In 2013, the Massachusetts State Automobile Dealers Association (the "Association") received calls from a number of its member dealers who said that they had been approached by the U.S. Department of Labor (the "DOL") about potential violations of wage and hour laws. Each of the dealers had done business with Kilnapp Enterprises, a broker of auto detailing services doing business under the name Real Clean. Real Clean connects dealers with individuals who provide auto detailing services and takes the position that the detailers are independent contractors rather than employees of Real Clean. In its meetings with dealers, the DOL asserted that the detailers were employees of Real Clean and threatened to hold the dealers liable as a joint employer for unpaid overtime wages, unemployment insurance and other required payments. In some cases, the DOL demanded payments from the dealers.

Association Alerts Members

The Association believed that it needed to make its members aware of this important and urgent legal issue. In November 2013, the Association published a newsletter featuring an article written by the Association’s outside employment counsel titled: "Alert: DOL Cracking Down on Dealers Using Real Clean." The Association posted a nearly identical article on its website. The article described the circumstances with the DOL and stated: "This is a serious situation for dealers who have relationships with Real Clean, and it will only get worse." The article also laid out several options for dealers, some of which included terminating the relationship with Real Clean.

Real Clean Files Defamation Lawsuit

In May 2015, Real Clean filed a lawsuit in Suffolk Superior Court against the Association, its employment counsel and his law firm. The crux of Real Clean’s allegations was that the publications were false or misleading because they suggested that the problem rested only with Real Clean when it was really an industry-wide issue. Real Clean alleged in its complaint that it had lost $3 million in business as a result of the publications and raised claims of defamation, commercial disparagement, violations of the Lanham Act, unfair and deceptive business practices and others. Each of these claims required a showing that the factual statements published by the Association and its counsel were false or misleading.

The defendants filed a joint motion to dismiss Real Clean’s complaint, arguing that everything stated in the published statements was true and, in some instances, a matter of opinion that was not actionable in a defamation case. The defendants based their arguments on statements made by Real Clean’s prior counsel in a letter to the Association, which Real Clean had attached to its Complaint. The attorney’s letter admitted to the same basic facts that were published by the Association. The Superior Court agreed that Real Clean would be unable to prove that the defendants published false or misleading statements about Real Clean and dismissed the lawsuit.

Court Unanimously Affirms Lawsuit Dismissal

Real Clean appealed the lawsuit to the Massachusetts Appeals Court. The parties argued the case to a three judge panel in December. On March 17, 2016, the Appeal Court issued a written decision unanimously affirming the dismissal of the lawsuit. The Court stated that the published statements were conditionally privileged because the Association and its members have a common interest in the subject matter and the statements were reasonably calculated to further or protect that interest. The Court agreed that, in light of the admissions made by Real Clean’s attorney, it could not show that the statements published by the Association were false.