Defamation And The Common Interest Privilege In The Construction Industry

Construction projects often involve a complex array of contractors, subcontractors, banks, bonding agents, architects, engineers and so on. With that many parties depending on each other to complete a project, negative statements about the quality and integrity of other peoples' work often arise. Such statements, if false, may give rise to defamation claims. However, even a false statement may be protected from liability by a "common interest" privilege. Two recent Massachusetts cases address what kinds of statements qualify for common interest privilege protection in matters related to the construction industry.

Defamation and Qualified Privileges

The law of defamation tends to vary from state to state. In Massachusetts, defamation is defined as the publication of a statement of fact (i.e., not opinion) concerning the plaintiff that is both false and capable of damaging the plaintiff's reputation. The statement must be published with the requisite fault — anywhere from negligence to willful lying, depending on the circumstances — and it must cause actual harm or be the type of statement presumed to cause harm.

A statement that satisfies these elements may nevertheless enjoy the protection of a "qualified" or "conditional" privilege, such as the common interest (or "shared interest") privilege. This privilege applies when the publisher and recipient of a statement share a common interest in the subject, and the statement is reasonably calculated to further that interest. The common interest privilege is most often invoked in the employment context, where an employer has a conditional privilege to disclose potentially defamatory matter about an employee's job performance to those who share an interest in that performance, such as the employee's manager, and in some cases customers or co-workers. The privilege may also arise in the context of a legal duty, such as a school principal's duty to share with parents information that may affect the welfare of their child. In Massachusetts, the privilege is considered an affirmative defense, but some jurisdictions describe it as an additional element (i.e., the element that the statement is "unprivileged").

The common interest privilege can be "abused" and thereby forfeited in certain circumstances. In Massachusetts, a conditional privilege is abused if it is (1) published with constitutional or "actual" malice, i.e., knowledge of its falsity or reckless disregard as to its truth; (2) published with common law malice, i.e., ill will or in bad faith; or (3) recklessly over-published to too many people, or to those who had no need to know the information.

Defining the Common Interest Privilege in the Construction Industry

Two recent Massachusetts Appeals Court decisions provide useful guidance about where to draw the line when applying the common interest privilege in the construction industry.

The first case, Downey v. Chutehall Construction Co., 86 Mass. App. Ct. 660 (2014), is a fairly typical application of the privilege. In that case, a homeowner hired the plaintiff, a roofing contractor, to install a roof. The homeowner later hired the defendant (another roofing professional) to investigate the cause of a leak in that roof. The defendant's report to the homeowner stated that the roof was "substandard" and had been installed by the plaintiff over soaking wet fiberboard insulation. The Appeals Court held that the report was protected by the common interest privilege. The defendant shared a common interest with the homeowner in evaluating the source of the leak so repairs could be made, and the statements in...