, speaking of cashmere: that thing I’m knitting of yarn that I firmly believe is pure cashmere and obtained from a source not mentioned in this post that I messed up by inserting a single twist is doing just fine, thanks. Decided to reknit in the round, and not a twist in sight. Had a momentary lapse when halfway done, wondering whether I had just run out of one of the yarns I was using. Fortunately I found the other cone.)
And then nothing really seemed to happen, more exciting things like Ravelry turned up, and aside from the resolution that I would never buy a wool-blend yarn that claimed to have 15% or less cashmere — because, well, why, really? What difference does that amount of cashmere really make? — as I was saying, aside from that resolution and a general mistrust of labels (exacerbated by the recent disclosure about Elsebeth Lavold Silky Wool, also distributed in the U.S. by Knitting Fever), we had nothing to show for it.
(Another aside: speaking of the pointlessness of low cashmere content, I bought some Fiddlesticks Knitting Luscious Tweed recently, and to my fingers it felt just as soft as Jo Sharp Silkroad (Aran/DK) Tweed. Luscious Tweed is 90/10 wool/silk; Silkroad Tweed is 85/10/5 wool/silk/cashmere. I remember reading about an acceptable 3% variation (provided it is unintentional) in content; what does that do to 5% cashmere?)
Anyway, here I am, folks, doing exactly what you and those unknown PR people would expect.
Newsflash! On Tuesday The Knit With sued Knitting Fever, Designer Yarns, Filatura Pettinata, Sion and Diane Elalouf, Jeffrey Denecke, Jr., Jay Opperman, and Debbie Bliss (hands up those of you who think the last individual was named out of pure swank). The complaint alleges false advertising, breach of express and implied warranties of merchantability, unfair competition, and even invokes RICO.
The complaint is a hefty 60 pages that I haven’t read through yet, and I’m certainly not going to finish tonight. I’ll edit this post once I’ve finished the first 82 paragraphs.
Edit: here we go…
Okay, here’s precis of what I’ve read so far, after the jump.
After skimming through the first part of the complaint — just the factual allegations, and not the part of the complaint that actually sets out the legal grievances against the defendants — this story, truly, is told by the subheadings used in the complaint. The writer has a certain type of literary flair:
II. The Parties
B. Corporate Defendants
C. Individual Defendants
III. Jurisdiction and Venue
Okay, so far, I’m sure you’ve been lulled into a false sense of security. Standard form complaint, nothing to see here, move along.
IV. Facts In Support of Plaintiff’s Claims
A. A Long-Standing Relationship Corrupted
B. Knitting Fever’s Place in the Specialty Yarn Trade
1. The Plan for Designer Yarns
2. Factors Further Enabling the Ensuing Cashmerino Caper
See? See? It’s getting better. To be honest, I don’t think this would be my choice of style, but then I don’t get to sue people over knitting yarn. Have fun with it, people!
Unfortunately, the language of the complaint did not make me sympathetic with the plaintiff; rather, it made me picture the defendants as the Dynamic Duo. Pow! Splat!
C. The Cashmerino Caper
1. The Cashmerino Caper Develops Successfully
2. In the Course of Time, The Cashmere Caper Unravels, Unexpectedly
3. Plaintiff’s Due Diligence Concerning the Rumored Cashmere Caper
4. The Explosion of the Cashmere Caper Exponentially Expands
D. The Conspiracy for the Cashmere Caper Naturally Expands to a Cover-Up
1. Pettinata V.V.G. Joins the Cashmere Conspiracy
2. Elalouf Entices Denecke to Join the Cashmere Conspiracy
3. The Cashmere Conspirators Risk a Trade Debacle
4. Elalouf Ensnares Debbie Bliss and Jay Opperman in The Conspiracy
It would be harder to draft a complaint about qiviut, I think. I also think that the Xenakises are safe.
E. Plaintiff Recalls the Defective/Mis-Labeled Cashmerinos
F. The Modus Operandi of Sion Elalouf as Chief Executive of Knitting Fever, Inc.
G. Plaintiff’s Injury
Okay, that’s less exciting.
So, let’s start with the cast of characters:
The Knit With (TKW): Plaintiff. Yarn shop. Family owned. One principal of the business is James Casale. He’s also the shop’s lawyer in this action.
