Under the Influence with Terry O'Reilly - S4E20 - Sue Me, Sue You Blues: Famous Advertising Lawsuits

Episode Date: May 17, 2015

This week, we look at Famous Advertising Lawsuits. Because the stakes are so high in the world of marketing, it leads to some interesting - and odd - lawsuits. We’ll tell the story of how an elderly woman sued McDonald’s because her coffee spilled on her lap and why she won the case, how Microsoft came gunning for a 17 year-old Mike Rowe's website with the domain name www.MikeRoweSoft. com, how a Hollywood actress sued a store for tweeting a photo of her shopping there, and the amusing story of Hall & Oates suing a company over a cereal called Haulin’ Oats. Everyone rise, court is in session. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling. Subscribe now and don't miss a single beat. BetMGM, authorized gaming partner of the NBA, has your back all season long. From tip-off to the final buzzer, you're always taken care of with the sportsbook Born in Vegas. That's a feeling you can only get with BetMGM.

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about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. From the Under the Influence digital box set, this episode is from Season 4, 2015. You're not you when you're hungry.

You're a good hand with all things. You're under the influence with Terry O'Reilly. When I was a young whippersnapper, my second favorite band, after the Beatles, was Creedence Clearwater Revival. They were originally called the Gollywogs, but when their record label insisted on a better name, the band came up with Creedence Clearwater Revival. The name was inspired by three things. Creedence was the first name of a close friend of the band.

Clearwater was based on an Olympia beer commercial. We make Olympia for times like these, and we brew it with the best water we know, the naturally pure artesian brewing water of Tumwater, Washington. And Revival signaled a resurgence for the band. CCR would go on to have a short but remarkably successful career. Between 1968 and 1972, the band had a string of over 20 hit songs. Hard to believe, but CCR never had a number one record. But they hold the record for the band with the most number

two Billboard singles that never had a number one hit. Then, in 72, the band broke up, and it wasn't an amicable split. Lead singer and songwriter John Fogerty became estranged from the rest of the band, and he began a long, drawn-out fight with his label, Fantasy Records, over songwriting ownership. Fogarty strongly believed their seven-year recording contract created an unrealistic burden, as they were required to record as many as 50 songs per year. As the band's sole songwriter, he couldn't deliver. So, in order to get out from under that contract, Fogarty signed away the rights to all his hit records. Licking his wounds, he embarked on a solo career. In 1984, he released a new song entitled

Old Man Down the Road. Then, the strangest thing happened. Fantasy Records sued John Fogerty for copyright infringement. The record label felt that Old Man Down the Road sounded too much like the CCR hit Run Through the Jungle, which they own the rights to. In other words, John Fogerty was being accused of plagiarizing John Fogerty. The case went to the Supreme Court. Fogarty explained the two songs were variations on his signature swamp rock sound. Then he pulled out his guitar on the stand and played both songs for the court,

showing how they differed. The court agreed with Fogarty. The case was dropped, and eventually Fantasy had to pay Fogarty over $1 million in legal expenses. It was one of the strangest lawsuits in music history. The world of marketing has its own list of strange lawsuits. Sometimes it's one brand suing another brand. Sometimes it's a customer suing another brand. Sometimes it's a customer suing a company. And sometimes it's a

colossal corporation suing a 17-year-old kid. Each case fascinating in its details. Everybody rise. Court is in session. You're under the influence. The advertising business is a high-stakes game involving hundreds of millions of dollars.

And when brands battle it out in the corners, the elbows often go up and lawsuits arise. One of the most competitive categories in the world of marketing is fast food. Generating over $210 billion a year in North America, there are over 230,000 fast food locations in the States and over 30,000 in Canada. And there's not a lot of love lost between brands. Take the lawsuit between Jack in the Box and Carl's Jr. Both are American hamburger chains.

At the time, Carl's Jr. was proudly advertising its Angus burgers. In response, rival Jack in the Box introduced its new 100% sirloin burger. It ran a television commercial showing their spokesperson standing in front of a clinical diagram of a cow pointing to where the various cuts of beef come from. Okay, listen up. This is big. We have just launched the first 100% sirloin burger in fast food history. Take a look.

