Opinion
Civil Action No. 00-30003-MAP.
December 27, 2002
MEMORANDUM REGARDING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Docket No. 79)
I. INTRODUCTION
Plaintiff Butler Corporation ("Butler") has brought suit under Massachusetts common law and under Mass. Gen. Laws ch. 93A §§ 2, 11 against the defendant, General Motors Acceptance Corporation ("GMAC"). Butler contends (1) that GMAC has defamed it, (2) that it has suffered damage from GMAC's acts of discrimination and unfair trade practice, and (3) that GMAC has tortiously injured its advantageous business relations. GMAC has moved for summary judgment. The court previously issued a short memorandum indicating that the motion would be allowed. This memorandum will delineate the reasons for the court's ruling; an attached order will direct the clerk to enter judgment for GMAC.
II. STANDARD OF REVIEW
Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A "genuine" issue is one that reasonably could be resolved in favor of either party, and a "material" fact is one that affects the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). In addressing a motion for summary judgment, "the district court must view 'the facts in the light most favorable to the non-moving party, drawing all reasonable inferences in that party's favor.'" Bienkowski v. Northeastern Univ., 285 F.3d 138, 140 (1st Cir. 2002) (quoting Barbour v. Dynamics Research Corp., 63 F.3d 32, 36 (1st Cir. 1995)).
III. FACTUAL BACKGROUND
The facts below are viewed in the light most favorable to the plaintiff; all reasonable inferences are drawn in its favor.
Butler manufactures carpet cleaning systems, which it installs into commercial vans through a process known as "upfitting" the vehicles. These vans are either purchased by Butler from local dealers or purchased by customers themselves. As with many motor vehicle purchases, financing is often needed to complete the transaction.
Operating nationally through regional offices, GMAC provides financing to consumers for the purchase of motor vehicles. Each GMAC office makes its own credit decisions and exercises considerable discretion to assess the credit risk of a potential customer or security offered. In exercising this discretion, (except perhaps in circumstances not applicable here) GMAC is not required to provide financing to anyone.
It is undisputed that in the early 1990s, GMAC suffered significant losses on loans secured by upfitted vehicles, some of which were upfitted with Butler equipment. Though Butler denies any direct involvement in referring the delinquent transactions to GMAC, some of the vehicles associated with these defaults were referred by Finance America, an affiliate of Butler. In 1993, as a result of these losses, the Westborough office ("Westborough") of GMAC, the main contact at that time for commercial truck transactions through GMAC, decided to stop providing financing to consumers purchasing upfitted vehicles, including those featuring Butler systems. It is undisputed that this new policy did not single out Butler, and that Butler customers were free to purchase vehicles and, if necessary, obtain financing from entities other than GMAC.
Fully aware of the Westborough policy on financing for upfitted vehicles, the branch manager for the GMAC regional office, Kevin McNally ("McNally"), according to plaintiff, nevertheless approved finance applications for the purchase of roughly twenty-six upfitted "lube" trucks from Paul Maguire Chevrolet during 1993-1995. GMAC subsequently suffered losses after some of these loans defaulted. Although Butler had nothing to do with these transactions, it is the plaintiff's theory that, in order to shift the blame from himself, McNally concocted a scheme to pass the responsibility for the losses onto Butler by falsely telling third parties that Butler had failed to pay some $500,000 it owed GMAC, and that this was the reason GMAC was refusing to finance Butler-upfitted vehicles. Butler says that the dissemination of this falsehood caused it economic damage.
The problem with this theory is that a careful review of the record reveals no cognizable evidence actually supporting it. True, accepting the facts in the light most favorable to plaintiff, a jury might conclude that McNally made comments generally disparaging of Butler to other employees within GMAC, which he was perfectly entitled to do. In addition, substantial evidence suggests that McNally (and others at GMAC) stated that GMAC lost money on defaulted loans for Butler-upfitted vehicles, as well as other upfitted vehicles. These statements were indisputably true. But, as will be seen below, the cognizable evidence suggesting that McNally told third parties that Butler owed GMAC $500,000 is very thin. More importantly, to the extent that a jury might conclude that some false, or at least incorrect, statements to the effect that Butler owed GMAC money may have been made by either McNally or some other GMAC employee to some party outside GMAC, the record is undisputed that these third parties either disbelieved or disregarded the statements. The record is absolutely devoid of any evidence that Butler ever suffered any damage to its business or reputation as a result of GMAC's spreading the "Butler owes GMAC $500,000" scuttlebutt.
