Business disparagement and defamation of an individual distinguished (In re Lipsky Tex 2015)

 
TWO DISTINCT TORTS: BUSINESS DISPARAGEMENT AND "CHARACTER ASSASSINATION" (DEFAMATION)
   
Business disparagement and defamation are similar in that both involve harm from the publication of false information. Waste Mgmt. of Tex., Inc. v. Tex. Disposal Sys. Landfill, Inc., 434 S.W.3d 142, 155 (Tex. 2014). The respective torts, however, serve different interests.

Whereas “defamation actions chiefly serve to protect the personal reputation of an injured party, [] a business disparagement claim protects economic interests.” Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003). Business disparagement or “injurious falsehood applies to derogatory publications about the plaintiff’s economic or commercial interests.” 3 DAN B. DOBBS, PAUL T. HAYDEN & ELLEN M. BUBLICK, THE LAW OF TORTS § 656, at 615 (2d ed. 2011).

The tort does not seek to redress dignitary harms to the business owner, but rather redresses aspersions cast on the business’s commercial product or activity that diminishes those interests. Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766–67 (Tex. 1987).

A corporation or other business entity that asserts a claim for defamation may assert an additional or alternative claim for business disparagement if it seeks to recover economic damages for injury to the business. Burbage v. Burbage, 447 S.W.3d 249, 261 n.6 (Tex. 2014). Impugning one’s reputation is possible without disparaging its commercial interests and vice versa. Depending on the circumstances, then, a plaintiff may have a claim for defamation, or for business disparagement, or both.

ELEMENTS OF BIZ DISPARAGEMENT CAUSE OF ACTION 

“To prevail on a business disparagement claim, a plaintiff must establish that (1) the defendant published false and disparaging information about it, (2) with malice, (3) without privilege, (4) that resulted in special damages to the plaintiff.” Forbes, 124 S.W.3d at 170 (citing Hurlbut, 749 S.W.2d at 766). 

SOURCE: TEXAS SUPREME COURT - No. 13-0928 - IN RE STEVEN LIPSKY 
[Opinion by Justice Divine in pdf] - 4/24/2015 

CITATION: In re Lipsky, No. 13-0928, ___ S.W.3d ___ (Tex. 2015) 

COA OPINION BELOW: In re Lipsky, 411 S.W.3d 530 (Tex.App.-Fort Worth 2013, orig. proceeding)   

IN RE STEVEN LIPSKY

No. 13-0928.

Supreme Court of Texas.

Argued December 4, 2014.

Opinion Delivered: April 24, 2015.

JUSTICE DEVINE delivered the opinion of the Court.

JOHN P. DEVINE, Justice.

The Texas Citizens Participation Act (TCPA)[1] protects citizens who petition or speak on matters of public concern from retaliatory lawsuits that seek to intimidate or silence them. TEX. CIV. PRAC. & REM. CODE §§ 27.001-.011. The protection consists of a special motion for an expedited consideration of any suit that appears to stifle the defendant's communication on a matter of public concern. Id. § 27.003. In reviewing that motion, the trial court is directed to dismiss the suit unless "clear and specific evidence" establishes the plaintiffs' "prima facie case." Id. § 27.005(c). When applying the Act's requirement for clear and specific evidence, however, the courts of appeals disagree about the role of circumstantial evidence.

Some courts hold that only direct evidence is relevant when considering a motion to dismiss under the Act, while others have concluded that relevant circumstantial evidence must also be considered. The court of appeals here considered circumstantial evidence, and we agree that clear and specific evidence under the Act includes relevant circumstantial evidence. 411 S.W.3d 530, 546 (Tex. App.-Fort Worth 2013). We further agree, generally, with the court of appeals's disposition of the proceedings below and accordingly deny all relief requested here.

I. Background and Procedural History

Steven and Shyla Lipsky own several acres in Weatherford, Texas. In 2005 they drilled a well on their property to a depth of about two hundred feet to provide water to a cabin and boathouse. In 2009 they finished a house on the property, connecting the well to their new home. That same year, Range Resources Corporation and Range Production Company drilled two gas wells about a half-mile from the Lipskys' property.

A few months after moving into their new home, the Lipskys experienced mechanical problems with their well. They contacted a well-servicing company, which identified the problem as "gas locking," a condition typically associated with an excess of natural gas in the ground water. A submersible pump's ability to transport water from a well can be affected when too much gas is in the water.

