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AGTA Fires Back at Chatham By Filing FTC Complaint
Apr 14, 1994 2:50 PM
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_____________________ New Skirmish in Ongoing Feud
_____________________
By Jane Everhart
Tucson, Ariz.- The latest fusillade was fired in the feud between
the American Gem Trade Association (AGTA) and top U.S. lab-gem
grower Thomas Chatham when Owen Bordelon, president of AGTA,
called a press conference during the Tucson Gem Shows and
announced to trade reporters that the AGTA has filed a formal
complaint to the Federal Trade Commission against Chatham.
It seems that after years of tolerating Chatham's
colorful and sometimes audacious advertisements, the natural
[mined]-gem proponent AGTA has decided that Chatham's ads "blur
and confuse" the distinction between natural and synthetic
stones. The fact that the San Franciso-based Chatham has
a suit pending against AGTA for denying him membership in the
400-member not-for-profit trade association "had nothing to do"
with AGTA's complaint, Bordelon asserted. "This is not
tit for tat. It's not a knee-jerk reaction to the law suit,"
Bordelon insisted. It was merely an accumulation of indignities,
he said, which added up as material was being collected for
AGTA's defense in the law suit. He compared Chatham's ads to
rocks piling up on a recumbent man's chest. At the press
conference, Bordelon, who is a lawyer as well as president of the
Dallas-based AGTA, presented reporters with a 3-lb., 182-page,
three-ring binder in which he had compiled Chatham's alleged
transgressions. The notebook, which Bordelon said was
sent to the FTC on February 1, contains alleged "evidence,"
ranging from documents dating back to the late Carroll F.
Chatham's case before FTC in 1959 (Carroll Chatham, who
discovered the Chatham process for growing emeralds, is Tom
Chatham's father) to an article written by Chatham in 1980 for
the now-defunct The Goldsmith magazine. On each page of
the complaint, the phrases that offended AGTA were highlighted
with a yellow magic marker, including such statements as,
"Chatham Created Gems have all the beauty, brilliance and natural
properties of the most valuable of gemstones at a fraction of the
price." (Chatham later charged that such marked phrases had been
"taken out of context.") Among the allegedly offending
ads in the three-ring binder was Chatham's famous cereal box ad
dating back to the mid-1980s, which claimed Chatham Created
Emeralds are composed of "100% Natural" ingredients such as
beryllia, alumina, silica and chromium. The ad created a stir
back then, mostly as a humorous parody. Bordelon said
during the press conference that New York emerald dealer Maurice
Shire had been complaining about the Chatham ads for years, "and
by golly, the old man was right." Shire and Chatham have been
vocal adversaries for years, and the cereal-box ad has long been
one of Shire's pet peeves. In a letter sent to the FTC
along with the 3-lb. "evidence," Bordelon urges the FTC to take
action and contends that "Chatham has, over an extended period of
time, engaged in a willful course of conduct calculated to
enhance sales of Chatham products by the intentional
misrepresentation of the nature of such products for the purpose
of blurring and confusing the distinction between natural and
synthetic gemstones..." Chatham said he first learned of
the AGTA's complaint from trade reporters who came to his booth
at the Gem and Lapidary Dealers Association show in Tucson.
"I feel 'attacked' publicly and unfairly," Chatham told
RDR. "This will be added to our lawsuit as another example of
AGTA's restricting our trade." Later, Chatham issued a
statement to the press that said in part: "The act of holding a
public forum to criticize and announce an FTC complaint was very
unprofessional and legally naive. This public announcement
appears to be just another shot in an unfair competitive war; it
only adds credence to our current anti-trust suit against the
AGTA... "To attempt privately to embroil our company in
disputes with the FTC on such baseless accusations would be bad
enough. But it is worse to do so in a public press conference in
such a way as to disseminate the false idea that we are guilty of
something throughout the trade. It flaunts the laws which protect
every citizen against slander and defamation. Our attorney is now
looking at the addition of this unfair tactic to the lawsuit now
in progress. "...We take great pains to make clear that
what we sell are created gemstones, not natural ones," Chatham's
statement adds. "What the AGTA has done to our ads, video and
newsletter to justify their position is nothing less than
blatant, out-of-context distortion, ignoring the plain meaning
and import of our materials." The statement concludes,
"Maybe the FTC should take a look at what the AGTA calls
'natural' in its trade show. Could they find one?" The
last two sentences appear to refer to Chatham's long-time
contention that so-called "natural" stones are hardly natural any
longer after they have been heat-treated, irradiated, diffused,
oiled, opticoned, nuked, colored, coated or filled with glass,
and it appears calculated to cross swords with the AGTA in a
matter on which the group is particularly vulnerable: gem
treatments. Another laboratory gemstone grower,
Judith Osmer, head of the Redondo Beach, Calif.-based J.O.
Crystal Co. and producer of the Ramaura Cultured Ruby, staunchly
defended Chatham. "In my opinion, Chatham has never
advertised deceptively and has never done anything unethical. He
clearly states in his ads that it is a lab-grown or created
stone," said Osmer. "Ask the public. They know the stones are
lab-grown. I think he's going overboard to be straightforward.
He's never tried to sell his stones as natural. "Why
isn't AGTA going after the Allenite people?" Osmer added.
[Allenite is a company that is selling stones, mostly CZs, as
"Allenite," a practice that has been condemned by many in the
industry.] Osmer felt that AGTA's complaint to the FTC
was an unsavory move: "When they [AGTA] take things out of
context, they are being unethical and deceitful. When they try to
use governmental agencies as their agent to fight their battles,
that may in itself be illegal." The AGTA-Chatham
imbroglios stem back at least 12 years to the time when AGTA's
now-defunct predecessor, the American Stone Importers
Association, Inc. (ASIA) was in existence. Chatham, in
the suit filed in June 1993 against AGTA, claims that he was
drummed out of ASIA without notice or explanation. Immediately
following Chatham's expulsion, ASIA and AGTA merged, and members
of ASIA were grandfathered into the new organization, AGTA.
Chatham has charged that individuals named in his suit
"conspired" to suspend him from ASIA in order to keep him from
becoming a full member of AGTA. Chatham's suit, which is
still pending, also charges AGTA with restraint of trade, and
contends that the defendants [the suit names five of AGTA's
former leaders] "have repeatedly disparaged Chatham and its
gemstones to he market, customers, regulatory agencies and other
gem dealers, to injure and foreclose competition from Chatham and
other gem growers." Thus, according to the suit, the
alleged conduct of AGTA "constitutes a conspiracy to restrain
trade in the market in violation of the Sherman Antitrust Act."
AGTA has sought to have the suit dismissed, but a U.S.
District Court tossed out only the suits against the individuals
named, although not their companies. Per California rules, both
sides are preparing additional arguments prior to pre-trial
meetings with the judge.
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Tags:
AGTA
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