Texas Supreme Court Addresses Free Speech Issues Raised by Corporate Defamation Claims

by Paul Alan Levy

In two rulings in late August, the Texas Supreme Court addressed significant issues of free speech arising in defamation cases brought by companies against their critics – the availability of injunctive remedies, and the proper procedure for discovery to identify potential defamation defendants who spoke anonymously.  The court staked out somewhat unusual positions that were more protective of the relevant speech interests than some other courts.

Injunctions Against Defamation

Kinney v Barnes arose from a dispute between former partners in the legal recruiting business; after they had a falling out, and Kinney left to compete with the Barnes firm, Barnes sued Kinney alleging, among other things, that Kinney had been fired for engaging in a kickback scheme while employed with Barnes.  Barnes later posted statements on its own web site, and well as two other web sites repeating the allegations about Kinney, and Kinney sued for defamation, seeking only injunctive relief.  The trial court granted summary judgment for Barnes on the ground that permanent injunctive relief against defamatory speech, even assuming a ruling after trial on the merits holding defendant liable for defamation, would be an impermissible prior restraint under the Texas Constitution.   

It is generally accepted at the appellate level, following the US Supreme Court’s decision in Organization for a Better Austin v. Keefe, that a preliminary injunction against defamation is a prior restraint, forbidden by the constitution.  Whether injunctions against defamation are allowed after a final determination on the merits of defamation by the trier of fact has divided the state and federal courts.  It is generally recognized that an injunction against speech other than that which was specifically found defamatory – for example, a general injunction against criticizing the plaintiff – is also a prior restraint, but what about an injunction that simply forbids the repetition of the specific words found defamatory?  Some state courts, as in California and Missouri, have decided that those injunctions are permissible, while other courts, such as in Pennsylvania and Florida, have forbidden them.  Some of those have put their reasoning in the language of prior restraint, whether under the First Amendment or state constitutional law, while others have put their reasoning in terms of the  traditional rule that “equity will not enjoin a libel” or, indeed, more generally, that equity will not enjoin any tort, in that damages are an adequate remedy at law.  

In a unanimous opinion authored by Justice Lehrman, the Supreme Court first stressed that it was only addressing the issue under the Texas constitution, which it said was, for the purpose of this issue, in pari materia with the First Amendment.  Considering that the common law objections to injunctive relief were of the table, there was a substantial discussion of the general rule that damages are the normal and, indeed, the proper remedy for defamation.  When the issue of injunctive relief under the common law returns to the state Supreme Court, there will be many indications that regardless of the constitutional issue, Texas equity will not enjoin a libel.  Thus, to the extent that some reports have characterized the decision as authorizing a new remedy for online defamation, it seems to me that they have ignored the limitations of the court’s ruling.

On the constitutional question, the Texas Supreme Court split the baby:  it decided that insofar as speech has already occurred, and has been determined to meet the First Amendment conditions for a finding of liability (and hence being unprotected under the First Amendment), an order that simply requires that the speech be taken down from the defendant’s own Internet site, the order is not a “prior” restraint.  However, insofar as an order is directed to the future repetition of the speech, the order would be a prior restraint, and hence is forbidden.  In this regard, the court reasoned that, even though the particular speech has been held unprotected, it would be a useless rule to forbid speech that exactly replicates the words previously uttered, while allowing speech is somewhat different from the previously adjudicated language; it can be difficult to judge whether the words are enough different from the adjudicated speech, and those judgments should nor be made in construing the injunction and hence deciding whether the judgment loser is in contempt.  Thus, the court allowed injunctions requiring a defendant to remove of defamatory speech from locations under its control after final judgment, but not injunctions barring repetition of that same speech.  The court said that it was also not addressing whether a defendant could be ordered to ask third parties to take down the defendant’s own statements.

The Texas approach of enjoining removal but not repetition of the identical statement could be particularly significant in light of the single publication rule, followed in Texas as it is throughout the United States, under which liability for a given publication arises, if at all, when it is first published.  The fact that additional copies of a print publication may be circulated, or that a statement on a web server may be downloaded to additional readers’ computers over time, does not make each additional access a separate, actionable tort.  Hence, a separate lawsuit cannot be filed over the fact that the defendant refused to remove the statement even though new information puts him or her on notice that the statement is false. 

But if a statement has to be removed, a plaintiff who claims that he has been defamed might well argue that future repetition of that same statement is a new publication, and hence is independently actionable.  Indeed, courts that refuse to allow equity to enjoin a libel note that the parties will have to litigate anew the issues of falsity and fault; just as the defendant might try to point to new evidence of truth, the plaintiff might well point to the earlier defamation judgment against the statement as  supporting a finding of negligence or actual malice by arguing that the defendant was on notice of the statement's probable falsity.

Personal Jurisdiction in Dendrite Cases

In re John Doe a/k/a Trooper,  by contrast, produced a sharply divided ruling from which four justices dissented.  The issue was whether to require Google to identify a blogger whom, using the pseudonym Trooper, had mean things to say about a company, Reynolds & Reynolds, that is based in Ohio but also has offices in Texas, and on its CEO, Robert Brockman, who lives in Houston.  Both company and CEO brought a proceeding in Harris County, for pre-litigation discovery, stating that once the Trooper was identified, they would sue him or her for defamation and business disparagement, and that if, as the blog suggested, Trooper proved to be an employee, they would sue for breach of fiduciary duty as well.    In many states, the procedure for identifying a Doe speaker accused of wrongdoing would be to sue the Doe as a defendant, and then seek leave to take early discovery to identify the defendant so that he or she can be served; but Texas, and a number of other stated, allow the would be plaintiff to file a petition for pre-litigation discovery in the court in which the suit could properly be maintained.  Trooper entered a special appearance to oppose the request for leave to depose Google, asserting that he was not located in Texas.  After the trial court ordered Google to submit to deposition, apparently having rejected Trooper’s argument that there was insufficient ground to believe that the suit against him could be successful to overcome his First Amendment right to speak anonymously, and the court of appeals refused to intervene, the Texas Supreme Court granted review to decide whether objections to personal jurisdiction are sufficient to derail discovery to identify the Doe. 

