First Amendment advocates wary of company's suit over rumor

By The Associated Press

04.30.01

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HOUSTON — A legal battle between Procter & Gamble Co. and rival Amway Corp. may turn on what judges decide is protected free speech under the First Amendment.

Procter & Gamble, maker of detergents and other household products, has filed several lawsuits against Amway and some of its distributors over the years after false rumors began linking P&G's "man in the moon" symbol to Satanism in the 1980s.

Procter & Gamble claims distributors for Ada, Mich.-based Amway revived the rumors in 1995 when a Utah distributor left a Satanism-related message on the company's national voice mail system for distributors.

U.S. District Judge Vanessa Gilmore threw out P&G's case after it went to trial here in May 1999, saying she had no jurisdiction because a Utah federal court already had dismissed a similar case there.

Procter & Gamble argued the lawsuits were different and noted that an appeals court revived part of the Utah lawsuit against some Amway distributors, though not against the company itself.

A three-judge panel of the 5th U.S. Circuit Court of Appeals ruled in February that Gilmore must reconsider the company's claims under a trademark law that makes it a civil offense to misrepresent goods, services or commercial activities.

Amway attorney Chip Babcock said the panel's decision to allow Procter & Gamble to pursue Amway and some Texas distributors using the federal trademark law, called the Lanham Act, could create a "major loophole" in 35 years of Supreme Court precedent protecting free speech.

Amway, backed by several news media organizations, asked the full 5th Circuit to rehear the issue, arguing that P&G was trying to stifle what the press, consumer advocates and others can say about businesses.

"The First Amendment is most difficult — and most important — to apply to speech that many find offensive," attorneys John Gerhart and Paul Watler wrote on behalf of the media interveners. "It is no accident that some of the most important decisions involving free speech ... have come in cases involving speech that judges understandably reviled."

However, the 5th Circuit last week declined to rehear the case, formally returning it to Gilmore.

Cincinnati-based Procter & Gamble did not respond to questions e-mailed by the Associated Press. In a brief filed by company lawyers last month, it noted that the Supreme Court already has distinguished editorial speech by news organizations from commercial speech inspired by monetary gain.

Procter & Gamble accuses Amway and some distributors of the latter of reviving wild Satanism rumors the company has denied for two decades.

The case revolves around a Utah distributor's voice mail message that incorrectly said the president of Procter & Gamble had publicly admitted the company's allegiance to Satan on a television talk show.

The message concludes: "I tell yah, it really makes you count your blessings to have available to all of us a business that will allow us to buy all the products that we want from our own shelf. And I guess my real question is, if people aren't being loyal to themselves and buying from their own business, then whose business are they supporting and who are they buying from?"

Two retractions later were posted on the voice system, but Procter & Gamble claims the damage already had been done.

The 5th Circuit also revived Procter & Gamble's accusation of fraud and racketeering against some Amway distributors, though Amway's lawyers argue the distributors who reignited the rumors in 1995 thought they were true.

While Babcock says the attempt to criminalize the speech by Amway distributors under racketeering law is disturbing, the trademark case bothers him more.

"To me (racketeering) is such a far-fetched theory, the Lanham Act seems to be more of a threat," Babcock said.

Related

High court refuses to hear First Amendment appeals
Justices let stand rulings on cases ranging from corporate rumors to Confederate flag-waving to protest limits.  10.02.01

10th Circuit upholds dismissal of Amway defamation suit
Procter & Gamble had asked three-judge panel to reinstate lawsuit accusing Amway of spreading rumors linking company to devil worship.  01.08.03