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Date: 02-14-2001
Case Style: Procter & Gamble Co. v. Amway Corp.
Case Number: 99-20590
Judge: Jerry E. Smith
Court: United States Court of Appeals for the Fifth Circuit
Plaintiff's Attorney: Arthur R. Miller, Cambridge, Massachusetts; Stanley M. Chesley, Fay E. Stilz and Paul Michael DeMarco of Waite, Schneider, Bayless & Chesley, Cincinnati, Ohio; and Richard A. Sheehy
Defendant's Attorney: Charles L. Babcock, David T. Moran and Carl C. Butzer of Jackson & Walker, Dallas, Texas and Richard Earl Griffin
William J. Abraham and Rick Joseph Abraham of the Abraham Law Office, Columbus, Ohio and Edward B. McDonough, Jr.Mark Stephen Dube of McDonough & Associates, Houston, Texas for Amway Distributors Association Council. Description: The Procter & Gamble Company ("P&G") appeals the dismissal of its lawsuit against Amway Corporation and other defendants for defamation, fraud, and violations of the Lanham Act, RICO, and Texas state law.
P&G, a manufacturer and distributor of numerous household products, has been plagued by rumors of links to Satanism since the late 1970's or early 1980's. The most common variant of the rumor is that the president of P&G revealed on a television talk show that he worships Satan; that many of P&G's profits go to the church of Satan; and that there is no harm in such disclosure, because there are no longer enough Christians left in the United States for such devilish activities to make a difference. The rumor often was circulated in the form of a written flier that listed numerous P&G products and called for a boycott.
P&G has spent considerable time and money unsuccessfully trying to determine the original source of the rumor and to squelch it. P&G has not been able to prove how the rumor began, although it asserts here that the rumor was either started or spread by Amway(2) or its distributors in the 1980's. P&G offered no proof that Amway originally started the rumor, but it did offer evidence showing that various Amway distributors spread it in the 1980's. Rather than suing Amway at that time, however, P&G worked with Amway's corporate headquarters, which promised to help stop the rumor.
The rumor re-surfaced on April 20, 1995, when an Amway distributor named Randy Haugen forwarded it to other Amway distributors via a telephone messaging system for Amway distributors known as "AmVox."(3) Haugen is a highly successful Amway distributor with a network of tens of thousands to possibly 100,000 distributors underneath him throughout Utah, Nevada, Texas, Mexico, and Canada. He also served on Amway's Distributors Association Council ("ADAC"), which is an advisory body for Amway distributors. Defendants Freedom Associates, Inc.; Freedom Tools Inc.; Randy Walker; and Walker International Network are Amway distributors in Haugen's distribution network. * * *
The Texas district court granted Amway's Fed. R. Civ. P. 12(b)(6) motion dismissing P&G's RICO claim, because P&G did not allege that it had relied on Amway's alleged predicate acts of mail and wire fraud. Then, on summary judgment, the court held that P&G lacked standing to bring its § 43(a) claim based on Amway's alleged illegal pyramid scheme and that the fraud claim was time-barred. In September 1998, the Utah court granted defendants' joint motion for summary judgment and dismissed the § 43(a) claim, stating that "the misrepresentation at issue does not relate to a product within the meaning of the Lanham Act." Inexplicably, in the Utah court, P&G claimed only that Amway's actions constituted a violation of the Lanham Act's prohibition on the misrepresentation of goods or services, even though that act also provides a cause of action for misrepresentation of commercial activity.(9)
* * * Click the case caption above for the full text of the court's opinion. Outcome: Affirmed in part, reversed in part, and remanded. Plaintiff's Experts: Unknown Defendant's Experts: Unknown Comments: None
Robert L. DeJong of Miller, Canfield, Paddock & Stone, Grand Rapids, Michigan for Ja-Ri Corp.
Byron George Lee, Kim G. Altsuler and Allison Linneman Strawn of Coats, Rose, Yale, Holm, Ryman & Lee, Houston, Texas for Donald R. Wilson, Wow Internation, Inc., Wilson Enterprises, Inc., Ronald A. Rummel, Randy Haugen, Freedom Associates, Inc., Freedom Tools, Inc., Randy Walker, Walker International Network, Dexter Yager, Sr., Birdie yager and D&B Yager Enterprises, Inc.
Warren Royal Taylor of Taylor & Taylor, Houston, Texas for Kevin Shinn and Gene Shaw.