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NO. 05-12-00575-CV - 5th Court of Appeals

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					                                                                ACCEPTED
                                                                225EFJ016915026
                                                                FIFTH COURT OF APPEALS
                                                                DALLAS, TEXAS
                                                                12 June 6 P2:33
                                                                Lisa Matz
                        NO. 05 12 00575 CV                      CLERK
________________________________________________________________________

               IN THE FIFTH DISTRICT COURT OF APPEALS
                           AT DALLAS, TEXAS
________________________________________________________________________

         THE BETTER BUSINESS BUREAU OF METROPOLITAN
                         DALLAS, INC.
                                                 Appellant
                              v.

                             LLOYD WARD

                                                            Appellee
________________________________________________________________________

                               On appeal from the
                County Court at Law No. 3 of Dallas County, Texas
                       (Hon. Sally Montgomery, Presiding)
________________________________________________________________________

                          APPELLANT’S BRIEF
________________________________________________________________________

                                      David C. Myers
                                      State Bar No. 14759400
                                      Stephanie C. Sparks
                                      State Bar No. 24042900
                                      JACKSON WALKER L.L.P.
                                      901 Main Street, Suite 6000
                                      Dallas, Texas 75202
                                      (214) 953-6000
                                      (214) 953-5822 – Facsimile

                                      ATTORNEYS FOR APPELLANT




ORAL ARGUMENT REQUESTED
                     IDENTITY OF PARTIES AND COUNSEL

      The following is a complete list of all parties before the trial court and the names
and addresses of all counsel.

1.    Appellant in this Court (Defendant in the trial court)

      The Better Business Bureau of Metropolitan Dallas, Inc.

      Counsel for Appellant/Defendant:

      David C. Myers
      Stephanie C. Sparks.
      JACKSON WALKER L.L.P.
      901 Main Street, Suite 6000
      Dallas, Texas 75202
      (214) 953-6000
      (214) 953-5822 – Facsimile

2.    Appellee in this Court (Plaintiff in the trial court)

      Lloyd Ward
      Lloyd Ward & Associates, P.C. (Plaintiff in the trial court)

      Counsel for Appellee/Plaintiffs:

      Lloyd E. Ward
      Lloyd Ward & Associates, P.C.
      12655 N. Central Expressway, Suite 1000
      Dallas, Texas 75243
      (972) 361-0036




                                             -i-
                                              TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ....................................................................... i

STATEMENT OF THE CASE ......................................................................................... vii

STATEMENT REGARDING ORAL ARGUMENT ......................................................viii

STATEMENT OF JURISDICTION ................................................................................viii

ISSUE PRESENTED .......................................................................................................viii

PRELIMINARY STATEMENT ......................................................................................... 1

STATEMENT OF FACTS.................................................................................................. 1

A.       The Parties. ............................................................................................................... 1

B.       The January 2010 Business Review about LWA..................................................... 2

C.       The BBB’s Complaint Process................................................................................. 3

D.       Complaints about LWA............................................................................................ 3

E.       The BBB’s Rating System........................................................................................ 4

F.       The February 2011 Business Review about LWA................................................... 4

G.       Ward’s Lawsuit against the BBB. ............................................................................ 5

H.       The BBB’s Motion to Dismiss. ................................................................................ 6

I.       The Trial Court’s Order............................................................................................ 6

SUMMARY OF THE ARGUMENT .................................................................................. 7

ARGUMENT....................................................................................................................... 9

         I.        The trial court reversibly erred by denying, and failing to grant, the
                   BBB’s Motion to Dismiss. ............................................................................ 9

                   A.         The Standard of Review..................................................................... 9

                   B.         The BBB is entitled to the protections afforded by Chapter
                              27. ....................................................................................................... 9




                                                                - ii -
                              1.        The BBB exercised its right of free speech by
                                        publishing the review. ........................................................... 11

                              2.        Ward’s claim is based on the BBB’s business review. ......... 11

                    C.        Ward failed to meet his burden to produce clear and specific
                              evidence establishing a prima facie case of each element of
                              his claims.......................................................................................... 12

