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Advanced Technology Corporation, Inc. v. Instron

United States District Court, D. Massachusetts

December 18, 2014

ADVANCED TECHNOLOGY CORPORATION, INC., Plaintiff,
v.
INSTRON, INC., Defendant

Page 264

For Advanced Technology Corporation, Inc., Plaintiff: David B Mack, LEAD ATTORNEY, Tara J. Myslinski, O'Connor, Carnathan and Mack LLC, Burlington, MA.

For Tinius Olson International Co., Defendant: Harvey Weiner, Jill M. Brannelly, LEAD ATTORNEYS, Peabody & Arnold LLP, Boston, MA.

For MTS Incorporated, Defendant: Lisa C. Wood, LEAD ATTORNEY, Robert E. Toone, Jr., Foley Hoag, LLP, Boston, MA.

For Instron, Inc., Defendant: Martha C. Gaythwaite, Verrill & Dana, LLP, Portland, ME; Sara E. Hirshon, Verrill Dana, LLP, Boston, MA.

Page 265

MEMORANDUM AND ORDER

WILLIAM G. YOUNG, DISTRICT JUDGE.

I. INTRODUCTION

Advanced Technology Corporation, Inc. (" ATC" ) brings this suit against Instron, Inc. (" Instron" ) claiming commercial disparagement. Essentially, ATC alleges that Instron published a magazine article that readers could infer was about ATC's technology. ATC claims that this inference reflected negatively on its products and caused it to lose client sales. Instron now moves for summary judgment under Federal Rule of Civil Procedure 56. Because ATC has failed to provide sufficient evidence of special damages, the Court GRANTS the motion.

A. Procedural Posture

The complaint and first amended complaint were filed January 30, 2012, Compl., ECF No. 1; Compl., ECF No. 4. Instron filed a motion to dismiss on June 1, 2012. Def. Instron's Mot. Dismiss, ECF No. 23. On February 26, 2013, Judge Tauro granted Instron's motion to dismiss for Counts I and II, and denied its motion with respect to Count III. Order, February 26, 2013, ECF No. 47. ATC then filed a second amended complaint on

Page 266

March 25, 2013, Second Am. Compl., ECF No. 52,[1] and Instron renewed its motion to dismiss on April 9, Def. Instron's Renewed Mot. Dismiss, ECF No. 57. On October 28, 2013, the case was reassigned to this session of the Court. Electr. Notice, ECF No. 66. This Court denied Instron's renewed motion to dismiss on December 17, 2013, and placed this case on the running trial list for September 2014. Electr. Clerk's Notes, ECF No. 73.

On May 30, 2014, Instron filed a motion for summary judgment and an accompanying memorandum in support. Def. Instron's Mot. Summ. J., ECF No. 105; Mem. Supp. Def. Instron's Mot. Summ. J. (" Instron's Mem." ), ECF No. 106. ATC filed a memorandum in opposition to the motion on June 20, 2014. Pl. Advanced Technology Corp., Inc.'s Mem. Opp'n Def. Instron's Mot. Summ. J. (" ATC's Opp'n" ), ECF No. 116. On June 27, 2014, Instron filed its reply. Reply Supp. Def. Instron, Inc.'s Mot. Summ. J. (" Instron's Reply" ), ECF No. 121. A hearing regarding the motion for summary judgment was held July 10, 2014, at which time the Court took the matter under advisement. Electr. Clerk's Notes, ECF No. 127.

B. Factual Background

ATC is a Tennessee corporation that manufactures the Stress-Strain Microprobe System, a testing system based on a method called automated ball indentation (" ABI" ).[2] Second Am. Compl. ¶ ¶ 5, 7. This method " measure[s], non-destructively, tensile properties (yield strength, ultimate strength, stress-strain curve, ductility), and fracture toughness of materials and components on site without the need to cease operation and cut test samples." Id. ¶ 7. The two major advantages ABI has over the conventional, destructive tensile test are that it is fast and nondestructive. Id. ¶ 8. The " hallmark of ABI is its 'partial unloading technique,' whereby force is applied to a metal, partially removed, and then increased further in multiple intervals." ATC's Opp'n 2.

Instron, a Massachusetts subsidiary of Illinois Tool Works, Inc., an Illinois company, is an important player in the market for the more conventional destructive variety of tensile-testing equipment. Second Am. Compl. ¶ ¶ 6, 13-14. ATC claims that its nondestructive technique threatened Instron's established business in this market. Id. ¶ 13. According to ATC, Instron reacted to this threat by using " its employees' positions on key national and international standards organizations to promote measures that would discredit the ABI technique." Id. ¶ 21.