Concerned about the gas in their well water, the Lipskys contacted local health officials who referred them to Alisa Rich, an environmental consultant with Wolf Eagle Environmental. After tests, Rich confirmed the presence of methane and other gases in the well. About this time, Lipsky made a video of himself lighting gas escaping from a garden hose attached to his well. To produce this effect, Lipsky connected the hose to a vent on his water well. He shared his video with the Environmental Protection Agency (EPA) and the media, which reported on the flammable nature of Lipsky's water well. He also complained about the gas in his well to the Texas Railroad Commission. Lipsky's own investigation led him to believe that Range, the oil and gas operator closest to his property, had some responsibility for contaminating his ground water.

Both the EPA and Railroad Commission began investigating Lipsky's complaints. The EPA initially concluded that Range's production activities had contributed to the gas in the Lipskys' well water and that the situation could be hazardous to health and safety. The federal agency ordered Range to provide the Lipskys potable water and to install explosivity meters at their property.

The Railroad Commission completed its investigation a few months later. Although invited to participate in the Commission's evidentiary hearing, the Lipskys declined. The Commission thereafter concluded that Range's operations in the area were not the source of the contamination. Lipsky immediately denounced the Railroad Commission's decision in the media and continued to blame Range, pointing to the EPA's action and his expert's opinions.

The Lipskys thereafter sued Range and others involved in developing their residential area. As to Range, they alleged that its fracking operations near their property were negligent, grossly negligent, and a nuisance. They asserted that Range's operations contaminated their water well, causing the water to become flammable and their home uninhabitable. Range answered the suit and moved to dismiss all claims as an improper collateral attack on the Railroad Commission's ruling. Range also filed a counterclaim against the Lipskys and a third-party claim against Rich (the Lipskys' environmental consultant) alleging defamation, business disparagement, and a civil conspiracy. The Lipskys and Rich responded by moving to dismiss Range's counter-attack as an improper attempt to suppress their First Amendment rights guaranteed under the Constitution and protected by the Texas Citizens Participation Act. TEX. CIV. PRAC. & REM. CODE § 27.005.

The trial court granted Range's motion to dismiss, agreeing that the Lipskys' claims were an improper collateral attack on the Commission's determination. The court also declined to dismiss Range's claims against the Lipskys and Rich by denying their motions to dismiss under the Texas Citizens Participation Act. The Lipskys and Rich attempted an interlocutory appeal from this latter ruling, but the court of appeals dismissed the appeal for want of jurisdiction.[2] See Lipsky v. Range Prod. Co., No. 02-12-00098-CV, 2012 WL 3600014, at *1 (Tex. App.-Fort Worth Aug. 23, 2012, pet. denied) (mem. op.). The court, however, allowed the challenge to proceed as an original proceeding. 411 S.W.3d at 536. Meanwhile, the EPA withdrew its administrative order against Range without explanation. See Joint Stipulation of Dismissal Without Prejudice, United States v. Range Prod. Co., No. 3:11-CV-00116-F (N.D. Tex. Mar. 30, 2012).

The court of appeals thereafter determined that the Texas Citizens Participation Act required the dismissal of Range's claims against Lipsky's wife, Shyla, and his environmental consultant, Rich, and that the trial court had accordingly abused its discretion in not dismissing those claims. 411 S.W.3d at 554. The court further determined that the TCPA did not similarly require dismissal of all of Range's claims against Lipsky.[3] Id. at 546. The court of appeals granted mandamus relief to Lipsky's wife and consulant, while denying similar relief to Lipsky, prompting both Lipsky and Range to seek mandamus relief in this Court. In their respective petitions, Lipsky argues that the TCPA required the trial court to dismiss all claims against him also, while Range argues that the TCPA did not require the dismissal of any claims. The Lipsky petition accordingly concludes that the trial court abused its discretion in failing to grant his TCPA motion. The Range petition, on the other hand, concludes that the court of appeals abused its discretion in granting mandamus relief to Lipsky's wife, his environmental consultant, and Lipsky himself (in part) because the TCPA did not require it.

II. The Texas Citizens Participation Act

As already mentioned, the Texas Citizens Participation Act or TCPA protects citizens from retaliatory lawsuits that seek to intimidate or silence them on matters of public concern. See House Comm. on Judiciary & Civil Jurisprudence, Bill Analysis, Tex. H.B. 2973, 82nd Leg., R.S. (2011). The Act provides a special procedure for the expedited dismissal of such suits. A two-step process is initiated by motion of a defendant who believes that the lawsuit responds to the defendant's valid exercise of First Amendment rights. Under the first step, the burden is initially on the defendant-movant to show "by a preponderance of the evidence" that the plaintiff's claim "is based on, relates to, or is in response to the [movant's] exercise of: (1) the right of free speech;[4] (2) the right to petition;[5] or (3) the right of association."[6] TEX. CIV. PRAC. & REM. CODE § 27.005(b). If the movant is able to demonstrate that the plaintiff's claim implicates one of these rights, the second step shifts the burden to the plaintiff to "establish[] by clear and specific evidence a prima facie case for each essential element of the claim in question." Id. § 27.005(c).

