GAF Materials LLC v. Lipinskiy

GAF MATERIALS LLC, Plaintiff, v. DMITRY LIPINSKIY and ROOFING INSIGHTS, LLC, Defendants.

Case No. 20-CV-2194 (PJS/TNL)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

November 23, 2020

ORDER

Katherine A. Moerke, Adine S. Momoh, and Jon M. Woodruff, STINSON LLP, for plaintiff.

James T. Smith, HUFFMAN, USEM, CRAWFORD & GREENBERG, PA, for defendants.

Defendant Dmitry Lipinskiy is a roofer who used to be a member of the Certified Roofing Contractor Program operated by plaintiff GAF Materials LLC ("GAF"). After GAF declined to renew Lipinskiy's membership in 2016, Lipinskiy began to criticize GAF through various social-media outlets. GAF initiated a legal action against Lipinskiy, alleging that he had violated the non-disparagement clause in his contract with GAF.

That legal action settled in September 2017. As part of the settlement, Lipinskiy agreed "not to disparage GAF or its products or employees," Woodruff Decl. Ex. B, ¶ 3(a), and not to say anything about GAF "that may be considered demeaning, disparaging, or detrimental to [GAF]," id. ¶ 11. Lipinskiy made these promises even though he runs a media company (defendant Roofing Insights, LLC) that produces content for roofing contractors, including evaluations of shingles and other roofing materials.

Lipinskiy more or less honored his promise not to disparage GAF until October 2020, when two prominent members of the roofing industry accepted an invitation to be interviewed by Lipinskiy but then abruptly changed their minds. Lipinskiy got angry at GAF, suspecting that the company was behind the volte-face. In retaliation, Lipinskiy launched a social-media blitz against GAF, beginning with a video entitled "GAF Roofing: The Biggest Bully in [the] Industry." ECF No. 8 at 16. In a number of subsequent social-media posts, Lipinskiy attacked GAF, its employees, and its products.

GAF filed this action against Lipinskiy and Roofing Insights, seeking injunctive relief and damages for breach of the settlement agreement, defamation, product disparagement, deceptive trade practices, and tortious interference with prospective economic advantage. This matter is before the Court on GAF's motion for a preliminary injunction. ECF No. 6. For the reasons that follow, the Court grants GAF's motion.

I. BACKGROUND

GAF is the largest manufacturer of roofing products in North America. In addition to manufacturing roofing materials, GAF offers various certifications forroofing contractors. Compl. ¶¶ 9, 17. Lipinskiy obtained one of these certifications when his roofing company, Storm Group Roofing, LLC ("Storm Group"), entered into a year-long Certified Contractor Program Participation Agreement ("the certification agreement") with GAF in May 2014. Compl. ¶¶ 17-18; Woodruff Decl. Ex F. That certification agreement contained a non-disparagement clause, and that clause explicitly survived the termination of the contract. Smith Aff. Ex. A, at 7.

GAF renewed Lipinskiy's membership in 2015 but, after Lipinskiy posted videos that were critical of GAF products on his YouTube channel, GAF declined to renew Lipinskiy's membership in 2016. GAF also declined Lipinskiy's request that his status be upgraded to Master Elite Roofing Contractor. Compl. ¶¶ 18-21. Lipinskiy continued to post videos about GAF to YouTube. GAF deemed those videos to be disparaging and accused Lipinskiy of breaching the non-disparagement clause in the certification agreement. Woodruff Decl. Ex F.

On December 30, 2016, GAF initiated arbitration proceedings against Lipinskiy and Storm Group. Compl. ¶¶ 26-27. The parties settled their dispute in an agreement dated September 19, 2017. Woodruff Decl. Ex. B. The settlement agreement includes three non-disparagement provisions, two of which are relevant to this action:¹ First, ¶ 3(a) provides that "Lipinskiy agrees not to disparage GAF or its products oremployees . . . in any public medium . . . ." Woodruff Decl. Ex. B, ¶ 3(a). Second, ¶ 11—which applies to GAF, as well as to Lipinskiy—provides that the "parties shall not . . . say anything about any other party that may be considered demeaning, disparaging, or detrimental to that other party . . . ." Woodruff Decl. Ex. B, ¶ 11.

Beginning in February 2020, Lipinskiy posted a series of videos and messages about GAF on the social-media pages of Roofing Insights. Woodruff Decl. Ex. C. Roofing Insights aims to be "a voice for the roofing community[.]" Smith Aff. Ex. A, at 16. The company operates several popular social-media pages, with more than 33,000 YouTube subscribers and thousands of followers on Facebook, Instagram, and LinkedIn. The company also runs an online school for roofers. Smith Aff. Ex. A, at 16, 21.