                              1.        The Complained of Statements are not defamatory.............. 14

                              2.        The Complained of Statements are true. ............................... 16

                              3.        The Complained of Opinion is not actionable as a
                                        matter of law. ........................................................................ 20

                              4.        Ward failed to produce clear and specific evidence of
                                        negligence. ............................................................................ 21

                              5.        Because the defamation claims fail, the negligence
                                        claim fails. ............................................................................. 22

          II.       Ward filed his action after the effective date of Chapter 27;
                    therefore, Chapter 27 applies to his claims. ................................................ 22

PRAYER ........................................................................................................................... 22




                                                              - iii -
                                       INDEX OF AUTHORITIES

                                                STATE CASES

Abdel-Hafiz v. ABC, Inc.,
      240 S.W.3d 492 (Tex. App.—Fort Worth 2007, pet. denied)................................ 12

Associated Press v. Cook,
      17 S.W.3d 447 (Tex.App.—Houston [1st Dist.] 2000, no pet.)............................. 16

Carr v. Brasher,
       776 S.W.2d 567 (Tex. 1989) .................................................................................. 20

City of San Antonio v. Pollock,
       284 S.W.3d 809 (Tex. 2009) .................................................................................. 19

Delta Air Lines Inc. v. Norris,
      949 S.W.2d 422 (Tex. App.—Waco 1997, writ denied)........................................ 20

Dolcefino v. Randolph,
      19 S.W.3d 906 (Tex. App.—Houston [14th Dist.] 2000, pet. denied)............. 15, 16

Entergy Gulf States, Inc. v. Summers,
      282 S.W.3d 433 (Tex. 2009) .................................................................................... 9

Foster v. Laredo Newspapers,
       541 S.W.2d 809 (Tex. 1976) .................................................................................. 21


KTRK Television v. Felder,
     950 S.W.2d 100 (Tex. App.—Houston [14th Dist.] 1997, no writ)....................... 22

McIlvain v. Jacobs,
      794 S.W.2d 14 (Tex. 1990) ........................................................................ 17, 18, 21

Means v. ABCABCO, Inc.,
     315 S.W.3d 209 (Tex. App.—Austin 2010, no pet.).............................................. 14

Musser v. Smith Protective Servs., Inc.,
      723 S.W.2d 653 (Tex. 1987) ............................................................................ 14, 16

In re P.C.S.,
       320 S.W.3d 525 (Tex. App.—Dallas 2010, pet. denied) ......................................... 9


                                                        - iv -
Robertson Tank Lines, Inc. v. Van Cleave,
      468 S.W.2d 354 (Tex. 1971) .................................................................................. 19

Rogers v. Dallas Morning News, Inc.,
      889 S.W.2d 467 (Tex. App.—Dallas 1994, writ denied)....................................... 17

San Antonio Express News v. Dracos,
      922 S.W.2d 242 (Tex. App.—San Antonio 1996, no writ).................................... 16

Scripps Texas Newspapers, L.P. v. Belalcazar,
      99 S.W.3d 829 (Tex. App.—Corpus Christi 2003, pet. denied) ............................ 21

Soukup v. Law Offices of Herbert Hafif,
      139 P.3d 30 (Cal. 2006)............................................................................................ 9

Turner v. KTRK Television, Inc.,
      38 S.W.3d 103 (Tex. 2000) .................................................................................... 14

WFAA-TV v. McLemore,
    978 S.W.2d 568 (Tex. 1988) .................................................................................. 13

                                                FEDERAL CASES

Citizens United v. Fed. Election Comm’n,
       130 S. Ct. 876 (2010) ............................................................................................. 10

Hustler Magazine v. Falwell,
      485 U.S. 46 (1988) ................................................................................................. 22

Nationwide Bi-Weekly Admin., Inc. v. Belo Corp.,
      512 F.3d 137 (5th Cir. 2007) ............................................................................ 16, 21

Patton v. United Parcel Serv., Inc.,
      910 F. Supp. 1250 (S.D. Tex. 1995)....................................................................... 18




