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Jury Dismisses Blue Nile $60M Claim Against Yehuda Diamond
By Rapaport Diamond News

11/2/2009
Press Release: Following a six-day trial, a federal jury in Seattle, Washington dismissed Blue Nile Inc.'s $60.1 million claim against The Yehuda Diamond Company, reaffirming Yehuda Diamond's right to compare the prices of its clarity-enhanced diamonds to the untreated diamonds sold by online retailer Blue Nile. Yehuda Diamond, based in New York, has earned widespread industry and consumer loyalty for its successful competition with Blue Nile and other online jewelers, favoring consumers not only with lower prices, but also with unsurpassed, expert, face-to-face service and full Federal Trade Commission (FTC)-compliant disclosure. The suit [No. C-07-2017 TSZ] brought by Blue Nile and heard during October in U.S. District Court for the Western District of Washington involved Blue Nile's efforts to prevent Yehuda Diamond from comparing the price and appearance of its clarity-enhanced diamonds to those of the natural untreated diamonds sold by Blue Nile. Yehuda Diamond has consistently contended, even before Blue Nile filed the lawsuit against it in December 2007, that Yehuda Diamond's price comparisons are in the best interest of consumers. After four and a half hours of deliberations, the jury agreed, dismissing both Blue Nile's federal and state claims that Yehuda Diamond had engaged in false or misleading advertising. Blue Nile, which has brought multiple lawsuits against smaller competitors over the past decade, had petitioned the jury to award it exemplary damages of $60,161,834.64, based on alleged actual damages of $20,053,944.88. "This is a momentous victory for all consumers and for free-market competition," said Dror Yehuda, president of Yehuda Diamonds. "In essence, the jury told Blue Nile that it can't use its massive size and legal muscle to prevent consumers from learning about lower-priced, quality alternatives to Blue Nile diamonds," explained Yehuda. "In recent years, Blue Nile has preferred to fight its competitors in the courtroom, rather than in the marketplace." The jury's decision clears the path for Yehuda Diamond to continue to inform consumers of how much they stand to save by shopping at Yehuda Diamond-authorized retailers, who offer competitive prices, along with personalized, expert, face-to-face customer service for its clarity-enhanced diamonds. By comparison, Blue Nile's untreated diamonds are frequently higher-priced and Blue Nile bypasses the retail distribution chain altogether. Moreover, Yehuda vowed that his company will continue to press its own lawsuit against Blue Nile [Court Case #08-CV-9751], filed in November 2008 in the U.S. District Court for the Southern District of New York. In that ongoing case, Yehuda Diamond contends that consumers who purchased rubies, emeralds, sapphires or jewelry containing those stones from Blue Nile were not informed that the gemstones had been treated to enhance their appearance. Yehuda previously noted that "We believe Blue Nile is deliberately misleading consumers about the quality of some of the gemstones it sells" in defiance of best industry recommend practices. "When a giant retailer such as Blue Nile does not do right by consumers, it taints our entire industry," he added. Yehuda Diamond has repeatedly endorsed full disclosure to consumers of any and all fillings and treatments made for valuable gemstones, including diamonds. Yehuda Diamond goes to great lengths to inform consumers of its own proprietary, diamond-clarity enhancement process, including prominent videos and text on its popular www.yehuda.com website that illustrate the Yehuda Diamond proprietary technique. Testifying at trial in Seattle, Yehuda cited Blue Nile's grading of its treated gemstones, such as rubies and emeralds, to rebut Blue Nile's contention that Yehuda Diamond acted improperly in grading its clarity-enhanced diamonds after enhancement. "Clearly, the jury understood the hypocrisy of Blue Nile saying that it is okay for Blue Nile to grade in this manner, but not okay for Yehuda Diamond," Yehuda noted after the verdict was announced. "More importantly, Yehuda Diamond is upfront and straightforward in telling our customers about our grading process, while Blue Nile keeps so many of its customers in the complete dark." Yehuda said that given the jury's rulings in support of Yehuda Diamond, he has asked his attorneys to petition the judge in the case, the Honorable Thomas S. Zilly, to require Blue Nile to pay Yehuda Diamond's legal fees. Yehuda Diamond is represented by Pearl Cohen Zedek Latzer LLP, a Manhattan-based law firm. Full details concerning the price advantages, brilliance and other characteristics of Yehuda clarity-enhanced diamonds can be found at www.yehuda.com. In addition, the Yehuda Diamond website explains why it encourages all consumers to visit an affiliated local jeweler and personally examine the diamonds before they buy — without cost, obligation or pressure. For additional information, contact Dror Yehuda of Yehuda Diamond at 212.221.5985.

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