By: Maggie Schmid, Esq.
HipSaver, Inc. (hereinafter referred to as “HipSaver” or the “Company”), a designer and manufacturer of its own brand of hip protectors, sued Douglas P. Kiel, M.D., an associate professor at Harvard Medical School, for commercial disparagement arising from the publication of an article in the Journal of the American Medical Association (“JAMA”).
Dr. Kiel, the article’s lead author, also conducted the clinical trial upon which the article was based. Citing the results of the clinical trial, Dr. Kiel’s JAMA article stated that “the clinical trial failed to demonstrate a protective effect of a hip protector on hip fracture incidence in nursing home residents despite high adherence,” and concluded that the clinical trial “‘confirm[s] the growing body of evidence that hip protectors are not effective in nursing home populations’” (collectively referred to as the “challenged statements”).
After the publication of the challenged statements, HipSaver filed a complaint in Superior Court alleging that Dr. Kiel had adversely impacted HipSaver’s ability to conduct business with its primary customer base: long-term care facilities and the U.S. Veterans Administration. Specifically, HipSaver contended that: (1) Dr. Kiel knew or had reason to know that the hip protector tested in the study differed in design and was of inferior quality to HipSaver’s products, (2) persons likely to read and write about Dr. Kiel’s JAMA article would be unaware of the distinction and would be convinced to falsely believe all hip protectors to be ineffective, and (3) Dr. Kiel published the article with malice and reckless indifference to the fact that his conduct would injure HipSaver. Moreover, HipSaver claimed that it had suffered and would continue to suffer severe economic damages as a direct and foreseeable consequence of the article’s publication.
Though Dr. Kiel’s motion to dismiss was denied, the Superior Court granted Dr. Kiel’s motion for summary judgment on the basis that HipSaver “had no reasonable expectation of proving [all of] the essential elements of its claim.” Subsequently, the Supreme Judicial Court (the “SJC” or the “Court”) granted HipSaver’s application for direct appellate review.
The SJC acknowledged the “scarcity of appellate decisions in [Massachusetts] analyzing a cause of action for commercial disparagement” – the Court had previously never considered “special damages” in the context of a commercial disparagement claim – and drafted its opinion with the objective of creating a complete analytical framework for the tort. The SJC adopted the test set forth in the Restatement (Second) of Torts (the “Restatement”), and thus, in order to prevail on a claim alleging commercial disparagement, a plaintiff must prove that a defendant: (1) published a false statement to a person other than the plaintiff; (2) “of and concerning” the plaintiff’s products or services; (3) with knowledge of the statement’s falsity or with reckless disregard of its truth or falsity; (4) where pecuniary harm to the plaintiff’s interests was intended or foreseeable; and (5) such publication resulted in special damages in the form of pecuniary loss.
Applying a de novo standard of review, the SJC considered the facts of the case in light of each of the Restatement’s elements of the test for commercial disparagement. First, the Court considered HipSaver’s contention that the clinical trial’s conclusions (and by extension, the challenged statements) were false because aspects of the clinical trial’s methodology were flawed. The Court disagreed, stating that “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.”
Second, the Court addressed whether the challenged statements were “of and concerning” HipSaver. Citing ELM Med. Lab., Inc. v. RKO Gen., Inc., the SJC reiterated the Massachusetts test for whether an alleged defamatory statement is “of and concerning” the plaintiff: the plaintiff must prove either that the defendant intended the words to refer to the plaintiff and that they were so understood, or 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. Though HipSaver’s products were not used in the clinical trial, and though the Company was not mentioned specifically in Dr. Kiel’s article, HipSaver argued that, as the second largest hip protector manufacturer in the United States, the article could be understood as referring to the Company. Again, the Court disagreed, stating that the article’s discussion of the “inefficacy of ‘hip protectors’ in general . . . was insufficient to give rise to a conclusion that Dr. Kiel was specifically discussing HipSaver’s product.”
Third, the Court debunked HipSaver’s claim that “Dr. Kiel published the challenged statements with knowledge that they were false, or with reckless disregard for their truth or falsity.” The theory underlying the Company’s claim was that “because Dr. Kiel purportedly ignored or concealed evidence suggesting that the design of the clinical trial was flawed, he therefore published the challenged statement with reckless disregard for their truth or falsity.” HipSaver’s argument failed to persuade the Court; in addition to referencing the significant amount of scientific oversight that attended the clinical trial and the subsequent JAMA article, the Court also stated that “[t]he challenged statements in the article reflected Dr. Kiel’s interpretation of the accurately reported data . . . .” and the fact “[t]hat 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.”
In regard to the fourth element of the Restatement’s test for commercial disparagement, the Court acknowledged that, based on Dr. Kiel’s correspondence, HipSaver had a reasonable expectation of proving that Dr. Kiel recognized, or should have recognized, that publication of the article was likely to result in pecuniary harm to the Company.
Fifth and finally, the Court considered whether HipSaver had demonstrated that it sustained “special damages” as a result of Dr. Kiel’s publication of the challenged statements. To establish special damages in an action for commercial disparagement, “a plaintiff must show, where feasible, a specific loss of sales to identifiable customers.” The Restatement recognizes an exception to the general requirement that customers must be identifiable “where a false statement has been ‘widely disseminated’ and it would be impossible to identify particular customers . . . . ,” and the SJC adopted the Restatement’s exception. Nevertheless, the Court was not persuaded that the Company’s lost profits were a direct and immediate result of the article’s publication. The SJC noted that several other articles related to the inefficacy of hip protectors had been previously published, and highlighted the fact that HipSaver had not eliminated other possible causes for the Company’s pecuniary loss.
Because HipSaver was unable to prove all the essential elements of the tort of commercial disparagement, the SJC affirmed the order of the Superior Court judge granting summary judgment to Dr. Kiel.
Maggie Schmid, Esq. is an associate at Donoghue, Barrett, & Singal, P.C.. Prior to working for Donoghue, Barrett, & Singal, Ms. Schmid interned at Massachusetts Executive Office of Health and Human Services. She also worked for the U.S. Department of Health and Human Services, Office of the General Counsel, Public Health Division during her third year of law school. Ms. Schmid received her law degree from The Catholic University, Columbus School of Law in Washington, D.C., where she was a Note and Comment Editor on the Journal of Contemporary Health Law and Policy. She received her undergraduate degree from Kenyon College.
 HipSaver, Inc. v. Kiel, 464 Mass. 517, 520 (2013).
 Id. at 518.
 Id. at 521.
 Id. at 519.
 HipSaver, Inc. v. Kiel, 464 Mass. 517, 524 (2013).
 Id.at 535.
 Id. at 523-524 (citing Restatement (Second) of Torts, supra at § 651 (setting forth plaintiff’s burden of proof in action for injurious falsehood)).
 Id. at 524-525.
 403 Mass. 779 (1989).
 HipSaver, 464 Mass. at 528 (citing ELM Med. Lab., Inc. v. RKO Gen., Inc., 403 Mass. 779, 785 (1989)).
 Id. at 529.
 Id. (citing Dulgarian v. Stone, 420 Mass. 843 (1995)).
 Id. at 532.
 Id. at 533.
 Id. at 534-535.
 HipSaver, 464 Mass. at 535.
 Id. at 536 (citing Restatement (Second) of Torts § 633(2)(a) & Comment C).
 Id. at 537-538 (citing Restatement (Second) of Torts § 633(2)(b)).
 Id. at 540.
 Id. at 540-541.
 Id. at 541-542.