That's 100% ground sirloin seasoned while it cooks. People can choose what kind of cheese and onions they want, but it's the sirloin that has to be tasted to be believed. Now, for those of you not from Texas, that's the sirloin that has to be tasted to be believed. Now, for those of you not from Texas, that's the sirloin area. Jack, our competitors serve Angus burgers. Could you point to

the Angus area? I'd rather not. The clear implication was that Angus burgers come from the rear end of the cow. In other words, Angus without the letter G.

As you can imagine, that didn't make Carl's Jr. very happy. First, Carl's Jr. asked Jack in the Box to stop running the ads. Jack in the Box refused. That's when the CEO

of Carl's Jr. said, if they want to have a war, we'll take the gloves off. Which they did and promptly sued Jack in the Box. Jack in the Box is taking a shot at its competition. One competitor, the owner of Carl's Jr. and Hardee's, is making a federal case out of this, filing suit in U.S. District Court to stop the ads.

Carl's Jr. believed the ads created the misleading impression that a Jack in the Box sirloin burger used a better quality of meat than the Angus beef used in a Carl's Jr. burger. The reason? Sirloin is a cut of beef found on all cattle,

whereas Angus is a breed of cattle. Jack in the Box defended its ad by saying it was just a humorous commercial that never referenced Carl's Jr. by name. When it went to court, a federal judge sided with Jack in the Box. So, the commercials stayed on the air.

Jack in the Box praised the decision, calling the lawsuit frivolous and trivial, and Carl's Jr. remained the butt of the joke. Not all advertising lawsuits are brand versus brand. Sometimes, brands are sued by their customers. In January of 2013, New Jersey resident Jason Leslie sued Subway. Leslie was a loyal customer, estimating he had eaten 50 Subway foot-long sandwiches every year for 14 years.

That's over 700 subs. But then Leslie filed a lawsuit saying that Subway footlong sandwiches were a half inch short. He sued for $142 million. His attorneys calculated that number very specifically. They estimated 25% of Subway's revenues came from selling footlongs, totaling $2.8 billion per year,

and roughly 5% of that represented unfair and deceptive revenue, based on the assumption that each footlong was at least half an inch short. That 5% equaled $142 million. It's an interesting case because it was the name of the product that got Subway in trouble.

If the sandwich had been called the Mega Sub or the Big Subway Stop, the class action suit couldn't have been filed. But Footlong wasn't just a name, it was seen as a promise. McDonald's has a disclaimer on its quarter pounder, saying the burger weighs a quarter of a pound before cooking.

Subway had no such fine print. The CEO of Subway defended his company, saying that all bread was baked fresh on the premises, not punched out in a factory. So there are occasional discrepancies in sizes. Clearly, a half inch is no trivial matter. Over the 14 years, Jason would have missed out on

700 times... a total of 29 feet of footlongs. So far, both sides of the lawsuit have exchanged over 1,000 pages of documents. But the lawyers recently told a federal

judge they are making progress. They're inches away from a settlement. There are many examples of frivolous lawsuits. But the one lawsuit that tops every frivolous list was the famous case of a woman suing McDonald's for millions because she spilled coffee on her legs. It became a punchline from that point forward. But here's what you may not know.

Stella Liebig was a 79-year-old woman living in New Mexico. One day, she went through a McDonald's drive-thru and ordered coffee. She wasn't driving. Her grandson was. After receiving their order, they pulled into a parking spot to put cream and sugar into the coffee. There were no cup holders in the car,

so Stella steadied it between her knees and opened the lid. The coffee gushed out onto her thighs and groin. She screamed in agony, and her grandson rushed her to the hospital. As it turned out, Stella had suffered not second-degree burns, which would have been painful, but third-degree full-thickness burns

to 16% of her body. The pictures of her burned thighs are, in a word, horrific. She required extensive skin grafts and surgery. Her family asked McDonald's to cover her expensive medical bills, as Stella Liebig was retired and didn't have much money.

McDonald's responded with an offer of $800. When the family said that amount didn't come close to covering the medical expenses, McDonald's told them to get a lawyer. The court arranged two mediation meetings, but McDonald's didn't attend either. The corporation clearly wanted a jury trial. Liebig's lawyer approached McDonald's with a $50,000 settlement. McDonald's refused. In court, it was revealed that McDonald's

heated its coffee to 187 degrees Fahrenheit, or 86 degrees Celsius. Most coffee is heated to around 150 degrees Fahrenheit or 65 degrees Celsius. McDonald's kept it that hot because it made for a longer shelf life. In other words, it was a business decision. McDonald's lawyers also brought in a chart showing that only 700 people had been scalded by their coffee, which they saw as statistically insignificant considering they serve millions of coffees a day.

