Opinion ID: 23169
Heading Depth: 1
Heading Rank: 3

Heading: P&G to Satanism is false.

Text: P&G avers that the district court erred in 13 ruling that P&G was required to prove “actual In Seven-Up Co. v. Coca-Cola Co., 86 F.3d malice”11 to prevail on its § 43(a) claim for 1379, 1383 n.6 (5th Cir. 1996), we held that the disparagement of commercial activities. The Lanham Act extends only to false or misleading actual-malice standard has developed in cases speech that is encompassed within the Supreme involving defamation of public figures. P&G Court's commercial speech doctrine: argues that strict liability and not actual malice The “commercial” requirement was inserted to ensure that § 43(a) does not infringe on free speech protected by the First Amend- ment. See 135 Cong. Rec. H1216-17 (daily ed. Apr. 13, 1989) (statement of Rep. Kastenmeier) (“[T]he proposed change in 10 section 43(a) should not be read in any way Of course, the Texas district court retains its normal discretion in scheduling cases and granting to limit political speech, consumer or editostays pending other developments or the outcomes rial comment, parodies, satires, or other of similar trials. Should the court try this case to constitutionally protected material . . . . The conclusion before the Utah court does, however, section is narrowly drafted to encompass then the tables will be turned, and it will be left to only clearly false and misleading commerthe Utah court and the Tenth Circuit to determine cial speech.”); 134 Cong.Rec. 31,851 (Oct. the res judicata effect on the Utah case of the 19, 1988) (statement of Rep. Kastenmeier) Texas court’s decision. (commenting that the reach of § 43(a) “specifically extends only to false and mis- 11 “Actual malice” is a term of art meaning that leading speech that is encompassed within the speaker knew the statement was false when the ‘commercial speech’ doctrine developed spoken or in fact entertained serious doubt about by the United States Supreme Court”). See its truth. Peter Scalamandre & Sons, Inc. v. generally Gordon & Breach Science PubKaufman, 113 F.3d 556, 560 (5th Cir. 1997). lishers S.A., STBS v. Am. Inst. of Physics, Actual malice must be proven by clear and con- 859 F. Supp. 1521, 1533-34 (1994) (disvincing evidence. Id. (continued...) 8 ond, and alternatively, Amway argues that tics that the Supreme Court has said make even if the speech is commercial, the actual- certain speech “commercial” and therefore malice standard should apply, because the worthy of less protection. Third, we take the Satanism rumor is an issue of public concern, facts of the case sub judice and apply the test and P&G is a “limited-purpose public figure” set out in Bolger v. Youngs Drug Products with respect to the rumor. Corp., 463 U.S. 60 (1983), for determining whether a specific instance of speech is com- Thus, to determine what P&G is required mercial. Our application of the Bolger test is to prove to prevail on its § 43(a) claim that what ultimately determines whether the speech Amway misrepresented its associations and is commercial. commercial activities, we first must determine whether the spreading of the false Satanism ru- 1. mor is “commercial” speech. If we decide it P&G relies heavily on U.S. Healthcare, Inc. is, we must decide whether the fact that the v. Blue Cross, 898 F.2d 914 (3d Cir. 1990), to false speech was made about a “limited-pur- argue that the commercial speech line of cases pose public figure” on an issue of public con- developed in the context of government regucern brings the actual-malice standard into lation also should apply here in the context of play. This effectively would trump the tradi- a private suit for false speech. In U.S. Healthtional view that there is no First Amendment care, the two parties had waged an advertising protection for false commercial speech. We battle contrasting the benefits of HMO health review these questions of law de novo. United insurance plans with “traditional” and preStates v. Brackett, 113 F.3d 1396, 1398 (5th ferred provider organization (“PPO”) plans. Cir. 1997). When U.S. Healthcare sued under the Lanham Act, Blue Cross argued that the commercial A. speech doctrine was inapplicable because the We begin by examining what is meant by, Supreme Court “views damage claims and what protections extend to, “commercial [brought by private citizens] and government speech.” First, we consider whether the com- restrictions of speech as requiring distinctly mercial speech line of cases, which mainly different analysis for First Amendment purdeals with government regulation of speech, poses.” Id. at 927. should apply in this case of a private action for false speech.14 Second, we examine the histor- As we do now, the court treated the issue ical development of the commercial speech as one of first impression. It began by noting exception to the full protections granted by the that under the First Amendment, the correctFirst Amendment. In making this examination, ness of ideas is judged not by courts, but in the we pay particular attention to the characteris- marketplace of ideas.15 With regard to com 13 15 (...continued) The Third Circuit said: cussing the legislative history of the Lanham Act). Most speech is protected by the First Amendment. Bose Corp. v. Consumers 14 This is a question of first impression in this Union of U.S., Inc., 466 U.S. 485, 503 circuit. (continued...) 