In a case closely-watched by Texas media groups, the Supreme Court of Texas has refused for the second time to dismiss a libel action against the Corpus Christi Caller-Times.
In doing so, the court affirmed a lower court’s ruling that 25 articles about alleged improprieties at the Corpus Christi Chamber of Commerce published between February and June 2008 were not entitled to dismissal on the grounds that they were substantially true. The Caller-Times had argued that the articles accurately reflected the accusations of others on a matter of public concern. The 13th Court of Appeals disagreed, and last week’s SCOTX decision affirmed that decision.
The 23-page opinion, written for the court by Justice John Devine, returns the case to Nueces County for trial.
The longstanding lawsuit was filed in 2008 by Terry Carter, the civic organization’s former chief executive officer. The original suit accused the Caller-Times and its parent company, Scripps Texas Newspapers (now Scripps NP Operating) of defamation, conspiracy and interference with his employment contract.
The ongoing lawsuit also includes the Corpus Christi Chamber of Commerce, but the Chamber was not involved in the current appeal.
Carter resigned from the Corpus Chamber in April 2008 amidst allegations that he had manipulated Chamber finances in late 2007 to make the organization appear profitable at year-end when it was not. The financial maneuvers, reported by the Caller-Times – with on-the-record sources and frequent explanations and denials by Carter – came as Carter was seeking a raise, a bonus and an extension of his contract with the Chamber.
The reports, quoting a letter from the organization’s treasurer to other Chamber officials, suggested that Carter had scrambled at the end of 2007 to report a positive net income for the organization. To do so, he had deferred his own salary and folded dues payments from 2008 into those of 2007. And by doing so, he was able to report net operating income of $40,425 in lieu of an actual $61,782 operating loss.
In addition, Carter was cited for moving more than $18,000 from a Chamber building fund into its operating budget, a move – it was alleged – that could have caused the Corpus Chamber to lose its tax-exempt status as a non-profit organization.
An audit later confirmed the budget machinations but characterized them as “misstatements” that had been “corrected by management.”
Carter has maintained that the newspaper’s publisher and executives resented his appearance before the Corpus Christi city council in mid 2017, during which he was perceived to oppose $40 million in city tax incentives for the development of a shopping mall. Caller-Times publisher Patrick Birmingham, a member of the Chamber board, publicly resigned his position over Carter’s stance regarding the mall development.
Although the newspaper was alerted to the Carter controversy by an outside party, Carter argues that newspaper’s focus on him, in particular an editorial effectively demanding his resignation, was driven less by his handling of the Chamber budget than the politics over the mall.
The unsigned editorial linked Carter’s skewed budget to an effort to qualify himself for a bonus – a charge made by several Chamber officials that proved mistaken. The editorial, citing the paper’s own accounts of the controversy, also decried the “intimidation, secrecy and duplicity” of the situation and demanded that Carter explain himself or allow the Chamber “to move on without him.”
The Caller-Times argues that the editorial was strictly opinion; and opinion is protected speech. But the Supreme Court reasoned that the editorial linked itself to the articles that came before it, and that any defamation should be gleaned from their collective effect.
“We disagree with the newspaper’s claim that it was simply reporting allegations by third parties,” wrote Justice Devine. “The gist of the editorial was that the statements in the prior articles regarding Carter’s shifting of funds for his own financial gain and intimidation of his critics were true, not that they were merely the accusations of others.”
The case was argued before the Supreme Court in February for Terry Carter by Bryan Garner of Dallas and for the Caller-Times by Paul Watler of Jackson Walker, also of Dallas.
Of particular concern to media organizations has been the failure before the courts of two traditional defenses relied on by the Caller-Times. Five years ago, SCOTX rejected the newspaper’s argument that Carter – CEO of the city’s most important business lobbying organization – was a public figure by definition. As a public figure, Carter would have to show actual malice motivated the publication of articles about the controversy.
In this, the newspaper’s second appearance before the Supreme Court, the Caller-Times argued that as an important civic organization, the Chamber’s internal imbroglio should be subject to First Amendment protections for significant public controversies.
In a jointly-filed “friend of the court” brief, the Texas Press Association – along with the Texas Association of Broadcasters and the Freedom of Information Foundation of Texas – agreed. The media groups said that by not protecting newsworthy allegations – whether they prove true or not – media groups will find themselves under a profound disincentive to consider coverage of even the most obvious public controversies.
“This is not a case where a plaintiff has a legitimate claim to redress for harm caused by negligent or malicious falsehoods; it is a case where a plaintiff seeks to punish speech that contributes to meaningful debate because he simply didn’t like being the subject of the debate,” the media groups wrote.
The SCOTX case is No. 17-0046 Scripps NP Operating dba The Corpus Christi Caller-Times v. Terry Carter