Wednesday, October 06, 2021

accusing a home inspectors' group of link with NAMBLA isn't believable enough for defamation

Examination Board of Professional Home Inspectors v. International Association of Certified Home Inspectors, 2021 WL 492482, No 18-cv-01559-RBJ (D. Colo. Feb. 10, 2021)

Although an individual's comments linking his rival to NAMBLA and Jeffrey Dahmer were non-actionable non-facts, statements arguably closer to his expertise were falsifiable despite his over-the-top online persona.

Two entities, EBPHI and ASHI, sued InterNACHI. EBPHI administers and owns the National Home Inspectors Examination (NHIE), an exam many states use to license home inspectors. In addition to being a membership association for home inspectors, InterNACHI also offers a competing licensing exam for the home inspection industry. Defendant Gromicko made numerous statements about EBPHI and the NHIE on InterNACHI’s online forum, such as:

The NHIE is a joke of an exam. Meaningless piece of crap and a scam IMHO....;

The questions about basements are fine as basements are part of a home inspector’s SOP . ..even in areas that don’t have basements...the questions about radon and sprinklers are not...I can go to court for you and get an injunction forcing EBPHI to grade your exam without those questions. Then through discovery, I’ll find out everyone else who has ever failed the NHIE, and file a class action suit against the EBPHI....It’s not even a psychometrically valid exam and I can prove it in court. They’ll owe millions in lost revenue....Just say go.

EBPHI sued for (1) defamation, (2) trade libel, (3) commercial disparagement, (4) tortious interference with business expectancy, and (5) deceptive trade practices under the Colorado Consumer Protection Act.

ASHI and InterNACHI are also competitors in the home inspection industry as membership organizations. Member home inspectors enjoy certain benefits, including being advertised to homebuyers on the associations’ websites.

ASHI’s website has a “Find a Home Inspector” tool whose tagline reads, “Educated. Tested. Verified. Certified.” Results list whether the inspector is an ASHI associate, inspector, or certified inspector, ASHI’s three membership classes. Certified inspectors must prove they’ve conducted at least 250 home inspections, pass the NHIE, and meet other standards; inspectors must pass the NHIE or their state’s exam, conduct at least 75 home inspections, and meet other standards; associates must complete the ASHI standards of practice and ethics education modules. Associates are not required to complete the continuing education requirements until after one year of membership. ASHI also began using a background verification logo to indicate which home inspectors had undergone successful background checks; individuals who have been convicted of felonies aren’t given the logo.

InterNACHI was founded by Gromicko, who is quite active on its forum. For example, in response to Washington Post article that purportedly recommended homebuyers use InterNACHI home inspectors rather than ASHI’s, he posted “[t]he reporter failed to note that ASHI (American Society of Home Inspectors) was taken over by NAMBLA on Friday.” An InterNACHI member replied that he searched NAMBLA online and it was not the result he was expecting. Yet another member replied “[m]e either, creepy and not cool.”  There was, of course, no merger with the North American Man-Boy Love Association. After this lawsuit started, he posted, “ASHI is a statistical mass murder [sic] of children on a grand national scale. I’d sooner work with Jeffrey Dahmer. He only killed and ate 17 people.” “Perhaps it goes without saying, but ASHI does not engage in the mass murder of children.” ASHI sued for (1) defamation, (2) trade libel, (3) commercial disparagement, and (4) deceptive trade practices under the Colorado Consumer Protection Act. Defendants counterclaimed against ASHI: (1) false advertising under the Lanham Act, and (2) tortious interference with business expectancy.

Defamation: “[N]o reasonable person, much less a ‘substantial and respectable minority’ could reasonably believe that the NAMBLA comment is factual.” Defendants made the statement “alongside other statements incapable of being factual,” such as that the purported merger was a good thing because most of ASHI’s members suffered from rigor mortis. No reasonable person “could believe that a professional home inspectors’ association merged with a fringe, highly vilified pro-pedophilia group, particularly when such a statement comes from none other than a loud-mouthed competitor.”

What about the claim that the NHIE wasn’t psychometrically valid because it tested subjects outside the industry’s standards of practice? First, was this a matter of public concern? Yes, the exam is offered in 29 states and “has the potential to impact members of the public or the public as a whole.” The statement was made in online, open forum accessible to virtually any member of the public with internet access. And it was made in response to the complaint of a third party—not involved this lawsuit—that she and her husband were “prepared” and “studied hard” for the NHIE but only recognized a handful of questions and ultimately failed the test. “Thus, the content, form, and context of the NHIE comment all support the conclusion that it involved a matter of public concern.” Although the speaker was self-interested, that wasn’t dispositive.

