College Savings Bank May Sue Calif. Treasurer
LOS ANGELES -- College Savings Bank of Princeton, N.J., said it is considering legal action against the California state treasurer over her criticism of the bank's advertisements in Newsweek magazine.
Escalating its feud with Treasurer Kathleen Brown, the bank retained Los Angeles lawyer Shirley Hufstedler to explore whether Ms. Brown may have "misused the power of her office" in denouncing the bank's magazine ads.
In those ads, College Savings and its president, Peter A. Roberts, questioned the usefulness of zero coupon bonds sold by California and other states to help parents save for their children's college educations.
A Competing Bank Product
College Savings offers a product for the same market called the CollegeSure CD -- and has termed the state-issued zeros "highly speculative" in ads placed in The Wall Street Journal and other publications.
Newsweek recently pulled one of the bank's ads after Ms. Brown wrote to complain that an earlier ad went too far in alleging that state college savings bonds are "unsafe and unsound."
While Ms. Brown did not directly ask the magazine to ban the ad, she questioned Newsweek's "truth in advertising" standards.
In a press release Nov. 25, Mr. Roberts of College Savings announced his hiring of Ms. Hufstedler, a partner in Hufstedler, Kaus & Ettinger.
She is a former state appeals court judge and was the first secretary of education in the Carter administration.
Ms. Brown's father, former California Gov. Edmund G. Brown Sr., appointed Ms. Hufstedler to the California Court of Appeals in the late 1960s.
Basis for Lawsuit Unsure
It remains uncertain whether the bank has any basis for legal action against the California treasurer. But Mr. Roberts vowed, "We are very serious on this matter."
"Kathleen Brown may have violated the federal Civil Rights Act by misusing the power of her office to deprive the bank of its speech rights protected by the First Amendment of the United States Constitution," Mr. Roberts said in the press statement.
Mr. Roberts also cited a reply to Ms. Brown by Peter W. Eldredge, publisher of Newsweek.
In a Nov. 18 letter, Mr. Eldredge said he was "confident that [readers] are discerning enough to separate editorial matter from advertising copy."
Mr. Eldredge did not state whether Newsweek would print the College Savings ads again.
Newsweek said it withdrew the bank's ad Nov. 8 because it specifically disputed assertions by Ms. Brown and because she had not given a legal release to be named and quoted in the ad.
Other Publications Accepted Ad
The Wall Street Journal, The New York Times, California Journal, and San Francisco Chronicle have run the ad that Newsweek rejected, Mr. Roberts said.
A spokeswoman for Ms. Brown said the treasurer last week sent another letter complaining about the advertisements to Robert Higgins, director of advertising at The Wall Street Journal.
The spokeswoman did not say whether other letters would be sent.