Retail Memo - Breaking News: Portland's New Seasons Market and Whole Foods Market, Inc. Reach Agreement; New Seasons Will Provide Trade Secrets

FTC vs. Whole Foods Market, Inc. - and the Subpoenas

Portland, Oregon's New Seasons Market reached a compromise today with Whole Foods Market, Inc. to comply with its subpoena for New Seasons' proprietary sales, financial, marketing and other trade secret information, according to Brian Rohter, CEO of the nine-store independent natural foods grocer.

Below (in italics) is what Rohter said today about the agreement with Whole Foods in the New Season's Market Blog:

Friday, January 16, 2009

We're Finally Getting Back To Minding Our Own (Local) Business
Thank you, thank you, thank you. I'm always so impressed by the power of a united community. Because of all of the voices that chimed in from the Portland area and from all over the country, we've been able to bring the issue with Whole Foods to a resolution that works for us.

As you probably know, we've never taken a position on the dispute that Whole Foods has with the Federal Trade Commission (FTC) about their takeover of Wild Oats. We tried really hard to stay out of the crossfire of this fight, because it really has nothing to do with us. Obviously, we wish we weren't being forced to give any of our internal financial records to one of our competitors, but we're pleased that a compromise was reached. As part of the settlement, I promised not to disclose the actual terms of the agreement, but I can tell you that there is a big difference between what the original subpoena demanded and what we're going to actually turn over.

Thanks again for your help in protecting the future of New Seasons Market. We're excited about getting back to minding our own (local) business.

Whole Foods Market, Inc. co-president Walter Robb, who has a long time personal as well as professional relationship with New Seasons Market CEO Brian Rohter, had been negotiating with Rohter since about late November, 2008 about working out a compromise in which the Portland natural grocer could comply with Whole Foods' subpoena, yet still protect what it feels are its most sensitive trade secrets. We've reported this previously in the Blog.

The negotiations didn't go anyplace until about two weeks ago when Whole Foods, via Walter Robb, started to make some concessions in New Season's favor, Natural~Specialty Foods Memo has learned.

Obtaining the information from New Seasons Market has been key for Whole Foods Market because the Portland natural foods grocer, along with the southern U.S.-based Earth Fare natural food chain, are considered in the FTC case against the Wild Oats acquisition to be Whole Foods Market, Inc.'s two main regional competitors.

As we reported on Wednesday, January 14 in this piece [Retail Memo: Whole Foods Offers Carrot and Stick to Retailers That Have Yet to Comply to Subpoena For Trade Secret Data and Information] Whole Foods Market, Inc. decided to reach out to the numerous retailers, out of the 93-94 subpoenaed for their respective trade secrets, who have yet to comply with the legal demands, appealing to them using a carrot (positive and assuring) and stick (legal threat) approach.

It was this action, using mostly the carrot approach, which included a number of compromises by Whole Foods from the original demands in the subpoena, that led to the agreement between New Seasons and Whole Foods Market, which has now led CEO Rochter to comply with the subpoena and release the information to Whole Foods, based on certain stipulations and exclusions given him and New Seasons by Whole Foods Market, Inc.. Whole Foods' Walter Robb was the key back channel to Brian Rohter and New Seasons in the negotiations, we've learned.

It's our analysis that the agreement between Whole Foods Market and New Seasons will likely open the door further for the other subpoenaed retailers who've yet to comply to be more open to doing so. Whole Foods has now indicated its much more open to working out individual compromises with retailers on the matter. In addition, as we reported in the January 14 story, Whole Foods has asked the FTC to enforce the legal sanctions of non-compliance (the stick) in the subpoena. Those sanctions include possible fines, along with being charged with contempt of court for not complying with the subpoena.

Additionally, New Seasons Market has been to date the only retailer, out of those among the 93-94 that haven't complied with the subpoena, that has publicly fought (and lost) the subpoena and spoken out in public about doing so. Many of the subpoenaed retailers that haven't complied have been watching what New Seasons Market would do closely. Therefore, now that New Seasons Market has worked out an agreement with Whole Foods, we think some of the other retailers will be more open to doing so as well.

The original date for the 93-94 subpoenaed retailers to comply was November 4, 2008. Only slightly more than half had complied by late December, 2008, as we've previously reported. At last Tuesday's press conference, Whole Foods' lead outside legal counsel Lanny Davis, a partner at the Orrick law firm in Washington, D.C., said the Austin, Texas-based natural grocery chain sent letters of compliance to "a couple dozen" of the retailers that have failed to comply. Our sources say there are more that two dozen (closer to about three dozen) that have yet to comply, but that Whole Foods is targeting those it needs the data and information from the most in order to build its case that there's plenty of competition against it in the 29 U.S. markets the U.S. Federal Trade Commission (FTC) argues Whole Foods holds a monopoly in.

Obtaining this information -- and fast -- is key for Whole Foods Market's outside legal counsel because it must analyze, compile and make sense of it before the scheduled April 6, 2009 FTC Administrative hearing/trail which will determine the fate of the merger. The competitive retailer information is going to be the backbone of Whole Foods' legal argument against the FTC.

For New Seasons Market it appears it's direct and time consuming involvement in FTC v. Whole Foods Market, Inc. is likely over, unless there's a breach of its trade secret information like happened in the past, of course. However, since one concession Brian Rohter got from Whole Foods involved some information the natural grocer thought to be its most sensitive, the risk even if such information did get released is much less now for Rochter and New Seasons. Let's just say CEo Rochter's comfort level has dramatically increased in the last two days.

Meanwhile, obtaining the key information from New Seasons Market is an important but small win for Whole Foods.

It's big challenge is till to come -- proving it's not a monopolist, as the burden of proof is on the natural foods chain to do so. And it appears the FTC, despite our analysis being that it's completely wrong in its argument that a combined Whole Foods-Wild Oats poses a monopoly -- for reasons we've laid out here -- seems determined to waste U.S. taxpayer's money, and use FTC human and material resources in a foolish manner, by continuing to pursue its legal case against Whole Foods Market, Inc., which is designed to unwind the combined Whole Foods-Wild Oats.

But at least New Seasons Market's Brian Rohter and his team can now get back to selling natural and organic foods and groceries and competing against Whole Foods Market in the Portland, Oregon Metropolitan market.

Natural~Specialty Foods Memo (NSFM) Reader Resources

Recent NSFM coverage and analysis on the Whole Foods-New Seasons Market subpoena issue:

>January 14, 2008: Retail Memo: Whole Foods Offers Carrot and Stick to Retailers That Have Yet to Comply to Subpoena For Trade Secret Data and Information

>January 12, 2008: Retail Memo - Breaking News: Whole Foods Press Conference Tomorrow; Objective: Get Retailers to Comply With Subpoena; Need: Urgent

>December 29, 2008: Retail Memo - Breaking News: New Seasons Market Doesn't Turn Over Trade Secrets to Whole Foods Market Despite Deadline to Do So Being Today

>December 28, 2008: Retail Memo: Web Site and Blog-Driven Viral Boycott of Whole Foods Market Stores in Portland, Oregon Region Going On; Could it Intensify?

