Pink Iron, a women's fitness gym in Los Angeles run by Holly Holton, a celebrity personal trainer and former Ms. Fitness America contestant, sued Jay McGraw, the son of TV personality Dr. Phil, claiming he used the gym's branding for a series of home workout DVDs when Horton refused to hand over the rights to the name of her gym.
Like his father, Jay McGraw is involved in television dealing with health advice. Jay McGraw produces the TV show "The Doctors." He allegedly told Holton "My Dad will market the shit out of Pink Iron."
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Then in December 2010, McGraw allegedly formed the company Pink Iron Home Fitness Inc. without informing the Pink Iron gym. At the end of the following month, McGraw's attorney Christopher Chatham (not a defendant) presented Holton with agreements.
Chatham allegedly told Holton she and her gym "will get exposure from Jay, unlike any you could ever get on your own" and that she "would be on 'The Dr. Phil Show' and 'The Doctors,' and that the name will be everywhere."
Holton and Pink Iron's president Rick Robles "told Chris Chatham that they were uncomfortable with the agreement as Pink Iron was their creation and 'baby' and did not want to simply give the name away," the complaint states.
It continues: "At that time, Chris Chatham became almost aggressive, stating that Jay McGraw could do this for anyone and that they were lucky that he picked them. Chris Chatham strongly recommended that they take the deal because once they say 'no,' then Jay McGraw will not want to have anything to do with them and that there was no negotiating the initial agreement. Jay McGraw is the author of a book titled 'Life Strategies for Dealing with Bullies.'"
Holton's Pink Iron and McGraw's Pink Iron Home Fitness reached an agreement in January where the gym owns the character mark in connection to health club services and personal training, the complaint states.
The agreement also allowed their marks to be used to create home fitness videos and fitness clothes and accessories, which would be sold at Pink Iron gyms. Additionally, Holton would be the spokesperson for the company, according to the complaint.
However, just one month after signing the agreement, Pink Iron Home Fitness' president Scott Waterbury terminated it, even though the agreement required a six-month written notice of termination, the complaint states.
The article says former fitness competitor Cynthia Pasquella created a weight-loss program called the "P.I.N.K." method (Power, Intensity, Nutrition, and Kardio), which it reports was presented on Dr. Phil's show and incorporated by Scott Waterbury.
The complaint claims it "appears to defy logic" that McGraw told Newsweek that he "had no involvement in the creation of the P.I.N.K. Method diet and...merely coordinated the publication of the book."
The Newsweek article said that the P.I.N.K. Method "has also become a commercial hit [as was 'The 17 Day Diet'] after a similarly intensive promotional effort by the McGraw's; the plan sold 150,000 copies in three months, according to its author," the lawsuit states.
"It does not appear to be a coincidence that defendant Pink Iron Home Fitness' spokesperson, Holly Holton, and defendant Pink Method's spokesperson, Cynthia Pasquella, share a striking resemblance," according to the complaint.
The packed audience on the Dr. Philshow is hungry for advice. It is four days after Thanksgiving 2010, not long before the next holiday season of heavy feasting is to begin. Phil McGraw, the folksy host, is dressed in a light gray double-breasted suit, impeccably tailored to fit his brawny 6-foot-4 frame. He stands behind a festive holiday table laden with desserts. "Bad news," he warns the crowd as the hourlong show begins. "You could gain 12 pounds during the holidays. Twelve pounds!"
The $27 hardcover book would become a national bestseller, generating a host of spinoff products, including a workout video, Spanish and audio editions, and a special 17 Day Diet Cookbook. But who exactly are "these guys," as Dr. Phil put it?
The Dr. Phil show and its sister program, The Doctors, which is run by McGraw's 32-year-old son, Jay, hosted enthusiastic discussions of The 17 Day Diet during 17 episodes, including several reruns. The marketing could be relentless: on Jan. 5, 2011, Dr. Phil mentioned The 17 Day Diet 27 times in one show.
What those buying the book didn't know: Jay McGraw has had a financial interest in both The 17 Day Diet and another weight-loss plan he and his father heavily promoted. That plan, the P.I.N.K. Method, is a weight-loss program aimed specifically at women. It has also become a commercial hit after a similarly intensive promotional effort by the McGraws; the plan sold 150,000 copies in three months, according to its author. In the case of the P.I.N.K. Method, Dr. Phil in January of this year acknowledged on his show for the first time that his son was the publisher.
