Of the United States of America

in the

SUPREME COURT

OF THE UNITED STATES OF AMERICA

Docket No. 06-1669

Adam’s Apple Markets, Inc.,

Petitioner,

Aphrodite Cosmetics, Inc.,

Respondent.

On Writ of Certiorari

to the

United States Court of Appeals for the Ames Circuit

JOINT APPENDIX

Off-Limits Materials……………………………………………………………………………….ii

Complaint..…………………………………………………………………………………………1

Exhibit A 9

Exhibit B………………………………………………………………………………… 11

Exhibit C …………………12

Exhibit D…………………………………………………………………………………13

Exhibit E…………………………………………………………………………………14

Defendant’s Motion for Dismissal………………...... 15

Decision and Order on Defendant’s Motion for Dismissal…………………..……….……….…16

Notice of Appeal……………………………………………………………………………….…23

Notice of Cross-Appeal………………………………………………………………..…………24

Decision on Appeal……………………………………………………………………………….25

Order Granting Petition for Writ of Certiorari…………………………………………..………..27

OFF-LIMITS MATERIALS

The following materials are off-limits during the Fall 2006 Ames Moot Court Final Round Competition, and no team member may cite or consult them:

· Any and all court filings, briefs, transcripts of proceedings, audio recordings of proceedings, attorney work product, or court records (except reported judicial decisions) from any case addressing the issues raised in this case.

· Any and all law review articles, bar journal articles, or similar publications that analyze the issues raised in this case and which are not yet publicly available through publication either in print, on Lexis or Westlaw, or on the Internet. In the event that a team or one of its members has already had access to such a publication, disclosure of the title and author of the publication and the circumstances in which it was accessed must be made to the Ames Moot Court Competition Case Writers, Julie Barton, HLS ‘92 () and Meryl Kessler, HLS ‘93 (), and to the opposing team. In such circumstances, arrangements will be made to afford the opposing team access to the publication in question, and both teams will be required to treat the publication in question as confidential unless the author or copyright owner of the publication agrees otherwise. Publications by practitioners and students are included in this prohibition; however, no team member is required to disclose his or her own related scholarship.

· Any studies or surveys beyond those explicitly included in the Record. Nor may any team member use any material external to the record to undermine, support, or elaborate on any studies or surveys referred to in the Record.

Promptly direct any questions about this policy for Off-Limits Materials to Julie Barton or Meryl Kessler.

UNITED STATES DISTRICT COURT

DISTRICT OF AMES

)

ADAM’S APPLE MARKETS INC., )

)

Plaintiff, )

)

v. ) Civ. No. 06-321

)

APHRODITE COSMETICS, INC., )

)

Defendant. )

)

COMPLAINT

Plaintiff Adam’s Apple Markets, Inc. (“Adam’s Apple”) brings this action against Defendant Aphrodite Cosmetics, Inc. (“Aphrodite”) for violation of the Lanham Act §43(a), 15 U.S.C. §1125(a) and the Ames False Advertising Statute, 16 A.G.L. §152.

JURISDICTION AND VENUE

1. Adam’s Apple brings this action pursuant to 15 U.S.C. §1051 et seq. to recover from competitive injuries suffered as a result of the false or misleading commercial speech of Aphrodite.

2. This Court has jurisdiction pursuant to 28 U.S.C. §1331.

3. Venue is appropriate in this Court under 28 U.S.C. §1391(b) because a substantial part of the events giving rise to Adam’s Apple’s claims occurred within this district.

4. This Court has supplemental jurisdiction over Adam’s Apple’s state law claims under 28 U.S.C. §1367(a) because these claims are so related to Adam’s Apple’s Lanham Act claims that they form part of the same case or controversy in that they arise from the same nucleus of operative fact and amount to a single judicial proceeding.

PARTIES

5. Plaintiff Adam’s Apple is a Delaware corporation having an office and principal place of business in Ames City, Ames.

6. Defendant Aphrodite is a Delaware corporation having an office and principal place of business in Ames City, Ames.

FACTUAL ALLEGATIONS

7. Adam’s Apple, founded in 1992, is an organic and natural foods supermarket chain, with 21 locations in the state of Ames and 183 locations nationwide. Adam’s Apple sells only food products that are certified as organic or all-natural.

8. Additionally, Adam’s Apple sells some non-food items, including cosmetics and skincare products. It is the explicit policy of Adam’s Apple to sell only cosmetics and skincare products that are developed and manufactured without the use of animal testing.

