- Ninth Circuit Affirms Former Baseball Star Steve Garvey Not Liable In FTC Action Over Infomercial Endorsement
- March 8, 2005
- Law Firm: Frost Brown Todd LLC - Louisville Office
On September 1, 2004, the Ninth Circuit held Steven Patrick Garvey, a retired first baseman for the Los Angeles Dodgers, not liable for statements he made while appearing in infomercials for weight loss supplements. Enforma Natural Products ("Enforma") marketed two dietary supplements, "Fat Trapper" and "Exercise in a Bottle." Together, these two products constitute the "Enforma System."
Garvey made a number of statements regarding the Enforma System, including the following:
"Forget all those complicated, expensive diets that deprive you. With all natural Fat Trapper and Exercise in a Bottle -- the Enforma System -- you simply take Exercise in a Bottle twice a day and Fat Trapper before any meal that contains fat. Then go ahead and enjoy the foods that you love without the fear of fat. It's that easy."
After filming two infomercials, Garvey made several radio and television appearances to promote the Enforma System. From December 1998 to December 2000, Enforma's sales exceeded $100 million.
The lawsuit against Garvey came after the FTC had pursued similar claims against Enforma. Indeed, the FTC settled claims against Enforma and related entities, which required Enforma and others to pay $10 million to the FTC, as well as prohibited Enforma from undertaking specific conduct in the future. Despite this settlement, the FTC filed an action against the Garvey defendants -- as well as the video production company and other individuals -- alleging that the defendants, in marketing the Enforma System, violated sections 5(a) and 12 of the Federal Trade Commission Act ("FTCA").
The Ninth Circuit affirmed the district court, and rejected the FTC's claims that Garvey should be held liable as a "direct participant" in the making of false advertising claims or under the principles of "endorser" liability.
Commenting that the trial judge's findings of fact are reviewed for clear error, the appellate court found that Garvey had sufficient substantiation to avoid participant liability. Specifically, the court noted that: 1) Garvey himself used the system and lost approximately eight pounds during a 3-4 week period; 2) Garvey's wife lost approximately 27 pounds on the Enforma System; 3) Garvey received and reviewed two booklets containing substantiation materials for the system; and 4) Garvey met and spoke with several individuals who had experienced "positive results" using the Enforma System.
Noting these facts, the Ninth Circuit found that the FTC failed to show that Garvey was recklessly indifferent to the truth of his statements or was aware that fraud was highly probable and avoided the truth. Indeed, the FTC did not present any evidence that Garvey was aware that the statements he made were false.
Similarly, the court also rejected the FTC's argument that Garvey was liable under the FTC's "endorser" theory of liability on the basis of the FTC Guides Concerning Use of Endorsements and Testimonials in Advertising ("the Guides"). According to the Guides, an "endorsement" is "any advertising message . . . which message consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser." Referencing the highly deferential "clearly erroneous" standard of review for findings of fact, and that there was competing expert testimony on the issue, the Ninth Circuit held that Garvey was also not liable as an "endorser" under the FTC's Guides.
The decision is the highest ruling to date addressing the FTC's policies on celebrity endorsements. The decision does make clear, however, that celebrity endorsers may be held liable -- particularly in the hot bed of weight loss products which has been the focus of the FTC for years -- for merely accepting endorsement fees and reading a script.