HipSaver, which makes medical devices that are supposed to
reduce the risk of hip fractures in the event of a fall, sued Kiel for
commercial disparagement from a 2007 article in the Journal of the American Medical Association that concluded that a
hip protection device (not HipSaver’s) didn’t improve outcomes. Kiel conducted
the clinical trial that formed the basis for the article and was its lead
author. The study described the trial, analyzed
the data, and concluded, among other things, that the trial “confirm[ed] the
growing body of evidence that hip protectors are not effective in nursing home
populations.”
The trial court granted Kiel’s post-discovery motion for
summary judgment, and the court granted HipSaver’s application for direct
appellate review. Finding no error, the
court affirmed, while taking the opportunity to discuss the elements of
commercial disparagement.
Kiel “has done research on osteoporosis, falls, and related
bone fractures; has published over 125 papers in peer-reviewed journals; and is
regarded by others as an expert on hip protectors.” He received a multimillion, 5-year grant from
NIH to study the efficacy of hip protectors, given that the findings of at
least 12 earlier studies had been mixed.
He conducted a trial for two years involving over 1000 patients at 37
nursing homes in 3 states. Residents
wore a pad on one hip, but not the other, so they were their own controls. About 20 months into the study, the review board
recommended termination “due to lack of efficacy and the low probability of
being able to demonstrate efficacy in the remaining years of the study.” The study ended and the researchers wrote up
the results for JAMA, which is of
course a highly respected and widely circulated journal. JAMA undertook a
7-month peer review process before publishing.
HipSaver argued that Kiel knew or had reason to know that
the 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 article
applied to all hip protectors. The trial
judge ruled that HipSaver didn’t show falsity: its proposed expert testimony
that the clinical trial’s design was flawed didn’t necessarily mean that its scientific
conclusions were false. Also, HipSaver
hadn’t shown intentional falsity or reckless disregard for truth.
The court began by noting the differences between commercial
disparagement and defamation; the former targets harm to the economic interests
of the injured party arising from false, disparaging statements about the
party’s property, usually a product or service.
The line between commercial disparagement and defamation can be
difficult to draw; false statements about a business’s lack of integrity or
dishonesty can be defamatory.
Massachusetts follows the Restatement (Second) of Torts,
supra at § 623A: “One who publishes a false statement harmful to the interests
of 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 should
recognize that it is likely to do so, and (b) he knows that the statement is
false 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 purported
design defects in the clinical trial were acknowledged by Dr. Kiel in the
article, and did not necessarily render the challenged statements false.” The
article fully described the hip protector used, acknowledged that differences
between the clinical trial and previous studies “may have resulted from the
type of hip protector used,” and explained several possible limitations of the
clinical trial. The conclusion recommended future studies of new hip
protectors. The statement that the study
“add[ed] to” or “confirm[ed]” the “growing body of evidence” of ineffectiveness
wasn’t false even if the design of the clinical trial was flawed. HipSaver didn’t allege that Kiel inaccurately
interpreted or reported the data. (Thus, the court had no need to reach whether
the fact/opinion divide works in commercial disparagement as it does in
defamation, where a statement cast as opinion can be actionable if it implies
the existence of undisclosed defamatory facts.)
What about whether the statements were “of and concerning”
HipSaver? Allowing a plaintiff who isn’t
really identified to sue poses a threat of chilling speech. “Of and concerning” can be shown by proof
either “(1) that the defendant intended the words to refer to the plaintiff and
that they were so understood or (2) that persons could reasonably interpret the
defendant's words to refer to the plaintiff and that the defendant was
negligent in publishing them in such a way that they could be so understood.” If the publication doesn’t use a person’s
name or other readily identifiable descriptions, extrinsic proof is required
that a third person understood the reference.
And where a group is targeted, “an individual member of the defamed
class cannot recover for defamation unless ‘the group or class is so small that
the matter can reasonably be understood to refer to the member, or ... the
circumstances of publication reasonably give rise to the conclusion that there
is particular reference to the member.’”
HipSaver wasn’t mentioned in the article, and the hip
protector 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 was
only for one hip, while HipSaver doesn’t make a one-hip product. The reference
to “hip protectors” generally being ineffective was insufficient to conclude
that Kiel was specifically discussing HipSaver’s product. HipSaver alleged that
it was the second largest manufacturer in the US, but at least 22 other
companies make hip protectors, and HipSaver had no third-party evidence that
others understood the article as referring to or being about HipSaver and its
product. Indeed, HipSaver’s president/CEO stated that it was unlikely that the
hip protector described in the article could be confused with HipSaver's
product. “Simply put, the article cannot be understood as referring to
HipSaver, either expressly or by clear implication.”
What about knowledge of or reckless disregard for
falsity? (There was no need to adopt the
description “actual malice” because the current standard was clear and precise.