9 mercial speech, however, the court “believe[d] “subordinate position in the scale of the subordinate valuation of commercial First Amendment values.” Ohralik v. speech is not confined to the government Ohio State Bar Assn., 436 U.S. 447, regulation line of cases[,]” but instead should 456 . . . (1978). It also is more easily extend to defamation and Lanham Act cases as verifiable and less likely to be deterred well. Id. at 932. The court noted that the by proper regulation. Virginia PharSupreme Court macy Bd. v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771-772 on many occasions has recognized that . . . (1976). Accordingly, it may be certain kinds of speech are less central regulated in ways that might be imperto the interests of the First Amendment missible in the realm of noncommercial than others. . . . In the area of protected expression. Ohralik, . . . [436 U.S.] at speech, the most prominent example of 456 . . .; Central Hudson Gas & Elec. reduced protection for certain kinds of Corp. v. Public Serv. Comm’n of New speech concerns commercial speech. York, 447 U.S. 557, 562-63 . . . (1980). Such speech, we have noted, occupies a U.S. Healthcare, 898 F.2d at 932 (quoting Dun & Bradstreet, Inc. v. Greenmoss Build- 15 (...continued) ers, 472 U.S. 749, 758 n.5 (1985)) (some (1984) (there are “few classes of ellipses and brackets added). Based on this ‘unprotected’ speech”). “Under the language, the U.S. Healthcare court concluded First Amendment there is no such thing that the lesser protection commercial speech as a false idea. However pernicious an receives from direct government regulation opinion may seem, we depend for its also must apply to private actions for defama- correction not on the conscience of judges and juries but on the competi- tion and the like. tion of other ideas.” Gertz [v. Robert Welch, Inc.], 418 U.S. [323,] 339-40 We agree. If commercial speech receives [(1974)] (footnote omitted), quoted in less protection from government regulation, Jenkins v. KYW, 829 F.2d 403, 408 then it also should receive less protection from (3d Cir. 1987). Even false statements private suits, which are not much more likely of fact are insulated from liability in than are government regulation to infringe on some situations. Hepps, 475 U.S. those values the First Amendment seeks to [767,] 778 [(1986]; Gertz, 418 U.S. at protect. Furthermore, private suits can be a 340-41. As Judge Learned Hand put form of government regulation. it, the First Amendment “‘presupposes that right conclusions are more likely 2. to be gathered out of a multitude of Having determined that the commercial tongues, than through any kind of au- thoritative selection.’” New York Times speech line of cases should apply here, we ex- Co. v. Sullivan, 376 U.S. 254, 270 amine it and the characteristics of commercial (quoting United States v. Associated speech it reveals. We also review the instant Press, 52 F. Supp. 362, 372 (S.D.N.Y. facts to determine whether they meet the char1943), aff'd, 326, U.S. 1 (1945)). acteristics that the Supreme Court has said define commercial speech. U.S. Healthcare, 898 F.2d at 928. 10 Commercial speech has been defined, at its restrictions on speech, a lower standard of core, as speech that merely proposes a com- scrutiny is appropriate for commercial speech. mercial transaction. Va. State Bd., 425 U.S. at The Court noted that false or misleading 762. Because such speech traditionally has commercial speech should receive no probeen thought less valuable than political tection,18 because commercial speech merely speech, which is at the core of the First gives information to consumers about a proAmendment, commercial speech is not ac- ducer’s goods, and any false information either corded the full protections given to political has no value or is harmful. speech, speech on matters of public concern, and speech regarding public figures.16 In fact, The Court since has held that speech is for a time it was thought that commercial commercial when it is an “expression related speech might not be worthy of any First solely to the economic interests of the speaker Amendment protection.17 and its audience.” Central Hudson, 447 U.S. at 561 (citing Va. State Bd., 425 U.S. at 762 In Virginia State Board, the Court finally (other citations omitted)). Additionally, in dedecided that commercial speech should receive fining something as commercial speech, the some protection, holding that a state may not Court says we are to rely on “the ‘commonprohibit pharmacists from truthfully advertis- sense’ distinction between speech proposing a ing the prices at which they sell drugs. The commercial transaction, which occurs in an Court suggested, however, that instead of the area traditionally subject to government regustrict scrutiny with which courts review most lation, and other varieties of speech.” Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 455-56 (1978). 16 In Central Hudson Gas & Elec. Corp. v. Further, although Amway argues that the Public Serv. Comm’n, 447 U.S. 557, 564 n.6 (1980), the Court explained why commercial Satanism rumor is a matter of public concern, speech may be more heavily regulated: which should make the speech noncommercial, the Court “ha[s] made clear that advertising Two features of commercial speech permit which ‘links a product to a current public regulation of its content. First, commercial debate’ is not thereby entitled to the constituspeakers have extensive knowledge of both tional protection afforded noncommercial the market and their products. Thus, they speech.” Bolger, 463 U.S. at 68 (quoting are well situated to evaluate the accuracy of Central Hudson, 447 U.S. at 563, n.5). Thus, their messages and the lawfulness of the in Bolger the Court held that informational underlying activity. In addition, commercial pamphlets mailed by a condom manufacturer speech, the offspring of economic self-inter- est, is a hardy breed of expression that is not particularly susceptible to being crushed by 18 overbroad regulation. Va. State Bd., 425 U.S. at 771-72 n.24 (“[T]here can be no constitutional objection to the 17 See Valentine v. Christensen, 316 U.S. 52 suppression of commercial messages that do not (1942); Breard v. Alexandria, 341 U.S. 622 accurately inform the public about lawful activity. (1951); Murdock v. Pennsylvania, 319 U.S. 105, The government may ban forms of communication 111 (1943); Jamison v. Texas, 318 U.S. 413, 417 more likely to deceive the public than to inform it . (1943). . . .”). 