Lipinskiy ramped up his attacks on GAF in October 2020, after Lipinskiy suspected that GAF had induced two prominent individuals in the roofing industry to refuse to be interviewed by him. (The details of this incident are described below.) On multiple occasions, GAF notified Lipinskiy that Roofing Insights' social-media posts violated the settlement agreement's non-disparagement clauses and asked Lipinskiy to take them down. See Woodruff Decl. Exs. D, E, F. In response, Lipinskiy removed only some of the posts and continued to post new disparaging content about GAF. SeeLipinskiy Aff. ¶ 4; Woodruff Decl. Exs. D, E, F. On October 19, 2020, GAF filed this action, and shortly thereafter GAF moved for a preliminary injunction.

II. ANALYSIS

A. Standard of Review

A court considers four factors in reviewing a motion for a preliminary injunction: (1) the movant's likelihood of success on the merits; (2) the threat of irreparable harm to the movant if the injunction is not granted; (3) the balance between that harm and the harm that granting the injunction will inflict on the other parties; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc). "A preliminary injunction is an extraordinary remedy never awarded as of right." Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). "[T]he burden of establishing the propriety of an injunction is on the movant." Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003) (internal citation omitted).

B. Likelihood of Success

For the purpose of its motion for a preliminary injunction, GAF relies solely on its claim that Lipinskiy breached the non-disparagement clauses of the settlement agreement. Pl.'s Mem. Supp. Prelim. Inj. 38 n.1. The parties agree that Delaware law governs the enforcement of the settlement agreement. Woodruff Decl. Ex. B, ¶ 22. Under Delaware law, a breach-of-contract claim consists of three elements: (1) theexistence of the contract; (2) breach of a contractual obligation; and (3) damage to the non-breaching party. VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).

The first and third elements of GAF's breach-of-contract claim are not in dispute. The settlement agreement exists, and Lipinskiy's social-media posts have undoubtedly harmed GAF. See Compl. ¶ 133 (listing comments from consumers who decided not to buy GAF products due to Lipinskiy's posts). Only the second element—breach—is in real dispute.

Lipinskiy argues that he did not breach the settlement agreement because he did not disparage GAF. In the alternative, Lipinskiy argues that even if he did breach the settlement agreement, GAF breached the agreement first by disparaging Lipinskiy, and GAF's earlier breach excused Lipinskiy's later breach. The Court considers each of these arguments in turn.

1. Did Lipinskiy Breach?

Lipinskiy's first argument—that he did not disparage GAF and therefore did not breach the settlement agreement—is plainly meritless.

Because the settlement agreement does not define the term "disparage," the Court looks "to the ordinary and usual meaning of the word." Virtual Bus. Enters., LLC v. Md. Cas. Co., No. 07C-12-070 MMJ, 2010 WL 1427409, at *6 (Del. Super. Ct. Apr. 9,2010) (considering definition of "disparage" when contract did not define it). Definitions of "disparage" tend to emphasize the critical, disrespectful nature of disparaging statements. For example, Black's Law Dictionary defines "disparage" as, first, "[t]o speak slightingly of; to criticize (someone or something) in a way showing that one considers the subject of discussion neither good nor important[,]" and second, "[t]o degrade in estimation by disrespectful or sneering treatment." Disparage, Black's Law Dictionary (11th ed. 2019); see also Disparage, The American Heritage Dictionary of the English Language (5th ed. 2011) ("1. To speak of in a slighting or disrespectful way. 2. To reduce in esteem or rank."). Similarly, the Oxford English Dictionary defines "disparage" as "[t]o bring discredit or reproach upon; to dishonour, discredit; to lower in credit or esteem." Disparage, Oxford English Dictionary (3d ed. 2015).²

Lipinskiy posted several videos and messages about GAF that are clearly disparaging.³ To cite just a small sampling: Lipinskiy uploaded videos entitled "GAF Roofing: The Biggest Bully In Industry[,]" "GAF leadership failure. What would ElonMusk do? Leadership crisis in roofing industry[,]" and "GAF Glenwood: Worst Roofing shingle in History!!! (Will be DELETED) DOWNLOAD I Roofing Insights[.]" Woodruff Decl. Ex. C. Lipinskiy also posted memes comparing GAF to North Korea and to Dennis Rodman, comparisons that were obviously not meant to be flattering. Woodruff Decl. Ex. F; Pl.'s Mem. Supp. Prelim. Inj. 18, 29-30. And in one Facebook post, Lipinskiy wrote that GAF stands for "Great American Failure." Woodruff Decl. Ex. C. Even a cursory review of the record reveals a plethora of posts speaking slightingly of GAF, criticizing GAF, and degrading GAF's reputation.

Lipinskiy argues that statements must be false in order to be disparaging under Delaware law and claims that his videos and other posts, while critical of GAF, were not falsely critical. In claiming that Delaware requires falsity, Lipinskiy relies on a single...