D’s own ads prove materiality of difference between Fraser and balsam firs

Evergreen East Cooperative v. Bottomley Evergreens &
Farms, Inc., 2021 WL 1163799, No. 20-cv-184 (AJN) (S.D.N.Y. Mar. 26, 2021)

“Christmas tree distributor Evergreen East Cooperative claims
that its rival Bottomley Evergreens & Farms sold mislabeled trees through
retail partners including Home Depot and Whole Foods.” Defendants moved to
dismiss, relevantly arguing that consumers would not care whether their trees
were the more desirable Fraser firs (as advertised) or cheaper, faster-drying, more-shedding
balsam firs (as they were in fact). Defendant Whole Foods wasn’t adequately
alleged to be liable, but the other claims survived.

Evergreen allegedly paid more for Fraser firs because of
their scarcity, and so was forced to market them to consumers for higher
prices. Bottomley allegedly imported thousands of balsam firs from Canada,
labeled them as Fraser firs, and sold them to consumers throughout the New York
area, undercutting Evergreen’s prices for genuine Fraser firs and making
consumers believe that its prices were unreasonable.

The labels at Home Depot used the words “Fraser Fir” printed
in large letters, followed by three bullet points: “Most highly awarded
Christmas tree”; “Superior needle retention with sturdy branches for
ornaments”; “Soft texture and traditional holiday fragrance.” Home Depot’s
in-store signage and advertising also identified the trees as Fraser firs. Evergreen
notified Home Depot of the problem, but it took no action for the rest of the
Christmas season. However, it didn’t allege that Whole Foods used misleading
labels or that it notified Whole Foods of the problem.

Materiality: “Accepting Evergreen’s allegations as true and
drawing all reasonable inferences in its favor, there are significant
differences between balsam and Fraser firs that affect their desirability to
consumers and drive the Fraser fir’s higher price…. Bottomley and Home Depot
offer no argument as to why shorter shelf life and inferior durability would
not influence the purchasing decisions of consumers.” Instead, they argued that
shoppers examine individual trees, so they’d pick the one they wanted
aesthetically. Even if that were appropriate on a motion to dismiss, “[a]s
between two trees that look the same, consumers might prefer (and pay more for)
one that will retain its needles longer.”

Plus, their own advertising also refuted their immateriality
argument.

The trees’ labels prominently
identify them as Fraser firs—twice on just the front of the label. The label
then lists qualities of Fraser firs as selling points to consumers. In
isolation, a statement like “superior needle retention” might amount to no more
than puffery. But the label does not present this claim as a vague boast about
the quality of the seller’s trees. Instead, it lists it as a bullet point
beneath the heading “Fraser Fir” along with other statements that appear to
describe that variety of tree, conveying the message that consumers should
select Fraser firs over other Christmas trees because of their particular
qualities. Puffery or not, the label reflects that consumers should—and do—care
about the difference between Fraser firs and balsam firs.

As for causation, this was “the classic Lanham Act
false-advertising claim in which one competitor directly injures another by
making false statements about his own goods or the competitor’s goods and thus
inducing customers to switch.” “This Court disagrees with Bottomley and Home
Depot that a plaintiff needs to plead an encyclopedic set of details about the
Christmas tree market, their inventory, and the characteristics of their trees to
plausibly allege causation under this well established theory.”

State claims: Was this consumer-oriented conduct or merely
private harm? § 349 doesn’t require harm to public safety. “Where the allegedly
deceptive communication is made directly to consumers, it is self-explanatory
that the conduct is ‘consumer-oriented,’ and thus no further showing on this
element is required.” Also, “consumers are harmed when they do not get what
they pay for.” Contrary district court holdings were “plainly inconsistent with
subsequent pronouncements of the New York Court of Appeals.”

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