Also, here HipSaver was a limited purpose public figure because it injected
itself into the debate over the efficacy of hip protectors through its ads and
sponsorship of its own research. More broadly, in any commercial disparagement
claim, the plaintiff must show knowledge/reckless disregard no matter whether
the plaintiff is a public or private figure.)
HipSaver didn’t argue that Kiel fabricated data, but rather that he
ignored or concealed evidence suggesting that the design of the clinical trial
was flawed and therefore must have published with reckless disregard. Not so.
The court emphasized the “scientific oversight” that was
integral to both the trial and the article.
The NIH appointed a review board for the study; four institutional
review boards assessed the trial protocol (ed. note: though they shouldn’t have
been reviewing for correct design!); JAMA
put the article through peer review, which resulted in changes in response to
reviewers’ comments. Given the conflicting results of earlier trials, Kiel used
a different clinical trial to address deficiencies in earlier studies. “It is
generally understood that scientific research is not characterized by perfect
theories, flawless studies, and desired results. Rather, the hallmarks of
scientific research are continuous inquiry, testing, debate, disagreement, and
revision.”
The challenged statements were Kiel’s interpretations of the
accurately reported data. “That concerns
may have been raised about the chosen design does not mean that Dr. Kiel
entertained serious doubts about the truth of the challenged statements as they
were a reflection of the achieved results.” The article “candidly” discussed
the flaws and limitations of the clinical trial, including whether the chosen
pad was the best possible design and whether results from 1-sided hip
protectors would generalize to 2-sided protectors. There wasn’t sufficient evidence of reckless
disregard.
The court nonetheless analyzed whether HipSaver showed that
Kiel intended, knew, or should have known that publication would result in
pecuniary harm. As evidence of Kiel’s
knowledge, HipSaver pointed to the fact that the name of the particular device
used in the clinical trial was removed prior to publication because of an email
from the maker of that device, who said that including the name “might lead us
to be involved in costly litigation and loss of market share.” Also, a HipSaver principal also sent an email
to Kiel: “From what I am hearing about Fall Guard in the nursing homes ... your
study will be just another nail in the coffin of the hip protector product
category.” Kiel responded: “FallGard is superior to your untested product. You
are 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 and
understood that publication likely would cause makers of hip protectors,
including HipSaver, pecuniary harm.
(Note the relationship here between knowledge of likely harm and “of and
concerning.”)
In a footnote, the court rejected HipSaver’s argument that
Kiel’s failure to disclose in the grant application his financial ties to
pharmacos that make drugs to promote bone density showed reckless disregard for
the truth. But HipSaver didn’t show that
bone density drugs compete with hip protectors in the market, or that Kiel’s
research on such drugs biased or otherwise affected his clinical trial
here. Also, HipSaver contended that
Kiel’s characterization of HipSaver’s principal as a “scam artist” showed that
he was ready to make statements without factual foundations. “Although this intemperate personal comment
may 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 we
sometimes have to defend them both in public.)
Finally, the court considered whether HipSaver showed
special damages. Where feasible, this
requires showing specific losses of sales to identifiable customers. There’s an
exception when a false statement has been widely disseminated and it would be
impossible to identify particular customers who chose not to buy the
plaintiff’s products; in such cases, plaintiffs can rely on circumstantial
evidence of lost markets as long as they eliminate other causes. They must still
show that the disparaging publication was the direct and immediate cause of
that pecuniary loss. (In a footnote, the court noted that some jurisdictions
allow a similar showing of harm without wide dissemination as long as the
plaintiff can show a decline in business or lost growth opportunities and can
eliminate other possible explanations for the decline. The court left the possible adoption of this
broader exception for another day.)
HipSaver argued that, as the second largest manufacturer in
the US, it bore the full brunt of the ineffectiveness statement. But HipSaver
didn’t get any information from its customers about their purchasing decisions.
The JAMA article was widely
disseminated, though. HipSaver used
expert testimony to claim lost sales. But the experts didn’t opine that the
alleged lost profits were a direct and immediate result of the article, rather
than other factors. HipSaver didn’t
analyze the impact of prior clinical studies—allegedly “well-known” as
important sales drivers—some of which had also been negative. It didn’t show whether any competitors had
also experienced losses after the article was published, which would have
suggested a causal relationship. Plus, there were other causes of loss:
HipSaver had sued its largest competitor for false advertising several years
before the JAMA article. It claimed that the sales impact had ended
long before the JAMA publication, but
as of 2007, HipSaver had been “completely frozen out of every private sector
nursing home and health care facility chain and every private distribution
chain,” “frozen out of all the major catalog distributors and resellers of hip
protectors,” and still had “no ability to access the private health care
distribution and facility chains.” Thus, HipSaver didn’t show that the false
advertising wasn’t a cause of lost sales.
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