Advertisers should keep eye on case of competing clothiers

Wednesday, August 30, 2006

When we’re told something’s not about the money, we know it’s almost always about the money. And when a judge in a libel case tells us a ruling’s not about journalistic standards, we know it’s almost always about journalistic standards.

Such was the case in Imperial Apparel v. Cosmo's Designer Direct, a recent Illinois appellate court decision that allowed a men’s clothing store to sue a competitor and the Chicago Sun-Times over an ad that the store — and the court — found offensive.

The ad was placed in the Sun-Times by Cosmo’s Designer Direct, a seller of discounted men’s clothing. Cosmo’s placed the full-page ad after the competitor, Imperial Apparel, began copying Cosmo’s popular three-for-one sales.

“WARNING! Beware of Cheap Imitations,” the ad began. “We all know there is … only one ‘3 for 1’ in the Midwest … . So to the shameless owners of Empire rags center, east Eden and south of quality, we say … ‘Start being kosher … Stop openly copying and coveting your neighbor’s concepts or a hail storm of frozen matzo balls shall deluge your ‘flea market style warehouse.’

“Thankfully,” the ad continued, “most readers, like thousands of our customers, possess a taste level that can easily decipher the quality gap between dried cream cheese and real Parmigiano… . It is laughable how with all the integrity of the ‘Iraq Information Minister’, they brazenly attempt pulling polyester over your eyes by conjuring up a low rent 3 for imitation that has the transparency of a hookers come on … but no matter how they inflate prices and compromise quality, much to their dismay, Cy and his son Paul the plagiarist still remain light years away from delivering anything close to our ‘3 for 1’ values.”

Whatever their ability to deliver values, Cy and Paul Rosengarten quickly delivered a lawsuit to Cosmo’s and the Sun-Times. In their suit, the Rosengartens and Imperial alleged libel and product-disparagement claims against both defendants and invasion-of-privacy and consumer-fraud claims against Cosmo’s. The trial court dismissed all of the claims, holding the ad constituted “non-actionable opinion.”

The appeals court, however, disagreed. In doing so, it claimed to be simply following the law. “At the outset of our analysis,” the court said in its June 28 ruling, “we wish to make it quite clear that our function is not to judge the literary merit of Cosmo’s ad or the journalistic standards of a newspaper that would publish such obviously offensive material. Our function is solely to determine whether the ad is legally actionable under any of the theories pled.”

In making that determination, the court acknowledged the ad was actionable only if it stated false facts about one or more of the plaintiffs. If the ad contained only statements of opinion, the court recognized, it was fully protected by the First Amendment.

Relying heavily on the U.S. Supreme Court’s 1990 decision in Milkovich v. Lorain Journal Co., the Illinois appeals court held that opinions lose First Amendment protection if they state or imply “objectively verifiable assertions” that are false. In this case, the court said, the statements comparing the plaintiffs’ integrity to that of the Iraqi information minister, accusing them of pulling the polyester over the public’s eyes, charging them with inflating the price of their clothing and claiming they had compromised the clothing’s quality could be interpreted to state “actual facts” about the plaintiffs’ integrity and about the “originality and quality” of Imperial’s goods.

Therefore, the Illinois court concluded, “Cosmo’s ad is not entitled to First Amendment protection.” The court accordingly reinstated Imperial’s libel action and the claims for product disparagement, invasion of privacy and consumer fraud.

Perhaps most notable about the court’s ruling was the ease with which it rejected the Sun-Times’ argument that the context of the ad made it unlikely any reasonable reader would interpret it as stating facts about Imperial or its owners. References to the Iraqi information minister and the pulling of polyester over customers’ eyes arguably say more about the author of the ad than they do its subjects. Especially in the context of this rather crudely written ad, the author’s rants are much more likely to be considered hyperbole and poor word play than accusations of verifiable facts.

Moreover, the notion that derogatory remarks about a competitor’s prices and quality are statements of fact rather than expressions of opinion is sure to trouble advertisers in Illinois. While the court claimed that “[w]hether Imperial was selling imitation goods of inferior quality is certainly capable of objective verification,” it did not explain how that proof would be objective or verifiable. Quality — especially when considered in tandem with price — is most often a question of value, an inherently subjective inquiry. Additionally, no reasonable consumer considers an advertiser an unbiased source for factual information about the quality of a competitor’s products.

Illinois advertisers surely hope the offensiveness of Cosmo’s ad is a distinguishing factor that dissuades courts from applying the holding in Imperial Apparel to other cases. If other Illinois courts follow the holding and find advertisers liable to each other for libel, however, the decision in Imperial Apparel will turn out to be about more than journalistic standards after all — it will also be about money, and large sums of it.

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