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New Jersey Floral Network Settles Deceptive Advertising Lawsuit

(Wilmington, DE): Attorney General M. Jane Brady today announced that her office has resolved litigation with several New Jersey companies who misrepresented they were located in Delaware. A Stipulation and Order to Cease and Desist with Preferred Florist Network, Inc., Newark Florist, Inc., TTP, Inc., t/a Flowers With Gifted Elegance, The Koi Pond, Inc., (hereinafter "defendant companies") and Thomas Meola, the owner/operator of the defendant companies was filed today in Delaware Court of Chancery. "Delaware consumers deserve honesty from the companies they do business with. This enforcement action helps assure that," said Brady. The State asserts that Meola and the defendant companies misled Delaware consumers, since at least April, 1996 through December 2001, by placing various fictitious telephone directory florist listings in Delaware telephone directories to create the impression that each such listing corresponded to a bona fide Delaware retail florist business. In fact, calls were diverted to Meola's defendant companies located in Randolph, New Jersey where orders were placed. The New Jersey companies would, in turn, contact certain select Delaware florists to fulfill consumer orders. These hand-picked Delaware florists agreed to split the total cost of the order with Meola in a predetermined fee schedule. The Consent Order requires that Meola and defendant companies not publish "dummy telephone listings" that create a false impression that the listing is for a bona fide Delaware business and to answer all questions from Delaware consumers who place calls to the defendant companies' listings relating to the location of the businesses. The law allows out of state businesses to secure local telephone numbers but requires that they indicate their geographic location. Presently, Meola's businesses, including listings for Florist in Newark, Florist in Middletown and Florist in Harrington among others, list Randolph, New Jersey in addition to a local telephone number so that consumers are aware that the business is not actually located in Delaware. The Order also requires Meola and the defendant companies to pay $30,000 to the Consumer Protection Fund as a civil penalty and to pay $20,000 to the Fund to offset the Attorney General's investigation and attorney's fees. The Attorney General's office brought an action against Meola and the defendant companies in 2000 alleging violations of the 1998 amendment to the Consumer Fraud Act which specifically addresses business practices of florists. This amendment makes it illegal to misrepresent the geographic location of a florist by using a "dummy telephone listing" to lead consumers to believe that the florist is a local, Delaware business. The action also alleged violations of other sections of the Consumer Fraud Act and the Uniform Deceptive Trade Practices Act which prohibit passing off goods and services as those of another, causing a "likelihood of confusion or misunderstanding" as to the "source" of the goods or services. In April, 2001, Meola and the defendant companies attempted to have the Attorney General's action dismissed claiming that the State of Delaware did not have personal jurisdiction over him and his defendant companies. In June, 2001, Vice Chancellor Stephen Lamb handed down a landmark decision ruling that Delaware could assert personal jurisdiction over Meola and his out-of-state defendant companies, because the State made a factual showing that Meola and his defendant companies had sufficient "minimum contacts" with the State of Delaware and that consumer fraud was the type of illegal activity that triggered Delaware's "long-arm" statute. The ruling also found that even though Meola was a corporate officer acting in a corporate capacity, he could be sued personally for his "active participation" in the alleged unlawful acts. The Court rejected Meola's "corporate veil-piercing" defense. The Court pointed out that, under Delaware law, liability can attach to corporate officers who "directed, ordered, ratified, approved, or consented to the improper [conduct]."

Contact: Michael A. Undorf, Deputy Attorney General Consumer Protection Unit (302) 577-8924 After Hours: Olha N.M. Rybakoff, Deputy Attorney General Director, Consumer Protection Unit (302) 218-0040 - cell Date: November 27, 2002

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