That tactic would turn out to be a mistake, as the jury found that stat anything but insignificant. In the end, the jury decided Stella was 25% at fault for spilling her coffee, McDonald's 75% at fault for scalding her coffee, McDonald's 75% at fault for scalding her with its overheated product. The jury awarded Stella

about $200,000. But the judge wasn't happy with McDonald's and directed the jury to implement punitive damages. So, the jurors ordered McDonald's to give Stella two days' worth of coffee sales,

which totaled $2.7 million. Stella never regained her quality of life after the incident. All she had wanted was to cover her medical expenses. It wasn't a frivolous lawsuit. It was a cautionary tale for corporations. And we'll be right back. If you're enjoying this episode, why not dip into our archives,

available wherever you download your pods. Go to terryoreilly.ca for a master episode list. The right to sue a company for negligence or deception is an option you can always exercise. Or can you? A year ago, the New York Times reported that General Mills had quietly added a new term on its website. It alerted customers that they give up their right to sue the company if they downloaded a coupon, liked the company on Facebook, or engaged with the company in a variety of other ways. Therefore, if a customer had a dispute with the maker of Cheerios and Betty Crocker, it would now have to use informal negotiation via email or go through forced arbitration.

The backlash was immediate. The press piled on, customers complained loudly, and legal experts said that when you're talking about food, you're also talking about things that can kill you, and the stakes were too high to limit a customer's legal options. General Mills backed down one week later, saying that while many other companies were adopting this same policy, they would revert back to its previous terms and apologized,

meaning it was safe to like Cheerios again. In 1995, a man named Michael Doney saw a bumper sticker that made fun of PETA. He thought PETA was ripe for parody and was surprised to discover the domain name PETA. He thought PETA was ripe for parody and was surprised to discover the domain name PETA.org was available. So he purchased it

and created a website called People Eating Tasty Animals. P-E-T-A. The site contained 30 links to beef recipes, butchers, leather shops, taxidermists, and hunting magazines. PETA, the animal rights activists, sued,

and thus began a long-running lawsuit based on domain names and humor. Dhoni's lawyers argued that the site was a parody, but a judge said a parody has to convey two contradictory messages simultaneously. Put another way, the domain name had to look legit, but then instantly communicate that it wasn't. The judge gave the example of a parody site for Star Trek called Starbleck.

Dhoni's lawyers disagreed, saying the PETA trademark set up the parody, that there has to be a lag of a few seconds. So, when people clicked on PETA.org, then discovered the humor, the parody worked, meaning the website's content was as important as the domain name.

The judge disagreed and sided with PETA. Dhoni was ordered to turn the domain name over to the animal rights activists. The case had taken five years to resolve. When two big brands go to war, it's Goliath versus Goliath. But sometimes, David picks up a stone. Back in 2003, Mike Rowe was a 17-year-old kid living in British Columbia. He set up his own website and, for fun, added the word soft to his domain name, MikeRoweSoft.com.

His website was modest. It contained a small portfolio of his graphic design work and got about 30 views per month. Then, Microsoft found out about it. On January 14, 2004, Rowe was contacted by Microsoft's Canadian law firm. He was told his site qualified as trademark infringement and demanded he turn the domain name over to Microsoft. Rowe asked to be compensated. Microsoft offered him $10,

the original domain registration fee. Insulted, Mike Rowe asked for $10,000. A few weeks later, Rowe received a 25-page cease and desist order from Microsoft. The company accused him of cyber-squatting and extortion. Rowe was given the option of handing over his website or face the wrath of Microsoft's vast legal department. So, the 12th grader decided to go to the press. New year, new me.

Season is here and honestly, we're already over it. Enter Felix, the healthcare company helping Canadians take a different approach to weight loss this year. Weight loss is more than just diet and exercise. It can be about tackling genetics, hormones, metabolism. Felix gets it. They connect you with licensed healthcare practitioners online who'll create a personalized treatment plan that pairs your healthy lifestyle with a little help and a little extra support. Start your visit today at felix.ca. That's F-E-L-I-X dot C-A.

