Mass. anti-SLAPP law/litigation privilege doesn’t cover p’s nasty statements about competitor to customers

Riverdale Mills
Corporation v. Cavatorta North America, Inc., 189 F.Supp.3d 317 (D. Mass. 2016)
Previous decision—denying a recall when the
falsely advertising competitor had already notified consumers—discussed here
.  The
parties compete in the market for wire mesh used to make marine traps.  Riverdale makes “Aquamesh.” Metallurgica makes
“SEAPLAX,” sold in the US by Cavatorta. Both brands are purportedly “galvanized
after welded” (GAW), which is allegedly better than “galvanized before welded”
(GBW). In 2015, Riverdale learned of a production error at Metallurgica that
caused a non-SEAPLAX, non-GAW product to be delivered to certain customers in
the United States and Canada.
Riverdale sued for
false advertising.  The court enjoined
defendants (1) from manufacturing and selling mesh labeled as GAW if it was not
actually GAW; (2) from making false statements in advertising that SEAPLAX was
GAW if it was not in fact GAW; and (3) to immediately properly label all
SEAPLAX product that was not GAW. 
Larry Walsh, vice
president of sales and marketing at Riverdale, sent emails to twelve customers
of Cavatorta with a 3-page excerpt from defendants’ memorandum in opposition to
the motion for preliminary injunction and two affidavits from defendants. The
emails varied; “all referenced the attached materials and stated that
Plaintiff’s attorney would contact the customers and request additional
information.” One email also stated: “If you did get GBW that was labeled GAW
you should have received a notice from [Cavatorta] and some sort of monetary
compensation …. For a full year [Defendants] were selling mislabeled product
and traps are falling apart very quickly.” Another email characterized
Cavatorta’s product as “defective wire.”
Metallurgica and
Cavatorta counterclaimed for tortious interference with business relations and
violations of Chapter 93A, based on communications that Riverdale had made to
some of Cavatorta’s customers during the pendency of this lawsuit.
Riverdale argued
that Riverdale’s communications with Defendants’ customers were protected by
the litigation privilege, which “protects statements made in the institution or
conduct of litigation or in conferences and other communications preliminary to
litigation.” “[T]he relevant inquiry is not who made the statement, or to whom
it was made, but whether the statement is pertinent to the supervening
litigation,” even if the statements were uttered maliciously.  However, the privilege does not protect
“unnecessary or unreasonable publication to parties outside the litigation
….”
Defendants argued
that Riverdale knew before sending the emails that all of the
customer-recipients had already been made aware of the issues with the SEAPLAX mesh,
and that Walsh wasn’t seeking any information from them.  The court agreed that the privilege didn’t
apply.  “The recipients were outside of
the litigation, and it did not serve Riverdale’s prosecution of the case to
reiterate its claims and forward the selected pleadings to Defendants’
customers, many—if not all—of whom already knew about the lawsuit.…The purpose
of the privilege is not served by giving Riverdale immunity to send gratuitous
communications to the customers of its competitors.”
However, defendants
still failed to state a (counter)claim. 
Though they sufficiently alleged the existence of specific relationships
and Riverdale’s intent to harm them, they made no specific allegations of harm,
such as customers who ended their relationships or bought less as a result.

Riverdale also moved
to dismiss the counterclaims pursuant to Mass. Gen. Laws ch. 231, § 59H (the
anti-SLAPP statute), which covers claims based on the targeted party’s “exercise
of its right of petition.” The courts have construed “petitioning activity” as
including all “statements made to influence, inform, or at the very least,
reach governmental bodies—either directly or indirectly.” Riverdale argued that
its emails were petitioning activity because the statements mirrored the
allegations contained in the pleadings.  However, “the mere replication of protected
statements sent to governmental entities is not alone dispositive.”  Given the context—direct competition, careful
selection of what to send, and the fact that only two customers were later
subpoenaed—“the emails have a distinctly commercial flavor.” Thus, the emails
were not petitioning activity, and the anti-SLAPP statute didn’t apply.

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