When Newsweek presented the two McGraws a series of questions about the family's business connections to the diets, attorney L. Lin Wood sent written responses from both men. Jay McGraw confirmed that he helped publish and distribute both The 17 Day Diet and The P.I.N.K. Method, and said he was "compensated for my efforts in a manner that is customary in the publishing industry." Phil McGraw said he had "never directly or indirectly received a single dime" from the diet enterprises, and thus he was not "required to explain that my son assisted in publishing" The 17 Day Diet on his show.
"There is a good chance that this violates the FTC guidelines on endorsements," says Angela Campbell, professor of communications law at Georgetown University Law Center, and an expert in Federal Trade Commission regulations, after reviewing documents related to the promotion of the two books. The involvement of Dr. Phil's son, she explained, "is relevant to how much weight the consumer would put on the recommendation, and so I think it is deceptive not to disclose the connection."
Another legal expert, Rebecca Tushnet, a Georgetown Law professor who specializes in false-advertising issues, said that such a case might not require legal disclosure. She said the FTC was chiefly focused on people who are paid directly for their endorsements. "The FTC guidelines are really targeted at that kind of economic relationship," Tushnet said. Still, she said, "Maybe this should be done by the court of public opinion rather than the law."
Mary Engle is the FTC official who polices advertising and endorsements. She declined to entertain questions about specific shows. But when asked about a hypothetical talk-show host whose endorsement might financially benefit his son, she said: "Most parents want their kids to succeed, and you might have a bias there. And that's the sort of thing that's behind the need for disclosure." Engle would not say whether the hypothetical constituted a violation. The standard for legal disclosure, she says, is this: "Is that connection material? And that's answered by thinking about whether the audience would reasonably expect that connection and if the answer is no, then it should be disclosed."
Wood, an Atlanta-based lawyer for the talk-show host, said in a statement to Newsweek: "Dr. Phil McGraw makes every effort to insure that his show meets all applicable broadcasting rules and regulations. Long before learning of Newsweek's investigation, Dr. McGraw employed FTC lawyers who reviewed the issues discussed in your article. To suggest that Dr. McGraw and his son have acted in bad faith or in violation of any law is blatantly false and impugns the integrity of these well-respected professionals."
Around the same time, McGraw also signed on to endorse a line of dietary supplements called Shape Up! With Dr. Phil McGraw. The ingredients matched the recommendations in McGraw's book. The Federal Trade Commission began investigating the product, which cost about $120 a month to use. The probe was dropped only after CSA Nutraceuticals, the distributor of Shape Up! With Dr. Phil McGraw, agreed to stop selling the supplements. Then a class-action suit was filed, bringing with it a storm of bad publicity. ("Diet Pickle for Dr. Phil," blared a headline in the New York Daily News.) In 2006 McGraw, CSA Nutraceuticals, and Alticor, the parent company of Amway, agreed to a settlement worth $10.5 million. McGraw, like the other defendants, admitted no wrongdoing, and he was not required to contribute to the payout.
It was just four years after settlement in that case that Dr. Phil began promoting The 17 Day Diet, authored by Dr. Michael Moreno, a telegenic California physician. In the book Moreno dismisses the medical field's standard caveats about diets: "Despite what many nutritionists have preached for years," Moreno writes, "rapid-weight-loss diets can be healthy if done correctly."
In a phone interview with Newsweek, Moreno explained how the book came about. The San Diego family practitioner had made guest appearances on The Doctors, the Dr. Phil spinoff hosted by four board-certified physicians and run by Jay McGraw. Moreno was a natural on TV, and The Doctors started booking him to discuss health issues. Halfway through 2010, Moreno says, casual conversations with staff at The Doctors turned to serious talk about creating a diet book. Although Moreno had no special expertise in weight-loss research, he had a host of patients whose medical problems revolved around obesity. "I did an outline and weaved in some of my patients' stories," Moreno says.
A Los Angeles attorney named Christopher Chatham, who has appeared as a guest on Dr. Phil's show twice according to a search of transcripts, did much of the legal work. California state records show that he's the lawyer who incorporated 17 Day Diet Inc. in the fall of 2010, and also incorporated a firm called M Print Publishing, which would publish The 17 Day Diet. (Chatham did not return calls seeking comment.) The literary agent who would represent The 17 Day Diet was Jan Miller, who also works as an agent for both Phil and Jay McGraw. (Neither Miller nor Greenwood-Robinson returned calls seeking comment). 152ee80cbc
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