Knitting Fever, Inc. (KFI): Defendant, based in U.S. Yarn distributor.
Designer Yarns, Ltd. (DY): Defendant, based in UK. Believed by plaintiff to be controlled by Sion Elalouf (see below). Licensee of Debbie Bliss (see below).
Filatura Pettinata V.V.G. Di Stefano Vaccari & C. S.A.S. (Pettinata): Defendant. Italian broker of yarns, but apparently KFI identifies this company as the manufacturer. Plaintiff believes this company is controlled (“dominated”) by Sion Elalouf.
Sion Elalouf: Defendant. The man in charge of KFI, sole or controlling shareholder, “chief executive”.
Diane Elalouf: Defendant. Spouse of above, believed by plaintiff to be some sort of officer of KFI.
Jay Opperman: Defendant. Based in U.S. First an independent sales representative of KFI, then KFI sales manager. Director of DY, above.
Jeffrey Denecke, Jr.: Defendant. Based in U.S. Participated in those threads on Knitter’s Review. Operations Manager of KFI.
Debbie Jane (Mrs. Barry W.) Bliss: Defendant. Yes, that’s how she’s identified in the complaint. Do women still need to be defined with reference to their spousal units? I missed that memo. Designer. Based in UK. Licensed her name to DY.
Skipping over the jurisdiction and venue section, we’ve gone over the most interesting of the first 15 paragraphs of this complaint. There remain 67 paragraphs in this first part of the complaint. I’m going to do it in nine.
1. Debbie Bliss was a UK retailer of yarns and designer of patterns who wanted to create her own yarn line. Somehow, she managed to become acquainted with Sion Elalouf and KFI. The plaintiff believes that sometime between 1999 and 2001, Bliss and Elalouf agreed to enter into an arrangement whereby Bliss:
a. ) would become the ‘Martha Stewart’ of the US yarn trade;
b. ) hold herself out as the creative source of the Debbie Bliss brand of yarns;
c. ) be available to promote the sale of products branded as Debbie Bliss yarns;
d. ) forego the travails and financial uncertainty of operating her retail yarn business;
e. ) devote herself to the creative processes of designing and writing handknitting patterns;
f. ) benefit economically from the branding of yarn products produced at the direction of Mr. Elalouf and offered for resale to US yarn shops and for ultimate resale to handknitting
consumers; and whereby Mr. Elalouf could simultaneously;
g. ) capitalize on Mrs. Bliss’ design creativity by exclusively importing and wholesaling the Debbie Bliss line of yarns; and
h. ) protect his invested efforts and resources promoting the Debbie Bliss designer products against the possibility ( distinct based upon his experience ) of the designer ceasing to do business with Mr. Elalouf personally or through Knitting Fever, Inc. after KFI developed a market for the Debbie Bliss yarns.
(Complaint, paragraph 30)
(Comment: no, seriously. What would Martha Stewart wear? She’d wear Bliss, baby. However, I find it hard to believe that Martha Stewart was a parameter of any agreement between these two.)
2. To this end, Elalouf and Opperman “created a company to hold the brandnames and distribution rights to ‘designer yarns’ – yarns to be branded with the names of recognized designers in the international handknitting yarn trade” (Complaint, paragraph 31), this company being DY, incorporated in 2001. The plaintiff believes, though, that while Elalouf makes the decisions for DY concerning product fiber content, pricing, and promotion (Complaint, paragraph 33), he “is not disclosed as a shareholder, director or participant in” DY, “[a]pparently to avoid if not evade US Customs scrutiny of import transactions between related parties” (Complaint, paragraph 32).
