SUPREME COURT LETS SUZUKI SUE CONSUMERS UNION OVER ARTICLE.
Without comment, the court declined to hear the nonprofit group's appeal in Consumers Union v. Suzuki Motor Corp., et al. (03-281), thus upholding an order by the Ninth U.S. Circuit Court of Appeals.
The organization promised to continue to fight the lawsuit, in which Suzuki alleges CU rigged the tests.
"Consumers Union will not back down and we're ready to face a jury," said CU President Jim Guest.
The organization had tried to get the Supreme Court to hear the case on grounds that the Ninth Circuit applied the wrong standard. CU unsuccessfully argued other federal circuits have held judges must independently examine the entire record in such cases, not just the plaintiff's evidence.
The Supreme Court is more likely to take cases in which there is a split among the circuits, and it has a long record of overturning Ninth Circuit decisions. CU's petition was supported by the Insurance Institute for Highway Safety, which conducts its own tests, as well as many consumer groups and media companies.
Consumers Union had tested the Suzuki Samurai in 1988 and published an article in its magazine, Consumer Reports, that year in which it rated the sport-utility vehicle "not acceptable." But Suzuki didn't sue until after CU repeated the negative rating in its 60th anniversary issue in 1996.
The manufacturer went to court alleging product disparagement.
As a public figure, Suzuki had to show by clear and convincing evidence that the statements were published with actual malice - that is, knowing they were false or made with reckless disregard as to whether they were true.
CU moved for summary judgment, which the trial judge granted on grounds a reasonable jury couldn't conclude CU had acted with actual malice.
Suzuki appealed, and a three-judge panel reversed the ruling.
CU sought an en banc hearing. The Ninth Circuit denied it, but in an unusual move vacated the initial opinion and substituted a new one also reversing the summary judgment and remanding the case for trial.
Suzuki's case centered on a change CU made while testing the vehicle. After the Samurai and other SUVs completed the standard course without threatening to roll over, CU altered the course to make the turns more abrupt. The other vehicles didn't show a problem, but the Samurai tipped up and would have rolled over but for outriggers set up to prevent that outcome.
Suzuki further argued that CU had a financial motive in disparaging its product because the nonprofit organization was trying to raise money for a new building.
CU said it altered the test after it became aware rollovers might be a problem, and it was fairly applied to each vehicle.
Judge A. Wallace Tashima, who had written the original 2-1 ruling, wrote for the new 13-11 majority that Suzuki's evidence of rigging and financial motive was credible enough to go to a jury.
He noted that a former CU employee testified that Irwin Landau, the magazine's editorial director, told a test driver, "If you can't find someone to roll this car, I will."
"The evidence of financial motive dovetails with the evidence of test-rigging," Tashima wrote.
"The fact that CU needed to boost its revenues to complete its capital campaign lends credence to Suzuki's contention that CU rigged the Samurai testing to produce the predetermined rollover result," he said.
"We conclude that the evidence of motive and test-rigging, in combination, is sufficient to preclude summary judgment and therefore requires reversal."
Judge Alex Kozinski dissented, joined by 10 other judges. Kozinski said Consumer Reports had fully disclosed the circumstances of the two rounds of testing and the reasons it based its opinion on the second round.
"I find it incomprehensible that a review truthfully disclosing all this information could be deemed malicious under New York Times v. Sullivan," Kozinski said.
"If CU can be forced to go to trial after this thorough and candid disclosure of its methods, this is the death of consumer ratings: It will be impossible to issue a meaningful consumer review that a band of determined lawyers can't pick apart in front of a jury," he said.
"The majority's gripe here is not with CU's reporting of its tests, but with its experimental design, and that is entirely the wrong focus. If CU had found the Samurai 'Not Acceptable' based on tests performed with a Ouija board, most consumers would dismiss its rating as worthless. But, so long as CU disclosed its method, the report would be protected by the First Amendment.
"By exposing CU to liability for basing its negative opinion on a fully disclosed testing procedure, the majority runs head-first into a settled First Amendment principle: 'Where a publication sets forth the facts underlying its statement of opinion . . . and those facts are true, the Constitution protects that opinion from liability for defamation,'" Kozinski wrote.
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|Publication:||Liability & Insurance Week|
|Date:||Nov 9, 2003|
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