                                                           -v-
                                   SECONDARY AUTHORITIES


                                           STATE STATUTES

Texas Civil Practices and Remedies Code § 27.001, et. seq. ................... 1, 4, 6, 7, 8, 9, 10
                                                                         11, 12, 13, 16, 19, 22

Texas Civil Practices and Remedies Code § 16.002 ................................................... 16, 22

Texas Civil Practices and Remedies Code § 73.001 ......................................................... 14

Texas Government Code § 311.005(2) (West 2005) ........................................................ 10

2011 Tex. Sess. Law Serv. Ch. 341 §§ 3-4 (H.B. 2973) ................................................... 22


                                           MISCELLANEOUS

Black's Law Dictionary 268 (8th ed. 2004)....................................................................... 13

Gardner's Modern Legal Usage 192 (3d ed. 2011) .......................................................... 13

Restatement (Second) of Torts § 580B cmt. g (1977)....................................................... 21




                                                      - vi -
                             STATEMENT OF THE CASE

Nature of the Case:           The Better Business Bureau of Metropolitan Dallas, Inc.
                              (the “BBB”) appeals from the trial court’s order denying
                              its Motion to Dismiss the action of Lloyd Ward (“Ward”)
                              pursuant to Chapter 27 of the Texas Civil Practices and
                              Remedies Code. (“Chapter 27”). Ward sued the BBB for
                              libel and slander complaining about statement made by
                              the BBB in an online business review of Lloyd Ward &
                              Associates, P.C.(“LWA”), a law firm owned by Ward.

Parties:                      Appellant/ Defendant is The Better Business Bureau of
                              Metropolitan Dallas, Inc.

                              Appellee/Plaintiff is Lloyd Ward



Trial Court:                  County Court at Law No. 3 of Dallas County, Texas;
                              Hon. Sally Montgomery, Presiding.


Trial Court’s Disposition:    The trial court denied the BBB’s Motion to Dismiss by
                              order dated April 13, 2012. (CR 79).




                                        - vii -
                 STATEMENT REGARDING ORAL ARGUMENT

       Chapter 27 of the Texas Civil Practice and Remedies Code became effective June

17, 2011 and to date there are no reported opinions by the Texas appellate courts.

Accordingly, oral argument will assist the Court in interpreting its provisions and

applying them to the issues raised by this appeal.


                          STATEMENT OF JURISDICTION

       The Court has jurisdiction of this appeal pursuant to Texas Civil Practices and

Remedies Code § 27.008.


                                  ISSUE PRESENTED

       Did the trial court reversibly err in denying, and failing to grant, the BBB’s

Motion to Dismiss under Chapter 27 of the Texas Civil Practice and Remedies Code?




                                          - viii -
TO THE HONORABLE COURT:


                            PRELIMINARY STATEMENT

       This is an expedited appeal from an order denying the BBB’s Motion to Dismiss

under Chapter 27 of the Texas Civil Practices and Remedies Code. As shown below, the

trial court reversibly erred when it denied, and failed to grant, the motion, contrary to the

dictates of Chapter 27. Consequently, the Court should reverse and render judgment that

Ward take nothing. In addition, the Court should remand to the trial court solely for a

determination of an award to the BBB of court costs, attorneys’ fees and other expenses

incurred by the BBB in defending against Ward’s action as required by section 27.009(a).

                               STATEMENT OF FACTS

A.     The Parties.

       The BBB is an independent, non-profit corporation founded in 1920 that promotes

ethical business practices through voluntary self-regulation. (CR 35). To this end, the

BBB provides the general public with consumer alerts, tips, reviews, and complaint

processing. (CR 35). As part of its mission, the BBB publishes business reviews on its

website of businesses located in its territory. (CR 35). The information is provided so

that consumers may make informed decisions in marketplace transactions. (CR 35).

       Ward is a Dallas attorney. (CR 68). He is the principal of Lloyd Ward &

Associates, P.C. (“LWA”). (CR 68).