3. At some point, before the official launch of Debbie Bliss Cashmerino, Elalouf is alleged to have “discovered indistinguishable versions of a yarn called Cashmerino; the versions, one spun with a quantity of cashmere and the other with no cashmere at all, could constitute, to a merchant of a certain character, a remarkable find” because of the difficulty in distinguishing the two, and the lack of retailers’ resources to retain the professional expertise to determine the fiber content of finished yarns – or other professionals to seek redress in the event a yarn is discovered to be mis-labeled” (Complaint, paragraph 34). Thus, Elalouf and DY “entered into an agreement to substitute the 0% cashmere version for the Cashmerino spun of 12% cashmere”. And so:
a. ) Alberto Oliaro, Pettinata V.V.G.’s principal officer was directed to manufacture the 0% cashmere yarn – through a spinner, more specifically known only to the Defendants – but label the finished product as spun of 12% cashmere;
b. ) by processes and at a time more specifically uniquely within the Defendants’ purview, but certainly by June 9, 2001, the zero-cashmere version of the Cashmerino was included in the new line of Debbie Bliss yarns to be launched by Designer Yarns;
c. ) the zero cashmere version of the Cashmerinos was subsequently imported to the US for wholesale distribution by KFI under the Debbie Bliss brand from Designer Yarns and the K.F.I. brand – when Mr. Elalouf knew, or should have known, the Cashmerino version actually manufactured was spun of a 0% [ zero percent ] cashmere.
(Complaint, paragraph 36)
4. The plaintiff purchased both the Bliss Cashmerino, as well as another product called KFI Cashmerenos DK, on the strength of representations that the yarn contained 12% cashmere. Some of these representations were made by Opperman as an independent rep. The plaintiff continued to purchase such products through August 2005, when KFI terminated its relationship with the plaintiff (Complaint, paragraphs 37-42). The breakdown of the relationship between KFI and TKW is actually dealt with earlier in the complaint; in a nutshell, TKW became displeased with some business practices of KFI, their differences were not resolved, TKW therefore purchased substantially less from KFI, and KFI advised TKW that it would stop dealing with TKW (Complaint, paragraphs 16-24).
5. The Cashmerino products were so successful that KFI’s supplier was unable to meet consumer demand by 2004 (Complaint, paragraph 43). A competitor of KFI’s therefore sought to “knock off” Cashmerino… “and found, through reverse-engineering, that Cashmerino Aran was not spun with any cashmere at all; later testing by the Cashmere and Camel Hair Manufacturer’s Institute ( hereinafter, Cashmere Institute ), showed Cashmerino Chunky too was spun of 0% [ zero ] cashmere” (Complaint, paragraph 44). This was a topic of conversation at a trade show in Indianapolis held from June 10 to 12, 2006. The plaintiff received a report of a rumor on July 6, 2006 that a yarn, said to have the fiber composition of Cashmerino, had been tested and found not to contain cashmere at all. This rumor was supported by a letter from K.D. Langley Fiber Services to the Cashmere Institute, dated May 26, 2006 (Complaint, paragraphs 45-47; the letter was reproduced on TKW’s website).
6. TKW removed its remaining suspect Cashmerino stock from its shelves (Complaint, paragraph 48) and confirmed with the Cashmere Institute the information in the letter, and that the testing had been initiated by Cascade Yarns, but would not identify the specific yarn (Complaint, paragraph 49). Shortly thereafter, TKW requested of all its vendors a “Guaranty of Compliance” that their yarns did in fact comply with labelling laws: “a request which KFI alone neither acknowledged nor fulfilled”. TKW also sent five samples of yarn to the same lab that had done the test for Cascade Yarns: three versions of Cashmerino and two others. The test results for the Cashmerino yarns stated that “no cashmere fibers were observed” (Complaint, paragraphs 54-56; see the FTC’s site to learn what such a guaranty is). On the same day that TKW learned of these results, Cascade sent correspondence to its customers (retailers) concerning the result of its test (Complaint, paragraph 57; see the shorter Knitter’s Review thread, which relates to the receipt of that correspondence).
7. Allegedly, upon learning of the Cascade Yarn test results, and “to effect ‘damage control’ and to continue ‘pulling the wool over’ the trade concerning the cashmere content of the Cashmerinos” (did you really think we could avoid that expression?), Elalouf and DY agreed “to claim the Cashmerinos, since 2001, always contained the requisite quantity of cashmere ( or, conversely, to cover-up the absence of any cashmere content in the Debbie Bliss Cashmerino since 2001 )” (Complaint, paragraph 60). KFI then provided Cascade Yarns “with copies of reports of four fiber analyses claimed to have been performed on Cashmerino Aran and suggesting the competitors ‘put this unfortunate episode’ to rest ‘for the good of the industry’” (Complaint, paragraph 61).