One such employee was Edward Tobolski (" Tobolski" ), who served on an industry committee " tasked with evaluating drafts of ABI test methods." Resp. Pl. Advanced Tech. Corp., Inc. Def.'s Statement Undisputed Material Facts Supp. Mot. Summ. J. & Advanced Tech. Corp., Inc.'s Statement Facts Genuine Issue Be Tried (" PSF" ) ¶ ¶ 13-14, ECF No. 117. According to ATC, Tobolski attempted to identify the ABI technique with an unrelated technique used by Instron, called instrumented indentation testing (" IIT" ). Second Am. Compl. ¶ ¶ 24-26; see also PSF ¶ ¶ 18-25

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(describing Tobolski's alleged activities as a member of the standards committee linking ABI and IIT). Unlike ABI, IIT " cannot be performed in the field on any pipeline and cannot produce yield strength or other tensile or fracture toughness properties." Second Am. Compl. ¶ 27. Therefore, ATC contends that any attempt to portray the two techniques as interchangeable would be inaccurate. Id. ¶ 30.

In 2009, Tobolski and another Instron employee, Bill O'Neill, co-authored an article published in the February 2009 issue of Advanced Materials & Processes, an industry magazine read by more than 39,000 people.[3] PSF ¶ ¶ 39-41. The article discussed the International Standards Organization (" ISO" ) Technical Report TR 29381 - written at least in part by Tobolski himself, see id. ¶ ¶ 26-28 - which " describe[d] three methods for determining metal tensile strength properties by using . . . IIT, a non-destructive testing method." Instron's Mem. 3 (footnote omitted). One of the methods mentioned in both the ISO report and the magazine article was " RSS," the name used by Frontics, a competing company, for its method that purportedly mimics ABI. ATC's Opp'n 6-7; PSF ¶ ¶ 26-27, 36. Describing RSS as a particularly promising test, the article noted that the method involved " periodic partial unloadings" and was designed to facilitate in situ testing of pipelines. PSF ¶ 44-45. The article also suggested, however, that the method was " still under development" and that its accuracy had yet to be fully determined. Id. ¶ 46. ATC argues that " [b]ecause 'RSS' was unknown at the time the [a]rticle was published, while ABI had for years been a well-known and well-respected testing method, the hallmark of which was a 'partial unloading' technique, those reading the [a]rticle were likely to believe that it was discussing ABI." PSF ¶ 47. ATC contends that the article caused it to lose a sale to one of its clients, Vectren, and to lose projected growth. ATC's Opp'n 13-14.

II. ANALYSIS

A. Standard of Review

Summary judgment is proper if the moving party shows, based on the materials in the record, that " there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). An issue of material fact is genuine if " the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1985). The materiality of a fact depends on the substantive law of the case, and only factual disputes that might affect the outcome of the suit can properly preclude summary judgment. Id.

When deciding a motion for summary judgment, the Court views the record " in the light most favorable to the non-moving party and draw[s] all reasonable inferences in their favor." Pineda v. Toomey, 533 F.3d 50, 53 (1st Cir. 2008). Summary judgment must be granted if, after adequate time, the non-moving party " fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

B. Commercial Disparagement Requirements

Commercial disparagement goes by many names, including injurious falsehood,

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slander of goods, and trade libel. First Act Inc. v. Brook Mays Music Co., Inc., 429 F.Supp.2d 429, 432 n.1 (D. Mass. 2006) (Harrington, J.). A lawsuit based on commercial disparagement " seek[s] to impose liability on a defendant for harm sustained by a plaintiff as a result of the publication of a false statement about the plaintiff." HipSaver, Inc. v. Kiel, 464 Mass. 517, 522, 984 N.E.2d 755 (2013). The scope of liability is defined as:

One who publishes a false statement harmful to the interests of another is subject to liability for pecuniary loss resulting to the other if (a) he intends for publication of the statement to result in harm to interests of the other having a pecuniary value, or either recognizes or should recognize that it is likely to do so, and (b) he knows that the statement is false or acts in reckless disregard of its truth or falsity.

Dulgarian v. Stone, 420 Mass. 843, 852, 652 N.E.2d 603 (1995) (quoting Restatement (Second) of Torts § 623A (1977) (internal quotation marks omitted). It is black-letter law in Massachusetts that a plaintiff pursuing a commercial disparagement claim bears the burden of proving that:

[The] 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.

HipSaver, 464 Mass. ...


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