Timothy Castleman & Castleman Consulting, LLC v. Internet Money Ltd.
546 S.W.3d 684
Tex.2018Background
- Castleman and Castleman Consulting operate an online retail platform; they hired O'Connor (Internet Money / The Offline Assistant) to fulfill customer orders.
- Castleman accused O'Connor of over-ordering and posted online statements criticizing O'Connor’s performance and warning potential customers; Castleman sought to recoup about $8,000.
- O'Connor demanded retractions, apologies, and $315,000; when Castleman refused, O'Connor sued for defamation.
- Castleman moved to dismiss under the Texas Citizens Participation Act (TCPA), asserting his statements were protected free-speech on a matter of public concern (consumer warnings).
- The trial court denied the TCPA motion, and the Amarillo Court of Appeals affirmed, holding the TCPA’s commercial-speech exemption applied. The Texas Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument (O'Connor) | Defendant's Argument (Castleman) | Held |
|---|---|---|---|
| Does TCPA apply to Castleman’s statements? | The statements are not protected free-speech or, if they are, fit within the TCPA commercial-speech exemption so TCPA does not apply. | Statements are protected communications on a matter of public concern (warnings about a service) and TCPA applies. | TCPA can apply; the commercial-speech exemption does not encompass Castleman’s statements. |
| Scope/meaning of TCPA commercial-speech exemption §27.010(b) | Exemption applies broadly whenever a seller makes statements related to sales/leases or commercial transactions, regardless whose customers are targeted. | Exemption should be limited to statements made by a seller in the seller’s capacity, arising out of the seller’s own sale/lease or commercial transaction and directed to the seller’s actual/potential customers. | Court adopts a four-part test limiting the exemption to statements by a seller in its seller capacity, arising out of the seller’s transactions, and aimed at the seller’s actual/potential customers. |
| How to read the "intended audience" modifier in the exemption | The intended-audience language modifies only "commercial transaction," so the audience requirement is narrowly tied to that item. | The audience requirement modifies the defendant’s statement or conduct — i.e., the audience must be the defendant’s actual/potential customers. | The modifier applies to the statement/conduct; audience must be defendant’s actual/potential customers for the exemption to apply. |
| Result on remand / dismissal under TCPA | (Implicit) Because exemption applies, TCPA dismissal denied. | TCPA applies; court must next consider whether Castleman met his burden and whether O'Connor established a prima facie defamation case. | The Supreme Court holds exemption does not apply here and reverses the court of appeals; remands for consideration of the remaining TCPA steps and prima facie/defense issues. |
Key Cases Cited
- Jose Carreras, M.D., P.A. v. Marroquin, 339 S.W.3d 68 (Tex. 2011) (statutory interpretation begins with text and context)
- Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006) (clear statutory language controls interpretation)
- In re Lipsky, 460 S.W.3d 579 (Tex. 2015) (TCPA three-step burden-shifting framework)
- Sullivan v. Abraham, 488 S.W.3d 294 (Tex. 2016) (punctuation is a permissible but not definitive interpretive tool)
- Posadas de P.R. Assocs. v. Tourism Co. of P.R., 478 U.S. 328 (1986) (commercial speech receives limited First Amendment protection)
- Va. Pharmacy Bd. v. Va. Citizens Consumer Council, Inc., 425 U.S. 748 (1976) (commercial speech doctrine fundamentals)