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Rainsoft v. MacFarland

United States District Court, D. Rhode Island

September 30, 2018

RAINSOFT, a division of Aquion, Inc., a Delaware corporation, Plaintiff,
v.
BRIAN MACFARLAND, d/b/a “Lazy Man & Money, ” Defendant.

          OPINION AND ORDER

          WILLIAM E. SMITH, CHIEF JUDGE.

         Brian MacFarland is the author of a series of blog posts criticizing the water-treatment company RainSoft. RainSoft has sued over these posts, alleging defamation and violation of the Lanham Act. MacFarland argues his posts are shielded by the First Amendment, and indeed successfully executes a “rolled-up plea”: when not protected opinion, they are substantially true. See Black's Law Dictionary 1270 (9th ed. 2009).

         I. Background

         MacFarland runs the website lazymanandmoney.com, where he blogs about companies who provide consumer products and services, with an eye toward saving his readers money. (See Def.'s Statement of Undisputed Facts (“DSUF”) ¶¶ 1-3, ECF No. 88.) MacFarland set his sights on RainSoft starting in summer 2013, after he and his wife sat through an in-home demonstration of RainSoft's water-treatment products. (Id. ¶¶ 9, 19, 24.) The demonstration was conducted by Gus Oster. (Id. ¶¶ 24-25.) Employed by Basement Technologies, a local RainSoft-products dealer, Oster pitched the MacFarlands according to a script written by RainSoft. (Id. ¶¶ 24-27.) The script repeatedly touted RainSoft as a maker of premier water-treatment products, without mention of Basement Technologies, a priority that tracked the companies' business plan. (See, e.g., id. ¶ 27; DSUF Ex. G at 25-27, ECF No. 88-7.)

         Their arrangement was, broadly, to make sales by foregrounding RainSoft's brand name and reputation. (See DSUF Ex. U at 2-7, ECF No. 88-21.) The preface to the companies' dealership agreement stated, “[I]t is expected that [Basement Technologies] will protect and embrace the RainSoft®-brand as we all make a living based on its reputation in the marketplace.” (Id. at 2.) RainSoft trusted Basement Technologies to “[p]romot[e] the RainSoft®-brand in every customer facing opportunity, ” so that eventually “every person in the world [would] recognize the RainSoft® trademark.” (Id. at 2; DSUF Ex. V at 26, ECF No. 88-22.) RainSoft and Basement Technologies also agreed that “all consumers who purchase RainSoft®-brand products . . . from [Basement Technologies] shall be considered the shared customers of AQUION, INC[.][1] and [Basement Technologies] . . . and that neither . . . has . . . any . . . superior right, interest[, ] or ownership in, or control of, such customers . . . .” (DSUF Ex. U at 6.)

         The agreement went on to stipulate that Basement Technologies could not “sell, service, rent, promote, lease[, ] or install products” other than RainSoft's without RainSoft's permission, (id.), which was never granted, (Pl.'s Statement of Disputed Facts (“PSDF”) ¶ 143, ECF No. 109.) It also defined “[t]he proper way for a[] [dealership] employee to greet customers when answering the phone”: “Hello, ABC Water Company, your local RainSoft Dealer.” (DSUF Ex. V at 24 (emphasis omitted).) Ultimately, the “spirit of this agreement” was for Basement Technologies to operate under RainSoft's aegis, and as closely as possible without merging into a single entity. (DSUF Ex. U at 2.) In other words, as the agreement's preface provided, addressing Basement Technologies, “You are becoming part of an organization that expects and counts on your participation and support . . . .” (Id.)