11 directly to the public constituted commercial more durable than other speech because the speech, even though the pamphlets spoke speaker has an economic motivation and is less about matters of public concern.19 likely to be chilled in its speech.21 Third, “commercial speakers have extensive knowl- A recent examination of Supreme Court edge of both their market and their own prodprecedent explaining why commercial speech ucts. Consequently, they are uniquely situated receives less protection was made in U.S. to evaluate the truthfulness of their speech.”22 Healthcare, in which the court identified four Fourth, “[t]o require a parity of constitutional characteristics of commercial speech that have protection for commercial and noncommercial been set out by the Supreme Court over the speech alike could invite dilution, simply by a years. First, commercial speech makes a qual- leveling process, of the force of the [First] itatively different contribution to the exposi- Amendment’s guarantee with respect to the tion of ideas.20 Second, commercial speech is latter kind of speech.”23 If we examine the facts of this case in light of these four characteristics, we see that the 19 Youngs Drug Products Company sent out speech at issue here has some but not all of the two informational pamphlets. The first was called characteristics typically found in commercial “Condoms and Human Sexuality,” which specifi- speech. The first characteristicSSthat commercally referred to the advantages of a certain brand cial speech makes a qualitatively different of condoms. The second informational pamphlet contribution to the exposition of ideasSSdoes was called “Plain Talk about Venereal Disease.” not shed much light on whether the speech in It discussed venereal disease and condoms without this case is commercial. ever referencing any specific condoms. The only reference to Youngs Drug’s products was at the bottom of the last page, where Youngs Drug identified itself as the manufacturer of the Trojan- 20 (...continued) brand condoms. The Court noted that Youngs ence”)). Drug described itself as “the leader in the manufacture and sale of contraceptives.” The Court opined 21 Id. at 934 (quoting Va. State Bd., 425 U.S. at that simply because “a product is referred to 772 n.24 (explaining that this quality “may make generically does not, however, remove it from the it less necessary to tolerate inaccurate statements realm of commercial speech. For example, a for fear of silencing the speaker.”)); see also Dun company with sufficient control of the market for & Bradstreet, 472 U.S. at 748 n.5, 762 & n.8 a product may be able to promote the product with- (discussing durability “to show how many of the out reference to its own brand names.” Bolger, same concerns that argue in favor of reduced con463 U.S. at 67 n.13. Even though the Court stitutional protection” in commercial speech acconcluded that the speech in Bolger was commer- tions also apply to defamation actions concerning cial, it nevertheless held that the federal statute was private speech). an unconstitutional restriction on the distribution of 22 truthful information. Id. at 74. Id. (citing Central Hudson, 447 U.S. at 564 n. 6; Bates v. State Bar, 433 U.S. 350, 381 (1977); 20 U.S. Healthcare, 898 F.2d at 933-34 (citing Va. State Bd., 425 U.S. at 772 n.24; Dun & BradCentral Hudson, 447 U.S. at 561 (defining com- street, 472 U.S. at 758 n.5, 762 & n.8). mercial speech as “expression related solely to the 23 economic interests of the speaker and its audi- Id. (quoting Ohralik, 436 U.S. at 456). 12 It might be that spreading the Satanism ru- have extensive knowledge of their market and mor does not contribute to the exposition of productsSSapplies imperfectly to these facts. ideas. Despite the falsity of the rumor, how- Amway has extensive knowledge of its market ever, it touched on the type of issues that are and products and is in a good position to know at the heart of First Amendment protections, the acts of its competitors. In this case, hownamely: religious issues and issues of how ever, the rumor discusses P&G’s use of its corporations act and influence society. Fur- profits and its charitable givingSStopics about ther, it is uncertain whether the speech was which Amway is likely to know less because related solely to the economic interests of the they do not relate directly to P&G’s products speaker or whether, instead, Haugen and other or sales methods. Nevertheless, if Haugen had distributors were sincerely, albeit mistakenly, checked with Amway, he could have verified discussing the rumor. that the rumor was false, because Amway had been aware of its falsity since the 1980’s. The second characteristicSSthat the speak- er’s economic motivation makes the speech The fourth characteristicSSa parity of conmore durableSSfavors classifying Amway’s stitutional protection for commercial speech speech as commercial. If the Satanism rumor would invite dilution of the First Amendwere true, it is doubtful that the requirement to mentSSis, as the Third Circuit noted, an extrinverify it before repeating it would stop distrib- sic reason that cannot be applied to the facts of utors from spreading the rumor about one of any one case. We accordingly do not discuss their competitors. We have some reservation it. about stating this too strongly, however, for we can imagine cases in which employees of In U.S. Healthcare, 898 F.2d at 935, the one company might legitimately but mistakenly court determined that the speech had all the repeat and discuss news about the political, characteristics of commercial speech. The religious, o r other beliefs of employees of a court concluded that competitor. It would violate First Amendment principles to quell all speech on these issues [b]ecause the thrust of all of the adveramong members of a competing company until tisements is to convince the consuming the news was fully and exhaustively verified.24 public to bring its business to one of these health care giants rather than the The third characteristicSSthat competitors other, there is no doubt that the advertisements were motivated by economic self interest. . . . [W]e believe it would 24 have to be a cold day before these cor- A current example may help illustrate this porations would be chilled from speakpoint. It was recently reported that some movie ing about the comparative merits of their studios have conducted advertising campaigns and focus groups on children under the age of seventeen products. to make some of their R-rated movies more attrac- tive to them. Discussion of this issue may be of Id. The court added that true concern to members of competing movie studios. Holding the accuracy of such discussion these are advertisements for products to a strict-liability standard likely would violate and services in markets in which U.S. First Amendment values. 