9. Adam’s Apple is the exclusive distributor of Soleil Skincare Products (“Soleil”), a brand of “cruelty-free” cosmetics and skincare products. Soleil has never used animals in the development or testing of any of its products. Moreover, Soleil has never contracted with a third-party to test its products on animals. Finally, none of the suppliers of the ingredients used in Soleil’s products perform testing on animals. Each and every Soleil product is labeled “Not Tested on Animals” and “Cruelty Free.”

10. The sale of Soleil products accounts for approximately 10 percent of Adam’s Apple’s gross sales, which in Fiscal Year 2005 totaled $3.8 billion.

11. Aphrodite, founded in 1965, is one of the largest cosmetics and skincare companies in the United States. Aphrodite currently produces over 20 different lines of products, including cosmetics (lipsticks, blushers, powders, eye shadows, foundations, etc.) skin cleansers, skin toners, exfoliators, bronzers and a variety of other skincare products.

12. In Fiscal Year 2005, Aphrodite’s total revenue was over $6 billion.

13. Most of Aphrodite’s sales are made through retailers (department stores and boutiques), but it had $40 million in Internet sales in Fiscal Year 2005.

14. Since the late 1970s, Aphrodite has been an aggressive marketer of its products to the public. Since 1980, Aphrodite has expended, on average, between one-quarter and one-third of its annual budget to promote, advertise and market its cosmetics and skincare products.

15. According to marketing specialists, by the mid-1990's, three times as many models and actresses were parties to working agreements with Aphrodite as with any other company. (See Kate Donaldson, Be Beautiful, The Aphrodite Spirit in the Corporate World, Jefferson Media Corp., Holbrook, MI., 1998, p. 25 [hereinafter, "Be Beautiful"].)

16. In 1995, Aphrodite paid Julia Roberts and Madonna $20 million each to become Aphrodite spokeswomen.

17. Aphrodite’s advertising and promotional campaign has been hugely successful. One Time Magazine story about the baby-boom generation quoted a social historian saying that the ethos of the largest American generation could be summed up in two words: "Be Beautiful." Brad Scott, an Advertising Director for Aphrodite, said, with respect to the Aphrodite slogan, "Be Beautiful," "This thing has become much more than an ad slogan. It’s an idea. It’s like a frame of mind." (See Donaldson, Be Beautiful, pp. 145-46.)

18. In the late-1990s, Aphrodite’s carefully cultivated image came under attack. Various media sources and corporate watchdogs provided documentary evidence that:

• Every year, Aphrodite developed and tested its products on thousands of animals—including primates, dogs, cats, rabbits, guinea pigs, rats, and mice—in its Ames corporate laboratory. (See, e.g., Exhibit A: “All Things Considered,” National Public Radio report, Transcript, November 12, 1999.)

• These animals were kept in small, dark, poorly ventilated, and overcrowded cages in the Aphrodite laboratory. (See Exhibit A.)

19. As a result of this public exposure of Aphrodite’s animal testing policies and practices, Aphrodite’s sales declined 14 percent between 1999 and 2000. During the same period of time, Adam’s Apples sales of Soleil products increased 22 percent.

20. Aphrodite failed to disclose its animal testing policies and practices to consumers either in the promotion of its products or at the point of purchase, or in any other manner. Furthermore, as more fully described below, in response to the public exposure of Aphrodite’s animal testing policies and practices, Aphrodite has misrepresented to the consuming public its policies and practices regarding animal testing.

21. In September 2002, Aphrodite ceased conducting animal testing in its own laboratory and established its own Code of Conduct, which stated that Aphrodite would not test its products on animals. (See Exhibit B.) Aphrodite displays its Code of Conduct on its website, www.aphroditecosmetics.com, and in its corporate literature, such as its Annual Report.

22. Aphrodite’s decision to stop conducting its own tests on animals and adoption of the Code of Conduct were intended, among other things, to entice consumers who do not want to purchase products tested on animals to buy Aphrodite products. For example, in a press release, dated September 16, 2002, entitled "Aphrodite Responds to Animal Testing Allegations," Aphrodite represented that "animals deserve respect and dignity. Consumers have recognized that it is inhumane to sacrifice them on the altar of human beauty, and members of the cosmetics industry have a moral obligation to adjust their policies accordingly. For this reason we have adopted a Code of Conduct that pledges that we will not test our products on animals.” (See Exhibit C.)

23. In a letter to the editor published in the Amesville Chronicle on December 14, 2002, Aphrodite’s Director of Communication, Leslie Wein, wrote:

Consumers…want to support socially conscious companies with good products and practices.…That is why we want consumers to know that Aphrodite has established the cosmetics industry’s first code of conduct regarding animal testing. (See Exhibit D.)

