Amway Distributors Liable for Satanic Rumours
" Satan' rumors cost four from Amway millions" describes the ten year lawsuit Procter & Gamble had against both Amway and some Amway distributors.
The story is summarized as: "Cincinnati | Procter & Gamble Co. has won a jury award of $19.25 million in a civil lawsuit filed against four former Amway distributors accused of spreading false rumors linking the company to Satanism to advance their own business.
The U.S. District Court jury in Salt Lake City on Friday found in favor of the Cincinnati-based consumer products company in a lawsuit filed by P&G in 1995. It was one of several the company brought over rumors alleging a link with the company's logo and Satanism."
But a review of the Utah Court Dockets reveals a fascinating story, Procter and Gamble lost this action twice before even getting to a jury trial.
By 2006, according to Procter & Gamble's Trial Brief, "This case, although once much larger and more complex, is now relatively simple with few remaining issues. Given the Court's ruling on P&G's motion for partial summary judgment, the only remaining factual issues are: (1) whether P&G and defendants sell competing products; (2) whether the Amway messages were sent to a sufficient number of Amway distributors to be a"promotion;" (3) whether the Satanism rumor contained in the Amway messages was able to cause confusion or deception among those who heard it; and (4) the amount of P&G's damages."
Further, "In March or April 1995, defendants used a vast telephone network known as the Amvox System to send a recorded version of the Satanism rumor, falsely asserting that P&G donated a large portion of its profits to the Church of Satan, simultaneously to numerous other Amway distributors, who in turn passed the message on to others in the large network. The message urged listeners not to buy 43 listed P&G products and to buy Amway products instead. It has been established that the defendants sent the Amvox messages, that the Satanism rumor is false,and that the Amvox messages are commercial speech"
P&G's underlying legal theory, by 2006, was based only upon the Lanham Act, which regulates misleading commercial advertising. Competitors cannot disparage the quality of their competition's goods or services.
Falsely spreading rumours that your competitor is linked to Satan seems a pretty sure bet to violate the Lanham Act, and you will be forgiven for thinking, as I did, that this seemed to be a pretty straightforward case. But law is never simple.
in 1998, the Utah US District Court dismissed P&G's Lanham Act cause of action stating "The Lanham Act "reaches only misrepresentations that tend falsely to represent some aspect of a product or service; it does not reach, as here, misrepresentations essentially unconnected to a product or service." Tire Kingdom v. Morgan Tire & Auto, 915 F. Supp. 360, 369 (S.D.Fla. 1996)(internal quotation marks and citation omitted), aff'd without opinion, 136 F. 3d 139 (11th Cir.1998); see a/so Thompson Everett, Inc. v. National Cable Advertising, L. P., 850 F. Supp. 470, 483(E.D. Va. 1994), aff'd, 57 F. 3d 1317(4th Cir. 1995). Misrepresentations concerning a producer or supplier's status or reputation that say nothing that would tend falsely to represent anything about the quality, nature, or characteristics of that producer's products are not actionable. See Tire Kingdom, 915 F. Supp. at 369."
That sounds pretty harsh. Could you buy good products from Satan, I wonder? Well, USCA 10th Circuit reversed the Utah's court's grant of summary judgment on P&G's Lanham Act claim, in 1988.
The P&G claim was also dismissed in 2004 on technical grounds, regrading the the failure of P&G to meet certain production of evidence orders. Again the USCA 10th Circuit reversed.
Finally, after a mere ten years, the jury found the Amway distributors liable for close to $20 million. (Amway had been let out of the action previously, arguing successfully that its control over distributors was limited to making sure that the distributors were not making false earnings claims to potential distributors. ... But that is a story for another day.)
Comments
This is a fantastic write up. Very surreal, but great stuff.
Posted by: Davis Freeberg
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March 23, 2007 6:00 PM
Davis, thanks for the kind remarks. I will follow-up if the jury verdict is appealed.
Posted by: michael webster
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March 23, 2007 7:16 PM