13 Healthcare and Blue Cross/Blue 3. Shield dealSSand, presumably, We now apply the test the Court has set out know more about than anyone else. to determine whether a specific instance of The facts upon which the advertise- speech is commercial. In Bolger, the Court ments are basedSScomparative recognized three factors that help determine price, procedures, and services whether speech is commercial: (i) whether the offeredSSare readily objectifiable. communication is an advertisement, (ii) whethThese advertisements were pre- er the communication refers to a specific cisely calculated, developed over product or service, and (iii) whether the speaktime and published only when the er has an economic motivation for the speech. corporate speakers were ready. If all three factors are present, there is “strong Consequently, the advertisements support” for the conclusion that the speech is were unusually verifiable. commercial. Bolger, 463 U.S. at 67. Id. Here we consider the Bolger factors in re- verse order25 and conclude that the thirdSSthe Unlike the situation in U.S. Healthcare, the motivation of the speakerSSis determinative. testimony here is that at least some of the This factor has not yet been decided by the speech at issue was made impulsively, without trier of fact, so we remand for that to be done. time to verify the facts. The U.S. Healthcare court stated that “[i]t is important to note that The second factor is easily satisfiedSSthe we do not have a situation in which a cor- message did refer to specific products of poration addresses an issue of public concern P&G’s. The first factorSSwhether the speech involving a competitor, but does so with is an advertisementSSseems to collapse into speech that is neither commercial nor chill re- the third factor in this case. Certainly the sistant.” Id. In the instant case, the primary repetition of the rumor via AmVox was not an question is whether Amway’s distributors ad- advertisement in the classic sense, but whether dressed an issue of public concern involving a it could be considered as a negative advertisecompetitor with speech that was neither com- ment against P&G seems to depend on the demercial nor chill-resistant. termination of the third factorSSwhether the speaker had an economic motivation for the Our analysis of the general characteristics speech. If Haugen or others who repeated this of commercial speech and the reasons behind its less protected status demonstrates that the 25 speech here does not sort cleanly into either The Bolger test easily disposes of any quescategory: commercial or noncommercial. Al- tion as to whether the fliers that were printed by Amway distributors and given to customers or po- though Supreme Court precedent and the tential customers were commercial speechSSthey Third Circuit’s thoughtful analysis of what is plainly were. These fliers, associating P&G with commercial speech are helpful, we still are left Satanism and suggesting Amway products as with a difficult issue. alternatives to P&G products, (i) were advertisementsSSi.e., they proposed a commercial transaction, (ii) they referred to specific products, and (iii) the distributors plainly had an economic motive in distributing them. 14 rumor did have economic motivations, then The question whether an economic motive the message resembles an advertisement seek- existed is more than a question whether there ing to encourage downline distributors to es- was an economic incentive for the speaker to chew P&G and buy Amway. If the motivation make the speech;27 the Bolger test also rewas not economic, then this looks more like a quires that the speaker acted substantially out case of individuals’ repeating false speech on of economic motivation. Thus, for example, a matter of public concern. speech that is principally based on religious or political convictions, but which may also ben- This question of the speaker’s motivation efit the speaker economically, would fall short will also help to clear up the difficulty in deter- of the requirement that the speech was ecomining whether the characteristics of com- nomically motivated.28 We stress that we are mercial speech summarized in U.S. Healthcare were present here. If the speakers were eco- nomically motivated, then issues of the quality 26 (...continued) of the speech, its durability, and the knowledge cial speech, and a suit may be successful against the speakers had of the relevant market and the speaker regardless of his knowledge of falsity. products become both more relevant and 27 easier to determine. Professor Farber has pointed out that the mere existence of some economic motivation can- Thus, on remand, if the trier of fact finds not be enough to drop speech to the lower protected that the motivation behind the Amway dis- status of commercial speech: “Economic motivatributors’ repetition of the rumor to other dis- tion could not be made a disqualifying factor [from tributors was not economic, the speech is not maximum protection] without enormous damage to the first amendment. Little purpose would be commercial, and there can be no Lanham Act served by a first amendment which failed to protect claim. On the other hand, if an economic mo- newspapers, paid public speakers, political canditivation is found, the speech is commercial, dates with partially economic motives and profesand a violation of the Lanham Act may be sional authors.” Farber, Commercial Speech and found.26 First Amendment Theory, 74 NW. U. L. REV. 372, 382-383 (1979) (footnotes omitted). 