Trust no one?

To recap:

1. There was a big blow-up two years ago about Debbie Bliss Cashmerino yarns (distributed in the US by Knitting Fever (KFI)) not containing the cashmere they were said to contain. After the initial scandal, nothing concrete seemed to come of it. (However, you might have noticed that as a result, at least one yarn — not a yarn distributed by KFI — had its content relabelled as a result of the manufacturer’s self-examination. I’d name the yarn, but I honestly can’t find the e-mail/wayback magic/ball band I need to back it up.)

2. It’s back, because The Knit With (TKW), the yarn shop that was most vocal about what was viewed as KFI’s duplicity, and that had actually procured its own test results, sued KFI and others last week (including Debbie Bliss herself) for the alleged deliberate mislabelling of yarns. This is not a class action suit for the end users, in case you’re wondering.

3. This lawsuit came hot on the heels of the news that Elsebeth Lavold Silky Wool, also distributed in the US by KFI, had been mislabelled for a few years. When it was first released, Silky Wool had been labelled (and apparently manufactured as) 65/35 silk/wool. It turns out that shortly after its release, the composition had been changed to 45/35/20 wool/silk/nylon because the mill determined that the original blend was too fragile; however, the product was not labelled correctly until mid-2008. In this case, KFI asserted that it only learned of the mislabelling shortly before it contacted its customers (retailers) and took some corrective action. (Not every KFI customer is happy, though, but this seems to be an ongoing theme.) For more info: Rav thread and Rav yarn page.

4. The next public blowup will either be about silk or organic fibers. (That’s a prediction, not fact. It’s also a pretty obvious guess to make.)

I had been trying repeatedly to upload at least part of TKW’s complaint to Scribd. I can’t get it to upload, so I gave up and tried another service. You can view the first part of the complaint here — this is the part with the backstory.

A quick summary of the rest of the complaint (since I had done the factual allegations previously), after the jump.

1. TKW alleges that KFI, Elalouf, and Opperman breached an express warranty of the merchantability of goods for resale to customers, because of the representations of cashmere content made; TKW claims that because the yarn did not contain the cashmere, it was not capable of honest resale (as labelled) and was therefore non-merchantable.

2. TKW alleges that KFI, VVG, Elalouf, and Opperman also breached an implied warranty of the merchantability of the goods for resale to customers for similar reasons.

These first two counts are based on Pennsylvania law. The rest are based on federal law:

3. TKW alleges that KFI engaged in false advertising by oral and written representations concerningg the cashmere content of the yarn.

4. TKW alleges that Elalouf caused injury to business and property as a result of racketeering activity contrary to RICO. The alleged racketeering acts include mail and wire fraud — communications regarding the Cashmerino yarns sent through the mail, including Debbie Bliss shade cards and KFI price lists, and KFI’s public responses to the cashmere allegations back in 2006. The allegations also include witness tampering in an otherwise unrelated lawsuit KFI started against Coats over the distributorship of other yarns. It should be noted, however, that this other case settled, and whatever did actually happen during that lawsuit (it seems that KFI and Elalouf acted a bit intransigent during the discovery process in that lawsuit), it is hard to see how TKW suffered harm from that behaviour. (There are also allegations of money laundering and foreign and interstate travel in order to engage in nefarious deeds; however, bank accounts and travel, when one is a yarn distributor, are inevitable.) The allegations about the Coats lawsuit are used to bolster the allegations of a continuing pattern of conduct. (Elalouf is also called a “kingpin”. A kingpin conspiring in a cashmere caper!)

5. TKW alleges that all of the defendants except for KFI conspired to cause injury to business and property pursuant to RICO, because they conspired to cover up the cashmere caper.

6. TKW alleges that KFI and the Elaloufs engaged in “perfidious trade practices” and unfair competition.

For all of these, TKW is seeking compensatory and punitive damages, and assorted other financial compensation for its expenses.

7. Finally, TKW seeks to pierce the corporate veil of KFI — n other words, hold the Elaloufs directly responsible for the actions of their corporations (one incorporates, generally, because of tax advantages and to avoid personal liability in business dealings).

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One Response to Trust no one?

  1. sarah says:

    Wow what a mess. It did make for an interesting read though. I read through all 24 pages of the complaint, and it all seemed to come of as a big “whine”. I’ll be interested to see how all of this unfolds.
    $150 000 in damages? really??