Perhaps the strongest evidence plaintiff can point to involves a GMC auto dealership called Regency Olds, Pontiac, GMC ("Regency") in Westfield, Massachusetts. Through the mid 1990s, Butler had a purchasing arrangement with Regency through its employee Harvie Houser ("Houser"). Despite being aware of the Westborough policy regarding financing of upfitted vehicles, Houser continued to submit such applications to GMAC, including applications for Butler-upfitted vehicles, and a few of these applications somehow managed to sneak through. As GMAC feared, one of these transactions ended in default, leading to GMAC's loss of $7000.
Houser stated at his deposition that, between 1992 and 2001, Mike Lickver ("Lickver") and Wayne Engelhardt ("Engelhardt"), representatives from the GMAC branch office in Springfield, Massachusetts, would occasionally state that GMAC refused to finance Butler-upfitted vans because "Butler owed GMAC a half million dollars." (Docket 86, Exhibit D, at 55-57). However, Houser confirmed that McNally himself corrected this statement, indicating that "[t]he Butler Corporation does not owe us $500,000." Id., at 58. The problem, McNally emphasized, was that GMAC had lost money on loans for Butler-upfitted vehicles. As noted, plaintiff does not dispute this. More importantly, Houser stated at his deposition that the Lickver and Engelhardt statements "never changed [his] opinion of the Butler Corporation," and did not result in any diminution in sales of Butler products at Regency. Id. at 161-62. According to Houser, the Lickver/Engelhardt statements simply "did not affect the number of Butler units . . . [sold]." Id. at 202.
As a result of a restructuring in 1995, GMAC's main contact for commercial truck transactions shifted from Westborough to the Long Island Truck Center branch ("Long Island"). Butler asserts that Long Island agreed to finance vans for a six-month period in 1995, but stopped the practice once McNally learned that this was occurring and allegedly informed the Long Island GMAC office of his low opinion of Butler. Along the same lines, McNally is alleged to have contacted a Michigan branch of GMAC and discouraged it from dealing with Butler. Again, to the extent that a jury may find that these conversations occurred, plaintiff does not contend McNally's statements to his own co-employees of GMAC, whatever his motives, were actionable. Employees within a corporation are entitled to speak candidly to each other without fear of being sued for defamation.
In another instance, in October of 1999, Steven Mazza ("Mazza"), the GMC truck manager at Houser Buick GMC in Springfield, Massachusetts, was discussing the denial of a GMAC financing application for a Butler-upfitted van with Joe Donahue ("Donahue"), a representative from the GMAC field office in Cape Cod, Massachusetts. Donahue reportedly stated, "You have no idea how much money this guy [Butler] took from us and it's not six figures." (Docket 86, Exhibit Z, at 62). Again, however, it is clear from Mazza's deposition that, while Donahue's statement stuck in his mind for about a year and a half, he never passed the statement on to anyone else and it did not lower his opinion of Butler. At most, the statement made him speculate that "[s]omething had gone wrong between Butler and GMAC" and "there was a question in the back of my mind as to what . . . went on and what happened." Id. at 35-36. The statement never affected his business relationship with Butler. Id. at 55-56.
The record does indicate that during the 1990's there was gossip being bruited about to the effect that Butler owed money to GMAC, but these sentiments came from persons other than GMAC employees. Thus, in March of 1997, Thomas Macomber ("Macomber") attempted to obtain GMAC financing for a Butler-upfitted van at Paul Masse GMC ("Masse") in Woonsocket, Rhode Island. According to Macomber, the Masse sales manager Scott Wellington ("Wellington"), not a GMAC employee, informed Macomber that such financing was impossible because Butler owed GMAC half a million dollars. Nevertheless, Macomber eventually did purchase a Butler-upfitted van, without GMAC financing.
Another Butler customer, Darlene Ambrose ("Ambrose"), reported that Joe Delmonico ("Delmonico"), an employee of a dealership named Capital GMC — not GMAC — stated that GMAC would not finance a van upfitted with Butler equipment because of past losses incurred associated with Butler. (Docket 86, Ex. F, at 25-26). In this case, Delmonico got it right: GMAC was declining to finance upfitted vehicles, Butler's and others, due to prior losses on these loans. Ambrose, however, reported no statement to the effect that Butler owed GMAC money. Moreover, like Macomber, Ambrose ultimately consummated her Butler purchase, using other financing. Butler suffered no damage from Delmonico's true statement.
Delmonico also told Ambrose that GMAC would not finance a van upfitted with Butler equipment because the Butler units carried dangerous chemicals. Ambrose did not believe this explanation. (Docket 86, Ex. F, at 27-28).