                                             1
B.    The January 2010 Business Review about LWA.

      In late 2009, the BBB advised Ward that it had received several inquiries from

consumers concerning LWA’s relationship with debt settlement companies. (CR 69).

After receiving the inquiries, the BBB sent its standard business questionnaire to LWA

on January 6, 2010 and again on January 25, 2010. (CR 35; 69-70; 74). LWA did not

respond to the BBB’s written requests for information. (CR 35). The BBB posted an

online business review on LWA in or about January 2010. (CR 69-70).

      In that review, LWA was assigned an “F” rating based on the BBB’s concerns

with the debt settlement industry, about which it had received inquiries involving LWA.

(C.R. 75). The BBB’s concerns about the debt settlement industry arose because of the

many complaints from consumers alleging that debt settlement programs did not work as

well as advertised. (CR 77). According to the BBB’s industry tips to consumers,

complaints about companies in the debt settlement industry alleged that, “creditors

continue to harass clients, fees and interest continue to accumulate, and that the

companies do not contact the creditors.” (CR 77). The review also stated that the BBB

did not have information to determine how long LWA had been operating and did not

have sufficient background information on the business. (CR 75).

      LWA, but not Ward, sued the BBB in March 2010 alleging a defamation action

based on the January 2010 business review. In the March 2010 lawsuit, LWA complained

that the BBB classified LWA as a debt settlement company (in addition to “attorneys”)

and assigned an “F” rating on that basis. (CR 70). LWA dismissed that lawsuit in April

2010. (CR 71).


                                           2
C.     The BBB’s Complaint Process.

       When a consumer files a complaint with the BBB, the consumer designates the

type of complaint being made and the business against whom the complaint is made. The

BBB assesses the complaint against its complaint intake procedures. If the complaint

satisfies the intake procedures, it is forwarded to the business for a response. (CR 41).

       As an example, the BBB received a complaint against LWA on September 3,

2010. (CR 44). The complainant explained that she paid LWA $1,200 for a debt

settlement program, but LWA failed to take action to resolve her outstanding credit card

bills. (CR 44). According to the complainant, LWA would not return her calls or refund

her money. (CR 44). In accordance with its standard procedures, the BBB reviewed the

complaint and forwarded it to LWA on September 9, 2010. (CR 44). LWA did not

respond to the complaint.     On September 23, 2010, the BBB sent a “Reminder of

Dispute” to LWA.       (CR 44).     In the following month, the BBB sent two more

notifications of the dispute to LWA, but still received no response. (CR 44). The case

was then closed and flagged as “unanswered” per the BBB’s procedures. (CR 44).

D.     Complaints about LWA.

       Between June 2010 and February 11, 2011, the BBB received a total of 18

complaints from consumers about LWA. (CR 41). Six of those complaints did not meet

intake procedures and were determined to be invalid. (CR 41). The invalid complaints

were not forwarded to LWA. (CR 41). The BBB forwarded the remaining 12 complaints

to LWA for a response. (CR 41). LWA responded to eleven of those complaints. Eight

of the eleven complaints were closed as resolved or assumed resolved. (CR 41). One


                                             3
complaint went unanswered; two others were closed as unresolved. (CR 41). Ward did

not dispute these facts in his response to the Motion to Dismiss.

E.     The BBB’s Rating System.

       The BBB’s business reviews may contain letter ratings representing the BBB’s

opinion of the business based on the information in the BBB’s files. (CR 35). Each

business review contains links to an explanation of the letter rating generally and the

basis of that business’ letter rating specifically. The ratings are generated by a computer

program that factors the data input from the BBB’s files. (CR 35). As data about the

number of complaints, responses and closure status, and other data is input, a rating may

fluctuate. Id. Under the BBB rating system, the failure to respond to complaints, or to

resolve complaints, results in deductions against that business’ rating. (CR 35; 37-39).

The BBB rating procedures are outlined on the BBB website. (CR 35; 37-39).

