Thursday, December 29, 2011

Release trumps right of publicity claim even when endorsement was altered

Hauf v. Life Extension Foundation, 2011 WL 6757001 (6th Cir.)
Virginia Hauf, the mother of a child diagnosed with brain cancer, purchased shark cartilage supplements from the Life Extension Foundation. Several years later, Hauf contacted the Foundation and offered to endorse its products. The Foundation sent her a proposed “Testimonial” and a “Standard Release of Testimonials & Photos.” Hauf revised the proposed testimonial and returned it to the Foundation. She also signed and returned the release, which provides that Hauf grants the Foundation the “irrevocable right” to use her “name (or any fictional name)” and her image “in all manners, including composite or distorted representations, for advertising, trade, or any other legal purposes.” It further provides that Hauf releases “any right to inspect or approve the finished product, including written copy.”
The Foundation took the release and ran with it, ascribing a variety of testimonials to Hauf. She sued for false endorsement, false advertising, and misappropriation of name and likeness under the Lanham Act, the Michigan Consumer Protection Act, and Michigan common law. Based on the unambiguous language of the release, the district court summarily dismissed all of her claims, and the court of appeals affirmed.
In 1993, Hauf contacted the Foundation to buy shark cartilage supplements. A founder, William Faloon, spoke with her about why she was ordering. After learning her reasons, Faloon asked Hauf whether she would be willing to publish a letter to the editor in the Foundation’s Life Extension Magazine recounting her son's story. She agreed. Her letter was published in 1994, the year in which she stopped purchasing shark cartilage from the Foundation. Sometime later, she was asked and agreed to publish an updated letter to the editor. The updated letter was published in 1995.
In 2001, Hauf contacted the Foundation again and offered to endorse its products. She wrote: “i would like to get with you on the life extension foundation. i feel your products are wonderful .... i would like to work out something with you in regards to recommending your products.” A Foundation employee faxed her a proposed “Testimonial” and a “Standard Release of Testimonials & Photos.”  Hauf believed that the proposed testimonial contained several errors, so crossed out inaccuracies, interlineated additions, and faxed the result back to the Foundation.  Her statement said that her 13-year-old son was diagnosed with brain cancer and that surgeons were unable to remove all of it, giving him a 6-month prognosis at best.  It continued that Hauf had used “high doses of vitamin C, E, beta carotene, shark cartilage, garlic, selenium, and other nutrients and minerals” as well as an “immuno augmentative” therapy she obtained for him in Mexico, and that her son was now tumor free with no limitations.
The surgeon who operated on Hauf’s son disagreed: he testified that the surgery completely eradicated the tumor and that he never told them that the son had only 6 months to live.  Indeed, when the Make-a-Wish Foundation asked about Hauf’s son, he told that organization that the son’s condition was not life-threatening.  Another of Hauf’s son’s doctors also disagreed with Hauf’s version of events.
As to the release, Hauf alleged that in a phone conversation with the Foundation employee who sent her the release, she explained that she was supplying the testimonial for publication in a single issue of the Foundation’s magazine and that it wasn’t to be used for monetary gain.  She claimed that the employee assured her that her requests would be respected and that she’d be able to view and approve the testimonial before it was published.  She then signed the release.
The release gave the Foundation and all its business affiliates, assingns, licensees, and legal representatives 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.”
The Foundation published the testimonial more than forty times between 2001 and 2005.  Its language was altered to claim that Hauf found out about “immuno augmentative therapy” through the Foundation, and even though Hauf specifically struck out the phrases “In my search for a way to save my son's life, someone referred me to Life ExtensionTM” and “The People at your organization supported my search for different treatment regimens we could try,” they reappeared in several versions of the testimonial. At Hauf's request, in 2005, the Foundation ceased publishing testimonials bearing Hauf's name.  (Note that the defense’s victory here provides no solace against violations of the FTC Endorsement Guidelines were they to try to restart use based on the release.)
Hauf’s argument that her release wasn’t a release failed, based on its plain language. Its scope was unambiguous.  (As researchers who do consent forms know, many people don’t read or understand these things no matter how clearly and prominently you try to convey the information, because they simply don’t think that it matters to them—and, though I take no position on the actual facts of this case, if there is an oral conflicting promise then our default is to believe the human being over the text, contrary to the parol evidence rule.  See Jessica M. Choplin et al., A Psychological Investigation of Consumer Vulnerability to Fraud: Legal and Policy Implications, 35 Law & Psych. Rev. 61 (2011).   What should or can be done about this for consumer protection purposes is a difficult question, but empirically there can be little dispute that, if you’re not a lawyer or a superstar for whom an endorsement agreement is how you make your money, you’re not particularly likely to understand what you’re signing even if given all the opportunity in the world to peruse it.)
Here, the release was unambiguous; its plain language provided that the Foundation could use Hauf's name for advertising, including in composite or distorted representations, without Hauf's inspection or approval.  There was no need to reference testimonials specifically. “Simply put, Hauf is relinquishing the advertising rights in her name to the Foundation.”  Hauf argued that waiving “any right to inspect or approve the finished product, including written copy” didn’t authorize modification since “copy” means “duplicate,” but the context showed that the meaning was instead “advertising copy.”
Hauf also argued that the Lanham Act prohibited modifications of a testimonial, citing the unfortunate Facenda v. NFL Films, Inc., 542 F.3d 1007 (3d Cir. 2008).  Facenda “signed a release shortly before his death in 2004 giving NFL Films “the unequivocal rights to use the audio and visual film sequences recorded of me ... provided, however, such use does not constitute an endorsement of any product or service.” The Third Circuit construed this not as a statement that Facenda wasn’t endorsing products/services, but rather as a waiver only with respect to non-endorsement uses, such that if the estate proved that the NFL’s use counted as an endorsement then the waiver wouldn’t apply.  Anything that fell outside the Lanham Act prohibition on false endorsement would also fall within the contract waiver; this was based on the contract language, and by contrast here the release's express terms authorized the Foundation to modify the language of the testimonial without Hauf's knowledge.
Finally, the court agreed that the release wasn’t void as against public policy.  The language of the release didn’t violate any statutes, and the manner of the testimonial’s use didn’t constitute fraud because the changes were principally changes in wording.  (The irrevocable part, though, may well violate public policy, at least if the FTC’s Endorsement Guides count, since the Guides say it’s deceptive to continue using a testimonial when an endorser’s opinion has changed.)  The general principle is freedom of contract, unless there’s some well-defined explicit public policy to the contrary that is ascertainable with reference to laws and legal precedents rather than general principles. The release’s scope was limited to use “for advertising, trade or any other legal purposes.”  So that was ok.
Nor did de minimis alterations to the testimonial offend public policy. The modifications to which Hauf objected exaggerated the Foundation’s role in her son’s treatment, but didn’t tout the quality or efficacy of the Foundation’s products.  “They do not misrepresent the effectiveness of immuno-augmentative therapy, for example, or create a false impression regarding how the Foundation's products helped Hauf's son.  Indeed, they do not reference any of the Foundation's products.”  Any substantive misstatements about her son’s story were apparently from Hauf.

1 comment:

Mac Harwood said...

The saddest thing about this is the history:

* In 1995 they say they got an endorsement from her for a shark cartilage treatment for cancer.

* In 1995 they announced that they knew that shark cartilage is ineffective against cancer. Ref:

* In 2005 they took her endorsement for a product that they admit they knew was worthless and changed it to another unrelated product.

What laws should be used to stop these kinds of actions?