United States: Advertising Law Enters the Political Process

Last Updated: June 1 2015
Article by Ronald M. Jacobs and Amy R. Mudge

It is pretty rare for the Lanham Act and state law deceptive advertising cases to involve political candidates, but a case in Virginia shows how advertising law can be used to help candidates who have been harmed by entities trying to raise money using their name and likeness. We have more information on the political implications of this settlement on the Political Law Briefing Blog.

How it all Started

In 2013, Ken Cuccinelli was running for governor of Virginia, and a political action committee ("PAC") decided it would raise money, ostensibly to help him win. What Mr. Cuccinelli discovered, however, was that he only received a small amount of the money raised, and the PAC did not execute its promises of a get-out-the-vote campaign for him. Nearly a year after the election, he sued the PAC and the principals involved for false advertising. The defendants filed a motion for summary judgment. The court held a settlement conference, and the defendants ended up paying Mr. Cuccinelli $85,000, provided him their mailing lists of donors so he can use or rent those lists, and agreed to honor requests from candidates to stop using their name an image.

The Claims in the Solicitation Emails

What exactly were the claims, and how do they stack up under the Lanham Act? Cuccinelli claimed in his complaint that the PAC raised about $2.2 million in 2013 and contributed a total of $10,000 to his campaign. He cited eight separate emails sent from July through Election Day where the defendants promised to use the money raised from the emails to support Cuccinelli. The emails included specific claims like:

"We must pay for phone banks, get-out-the-vote programs, mailing, rallies – whatever it takes."

"Please, please help Ken by making the most generous contribution you possibly can today."

"We just launched our emergency Virginia Victory Money Bomb because Tea Party hero Ken Cuccinelli is about six points behind and he's desperately short on cahs. We must raise $50,000 by October 1st."

"[E]very single dollar we raise to help Ken will make all the difference in the world."

"Conservative Strike Force has promised to raise $50,000 to support Ken Cuccinelli by tomorrow night....Now we are in big trouble. We have only one day left, and we must raise $11,595."

"Please make the best gift you possibly can to help fund this critical get-out-the-vote effort....We are putting together one of the largest GOTV efforts in Virginia history. Ken has offices and volunteers in every corner of the state. Now all we need is to pay for the massive phone banks, absentee ballot campaigns, and the massive 'knock and drag' effort that will win this."

"We are putting together one of the largest GOTV efforts in Virginia history. Our goal is to turn out each and every conservative voter. Unfortunately though, grassroots get-out-the-vote campaigns are ridiculously expensive."

"Our online system will process your gift instantly, and your contribution will be put to work immediately to get Virginia conservatives to the polls on Election Day."

Then, in a thank you email sent after the election, the PAC said:

"With your support, we were able to give $15,000 directly to Ken's campaign and invest tens of thousands more in get-out-the-vote work on his behalf."

The complaint alleged that all of the emails cited also included a picture of Mr. Cuccinelli. It also alleged that the defendants could track exactly which contributions came from the emails featuring Mr. Cuccinelli, so they could segregate the Cuccinelli funds from other fundraising campaigns. Those online donation pages also included promises such as "your most generous contribution today [will] support the candidacy of Ken Cuccinelli for Governor of Virginia," and "All money raised by Conservative StrikeForce's Cuccinelli Fund will be spent on behalf of Ken Cuccinelli or given as a direct contribution."

How the Money Was Spent

The complaint then details how the money was actually spent. First, contrary to the claims in the thank-you email, defendants only gave Mr. Cuccinelli's campaign $10,000, not $15,000. The reports filed with the Federal Election Commission shows that the PAC spent no money during the second half of 2013 to support candidates. Thus, none of the promised get-out-the-vote activities happened. Of the total money raised, less than one-half of one percent was donated to Mr. Cuccinelli and none of it was spent in support of him. The FEC reports did show that the PAC made many payments to the companies associated with the individuals who ran the PAC.

The Lanham Act Claim

The complaint's primary allegation is that the defendants violated the Lanham Act's prohibitions on false advertising. Specifically, it claimed that the defendants were competing with the Cuccinelli campaign to raise contributions from the same donor base. It alleged that the promises highlighted in the emails were literally false or misleading based on how the money was actually spent. In order to fit into the Lanham Act, the complaint also focused on the commercial nature of the solicitations—that both defendants and the campaign were in the political fundraising marketplace.

This is important, because, as the defendants argued, the Lanham Act would not apply to advertisements that are not "commercial speech" made for the "purpose of influencing consumers to buy the defendant's good." Commercial speech is defined as a statement that does no more than propose a commercial transaction, or a statement that is related solely to the economic interests of the speaker and its audience. The defendants argued that the emails included significant political speech, which receives significant First Amendment protection, because it urged people to support Mr. Cuccinelli, included analysis of the election, and criticized his opponents.

The defendants made other arguments as well. First, they argued the transactions were not purchases subject to the Lanham Act, because they were donations, not tied to any goods. The complaint tries to get around this by arguing that fundraising is a commercial practice. Second, they argued that statements could not be proven as false because they were nothing more than puffery. Finally, they argued that the claims for get-out-the-vote activity were all made subject to being able to raise the necessary money; they didn't raise enough and so they didn't execute.

The court did not rule on the motion for summary judgment (indeed, it held a settlement conference before the plaintiffs even responded to the motion), so we do not know how the court would have ruled on these arguments. Nonetheless, Mr. Cuccinelli provided a roadmap for how to frame fundraising emails as commercial speech related to transactions.

Conclusions

Without a ruling on the motion for summary judgment, there is no precedent to bring the Lanham Act into the political world. Mr. Cuccinelli is not the first or the last candidate to have his name used to raise money, so we will have to see if other candidates try something similar in the future. Mr. Cuccinelli's complaint was the result of a year's worth of investigation, filed well after the election. Perhaps in the future, candidates will try to get into court sooner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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