24. In a February 2003 document entitled "The Aphrodite Code of Conduct: What it is, How it Works," Aphrodite represented that the "key provision of the Code is the pledge that…Aphrodite will not test its products on animals. This pledge represents our commitment to set the standard in the cosmetics industry."

25. In an Aphrodite document that was distributed to the media entitled "Aphrodite Production Primer," dated March 2003, Aphrodite represented that ". . . Aphrodite does not test its products on animals because of its deep conviction that such testing is morally wrong."

26. At the Aphrodite Annual Shareholder Meeting on September 22, 2005, Aphrodite CEO Penelope H. Duke represented that “Aphrodite is the industry leader on the issue of animal testing.… Animals should never be the victims of human beauty.” The identical representation was made by Ms. Duke in a letter dated October 1, 2005 to the New York Times.

27. Notwithstanding Aphrodite’s adoption of its Code of Conduct and its above-mentioned representations, Aphrodite has continued to purchase ingredients from suppliers who, in fact, do perform testing on animals.

28. Reports that Aphrodite continues to purchase ingredients that have been tested on animals have recently appeared in the media. CBS News, Financial Times, The New York Times, and The Amesville Chronicle, have all run stories and articles that expose that Aphrodite uses ingredients that have been tested on animals. For example, a CBS “48 Hours” News report on October 17, 2004 revealed that:

• Over 500 animals are housed in cages in the laboratory operated by Cosmeti-co, Inc., one of Aphrodite’s primary ingredients suppliers.

• Between January and June 2004, 12 primates died in the Cosmeti-co testing facility.

•Approximately 30 percent of the animals in the Cosmeti-co testing facility die within three weeks of their arrival.

•Aphrodite purchased over $20 million worth of cosmetics ingredients from Cosmeti-co in 2004.

29. In an environmental audit of the laboratory operated by ICD, Inc., another Aphrodite supplier, Ernst & Young found the following:

• The problem of overcrowding of laboratory animals needs more attention.

• Small cages, lack of ventilation, and poor lighting have contributed to deaths of mammals used for testing.

• More than half of the laboratory animals live in unsanitary conditions. (See Exhibit E: ICD document entitled, "Ernst & Young Environmental Audit of ICD Laboratory," January 13, 2005; this document was released by the Cosmetics Resource Action Center.)

30. In sum, because Aphrodite continues to purchase ingredients that have been tested on animals, its representations that it opposes animal testing are false or misleading.

31. As a result of said false or misleading representations, consumers who oppose animal testing have been misled into buying Aphrodite products. Since Aphrodite announced its Code of Conduct in 2002, sales of its products have risen 12 percent. During the same time, Adam’s Apple’s sales of Soleil products have decreased 20 percent.

32. As a further result of said false or misleading representations, Adam’s Apple’s well-established goodwill as a purveyor of only cruelty-free cosmetics and skincare products has been diverted to Aphrodite.

FIRST CLAIM FOR RELIEF (LANHAM ACT §43(a), 15 U.S.C. §1125(a))

33. Adam’s Apple realleges and incorporates by reference paragraphs 1 through 32 as if set forth herein in full.

34. In order to maintain and/or increase its sales and profits, Aphrodite, through its advertising, promotional campaigns, public statements and marketing, has made false or misleading descriptions or representations of fact, including but not limited to the following:

(a) claims that Aphrodite is morally opposed to animal testing, despite the fact that it continues to purchase ingredients from suppliers who do perform tests on animals;

(b) claims that Aphrodite will not engage in abusive or inhumane treatment of animals, despite the fact that it continues to purchases ingredients from suppliers who engage in abusive or inhumane treatment of animals; and,

35. Aphrodite’s claims regarding animal testing were made in furtherance of its business interest in selling their products, which compete in the same markets as Soleil’s and caused Adam’s Apple, as the exclusive distributor of Soleil products, to suffer a competitive business injury through lost sales, potential sales and goodwill.

36. Aphrodite’s actions, as set forth in this complaint, constitute false or misleading descriptions or representations of fact in violation of Section 43(a) of the Lanham Act, 15 U.S.C. §1125(a).

37. As a direct and proximate result of Aphrodite’s conduct as set forth in this count, Adam’s Apple has suffered irreparable and ongoing injury, in an amount to be proven at trial. Adam’s Apple has lost sales, and Aphrodite has enriched itself unjustly at Adam’s Apple’s expense.

SECOND CLAIM FOR RELIEF

(AMES FALSE ADVERTISING STATUTE, 16 A.G.L. §152)

38. Adam’s Apple realleges and incorporates by reference paragraphs 1 through 37 as if set forth herein in full.