>December 28, 2008: Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel

>December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied

>December 18, 2008: Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market

>December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets

>December 7, 2008: December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online

>December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data

>December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing

>December 2, 2008: December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady

>December 2, 2008: December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog

>December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

Retail Memo - Breaking News: Whole Foods Press Conference Tomorrow; Objective: Get Retailers to Comply With Subpoena; Need: Urgent

Reaching Out: FTC v. Whole Foods Market - and the Subpoenas

Whole Foods Market, Inc. will hold a press conference tomorrow (Tuesday, January 13) at 12 pm Eastern time, at which company executives will ask the nearly half of the 94 U.S. natural foods retailers it has subpoenaed for their confidential sales and related information to submit the trade secrets to its legal council in order to assist Whole Foods in its legal battle against the U.S. Federal Trade Commission (FTC).

Tomorrow's press conference, during which Whole Foods plans to offer verbal assurances to the subpoenaed natural foods retailers that their trade secrets will not be viewed by Whole Foods Market, Inc. employees, just members of its legal team, comes on the heels of a letter sent to the FTC today by company CEO John Mackey, in which he asks the members of the regulatory agency to offer assurances that the subpoena order, which states that only members of the FTC and Whole Foods' legal council can view the trade secrets, be enforced. The subpoena order states that if the information is viewed by other than authorized parties those doing so could be subject to a contempt of court violation.

Mackey also has sent a letter to the subpoenaed natural products retailers asking them to comply with the subpoena. In the letter he offers reasons for them to do so, along with offering assurances that the information will not be viewed by Whole Foods Market, Inc. employees.

Both Whole Foods and the FTC has previously assured the subpoenaed natural foods retailers that only the Whole Foods Market, Inc. legal team and FTC members and staffers are allowed to view the contents of the sales, financial and related trade secrets contained in the information submitted per the subpoena, according to its legal guidelines. However, despite those legal and verbal assurances, nearly half of the 94 natural products retailers located in 29 U.S. markets have not complied with the subpoena. The deadline for them to do so was November 4, 2008.

Whole Foods' executive vice president Jim Sud will do the briefing at tomorrow's press conference for the natural foods grocer. [we've suggested it would be a good idea for John Mackey to take a back seat in such public instances and instead have someone like co-president Walter Robb, or in this case Sud, handle the heavy lifting because there is bad blood between members of the FTC and Mackey. Perhaps Whole Foods and John Mackey agree with NSFM?] The lead outside legal counsel for Whole Foods, Lanny Davis of the Washington, D.C. office of the Orrick law firm, will participate in the press conference to address legal issues involving the subpoenas.

Whole Foods badly needs the trade secret data from the 94 competitors in those 29 U.S. markets in order to prove it isn't a monopolist in what the FTC calls the premium natural and organic retailing segment. The FTC says it is, and that argument forms the basis of the regulatory agency's continued objection to a combined Whole Foods-Wild Oats to this day, more than 18 months since the merger was completed.

The purpose of tomorrow's press conference is to ask the subpoenaed retailer's to help Whole Foods in its battle against the FTC in part for "the sake of the industry." The natural foods chain says its hand was forced by the FTC, which is why it had to subpoena the trade secrets from its competitors.

As we've been writing about extensively, one of those subpoenaed natural foods retailers, Portland, Oregon-based New Seasons Market, publicly fought the subpoena, submitting a legal brief to the FTC asking it to strike the subpoena down. An FTC Administrative Law Judge ruled in favor of Whole Foods last month and gave New Seasons until December 29, 2008 to comply with the subpoena and submit its sales information, financial data, strategic marketing plans and other trade secrets.

As we reported in this piece [Retail Memo - Breaking News: New Seasons Market Doesn't Turn Over Trade Secrets to Whole Foods Market Despite Deadline to Do So Being Today] on December 29, 2008, New Seasons did not comply with the deadline given to it by the FTC Administrative Law Judge. In addition, according to New Seasons Market CEO Brian Rohter, the nine-store Portland natural foods grocer has not yet turned over any information to Whole Foods per the subpoena.

According to our sources, as of today only about 55 of the 94 natural foods retailers have complied with the subpoena and submitted information to Whole Foods Market, Inc. Additionally, as we've previously reported, many of the retailers that have complied with the have self-edited the information demanded, excluding types of information they feared could be used against them in a competitive way.

Natural~Specialty Foods Memo (NSFM) has learned that one of the natural foods retailers that did just that is the fast-growing Sunflower Farmers Market chain, which was founded by and is headed by former Wild Oats founder Michael Gilliland. Gilliland left Wild Oats a considerable time before the Whole Foods acquisition.

According to our sources, Sunflower Farmers Market, as did a number of the other subpoenaed natural products retailers, omitted some trade secret information because of a lack of security about it not being read by Whole Foods Market, Inc. employees, which is a reasonable fear despite the assurances to the contrary.

Whole Foods has been talking privately with a number of the retailers who have yet to comply with the subpoena, including holding talks with New Seasons Market CEO Rohter and his legal counsel for the last couple weeks, attempting to assure them that the trade secret information will be kept confidential, along with trying to devise ways, including some possible compromises, to get these retailers to submit the information to Whole Foods' legal counsel, NSFM has learned.

Whole Foods may offer up some of those compromises at tomorrow's press conference as a way to encourage the retailers to comply with the subpoena.

Whole Foods Market's legal counsel needs the information right now as its needs to prepare for the April, 2009 administrative trail before an FTC Administrative Law Judge. With only about half of the information in, and incomplete at that, Whole Foods' lawyers don't currently have near enough data to use in defending the FTC's anti-competitive argument against it.

We will be covering tomorrow's press conference. Stay tuned for our report tomorrow.

Natural~Specialty Foods Memo (NSFM) Linkage: FTC v. Whole Foods:

January 12, 2008: Retail Memo: FTC Asks Judge to Force Whole Foods to Put Most of the Wild Oats' Genie Back in the Bottle Pending A Resolution of its Merger Challenge....

December 29, 2008: Retail Memo - Breaking News: New Seasons Market Doesn't Turn Over Trade Secrets to Whole Foods Market Despite Deadline to Do So Being Today....December 29, 2008: Independent Grocer Memo: Natural-Organic, Local, Fresh and Premium Keys to Pacific Northwest USA's Haggen Foods; Now Adding Value....December 28, 2008: Retail Memo: Web Site and Blog-Driven Viral Boycott of Whole Foods Market Stores in Portland, Oregon Region Going On; Could it Intensify?....December 28, 2008: Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel....