There have been a number of cases in which courts have rejected out of hand challenges to subpoenas to identify anonymous defendants based on apparent lack of personal jurisdiction; in mass downloading cases, for example, judges like Denny Chin in the Sony Music case said that personal jurisdiction should be considered only after the defendant is identified, although Judge Tatel's recent DC Circuit opinion in AF Holdings v. Doe may suggest that we are turning the corner on that problem.

In In re Doe a/k/a Trooper, however, the majority opinion, authored by Chief Judge Nathan Hecht, said that personal jurisdiction must be established before a pre-litigation petition can move forward, based not on due process (an issue that the court did not address) but rather on the language of the rule authorizing pre-litigation discovery, requiring that the petition has to be filed in “a proper court of any county . . . where venue of the anticipated suit may lie.”  Given that the burden is on the proponent of discovery to show that the petition was filed in the proper court, the plaintiff’s failure “to plead allegations showing personal jurisdiction over the defendant” was fatal to its petition.  The majority recognized that it could be difficult to plead jurisdiction without knowing who the defendant is, and thus where he is located, but “Rule 202 does not guarantee access to information for every petitioner who claims to need it.”  Otherwise, the court feared, every plaintiff seeking to identify anonymous speakers anywhere in the world might come to the Texas courts filing petitions for discovery.

A passionate dissent, signed by Justice Debra Lehrmann and joined by three of her colleagues, complained that the majority ruling “effectively extinguish[es] the claims of those who have the misfortune of being defamed by one who conceals his identity,” even in cases where the alleged defamer’s anonymity in unprotected by the First Amendment because the speech is so plainly false and actionable.  She argued that personal jurisdiction becomes relevant only when there is a prospect of imposing liability on the defendant, and at the pre-litigation discovery phase of the litigation, the only question is whether to identify the defendant.  Moreover, she suggested, a minimum contacts analysis cannot be conducted without knowing where the defendant resides, as well as other information about his contacts with the state.

As I see it, the dissent’s concerns are somewhat overblown.  Certainly, if a plaintiff could never find the right jurisdiction in which to file a proceeding against the Doe, and thus in which to originate a proceeding for discovery to identify an anonymous speaker, then there would be significant reason for concern.  We have argued for the Dendrite balancing test on the ground that it strikes the right balance between letting defamers get away with abusive speech just by doing it anonymously and letting companies identify their critics just by filing a facially valid complaint.  Just as we should worry about plaintiffs who invent causes of action that could bever succeed as an excuse for outing their critics, we should worry about a rule of law that allows an evil anonymous defendant to lie about not being in the jurisdiction where the suit has been filed and thus avoid being held accountable for obvious and damaging libel.

However, the Supreme Court’s opinion is limited to pre-litigation petitions; nothing would prevent the plaintiffs from filing a lawsuit against Trooper as a Doe defendant in Texas, claiming personal jurisdiction, and seeking discovery to identify the Doe; I have been involved in several such cases in Texas where we then moved to quash the subpoena.  And under Texas law, the burden is on defemdant contesting jurisdiction to negate all possible bases for personal jurisdiction alleged by the plaintiff; if the plaintiff does NOT plead a basis for longarm jurisdiction, the Doe has to prove that he does not live in Texas.  It might well be difficult for an anonymous defendant to do that (although we have made arguments in Doe cases based on affidavits of third parties confirming information about the Doe).

Moreover, in this case, the record suggests that the Trooper is located in Ohio – Trooper’s appellate brief quotes one of the blog posts as strongly implying that the blogger is located in Dayton ("I look out the window and see a, $40 million . . . data center . . ..  I am glad they are investing . .. here in Dayton.”) and I should think that if plaintiffs had sued in Dayton, the Doe might well have been estopped from denying residence in Texas.

Finally, it struck me as very odd that neither the majority nor the dissenting opinion had mentioned the possibility of personal jurisdiction based on the Supreme Court’s decision in Calder v. Jones.  Although the company was headquartered in Ohio, the individual plaintiff lived in Houston, and  I wondered whether the decision represent a judgment by the Texas Supreme Court to walk away from Calder v. Jones as a basis for personal jurisdiction in defamation cases on the theory that Trooper’s alleged defamation was a tort committed outside Texas that was intentionally directed toward Texas and cause damage in Texas.   To be sure, we have argued in some cases that a resident of a forum state cannot necessarily get personal jurisdiction over out-of-state defamers, but plaintiffs frequently argue that the Supreme Court’s decision in Calder v. Jones allows such jurisdiction, and that the Fifth Circuit’s decision in Revell v. Lidov supports jurisdiction at least if the plaintiff was in-state at the time of the defamation, the harm to reputation is most likely to be concentrated there, and the defendant knew that the target of criticism was located there.  I did not see Calder v. Jones mentioned in the briefs to the Texas Supreme Court, and when I mentioned the case name to one of the lawyers in the case it was apparent that he had never thought about it.

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