Following unsuccessful attempts at negotiation, Butler initiated this suit on December 20, 1999 in the Springfield Superior Court. GMAC subsequently removed the action to federal court on January 21, 2000. Defendant has now moved for summary judgment.
As noted, the complaint offers three counts: Count 1 for defamation; Count 2 for discrimination and unfair business practices under Mass. Gen. Laws ch. 93A §§ 2, 11; and Count 3 for intentional interference with a contractual relationship.
IV. DISCUSSION
A. Defamation
Under Massachusetts law, defamation is "the intentional or reckless publication, without a privilege to do so, of a false statement of fact, which causes damage to the plaintiff's reputation." Lebeau v. Town of Spencer, 167 F. Supp.2d 449, 456 (D.Mass. 2001) (citing Correllas v. Viveiros, 572 N.E.2d 7, 10 (Mass. 1991)); see Orell v. UMass Memorial Med. Ctr., Inc., 203 F. Supp.2d 52, 69 (D.Mass. 2002); O'Connell v. Bank of Boston, 640 N.E.2d 513, 517 (Mass.App.Ct. 1994), rev. denied, 646 N.E.2d 409. A for-profit corporation may be defamed by a false statement, if "the matter tends to prejudice [the corporation] in the conduct of its business or to deter others from dealing with it." Restatement, Second, Torts § 561(a); see Dexter's Hearthside Rest. v. Whitehall Co., 508 N.E.2d 113, 116 (Mass.App.Ct. 1987), rev. denied, 511 N.E.2d 620.
As noted above, statements made within one corporation about another cannot be defamatory, since an oral defamation must be heard by a third party, i.e. someone other than the plaintiff. See J.R. Nolan L.J. Sartorio, Massachusetts Practice § 129(4), at 194 (2d ed. 1989). Accordingly, the court will limit its analysis to the statements purportedly made by GMAC employees to third parties.
As noted in the summary of the facts set forth above, no evidence in the record would support a jury in concluding that (1) a GMAC employee (McNally or anyone else), (2) made a statement to a third party, (3) falsely suggesting that Butler owed GMAC $500,000 (or any other substantial sum of money), and (4) Butler suffered damage to its reputation or business as a result.
In apparent recognition of the deficiencies in the record, Butler has asked the court to compel GMAC to produce substantial additional documentation in the hope that these additional records will provide support for its claim. Specifically plaintiff has sought "a list of each transaction involving [GMAC] and the customers of Plaintiff's competitors in the carpet cleaning industry in which [GMAC] provided financing for the Plaintiff's competitor" and "documentation regarding loans being made to customers of competitors in the carpet cleaning industry." (Docket 73, at 2 (emphasis supplied)).
Butler argues that, if it received this information regarding GMAC's relationships with its competitors, it could contact the third-party buyers who purchased the competitors' products and inquire whether, in the course of these transactions, GMAC may have defamed the Butler in some way and thereby steered the buyers away from Butler towards the competitor.
The court cannot grant such a speculative discovery request, which amounts to no more than a classic "fishing expedition." Moreover, a plaintiff cannot avoid summary judgment by pointing to a speculative possibility that additional discovery might conceivably generate a dispute of fact. Plaintiff must make "some showing that discovery [i]s likely to produce probative evidence in his behalf" and cannot rely "on a bare hope that discovery will provide evidence to create an issue of fact." Hoffman v. Reali, 973 F.2d 980, 987 (1st Cir. 1992); see Milazzo v. Sentry Ins., 856 F.2d 321, 322 (1st Cir. 1988) ("Discovery is not a 'fishing expedition'; parties must disclose some relevant factual basis for their claim before requested discovery will be allowed.").
Since the evidence of record is flatly insufficient to support a claim for defamation, and the prospect of additional discovery providing any such evidence is no more than conjectural, at best, the motion for summary judgment on this count must be allowed.
B. Discrimination and Unfair Trade Practices
Massachusetts statutory law proscribes "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce," Mass. Gen. Laws ch. 93A § 2(a), and grants a cause of action to a party injured as a result of the proscribed conduct, Mass. Gen. Laws ch. 93A § 11. "An act or practice may be 'unfair' within the statutory meaning without being deceptive or fraudulent." Mass. Farm Bureau v. Blue Cross of Mass., 532 N.E.2d 660, 664 (Mass. 1989). Yet the violative conduct must be shown to fall within "at least the penumbra of some common-law, statutory, or other established concept of unfairness." Zayre Corp. v. Computer Sys. of Am., 511 N.E.2d 23, 30 (Mass. 1987) rev. denied, 513 N.E.2d 1289 (Mass. 1987). Furthermore, a plaintiff pursuing a Massachusetts statutory discrimination claim must demonstrate "loss of money or property, real or personal, as a result of the [proscribed conduct]." Mass. Gen. Laws ch. 93A § 11; see also Baldassari v. Pub. Fin. Trust, 337 N.E.2d 701, 708-09 (Mass. 1975) (finding the plain language of § 11 to require loss of money or property).
