Tuesday, March 20, 2007

$19 Million False Ad Damages Awarded in Satanism Voicemails Case

This posting was written by Bill Zale, editor of CCH Advertising Law Guide.

Household products manufacturer Procter and Gamble announced that it won a $19.25 million jury verdict on March 16 against four Amway distributors for spreading false rumors linking P&G to Satanism, in a false advertising suit in the federal district court in Salt Lake City. The rumors were spread in messages sent by the distributors via the Amway voicemail system.

"This is about protecting our reputation," said Jim Johnson, P&G's Chief Legal Officer. "We will take appropriate legal measures when competitors unfairly undermine the reputation of our brands or our company."

Prior to trial, the court had held on February 6 (CCH Advertising Law Guide ¶62,421) that P&G’s evidence was sufficient to demonstrate that the voicemail messages could have been sufficiently disseminated to constitute commercial advertising or promotion within the meaning of the Lanham Act Sec. 43(a) prohibition against false advertising.

In an earlier opinion in the case (CCH Advertising Law Guide ¶60,155 ), the U.S. Court of Appeals in Denver had determined that the messages, which accused P & G of using its profits to support the "church of satan," were commercial speech.

Even though the rumors were commercial speech, the trial court on March 2 denied P&G’s motion to exclude the distributor’s evidence that they spread the rumor for a religious or other noncommercial purpose. The evidence was admissible on the issue of whether the distributors statements were made “for the purpose of influencing consumers to buy the defendant’s goods or services,’’ according to the court.

The difference between this element of proof and the commercial speech element was “narrow, but significant,” the court said, although the evidence would appear to have had little effect on the jury’s verdict.

The March 2 ruling in Procter & Gamble v. Haugen, (D Utah) No. 1:95-CV-94 TS, will be reported in CCH Trade Regulation Reports and CCH Advertising Law Guide.

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