Case 5.1 Disparagement:
Zagat Survey, LLC, publishes the famous Zagat
series of dining, travel, and leisure guides for different cities and locations. The Zagat
restaurant guides list and rank each reviewed restaurant from 0 to 30 for categories
such as food, décor, and service. These ratings are calculated from surveys of
customers of the restaurants, and the Zagat guide often quotes anonymous
consumer comments.
Lucky Cheng’s is a restaurant owned by Themed Restaurants, Inc., that is located in
Manhattan, New York City. Lucky Cheng’s is a theme restaurant with a drag queen
cabaret where female impersonators are both waiters and performers, and
customer participation contributes to the entertainment. The Zagat survey of New
York City Restaurants rated the food at Lucky Cheng’s as 9 and rated the décor and
service as 15. The Zagat guide then stated: God knows “ you don’t go for the food” at
this East Village Asian- Eclectic—rather you go to “ gawk” at the “hilarious” “crossdressing” staff who “tell dirty jokes”, perform “impromptu floor shows” and offer “lap
dances for dessert”; obviously, it “can be exhausting”, and weary well-wishers suggest
they “freshen up the menu- and their makeup”
Themed Restaurants sued Zagat for disparagement. Zagat defended, arguing that the
ratings and comments about Lucky Cheng’s restaurant that appeared in the Zagat
guide were opinions and not statements of fact, and were, therefore, not actionable
as disparagement.
Question
a. Were the statements made in Zagat’s restaurant guide statements of fact or
statements of opinion?
b. Is Zagat liable for disparagement?
6.7 Ethics Case : Joseph Burger was the owner of a junkyard in Brooklyn, New
york. His business consisted, in part, of dismantling automobiles and selling their
parts. The state of New York enacted a statute that requires automobile junkyards to
keep certain records. The statute authorizes warrantless searches of vehicle
dismantlers and automobile junkyards without prior notice. One day, five plaincloths officers of the Auto Crimes Division of the New York City Police Department
entered Burger’s junkyard to conduct a surprise inspection. Burger did not have
either a license to conduct the business or records of the automobiles and vehicle
parts on his premises, the officers determined that Burger was in possession of
stolen vehicles and parts. He was arrested and charged with criminal possession of
stolen property. Burger moved to suppress the evidence.
Question
a. Did Burger act ethically in trying to suppress the evidence?
b. Does the warrantless search of an automobile junkyard pursuant to a state
statute that authorizes such a search constitute an unreasonable search and
seizure in violation of the Fourth Amendment to the US Constitution? Explain
your answer and rationale.
7.6 Ethics Case : Elvis Presley, a rock-and-roll singer became a musical icon
during a career that spanned more than twenty years, until he died at the age of 42.
Many companies and individuals own copyrights to Presley’s songs, lyrics,
photographs, movies, and appearances on TV shows. Millions of dollars of Elvis
Presley-related copyrighted materials are sold or licensed annually.
Passport video produced a video documentary titled The definitive Elvis, comprising
sixteen one-hour episodes. The producers interviewed more than two hundred
people regarding virtually all aspects of Elvis’s life. Passport sold the videos
commercially for a profit. Approximately 5 to 10 percent of the videos were
composed of copyrighted music and appearances of Presley on television and in
movies owned by copyright holders other than Passport. Passport did now obtain
permission to use those copyrighted works. Elvis Presley Enterprises, Inc., and other
companies and individuals that owned copyrights to the Presley works used by
Passport sued Passport for copyright infringement. Passport defended, arguing that
its use of the copyrighted materials was fair use. The U.S. District Court held in favor
of the plaintiff copyright holders and enjoined Passport from further distribution of
its documentary videos. Passport appealed.
Question
a. Did Passport act ethically in including the Elvis Presley copyrighted
material in the video?
b. Why do you think Passport Video did so?
c. Has there been fair use in this case or copyright infringement? Explain your
answer and rationale.
8.1 False Advertising: Papa John’s International, Inc., is the third-largest
pizza chain in the United States, with more than 2,050 locations. Papa John’s
adopted a new slogan – “Better Ingredients. Better Pizza.” – and applied for and
received a federal trademark for this slogan. Papa John’s spent over $300 million
building customer recognition and goodwill for this slogan. This slogan has
appeared on millions of signs, shirts, menus, pizza boxes, napkins, and other items,
and it has regularly appeared as the tag line at the end of Papa John’s radio and
television advertisements. Pizza Hut, Inc., is the largest pizza chain in the United
States, with more than 7,000 restaurants. Pizza Hut launched a new advertising
campaign in which it declared “war” on poor quality pizza. The advertisements
touted the “better taste” of Pizza Hut’s pizza and “dared” anyone to find a better
pizza. Pizza Hut also filed a civil action in federal court, charging Papa John’s with
false advertising in violation of section 43(a) of the federal Lanham Act.
Question
a. What is false advertising?
b. What is puffery?
c. How do they differ from one another?
d. Are consumers smart enough to see through companies’ puffery?
e. Is Papa John’s advertising slogan "Better Ingredients, Better Pizza” false
advertising? Explain your answer and rationale.