26 28 We are not simply repackaging the “actual We offer a specific example: A woman who malice” requirement as a requirement of economic owns a small religious book and music store tells motivation. A finding of actual malice turns on the customers that most rock and roll music is influfinding of false speech knowingly made, or of false enced by the devil and that the only kind of rock speech made with a reckless disregard for the truth. music they should buy is “Christian rock,” which The requirement of finding an economic motivation is, of course, the only kind she sells. The determito label something commercial speech does not nation of whether a Lanham Act suit could be require a finding that the speech was false or that brought will turn on her motivation. the speaker knew the speech was false before making it, but only a motive to profit by the Evidence that she started the bookstore because speech. Once that motive is found, and if the other of strongly-held religious beliefs that Christian Bolger elements are present to provide strong books and music need to be made available to support that the speech is commercial, the speech combat the evils of rock and roll and pulp fiction is dropped to the less-protected status of commer- would be compelling evidence of a primarily reli- (continued...) (continued...) 15 not shortening the Bolger test to a single fac- Amway products to the public, but also by retorSSwhether the speaker’s motive was eco- cruiting other distributors into the organizanomicSSbut rather, we conclude that the other tion, who become “downline” distributors, and two Bolger factors are not conclusive, and upon whose sales the “upline” distributors then therefore the motive factor is determinative. get commissions. This does not mean that whenever the pri- This system gives the distributors a motivamary motivation for speech is economic, the tion not just to sell Amway products, but also speech is commercial.29 As the Court said in to recruit distributors and to encourage their Bolger, finding all three factors merely pro- sales. Thus, when Haugen and other Amway vides “strong support” for the proposition that distributors spread the Satanism rumor via the speech is commercial. The difference be- AmVox to their downline distributors, they tween commercial speech and noncommercial were not simply repeating a rumor to cospeech is, after all, “a matter of degree.” City workers or fellow independent distributors; of Cincinnati v. Discovery Network, Inc., 507 they were repeating a rumor to persons analo- U.S. 410, 423 (1993). We can well imagine gous to employees,31 in whose motivation and cases in which a speaker’s primary motivation sales they have a direct interest. These facts, is economic, but the speech nonetheless is pro- and all other relevant evidence, of course, may tected.30 be used by the finder of fact in determining whether, as a matter of fact, those who circu- Also, in determining whether there was an lated the Satanism rumor via AmVox acted economic motivation to the repetition of the out of economic motivation. rumor, the finder of fact is free to take into account, among other things, Amway’s unique B. structure. Pertinent is the fact that Amway Notwithstanding Supreme Court precedent distributors make money not simply by selling holding that false commercial speech receives no First Amendment protection, Amway ar- gues that we should require a finding of actual 28 (...continued) malice whenever speech is made about a public gious, rather than economic, motivation for her figure on an issue of public concern. In makspeech. On the other hand, evidence showing that ing this argument, Amway looks to the line of she is agnostic and opened the bookstore only after defamation cases setting out and developing a case study in her MBA program showed that the actual-malice standard. Christian bookstores can be extremely profitable when set up in the right locations would be strong That standard was developed in New York evidence that her speech was economically moti- Times v. Sullivan, 376 U.S. 254 (1964). vated and thus commercial. 29 As the Court said in Gertz v. Robert Welch, 31 Inc., 418 U.S. 323, 344 (1974), “it is often true We use the phrase “analogous to employees” that not all of the considerations which justify purposely. We are merely making an analogy and adoption of a given rule will obtain in each particu- are not ruling on whether Amway distributors are lar case decided under its authority.” employees or independent contractors. We have not been asked to decide this question, nor do we 30 Labor cases come to mind as an example. have sufficient evidence to do so. 16 There, a group of black clergymen ran an ad- Id. at 279-80.32 vertisement in the Times in the form of an ed- Three years later, the Court extended the itorial; they spoke of the civil rights demon- protection of the actual malice standard from strations by black students then occurring in public officials to public figures in the companthe South and of the intimidation and violence ion cases of Curtis Publishing Co. v. Butts and practiced against the protestors and against Associated Press v. Walker, 388 U.S. 130 Dr. Martin Luther King, Jr. The advertisement (1967). In Gertz v. Welch, 418 U.S. 323, 342 complained of the police responses to the (1974), the Court explained why the actualdemonstrators and asked for financial dona- malice standard is appropriate in defamation tions in support of the student movement, the cases involving public officials or public figstruggle for the right to vote, and the legal ures as plaintiffs. The Court gave the reasons defense of Dr. King. L.B. Sullivan, the Mont- for the lower level of protection for these gomery commissioner in charge of police, sued plaintiffs: the clergymen and the Times for civil libel, arguing that the actions ascribed to the “po- Public officials and public figures usually lice” were necessarily imputed to his lead- enjoy significantly greater access to the ership and that some of the accusations were channels of effective communication and false. Sullivan further argued that the Times hence have a more realistic opportunity could have discovered that the allegations were false by checking its files of previously published articles. 