Tuesday, August 04, 2009

Release bars false advertising and other claims

Hauf v. Life Extension Foundation, --- F.Supp.2d ----, 2009 WL 1833460 (W.D. Mich.)

Sometimes it seems like the only way to win a false endorsement case is to have permission, since courts don’t worry overmuch about actual confusion or the nature of the use. Fortunately for defendant here, permission is what it had. Some background from the motion to dismiss here.

In 1993, Hauf bought shark cartilage from defendant for her son Barrow, who suffered from brain cancer. He recovered, and defendant published Hauf’s testimonial in its magazine. In 2001, Hauf wrote defendant’s co-founder: “I would like to get with you [sic] on the life extension foundation. I feel your products are wonderful. If you could please give me a call ... I would like to work out something with you in regards to recommending your products.” She thereafter updated her testimonial and signed a release giving defendant “the irrevocable right to use my name (or any fictional name), picture, portrait, digital image, or photograph in all forms and media and in all manners, including composite or distorted representations, for advertising, trade or any other legal purposes, and I waive any right to inspect or approve the finished product, including written copy, that may be created in connection therewith.”

At Hauf’s request, defendant ceased publishing her testimonial in 2005. She and Barrow sued for false endorsement/association, false advertising, and violation of their right to privacy.

Defendant argued that the release barred both plaintiffs’ claims because Barrow admitted that his mother had his permission to use his name.

The court found the release clear and unambiguous. “[T]here is no broader classification than the word ‘all.’” Coupled with a waiver of the right to inspect, the court was convinced that the release covered all the challenged conduct, even though Hauf argued that she only intended for her testimonial to appear in defendant’s magazine, which was the only thing that had occurred in the past, and did not intend commercial use. Defendant’s marketing directors also stated in depositions that their practice was to have any changes to a testimonial reviewed by the person who provided it. Still, that wasn’t enough to avoid summary judgment. The terms of the relase were unambiguous, so any contrary inferences she drew were subjective and irrelevant.

Consent negated key elements of all the claims. Among other things, the court reasoned that the release precluded state-law false advertising claims because Hauf’s permission included permission to issue a version of the testimonial she didn’t inspect or approve. Now, if the FTC came after defendant for violation of its rules on endorsements, Hauf’s permission to distort her testimonial would be no defense. In fact, it’s precisely the problem of advertisers writing their own “endorsements” that the FTC’s rules are targeted against, because the advertiser can falsely increase its credibility by putting its own words in the mouth of a seemingly distinct entity. However, Hauf isn’t the one suffering the injury from that—consumers are—so I understand the reasoning that the contract prevents her from complaining.

One could reason that, to the extent the contract allows real distortions of the testimonial, it is void as against public policy, but the court didn’t suggest that there was a question whether the changes here rose to the level of deceptive distortions. See § 255.1(b) (“The endorsement message need not be phrased in the exact words of the endorser, unless the advertisement affirmatively so represents. However, the endorsement may neither be presented out of context nor reworded so as to distort in any way the endorser’s opinion or experience with the product.”) Note also that defendant’s cessation of use of the testimonial, despite the release, was good business, but the FTC Guides arguably allow continued use over Hauf’s objections if Hauf wasn’t a celebrity or an expert: § 255.1(b) also says “An advertiser may use an endorsement of an expert or celebrity only as long as it has good reason to believe that the endorser continues to subscribe to the views presented.”

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