         Though MacFarland was not privy to the companies' agreement, his first RainSoft post, regarding the in-home presentation, showed that Oster had accurately conveyed its essence. Titled “Is Home Depot's Water Test from RainSoft a Scam?” the post mixed narration - “The salesman was super nice, and very friendly with our dog.” - and critique of Oster's presentation. (Pl.'s Statement of Undisputed Facts (“PSUF”) Ex. A at 2-5, ECF No. 106-1.) The latter consisted of calling the in-home presentation a “magic show” and accusing RainSoft of making “false promises, ” using “high-pressure sales tactics, ” and other “slightly deceptive practices.” (Id.) MacFarland referred by “magic show” to various acts Oster performed ostensibly showing RainSoft's products purifying the tap water in MacFarland's home. (Id. at 2-3.) MacFarland wondered if Oster had something up his sleeve: “I love to think about how, if I wanted to be devious, I could pull it off. For example, the bottles he brought with him that were labeled for our water could have been laced with contaminants. I'm not saying they were, but it's possible.” (Id.) “As you can tell, ” MacFarland wrote, “I'm a skeptical person by nature.” (Id. at 2.)

         The “false promises” MacFarland attributed to Oster included that RainSoft's filtration system would save him $20, 000 in appliance-replacement costs over 20 years - this MacFarland “highly doubt[ed], exclaiming, “Wholy [sic] statistics gone wrong, Batman.” (Id. at 3.) MacFarland took Oster to task too for what he considered “high-pressure sales tactics, ” such as offering five years of free soap if MacFarland purchased a RainSoft system on the spot. (Id. at 4.) Because it did not include the cost of labor, MacFarland also found RainSoft's lifetime warranty deceptive: “[i]f I have a lifetime warranty and it costs me $80 a month for repeated maintenance, ” he reasoned, “what is the warranty actually giving me?” (Id.)

         In this first post, MacFarland concluded not that RainSoft was a scam, but that its products were not worth their price: “I don't want to say that the RainSoft EC4 product doesn't work. . . . From what I'm reading though, the quality is closer to mid-level, but it is really high-priced . . . .” (Id. at 5.) He ended the post by asking his readers if they had “ever installed a water purification system? . . . Was it RainSoft?” (Id.) Despite his skepticism, however, MacFarland and his wife - who MacFarland “recognized . . . was impressed by the product” - gave Oster a $100 check to keep the free-soap option open.[2] (Id.)

         Published eight days later, MacFarland's second RainSoft post - “RainSoft Scam? (Part 2)” - updated readers on his “ongoing efforts to get healthy water in [his] home.” (PSUF Ex. B at 1, ECF No. 106-2.) MacFarland relayed a conversation he had had with a “RainSoft representative” in which MacFarland haggled $1, 000 off the price Oster quoted him. (Id.) He also told of a trip he made to Lowes where a “representative in plumbing was shocked” that Home Depot - who had introduced MacFarland to RainSoft's products - would “only connect [MacFarland] to this shady RainSoft company, ” rather than show him “a range of filtration systems from various manufacturers.” (Id.) MacFarland again mentioned Oster's “magic tricks” and “bad logic, ” before answering the titular question - “RainSoft Scam?” - by saying he was “leaning towards yes, but you are free to make your own decisions.” (Id. at 3.)

         MacFarland was less equivocal in his next post, “Yep. RainSoft Scammed Me Out of $100.” (PSUF Ex. C at 2-3, ECF No. 106-3.) There MacFarland reported that Oster cashed the $100 check that had held open the free-soap option, contrary to MacFarland's expectations of their agreement, which was that MacFarland would be able to cancel the check any time. (Id.) MacFarland warned his readership that “if you suspect a company to be a scammer, don't even give them an inch, they'll take a mile.” (Id. at 3.) He later added an update to the top of this post, reporting that “RainSoft's parent company, Aquion, saw this and . . . sent me a $100 check to make it right.” (Id. at 2.)

