The publishers of Consumer Reports, the nonprofit magazine that rates products, urged the Supreme Court on Monday to shield it from costly lawsuits by corporate critics.
The magazine is seeking to squelch a lawsuit by Suzuki Motor Corp., which alleges that the publication deliberately “rigged” a test to show that the Suzuki Samurai “rolls over too easily.”
In May, by a 12-11 vote, the U.S. 9th Circuit Court of Appeals cleared the suit to go to trial before a jury in Santa Ana.
But on Monday, leaders of Consumers Union, citing the 1st Amendment’s protection of freedom of speech and the press, petitioned the Supreme Court to review the 9th Circuit’s decision. They contend that the suit should have been dismissed without a hearing.
“At risk is our right as consumers to read independent reviews in any publication -- not just of cars, but of movies or software or any other product or service,” said Jim Guest, the president of Consumers Union, which publishes the magazine.
If product evaluators can be forced to stand trial, he said, “it sets a dangerous precedent by allowing disgruntled companies to misuse the judicial system to intimidate and punish their reviewers and critics.”
In 1988, sport utility vehicles were growing in popularity, but questions had been raised about whether some models were inclined to tip or roll over during sharp turns. Using outriggers to prevent rollovers, Consumer Reports tested the four-door Jeep Cherokee and Isuzu Trooper II and the two-door Jeep Wrangler and Suzuki Samurai.
In its first set of tests, the Samurai performed well. Not satisfied, R. David Little, Consumers Union’s technical director, drove the light SUV through several short, hard turns, designed to simulate an emergency, such as trying to avoid a child running in front of the car. The Samurai tipped, and, the magazine said, “would have rolled over” had the outriggers not been attached to the vehicle. A second set of tests confirmed that, at certain speeds, the Samurai tipped. In its July 1988 issue, Consumer Reports labeled the Samurai “not acceptable” -- the organization’s lowest ranking. Sales of the Samurai plummeted, and it was withdrawn from the market in 1995.
A year later, the magazine proudly cited its report on the Samurai in its 60th anniversary issue. This time, Suzuki sued for “product disparagement” under California law.
A lawyer for Suzuki said he would ask the Supreme Court to turn away the appeal and allow the suit to go to trial.
“This case is about lying and cheating by Consumers Union for its own financial motives,” George F. Ball, Suzuki’s managing counsel, said Monday. “They were in debt [in 1988], and they needed a blockbuster story to raise and solicit funds.”
Consumers Union is a nonprofit organization funded by the sale of the magazine and other services and by noncommercial contributions, grants and fees.
Ball said Suzuki pursued the lawsuit after 1996 because the adverse publicity continued to hurt its overall sales and spurred lawsuits. “When you get this kind of terrible publicity, it stimulates litigation. People who fall asleep at the wheel and drive into a ditch decided to sue the automaker,” he said.
Lawyers on both sides said Monday they were confident they would win before a jury. However, the appeal to the Supreme Court tests whether such suits can proceed to a jury trial.
In 1964, in the landmark case of New York Times vs. Sullivan, the high court ruled that the press may not held liable for honest mistakes in reporting on matters of public concern. Damage suits can be won only when the news reports were known to be false or were published with a “reckless disregard” for the truth. This is referred to as proof of “actual malice.”
But lower courts are divided on how to apply that standard.
Three years ago, U.S. District Judge Alicemarie Stotler in Santa Ana threw out Suzuki’s suit, ruling that the automaker did not have convincing evidence that Consumer Reports had set out to malign the Samurai.
Last year, a 9th Circuit panel revived the suit on a 2-1 vote. “Drawing all reasonable inferences in favor of Suzuki,” a jury could conclude that Consumer Reports had set out to prove the Samurai was dangerous, said Judge A. Wallace Tashima in Los Angeles.
Earlier this year, the magazine’s lawyers appealed to the full 9th Circuit Court, arguing that the 1st Amendment required the judges to evaluate the whole record. They fell just short of winning a reversal.
If such lawsuits are not dismissed at the beginning, it “is a death of the consumer ratings,” Judge Alex Kozinski said, speaking for the 11 dissenters. “It will be impossible to issue a meaningful consumer review that a band of determined lawyers can’t pick apart in front of a jury. The ultimate losers will be American consumers denied access to independent information about the safety and usefulness of products they buy with their hard-earned dollars.”
The court is not likely to act on the case before late October.