December 24, 2008: Christmas Eve Memo 2008: 'Twas the Night Before Christmas' - FTC v. Whole Foods Market, Inc. Version....December 24, 2008: Independent Grocer Memo: From Mrs. Gooch's to the Auto Body Business, Then Back to Retail, Chris Kysar is On A Healthy Organic Foods Retailing Roll....December 24, 2008: Retail Memo: It's 'Deja Vu All Over Again' - Judge Paul Friedman to Whole Foods Market, FTC: 'What's My Role Here?'....December 23, 2008: Retail Memo: FTC Postpones Scheduled February 16 Administrative Hearing on Whole Foods-Wild Oats Deal Break-Up Until April 6, 2009....

December 23, 2008: Independent Grocer Memo: National Grocers' Association Asks President-Elect Obama to Look Out For Independent Grocers When He takes Office in January....December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied.... December 22, 2008: Retail Memo: Whole Foods Market Wants to Depose and Obtain Internal E-Mails From FTC Commissioner, Suggesting Possible Conflict of Interest Situation....December 22, 2008: Retail Memo: At Hearing Today Judge Tells FTC to Provide Road Map of How Whole Foods Could Take About Merged Companies Should Ruling Go In its Favor....

December 19, 2008: Retail Memo: Whole Foods' Lobbying Effort Baring More Fruit - House Committee Leaders Send Letter to FTC Chair Similar to One Sent By Senate Leaders....December 18, 2008: Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market.... December 18, 2008: Retail Memo: The 'Whole Primary Source Scoop' -- FTC and U.S. Federal Court Documents on the FTC v. Whole Foods Market, Inc. Case....December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets....

December 16, 2008: Retail Memo: Whole Foods, Wild Oats and Boulder, CO...And the Rocky Mountain News' Editorial Take On FTC v. Whole Foods Market, Inc....December, 15, 2008: Retail Memo: Eight Members of U.S. Senate Judiciary Committee Send Letter to FTC Chairman Regarding FTC's Legal Case Against Wild Oats' Acquisition....December, 13, 2008: Retail Memo - Analysis & Commentary: More On FTC v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC....December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Likley With Mass Market Lift....

December 9, 2008: Retail Memo: Whole Foods Markets' 'Whole Legal Paycheck:' Three Top Washington, D.C. Law Firms Teaming Up On The Natural Grocery Chain's FTC Lawsuit....December 9, 2008: Retail Memo: Whole Foods Market CEO John Mackey and Team Launch First Aggressive Attack Against the FTC's Legal Case at Press Conference This Morning....December 8, 2008: Retail Memo: Mr. Mackey (and the Whole Foods Market Troops) Goes to Washington....December 8, 2008: Retail Memo: Breaking News - Whole Foods Market, Inc. Files Lawsuit Against the FTC; Argues the Regulator Violated the Company's Due Process Rights....

December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data....December 7, 2008:Retail Memo: Whole Foods Market Retains Top Washington D.C. lawyers and Politically-Connected Lobbyists to Plead its Case Against the FTC....

December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas....December 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....

December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

FTC v. Whole Foods - Linkage from the Natural~Specialty Foods Memo archives:

Click here, here and here for stories about the FTC-Whole Foods issue from our archives, including pieces about mass market and natural foods class of trade retail competitors.

Retail Memo - Breaking News: New Seasons Market Doesn't Turn Over Trade Secrets to Whole Foods Market Despite Deadline to Do So Being Today

In our story yesterday (Sunday, December 28) [Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel], we reported that today (Monday, December 29) is the deadline Federal Trade Commission (FTC) Administrative Law Judge Michael Chappell has given Portland, Oregon-based New Seasons Market to comply with Whole Foods Market, Inc.'s subpoena for the nine-store natural grocer's financial records, sales data, strategic marketing plans and related trade secrets.

We can now report that as of the end of business today, New Seasons Market has not submitted the information demanded in the subpoena to lawyers for Whole Foods Market, Inc., as directed by the FTC judge.

This has been confirmed by Brian Rohter (pictured at left), the CEO of New Seasons Market.

Rohter says he can't talk about any other aspects of the subpoena or the legal issue at present, on advise of his legal counsel.

We can report however that New Seasons Market has no plans to turn over the information demanded by Whole Foods Market, Inc. on Tuesday, December 30. And since Wednesday is New Year's Eve, and Thursday and Friday are part of the four day New Year's Day holiday weekend, don't expect to see New Season's submitting its trade secrets to Whole Foods' legal counsel at all this week.

New Season's CEO Rohter says he hopes to have more details regarding the subpoena issue as soon as he can. Right now though he says he's essentially being kept on a short leash by his legal counsel in terms of discussing the issue.

What we do know is that Rohter and other members of the New Seasons Market management team huddled with their lawyers last week in an attempt to come up with a strategy to fight the FTC Administrative Law Judge's ruling that the Portland natural grocer turn over its trade secrets to Whole Foods' legal counsel by today.

Therefore it's possible the natural grocer and its legal counsel have come up with such a strategy but can't announce it publicly as of yet.

Stay tuned.

Retail Memo: Web Site and Blog-Driven Viral Boycott of Whole Foods Market Stores in Portland, Oregon Region Going On; Could it Intensify?

The Portland, Oregon USA region offers lots of fresh air, green grass, public transportation and one of the highest per-capita natural foods shopping consumer population segments in the United States. Portland-area consumers love -- and buy -- natural and organic. Portland is a key market for any natural products retailer, and Portland market region consumers are people those retailers want (and need) on their side.

An informal, primarily Web site and Blog-driven, viral boycott of Whole Foods Market stores in the Portland, Oregon USA region is being conducted by an intere,sting decentralized collection of consumers -- political progressives, libertarian types, local business advocates, and others who just plain dislike Whole Foods' issuing of a subpoena earlier this year to Portland-based New Seasons Market.

The subpoena, which also was issued to 92 other natural foods retailers throughout the U.S., demands that the local, nine-store natural foods grocer turn over its sales and financial information, strategic marketing plan (including plans to open new stores), e-mails and other proprietary information to Whole Foods Market, Inc.'s legal council as part of the Austin, Texas-based natural grocery chain's battle against the U.S. Federal Trade Commission's attempt to overturn its friendly acquisition last year of Wild Oats Market, Inc.

As we've reported, Whole Foods Market, Inc. issued subpoenas to 93 natural products retailers in the U.S., including Portland's New Seasons Market. The subpoenas demand the information detailed above from the retailers because Whole Foods' says it must have the data to fight the FTC's legal claim that a combined Whole Foods-Wild Oats is a monopoly in what the regulator calls the "Premium Natural and Organic Retailing Segment" in some near-30 markets in the U.S. Whole Foods says this claim is folly, and that the information from its competitor natural foods grocers will help it prove in court that the FTC is wrong.