Overnight, the case became international news. Within 12 hours, Roe's website generated over 250,000 hits. The traffic was so heavy, the site had to be transferred to a bigger server. Anonymous supporters sent in over $6,000 in donations to cover court expenses. A law firm offered free legal counsel. 17-year-old Mike Roowe was suddenly an Internet hero. With all the attention, it began to turn into a public relations disaster for Microsoft,

as the Court of Public Opinion watched a $278 billion corporation bully a kid in grade 12. The company backpedaled immediately. It released a statement admitting they may have taken their trademark a little too seriously. Throwing a nervous arm around Mike Rowe, Microsoft offered a settlement. In exchange for Rowe's domain name,

Microsoft would pay all his expenses, set up a new website for him, pay for a Microsoft certification course, bring his family to the Microsoft Research Tech Fest at their head office in Redmond, Washington, and give him an Xbox loaded with games. Mike Rowe took the deal. Oh, and Mike enjoyed one other added bonus.

He sold the original cease and desist order on eBay for $1,000. Social media has added a new wrinkle to advertising lawsuits. Recently, actress Katherine Heigl was photographed by paparazzi leaving a Duane Reade drugstore in New York carrying two shopping bags. Not long after, Duane Reade tweeted the photo saying, Even Katie Heigl can't resist shopping

at NYC's favorite drugstore. Heigl also couldn't resist suing the company for $6 million. According to her complaint, the store was using her image for advertising purposes without her knowledge or permission. Duane Reade contended the tweet was not for commercial purposes, but merely said Heigl had shopped at one of their stores, and that the tweet contained no hint of endorsement. The courts, however, sided with Heigl. A settlement was reached

and the drugstore chain ended up making a substantial donation to her animal rights foundation. Tweeting can get really expensive. Then, there's the case of Hall & Oates. That's Hall & Oates The Cereal, spelled H-A-U-L-I-N, as in

transporting oats. Early Bird is a Brooklyn-based granola company. They launched Hall & Oates cereal recently, and when they did, Hall & Oates, the band, sued. Daryl Hall & John Oates Company, Whole Oats Enterprises, owns the federal trademark for Hall & Oates. And get this, they also own the trademark for Hall & Oates, the same name the cereal company is using.

Nice bit of foresight there, boys. The band is seeking damages, insisting Early Bird change the name of the cereal because it implies the band is endorsing the product. The company refused. The case is now before the courts. Meanwhile, the cereal company offered a 25% discount on bags of hollow notes with the coupon code SAYITISN'TSO.

In many advertising categories, just a half percentage point of market share can be worth millions and millions of dollars. That's why the gloves come off. Jack in the Box comically removed the G from Angus Burgers and it resulted in a costly court battle. When a drugstore tweeted a picture of Katherine Heigl, little did they know it would turn out to be a $6 million tweet.

But the real toll comes when companies take their customers for granted. Some brands are quietly rewriting their online terms and conditions so that liking a brand on Facebook means customers may lose their right to sue down the road. When Jason Leslie took Subway to court because his foot-long sandwiches were a half-inch short, you have to remember something. Jason spent money at Subway every week for 14 years. He was a die-hard, loyal customer. But when he felt his trust and loyalty was betrayed, he sued. When Microsoft

unleashed its battalion of lawyers on 17-year-old Mike Rowe, the internet rallied around the grade 12 student. And when McDonald's told Stella Liebig to lawyer up, little did they know they'd meet a jury that didn't buy their point of view.

It's one thing for companies to sue each other into oblivion, but quite another thing when they place their own customers in the crosshairs. It's the difference between Hall & Oates and Hall & Oates when you're under the influence. I'm Terry O'Reilly. Zip, zip. Hey, Terry. I liked your show on Facebook today, and I tweeted a photo of you yesterday.

So tell me, do I need to lawyer up? Oh, really, do I? Under the Influence was recorded at Pirate Toronto. Series producer, Debbie O'Reilly. Sound engineer, Keith Oman. Theme music by Ari Posner and Ian Lefevre. Research, James Gangle. Um, do you wear clothes when you listen to our show?

If so, have we got a t-shirt for you. Go to terryoreilly.ca slash shop. See you next week.