Ruling could set precedent for all advertisers and marketers employing celebrity spokespeople
WASHINGTON (November 12, 2002) – Marketers, advertisers and celebrity product endorsers can breathe a sigh of relief following a decision in a California federal court earlier this month holding that former Los Angeles Dodger Steve Garvey is not responsible for claims made while hosting a television infomercial.
The Federal Trade Commission filed suit against Garvey for his role as a celebrity spokesman for "Fat Trapper" and "Exercise in a Bottle," weight loss supplements made by Enforma Natural Products of Encino, Calif. Enforma had previously settled its own case against the FTC in 2000. However, the Commission then tried to expand the scope of liability by bringing separate actions against the former baseball star as well as the producers of the half-hour infomercial. The case against the producers was dismissed on technical grounds.
This is the first litigated case to be tried under new FTC policies seeking to expand the scope of advertising liability, and the first to go after a celebrity endorser in over 20 years, when a suit was brought against singer Pat Boone for his endorsement of an acne medication.
Had the U.S. District Court for the Central District of California ruled in favor of the government, Mr. Garvey would have had to repay the $1.1 million he received in royalties from sales of the Enforma products.
The Court’s dismissal of the Garvey case has substantial impact well beyond the infomercial niche. Advertising and marketing professionals are increasingly turning toward celebrities for the persuasive power and popularity they bring to a product endorsement. According to a University of North Alabama market research study, over $500 million is spent annually by advertisers and marketers on celebrity endorsements, and over 20% of all commercials feature celebrities.
"The advertising and marketing community should take tremendous comfort in this decision because for the first time, it establishes rules concerning when celebrities who appear as spokespersons can be held liable in false advertising suits," said Edward Glynn, a partner at the Washington law firm of Venable LLP, which represented Mr. Garvey. Mr. Glynn, who practices in the firm’s marketing, advertising and new media practice, is a former associate director at the FTC.
According to the suit, Mr. Garvey was hired principally to read a script highlighting the benefits of Enforma’s supplements. The FTC claims that the statements in the script were so facially implausible that he could not reasonably believe them. Mr. Garvey was not a promoter, shareholder, officer or director of Enforma and was not legally required to determine if the products’ claims could be substantiated, Mr. Glynn argued. Also, Mr. Garvey had a good faith belief that the product worked.
The statements used in the infomercial are not statements of endorsement as that term is used in FTC regulations, Judge Gary Allen Feess stated in his ruling. The ruling clarifies that celebrity endorsers are essentially paid spokespeople, not experts responsible for the advertising claims.
Infomercials have long been easy targets, with their 28.5 minute length and repeated airings during non prime viewing times. However, products sold via direct-response advertising represent a growing segment of the advertising business. According to a Wall Street Journal article, spending on direct-response advertising was projected to exceed more than $3 billion in 2001. And now, major brand-name manufacturers such as Sears, IBM and Allstate are beginning to move into direct-response television to boost their sales.
The government has recently become more aggressive in holding manufacturers and marketers accountable in product claims with that accountability extending to those who appear in the ads as well as the directors and producers of the spots.
"The FTC has been broadening its scope of who can be considered responsible for unsubstantiated claims," said Mr. Glynn. "The Garvey decision is not only significant for those who market their products on infomercials, but for any advertiser that relies on celebrities. Companies that hire celebrities to endorse their products should not feel as if they’ve been muzzled."
Venable maintains one of the leading advertising and marketing practices. The firm frequently counsels clients that rely on using celebrity spokespeople.
For more information or to schedule an interview with Mr. Glynn, please contact us.
One of the American Lawyer’s top 100 law firms, Venable LLP has attorneys practicing in all areas of corporate and business law, complex litigation, intellectual property and government affairs. Venable serves corporate, institutional, governmental, nonprofit and individual clients throughout the U.S. and around the world from its headquarters in Washington, D.C. and offices in California, Maryland, New York and Virginia.