The informal boycott, which is using the Internet -- Blogs and Web sites -- as its organizing point (organizing from a viral standpoint that is), is based on the simple premise that New Seasons Market is a local business and natural foods retailer (David), while Whole Foods is a mega-chain (Goliath), which by its subpoena is attempting to put unfair and onerous demands on the local New Seasons Market, along with engaging in "big brother" tactics by legally demanding the smaller natural grocer's trade secrets, which New Seasons Market CEO Brian Rohter believes could be used by Whole Foods Market, Inc. against his company, despite assurances by Whole Foods Market, Inc. and the FTC that only Whole Foods' lawyers FTC commission members and others related to the court proceedings will be able to view the data and related information.

Suggestions of such a boycott of Whole Foods' Portland stores first started appearing in the comments section of a post by New Seasons Market CEO Brian Rohter on the company's Blog in early December in which he talked about the subpoena against his company and how he planned to fight it. The comments to his posting were spontaneous, individual comments by local Portland area consumers saying they would no longer be shopping at Whole Foods stores because of the subpoena.

Many of these commentors took to e-mail, sending messages to friends in the region, asking them to boycott Portland-area Whole Foods stores. [Natural~Specialty Foods Memo has been sent copies of those e-mails because many Portland region residents have been following our coverage of the issue.]

At one point, the comments on the natural grocer's Blog got so hot and numerous about boycotting the Portland-region Whole Foods stores, that New Seasons' CEO Rochter made a brief post, reminding his readers that they shouldn't take out their anger on the Portland-area Whole Foods Market store-level employees, who he called "our friends and neighbors."

Additionally, in early December, Leslie Carlson, a contributor to the popular and politically progressive-oriented Blue Oregon.com Web site, wrote a post in which she said she would no longer shop at any Portland-region Whole Foods Market stores because of the supoena of New Seasons trade secrets.

Below is the leed paragraph from her stinging post in early December, in which she announces she will boycott Whole Foods Market stores in the region:

"I'm spitting mad about Whole Foods' latest, thuggish attempt to mess with Portland food retailer New Seasons. You may have read the Oregonian story or New Seasons' CEO Brian Rohter's post about the subpoena asking for proprietary and confidential business information. The subpoena sent to New Seasons is part of a screwed-up merger that Whole Foods has been trying to execute with rival Wild Oats for the past 18 months."

And, the closing paragraph of Ms. Carlson's post:

"In the past, I have occasionally stopped into Whole Foods. That ends today. Threaten my favorite locallly-owned grocery store, and I promise to never darken your door again."

You can read her complete post here.

In the post, Ms. Carlson also called for readers of the progressive Web site to join her in boycotting Oregon's Whole Foods stores because of the subpoena issue. There are currently 43 reader comments on her post. You can view the comments here.

BlueOregon.com has a substantial readership among political progressives -- not just in Oregon but throughout the Pacific Northwest and in California -- who just happen to be a significant portion of Whole Foods Market's customer base.

Since Ms. Carlson's post came out in early December, it has been e-mailed to people all over Oregon (and throughout the U.S. for that matter), with notes attached asking them to boycott Whole Foods stores in the Portland region and throughout the state, because of the subpoena issue.

Patrick Alan Coleman, a Blogger at the popular Portland Mercury alternative newspaper Web Site, also has come out in favor of boycotting Whole Foods Market stores in the region because of the natural foods grocery chain's subpoena for local guy New Seasons Market's proprietary information. You can read him here.

Portland Food & Drink, a local Web site that covers all things consumable in the Portland region, also received numerous responses to a post it made about the issue in early December. Not all of the comments were advocating a boycott of the local Whole Foods stores. But a considerable number of them do -- such as these three examples below:

>lauhal63 says:
December 3, 2008 at 9:45 pm
Bullies! Whole Foods will not get another dime from me. Ever.

>Jessica Roberts says:
December 8, 2008 at 1:52 pm
Just sent WF management a message:
I was disgusted to read of your attempt to subpoena New Seasons’ sensitive corporate information. What, you are afraid that big bad 9-store chain New Seasons might offer better customer service and better products compared to poor little Whole Foods, with only 270 stores around the nation?You’re not fooling anyone. While I understand why it would benefit you to know exactly what next move your competition will take, I don’t see that it’s worth creating an image of yourself as an anticompetitive corporate bully. I used to shop at Whole Foods several times a month, because my work is right near one of your shops. No more. I’ll make sure to boycott your business for as long as you’re bullying local businesses in my back yard.

>Heather says:
December 16, 2008 at 11:36 am
I, too, will continue to shop at New Seasons, but now it will be exclusively. Furthermore, I will Twitter my “boycott Whole Foods” message, blog it, and take any opportunity to slam them verbally. I always knew there was something I didn’t like about WF. They really shoulda known better than to screw with Portland.
You can read the post, and the reader comments, at Portland Food & Drink here.

It isn't clear if the Portland region Whole Foods Market stores are overall experiencing a significant drop in sales because of this informal, primarily Web site and Blog-promoted boycott. However, this is what we do know, based on our reporting and research:

> Customer counts are down at some Portland-region Whole Foods Market stores. A Natural~Specialty Foods Memo (NSFM) correspondent was in Portland two weeks ago. While there he visited a number of Whole Foods stores. While in the stores he talked with employees, asking if they had noticed any drop-off in sales because of the New Seasons subpoena issue. First off, almost every single store employee he asked was aware of the issue. Second, a number of them told the correspondent they did believe there was a slight drop in business because some customers were boycotting the stores over the issue.

>During the two days in Portland, the NSFM correspondent also taked to four different sales representatives who call on Whole Foods stores. Two of the sales reps said they couldn't tell if there was any drop in customer counts since early December. However, the other two said in at least a couple of Whole Foods stores they call on, employees have been talking openly about a drop in business, which the store workers attribute primarily to the subpoena issue.

>The NSFM correspondent also visited a number of New Seasons Market stores. Employees at two stores in Portland said they've seen a significant increase in customers coming into the stores, both saying they thought it has lots to do with Portland residents not shopping at Whole Foods over the subpeona issue. In fact, one of the New Seasons store employees pointed out the post on the BlueOregon.com Web site to the NSFM correspondent. Additionally, the manager of one of the two New Seasons stores told the NSFM correspondent that numerous customers had mentioned they are doing all of there shopping at the store and Boycotting Whole Foods over the subpoena issue.

>NSFM talked to two vendors in the Portland market today. They commented that it appeared to them a number of the New Seasons stores had higher Christmas holiday shopping customer counts they they could recall seeing last year. One of the vendor represenatives also said he saw a man handing out flyers on day about two weeks ago in tee parking lot of a Portland Whole Foods Market store. He says the flyers asked consumers not to shop at Whole Foods because of its demands in the subpoena to New Seasons. We haven't been able to track down any of those flyers to date. It appears it was a "one-man effort" rather than part of a mass anti-Portland region Whole Foods mass-flyer distribution campaign.