As a preliminary matter, it is important to emphasize that refusal to do business does not constitute an actionable unfair trade practice, absent monopolistic purpose or concerted effort to hinder trade. PMP Assocs., Inc. v. Globe Newspaper Co., 321 N.E.2d 915, 917-19 (Mass. 1975); see Holmes Prods. Corp. v. Dana Lighting, Inc., 958 F. Supp. 27, 35 (D.Mass. 1997). Generally speaking, a corporation is entitled to conduct its business, or decline to conduct its business, with whomever it chooses. While some exceptions may exist to this basic rule, none of these exceptions applies here. GMAC could decline — for any reason or for no reason — to do business with Butler. Its decision not to finance vehicles upfitted with Butler equipment, standing alone, cannot therefore form the basis of any claim under Ch. 93A.
To the extent that Butler's Ch. 93A claim is anchored on conduct on the part of GMAC other than simple refusal to finance its vehicles, the inability to demonstrate actual damage caused by this conduct is fatal. For the reasons stated above, Butler simply cannot demonstrate any "loss of money or property" necessary for a § 11 suit. See Baldassari v. Pub. Fin. Trust, 337 N.E.2d 701, 708-09 (Mass. 1975); Halper v. Demeter, 610 N.E.2d 332, 335 (Mass.App.Ct. 1993). For this reason the defendant's motion for summary judgment with respect to this count must be allowed.
C. Intentional Interference With Business Relationships
To establish a claim for interference with contractual or advantageous relations, a plaintiff must demonstrate (1) the existence of a contract or a business relationship with contemplated economic benefit; (2) the defendant's knowledge of the contract or relationship; (3) the defendant's intentional interference with the contract or relationship for an improper purpose or by improper means; and (4) the loss of an advantage resulting from the defendant's conduct. See Swanset Dev. Corp. v. City of Taunton, 668 N.E.2d 333, 338 (Mass. 1990); see also Pure Distribs., Inc. v. Baker, 285 F.3d 150, 157 (1st Cir. 2002); Schultz v. Kelly, 188 F. Supp.2d 38, 56-57 (D.Mass. 2002). The Massachusetts Supreme Judicial Court has construed improper to mean "wrongful by some measure beyond the fact of interference itself." United Truck Leasing Corp. v. Geltman, 551 N.E.2d 20, 23 (Mass. 1990) (quoting Leigh Furniture Carpet Co. v. Isom, 657 P.2d 293, 304 (Utah 1982)).
Again, it must be emphasized that under Massachusetts law, refusal to deal alone does not amount to tortious interference. See Spencer Cos., Inc. v. Chase Manhattan Bank, N.A., 81 B.R. 194, 204 (D.Mass. 1987) ("Mere refusal to deal does not constitute tortious interference."); see also Gen. Elec. Co. v. Lyon, 894 F. Supp. 544, 551 (D.Mass. 1995) (finding that alleged conduct by defendant prohibiting authorized compounders to sell plaintiff's equipment exceeded mere refusal to deal).
Recognizing that simple refusal to deal does not constitute tortious interference, Butler responds that GMAC's conduct constituted "a malicious campaign against Butler's reputation." (Docket 86, at 59). Unfortunately for plaintiff, as discussed above, the record lacks evidence that any "malicious campaign," or any other even arguably improper conduct, on the part of GMAC had any damaging impact whatsoever on Butler's contractual or business relations with third parties. Quite simply, the plaintiff has been unable to demonstrate any loss of any business advantage resulting from GMAC conduct, the fourth prong of the test for tortious interference.
For these reasons, the defendant's motion for summary judgment must be allowed with respect to the claim for tortious interference.
V. CONCLUSION
For the reasons set forth above, defendant's Motion for Summary Judgment is hereby ALLOWED in its entirety.
A separate order will issue.
ORDER
PONSOR, D.J.
The court has previously allowed defendant's motion for summary judgment. For the reasons stated in the attached memorandum, the clerk is now ordered to enter judgment for the defendant.
It is So Ordered.