A week before American Apparel agreed to pay Woody Allen $5 million for misappropriating his image, a judge had shredded the clothing company's First Amendment defense based on its CEO's “mental processes,” On Point has learned.

The settlement of Allen's publicity rights suit was announced May 18 as the case was about to go to trial. He had alleged that American Apparel's billboard advertising campaign featuring a still photo of him dressed as a Hasidic Jew from the film “Annie Hall" was a “blatant misappropriation” of his image.

Neither side said much at the time about why they had settled the case, but U.S. District Judge Thomas P. Griesa's rulings at a pretrial hearing May 11 –- in which he said American Apparel's liability was "very clear" -- provide much of the missing context.

American Apparel's defense against liability was that the billboards were a constitutionally protected parody in which company CEO Dov Charney, who has been accused by employees and others of bizarre sexual behavior in the workplace, used Allen's image to “artistically express” his own thoughts on “media sensationalism.”

According to a transcript of the May 11 hearing obtained by On Point, American Apparel attorney Stuart P. Slotnick said evidence related to the disclosure in 1992 of Allen's affair with his stepdaughter, Soon-Yi  Previn, was relevant to that defense.

Charney -- “a very big Woody Allen fan” -- had an “epiphany” when he saw “Annie Hall” one night, Slotnick explained. Not only did he feel like Allen's character in the movie, but he also felt like “Woody Allen, the person behind the character, because Woody Allen, too, was subject to public scandal.”

The Soon-Yi scandal was “a part of my client's thought process of what he did and why he used this image,” Slotnick said.

But the Yiddish phrase on the billboards expressed nothing about media sensationalism -– according to Allen attorney Michael P. Zweig, it means “either 'grand rabbi' or 'our spiritual leader.'” And Judge Griesa ruled the Soon-Yi evidence inadmissible.

It would have been one thing, he said, if Charney had written an article to “convey how he was affected emotionally” by seeing “Annie Hall.” But the billboards were something “merchants use, businesses use” and the Soon-Yi evidence

really does not contradict the clear commercial use of this image. It doesn't contradict it at all. And there has to be some objective view of the problem. And if somebody puts a clearly commercial type of material out and says, "Well, I had it in the back of my mind to write about my own personal mental processes," it is no defense.

The argument of American Apparel co-counsel Ryan Farley that “you have to examine what Mr. Charney's intent was” didn't get far either. “[T]hat billboard is the kind of thing that is usually associated with advertising, and if that billboard has American Apparel on it, that is sufficient purpose,” Griesa said.

“To have in Hebrew 'Our spiritual leader,' who is the 'our'?” he asked. “It is American Apparel. American Apparel's name is down there.”

With the liability defense in shreds, American Apparel agreed to pay Allen $5 million in damages even though it had previously attacked his claim for at least $5.68 million, saying it “vastly” exceeded what he had been paid for celebrity endorsements in the past.

There was, moreover, no confidentiality clause in the settlement agreement -– which is unusual in a celebrity case -- and no language to the effect that the defendant denied liability.

By Matthew Heller
6/16/09