This day in time, you have to be careful what you say or write. Indeed, the utterance of only a few words can lead to an expensive lawsuit and the potential award of damages for causes of action such as defamation, business disparagement, and malicious criminal prosecution claims.
But what do you do if you already find yourself in a lawsuit related to these claims? Thankfully, the Texas legislature has enacted certain statutory provisions that are helpful in defending against the lawsuit. This Insight discusses potential statutory defenses to defamation, business disparagement, and malicious criminal prosecution.
What is Defamation, Business Disparagement, and Malicious Criminal Prosecution?
Texas law recognizes a person may suffer from damages due to defamation, business disparagement, and malicious criminal prosecution. I have already written an Insight regarding the cause of action for defamation, which can be found here. The elements for business disparagement and malicious criminal prosecution are discussed more fully below.
Business Disparagement. (1) The defendant published false and disparaging information about the plaintiff; (2) with malice; (3) without privilege; (4) that resulted in special damages to the plaintiff. In re Lipsky, 460 S.W.3d 579, 592 (Tex. 2015) (orig. proceeding).
Malicious Criminal Prosecution. (1) A criminal prosecution was commenced against the plaintiff; (2) the defendant initiated or procured the prosecution; (3) the prosecution terminated in favor of the plaintiff; (4) plaintiff was innocent of the charges; (5) defendant lacked probable cause to initiate the prosecution; (6) defendant acted with malice; and (7) plaintiff suffered damages. Kroger Tex. Ltd. P’ship v. Suberu, 216 S.W.3d 788, 793 n. 3 (Tex. 2006).
All three of these causes of action share a common thread—each can potentially chill the constitutional rights of a defendant. These rights include the right of free speech, the right to petition, and the right of association. But how do you balance these rights against the rights of persons to bring meritorious lawsuits for damages?
The Texas Citizens Participation Act.
The Texas legislature answered the above question in 2011 by passing the Texas Citizens Participation Act (TCPA). The TCPA was later amended in 2019. Its purpose is to encourage and safeguard the constitutional rights of a person to speak freely, petition the government, and associate freely while simultaneously trying to balance the rights of persons to file meritorious lawsuits for demonstrable injuries.
The heart of this balance is the TCPA’s statutory motion to dismiss procedure. Under the TCPA, a defendant may file a motion to dismiss if the lawsuit is based on or in response to the defendant’s exercise of a constitutional right.
The defendant bears the initial burden of proving to the trial court that the lawsuit falls within one of the prescribed constitutional rights: right of free speech, right to petition, or right of association. If the defendant meets this burden, the burden then shifts to the plaintiff to establish by clear and convincing evidence a prima facie case for each essential element of the claim or claims in question. If the plaintiff establishes a prima facie case, the burden shifts back to the defendant to establish an affirmative defense or other ground on which the defendant is entitled to judgment as a matter of law.
The advantage of a TCPA motion to dismiss comes from the remedies afforded to a successful motion—decreased litigation expenses and time. Specifically, if a defendant prevails on a TCPA motion to dismiss, the trial court must dismiss the legal action and award the defendant court costs and reasonable attorney’s fees. Moreover, the trial court has discretion to award the defendant sanctions to deter future similar lawsuits by the plaintiff. Even if the plaintiff succeeds in having the motion to dismiss denied, the plaintiff may only be awarded his costs and reasonable attorney’s fees if the trial court finds that the motion to dismiss was “frivolous and intended to delay.”
Claims for defamation, business disparagement, and malicious criminal prosecution have all been found to relate to protected constitutional rights under the TCPA. Accordingly, it is common for defendants to file motions to dismiss with respect to these causes of action. Indeed, it is also common for defendants to succeed on these motions. See In re Lipsky, 460 S.W.3d 579 (Tex. 2015) (concluding that TCPA motion to dismiss was proper because plaintiffs provided no clear and convincing evidence to establish a prima facie case that defendants published any defamatory claims); McDonald Oilfield Operations, LLC v. 3B Inspection, LLC, 582 S.W.3d 732 (Tex. App.—Houston [1st Dist.] 2019, no pet.) (concluding that trial court erred in denying defendant’s TCPA motion to dismiss for defamation and business disparagement claims); Buckingham Senior Living Community, Inc. v. Washington, 605 S.W.3d 800 (Tex. App.—Houston [1st Dist.] 2020) (trial court erred in not granting TCPA motion to dismiss for defamation and malicious criminal prosecution).
Defamation Mitigation Act.
There are other statutory defense provisions that relate to defamation claims. Specifically, in 2013, the Texas legislature enacted the Texas Defamation Mitigation Act (DMA). The purpose of the DMA is to provide a method for a person who has been defamed by a publication to mitigate any perceived damage or injury.
Under the DMA, a plaintiff may maintain an action for defamation only if: (1) the person has made a timely and sufficient request for a correction, clarification, or retraction from the defendant, or (2) the defendant has made a correction, clarification, or retraction. A request for correction, clarification, or retraction is timely if it is made during the period of limitations applicable to a claim for defamation. If a person does not request a correction, clarification, or retraction within 90 days after receiving knowledge of a publication, such person may not recover exemplary damages. Generally, a defendant in a lawsuit in which the DMA governs who does not receive a timely and sufficient written request for correction, clarification or retraction may file a plea in abatement not later than the 30th day after the date the defendant files an original answer in the court in which the suit is pending.
There is a split of authority in the Texas appellate courts regarding whether a failure to make a timely and sufficient retraction request pre-suit is a complete bar to litigation or just a preclusion of recovery of exemplary damages. The Texas Court of Appeals in Dallas and Austin have both interpreted the provisions of the DMA as meaning that the consequence for failing to timely make a request is not dismissal, but rather preclusion of recovery of exemplary damages. Warner Bros. Entm’t v. Jones, 538 S.W.3d 781, 812 (Tex. App.—Austin 2017, pet. granted); Hardy v. Commc’n Workers of Am. Local 6215 AFL-CIO, 536 S.W.3d 38, 47 (Tex. App.—Dallas 2017, pet. denied). However, other courts of appeal have disagreed. See Zoanni v. Hogan, 555 S.W.3d 321, 328 (Tex. App.—Houston [1st Dist.] 2018, pet. filed).
There are many defenses to a defamation, business disparagement, or malicious criminal prosecution claim. But it is important to note that in many cases these defenses must be raised early in the proceedings. Accordingly, if you are subject to a defamation, business disparagement, or malicious prosecution claim, it is imperative to discuss these defenses early with legal counsel.
Business Tax Planning Lawyer
If you need assistance in managing the business planning process, Freeman Law can help clients navigate business tax laws. We offer value-driven services and provide practical solutions to complex issues. Schedule a consultation or call (214) 984-3410 to discuss your corporate structuring or business and tax planning concerns.