In an opinion by Justice Gisela Triana. he Austin Court of Appeals has substantially upheld a Williamson County district court’s refusal to grant a motion to dismiss a defamation lawsuit under the Texas Citizens Participation Act (TCPA). The case, Thibodeaux and Thibodeaux v. Starx Investment Holdings, Inc. d/b/a Georgetown Collision Center (No. 03-20-00613-CV) arose from a series of Facebook and other communications posted by a disgruntled customer and his wife alleging that a body shop had committed insurance fraud, acted illegally by waiving customers’ deductibles in exchange for positive BBB, Yelp, and Google reviews, and did more damage to the defendant’s truck than was caused by the collision. The posts, which urged other people to post negative comments and reviews of the body shop, were circulated widely in the community and reposted by other Facebook users. The body shop filed suit, alleging defamation and business disparagement. The defendants filed answers and TCPA motions to dismiss. The body shop then added claims for conspiracy and aiding and abetting. Although the trial court held a hearing to consider the TCPA motions, it did not act, and the motions were overruled by operation of law.
The defendants filed an interlocutory appeal, arguing that: (1) the business disparagement claim should have been dismissed because the body shop admitted it had no evidence of special damages, an essential element of the claim; (2) the defamation claim should have been dismissed because the body shop did not meet its evidentiary burden because it failed to show that the challenged statements were objectively verifiable false statements of fact, the defendants negligently made the statements, and that the body shop was damaged; and (3) the conspiracy andf aiding and abetting claims should be dismissed because the body shop did not present prima facie evidence of wrongful intent or agreement. They also alleged that 47 U.S.C. § 230(c)(1) bars claims against an Internet user based on content published by another user (the court of appeals summarily dismissed this claim because the defendants themselves published the disputed content).
The court of appeals agreed that the trial court should have dismissed the business disparagement claim because the body shop announced in open court that it had no evidence of special damages and would not pursue that claim. It reversed and remanded this part of the case to the trial court for consideration of TCPA attorney’s fees and sanctions, as provided by the statute. With respect to the remaining claims, however, the court of appeals affirmed. The bulk of the opinion, the defamation analysis, examined whether the body shop established the essential elements of the claim. That is, a defamation plaintiff must show that: (1) the defendant published a false statement of fact to a third party, (2) the statement defamed the plaintiff, (3) the defendant acted negligently with respect to the truth of the statement (malice is not required for a private business), and (4) the plaintiff suffered actual damages, unless the statement constitutes defamation per se.
The court first determined the threshold questions: (1) whether the gist of the defendants’ posts, as shown by actionable statements of facts rather than statements of opinion, were reasonably capable of a defamatory meaning; and (2) whether such meaning is reasonably capable of defaming the body shop. The defendants argued that social media posts are by nature exaggerated, subjective, and opinionated and cannot rise to the level of defamatory statements of fact. The court of appeals rejected this argument, holding that the statements accused the body shop of fraud, illegal activity, and deliberate damage to the defendants’ property. Holding that the gist of these accusations was reasonably capable of defamatory meaning, the court of appeals then found that the statements could be objectively verified, removing them from the realm of opinion and into the realm of defamation of the body shop. The body shop thus met the TCPA test requiring the nonmovant provide sufficient evidence of defamatory factual statements.
The defendants contended that the body shop, as a private entity as opposed to a public official or public figure, must show that the defendants acted negligently with respect to the truth of their statements. Here the court of appeals read additional evidence containing allegations by the defendants that they had taken the vehicle to a dealership, which informed them that the body shop had accepted insurance reimbursement for parts they never installed. The court noted, however, that the defendants’ posts accusing the body shop of fraud were posted before this alleged communication and were not retracted even after the defendants saw the body shop’s invoices. This evidence was enough to make a prima facie showing that the defendants negligently made the challenged statements.
In response to the defendants’ argument that the body shop failed to provide evidence of actual damages, the court of appeals conducted an analysis of the Texas common law of defamation per se, which refers to statements that are so evidently harmful to a person’s reputation that a jury may presume general damages (including damages for mental anguish or loss of reputation). The court had no trouble finding that the statements constituted defamation per se because they “adversely reflect on a person’s fitness to conduct his or her business or trade.” Consequently, the jury may assume general damages, although any award exceeding a nominal sum must be subjected to evidentiary review. The defendants argued further that the body shop must show that they made the statements with malice in order to trigger the presumption of general damages. The court of appeals, relying on SCOTX precedent, rejected this position. Finally, the court held that the defendants failed to establish as a matter of law that their statements were substantially true.
With regard to the conspiracy and aiding and abetting claims, the defendants argued that the body shop did not make a prima facie case for the essential elements of either claim, as required by the TCPA. The court held that since those claims were derivative of the defamation claim, a prima facie showing of the elements of the underlying defamation claim sufficed for TCPA purposes.
This case illuminates the impact of the TCPA on a private social media campaign to damage a person’s business reputation. It is particularly helpful in its analysis of the elements of defamation and the damages issues. Businesses who deal with these kinds of attacks should take note of this decision.