Tuesday, March 19, 2019

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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