HipSaver, which makes medical devices that are supposed toreduce the risk of hip fractures in the event of a fall, sued Kiel forcommercial disparagement from a 2007 article in the Journal of the American Medical Association that concluded that ahip protection device (not HipSaver’s) didn’t improve outcomes. Kiel conductedthe clinical trial that formed the basis for the article and was its leadauthor. The study described the trial, analyzedthe data, and concluded, among other things, that the trial “confirm[ed] thegrowing body of evidence that hip protectors are not effective in nursing homepopulations.”
The trial court granted Kiel’s post-discovery motion forsummary judgment, and the court granted HipSaver’s application for directappellate review. Finding no error, thecourt affirmed, while taking the opportunity to discuss the elements ofcommercial disparagement.
Kiel “has done research on osteoporosis, falls, and relatedbone fractures; has published over 125 papers in peer-reviewed journals; and isregarded by others as an expert on hip protectors.” He received a multimillion, 5-year grant fromNIH to study the efficacy of hip protectors, given that the findings of atleast 12 earlier studies had been mixed. He conducted a trial for two years involving over 1000 patients at 37nursing homes in 3 states. Residentswore a pad on one hip, but not the other, so they were their own controls. About 20 months into the study, the review boardrecommended termination “due to lack of efficacy and the low probability ofbeing able to demonstrate efficacy in the remaining years of the study.” The study ended and the researchers wrote upthe results for JAMA, which is ofcourse a highly respected and widely circulated journal. JAMA undertook a7-month peer review process before publishing.
HipSaver argued that Kiel knew or had reason to know thatthe product he tested had a different, inferior design to HipSaver’s product;that readers wouldn’t know this; and that they’d believe that the articleapplied to all hip protectors. The trialjudge ruled that HipSaver didn’t show falsity: its proposed expert testimonythat the clinical trial’s design was flawed didn’t necessarily mean that its scientificconclusions were false. Also, HipSaverhadn’t shown intentional falsity or reckless disregard for truth.
The court began by noting the differences between commercialdisparagement and defamation; the former targets harm to the economic interestsof the injured party arising from false, disparaging statements about theparty’s property, usually a product or service. The line between commercial disparagement and defamation can bedifficult to draw; false statements about a business’s lack of integrity ordishonesty can be defamatory.
Massachusetts follows the Restatement (Second) of Torts,supra at § 623A: “One who publishes a false statement harmful to the interestsof another is subject to liability for pecuniary loss resulting to the other if(a) he intends for publication of the statement to result in harm to [the]interests of the other having a pecuniary value, or either recognizes or shouldrecognize that it is likely to do so, and (b) he knows that the statement isfalse or acts in reckless disregard of its truth or falsity.” This includes an “of and concerning”requirement, and also requires special damages in the form of pecuniary loss.
The court here agreed with the trial judge: “any purporteddesign defects in the clinical trial were acknowledged by Dr. Kiel in thearticle, and did not necessarily render the challenged statements false.” Thearticle fully described the hip protector used, acknowledged that differencesbetween the clinical trial and previous studies “may have resulted from thetype of hip protector used,” and explained several possible limitations of theclinical trial. The conclusion recommended future studies of new hipprotectors. The statement that the study“add[ed] to” or “confirm[ed]” the “growing body of evidence” of ineffectivenesswasn’t false even if the design of the clinical trial was flawed. HipSaver didn’t allege that Kiel inaccuratelyinterpreted or reported the data. (Thus, the court had no need to reach whetherthe fact/opinion divide works in commercial disparagement as it does indefamation, where a statement cast as opinion can be actionable if it impliesthe existence of undisclosed defamatory facts.)
What about whether the statements were “of and concerning”HipSaver? Allowing a plaintiff who isn’treally identified to sue poses a threat of chilling speech. “Of and concerning” can be shown by proofeither “(1) that the defendant intended the words to refer to the plaintiff andthat they were so understood or (2) that persons could reasonably interpret thedefendant's words to refer to the plaintiff and that the defendant wasnegligent in publishing them in such a way that they could be so understood.” If the publication doesn’t use a person’sname or other readily identifiable descriptions, extrinsic proof is requiredthat a third person understood the reference. And where a group is targeted, “an individual member of the defamedclass cannot recover for defamation unless ‘the group or class is so small thatthe matter can reasonably be understood to refer to the member, or ... thecircumstances of publication reasonably give rise to the conclusion that thereis particular reference to the member.’”
HipSaver wasn’t mentioned in the article, and the hipprotector studied wasn’t commercially available, while HipSaver’s product was.The article gave a lengthy and detailed description of the device studied,which had distinct materials not present in the HipSaver product, and which wasonly for one hip, while HipSaver doesn’t make a one-hip product. The referenceto “hip protectors” generally being ineffective was insufficient to concludethat Kiel was specifically discussing HipSaver’s product. HipSaver alleged thatit was the second largest manufacturer in the US, but at least 22 othercompanies make hip protectors, and HipSaver had no third-party evidence thatothers understood the article as referring to or being about HipSaver and itsproduct. Indeed, HipSaver’s president/CEO stated that it was unlikely that thehip protector described in the article could be confused with HipSaver'sproduct. “Simply put, the article cannot be understood as referring toHipSaver, either expressly or by clear implication.”