32 See also New York Times, 376 U.S. 271-72 (stating that “erroneous statement is inevitable in The Court agreed that references to the po- free debate, and . . . it must be protected if the lice could be imputed to Sullivan and that freedoms of expression are to have the ‘breathing some of them were false. Nevertheless, the space’ that they ‘need . . . to survive’”) (quoting Court held that proof of more than factual in- N.A.A.C.P. v. Button, 371 U.S. 415, 433 (1963)). accuracies was required to prevent speech pro- The inevitability of erroneous statements being tected by the First Amendment from being made in free debate is not a new concept: “chilled.” The Court held: [T]o argue sophistically, to suppress facts The constitutional guarantees require, or arguments, to misstate the elements of the we think, a federal rule that prohibits a case, or misrepresent the opposite opinion . public official from recovering damages . . all this, even to the most aggravated for a defamatory falsehood relating to degree, is so continually done in perfect his official conduct unless he proves that good faith, by persons who are not considthe statement was made with ‘actual ered, and in many other respects may not deserve to be considered, ignorant or incompe- malice’SSthat is, with knowledge that it tent, that it is rarely possible, on adequate was false or with reckless disregard of grounds, conscientiously to stamp the miswhether it was false or not. representation as morally culpable; and still less could law presume to interfere with this kind of controversial misconduct. J. Mill, ON LIBERTY, 47 (Oxford: Blackwell 1947). 17 to counteract false statements than did not dispute this ruling, it is now bound private individuals normally enjoy. thereby for purposes of this appeal. Although Private individuals are therefore in its reply brief, P&G states that it “does not more vulnerable to injury, and the concede that it is a ‘public figure’ for purposes state interest in protecting them is of defendants’ misrepresentations,” an “appelcorrespondingly greater. lant abandons all issues not raised and argued in its initial brief on appeal.” Cinel v. Connick, Id. at 344 (footnote omitted). 15 F.3d 1338, 1345 (5th Cir. 1994) (declining to address argument discussed only in appel- A plaintiff becomes a general purpose pub- lant’s reply brief). Thus, we assume for purlic figure by attaining pervasive power and in- poses of this appeal, without deciding the issue fluence in society. Id. at 345. Alternatively, as a matter of law, that P&G is a limitedhe may become a limited-purpose public figure purpose public figure with regard to the Satanwith regard to that controversy by thrusting ism rumor. himself into a particular public controversy “to influence the resolution of the issues in- Amway makes two arguments in support of volved.” Id. “Hypothetically, it may be pos- its theory that P&G must prove actual malice. sible for someone to become a public figure First, Amway turns to the well-reasoned opinthrough no purposeful action of his own, but ion in National Life Insurance Co. v. Phillips the instances of truly involuntary public figures Publishing, Inc., 793 F. Supp. 627, 647 (D. must be exceedingly rare.” Id. Md. 1992), in which the court noted that there is a tension in the law regarding the treatment We are powerless to decide whether this is of false speech: “While defamation tolerates one of those “exceedingly rare” cases in which some false statements, in order to give the plaintiff P&G involuntarily has become a pub- First Amendment the ‘breathing space’ it relic figure, because t hat issue has not been quires; commercial speech does not forgive properly raised on appeal. In its opening brief, false speech so easily.” Id. The court opined P&G noted that the district court found it to that this tension should be considered rather be a “limited-purpose public figure” for the than ignored when dealing with cases of false purpose of analyzing whether it must prove commercial speech about public figures.33 actual malice in its § 43(a) claim; that court decided that the rumor is an issue of public The National Life court reasoned that concern and has been associated with P&G denying constitutional protection to all false long enough to render P&G a limited-purpose public figure for purposes of discussion of the rumor. P&G did not assign error to this ruling 33 The court cites two examples of the tension in in its initial brief but, instead, asserted that the Supreme Court caselaw. It compares Gertz, 418 repetition of the Satanism rumor constituted U.S. at 340 (holding that application of the malice commercial speech to which the New York standard to public figure plaintiffs is predicated on Times actual malice standard does not apply. the recognition that error is “inevitable in free debate”), with Central Hudson, 447 U.S. at 564 (stating that “there can be no constitutional objec- Amway correctly notes that because P&G tion to the suppression of commercial messages that do not accurately inform. . . .”). 18 commercial speech ignores the rationale of commercial speech as though they do not Gertz: that the need to protect one from false overlap. Amway contends that such treatment or misleading speech varies, depending on ignores that political speech can arise from whether he is a private or public figure. The commercial motives or may address areas of court pointed out that “[e]ven U.S. Healthcare great public concern.35 recognized that a state has only a ‘limited’ in- terest in compensating public persons for in- Although Amway raises legitimate points jury to reputation by defamatory statements, about the overlap between commercial and but has a ‘strong and legitimate interest’ in noncommercial speech, between economic and compensating private persons for the same non-economic motivation for speech, and injury.” National Life, 793 F. Supp. at 648 about the variable interest a state has in pro- (quoting U.S. Healthcare, 898 F.2d at 930).34 tecting a plaintiff’s reputation depending on Thus, the court concluded that a state’s inter- the plaintiff’s status as a public or private figests in regulating false commercial speech and ure, Supreme Court precedent prevents us in providing some protection to public figures’ from importing the actual-malice standard into reputations must be balanced against the free cases