Defamation, but not false advertising, claim survives against niche publisher that added wrong info about allegations of wrongdoing

MiMedx Group, Inc. v. DBW Partners LLC, No. 17-1925 (JDB), 2018
WL 4681005 (D.D.C. Sept. 28, 2018)
MiMedx, a seller of medical products, sued DBW, which offers
business and regulatory analysis to paid subscribers, for libel, slander,
defamation, false light invasion of privacy, tortious interference with
business relations, and false advertising under the Lanham Act after defendants
published articles that questioned MiMedx’s sales practices.  One article, “MiMedx: Channel Stuffing
Accusations Resurface in Recent Counterclaim; Former Employees Corroborate
Allegations; A Close Look at Potential Risk,” outlined allegations MiMedx’s
former employees made in court filings against MiMedx claiming that the company
had artificially inflated its sales and revenue figures by distributing more
products to retailers than the retailers could sell. An email described the
article: “we detail channel stuffing allegations and recent counterclaims which
may pose as a regulatory risk for the company. The article examines the
allegations made by customers & former employees, the company’s response to
these claims, and the potential legal risks for MiMedx” and ended with an
invitation to “schedule a call” with DBW for more information. DBW now acknowledges
that the reference to “customers” was a mistake.
As part of its “ongoing examination of allegations of
channel stuffing made by former MiMedx employees,” DBW also submitted a FOIA
request to the Department of Veterans Affairs, Office of the Inspector General
(OIG), and dermined that an OIG investigation “involve[d] documents related to
MiMedx.” MiMedx allegedly informed DBW “off-the-record that MiMedx had
initiated contact with the OIG, that MiMedx was voluntarily working with the
OIG, and that MiMedx was specifically not a target of the investigation.” DBW
published another article titled “VA Office of Inspector General Confirms
Investigation Involving MiMedx Documents,” relaying DBW’s conclusions from its
FOIA request, and also promoted the article via email. Both emails reached at
least some MiMedx shareholders.
DBW allegedly served “as a ‘shill’ for bearish traders in
MiMedx stock” including “friends, family, affiliates, and/or even … [DBW]
themselves.” MiMedx’s stock price declined after the two articles were published.
Libel, slander, defamation: DBW argued that falsity wasn’t
pled; the single word “customers” wasn’t defamatory in that it didn’t render
the first email substantially false and it didn’t cause any incremental harm
compared to the unchallenged bulk of the publication. MiMedx argued that “the
use of the word ‘customers’ … substantively changed the meaning of the entire
communication” because “there is a significant difference between allegations
by a company’s customers and its disgruntled former employees” and further
because it “made it appear that the article contained new or additional allegations
that might corroborate the former employees’ allegations.”
The court concluded that adding “customers” was at least
“capable of defamatory meaning” under DC law and allegations of wrongful
commercial practice would “tend[ ] to injure” MiMedx’s “trade, profession or
community standing.” Under Georgia law, whether the statement was defamatory was
ambiguous, when construed in context of the entire publication as required.  Either way, this survived a motion to dismiss.
 DBW argued, citing case law, that “[c]orporate
plaintiffs are treated as public figures as a matter of law in defamation
actions brought against mass media defendants involving matters of legitimate
public interest,” but MiMedx argued that DBW wasn’t a mass media defendant and the
court declined to judicially notice otherwise. MiMedx might be able to show
facts indicating that it was a private figure for these purposes.
The court didn’t specifically address the FOIA related allegations; it seems to me that those should have to go, as not reporting MiMedx’s preferred interpretation of what seem like uncontested facts doesn’t seem defamatory.
False light: a corporation has no personal right of privacy
and therefore no cause of action for false light invasion of privacy.
Tortious interference: this requires allegations of specific
lost business.  Pleading “customers,
investors, and creditors” isn’t enough, so this claim was also dismissed.
Lanham Act false advertising: MiMedx failed to allege a competitive
injury related to MiMedx’s commercial interests, such as customers withholding
trade or lost revenue; it didn’t even allege that the misleading communications
reached customers (as opposed to shareholders).

from Blogger

This entry was posted in Uncategorized and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s