Scotts Sues Startup over Worm-Dropping Claims

Fertilizer giant Scotts sues TerraCycle, a small company in New Jersey, for false advertising that sells fertilizers made from worm droppings. Farmers and gardeners have long used worm droppings but now they're sold by mass marketers alongside chemical fertilizers.

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RENEE MONTAGNE, host:

And as the summer gardening season winds down, we have a story about a dispute within the garden fertilizer business. The giant of the fertilizer industry is suing a small start-up company that sells worm droppings in old soda bottles.

NPR's Dianna Douglas reports.

DIANNA DOUGLAS: Tom Szaky, the 25-year-old founder and CEO of TerraCycle, picks up a couple of worms from a blue plastic tub. He calls them TerraCycle employees.

Mr. TOM SZAKY (Founder; CEO, TerraCycle Incorporated): So we have a pile of worms and a pile of garbage, and they're eating the garbage, making worm poop. It's not bad being a TerraCycle worm. You breed and you eat, and that's what you do.

DOUGLAS: This greenhouse in Trenton, New Jersey is full of experiments testing his fertilizer against others. Dr. Joe Willis feeds plants with various fertilizers, including Szaky's liquified worm castings, as worm poop is more delicately called. The worm castings are pushing the plants up faster and making them bigger.

Dr. JOE WILLIS (Director, Plant Research, TerraCycle): And all I do is just harvest and wait, and this one was 300 percent more growth than this one.

DOUGLAS: TerraCycle makes all kinds of plant fertilizers with worm castings. Tom Szaky's passion for worms began somewhat inauspiciously when he was a freshman at Princeton. Some of his friends were trying, unsuccessfully, to grow marijuana in their basement.

Mr. SZAKY: It's one thing, you know, for guys to be gardening, especially when you're 19. It's really hard. And then they were using chemicals. And that was even harder.

DOUGLAS: Then they had a breakthrough.

Mr. SZAKY: They were doing amazingly well and it turned out worm poop fixed everything.

DOUGLAS: These college kids hadn't exactly discovered fire. Worm castings are often used by gardeners and farmers. They know that worms make healthy soil. But Szaky was inspired.

Mr. SZAKY: I came back to Princeton and sat down with my friends in, you know, our dorm room and said, look, let's corner the market on worm poop.

DOUGLAS: He dropped out of school and invested everything into this idea. He constructed a standing worm farm, basically a giant poopery. He fed the worms garbage and collected their nutrient-rich leftovers.

Mr. SZAKY: So we're walking through right now our bottling zone, where we take the liquid worm poop and bottle it in used soda bottles. So these are all bags and bags of soda bottles that have been delabeled. And it's one of the things that we try to do is make and package everything out of garbage.

DOUGLAS: TerraCycle is projecting $5 million in sales this year, which means it would finally turn a profit after five years in business. But there's a catch. Scotts Miracle-Gro, the industry giant in lawn and garden fertilizers, is suing TerraCycle for false claims. TerraCycle talks a big game on its packages, saying it's better than a leading synthetic fertilizer. Scotts demands to see their research.

Here's company representative Sue Lock(ph).

Ms. SUE LOCK (Scotts Miracle-Gro): If a company is going to make product superiority claims, regardless of their size, they should be able to prove it, and that is the basis of our lawsuit.

DOUGLAS: TerraCycle is selling its products alongside Miracle-Gro at retailers like Target, Wal-Mart and Home Depot. And while sales in the lawn and garden market are stagnant, organic fertilizers are booming. Tom Szaky is willing to fight the lawsuit. He believes that winning in court would prove that his organic fertilizers are better for plants and the soil in the long run than chemicals. His attorneys say that the court fight will cost more than a million dollars. And legal fees have already cut into their other projects.

Mr. SZAKY: It's a big problem for us because we're a small company. And relative to their size, we're tiny.

DOUGLAS: TerraCycle's fight against Scotts has generated a lot of interest on blogs and in magazines. TerraCycle's Web site compares the suit to David versus Goliath. They hope the negative publicity will pressure Scotts to drop the lawsuit. Otherwise, TerraCycle will have to fight or settle. And if they lose, Szaky says, they're out of business.

Dianna Douglas, NPR News.

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