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10th Circuit upholds dismissal of Amway defamation suit

By The Associated Press


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SALT LAKE CITY — An appeals court has ruled that a federal judge in Utah was correct in dismissing a lawsuit by Procter & Gamble accusing Amway Corp. of spreading rumors linking P&G with the Church of Satan and devil worship.

The unanimous decision Jan. 6 by a three-judge panel of the 10th U.S. Circuit Court of Appeals in Denver upheld a 2001 ruling by U.S. District Judge Dale A. Kimball, who held that the rumors were not defamatory and that Procter & Gamble had not made a case for specific damages.

In its 25-page opinion upholding Kimball’s decision, the 10th Circuit panel concluded that throughout its “protracted and duplicative litigation, P&G has tried to evade the law of the case doctrine, and has squandered scarce judicial resources.”

P&G spokeswoman Linda Ulrey yesterday said that while the company was disappointed with the 10th Circuit ruling, they have a case in Texas against the Ada, Mich.-based Amway and individual distributors — including an Ogden man — that remains to be tried.

“We believe it is wrong for anybody to spread false rumors against our company,” Ulrey said.

Devil-worship rumors began linking P&G’s former crescent-shaped logo depicting a bearded man on the moon and stars to Satanism in the late 1970s.

The supposed satanic connection was further fueled by a rumor that the company’s president had promoted devil-worshipping on a Phil Donahue show. No such show was ever taped.

In 1995, P&G sued Amway distributor Randy L. Haugen of Ogden for allegedly spreading the Satanic rumor to other Amway salesmen on a phone-message system.

Haugen passed along the Donahue story in Amway’s common message system, and one of its subscribers relayed the message to Procter & Gamble. Amway says it acted quickly to quash the rumor, sending a “truth-kit” to Haugen, who put a retraction on the message system.

Procter & Gamble later named Amway as a defendant in the complaint against Haugen.

In a statement yesterday, Amway general counsel Michael Mohr said the company was “proud but not surprised that Amway has been completely vindicated in this ridiculous case. We never spread the rumor — in fact, we spent years helping P&G fight it.”

Cincinnati-based P&G has sued 15 times to stop the rumors, eight times involving Amway or its distributors.

Amway has spent at least $30 million on legal bills since the suits began nearly eight years ago, company spokeswoman Susan Stevens said yesterday. Ulrey declined to say how much P&G has spent.

More than 60 lawyers for the two sides have generated more than 2 million pages of documents in three federal lawsuits filed by the companies in Utah, Texas and Michigan.

The Michigan case was dismissed in 2001.

A federal judge in Texas threw out some of P&G’s claims in 1999 and ruled for Amway in another part of the case. As in Utah, P&G claimed Amway sales agents spread the rumored satanic ties and said the company was responsible for the actions of its salespeople.

On appeal, a three-judge panel of the 5th U.S. Circuit Court of Appeals upheld part of the lower court ruling but ruled that P&G’s trademark and racketeering claims should go forward.

In October 2001, Amway lost its Supreme Court appeal on that case when the court, without comment, declined to review the Texas lower court’s decision that rumors spread to hurt a company are not entitled to free-speech protection.

“That doesn’t mean the case ends; that just means they declined to hear that portion of the case,” Stevens said.

The case against Haugen and other individuals who sold Amway products and the trademark and racketeering claims will be tried at the same time in Houston, she said.


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

First Amendment advocates wary of company's suit over rumor
Attorney says panel’s decision to allow Procter & Gamble to sue Amway could create ‘major loophole’ in 35 years of Supreme Court precedent protecting free speech.  04.30.01