>Lastly, it is without a doubt that Whole Foods Market is being hurt from a reputational and public relations standpoint in the Portland Metro region over the New Seasons subpoena issue. It appears there is very little support for Whole Foods' side of the issue, and lots of support for local guy New Seasons Market, as evidenced by the posts and comments on the local Blogs and Web Sites, along with all of the other observable activity regarding the issue.

Whole Foods Market and New Seasons Market essentially share the same customer base in the Portland regional market -- well educated consumers who buy primarily natural and organic foods, groceries and related products, but also desire and buy specialty, premium and ethnic foods. This shared customer base also consists of consumers who are "greener" than the average shopper, believe and practice sustainability more than the average consumer, and care more about local foods and ethical retailing than the general shopper does. In fact, the FTC sites New Seasons as one of its examples of "Natural and Organic Premium Segment" key competitive retailers to Whole Foods Market in its legal case against the Wild Oats acquisition.

In other words, this is Whole Foods' key customer base, as it is News Seasons,' and in Portland, as is the case elsewhere, it can't afford to lose very many of the consumers that comprise the segment because they are core Whole Foods Market customers.

However, although we have no quantification on the matter, we do know many of these consumers are being lost to New Seasons over the subpoena issue, and probably to other grocers, right now. This isn't good news for Whole Foods, particularly in Oregon, which is one of the top per-capita states in sales for natural products retailing. It will be even worse news if this informal, primarily Internet-driven boycott picks up steam and takes on more formal organizational characteristics in the days and weeks to come.

Since, as we reported earlier today, tomorrow is the deadline given to New Seasons Market by the FTC Administrative Law Judge to comply with Whole Foods' subpoena, the issue isn't going away, particularly in Portland, Oregon, anytime soon.

Based on our extension reporting and research on the issue, we wouldn't be surprised to see the boycott of Whole Foods stores in the Portland, Oregon region -- as well as seeing it spread throughout the state and maybe into other parts of the Pacific Northwest -- grow and intensify over the coming weeks, both via the Internet and in other more formal, person-to-person ways.

The power of using the Internet alone to spread such campaigns virally (social media) today is significant and real. Thus far the efforts to convince Portland-area consumers to boycott Whole Foods stores in the region have been mostly individual and spontaneous. However, that could easily change -- and change rapidly because of the speed of "Internet time."

Reader Resources

Most recent, related posts from Natural~Specialty Foods Memo (NSFM):

~December 28, 2008: Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel

~December 24, 2008: Retail Memo: It's 'Deja Vu All Over Again' - Judge Paul Friedman to Whole Foods Market, FTC: 'What's My Role Here?'

~December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied

FTC v. Whole Foods Market - Whole Foods Market v. FTC: Recent coverage and analysis in Natural~Specialty Foods Memo (NSFM):

December 24, 2008: Christmas Eve Memo 2008: 'Twas the Night Before Christmas' - FTC v. Whole Foods Market, Inc. Version....December 24, 2008: Independent Grocer Memo: From Mrs. Gooch's to the Auto Body Business, Then Back to Retail, Chris Kysar is On A Healthy Organic Foods Retailing Roll....December 24, 2008: Retail Memo: It's 'Deja Vu All Over Again' - Judge Paul Friedman to Whole Foods Market, FTC: 'What's My Role Here?'....December 23, 2008: Retail Memo: FTC Postpones Scheduled February 16 Administrative Hearing on Whole Foods-Wild Oats Deal Break-Up Until April 6, 2009....

December 23, 2008: Independent Grocer Memo: National Grocers' Association Asks President-Elect Obama to Look Out For Independent Grocers When He takes Office in January....December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied.... December 22, 2008: Retail Memo: Whole Foods Market Wants to Depose and Obtain Internal E-Mails From FTC Commissioner, Suggesting Possible Conflict of Interest Situation....

December 22, 2008: Retail Memo: At Hearing Today Judge Tells FTC to Provide Road Map of How Whole Foods Could Take About Merged Companies Should Ruling Go In its Favor....December 19, 2008: Retail Memo: Whole Foods' Lobbying Effort Baring More Fruit - House Committee Leaders Send Letter to FTC Chair Similar to One Sent By Senate Leaders.... December 18, 2008: Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market.... December 18, 2008: Retail Memo: The 'Whole Primary Source Scoop' -- FTC and U.S. Federal Court Documents on the FTC v. Whole Foods Market, Inc. Case....

December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets....December 16, 2008: Retail Memo: Whole Foods, Wild Oats and Boulder, CO...And the Rocky Mountain News' Editorial Take On FTC v. Whole Foods Market, Inc....December, 15, 2008: Retail Memo: Eight Members of U.S. Senate Judiciary Committee Send Letter to FTC Chairman Regarding FTC's Legal Case Against Wild Oats' Acquisition....

December, 13, 2008: Retail Memo - Analysis & Commentary: More On FTC v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC....December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Likley With Mass Market Lift....December 9, 2008: Retail Memo: Whole Foods Markets' 'Whole Legal Paycheck:' Three Top Washington, D.C. Law Firms Teaming Up On The Natural Grocery Chain's FTC Lawsuit....

December 9, 2008: Retail Memo: Whole Foods Market CEO John Mackey and Team Launch First Aggressive Attack Against the FTC's Legal Case at Press Conference This Morning....December 8, 2008: Retail Memo: Mr. Mackey (and the Whole Foods Market Troops) Goes to Washington....December 8, 2008: Retail Memo: Breaking News - Whole Foods Market, Inc. Files Lawsuit Against the FTC; Argues the Regulator Violated the Company's Due Process Rights....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online....

December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data....December 7, 2008:Retail Memo: Whole Foods Market Retains Top Washington D.C. lawyers and Politically-Connected Lobbyists to Plead its Case Against the FTC....December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas....

December 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....

December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

FTC v. Whole Foods - Linkage from the Natural~Specialty Foods Memo archives:

Click here, here and here for stories about the FTC-Whole Foods issue from our archives, including pieces about mass market and natural foods class of trade retail competitors.

Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel

Whole Foods Market, Inc., New Seasons Market, and the Subpoenas

Tomorrow (December 29, 2008) is the deadline Federal Trade Commission (FTC) Administrative Law Judge Michael Chappell has given nine-store Portland, Oregon natural foods grocer New Seasons Market to turn over its trade secrets to lawyers for Whole Foods Market, Inc. [Here's a link to the ruling.]

As Natural~Specialty Foods Memo reported on December 17 in this story [Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets], the FTC Administrative Law Judge ruled against New Seasons' appeal of the Whole Foods' subpoena, ordering the natural grocer to submit its sales, financial and other proprietary information called for in the subpoena to Whole Foods' lawyers by tomorrow.

