Legal Analysis of Lohan v. E*Trade
On February 7
th, 2010 E*Trade Securities LLC, an online financial services company, aired a commercial during the Super Bowl.
[1]As part of an ongoing campaign, the commercial featured talking babies comically discussing their use of E*Trade software. In the ad, a boy tells a girl via webcam from their respective cribs that he could not call the previous evening because he was using E*Trade to “diversify my portfolio and take control.” The girl responds, “and that milk-a-holic Lindsay wasn’t over?” The boy says, “Lindsay?” and then a new baby girl enters the scene saying, “milk-a-what?” concluding the commercial.
On March 8th, 2010 Lindsay Lohan filed suit against E*Trade Securities LLC claiming that “…the ditzy, ‘milk-a-holic’ baby girl named Lindsay is modeled after [Lohan] and improperly invoked her likeness, name, characterization, and personality without permission, violating her right to privacy.”[2] Lohan claimed $50 million in compensatory damages, as well as $50 million in exemplary damages.[3] The suit was brought in Nassau County Supreme Court in the State of New York. In the complaint issued by Lohan’s lawyers, Stephanie Ovadia and Anand Ahuja, the main argument is that: “24. The defendants took the plaintiff’s name and characterization and used in “ADVERTISEMENTS” without plaintiff’s consent and authorization,” “28. Defendants have acted knowingly, willfully and in bad faith,” and “29. Defendants, and their agents, have committed tortuous acts within the State of New York, which and are causing injury to the plaintiff.”[4]
It is important to consider Lohan’s past behavior when considering this case. An MTV article discussing the lawsuit summarizes: “Lohan was ordered to serve one day in jail in 2007 following guilty pleas to drunk driving and cocaine possession. The “Mean Girls” actress has also spent time in several rehabilitation facilities to deal with her dependency issues.”[5] Thus, due to the public nature of Lohan’s personal life, any statement poking fun at Lohan’s dependency issues could be viewed as actual malice by the defendant.
Law & Analysis
The law relevant to the crux of the case is the tort of commercial exploitation, which falls under the category of business torts. Commercial exploitation “prohibits the use of someone’s likeness or voice for commercial purposes.”[6] Therefore, it is the onus of the plaintiff to prove that the advertisement was referring to Lohan and that the defendant profited from using her persona without her consent.
Lohan was not physically portrayed in the advertisement nor mentioned by full name. It could be argued that the baby presumed to be the “Lindsay” that they are referring to does not bear much of a likeness to Lohan. Ovadia, a lawyer for the plaintiff, argues that, “…[Lindsay Lohan] has the same single-name recognition as Oprah or Madonna. Many celebrities are known by one name only, and E*Trade is using that knowledge to profit.”[7] A judge or jury might find a distinctive difference between Oprah, Madonna, and Lindsay Lohan since Lohan’s first name is not a “brand” in the same way that Oprah and Madonna’s are.
Since the case was eventually settled out of court, E*Trade never had an opportunity to make its case, and issued very short press statements denying the allegations. Documents from the creative agency that developed the ad were eventually leaked to Esquire Magazine.[8] The documents show that the name “Lindsay” was formerly “Deborah,” but this was changed during production. The leaked documents show that the commercial never seemed like it was intended from the beginning, or throughout the process, to be a satire of Lohan’s personal life. Undoubtedly, these documents would have surfaced during discovery, as would the defense that the advertising agency changed the name in homage to a woman named Lindsay, who worked on the ad.[9] These facts were likely discussed during the settlement process.
It is important to note that Lohan would not have a strong defamation suit against E*Trade; her claim of slander would have likely been quashed. In order to prove slander the plaintiff must prove all of the following: that the statement was defamatory, the statement was false, it was communicated, and that there was a resulting injury to the plaintiff. Since Lohan is a public personality, the landmark case New York Times Co. v Sullivan ruled that actual malice or reckless disregard of the truth on the part of the defendant had to occur.[10] Lohan would run into the same problem alleging defamation as she would commercial exploitation – that the “Lindsay” the ad was referring to was her.
Assuming that the “Lindsay” in the ad was Lohan, she could argue that the statement was defamatory because it implied that she had another addiction, and could get testimony that she was not, in fact, a “milk-a-holic.” The difficult part of her defamation argument would be convincing the judge or jury that viewers took being a “milk-a-holic” as a serious condition. The statement would, however, further worsen her reputation by bringing attention to her dependency issues. It is already known and agreed upon that the commercial was communicated to a very large audience, so communication could not be disputed. Finally, Lohan would have to prove injury. Lohan could argue that she could not get work after the ad appeared, that she was publically ridiculed, or a number of other emotional injuries. Even if her argument was air-tight, proving actual malice would be difficult given the leaked evidence and wealth of testimony that the ad agency and E*Trade could provide.
On September 20th, 2010, the case was settled.[11] According to the New York Post, Lohan’s mother Dina said that, “she was very pleased with the E*Trade deal,” and a spokesperson for E*Trade said, “Basically, it was a business decision to move on…We are pleased to have the matter behind us.”[12] Reading between the lines, E*Trade probably wanted to avoid a costly and highly publicized trial, and Lohan was willing to settle for what E*Trade thought was a reasonable amount.
Lohan’s claim for $50 million in compensatory and $50 million in punitive (exemplary) damages were undoubtedly optimistic given the analysis of the facts. Compensatory damages are intended to restore the defendant back to where they were before the alleged incident.[13] Lohan, noted for being out-of-work and low on money, surely could not have lost anywhere near that amount because of the commercial in terms of income or emotionally (it was not by any means an outrageous advertisement). Asking for $50 million in punitive damages is excessive in this case. Punitive damages are intended to punish for “extreme and outrageous” behavior,”[14] neither of which E*Trade is guilty of. An example of a commercial exploitation case that might include punitive damages is Allen v. American Apparel, where American Apparel advertised billboards featuring a still shot from Woody Allen’s film Annie Hall without any permission whatsoever. A much better argument can be made that American Apparel’s behavior was more extreme and outrageous than E*Trade’s.[15]
Ethically, should E*Trade and their ad agency have recognized that the commercial could be interpreted as a personal attack on Lohan? Potentially so. The ad was written in poor taste to Lohan’s numerous run-ins with the law regarding her addictions. Many, if not most viewers probably associated the mention of Lindsay, along with an implied addiction, with Lindsay Lohan. With over six million views on YouTube alone, the ad spread virally (which can also be attributed to the case at hand). Interestingly, the commercial is still on E*Trade’s official website for the campaign (www.etrade.com/tv), meaning that the removal of the ad was not part of the settlement. At the end of the day, it would appear that Lohan cared more about a cash settlement than her image.