Next Technologies, Inc. v. Beyond the Office Door LLC ( 2021 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 20-2169
NEXT TECHNOLOGIES INC.,
Plaintiff-Appellant,
v.
BEYOND THE OFFICE DOOR, LLC (doing business as
BTOD.com),
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 19-cv-217-wmc — William M. Conley, Judge.
____________________
ARGUED JANUARY 12, 2021 — DECIDED MARCH 24, 2021
____________________
Before EASTERBROOK, WOOD, and ST. EVE, Circuit Judges.
EASTERBROOK, Circuit Judge. Does the Constitution of the
United States tell us the limits of criticism in reviews of
standing desks? The district judge thought that it does,
treated the plaintiff (a seller of office products) as a “limited
purpose public figure,” and ruled in favor of the reviewer—
which sells a competing line of standing desks—under the
First Amendment. 2020 U.S. Dist. LEXIS 102413 (W.D. Wis.
2 No. 20-2169
June 10, 2020) (relying on New York Times Co. v. Sullivan, 376
U.S. 254 (1964), and GerA v. Robert Welch, Inc., 418 U.S. 323(1974), among other decisions). Call us skeptical about using
the Constitution rather than state law or the Lanham Act, 15
U.S.C. §1125, to resolve a fight about products’ aiributes.
But we need not decide what the Constitution has to say
about this subject, because Next Technologies, the aggrieved
manufacturer, lacks a good claim under Wisconsin law.
Next Technologies, a maker of office equipment, touts its
standing desks as the best in the industry, and it refers po-
tential customers to reviews that rate its products highly. So
it was dismayed when Beyond the Office Door published
reviews critiquing the EvoDesk and NextDesk Terra models.
Beyond the Office Door sells many makers’ office products,
some under its own brand, so it is a competitor to Next. A
firm unhappy about a rival’s statements often resorts to the
Lanham Act, but Next did not. Instead it sued under the di-
versity jurisdiction, relying on Wisconsin’s common law of
defamation.
The district judge treated product reviews and political
commentary as equivalent and turned straight to the Consti-
tution, holding that because Next is a “limited purpose pub-
lic figure”—made so by its own efforts to sell its wares—all
criticism by a competitor is constitutionally protected unless
the statements are knowingly false or made with reckless
indifference to their truth. That high standard has not been
met, the judge ruled. On the district court’s approach, few
claims under the Lanham Act ever could succeed, and com-
mercial advertising would be treated just like political cam-
paigning.
No. 20-2169 3
One court of appeals took that path 41 years ago, see
Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264 (3d Cir. 1980),
but neither the Supreme Court nor any other court of ap-
peals has endorsed that approach. We do not reach any con-
stitutional issue today, because we follow the norm that
questions under statutes and the common law must be re-
solved ahead of constitutional theories, which should be ad-
dressed only when their decision is inescapable. See, e.g.,
New York City Transit Authority v. Beazer, 440 U.S. 568, 582
(1979).
The district court’s opinion includes a comprehensive list
of the subjects in dispute between the parties. A brief de-
scription of a few suffices for our purposes. For example, the
review of the NextDesk Terra published on November 1,
2017, states that the desk has mismatched colors and in-
cludes this photograph, which shows a vertical column in
painted gray and a horizontal piece in bare metal:
4 No. 20-2169
Next asserts that the review is false because both pieces are
“silver.” Another part of the review asserts that the desk
does not have automatic collision protection—a feature that
stops the desk’s vertical movement if it encounters some-
thing above or below it. Next asserts that its desks do have
this feature, to which Beyond the Office Door replies that the
electronics box of the desk under review lacks a dongle that
would have enabled collision protection. Next contends that
a change to the Terra’s electronics in 2017 made dongles un-
necessary; Beyond the Office Door rejoins that the electronics
box of the desk it obtained in 2017 was stamped “2014” and
that the desk as shipped lacked collision protection. And so
on.
The review of the EvoDesk published on January 16,
2018, observes that its frame was manufactured under con-
tract in China (which Next agrees is true) and states that a
problem with many Chinese standing desks is excessive lu-
brication. The review concludes that this is true of the Evo-
Desk in particular. “After cycling the EvoDesk [up and
down] only a handful of times you will start to see the white
lubricant building up on the outside of the columns.” This
statement was accompanied by a picture:
No. 20-2169 5
Next maintains that the review’s statement and picture must
be false because the Chinese manufacturer has not received
complaints and Next’s inspections would have detected ex-
cessive lubrication, if there had been any.
One more illustrative dispute. The review observes that
the EvoDesk has two circuit boards rather than one in its
electronics box and asserts that the use of two pieces likely
reflects a desire to save costs. Next denies that lower costs
imply lower quality, and it insists that the two-board design
is as good as one-board designs.