The next day, December 18, we reported in this piece [ Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Grocer Must Turn Over Trade Secrets to Whole Foods Market], that Brian Rohter, the CEO of New Seasons Market, said he was huddling with his lawyers following the Administrative Law Judge's ruling, looking for ways to continue fighting the subpoena.

As of Friday, December 26, New Seasons hadn't filed any formal legal appeal to the FTC, according to our sources; nor have we been able to find anything legally filed.

Therefore, tomorrow is S (subpoena) Day for Portland's New Seasons Market. The natural foods retailer can either comply with the judge's order and submit its trade secrets to Whole Foods' lawyers, which is something CEO Rohter has been strongly against doing, or it can join a number of the other 92 natural products retailers issued subpoenas and not comply with the legal documents. As we reported here, as of last week only about 50 of the 93 retailers issued subpoenas by Whole Foods Market, Inc. have complied. The deadline to do so was November 4, 2008.

Portland's New Seasons Market is the only one of the 93 retailers to date that has publicly opposed the subpoenas and filed an appeal with the FTC. The others who haven't complied have done so silently, merely refusing to submit the information. Additionally, a number of the 93 natural products retailers that have complied with Whole Foods' subpoena for their trade secrets, have self-edited the information submitted, thus only partially complying with the demands made in the legal documents.

Since New Seasons is the only one of the 93 retailers to oppose the subpoenas and take a public stand in doing so, it is flying above the radar (the others that haven't complied are flying below the radar screen in terms of visibility on the issue) in terms of its decision tomorrow. There are certain negatives as well as certain benefits of doing so.

Most of these 93 natural products retailers are privately-held companies like New Seasons Market is. As such, they aren't required to publicly disclose annual sales and profit information, which the Whole Foods subpoena calls for.

But the subpoena calls for far more than this data. It also demands the retailers locate, make copies of, and submit to Whole Foods' any internal company e-mails that might discuss competitive issues as they relate to Whole Foods Market, Inc. in each of the 93 retailers' respective markets.

In addition, the Whole Foods' subpoena demands the retailers disclose in writing their respective strategic plans, including any new stores they plan to open in the next few years.

Whole Foods says obtaining this information is essential in order for it to demonstrate that a combined Whole Foods-Wild Oats is not a monopoly in any U.S. Market.

Late last week, New Seasons Market CEO Brian Rohter indicated the natural foods grocer might have something more up its sleeve in terms of continuing to fight the demands made in the subpoena.

We should know tomorrow. Stay tuned.

Reader Resources

FTC v. Whole Foods Market - Whole Foods Market v. FTC: Recent coverage and analysis in Natural~Specialty Foods Memo (NSFM):

December 24, 2008: Christmas Eve Memo 2008: 'Twas the Night Before Christmas' - FTC v. Whole Foods Market, Inc. Version....December 24, 2008: Independent Grocer Memo: From Mrs. Gooch's to the Auto Body Business, Then Back to Retail, Chris Kysar is On A Healthy Organic Foods Retailing Roll....December 24, 2008: Retail Memo: It's 'Deja Vu All Over Again' - Judge Paul Friedman to Whole Foods Market, FTC: 'What's My Role Here?'....December 23, 2008: Retail Memo: FTC Postpones Scheduled February 16 Administrative Hearing on Whole Foods-Wild Oats Deal Break-Up Until April 6, 2009....December 23, 2008: Independent Grocer Memo: National Grocers' Association Asks President-Elect Obama to Look Out For Independent Grocers When He takes Office in January....

December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied.... December 22, 2008: Retail Memo: Whole Foods Market Wants to Depose and Obtain Internal E-Mails From FTC Commissioner, Suggesting Possible Conflict of Interest Situation....December 22, 2008: Retail Memo: At Hearing Today Judge Tells FTC to Provide Road Map of How Whole Foods Could Take About Merged Companies Should Ruling Go In its Favor....

December 19, 2008: Retail Memo: Whole Foods' Lobbying Effort Baring More Fruit - House Committee Leaders Send Letter to FTC Chair Similar to One Sent By Senate Leaders.... December 18, 2008: Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market.... December 18, 2008: Retail Memo: The 'Whole Primary Source Scoop' -- FTC and U.S. Federal Court Documents on the FTC v. Whole Foods Market, Inc. Case....

December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets....December 16, 2008: Retail Memo: Whole Foods, Wild Oats and Boulder, CO...And the Rocky Mountain News' Editorial Take On FTC v. Whole Foods Market, Inc....December, 15, 2008: Retail Memo: Eight Members of U.S. Senate Judiciary Committee Send Letter to FTC Chairman Regarding FTC's Legal Case Against Wild Oats' Acquisition....December, 13, 2008: Retail Memo - Analysis & Commentary: More On FTC v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC....

December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Likley With Mass Market Lift....December 9, 2008: Retail Memo: Whole Foods Markets' 'Whole Legal Paycheck:' Three Top Washington, D.C. Law Firms Teaming Up On The Natural Grocery Chain's FTC Lawsuit....December 9, 2008: Retail Memo: Whole Foods Market CEO John Mackey and Team Launch First Aggressive Attack Against the FTC's Legal Case at Press Conference This Morning....December 8, 2008: Retail Memo: Mr. Mackey (and the Whole Foods Market Troops) Goes to Washington....

December 8, 2008: Retail Memo: Breaking News - Whole Foods Market, Inc. Files Lawsuit Against the FTC; Argues the Regulator Violated the Company's Due Process Rights....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data....December 7, 2008:Retail Memo: Whole Foods Market Retains Top Washington D.C. lawyers and Politically-Connected Lobbyists to Plead its Case Against the FTC....

December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas....December 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....

December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

FTC v. Whole Foods - Linkage from the Natural~Specialty Foods Memo archives:

Click here, here and here for stories about the FTC-Whole Foods issue from our archives, including pieces about mass market and natural foods class of trade retail competitors.

Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied

FTC v. Whole Foods Market - and the subpoenas

Nearly three weeks ago Natural~Specialty Foods Memo first reported that to date then only about 50 of the 93 natural foods retailing companies that received subpoenas for sales data, financial information and other trade secrets from Whole Foods Market, Inc. had complied with the subpoenas and submitted the information, and that a number of the retailer's that did comply thus far have submitted only partial information, omitting some of the proprietary information demanded in the legal document.

Today, weeks later, still only about 50 of the 93 natural foods retailers issued the subpoenas have complied, according to a recent filing with the federal court by Whole Foods Market, Inc. in which it has asked for an extension on submitting various legal arguments because it still needs the data from the companies yet to provide in order to do so, it says. The deadline to comply with the subpoena was November 4, over six weeks ago.

