Procter & Gamble can pursue devil-rumor lawsuit

Bloomberg News / August 24, 2000

Denver, Aug. 24 (Bloomberg) -- Procter & Gamble Co. can pursue its business-defamation lawsuit against independent distributors of Amway Corp. products who are accused of spreading a rumor linking the largest U.S. maker of household products to Satanism, a federal appeals court ruled.

Several Amway distributors are alleged to have used an Amway electronic voice mail system to disseminate gossip tying Procter & Gamble to the Church of Satan. The messages allegedly were part of an effort to get people to buy Amway products instead of Procter & Gamble goods.

Cincinnati-based Procter & Gamble sued the Amway distributors and Ada, Michigan-based Amway in federal court in Salt Lake City. The 10th U.S. Circuit Court of Appeals in Denver yesterday reversed U.S. District Judge Dale Kimball's March 1999 decision dismissing all claims in the case.

Kimball barred the business-defamation claim because the distributors never disparaged Procter & Gamble's products. The three-judge panel ruled the rumor could affect Procter & Gamble's commercial activities and, therefore, might constitute business defamation.

``Given the common association of Satan and immorality, a direct affiliation with the church of Satan could certainly undermine a corporation's reputation,'' Judge Carlos Lucero wrote for the court.

While the appellate panel reinstated the claims against the distributors, it found there was no case against Amway. The appeals court said Procter & Gamble provided no evidence that closely held Amway told distributors to spread the rumor.

Decisive Victory

``The court's ruling is a decisive victory for Amway,'' said Mike Mohr, the company's general counsel.

Procter & Gamble ``used Amway and the distributors as publicity scapegoats for a rumor that they haven't been able to stop for 20 years,'' Mohr said. Procter & Gamble said it was pleased that the appeals court allowed it to pursue its case.

The common thread running throughout the rumor was that Procter & Gamble's president discussed Satanism on the Phil Donahue program, a nationally televised talk show. The company -- dogged for two decades by whispers that it had ties to devil worship -- maintained that no Procter & Gamble executive ever discussed Satanism on television -- or elsewhere.

Procter & Gamble shares fell 1 3/8 to 62 15/16 on the New York Stock Exchange.