Presidio Enterprises, Inc. v. Warner Bros. Distributing Corp.
784 F.2d 674 (1986)
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Rule of Law:
A seller's exaggerated, subjective, and predictive statements about a product's quality or potential success are non-actionable expressions of opinion or "puffery," not fraudulent misrepresentations of material fact, even under consumer protection statutes.
Facts:
- Warner Bros. Distributing Corporation ('Warner') was producing a big-budget film titled 'The Swarm,' directed by the successful Irwin Allen and featuring numerous well-known actors.
- In August 1977, Warner sent a promotional brochure to exhibitors, including Presidio Enterprises ('Presidio'), describing the unfinished film as a "blockbuster for the summer of ’78" and "the most ‘want-to-see’ movie of the year."
- In December 1977, Warner sent a second brochure calling the film "one of the greatest adventure-survival movies of all time," a "chilling, riveting, harrowing, cinematic experience," and promising it would be "Irwin Allen’s biggest and best to date."
- Warner solicited bids for the film through a common industry practice known as "blind bidding," requiring exhibitors to make a noncancellable financial commitment without having seen the movie.
- Presidio, an experienced film exhibitor, submitted bids totaling $65,000 for the rights to show 'The Swarm' at two of its theaters.
- Warner accepted Presidio's bids, and the parties entered into a binding contract.
- Upon its release in July 1978, 'The Swarm' was a commercial failure, resulting in Presidio sustaining a financial loss of over $56,000.
Procedural Posture:
- Presidio Enterprises sued Warner Bros. Distributing Corporation in federal district court.
- Presidio alleged claims of common law fraud, negligent misrepresentation, and violations of the Texas Deceptive Trade Practices—Consumer Protection Act (DTPA).
- A jury found Warner liable on several DTPA claims and awarded damages.
- The district court entered a judgment in favor of Presidio for $521,483.23, which included trebled damages, attorney’s fees, and interest.
- Warner Bros. (appellant) appealed the judgment to the U.S. Court of Appeals for the Fifth Circuit.
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Issue:
Do a film distributor's promotional statements calling an unreleased movie a "blockbuster," the "most 'want-to-see' movie of the year," and "one of the greatest adventure-survival movies of all time" constitute actionable misrepresentations of fact under the Texas Deceptive Trade Practices—Consumer Protection Act?
Opinions:
Majority - Goldberg, Circuit Judge
No, a film distributor's promotional statements do not constitute actionable misrepresentations of fact. Such statements are non-actionable expressions of opinion or 'puffery' because they are not objective statements of fact that can be empirically verified. The court reasoned that actions for misrepresentation must be based on statements that can be judged true or false. Warner's claims used vague terms like 'blockbuster' and 'greatest,' which are inherently subjective and matters of opinion. Furthermore, predictions about a film's future success are speculative and not guarantees of fact. The court rejected Presidio's argument that Warner's 'special knowledge' made these opinions actionable, holding that such promotional hyperbole is common 'sales talk' that experienced professionals like Presidio's executives could not have reasonably relied upon as factual representations. This common law puffery doctrine applies even under the Texas Deceptive Trade Practices Act (DTPA), which does not transform subjective aesthetic judgments into verifiable facts.
Analysis:
This decision reaffirms the vitality of the common law "puffery" defense within the framework of a modern consumer protection statute. It clarifies that even broad remedial statutes like the Texas DTPA do not eliminate the fundamental distinction between objective, verifiable facts and subjective, promotional opinions. The ruling provides significant protection for advertisers, particularly in creative and speculative industries like entertainment, by confirming they are allowed a degree of hyperbole and exaggeration in promoting their products without facing liability for misrepresentation when those products fail to meet hyped expectations.
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