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N.Y. Court Dismisses 'Beardstown' Fraud Suit
Calvin Reid -- 2/7/00

The Supreme Court of the State of New York has dismissed one of two suits charging Buena Vista Publishing with false advertising and fraud over the cover claims of its 1998 title The Beardstown Ladies Common-Sense Investment Guide. A victory by the plaintiffs--individiuals who purchased the book-- could make publishers liable for the accuracy of the language they use to sell titles.

Victor A. Kovner from the firm Davis Wright Tremaine, Buena Vista's New York lawyer, told PW that the courts have dismissed the suit filed in New York and that plaintiffs have 30 days to appeal. "This is an extremely good ruling for publishers of all kinds. But it's not over yet." A parallel suit has been filed in California. That suit was dismissed, and then that dismissal was reversed by the California appellate courts, which held that a book jacket is unprotected commercial speech. Buena Vista Publishing (with the support of the AAP and other media trade associations) has appealed to the California State Supreme Court to review the appellate decision.

Kovner was optimistic about the chances of overturning the California ruling, calling the issues "identical to the New York suit. Is the cover protected speech, is it commercial speech, is the publisher liable to the reader for the author's errors?"

Both suits charge the publisher with fraud over claims on the Beardstown Ladies book jacket that the ladies' investment club had achieved a 23.4% annual return on its investments. The claim was revealed to be erroneous. The ladies had achieved only a 9.1% annual return.

Rejecting the plaintiffs' charges that book jacket claims are commercial speech, the New York State judge ruled that book jacket claims are protected by the First Amendment and that erroneous statements of fact are "inevitable in free debate." The judge noted that the First Amendment severely limits publishers' liability for the content of their books. Strict liability for errors, said the judge, "may lead to intolerable self-censorship."

The Beardstown Ladies Common Sense Investment Guide sold more than 800,000 copies in 1998. The plaintiffs are trying to recover costs of the book for anyone who bought it and legal fees for the suit.

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