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Pastt Press Releases Introduction

Gray Cary Ware & Freidenrich Wins Appeal
In Product Disparagement Case

San Diego, Ca, October 7, 1998- On September 29, 1998, the Fourth District Court of Appeal, Division One, reversed a libel verdict in excess of $1,500,000 in Melaleuca, Inc. v. Hulda Regehr Clark, clarifying important constitutional protections in product disparagement claims. Gray Cary Ware & Freidenrich was appellate counsel for Dr. Hulda R. Clark, the author of two books which made reference to Melaleuca products, a company which sells a line of personal hygiene, cosmetic, household cleaning, over-the-counter pharmaceutical, nutrition and pet care products.
Clark, an independent research scientist, developed technology which she claims is capable of detecting the presence of carcinogenic chemicals, such as benzene, in trace amounts in certain products. In two books she has published, Clark stated that she had found benzene in products containing melaleuca alternifolia oil, including certain of Melaleuca's products.
In reversing the judgment, the Court of Appeal clarified existing law that, even where a speaker has made false statements which disparage the contents of a product, the owner or distributor of the product is required to prove far more than publication of a false statement in order to recover damages. Instead, the owner or distributor must produce clear and convincing evidence that the speaker acted with constitutional malice as required by the First Amendment to the United States Constitution.
A statement is made with constitutional malice when the speaker either knows the statement is false or has some serious subjective doubt about the truth of the statement. Because the trial court erred in giving an instruction which permitted the jury to find constitutional malice on an objective basis, the verdict had to be overturned and the BAJI jury instruction on constitutional malice invalidated.
BAJI 7.04.1 Invalidated - Using BAJI 7.04.1, the trial court had instructed the jury in the Clark case that they could find Clark spoke with constitutional malice if she "must have had" serious doubts about the truth of her statements. The jury had made an express finding that Clark did not know her statements were false, but nonetheless published the statements in reckless disregard of whether they were false and awarded punitive damages.
As the law is clear that a finding of constitutional malice is a subjective standard, objective recklessness or doubt can not survive scrutiny, the Court of Appeal ruled. The Fourth District noted the United States Supreme Court has repeatedly eschewed liability based on what a speaker "must have realized." Thus, because BAJI 7.04.1 allowed the jury to draw the inference as to what Dr. Clark "must have believed," the verdict could not stand.
In so ruling, the Court noted the record could support a belief that Dr. Clark was as concerned and sincere about her findings as any of history's scientific iconoclast. Accordingly, the Court had little doubt that Clark would have obtained a more favorable verdict had the jury been properly instructed.
In reversing the verdict, the Court underscored that where allegedly false statements about the contents of a product are at issue, the plaintiff must demonstrate the highest degree of culpability: that the speaker had actual knowledge of falsity or actual serious doubts as to the truth of his or her statements. The Court reasoned that the public has a well-recognized interest in knowing about the quality and content of consumer goods.
Because Clark's statements were made in the context of books espousing her scientific theories and advocating the adoption of what she believes are healthy nutritional practices and the avoidance of a substance she believes cause serious illnesses, the Court found her statements addressed matters of obvious wide spread public interest.
Several other important rulings were made by the Court of Appeal in the Clark decision. While noting the sparseness of legal authority in the area of permitting expert testimony on the issue of truth or falsity of speech, the Court held that a party may, in appropriate circumstances, rely upon expert testimony to establish the truth or falsity of statements made. Where an expert is used, however, the expert must comply with the Kelly Rule. Under Kelly, when an expert offers testimony which is based upon the application of a new scientific technique, the party offering the expert's testimony must demonstrate that the technique is sufficiently established to have gained general acceptance in a particular field in which it belongs.
"Obviously we are pleased with the courts decision and with the speed with which the court delivered its decision" stated Marcelle E. Mihaila, the Gray Cary Ware & Freidenrich partner and appellate expert who argued this case for Clark.
"This opinion clarifies the standard for imposing liability in product disparagement cases," said Guylyn R. Cummins. "This clarification is vital to allow discussion and debate of the safety and effectiveness of products widely used by consumers without unwarranted liability. This is the essence of the First Amendment."