involving false commercial speech. speech interest individuals have in being able to comment freely on public issues and public To begin with, the Court has rejected atfigures. The court held that the way to tempts to blur the line between commercial achieve this balance, in cases of commercial speech and other types of expression. In Censpeech about a public figure, is to require that tral Hudson, the majority rejected the rationale the plaintiff prove actual malice. set forth in a concurrence that “[a]pparently . . . would accord full First Amendment Amway’s second argument is that the use protection to all promotional advertising that of the actual-malice standard in commercial includes claims ‘relating to . . . questions speech cases involving public figures avoids frequently discussed and debated by our pounrealistically treating commercial and non- litical leaders.’” Id. at 563 n.5 (quoting id. at 581 (Stevens, J., concurring). In rejecting this approach, the majority reasoned that “we think 34 In U.S. Healthcare, the court addressed the it would blur further the line the Court has same argument that Amway makes hereSSthat the sought to draw in commercial speech cases.” actual malice standard should apply to protect even Id.36 false commercial speech if it is made about a limited-purpose public figure. The court did not consider the argument directly, because it con- 35 Cf. Bolger (holding that First Amendment cluded that the corporations that were the parties in protects contraceptive manufacturer’s unsolicited that case were not public figures. Nevertheless, it mailing of informational and advertising pamphlets stated that “the [commercial] speech at issue does to households, because contraception informanot receive heightened protection under the First tionSSeven if distributed for commercial purAmendment. Because this speech is chill-resistant, poseSSis a matter of public concern). the New York Times standard is not . . . ‘necessary 36 to give adequate “breathing space” to the freedoms The Court noted that corporations protected by the First Amendment.’” U.S. Health- care, 898 F.2d at 939 (quoting Hustler Magazine, enjoy the full panoply of First Amendment Inc. v. Falwell, 485 U.S. 46, 56 (1988)). (continued...) 19 Further, the Court has consistently said that speech was protected because some of the speech protected in one context is not pro- advertisements contained statements regarding tected when the purpose of the speech is com- the legal rights of persons injured by a contramercial. In Bolger, the Court held that “ad- ceptive device. The Court held that these vertising which ‘links a product to a current statements “in another context, would be fully public debate’ is not thereby entitled to the protected speech,” but “[t]hat this is so does constitutional protection afforded noncommer- not alter the status of the advertisements as cial speech.” 463 U.S. at 68 (quoting Central commercial speech.” Id. at 637 n.7. Hudson, 447 U.S. at 563 n.5). “Advertisers should not be permitted to immunize false or Central Hudson, Bolger, and Zauderer, misleading product information from govern- combined with the Court’s plain statements ment regulation simply by including references that false commercial speech receives no proto public issues.” Id. tection,37 foreclose us from importing the actual-malice standard from defamation into the Somewhat more recently, in Zauderer v. law of false commercial speech. Thus, if the Office of Disciplinary Counsel of Supreme trier of fact determines that the Amway disCourt, 471 U.S. 626 (1985), the Court af- tributors’ motives in spreading the Satanism firmed its Central Hudson and Bolger hold- rumor were economic and that the speech ings. Zauderer was a lawyer who had been therefore was commercial, this false commersanctioned by the disciplinary committee of his cial speech cannot qualify for the heightened state supreme court for using deceptive news- protection of the First Amendment, so P&G is paper advertisements. He claimed that his not required to show actual malice in proving its Lanham Act claim. 36 (...continued) The Tenth Circuit concluded similarly in protections for their direct comments this case, holding that the AmVox message on public issues. There is no reason was economically motivated and rejecting Amfor providing similar constitutional way’s argument that such commercial speech protection when such statements are should receive higher protection because it made only in the context of commercial regarded a matter of public concern. P&G v. transactions. In that context, for ex- Haugen, 222 F.3d at 1275. ample, the State retains the power to “insur[e] that the stream of commercial In the present case, we are likewise information flow[s] cleanly as well as dealing with a message containing both freely.” . . . As we stated in Ohralik, a noncommercial, “theological” compothe failure to distinguish between com- nent and a commercial component. As mercial and noncommercial speech Bolger and Fox indicate, however, the “could invite dilution, simply by a leveling process, of the force of the [First] Amendment’s guarantee with 37 respect to the latter kind of speech.” E.g., Ibanez v. Fla. Dep’t of Bus. & Prof’l Regulation, 512 U.S. 136, 142 (1994); Shapero v. Id. (quoting Va. State Bd., 425 U.S. at 772, and Ky. Bar Ass’n, 486 U.S. 466, 472 (1988); FriedOhralik v. Ohio State Bar Ass’n, 436 U.S. 447, man v. Rogers, 440 U.S. 1, 14-15 (1979); Va. 456 (1978)). State Bd., 425 U.S. at 771-72 & n.24. 