Next assumes that defamation of a commercial product is
addressed by the same principles as defamation of a natural
person. In the district court the parties clashed on such ques-
tions as whether the statements in the review are true or,
perhaps, are opinions that could not be either true or false.
Those would be central questions if the plaintiff were a natu-
ral person complaining that he had been called incompetent
6 No. 20-2169
or a thief. But the parties’ briefs did not cite any Wisconsin
cases showing that the state’s judiciary looks at personal
defamation and product defamation identically. There is a
hint that it is harder for a product’s manufacturer than for a
natural person to recover, see Converters Equipment Corp. v.
Condes Corp., 80 Wis. 2d 257, 263 (1977), and we picked up on
that hint in Isaksen v. Vermont Castings, Inc., 825 F.2d 1158,
1165–66 (7th Cir. 1987), but the state’s judiciary has not fo-
cused on the subject. Indeed, a search for cases decided un-
der Wisconsin law arising from the supposed defamation of
a commercial product comes up almost empty.
Other states have addressed this subject, however, and
the ALI’s Restatement (Second) of Torts observes that most of
those have adopted one approach for personal defamation, a
second approach for corporate defamation, and still a third
for product defamation by a competitor. The dispute be-
tween Next and Beyond the Office Door concerns defama-
tion of a commercial product, which has its own section in
the Restatement. Section 626 calls the subject “trade libel” and
covers “disparagement of quality” of goods. The commen-
tary observes that some states do not entertain common-law
actions for trade libel, leaving the subject to the Lanham Act
and any state-law equivalents. When a claim of this kind
does exist at common law, the plaintiff must establish an “in-
jurious falsehood,” which §623A defines as a statement that
the speaker knows to be false or makes with reckless disre-
gard of its truth or falsity. And §649 adds that, even when
this standard has been satisfied, some states recognize a
conditional privilege for statements by business rivals:
A competitor is conditionally privileged to make an unduly fa-
vorable comparison of the quality of his own land, chaiels or
other things, with the quality of the competing land, chaiels or
No. 20-2169 7
other things of a rival competitor, although he does not believe
that his own things are superior to those of the rival competitor,
if the comparison does not contain false assertions of specific un-
favorable facts regarding the rival competitor’s things.
By the standards of the Restatement, Next’s suit is untenable.
The district judge aiributed to the Constitution a re-
quirement that a limited-purpose public figure show inten-
tional falsehood or reckless disregard of the truth, leading to
a fight on appeal about whether Next is a limited-purpose
public figure. But under §626 and §623A, any vendor suing
about bad reviews of its products must show these things—
and as a maier of common law, not of constitutional com-
mand. The dispute about whether Next is a limited-purpose
public figure becomes irrelevant, as does any question about
whether the Supreme Court is likely to extend New York
Times v. Sullivan from seditious libel to product reviews.
The conditional privilege in §649 also protects Beyond
the Office Door. Whatever one can say about whether both
gray paint and polished metal should be called “silver,” or
whether two circuit boards are as good as one, these are not
“false assertions of specific unfavorable facts”. They are the
sort of subjects on which competitors regularly disparage
one another. In competition a bruised (corporate) ego should
be dealt with by hiring an advertising agency, not by hiring
a lawyer. See Molson Coors Beverage Co. v. Anheuser-Busch
Cos., 957 F.3d 837 (7th Cir. 2020).
To say that Next loses under a Restatement is not neces-
sarily to say that it loses under Wisconsin law. A Restate-
ment tries to describe the norm among states, but different
jurisdictions may, and often do, go their separate ways. Still,
we assume that a state with liile or no law on a topic will
8 No. 20-2169
follow a Restatement when presented with an issue, unless it
has given some indication to the contrary. See Archdiocese of
Milwaukee v. Doe, 743 F.3d 1101, 1107 (7th Cir. 2014). We have
not seen anything in Wisconsin’s judicial decisions to make
us think that it would treat disparagement of products and
defamation of persons identically. The best hint that we
could find, in Converters Equipment, seems compatible with
§626 and related sections. A few decisions mention the
commercial tort of “injurious falsehood” but add that liabil-
ity on this ground is subject to conditional privileges and
“never has been greatly favored by the law.” Kensington De-
velopment Corp. v. Israel, 139 Wis. 2d 159, 168 (Ct. App. 1987).
So in this diversity suit, where our job is to predict how the
Supreme Court of Wisconsin would rule if faced with a legal
issue, we predict that it would follow Restatement (Second) of
Torts §§ 623A, 626, and 649, which means that the district
court’s judgment must be
AFFIRMED.