the Dallas Morning News, Inc. and Kevin Krause v. Lewis Hall and Richard Hall, Individually and on Behalf of Rxpress Pharmacies and Xpress Compounding
579 S.W.3d 370
Tex.2019Background
- The Dallas Morning News (Krause) published a series of articles in Feb–Mar 2016 reporting that Rxpress (owned by Lewis and Richard Hall) was the subject of federal scrutiny and recounting various civil suits alleging kickbacks, fraud, and mismanagement.
- A Department of Defense search warrant executed on a third‑party marketer (Nathan Halsey) sought communications between Halsey and Rxpress principals and records related to insurance reimbursements and Rxpress ownership/operations.
- Rxpress sued the News for defamation, alleging the articles (1) falsely stated Rxpress was “under investigation” and (2) implied Rxpress actually committed healthcare fraud.
- The News moved to dismiss under the Texas Citizens Participation Act (TCPA), asserting truth/substantial truth and statutory privileges for reporting official proceedings and third‑party allegations.
- At the TCPA stage, Rxpress relied on (a) the Halsey search warrant, (b) an affidavit from Richard Hall denying knowledge of any investigation, and (c) an expert report; the trial court denied dismissal, and the court of appeals affirmed.
- The Texas Supreme Court granted review and reversed, holding Rxpress failed to meet its TCPA burden to make a prima facie showing of falsity and that the News’ reporting of official proceedings/third‑party allegations was statutorily privileged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rxpress made a prima facie showing under the TCPA that the statement “Rxpress is under investigation” was false | The search warrant targets Halsey, not Rxpress; Hall’s affidavit and expert report show no federal investigation of Rxpress | The warrant expressly sought communications involving Rxpress owners/associates and records about Rxpress, and plaintiff’s affidavit/expert evidence is inadmissible/insufficient | Rxpress failed to show falsity by clear and specific evidence; dismissal required under TCPA because plaintiff did not meet §27.005(c) burden |
| Admissibility/weight of evidence offered to prove falsity (Hall affidavit and expert report) | Hall’s declaration and Heiskell’s report support that no investigation targeted Rxpress | Hall’s statements include hearsay/double hearsay and lack personal knowledge; expert testimony unnecessary to interpret the warrant | Hall affidavit contains inadmissible hearsay or at best shows lack of knowledge (insufficient); expert report inadmissible under Rule 702; neither proves falsity |
| Whether the Halsey search warrant establishes as a matter of law that Rxpress was under investigation (substantial truth defense under §27.005(d)) | Warrant targets Halsey; it does not conclusively show Rxpress was under investigation | Warrant sought communications and records related to Rxpress in a healthcare‑fraud inquiry; it reasonably supports that Rxpress was a focus | Court did not decide whether warrant alone satisfies the News’s §27.005(d) substantial‑truth burden because Rxpress failed §27.005(c); but the warrant is not clear evidence that Rxpress was not under investigation |
| Whether the articles implied Rxpress actually committed crimes (and thus were actionable despite truthful reporting of proceedings/third‑party allegations) | Juxtaposition of lawsuits, audits, and federal probe implied guilt (like Rosenthal) | Reporting on official proceedings and third‑party allegations is privileged if reported fairly and substantially true; pervasive sourcing qualified the pieces | The implication claim fails: articles are protected by the official‑proceeding privilege and the third‑party‑allegation rule; no actionable implication of guilt shown |
Key Cases Cited
- In re Lipsky, 460 S.W.3d 579 (Tex. 2015) (TCPA burden shifting and prima facie standard guidance)
- KBMT Operating Co. v. Toledo, 492 S.W.3d 710 (Tex. 2016) (media defendant must prove privilege applicability; plaintiff bears burden to prove falsity for reports of official proceedings)
- Neely v. Wilson, 418 S.W.3d 52 (Tex. 2013) (allocation of truth/falsity burden in media defamation suits)
- D Magazine Partners, L.P. v. Rosenthal, 529 S.W.3d 429 (Tex. 2017) (illustrating when juxtaposed truthful facts can create an actionable implication of criminality)
- Dallas Morning News, Inc. v. Tatum, 554 S.W.3d 614 (Tex. 2018) (definition and treatment of textual and implied defamation)
- Cox Media Grp., LLC v. Joselevitz, 524 S.W.3d 850 (Tex. App.—Houston [14th Dist.] 2017) (contextual reporting on investigations does not necessarily imply criminal conduct)