Brett SHIPP, Appellant v. Dr. Richard MALOUF and Leanne Malouf, Appellees.
No. 05-13-01080-CV
Court of Appeals of Texas, Dallas.
June 24, 2014.
Rehearing Overruled Sept. 19, 2014.
432 S.W.3d 432
Here, Tang‘s Rule 202 petition states that she sought pre-suit discovery to “investigate a potential retaliation claim or suit under the Texas Labor Code.” “It is beyond serious dispute that the Texas Commission on Human Rights Act requires a complainant to first exhaust his administrative remedies before filing a civil action.” Lueck v. State, 325 S.W.3d 752, 761-62 (Tex.App.-Austin 2010, pet. denied) (noting that authorities of Texas Supreme Court hold that administrative procedures are an “essential feature of the statutory framework” and are jurisdictional). Accordingly, Tang‘s contemplated retaliation claim under the Texas Labor Code would be subject to exhaustion of administrative remedies, and Tang cannot circumvent the statutorily required administrative procedures through the use of Rule 202. See In re Wolfe, 341 S.W.3d at 933; In re Jorden, 249 S.W.3d at 418.
Tang contends that she is entitled to Rule 202 discovery because, one day before the hearing and after the respondents had pointed out that Tang was attempting to circumvent the Labor Code‘s exhaustion requirement, Tang mentioned for the first time that she also anticipated bringing common law claims. Specifically, Tang‘s reply states that “the subject matter of the anticipated action would include claims for intentional infliction of emotional distress, libel and slander.” Even if Tang anticipated bringing claims that are not subject to the Labor Code‘s exhaustion requirements, those claims arise from the same facts and are thus intertwined with Tang‘s retaliation claim. The Legislature‘s chosen policy was to create an administrative scheme in which to address claims like those asserted by Tang. That well-established and mandatory administrative scheme vests the Commission with exclusive jurisdiction and requires claimant to exhaust administrative remedies before seeking redress in court. Courts may not undercut or allow claimants to bypass this legislative policy by permitting pre-suit discovery under Rule 202. See In re Jorden, 249 S.W.3d at 423 (noting that when the Legislature enacted
Conclusion
We conditionally grant Relators’ mandamus petition. We direct the trial court to vacate its August 30, 2013 order permitting the pre-suit depositions and document requests. We are confident the trial court will comply, and our writ will issue only if it does not.
C. Gregory Shamoun, John D. Reed, Jonathan J. Cunningham, Dallas, for Appellees.
Before Justices MOSELEY, LANG, and BROWN.
OPINION
Opinion by Justice MOSELEY.
Dr. Richard Malouf and his wife, Leanne Malouf, sued Brett Shipp for making an allegedly defamatory statement about Malouf in a television news broadcast. Shipp filed a plea to the jurisdiction and a motion to dismiss under the Texas Citizens Protection Act (TCPA), Chapter 27 of the
We conclude the trial court had subject matter jurisdiction, and thus affirm the trial court‘s denial of Shipp‘s plea to the jurisdiction. However, we also conclude that Shipp established this lawsuit relates to his exercise of the right of free speech, and the Maloufs failed to establish by clear and specific evidence a prima facie case for each essential element of their claims. Therefore, we reverse the trial court‘s order denying the motion to dismiss, render judgment dismissing appellees’ claims against Shipp, and remand the case for
BACKGROUND
Malouf, a dentist,2 is the founder and former majority owner of All Smiles Dental Center, Inc. Shipp is an investigative reporter employed by WFAA. On June 26, 2012, WFAA broadcast a two-minute report by Shipp regarding allegations of Medicaid fraud in lawsuits against Malouf. Toward the end of that broadcast, Shipp stated Malouf “has yet to comment on the allegations but filed for bankruptcy and is in the process of divesting his once impressive empire.” In fact, although All Smiles Dental Center, Inc. had filed for bankruptcy, Malouf had not filed for personal bankruptcy.