Whole Foods issued the subpoenas for the trade secrets as part of its defense against the U.S. Federal Trade Commission's (FTC) legal case in which the regulatory agency is trying to overturn the natural grocery chain's friendly acquisition last year of Wild Oats Market, Inc., on the grounds a combined Whole Foods-Wild Oats is a monopolist in numerous U.S. markets in what the FTC calls the "premium natural and organic retailing segment."

Most of the 93 U.S.-based natural foods retailing companies Whole Foods Market, Inc. issued the subpoenas to are privately-held companies. As such they aren't required to report sales and related financial information on a quarterly basis like public companies, such as Whole Foods, are required to do. Hence the subpoenas to obtain this proprietary information.

This isn't the only reason Whole Foods took the subpoena route though. The natural foods grocery chain also is demanding information from the 93 retailers such as if they have any plans in the future to open new stores in their respective market regions. The 93 retailers have natural foods stores in about 29 U.S. markets where the FTC says Whole Foods post the Wild Oats acquisition holds a monopolist position in.

The subpoenas also demand information from these 93 retailers such as providing the court and Whole Foods' lawyers with internal company e-mails in which discussion via-a-vis competition with Whole Foods and related topics might have been discussed.

Whole Foods' Market, Inc. and its outside legal counsel say all this information is needed in order for it to prove the chain does not pose an anti-competitive force to consumers or other retailers in the various U.S. markets where the FTC argues it does. Whole Foods' also says, as does the FTC, that only Whole Foods' legal council and the FTC commissioners will view the information.

As we've been reporting on and writing about, one of the 94 retailers, Portland, Oregon-based New Seasons Market, a nine-store natural foods chain, fought the Whole Foods subpoena in court. Last week a judge ruled against New Seasons and in Whole Foods' favor, giving the Portland natural grocer until December 29 to submit the information demanded in the subpoena.

Brian Rohter, the CEO of New Seasons, said last week he is huddling with his lawyers looking into the potential of appealing the decision. As of today, December 22, he has yet to decide if New Seasons will file an appeal.

Meanwhile it looks like the other 42 natural foods retailers that received the subpoenas have just decided to ignore them rather than fight the demands for information in court like New Seasons has done. After all, November 4 is long passed. New Seasons is the only one of the 93 natural products retail companies that's challenged the subpoena in court to date.

Additionally, in its court filing requesting an extension, Whole Foods Market, Inc. says much of the information it has received from those retailers who've complied with its subpoenas is lacking the detailed information demanded in the legal documents.

As of today, Whole Foods' legal counsel had no comment on what if anything it plans to do to require the remaining retailers to comply with the subpoenas or to get the additional information it says it needs from those retailers who have complied but only submitted partial information, other than to issue the retailers another subpoena and demand in writing they comply.

One of the demands in the subpoenas is that the retailers locate and print any and all e-mails within the company, both at headquarters and store-level, that might discuss competitive issues as they relate to Whole Foods and its acquisition of Wild Oats. This was the only aspect of the subpoena the FTC Administrative Law Judge, D. Michael Chappell, ruled in favor of last week for New Seasons Market in its appeal, saying New Seasons had to comply with all demands in the subpoena except for that one, ordering the Portland grocer to provide just the e-mails from corporate headquarters' staff and not those from store-level employees. The judge held New Seasons must comply with all other demands in the subpoena though.

New Seasons Market CEO Rohter says his biggest concern about submitting the trade secrets information to Whole Foods Market is that he doesn't believe the natural grocery chain's promise, which it says is backed by the court and the law, or the FTC Administrative Law Judge's agreement with Whole Foods in this one instance at least, that other than its legal counsel no other employees of Whole Foods Market, Inc. will be able to view the information.

"I can only shake my head at the judge's position that our private files will somehow be protected,"Rohter wrote in his company Blog on Friday regarding the judge's decision. "The reason I'm doubtful is because this same promise was made in this same case in 2007 and what really happen was quite different. First of all, one of Whole Foods lawyers, who is actually an employee of their company and who is on their Leadership Team, was allowed to see confidential information that was submitted. Second, the FTC accidentally posted information that was marked 'confidential' on their web site."

As it stands now, New Seasons Market has seven days, until December 29, to either comply with the subpoena in whole or in part like many of the other retailers have, do nothing and avoid complying, or file some sort of an appeal to the FTC Administrative Law Judge's ruling requiring the natural foods grocer to submit its trade secrets to Whole Foods Market, Inc.'s lawyers.

Many of the remaining 42 or so retailers are taking the second approach, avoiding responding to the subpoena all together. It's Christmas week, then the New Year holiday period. Much of Washington, D.C., including the federal courts, will be closed. Therefore, nothing much can happen in terms of Whole Foods' getting any action on the subpoenas for the next few weeks, as a result.

The FTC's administrative hearing on the Wild Oats' acquisition is set for the third week in February. That gives Whole Foods little time after the new year to obtain and compile the information it says is key in order to prove its case that it's not monopolist at that February, 2009 hearing.

Reader Resources

FTC v. Whole Foods Market - Whole Foods Market v. FTC: Recent coverage and analysis in Natural~Specialty Foods Memo (NSFM):

December 22, 2008: Retail Memo: Whole Foods Market Wants to Depose and Obtain Internal E-Mails From FTC Commissioner, Suggesting Possible Conflict of Interest Situation....December 22, 2008: Retail Memo: At Hearing Today Judge Tells FTC to Provide Road Map of How Whole Foods Could Take About Merged Companies Should Ruling Go In its Favor....

December 19, 2008: Retail Memo: Whole Foods' Lobbying Effort Baring More Fruit - House Committee Leaders Send Letter to FTC Chair Similar to One Sent By Senate Leaders.... December 18, 2008: Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market.... December 18, 2008: Retail Memo: The 'Whole Primary Source Scoop' -- FTC and U.S. Federal Court Documents on the FTC v. Whole Foods Market, Inc. Case....

December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets....December 16, 2008: Retail Memo: Whole Foods, Wild Oats and Boulder, CO...And the Rocky Mountain News' Editorial Take On FTC v. Whole Foods Market, Inc....December, 15, 2008: Retail Memo: Eight Members of U.S. Senate Judiciary Committee Send Letter to FTC Chairman Regarding FTC's Legal Case Against Wild Oats' Acquisition....

December, 13, 2008: Retail Memo - Analysis & Commentary: More On FTC v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC....December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Likley With Mass Market Lift....December 9, 2008: Retail Memo: Whole Foods Markets' 'Whole Legal Paycheck:' Three Top Washington, D.C. Law Firms Teaming Up On The Natural Grocery Chain's FTC Lawsuit....

December 9, 2008: Retail Memo: Whole Foods Market CEO John Mackey and Team Launch First Aggressive Attack Against the FTC's Legal Case at Press Conference This Morning....December 8, 2008: Retail Memo: Mr. Mackey (and the Whole Foods Market Troops) Goes to Washington....December 8, 2008: Retail Memo: Breaking News - Whole Foods Market, Inc. Files Lawsuit Against the FTC; Argues the Regulator Violated the Company's Due Process Rights....

