The Garvey case has been a test for the Federal Trade Commission. It stems from the agency's pursuit not just of company principals but also Mr. Garvey, who made several infomercials and appearances for two products of Enforma Natural Products, "Fat Trapper" and "Exercise in a Bottle." In spots and public appearances from 1998 to 2000, Mr. Garvey made untrue statements about the products, according to the FTC.
The ruling by U.S. District Court Judge Gary Allen Feess comes as the FTC readies a workshop on diet-drug ads. The agency has also issued several warnings to media companies about the need to review some ad claims.
Lawyers said the lower-court case is viewed by both the ad industry and the FTC as a test of how far the agency could go in pursuing product spokespeople and others who profit from marketing dubious products-including producers, ad agencies and perhaps the media itself.
The FTC earlier settled allegations with Enforma that Fat Trapper could "trap up to 120 grams of fat per day" and that Exercise in a Bottle didn't work. But it also took the unusual step of demanding Mr. Garvey and a co-host of the infomercial put their earnings toward a fund to compensate consumers.
The FTC argued that Mr. Garvey, whose management company got $7,500 plus royalties to make the infomercial (the amount exceeded more than $1 million) went too far in the program, making statements like "You can eat what you want and never, ever, ever have to diet again." The agency charged he misled consumers and also crossed the line between being an actor in a spot and becoming a product promoter. The FTC cited appearances on talk shows and elsewhere to say he showed "a reckless indifference to the truth," a legal standard that made him liable.
"Our view is he wasn't just a paid actor. He participated more deeply than that," said Heather Hippsley, the FTC's assistant director of advertising practices. "He should have realized that the claims he made were so outrageous they couldn't possibly be true."
Mr. Garvey, however, claimed he was an actor reading a script. While the FTC pointed to his having rewritten parts of the scripts, his lawyer, Edward F. Glynn Jr., argued that the rewriting merely put the words into Mr. Garvey's speech patterns. "Steve and his wife used the products and his wife had lost 27 pounds, but he didn't act on the shows like he used the products," he said.
The judge in 2001 had sided with the FTC in an initial ruling. But in the latest order, filed Oct. 31, he said the FTC hadn't shown that Mr. Garvey was sufficiently involved to warrant a money seizure. "[Garvey] had a very limited role," the judge wrote, adding that Mr. Garvey's occasional appearance on cable shows outside the infomercial weren't sufficient to make him an endorser, nor to make his statements knowingly false.
While Mr. Hendrickson called the decision "a stunning defeat for the FTC," he noted the judge didn't rule out the FTC acting, but only that the situation in the Garvey case didn't warrant action.
Judge Feess announced his plan to rule against the FTC in a "notice of intended ruling" and isn't expected to issue a final ruling for several weeks. FTC officials said they wouldn't make any decision on whether to appeal until the final ruling is issued.