Malouf sued Shipp for defamation and conspiracy, alleging the statements about Malouf filing for bankruptcy and divesting assets were false. Shipp filed a plea to the jurisdiction arguing the county court at law lacked subject matter jurisdiction because it could not seat a twelve-person jury. He also filed a motion to dismiss under the TCPA, arguing Malouf‘s lawsuit was based on, related to, or was filed in response to Shipp‘s exercise of his right of free speech and the lawsuit should be dismissed unless they established by clear and specific evidence a prima facie case for each essential element of their claims. After hearings and briefing by the parties, the trial court denied the plea to the jurisdiction and the motion to dismiss.
JURISDICTION
We first address Shipp‘s challenge to the trial court‘s subject matter jurisdiction. Shipp argued in his plea to the jurisdiction that because this case was filed in the county court at law, he was denied his claimed right to a twelve-person jury. However, this Court has expressly held that the size of a jury is not a jurisdictional matter. In re Siemens Corp., 153 S.W.3d 694, 698 (Tex.App.-Dallas 2005, orig. proceeding). Jurisdiction refers to a court‘s authority to adjudicate a case. Id. The legislature has constitutional power to establish “such other courts as it may deem necessary and prescribe the jurisdiction and organization thereof, and may conform the jurisdiction of the district and other inferior courts thereto.”
We overrule Shipp‘s fifth issue.
TCPA MOTION TO DISMISS
To prevail on a TCPA motion to dismiss, the movant must show by a preponderance
Shipp argues we should apply a de novo standard of review to the interpretation and application of the TCPA. Malouf does not disagree. We review the trial court‘s order de novo. See Avila v. Larrea, 394 S.W.3d 646, 652-53 (Tex.App.-Dallas 2012, pet. denied).3
A. Exercise of Free Speech
We begin with whether Shipp met his burden to show Malouf‘s lawsuit was based on, related to, or filed in response to Shipp‘s exercise of his right of free speech. Although the parties disagree about several matters, the facts of the communication are undisputed. The following is a transcript of the June 26, 2012 WFAA broadcast concerning Malouf:
GLORIA CAMPOS: Cash for crooked teeth. Texas taxpayers have paid out millions of dollars. Now the Texas Attorney General wants 30 million of it back from a Dallas dentist. The State is suing the dentist for fraud, all of it after a News 8 investigation. Channel 8‘s Brett Shipp has a follow-up tonight.
BRETT SHIPP: Byron Harris’ year-long investigation into questionable Medicaid dental payments has exposed one of the largest dental overbilling scandals in the nation. One of the central figures in the investigation, Dallas dentist Richard Malouf, whose billing successes afforded him this multimillion-dollar mansion, corporate jets, and numerous luxury vehicles.
Now Attorney General Greg Abbott and his civil Medicaid fraud division have taken notice. The AG has filed two civil lawsuits accusing Malouf and his partners of violating state Medicaid laws. The court filings lay out the alleged scheme: dental clinics allegedly improperly recruiting welfare families, performing needless orthodontic work on the children, then billing the State for millions of taxpayer dollars. Harris’ investigation revealed Texas paid more in Medicaid orthodontic claims than the other 49 states combined. This past April, a congressional committee took note, ....
BRETT SHIPP: In addition to the congressional hearings, several key Medicare regulators in the state have announced resignations or been reas-signed.
In March, Dr. Malouf agreed to pay $1.2 million to federal and state regulators
in a settlement over questionable billing. He has yet to comment on the allegations but filed for bankruptcy and is in the process of divesting his once impressive empire. An attorney general spokesman said today their investigation is ongoing. Brett Shipp, Channel 8 News.
One of the disagreements between the parties centers on the scope of the court‘s inquiry in determining whether Malouf‘s lawsuit relates to a communication made in connection with a matter of public concern. Malouf contends the only relevant fact for our analysis is the publication that Malouf “filed for bankruptcy and is in the process of divesting his once impressive empire.” He claims his personal financial status is not a matter of public concern. Shipp argues we must look to the entire broadcast in context to determine whether Chapter 27 applies. We agree with Shipp.
The TCPA broadly defines the legal actions to which it applies as those based on, relating to, or filed in response to a party‘s exercise of the right of free speech, that is, a communication made in connection with a matter of public concern.
