Final answer:
The Reverend Jerry Falwell lost his case against Hustler Magazine because the ad parody was protected by the First Amendment, and he was unable to prove that it was made with actual malice.
Step-by-step explanation:
The Reverend Jerry Falwell was unable to win on his appropriation (privacy) claim against Hustler Magazine because the court found that the First Amendment protected the magazine's right to parody a public figure. In the landmark case, Hustler Magazine, Inc. v. Falwell, the United States Supreme Court ruled that public figures such as Falwell could not recover for emotional distress caused by caricatures, parodies, and satires unless they could show that the statements were made with actual malice, meaning with knowledge that they were false or with reckless disregard as to whether or not they were true. Since Hustler's ad parody was not believed to be stating actual facts about Falwell, but rather was a satirical and exaggerated portrayal meant to invoke humor, the claim of emotional distress was not upheld.