The Supreme Court of Texas has tossed out a defamation lawsuit against the Dallas Morning News, reversing two lower courts that declined to do so despite it involving a situation that the Texas Citizens Participation Act was actually designed to protect a media outlet in.
In a 19-page opinion, Texas’ High Court ruled that Lewis and Richard Hall did not carry their burden to survive a dismissal of their lawsuit under the act. The opinion also determined that the News’ coverage of third-party judicial allegations is “statutorily protected.”
“The News argues that upholding the court of appeals’ decision will chill First Amendment speech, and it is probably right,” wrote Justice Jeffrey Brown, who delivered the opinion.
The Lewis’ lawsuit alleged that the Dallas Morning News and reporter Kevin Krause committed defamation because the News ran a series of Krause’s articles in 2016 that stated their compounding pharmacy, Rxpress, was under federal investigation and that the News implied that Rxpress was guilty of misconduct.
The News moved to dismiss the lawsuit under TCPA grounds, but both the trial court and court of appeals declined to do so. The newspaper appealed to the Texas Supreme Court, arguing that the lower courts erred both in their interpretation of the TCPA and in their reliance on an affidavit by Richard Hall that claimed the company was not under investigation.
But, the Supreme Court pointed out, “even an executive ‘with his ear to the ground’ is unlikely to have personal knowledge of a sealed Department of Defense investigation.”
“At best, the Hall affidavit is evidence that one of Rxpress’s owners was not aware of an investigation,” Justice Brown writes. “That’s it, and that’s not enough.”
The Texas Supreme Court also sided with News’ argument that the articles about Rxpress were protected under a privilege that media outlets enjoy when they report on third party allegations made in civil lawsuits or other official proceedings.
Krause’s reporting on Rxpress’ federal investigation drew largely on civil lawsuits involving Rxpress as well as the search warrant for communications from a third party, which authorized agents to seize all communications between with the Halls and any other associate of Rxpress Pharmacy.
Though the allegations in the civil lawsuits were “certainly not flattering,” that’s neither here nor there, the Texas Supreme Court ruled.
“Not flattering is not defamatory – especially in the face of the third-party allegation rule and the official-proceeding privilege,” Justice Brown wrote. “Basing its articles on the search warrant and court documents from the various lawsuits, the News fairly and accurately reported on the accusations, and qualified all of it with pervasive sourcing language.”
Though SCOTX did not weigh in on the lower court’s ruling that the search warrant did not establish Rxpress was under investigation, Texas’ High Court “struggle[d] to see how a search warrant seeking documents and communications on Rxpress’s owners and operations, in the context of an inquiry into possible healthcare fraud, is clear and specific evidence that Rxpress wasnot ‘under investigation.’”
V&E partner Tom Leatherbury, who argued the case for the News, said the Supreme Court ruling “unanimously held that the plaintiffs had no case.”
Fort Worth attorney John Shaw, who argued the case for the Halls, did not immediately return a call seeking comment.
“We pursued this story in good faith and with an eye towards the public interest,” Dallas Morning News editor Mike Wilson said in a written statement. “The court agreed that our reporting was based on court filings and strong, thorough sourcing.”
To learn more details about the case, read our previous in-depth report here.