## Facts

- A retired women’s investment club marketed as the “Beardstown Ladies” gained national attention for claiming a 10-year average annual investment return of 23.4%, allegedly outperforming major benchmarks.
- Buena Vista-affiliated publishers and a videotape producer published and marketed books and a videotape about the club.
- Product covers and packaging prominently touted the club’s purported superior investment returns as a selling point.
- Later analyses concluded the club’s reported returns were substantially overstated due to accounting errors (including treatment of deposits).
- Russell Keimer sued on behalf of the general public, alleging the cover and packaging statements were false or misleading, and that defendants knew or should have known of their falsity.
- Keimer sought injunctive relief, corrective advertising, and restitution/disgorgement under California’s unfair competition and false advertising statutes.

## Issues

1. Whether promotional statements on book and videotape covers that repeat specific investment-return claims are commercial speech or fully protected noncommercial expression.
2. Whether the First Amendment bars claims under Business and Professions Code §§ 17200 and 17500 at the pleading stage when the advertising is alleged to be verifiably false or misleading.

## Decision

- The Court of Appeal reversed the judgment sustaining defendants’ demurrers without leave to amend.
- The court held the complaint stated causes of action under Business and Professions Code §§ 17200 (unfair competition) and 17500 (false advertising).
- The court concluded the challenged cover and packaging statements, as pleaded, were commercial speech aimed at inducing purchases.
- Because the statements were alleged to be false or misleading and objectively verifiable, the First Amendment did not bar regulation in this context.
- The matter was remanded for further proceedings.

## Legal Principles

- Commercial speech includes advertising or promotional statements proposing or encouraging a commercial transaction; it receives limited First Amendment protection compared to noncommercial expression.
- False or misleading commercial speech is not protected by the First Amendment and may be prohibited or regulated.
- Business and Professions Code § 17500 prohibits disseminating untrue or misleading advertising statements that are known, or that in the exercise of reasonable care should be known, to be untrue or misleading.
- Business and Professions Code § 17200 prohibits unlawful, unfair, or fraudulent business acts or practices and may incorporate violations of other laws, including § 17500.
- The presence of expressive content in the underlying book or videotape does not immunize separate promotional copy on covers or packaging when that copy functions as advertising and makes verifiable factual claims.

## Conclusion

The court held that allegedly false, verifiable investment-return claims used as promotional copy on book and videotape covers constitute commercial speech subject to California’s false advertising and unfair competition statutes, and the First Amendment did not justify dismissal at the demurrer stage.


Keimer v. Buena Vista Books, Inc., 75 Cal. App. 4th 1220, 89 Cal. Rptr. 2d 781 (Ct. App. 1999)