         The fourth of MacFarland's posts panning RainSoft was published over a year later, on December 9, 2014. (PSUF ¶ 148, ECF No. 110; PSUF Ex. D at 1, ECF No. 106-4.) “How to Get Clean, Purified Water (at [t]he Best Price)” recounted a spat MacFarland had, in the comments section of one of his other RainSoft posts, with someone he suspected was, though who denied being, a RainSoft dealer; MacFarland discounted the commenter's glowing RainSoft review because of this supposed bias, accusing the supposed dealer of engaging in a “comment scam.” (Id. at 2, 4.) The post also rehearsed MacFarland's previous complaints about RainSoft and added another about the vagueness of RainSoft's guarantee that if a customer finds a better-performing product, the customer keeps the RainSoft system gratis. (Id. at 2-4 (“There's no real fine print[, ] . . . and the terms are ambiguous . . . .”).) MacFarland then summoned “a little common sense” to piece together a “formidable water purification system” - hyperlinking to other companies' products - “[t]hat's less than 1/6th the cost of what RainSoft was going to charge.” (Id. at 4-5.) “I'm not a water purification expert, ” MacFarland wrote, “but I know basic problem solving, scientific process, and consumer scams . . . .” (Id. at 5.)

         Readers were able to comment on each of MacFarland's four RainSoft posts. (See, e.g., id. at 8-19.) And MacFarland commented back, dozens of times, usually to agree with those who agreed with him. (See, e.g., PSUF Ex. O at 33, ECF No. 106-15 (“Thanks[, ] Josh. Your story is exactly the point I've been trying to make.”).) Or to trade barbs with those who did not. (See, e.g., id. at 2, 7, 34 (“Clearly paying $5, 000 or $10, 000 for soft water is going to lead to soap savings that will help you retire 20 years early.”; “Doug, [w]ith all due respect, I believe your intentions were slimy.”; “No I hadn't heard of ‘Kratt foods.' If you are going to be sarcastic about it, at least get the spelling right.”). MacFarland also reiterated in the comments his position that “RainSoft salesmen” were “selling fear” via “scammy sales tactics” and “magic shows.” (Id. at 2, 9, 20.)

         After RainSoft initiated this lawsuit in April 2015, MacFarland posted “What is a Scam Anyway?” in which he explained that when he uses the word ‘scam' he does not necessarily mean to connote illegal activity, but instead, more colloquially, a “confidence trick.” (PSUF Ex. F at 2-4, ECF No. 106-6.) He argued this interpretation was consistent with the “conversational tone” he uses on his site, “a reflection of what [he]'d say to a friend, a colleague, or anyone else if they asked [him] about [his] opinion on something.” (Id. at 2.) MacFarland's reluctance to make legal claims stems, he said, from the fact that he does not “possess a 100% understanding of all laws.” (Id. at 3.) “I don't even think judges know ALL laws, ” he ventured.[3] (Id.)

         MacFarland's etymological foray was not happenstance, it turned out. Discovery turned up the fact that MacFarland penned “What is a Scam Anyway?” to “cover [his] ass.” (PSUF Ex. R at 29, ECF No. 110-2.) That is, to circumvent precedent, as MacFarland saw it, in Illinois - where this case was originally brought - that treated the word ‘scam' as “libel per se.”[4] (Id.) Discovery also made manifest that MacFarland knew by the end of August 2013 - after he had written the first three RainSoft posts, but before publishing “Yep. RainSoft Scammed Me Out of $100.” - that Basement Technologies and RainSoft were distinct entities, and that Oster worked for the former. (PSUF Ex. P at 15, ECF No. 110-1 (“Q. [Y]ou underst[ood] based on this [August 29, 2013, ] email that RainSoft's dealers are independently owned, right? A. . . . yes.”).)

         And, in fact, when viewed in the light most favorable to RainSoft, the evidence shows MacFarland understood this to be true from the very beginning: the aforementioned $100 option check was made out to Basement Technologies - though its memo section read, “deposit-rainsoft” - (DSUF Ex. H at 2, ECF No. 88-8), and MacFarland had written in an April 29, 2015, email that “[t]he reason why I didn't mention the local dealer [is] it gives away the fact that I'm in Rhode Island and I try to hide that a bit due to the MLM stuff.”[5] (PSUF Ex. R at 9.) He continued, “I try to write for a national audience and from what I've read online my experience [with in-home demonstrations of RainSoft products] happens across the country.” (Id.) MacFarland admitted that RainSoft had “a ...


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