Tortious interference with prospective business relations - Elements of this biz tort under Texas law

INTERFERENCE WITH EXPECTED BUSINESS AS A TORT 

Texas has long recognized the tort of interference with prospective business relations. Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 712-13 (Tex. 2001).

 

Although the Texas Supreme Court has never set forth the elements for this claim, see Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 78 (Tex. 2000), several appellate courts have. See, e.g., Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 367 (Tex. App.-Dallas 2009, pet. denied); Labor v. Warren, 268 S.W.3d 273, 278 (Tex. App.-Amarillo 2008, no pet.); Tex. Disposal Sys. Landfill, Inc. v. Waste Management Holdings, Inc., 219 S.W.3d 563, 590 (Tex. App.-Austin 2007, pets. denied); Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.-Houston [14th Dist.] 2001, pets. denied).

These courts hold that to establish a claim for tortious interference with prospective business relations, a plaintiff must show: (1) a reasonable probability that the parties would have entered into a business relationship; (2) an intentional, malicious intervention or an independently tortious or unlawful act performed by the defendant with a desire to prevent the relationship or with the knowledge the interference was likely to occur as a result of its conduct; (3) lack of privilege or justification for the defendant's actions; and (4) actual harm or damages suffered by the plaintiff as a result of the defendant's interference, i.e., the defendant's actions prevented the relationship. Labor, 268 S.W.3d at 278.

SOURCE: SAN ANTONIOCOURT OF APPEALS - 04-13-00033-CV - 11/6/2013 

Proving revenue loss and lost profits - expert testimony, evidence to aid quantification

LOST PROFITS - HOW DO YOU PROVE THAT?

Since how much a biz would have made $$$-wise [if such and such would not have happend] can hardly be known with perfect certainty, and is almost always somewhat speculative, it's not as simple as quantifying and accounting for lost monthly salary or hourly wages.

Lost profits "must be shown by competent evidence with reasonable certainty." Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992). "The requirement of `reasonable certainty' in the proof of lost profits is intended to be flexible enough to accommodate the myriad circumstances in which claims for lost profits arise." Texas Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994).
 
Competent evidence consists of "opinions or estimates of lost profits . . . based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates." Holt Atherton, 835 S.W.2d at 84 (citations omitted).

Conflicting evidence about the value of property generally falls into two categories: evidence of two distinct options or evidence of a range for value based on certain factors. See, e.g., Waterways on the Intercoastal, Ltd. v. State, 283 S.W.3d 36, 46 (Tex. App.-Houston [14th Dist.] 2009, no pet.); Pleasant v. Bradford, 260 S.W.3d 546, 559-60 (Tex. App.-Austin 2008, pet. denied). When the testimony supports a range for valuation rather than two distinct options, determination of an award within that range is left to the jury's discretion. Waterways, 283 S.W.3d at 46. If the determination is within that range, "a reviewing court is not permitted to speculate on how the jury actually arrived at its award." Drury Sw., Inc. v. Louie Ledeaux #1, Inc., 350 S.W.3d 287, 292 (Tex. App.-San Antonio 2011, pet. denied).

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013

The testimony concerning the value of the lost profits was not based on a precise and fixed formula. Instead, Albrecht testified about the maximum Potter could have earned from the billboards. He also acknowledged other factors that could have impacted Potter's ability to reach that maximum, such as prolonged vacancies and not being able to reach as many customers.

None of CBS Outdoor's experts offered competing testimony about the lost profits that Potter could have realized. Instead, CBS Outdoor's experts' testimony consisted of critiques of the reliability of Potter's estimation of costs and Albrecht's estimation of lost revenue. The testimony of all of the experts involved established that the jury was presented with an inexact range for determining Potter's lost profits, not a precise set of competing fixed values. The jury's damage award does not exceed the range presented to the jury. Because the jury's damage award is within the permissible range, the amount awarded was within the jury's discretion, and we cannot speculate on how the jury reached its determination. See id. "[U]ncertainty as to the fact of legal damages is fatal to recovery, but uncertainty as to the amount will not defeat recovery." Sw. Battery Corp. v. Owen, 115 S.W.2d 1097, 1099 (Tex. 1938); see also ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 877 (Tex. 2010) (citing Sw. Battery and holding "discrepancy between two reasonably certain amounts will not defeat recovery"). Accordingly, we overrule CBS Outdoor's seventh issue.

