misrepresentation that OSHA rules required certain tools was literally false

Louisiana-Pacific Corp. v. James Hardie Building Products
Inc., 2018 WL 7272047, No. 18-cv-00447-JPM (M.D. Tenn. Dec. 20, 2018)
“This is an unfair trade practices action between two fierce
competitors in the residential and multi-family home siding market.” Defendant JH
is the dominant producer of cement board (Hardie Board), though the court
redacted details about its percentage in that category. LP is the industry
leader for OBS, “a type of engineered wood siding and a product which is
synonymous with its brand.” It uses agents such third party defendants The
Kruse Brothers to provide training seminars across the U.S. that compare LP’s
products with others in the industry including JH.
The court granted a preliminary injunction against one LP
sales sheet but not against the other claims challenged by JH (both parties
were challenging each other’s ads).  Respirable
crystalline silica (RCS) is a potentially dangerous dust byproduct from cutting
fiber cement, and OSHA standards explain when levels of RCS require additional
safety measures. An Action Level (25 micrograms per cubic meter of air averaged
over an 8-hour work day) triggers a specific standard, which includes a
suggested table of safety measures meant to assess and limit exposure.  Some of the options include not using a
circular saw, warning other people nearby, and, in certain circumstances, using
a respirator.
LP and The Kruse Brothers made statements in English and
Spanish that circular saws are now prohibited and respirators are a requirement
when cutting fiber cement. LP’s OSHA sale sheet included a summary of the
requirements of new OSHA Regulations and included a heading “Special Tools Now
Required For Cutting Fiber Cement,” under which it listed specific anti-dust
features for saws and respirators. JH argued literal falsity because those
measures don’t apply if RCS does not rise to the Action Level or if the
employer assess and limits exposure below the permissible level. The court
agreed. “LP’s language conveys that a worker cannot comply with OSHA
regulations without following each of the bulleted requirements. Labeling those
bullets points as requirements is literally false” because an employer can do
other things to limit exposure (though the court doesn’t explain how likely
that is to be possible).  Without
qualifications such as “if an employer chooses to follow the Table 1 safe
harbor they may be required to…” the bulleted statements “would be understood
as categorical.”
An LP rep sent an email to various third parties, customers,
and potential customers after the new OSHA silica rule came out likewise
claiming that “OSHA regulations prohibit the utilization of a standard circular
saw for cutting fiber cement siding. Doing so, could result in an OSHA imposed
citation,” though he later acknowledged that a circular saw could be used with
a dust collection system to cut fiber cement siding.  OSHA gives specific recommendations as to how circular
saws can be used within the Table 1 safe harbor provisions; his statement was
literally false, though the statement that using a standard circular saw “could
result in an OSHA imposed citation” was neither literally false nor misleading.
Similar, but more disputed, claims were allegedly made by
the Kruse Brothers at LP training sessions. 
If phrased as absolutes, they’d be literally false, but statements that
workers might have to warn neighbors
or use respirators wouldn’t be literally false or misleading, and it was hard
to say because the people listening didn’t necessarily take exact notes.  [Interesting question: how does the court
know that statements about what might be necessary aren’t misleading, absent
more information about probabilities/the circumstances under which such
measures would be necessary?  More
interesting question: assume that they said “might,” but many people—like the
witnesses here—took away “must.”  Why
isn’t that misleading?  I think there’s a
possible answer having to do with the cost-benefit analysis of providing useful
information to people even if some misunderstand that information, but more is
needed than just assuming that the modality of the verb is dispositive.]
The court also found that it wasn’t literally false or
misleading to emphasize that no respirator was required to work with LP
products; nothing about that suggested that a respirator was required to install other materials.
JH also challenged various social media statements:
• We are definitely making Hardie
nervous (in response to one of its contractor’s statements that OSHA is
cracking down on the Silica dust created from cutting James Hardie Fiber Cement
Siding)
• Use of a circular saw could
result in an OSHA imposed citation
• Moral of the story. Don’t want to
be stung by OSHA. Use LP Smartside as your exterior cladding of choice (made
when forwarding an article stating that silica citations hit 116 in 6 months,
allegedly implying that those citations were issued to siding contractors using
fiber cement products)
But these weren’t shown to be literally false. “Making
Hardie nervous” was an opinion. And it was true that a circular saw could
result in an OSHA imposed citation if it is not used according to the Table 1
safe harbors and the exposure limit was exceeded. Likewise with the 116
citations—that was a factual assertion not disputed by JH, and LP didn’t itself
claim that the citations were issued for siding.
LP also used the slogan “the easiest way to operate safely
with silica dust is don’t create it.” The court also thought that was fine: “LP
is accurately describing one way of operating to avoid safety risks of silica
dust,” and it wasn’t saying that was the only
way.
Materiality: LP argued that its statements weren’t material
because they didn’t specifically mention fiber cement or JH. That’s not necessary.
Here, the evidence of deception also supported a finding of materiality; the
OSHA sale sheet was created to convince people to use LP products, and its internal
communications encouraged its sales team to distribute the LP OSHA sale sheet
“as much as possible.”
The individual rep’s statements also produced evidence of
actual deception; one person “informed JH that she intended to discontinue
future work with JH because she believed from LP’s email that circular saws
could not be used to cut fiber cement boards,” while another “forwarded the
Rose email to other potential customers to inform them that circular saws are
no longer an option when cutting fiber cement board.” That was evidence of
materiality. This same evidence showed harm causation.
Thus, there was a limited likelihood of success on the
Lanham Act claims, but not on the Tennessee Consumer Protection Act claims,
since they required showing “an ascertainable loss of money or property under
the TCPA.”  For this, “[s]tatements that
customers said they were thinking about leaving but ended up staying with JH”
were insufficient. Likewise, tortious interference claims require LP to know of
specific relationships under Tennessee law, “and not a mere awareness of the
plaintiff’s business dealings with others in general.” There wasn’t enough
evidence of that here.
The court presumed irreparable harm from the risk to JH’s
reputation from the OSHA sheet, specifically “due to an inability to quantify
it and the difficulty in returning the injured party to the pre-injury
position.” LP wouldn’t be prevented from talking about the OSHA standard, but
only “from making specific statements that are false or misleading when made
out of context.” Thus, an injunction wouldn’t unconstitutionally restrain its
speech and the public interest weighed in favor of an injunction for the sale
sheet. The court didn’t grant an injunction as to the rep’s email, which hadn’t
been shown to be likely to be resent.

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