Thursday, April 11, 2019

Allegedly defamatory claims in e-recycling report weren't commercial speech despite some economic incentive

Electronic Recycling Ass’n v. Basel Action Network, 2019 WL 1453575, No. C18-1601-MJP (W.D. Wash. Apr. 2, 2019)

Plaintiff ERA is a Canadian non-profit corporation that specializes in recovering, refurbishing, and reusing discarded electronic equipment or “e-waste.” When it determines that equipment is no longer reusable, it allegedly transfers that equipment to “regulated and approved facilities to be recycled.” These entities, not ERA, allegedly then ship dismantled components to further destinations.

Defendant BAN is a non-profit environmental advocacy organization based in Seattle that investigates and reports on e-waste, including whether its exportation violates the Basel Convention governing such waste. In October 2018, BAN published “Export of e-Waste from Canada: A Story as Told by GPS Trackers” along with a press release titled “GPS Trackers Reveal More Canadian e-Waste Exported to Developing Countries.” It said that BAN affixed GPS trackers to 43 “non-functional and economically unrepairable” electronic devices, which it then delivered to “various electronics recyclers or recycler collection sites” in Canada, including ERA. The report said that ERA (1) shipped three of the tracked devices to China and Pakistan, “showing substantial evidence of likely illegal exportation”; (2) is a “repeat offender” with “a history of making similar exports in the past”; and (3) failed to remove “sensitive and private residual corporate data” from computers that it allegedly refurbished and re-sold to BAN. In addition, the report said that ERA’s founder “threatened BAN volunteers photographing his property and later sent people to confront and intimidate the volunteers with large dogs.” The press release said that ERA was “in likely violation of the Basel Convention.”

ERA sued for defamation and false advertising, alleging that (1) it has “no record of ever selling BAN any electronic devices and has no record of receiving any GPS-tracked devices from BAN or anyone else”; (2) it has “extensive policies and procedures to ensure [residual corporate data] is not retained on items that are reused or result”; (3) it did not export any of the shipping containers identified in BAN’s Report’ and (4) its founder “did not threaten BAN volunteers photographing his property and did not send anyone to ‘confront and intimidate the volunteers with large dogs.’ ”

On defamation, BAN challenged the sufficiency of the pleadings.  “While it is not sufficient to plead falsity in vague, conclusory terms,” it wasn’t always necessary to plead “specific facts proving the falsity of the statements in dispute.” Here, it was enough to allege the facts above, and that it “does not ship hazardous e-waste material within or outside of Canada.”  [Question about defamatory gist/sting, though: if ERA’s contracted facilities did the shipping, does it matter that ERA didn’t technically do the shipping? Causing them to be shipped—or even not ensuring that its partners didn’t ship them to China and Pakistan—would seem to be enough to blame ERA for the behavior BAN criticizes.  The court noted BAN’s point that the allegations “artfully avoid an actual denial” of the statements in the report and press release, but still thought that the court shouldn’t determine falsity at this stage as long as the complaint gave rise to a plausible inference of falsity.]

Statements about whether the founder threatened or intimidated BAN volunteers were factual enough to be falsifiable.  Even if the size of the dogs/perceived threat were subjective matters, on the whole the statements implied an assertion of objective fact.

However, statements about the “likely illegal[ity]” or legal implications of ERA’s conduct under the Basel Convention were nonactionable opinion made by laypersons in the context of an ongoing public debate, as well as being based entirely upon “disclosed or assumed nondefamatory facts” (i.e., the data set forth in the Report) and ddin’t “impl[y] that there are undisclosed facts on which the opinion is based.” “Arguments for actionability disappear when the audience members know the facts underlying an assertion and can judge the truthfulness of the allegedly defamatory statement themselves.”

Tortious interference claims also survived. ERA alleged that a specific customer ended its relationship with ERA based upon BAN’s report and press release.

Lanham Act claims, however, failed.  ERA alleged that BAN advertised commercial services including (1) its e-Stewards certification program and (2) its EarthEye GPS tracking technology for companies in the e-waste industry, giving BAN an economic interest in encouraging consumers to use e-Stewards certified companies over those not so certified.

That didn’t make the report and press release into commercial speech, under the Bolger factors.  The report wasn’t a typical ad.  There was no evidence that the editorial content was a mere sham added to advertising. Instead, references to e-Stewards and EarthEye were minimal—in approximately 13,000 words in the Report, “e-Stewards” appeared five times and “EarthEye” appeared twice.  As for references to specific products or services, the reference to e-Stewards was in connection to comparing other recycling standards, e.g.: ERA does not “operate under any certified environmental management systems such as ISO14001, nor do they possess recycling or data security certifications (e.g., e-Stewards, R2, NAID) – that are expected of responsible electronics recyclers.” The report did say that e-Stewards is comparatively “stricter with respect to exports, occupational safety and health, and downstream due diligence” and is “the only North American standard that audits and rewards companies for upholding the Basel Convention and the Ban Amendment.” But it also suggested that the apparently competing R2 standard should be amended to do the same.  Likewise, it recommended some form of GPS tracking to enforce the Basel Convention, but didn’t suggest that EarthEye was the only solution.  “[T]he overall impression left by these statements is not that readers should use any specific product or service, but rather that the e-waste industry is rife with violations of the Basel Convention, and e-Stewards and EarthEye are but one means of encouraging compliance.” Finally, BAN did stand to benefit economically from convincing corporations and governments to pay for its products and services. But “economic motive in itself is insufficient to characterize a publication as commercial...”

Just as a matter of common sense, this was not commercial speech.  The Lanham Act didn’t apply. Still, BAN wasn’t entitled to attorneys’ fees.  The report’s status was “somewhat of a close question, and ERA’s false advertising claim is not groundless or unreasonable as a matter of law,” at least on the current record.

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