Will the real Fairway please stand up?
The supermarket chain that bought Fairway Market out of bankruptcy in March says the former owners of the Big Apple grocer have been engaging in shady tactics to steal its customers for a new business.
Village Super Market, which operates the ShopRite chain of groceries, claims in a new lawsuit that the former owners of Fairway are mooching off assets they sold in bankruptcy — including the beloved Fairway name — to lure unsuspecting shoppers to spend money on a grocery startup called Fresh and Beyond Specialty Grocery.
The former owners — an entity controlled by Wall Street’s Goldman Sachs and run by CEO Abel Porter since 2017— have even been hanging banners for their new grocery right next to Fairway signs at the handful of stores they still operate, including in Red Hook, Brooklyn, the lawsuit says.
And they have refused to turn over the valuable customer data sold to Village Super Market in March, including telephone numbers and email addresses, according to the Manhattan federal lawsuit filed on July 30.
Village Super Market paid $76.2 million in March for Fairway’s name, its books and records and five of its most valuable stores, including the Fairway flagship on Manhattan’s Upper West Side, which started off as a fruit-and-vegetable stand in 1933.
But the sellers have continued to operate a handful of stores that failed to find bidders, including the popular waterfront store in Red Hook. That’s where the alleged confusion lies, as those stores won’t be required to give up the Fairway name until four months after the sale to Village Stores has closed — a process that appears to have taken place in April.
In addition to Red Hook, the new logo has been strung up next to Fairway Market signs at stores in Westbury, Douglaston and Stamford, Conn., the lawsuit claims. The new brand has also been slapped on products sold in those stores, like fresh mozzarella cheese — as well as online advertising circulars, the lawsuit says.
“Defendants’ simultaneous use of the Fairway and Fresh and Beyond Specialty Grocer marks has already created substantial marketplace confusion,” the lawsuit claims. “Customers encountering both marks are likely to mistakenly believe that Fresh and Beyond Specialty Grocer is a new supermarket brand owned by [Fairway].”
Village is suing for fraud, tradmark infringement and unfair competition — and experts say they appear to have a case.
“The new brand seems to be created to convert existing Fairway customers to the new brand, which appears in direct conflict to the purchase agreement that Fairway signed with Village Supermarkets,” said retail consultant Burt Flickinger.
“Village Super Markets is definitely in the right,” Flickinger added. “It seems both absurd and outrageous that this brand is trading off the goodwill and power of the Fairway trademark to shift shoppers to new stores.”
Fairway Market declined to comment on the complaint and by Wednesday the banners appeared to have been removed. One industry expert involved in the bankruptcy who asked not to be identified speculated that the Fresh and Beyond brand was created to allow Fairway to continue to operate stores that didn’t find buyers.
But the ShopRite owner’s lawsuit suggests the new logo is a more serious attempt at a real business — noting that the bankrupt owners registered the Fresh and Beyond Specialty Grocery mark with the US Patent and Trademark Office on June 3 for “grocery store services.”
The new entity also recently established a “VIP Club” that links to a Fairway-branded mobile app on Apple’s website and lists the stores that Village now owns, the lawsuit said.
Distressed debt expert Adam Stein Sapir, agrees, saying the former owners have until August 15 to decide “whether they want to reorganize certain Fairway assets that have not sold, including its liquor licenses, inventory and related wine business.”
“It looks like they are starting up a new business,” he said.
Credit: Source link