December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data....December 7, 2008:Retail Memo: Whole Foods Market Retains Top Washington D.C. lawyers and Politically-Connected Lobbyists to Plead its Case Against the FTC....

December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas....December 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....

December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

FTC v. Whole Foods: Linkage from the Natural~Specialty Foods Memo (NSFM) archives:

Click here, here and here for stories about the FTC-Whole Foods issue from our archives, including pieces about mass market and natural foods class of trade retail competitors.

Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market

Yesterday we reported in this story ["Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets] (and none of the mainstream press that's been covering the issue has yet to report that we can find accept for Dow Jones News Service) that an FTC Administrative Law Judge ruled against Portland, Oregon-based New Seasons Market's legal motion to the FTC to quash the subpoena issued the nine-store natural grocery chain by Whole Foods Market, Inc. demanding New Seasons turn over its sales and financial records and other trade secrets as part of Whole Foods' defense against the regulatory agency's legal attempt to overturn its 2007 acquisition of Wild Oats Market, Inc. [You can view the Whole Foods Market subpoena to New Seasons Market here.] [Here’s a link to the FTC Administrative Law Judge's ruling. ]

At the end of our story on the ruling, we mentioned the FTC Administrative Law Judge's ruling that New Seasons Market comply with the Whole Foods Market, Inc. subpoena left few if any alternatives for the Portland natural grocer. We suggested essentially that New Seasons can either comply with the judge's legal order and submit the information or not do so and be in violation of the court order.

New Seasons Market CEO Brian Rohter wasn't available to comment on the ruling yesterday. However, he did respond to the FTC Administrative Law Judge's ruling today in the New Seasons Market company Blog.

Writing in the Blog today, CEO Rohter says of the subpoena and yesterday's decision by the judge: "This isn't over yet;" This meaning the natural grocer's fight against the subpoena. Below (in italics) is New Seasons Market CEO Brian Rohter's response to yesterday's decision in favor of Whole Foods and its subpoena:

It's Getting Harder to Mind Our Own (Local) Business. Updated 12-18

Yesterday we heard from our attorneys that the Federal Trade Commission ruled that we have to turn our confidential internal financial, marketing and planning information over to Whole Foods Market. We disagree with and are disappointed in this decision. We’re huddling with the lawyers to figure out what our next step is going to be and I’ll get back to you once we have a clear direction. This isn’t over yet.

In the meantime, if you’re wondering why one of our competitors is demanding access to our private information, you can read about the details on this link. Thanks again to the hundreds of people in Portland (and actually all over the country) who have offered us their support

--Brian Rohter, CEO, New Seasons Market

We suspect New Seasons Market is considering if it can appeal the FTC Administrative Law Judge's ruling ordering the Portland, Oregon-based natural foods grocer to turn over its sales, financial and marketing-related information to Whole Foods Market, Inc. immediatly.

We asked an experienced antitrust lawyer today if appealing is possible. His answer: it is possible...but could be very expensive, and it isn't simple to do.

He suggested a better alternative might be if New Seasons Market and Whole Foods could work out a side-arrangement that perhaps would limit some of the information demanded in the subpoena, along with perhaps providing additional or stronger assurances to the Portland natural foods chain that only Whole Foods' legal council will view the company's trade secrets.

In its motion to quash the subpoena New Seasons Market says if it turns over the information, Whole Foods could use it competitively against the natural grocer in the Portland market region. The FTC Administrative Law Judge didn't accept that argument, or the others made in the motion by New Seasons, saying the law and the FTC process will protect its trade secrets.

Working out such a side-arrangement is something Whole Foods Market, Inc. co-president Walter Robb said he offered to attempt to do in a telephone conversation he had with New Seasons' CEO Rohter a couple weeks ago. However it appears nothing positive came of that discussion between the two men since New Seasons Market went on with its motion to quash the subpoena, which it certainly had the right to do.

It also appears such a negotiated solution is likely a moot point now because the FTC Administrative Law Judge has ruled in Whole Foods' favor.

It isn't likely -- and it was highly unlikely even before the ruling yesterday in our analysis -- that Whole Foods Market Inc.'s outside legal council would indulge New Seasons Market in Walter Robb's offer to amend the subpoena because the lawyers included the specific information contained in the subpoena, which was submitted to 93 other natural foods retailers, because it's the information they need to help prove their case that Whole Foods Market, Inc. isn't a monopolist in what the FTC calls the "premium natural/organic retailing segment" in the 29 or so U.S. markets it argues the chain is such a creature in. Antitrust lawyers like those at three of the top Washington, D.C. law firms working for Whole Foods Market seldom put extraneous information in subpoenas. Also, we expect the FTC itself wants the subpoena information as is.

So it appears, as of today, "This isn't over yet," according to New Seasons Market CEO Brian Rohter. Stay tuned.

Reader Resources

Below are recent posts from Natural~Specialty Foods Memo about Whole Foods' subpoena of New Seasons Market's trade secrets, FTC. v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC:

December 18, 2008: Retail Memo: The 'Whole Primary Source Scoop' -- FTC and U.S. Federal Court Documents on the FTC v. Whole Foods Market, Inc. Case....December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets....December 16, 2008: Retail Memo: Whole Foods, Wild Oats and Boulder, CO...And the Rocky Mountain News' Editorial Take On FTC v. Whole Foods Market, Inc....

December, 15, 2008: Retail Memo: Eight Members of U.S. Senate Judiciary Committee Send Letter to FTC Chairman Regarding FTC's Legal Case Against Wild Oats' Acquisition.... December, 13, 2008: Retail Memo - Analysis & Commentary: More On FTC v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC.... December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Likley With Mass Market Lift....

December 9, 2008: Retail Memo: Whole Foods Markets' 'Whole Legal Paycheck:' Three Top Washington, D.C. Law Firms Teaming Up On The Natural Grocery Chain's FTC Lawsuit....December 9, 2008: Retail Memo: Whole Foods Market CEO John Mackey and Team Launch First Aggressive Attack Against the FTC's Legal Case at Press Conference This Morning....December 8, 2008: Retail Memo: Mr. Mackey (and the Whole Foods Market Troops) Goes to Washington....

December 8, 2008: Retail Memo: Breaking News - Whole Foods Market, Inc. Files Lawsuit Against the FTC; Argues the Regulator Violated the Company's Due Process Rights....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data....

December 7, 2008: Retail Memo: Whole Foods Market Retains Top Washington D.C. lawyers and Politically-Connected Lobbyists to Plead its Case Against the FTC....December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas....December 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....

December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....

December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

FTC v. Whole Foods: Linkage from the Natural~Specialty Foods Memo archives:

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