8. In the meantime, TKW alleges that Elalouf and DY got Pettinata to particpate in this “scheme”, in which Pettinata (referred to as V.V.G. below):
a. ) certainly by June 20, 2006, caused to be produced in Italy – specifically for testing purposes and spun with cashmere – three small wraps of a semi-finished yarn which V.V.G. sent to Designer Yarns in Keighley, England – knowing the small wraps would be subjected to fiber analysis and the resulting report of which would be disseminated by Mr. Elalouf and Designer Yarns for reliance by others to support the Elalouf-Designer claim the Cashmerinos have always been spun of cashmere;
b. ) caused to be produced, in Italy – specifically for testing purposes – and certainly by July 7, 2006, small quantities of a fully finished yarn of an indeterminate cashmere content which V.V.G. sent to Designer Yarns at its place of business in Keighley, England – knowing that such small quantities would be subjected to expert fiber analysis and knowing the report of which would be disseminated by Mr. Elalouf and Designer Yarns for reliance by others to support the Elalouf-Designer claim the Cashmerinos are and have always been are spun of the requisite quantity of cashmere;
c. ) provided Mr. Elalouf – at or after the international yarn trade show in Florence, Italy July 5 -7, 2006 – copies of two fiber analysis reports which Mr. Elalouf on July 11 published to others for their reliance as supporting the claimed cashmere content of the Cashmerinos. See, id., at pgs. 6 – 7. One such report, issued by Laboratoria Accreditato 0331, would later be repudiated as the work-product of the testing company holding accreditation No. 0331. Compare, Exhibit “ 11 ”, pg. 7 with Exhibit “ 12 ”.
(Complaint, paragraph 62)
(I am missing the exhibits, but I suspect that many of them can be found on TKW’s website.) An allegedly “informal, private analysis” of the “small wraps” was performed by a private fiber testing service in England, and the results were provided to DY, which in turn were provided to Elalouf (Complaint, paragraphs 63-65). In other words — after the breaking news in late May and in June that some yarn, likely Cashmerino, had been found not to contain the cashmere it was supposed to, Elalouf is alleged to have procured small samples of yarn (not whole balls, just short lengths) that did contain cashmere that could be used in laboratory testing so that he could show a cashmere-positive test results at Pitti Filati a couple of weeks later.
9. Denecke, Jr.’s involvement is in the communication of “KFI’s official response to the Cascade mailing” by U.S. Mail and by e-mail, and by his participating on Knitter’s Review (paragraphs 67-69). (This is in the section headed “Elalouf Entices Denecke to Join The Cashmere Conspiracy”, although there is no discussion of what enticement was employed.) The response questioned the reliability of the initial test of Cashmerino, so TKW obtained a separate test by another analyst of the same yarns drawn from the same dyelots as those used by the first analyst (Langley). The results were “substantially identical” (Complaint, paragraph 70).
(It’s about time a knitting forum got subpoenaed, isn’t it?)
There are a number of details cut out of this summary, but the complaint smacks a bit of the kitchen sink. What you have above is the main thrust of the allegations; I’ve cut out bits about Diane Elalouf, and other allegations about Elalouf’s behaviour in another lawsuit, among other things (not blogged, either — it was about the distribution of Gedifra, Regia and Schachenmayer yarns, because KFI had been the distributor of these yarns for Coats but Coats had taken them back; KFI sued Coats for breach of contract, but it eventually settled; apparently there were issues about Elalouf’s conduct during the lawsuit). I will say that it helps to be acquainted with the subject matter of this dispute before you start reading. If the complaint had been drafted by a lawyer not intimately involved in this case, I think it would have been pruned — it’s a lengthy read and some of the content seems to be unnecessary to support the actual legal disputes in this lawsuit (ironically, the complaint describes some KFI correspondence as “prolix”), and some parts might make more sense presented in a different order. Edit: however, I have since learned that a great deal of detail is required in the pleadings for cases of this nature, in particular RICO.
Starting a lawsuit is no mean expense, but it is substantially cheaper if you are effectively representing yourself (as James Casale is, as both lawyer for and a partner in TKW). But I find myself wondering, whose money is on the line if this case doesn’t settle and he loses? Is the yarn shop then finished? This isn’t a class action for the customers who bought the mislabelled yarn. Who truly benefits from this lawsuit?