12-20-00054-CV
Tex. App.Nov 18, 2020Background
- Atlas Survival Shelters and Rising S (Scott) are competitors in the underground survival-shelter market; Atlas owner Ron Hubbard published two April 2019 YouTube videos (and a third June 2019 video after suit) criticizing Rising S and Scott.
- Scott sued Atlas for libel, business disparagement, breach of contract (and later added fraudulent misrepresentation based on a phone call); Atlas counterclaimed and moved to dismiss under the Texas Citizens Participation Act (TCPA).
- The trial court took evidence (videos, pleadings, testimony) and signed an order denying Atlas’s TCPA motion on October 15, 2019; Atlas filed an accelerated interlocutory appeal.
- Scott argued the October 15 order was void because the trial court missed the 30-day TCPA deadline and the motion was denied by operation of law earlier; the court found appellate jurisdiction nonetheless because Atlas filed its notice within the 15-day extension window and provided a reasonable explanation.
- On the merits the court held the communications were protected speech but that the TCPA’s commercial-speech exemption applied because (1) Atlas sells shelters, (2) the videos were made in its capacity as seller, (3) the statements arose from commercial transactions involving similar goods, and (4) the intended audience was actual/potential customers—so the TCPA did not apply and the trial court’s denial was affirmed.
Issues
| Issue | Plaintiff's Argument (Scott) | Defendant's Argument (Atlas) | Held |
|---|---|---|---|
| Jurisdiction / timeliness of appeal | The October 15 order is void because the trial court failed to rule within 30 days; notice of appeal was untimely | October 15 order modified the earlier operation-of-law denial; Atlas filed notice within extension period and gave reasonable explanation | Appellate court has jurisdiction; Atlas’s notice fell within the 15-day extension window and a reasonable explanation was given |
| Applicability of TCPA (free-speech) | Videos are actionable statements (libel/disparagement) but fall within TCPA protections of free speech | Videos are communications on matters of public concern and thus protected by the TCPA | Court agrees videos are protected speech under TCPA (right of free speech) |
| Commercial-speech exemption (dispositive) | Exemption applies: Atlas is a seller; videos relate to sales/marketing; audience were actual/potential customers | Exemption does not apply because videos are consumer reviews and warnings not made in Atlas’s capacity as seller and lack nexus to commercial transaction | Held for Scott: exemption applies—videos were made in Atlas’s capacity as seller, arose from commercial transactions for similar goods, and targeted actual/potential customers; TCPA does not apply |
| Trial court’s order form/standard | Trial court failed to address all TCPA criteria and contradicted itself in findings | Any perceived recital/contradiction doesn’t change decretal denial; review is de novo regardless | Overruled Atlas: decretal portion controls; no reversible error in form of order |
| Evidence/admissibility at TCPA hearing | Second amended petition/affidavit, videos, and live testimony were untimely or inadmissible under Rule 166a / amended §27.006 | Applicable TCPA version at filing allowed consideration of pleadings and affidavits; court may consider videos and (optionally) live testimony; no surprise from amended pleadings | Overruled Atlas: pre-amendment TCPA governed; court did not abuse discretion admitting/considering videos, pleadings, affidavits, or live testimony |
| Motion to strike opposing response as untimely | (Scott) Response was timely enough | (Atlas) Trial court erred by not striking Scott’s response as untimely | Overruled Atlas: appellate court lacks statutory authority to review denial of motion to strike in interlocutory TCPA appeal |
Key Cases Cited
- Castleman v. Internet Money Ltd., 546 S.W.3d 684 (Tex. 2018) (establishes four-element commercial-speech exemption test)
- In re Lipsky, 460 S.W.3d 579 (Tex. 2015) (TCPA creates a limited summary review of pleadings and evidence)
- Best v. Harper, 562 S.W.3d 1 (Tex. 2018) (if a statutory TCPA exemption applies, the TCPA dismissal mechanism is inapplicable)
- Hieber v. Percheron Holdings, LLC, 591 S.W.3d 208 (Tex. App.—Houston [14th Dist.] 2019, pet. denied) (party asserting exemption bears preponderance-of-evidence burden)
- Round Table Physicians Group, PLLC v. Kilgore, 607 S.W.3d 878 (Tex. App.—Houston [14th Dist.] 2020, pet. filed) (if exemption applies, nonmovant need not prove prima facie case)
- Morrison v. Profanchik, 578 S.W.3d 676 (Tex. App.—Austin 2019, no pet.) (discusses scope and applicability of TCPA exemptions)
- Goswami v. Metro. Sav. & Loan Ass'n, 751 S.W.2d 487 (Tex. 1988) (court’s consideration of late amended pleadings may cure lack of leave when no surprise shown)