CHICAGO (CN) – A federal judge refused to dismiss claims that Carfax made false and defamatory statements about AutoCheck’s vehicle history reports to sink the competitor’s $2.3 million deal with Subaru.
Ohio-based Experian Information Solutions sells vehicle history reports under the name AutoCheck. It directly competes with Carfax, which sells similar reports for customers to check if a used vehicle has ever been in an accident.
In December 2011, Experian sued Carfax, for making disparaging and false statements about its product to derail a $2.3 million deal with Subaru dealerships.
It claimed that Subaru was committed to a contract with Experian, under which Subaru’s Certified Pre-Owned program would offer customers free AutoCheck reports, but that Carfax interfered before the contract was signed.
Carfax sent Subaru a letter claiming that “AutoCheck’s auction frame data is highly flawed.” The letter also said that “AutoCheck will allow a significant number of problem vehicles into [Subaru’s] program,” and “there is a good chance Auto[C]heck will miss a problem vehicle.”
After Carfax sent the letter, Subaru reconsidered its deal with Experian and eventually decided to give the contract to Carfax.
U.S. District Judge Edmond Chang upheld the core of Experian’s defamation claim.
“Experian claims that the statement, ‘AutoCheck’s auction frame data is
highly flawed,’ qualifies as defamation per se… Viewed in the context of the entire letter, the natural and obvious meaning of the statement is that Experian offers a substandard product because it uses ‘highly flawed’ data. The statement directly impugns Experian’s ability to perform in its business by questioning the validity of its underlying vehicle data,” Chang said.
“Nor can the ‘problem vehicle’ statements be innocently construed as not impugning Experian’s professional competence… The terms ‘significant number’ and ‘problem vehicle,’ and the labeling of the probability as a ‘good chance,’ are all naturally interpreted as accusing AutoCheck of using inferior and inaccurate data to the point of loss of accreditation and competence,” the judge continued.
However, Chang found that other claims Carfax made accusing Experian of “not hav[ing] strong brand characteristics,” and “pursuing DAB [Dealer Advisory Board] members to rabble rouse and stir up discontent in an attempt to undermine Carfax’s integrity,” are not defamatory because they are unverifiable. “The statements do not reference anything specific that could be investigated and would require examining all aspects of Experian’s AutoCheck brand, contractual agreements with dealers, and interactions with the Dealer Advisory Board. Thus, these statements are expressions of opinion as they lack the specificity and factual content necessary to be verifiable and deemed factual assertions,” Chang concluded.