Malouf argues he does not complain about the entire broadcast, only the allegedly defamatory statements about personal bankruptcy and divesting assets. But in deciding whether the lawsuit is related to the exercise of free speech under the broad language of the TCPA, we must look to the context of the communication in which the allegedly defamatory statement is made. The communication here is the entire broadcast. Further, we must consider the broader context of the speech to know whether or not it relates to an issue identified an a matter of public concern by the legislature. We agree with Shipp that the entire communication--not just the allegedly defamatory portion--and the surrounding circumstances must be considered in determining whether the lawsuit relates to Shipp‘s exercise of his right of free speech.4
The record5 indicates Malouf is the subject of a longstanding investigation into Medicaid fraud in this State and is a party to lawsuits where the attorney general is attempting to recover taxpayer dollars. The attorney general alleged Malouf and his partners violated State Medicaid laws by billing the State for unnecessary orthodontic work on children of welfare families.
We conclude the evidence shows the broadcast was a communication made in connection with an issue related to government efforts to curb Medicaid fraud and recover taxpayer dollars. Thus, it was an exercise of Shipp‘s right of free speech and Malouf‘s lawsuit is based on, relates to, or was filed in response to Shipp‘s exercise of that right. Shipp satisfied the first requirement for a motion to dismiss under
B. Prima Facie Case
We now address whether Malouf established by clear and specific evidence a prima facie case for each essential element of his claims against Shipp.
We first focus on whether Malouf established by clear and specific evidence a prima facie case for the element of damages in his claims against Shipp.
Malouf contends he was not required to prove actual damages because a false statement that a person filed bankruptcy is defamation per se and general damages are presumed in such cases. Shipp counters that a statement is defamation per se only if it injures a person in his office, profession, or occupation and the statement about bankruptcy does not injure Malouf‘s profession as a dentist. He asserts that the statement about bankruptcy was not defamation per se, and thus that Malouf was required to make a prima facie case that he was damaged as a result of the statement.
To recover damages for defamation, a plaintiff must prove the media defendant: “(1) published a statement; (2) that defamed the plaintiff; (3) while either acting with actual malice (if the plaintiff was a public official or public figure) or negligence (if the plaintiff was a private
Historically defamation per se claims allowed the jury to presume the existence of general damages without proof of injury; however, the Constitution allows juries to do so only where: (1) the speech is not public, or (2) the plaintiff proves actual malice. Hancock, 400 S.W.3d at 65-66. Nominal damages are recoverable for defamation per se, but not for defamation per quod. Id. at 65. General damages are noneconomic in nature, while special damages are economic in nature, such as for lost income. Id. at 63 n. 4, 65. The plaintiff must always prove special damages in order to recover them. Id. at 66.
Whether a statement is capable of defamatory meaning from the perspective of an ordinary reader in light of the surrounding circumstances is a question of law for the court. Hancock, 400 S.W.3d at 66. Likewise, determining whether a statement is defamatory per se is first an inquiry for the court. Id. As applicable here, a statement is defamatory per se if it injures a person in his office, profession, or occupation.7 Id.
In Hancock, a physician, Variyam, claimed a statement that he lacked veracity and dealt in half-truths was defamation per se. Hancock, 400 S.W.3d at 63. Quoting the
The comments to the Restatement illustrate that defamatory statements may be actionable per se if the quality disparaged is “peculiarly valuable in the plaintiff‘s business or profession.”
Malouf argues that a false allegation of bankruptcy is always defamation per se. He cites several cases for this broad principle. On examination, however, these cases show the rule is not so broad and is consistent with the supreme court‘s analysis in Hancock. For example, in Gulf Construction Co. v. Mott, 442 S.W.2d 778 (Tex.Civ.App.-Houston [14th Dist.] 1969, no writ), the court explained that for words to be actionable per se, they must affect a person injuriously in his office, business, or profession. Id. at 783. To fall within this rule, “the words must ‘touch’ him in some way that is harmful to one engaged in his particular office, business or profession.” Id. at 784. The court concluded that a false charge of bankruptcy against a building contractor, who must rely on his credit, was injurious to his business or profession and actionable per se. Id.
