Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The 9th U.S. Circuit Court of Appeals on Tuesday revived a $60 million lawsuit that some say could have a chilling effect on the media’s willingness to criticize deep-pocketed companies. Reversing a lower court’s grant of summary judgment, a divided three-judge panel held that Suzuki Motor Corp. could present to a jury evidence to back up its claim that Consumer Reports unfairly disparaged the Samurai sport utility vehicle in order to turn a quick buck. “A reasonable jury could find by clear and convincing evidence that [Consumers Union of America] sought to produce a predetermined result in the Samurai test,” wrote Judge A. Wallace Tashima. Tashima was joined by Judge Susan Graber. Senior Judge Warren Ferguson penned a dissent. “By failing to apply the full procedural protections afforded by the First Amendment, the majority intrudes on the field of free expression in two of its most important contexts — consumer protection and public safety,” Ferguson wrote. The allegations involve a 1988 Consumer Reports issue that gave the Samurai, one of the first of a then-new line of cars called SUVs, a “Not Acceptable” rating. The article said the Samurai had a propensity to roll over. The suit was filed after Consumers Union published a 60th anniversary issue recounting its Samurai findings. Suzuki alleges that the ongoing publicity has damaged the company to the tune of $60 million. If the damages weren’t limited by the statute of limitations, said George Ball, managing general counsel of Suzuki, “You’d be talking literally hundreds of millions of dollars.” The majority in Suzuki Motor Corp. v. Consumers Union, 02 C.D.O.S. 5641, pointed to several incidents that seem to support Suzuki’s claim that Consumers Union had predetermined the outcome of the article. Several testers gave it high marks, and some drivers had to try many times before successfully tipping the car. Consumer Reports‘ editorial director reportedly told one tester: “If you can’t find someone to roll this car, I will.” In addition, Suzuki alleges that Consumers Union had financially overextended itself and needed to generate publicity for itself. One of Ferguson’s primary complaints was that the majority failed to undertake an independent review of the record in assessing the lower court’s ruling under New York Times v. Sullivan, 376 U.S. 254. He wrote that such a review would prevent a jury from taking facts out of context, and noted that four appellate courts have adopted that review standard. He also noted that the 9th Circuit itself applied it in a 1984 case. “The application of the independent review rule is the logical extension of New York Times for it addresses the Supreme Court’s concern regarding the chilling of speech,” Ferguson wrote. “As a practical matter, the threat and actual cost of litigation, including attorneys fees, inhibit speech.” Roger Myers, a San Francisco-based Steinhart & Falconer partner who represents media organizations, said the case could be significant. “It could certainly have a chilling effect on the media’s ability to criticize and challenge well-heeled” plaintiffs, Myers said. “They’ll be able to basically bleed them dry.” Another San Francisco-based media attorney, Kerr & Wagstaffe’s James Wagstaffe, said that the case could produce more lawsuits. “Frankly, juries have a hard time not applying a negligence standard, even when they’re told” to apply an actual malice standard, he said, adding that judges should be making those “talmudic distinctions.” The Samurai has been the target of several suits, including one filed by the attorneys general of seven states. Ball said his company has been successful in defending those cases. “We believe that kind of unfair, negative exposure has stimulated lawsuits,” he added. He also dismissed the argument that First Amendment actual malice cases demand extra scrutiny. “The Supreme Court precedent is that there is a set of basic summary judgment standards.” The case will now go back to a Santa Ana, Calif., federal court, where a jury will decide the outcome. That is precisely what should be avoided, argued Myers, due to the unpredictability of how juries will read a record. Ferguson, too, was worried. “On a broader level, the majority’s reasoning has troubling implications,” he wrote. “If taken to its logical end, the majority’s reasoning will allow any deficiency in a consumer group’s test to become the grounds for litigation. This will inhibit the speech of organizations and individuals who would fear voicing their findings and views because of the threat of litigation.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.