This holding meant that actual malice was required, not mere negligence. “Actual malice may be inferred by the finder of fact if an investigation is grossly inadequate.” Likewise, “a speaker who willfully chooses not to learn the truth prior to making an allegedly false statement can be found to have acted with actual malice.” The record would allow such a finding. Gromicko knew what “psychometrically valid” required; he admitted that he read books and articles on psychometrics and exam writing when creating his own home inspection licensing examination. He wrote the portion of InterNACHI’s website that, at one point, discussed the psychometric validity of its own test in some detail. EBPHI also presented evidence that testing outside of the standards of practice is not a factor that renders a test psychometrically invalid. Thus, the issue was for the jury.

Nor was this a mere statement of opinion. He implied that psychometric validity was a verifiable fact by stating that he could prove the NHIE is invalid in court, which also suggests he had evidence of this “fact.” The context, offering to “go to federal court for you and get an injunction,” further implied provability. And the circumstances did too: “Gromicko is the founder of the largest home inspectors’ membership association in the country. He made this comment on his company website where he communicates with current and aspiring home inspectors. … Using his position of a power as an industry leader, he disseminated this statement to members of the industry and implied that it was factual and that he had evidence to support it.” Despite his, um, quirky online persona, he was still in a position of authority such that “reasonable people would conclude that the assertions [were] ones of fact.”

Was the statement per se defamatory, which is to say did it carry “its defamatory imputation on its face,” or was it defamatory per quod, requiring innuendo or extrinsic evidence to establish its defamatory nature? Traditional categories of defamation per se include “imputation of (1) a criminal offense; (2) a loathsome disease, (3) a matter incompatible with the individual’s business, trade, profession or office; or (4) serious sexual misconduct.” Damages are presumed if the statement is per se defamatory but must otherwise be proved. The court found that this statement fell into category (3).

There was a dispute about falsity, and also about damages—EBPHI submitted expert testimony that the number of test takers for EBPHI’s exam decreased after the comment, and in Florida, the only state to offer both exams, the number of NHIE test takers dropped following the comment.

 Tortious interference: Though defamation is a wrongful means of interference, EBPHI couldn’t prove damages. It identified no individuals with whom they intended to contract but for InterNACHI’s interference. A drop in the number of test-takers might be sufficient to establish an inference of injury in other contexts, but was is insufficient for a tortious interference with business expectancy claim. “EBPHI’s evidence proves nothing more than that EBPHI had a ‘mere hope’ that more people would sit for their exam, which is insufficient.”

Counterclaim based on ASHI’s allegedly false tagline “Educated. Tested. Verified. Certified”: There was no evidence of intentional interference with InterNACHI’s relationships. After using the tagline, ASHI experienced a rise in associate members. But that didn’t show intentionality, or that InterNACHI had anything more than a “mere hope” that the associate members who joined ASHI would have joined InterNACHI but for the tagline.

Commercial disparagement/trade libel: Same results as defamation.

Colorado Consumer Protection Act: Requires a showing that the challenged practice “significantly impacts the public as actual or potential consumers.” Courts consider “the number of consumers directly affected by the challenged practice; the relative sophistication and bargaining power of the consumers affected by the challenged practice, and evidence that the challenged practice previously has impacted other consumers or has significant potential to do so in the future.”

First, even if the NAMBLA comment did support a claim for defamation, this court has held that “making defamatory not a deceptive trade is purely a private wrong.” And there was no evidence of public impact; it wasn’t enough to say that the public read or saw the comments.

Second, the NHIE comment hadn’t been shown to significantly impact the public. It wasn’t enough that twenty-three fewer people took the exam in Florida the year after the comment was made, given that the NHIE is a national exam.

Lanham Act counterclaim against “Educated. Tested. Verified. Certified.”

First, was this commercial advertising or promotion? While Angie’s List’s statements about one company on its review statements weren’t commercial speech as to Angie’s List, this was a very different situation. The tagline wasn’t speech about one member, but rather “speech that purportedly applies to every ASHI member, and therefore it is a statement about ASHI as an association.”

Second, did defendants show injury or damages? Defendants argued that they were entitled to an inference of harm because they’re in a two-party market (which they would prefer to monopolize, per public comments, noted by the court, that they might eventually have cause to regret). Despite this competition, the court held that defendants still “must show some evidence of causation and injury,” which they have not done.  Although “ASHI experienced a spike in new associate members” after including the tagline on its website, they didn’t show any loss suffered by InterNACHI, nor that any of the alleged members who joined ASHI had any knowledge of InterNACHI’s membership program. Defendants admitted that the associates who joined ASHI might not have been welcome at InterNACHI even if they had wanted to join, because InterNACHI “never promotes uncertified members to the public.”  ASHI was thus “the only membership service in this two-player market that would allow novice home inspectors to gain experience and be advertised to homeowners prior to certification.”

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