Similarly, in Denton Publishing Co. v. Boyd, 460 S.W.2d 881 (Tex.1970), the supreme court stated that in absence of a privilege, “a false statement that a merchant is bankrupt has been held to be libelous per se.” Id. at 883 (emphasis added); see also Hirshfield v. Ft. Worth Nat. Bank, 83 Tex. 452, 457, 18 S.W. 743, 744 (1892) (“to charge a merchant or trader falsely with being a bankrupt ... would present a case where the language should be held to be actionable per se “).
These cases illustrate the principle stated in Hancock--to be defamatory per se, the words must adversely affect the plaintiff‘s fitness for the proper conduct of his business, trade, or profession. See Hancock, 400 S.W.3d at 66. The words must touch the plaintiff in a way harmful to one engaged in his particular business or profession. See Mott, 442 S.W.2d at 784. A merchant or building contractor will be touched in their profession by a false statement of bankruptcy, but not necessarily others. See Boyd, 460 S.W.2d at 883; Hirshfield, 83 Tex. at 457; cf.
In this case, the false allegation of personal bankruptcy does not touch Malouf in a way that is harmful to one engaged in the profession of dentistry. A statement that a dentist is personally bankrupt does not adversely affect the dentist‘s fitness to practice dentistry--he may be a great dentist but a bad businessman. Therefore, we conclude Shipp‘s statement about Malouf was not defamatory per se. See Hancock, 400 S.W.3d at 68. As a result, Malouf was required to establish by clear and specific evidence a prima facie case of actual damages. See
The only evidence of actual damages presented by Malouf is an undated e-mail from a contractor who was performing improvements to Malouf‘s home. In the e-mail, the contractor said, “We are very concerned about the status of this project because of the news articles that have been circulating about your legal issues. We will require final payment in full prior to completion of the [water] slides.” Malouf cites nothing else in the record to support actual damages for the defamation claim. This e-mail makes no mention of Shipp‘s broadcast or the statement that Malouf had filed bankruptcy. The e-mail does not rise to the level of clear and specific evidence of actual damages to Malouf caused by the allegedly defamatory statement. We conclude the Maloufs failed to establish by clear and specific evidence a prima facie case for each essen-
With respect to Shipp‘s statement that Malouf was divesting himself of assets, Malouf makes no argument on appeal that the statement is defamation per se, and we conclude it is not. See Hancock, 400 S.W.3d at 66. Indeed, under the facts of this case we cannot reach a conclusion that the statement is defamatory. Neither does Malouf offer any evidence of actual damages resulting from this statement. We conclude Malouf failed to establish by clear and specific evidence a prima facie case for each essential element of his claim against Shipp based on this statement. See
Neither of the allegedly defamatory statements is about Mrs. Malouf and she does not contend otherwise. See Newspapers, Inc. v. Matthews, 161 Tex. 284, 339 S.W.2d 890, 893 (1960) (complained-of statement must reference plaintiff or be reasonably understood to do so by people knowing plaintiff); Main v. Royall, 348 S.W.3d 381, 394-95 (Tex.App.-Dallas 2011, no pet.). We conclude she failed to establish by clear and specific evidence a prima facie case for each essential element of a defamation claim against Shipp.
Shipp contends the Maloufs failed to present clear and specific evidence of their conspiracy claim. The Maloufs do not argue the conspiracy claim on appeal. We agree that the record does not contain clear and specific evidence to establish a prima facie case of the elements of conspiracy against Shipp.
CONCLUSION
We conclude the trial court had subject matter jurisdiction over this case and properly denied Shipp‘s plea to the jurisdiction. We also conclude Shipp established this action is based on or relates to his exercise of his right to free speech and the Maloufs did not establish by clear and specific evidence a prima facie case for each essential element of their claims. Accordingly, we affirm the trial court‘s order denying the plea to the jurisdiction, reverse the trial court‘s order denying the motion to dismiss, render judgment dismissing the Maloufs’ claims against Shipp, and remand for further proceedings under