20 bare fact that the subject message We recognize that alternative methods of contains a “theological” component reconciling the law of commercial speech with is insufficient to transform it into that of defamation have been suggested. Prononcommercial speech. If appellees fessor Langvardt has suggested one tempting had argued that a significant theo- alternative. He posits that courts should adopt logical, political, or other noncom- a negligence standard for private actions for mercial purpose underlay the sub- false commercial speech.38 After thoughtfully ject message, the message might be considering this solution, we feel compelled to accorded the substantially greater reject it. While Professor Langvardt’s proFirst Amendment protections en- posal is compelling in a number of respects, joyed by “core” religious speech our approach more closely adheres to the caseand the other varieties of noncom- law and principles set out by the Supreme mercial First Amendment speech Court in the areas of commercial speech and such as political speech. See, e.g., First Amendment law. Pleasant v. Lovell, 876 F.2d 787, 795 (10th Cir. 1989) (holding “that Langvardt agrees with our analysis that the the presence of some commercial full protection from chill that the actual malice activity does not change the stan- standard gives to core First Amendment dard of first amendment review” speech is inappropriate in the context of lesswhere the organization engaged in protected commercial speech. He argues that, such activity had a clear political instead, a standard should be used that gives purpose (citing In re Grand Jury commercial speech an intermediate level of Proceeding, 842 F.2d 1229, 1235 protection from chill. In his view, “negligence (11th Cir. 1988))). Significantly, effectively provides an intermediate standard appellees in the instant case have that falls between the polar extremes of actual made no such claim. At no time malice and strict liability.” Langvardt, 78 have they argued there is any theo- MINN. L. REV. at 393. Under such a regime, logical purpose underlying the sub- plaintiffs would be required to prove “that the ject message or its dissemination defendant failed to use the degree of care a via their AmVox system. reasonable person would have exercised, under the circumstances, to ascertain the truth or Id. falsity of the statement before making it.” Id. at 393. To Langvardt, the use of a negligence Amway has argued here, as it apparently standard recognizes that commercial speech is did not in the Tenth Circuit, that there was a more durable than noncommercial speech, but theological concern underlying the speech. it still prevents the former from being overly We thus are foreclosed from merely calling the chilled by the possibility of private suits for speech commercial. Regardless, both the Tenth Circuit and this court are using the same test to determine commercial speech, and both reject Amway’s argument that the actual- malice standard should apply. 38 Arlen W. Langvardt, Commercial Falsehood and the First Amendment: A Proposed Frame- work, 78 MINN. L. REV. 309 (1993). 21 strict liability under the Lanham Act.39 damage awards . . . may be markedly more inhibiting than the fear of prosecution under a Langvardt would avoid Supreme Court pre- criminal statute,” the Court has never limited cedent stating that false commercial speech re- its holding that false commercial speech receives no protection under t he First Amend- ceives no First Amendment protection. It is ment by restricting this holding to the direct- doubtful that the prospect of a private action is government-regulation line of cases from a significantly greater deterrent to a commerwhich it sprang. He points out that the Court cial speaker than is the prospect of the civil has not heldSSand he believes would not and criminal penalties available to government holdSSthat false commercial speech receives regulators. Further, a commercial speaker no First Amendment protection from private may be chilled in his speech by the prospect of suits.40 According to Langvardt, the reason having to pay the costs of a suit to have an the Court would not do so is that private suits overly broad regulation narrowed by a court. have a greater potential to chill commercial speech than do direct government regulations. Additionally, Langvardt’s proposal, if He claims that private suits are not as narrowly adopted, would result in differing amounts of tailored and allow large damage awards, both protection for false commercial speech deof which create greater potential for chill. pending on whether the speaker discusses his own goods or those of another. Langvardt ac- Although support for this theory may be knowledges that false advertising claims by a found in New York Times, 376 U.S. at 279-80, defendant about its own products traditionally in which the Court said that “[t]he fear of have been subjected to strict liability under § 43(a), and he does not argue that this exces- sively chills commercial speech. He maintains 39 Langvardt’s theory also would vary the stan- that strict liability should continue to apply to dard by which a party must prove negligence, a defendant’s claims about its own products based on whether the speech is a matter of public but that a negligence standard should be apor private concern. Allegations regarding the for- plied to false statements about a competitor’s mer should be proven by clear and convincing evi- products. dence, and the latter should be proven by a mere preponderance of the evidence. Id. at 393-95. It seems, however, that this double standard would further confuse commercial speech law. 40 Langvardt points out that before its 1989 The argument is not strong enough to justify revision, no suit could be brought under the Lan- differing standards of liability,41 especially in ham Act for false advertising about a competitor. light of the admonition that we not “blur The Act was amended effective November 16, further the line the Court has sought to draw 1989, by the Trademark Law Revision Act of 1988, 15 U.S.C. §§ 1051-1128 (1988). The pre- in commercial speech cases.” Central Hud- 1989 Act allowed only suits against companies for a company’s false advertising about its own prod- ucts. The post-1989 Lanham ActSSwith its strict 41 Moreover, such a double standard could be liability standard for false commercial subverted. Instead of saying that its product is the speechSSthus has a substantially greater potential best, a company could state that all other products to chill truthful commercial speech, according to are inferior and by doing so move from a strict liLangvardt. ability regime to one of negligence. 22 son, 447 U.S. at 563 n.5. Texas and Michigan law require that to prevail on an alter ego theory or otherwise to pierce