What about knowledge of or reckless disregard forfalsity? (There was no need to adopt thedescription “actual malice” because the current standard was clear and precise.Also, here HipSaver was a limited purpose public figure because it injecteditself into the debate over the efficacy of hip protectors through its ads andsponsorship of its own research. More broadly, in any commercial disparagementclaim, the plaintiff must show knowledge/reckless disregard no matter whetherthe plaintiff is a public or private figure.) HipSaver didn’t argue that Kiel fabricated data, but rather that heignored or concealed evidence suggesting that the design of the clinical trialwas flawed and therefore must have published with reckless disregard. Not so.
The court emphasized the “scientific oversight” that wasintegral to both the trial and the article. The NIH appointed a review board for the study; four institutionalreview boards assessed the trial protocol (ed. note: though they shouldn’t havebeen reviewing for correct design!); JAMAput the article through peer review, which resulted in changes in response toreviewers’ comments. Given the conflicting results of earlier trials, Kiel useda different clinical trial to address deficiencies in earlier studies. “It isgenerally understood that scientific research is not characterized by perfecttheories, flawless studies, and desired results. Rather, the hallmarks ofscientific research are continuous inquiry, testing, debate, disagreement, andrevision.”
The challenged statements were Kiel’s interpretations of theaccurately reported data. “That concernsmay have been raised about the chosen design does not mean that Dr. Kielentertained serious doubts about the truth of the challenged statements as theywere a reflection of the achieved results.” The article “candidly” discussedthe flaws and limitations of the clinical trial, including whether the chosenpad was the best possible design and whether results from 1-sided hipprotectors would generalize to 2-sided protectors. There wasn’t sufficient evidence of recklessdisregard.
The court nonetheless analyzed whether HipSaver showed thatKiel intended, knew, or should have known that publication would result inpecuniary harm. As evidence of Kiel’sknowledge, HipSaver pointed to the fact that the name of the particular deviceused in the clinical trial was removed prior to publication because of an emailfrom the maker of that device, who said that including the name “might lead usto be involved in costly litigation and loss of market share.” Also, a HipSaver principal also sent an emailto Kiel: “From what I am hearing about Fall Guard in the nursing homes ... yourstudy will be just another nail in the coffin of the hip protector productcategory.” Kiel responded: “FallGard is superior to your untested product. Youare the biggest scam artist. The nail will not be in any coffin but your own.”The court agreed that these communications showed that Kiel recognized andunderstood that publication likely would cause makers of hip protectors,including HipSaver, pecuniary harm. (Note the relationship here between knowledge of likely harm and “of andconcerning.”)
In a footnote, the court rejected HipSaver’s argument thatKiel’s failure to disclose in the grant application his financial ties topharmacos that make drugs to promote bone density showed reckless disregard forthe truth. But HipSaver didn’t show thatbone density drugs compete with hip protectors in the market, or that Kiel’sresearch on such drugs biased or otherwise affected his clinical trialhere. Also, HipSaver contended thatKiel’s characterization of HipSaver’s principal as a “scam artist” showed thathe was ready to make statements without factual foundations. “Although this intemperate personal commentmay have reflected Dr. Kiel's dislike for Goodwin, it was not evidence of Dr.Kiel's attitude toward the truth or falsity of the challenged statements.” (What we say in email is not what we say in JAMA, though as this case shows wesometimes have to defend them both in public.)
Finally, the court considered whether HipSaver showedspecial damages. Where feasible, thisrequires showing specific losses of sales to identifiable customers. There’s anexception when a false statement has been widely disseminated and it would beimpossible to identify particular customers who chose not to buy theplaintiff’s products; in such cases, plaintiffs can rely on circumstantialevidence of lost markets as long as they eliminate other causes. They must stillshow that the disparaging publication was the direct and immediate cause ofthat pecuniary loss. (In a footnote, the court noted that some jurisdictionsallow a similar showing of harm without wide dissemination as long as theplaintiff can show a decline in business or lost growth opportunities and caneliminate other possible explanations for the decline. The court left the possible adoption of thisbroader exception for another day.)
HipSaver argued that, as the second largest manufacturer inthe US, it bore the full brunt of the ineffectiveness statement. But HipSaverdidn’t get any information from its customers about their purchasing decisions.The JAMA article was widelydisseminated, though. HipSaver usedexpert testimony to claim lost sales. But the experts didn’t opine that thealleged lost profits were a direct and immediate result of the article, ratherthan other factors. HipSaver didn’tanalyze the impact of prior clinical studies—allegedly “well-known” asimportant sales drivers—some of which had also been negative. It didn’t show whether any competitors hadalso experienced losses after the article was published, which would havesuggested a causal relationship. Plus, there were other causes of loss:HipSaver had sued its largest competitor for false advertising several yearsbefore the JAMA article. It claimed that the sales impact had endedlong before the JAMA publication, butas of 2007, HipSaver had been “completely frozen out of every private sectornursing home and health care facility chain and every private distributionchain,” “frozen out of all the major catalog distributors and resellers of hipprotectors,” and still had “no ability to access the private health caredistribution and facility chains.” Thus, HipSaver didn’t show that the falseadvertising wasn’t a cause of lost sales.
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