Katherine Heigl and Duane Reade

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This case is based on a real situation between actress Katherine Heigl and drugstore Duane Reade. The lawsuit that resulted from the situation was settled out of court in a confidential settlement. Cases may settle out of court for a number of reasons – the parties do not want the expense of a lawsuit, the parties are uncertain of their likelihood of success, the parties want to avoid any potential negative publicity associated with the situation, etc. Because this case was settled out of court with a confidential settlement, we truly do not know who might have won the lawsuit. There is no real indication of admission of wrongdoing. As such, this case is a good case for a discussion of the ethical aspects of the decision.

 

Katherine Heigl

Katherine Heigl[1] was born in Washington DC in 1978, the youngest of four children.  When she was just seven years old, her 15-year-old brother was killed in a tragic car accident. At age 9, Katherine became a model with the international Wilhelmina modeling agency and starred in commercials for products like Cheerios within a few months.  In 1994, she was nominated for a Young Artist Award for her theatrical work and also was on the cover of 17 magazine.  In 1996, her parents were divorced and her mother was diagnosed with breast cancer. Nearing her 19^th birthday, she moved to Los Angeles in 1997 with her mother (who became her agent) and won parts in several small shows before being cast in Roswell. She had small parts in several shows and movies before being cast as Izzie for a five-year run in Grey’s Anatomy. While working with that show, she started her own production company. Since leaving Grey’s Anatomy, she has worked in several movies and television shows. Heigl has won several awards for her acting, including two Character and Morality in Entertainment Awards (2003, 2005), one Emmy for Supporting Actress in a Drama, and two People’s Choice Awards (2008, 2010). She is a major supporter of organ donation (because of her brother’s death) and founded the Jason Debus Heigl Foundation in his name to increase awareness of inhumane treatment of animals. In addition, she works with the Heigl Hounds of Hope, rescuing large dogs from kill shelters, and the Heigl Foundation’s Networking Program which financially supports rescue shelters instead of kill shelters. As an adult, Heigl purchased property in Utah and is a citizen of the state of Utah.

 

Duane Reade

Duane Reade is health and beauty chain in New York City (on Broadway between Duane and Reade streets) that was founded in 1960 by three brothers.[2] The store was a combination pharmacy and quick-stop shop for items needed by people on their way to and from work – cosmetics, hosiery, over-the-counter medications, and similar items. By 1973, they had nine stores in Manhattan. By 1989 the company had 33 stores, annual sales of $236 million, and was the 25^th largest drugstore chain in the U.S. The brothers sold the chain to Bain Capital Inc. in 1992. During the mid-’90s the chain continued modest growth but was constantly challenged by larger, national chains that had moved into the New York City market. The company went public in 1998 with 67 stores. By 2004, the chain had 239 stores when Oak Hill Capital Partners bought the company. Under Oak Hill, the company worked with a New York advertising firm to reposition itself and remind New Yorkers that it was a hometown company through its “Duane Reade. Your city. Your drugstore” tagline. In 2010, Oak Hill sold the chain to Walgreens for $1.18 billion. As of 2014, Duane Reade was a Delaware corporation with its headquarters in New York. It continues to exist as a separate brand in the New York metropolitan area.

 

The Interaction

In mid-March, 2014, Katherine Heigl went in to a Duane Reade store in Manhattan and purchased some items. On her way out of the store, a photographer (paparazzi) snapped her picture. That picture was posted on the celebrity gossip and entertainment news website JustJared.com.[3]  Someone in marketing at Duane Reade or Walgreens found the picture of Heigl leaving the Duane Reade store. Duane Reade had a Twitter account with over 2 million followers as well as a significant following on Facebook.

 

The Question(s) 

Participants can be asked to serve as an advisor to the marketing department (or as a decision maker in the marketing department) of Duane Reade and should assess the question, “Should Duane Reade use the picture in its social media campaign?”

 

Epilogue

The picture, with a description that included her name, was used in Twitter and on Facebook. On Twitter, the caption for the picture read, “Love a quick #DuaneReade run? Even @KatieHeigl can’t resist shopping #NYC’s favorite drugstore.” Katherine Heigl found out about the tweet (probably because they tagged her in it) and sued Duane Reade in federal court for $6 million. She sued under the federal Lanham Act (trademark) for false advertising, claiming a false endorsement; New York Civil Rights Law, Sections 50 and 51 for misappropriation of a name or picture without permission for advertising purposes; and the common law claim of unfair competition for misappropriating the picture from JustJared, and using it out of context to create a false endorsement. The case settled out of court with a confidential settlement agreement.