Proof that one expert testified to the contrary of the opponent's expert is not proof that the opponent's methodology is flawed. Instead, conflicts between the experts' testimony are left to the jury to resolve. See Hous. Lighting & Power Co. v. Dickenson Indep. Sch. Dist., 641 S.W.2d 302, 310 (Tex. App.-Houston [14th Dist.] 1982, writ ref'd n.r.e.) (holding "Texas courts have held that use of any one particular approach as the sole standard from which to derive value is fundamentally wrong" and that it is the jury's duty to weigh conflicting expert testimony on value).

An expert's opinion must be disregarded when it is conclusory or speculative. See Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex. 2004) (holding conclusory or speculative expert testimony cannot support a judgment). "An expert's opinion might be unreliable, for example, if it is based on assumed facts that vary from the actual facts . . . or it might be conclusory because it is based on tests or data that do not support the conclusions reached." Whirlpool Corp. v. Camacho, 298 S.W.3d 631, 637 (Tex. 2009).

The Supreme Court of Texas held in Texas Instruments, "The fact that a business is new is but one consideration in applying the `reasonable certainty' test." Id. at 280. This does not mean that a new business cannot recover lost profits. Id. Instead, profits are only denied when "profits which might have been made from such businesses are not susceptible of being established by proof to that degree of certainty which the law demands." Id. The determination of lost profits in such a situation focuses on the experience of the persons involved in the enterprise, the nature of the business activity, and the relevant market. Id.

Nothing in Texas Instruments categorically denies using the revenue obtained on CBS Outdoor's billboards to determine the lost profits Potter would have received on those exact same billboards. To the contrary, as Potter points out, profits of one business can be used to estimate the lost profits of another similarly situated business. See Bright v. Addison, 171 S.W.3d 588, 603 (Tex. App.-Dallas 2005, pet. denied) (upholding trial court's consideration of "actual data from an existing business" to determine the lost profits of a similar business).

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013

Tortious (not tortuous) Interference with Business Relations (prospective) and Lost-Profit Damages

BIZ TORTS 

Tortious Interference with Business Relations (in the future - as opposed to interfering with existing contract) The elements of tortious interference with prospective business relations are: (1) a reasonable probability that the plaintiff would have entered into a contractual relationship; (2) an independently tortious or unlawful act by the defendant that prevented the relationship from occurring; (3) the defendant did the act with a conscious desire to prevent the relationship from occurring or with knowledge that the interference was certain or substantially certain to occur as a result of his conduct; and (4) the plaintiff suffered actual harm or damage as a result of the interference. See Ash v. Hack Branch Distrib. Co., 54 S.W.3d 401, 414-15 (Tex. App.—Waco 2001, pet. denied). See also Finlan v. Dallas Indep. Sch. Dist., 90 S.W.3d 395, 412 (Tex. App.—Eastland 2002, pet. denied).

LOST PROFIT DAMAGES - HOW TO PROVE THEM

"Lost profits are damages for the loss of net income to a business measured by reasonable certainty." Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002). See also Bossier Chrysler Dodge II, Inc. v. Rauschenberg, 201 S.W.3d 787, 808 (Tex. App.—Waco 2006) rev'd in part, 238 S.W.3d 376 (Tex. 2007) (per curiam). "Net profits" is defined as "what remains in the conduct of a business after deducting from its total receipts all of the expenses incurred in carrying on the business." Turner v. PV Int'l Corp., 765 S.W.2d 455, 465 (Tex. App.—Dallas 1988, writ denied) (citing R. A. Corbett Transp., Inc. v. Oden, 678 S.W.2d 172, 176 (Tex. App.—Tyler 1984, no writ).

WHAT DEGREE OF PRECISION IS REQUIRED TO ESTABLISH LOSS OF PROFITS? 

 "Exact calculations" are not required to recover for lost profits. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 504 (Tex. 2001). "At a minimum [however], opinions or lost-profit estimates must be based on objective facts, figures, or data from which the lost-profits amount may be ascertained." Id.

SOURCE: 10-07-00362-CV (Tenth Court of Appeals in Waco, TX) (Oct 28, 2009)