F.     The February 2011 Business Review about LWA.

       Based primarily on the one or more unanswered and unresolved complaints in the

LWA file, the BBB generated an “F” rating for LWA in February 2011. (CR 36). The

BBB published that rating in an online review on February 11, 2011. (CR 36). The

review identified the factors that lowered LWA’s rating as follows: (1) the total number

of complaints filed against the business; (2) the failure to respond to one or more

complaints; (3) the number of unresolved complaints; and (4) the number of serious

complaints filed. (CR 35-36). All of the explanatory statements in the review used the

BBB’s standard text. (CR 36).




                                             4
G.      Ward’s Lawsuit against the BBB.

        In response to the February 11, 2011 business review, LWA, but not Ward, filed

suit on May 13, 2011 alleging causes of action for libel, slander, and negligence.1

(CR 91). LWA also sought an injunction seeking to force the BBB to remove the LWA

business review from the BBB’s website. Almost nine months later, after the deadline for

the joinder of additional parties, Ward joined the suit as a party plaintiff alleging the

same cause of actions in his individual capacity. (CR 12).

        In the amended petition filed on January 25, 2012, Ward did not allege that the

BBB’s statements in the online business review regarding consumer complaints were

false or defamatory. Instead, Ward (and LWA) complained only about four statements in

the BBB’s online review which, he says, were posted at some point prior to May 4, 2011:

(1) that the “BBB does not have sufficient information to determine how long this

business has been operating,” (2) that the “BBB has made two or more requests for

background information from the business,” (3) that the “BBB has not received a

response from the business and/or has not been able to verify information received from

this business,” and (4) that the “BBB does not have sufficient background information on

this business.” (CR 17). These statements are sometimes referred to collectively as the

“Complained of Statements.”2                Ward also complained of the “F” rating.                       (the

“Complained of Opinion”) (CR 17-18).



1
  The BBB has filed a request for a supplemental clerk’s record which will include the Original Petition.
2
   The Complained of Statements, or substantially similar statements, were published over a year earlier in the
January 2010 review.




                                                      5
H.    The BBB’s Motion to Dismiss.

      The BBB responded to the amended petition by filing its Motion to Dismiss as to

Ward’s individual action on March 20, 2012. (CR 24). In support of its Motion to

Dismiss, the BBB filed affidavits of its chief compliance officer (Chris Burgess) and the

director of its complaint resolution department (Lee Stallings).     (CR 34; 40).    The

Burgess affidavit explained the rating system and attached a document from the website

providing an overview of the grading system. (CR 35; 37-39). The Stallings Affidavit

explained the complaint processing procedures and attached exhibits showing LWA’s

failure to respond to one complaint. (CR 35, 44-49). Both testified that the BBB

believed the statements of fact in the review to be true when made and that they did not

have any reason to believe the statements were false. (CR 36; 42).

      On April 12, 2012, the day before the hearing, Ward filed a response, supported

only by his own affidavit.    (CR 53; 68).     The BBB filed a reply pointing out the

deficiencies of Ward’s affidavit testimony. (CR 80).

I.    The Trial Court’s Order.

      On April 13, 2012, the parties appeared before the trial court for a hearing and

presented argument. At the hearing, the trial court indicated that the BBB was not a

“citizen” and, therefore, could not take advantage of the protection afforded by Chapter

27. (RR 16-17). That same day, the trial court signed an order denying the BBB’s

motion. The BBB appeals from that order.




                                           6
                          SUMMARY OF THE ARGUMENT

       Chapter 27 provides a two-step process for determining whether dismissal is

appropriate. The defendant bears the initial burden to show “by a preponderance of the

evidence that the legal action is based on, relates to, or is in response to the party’s

exercise of…the right of free speech…” TEX. CIV. PRAC. & REM. CODE § 27.005(b)

(West 2011). Once the defendant meets this burden, the plaintiff can avoid dismissal

only by producing “clear and specific evidence” establishing a “prima facie case for each

essential element of the claim in question.” TEX. CIV. PRAC. & REM. CODE § 27.005(c).

       Under this analysis, dismissal was appropriate because the BBB conclusively

proved—and Ward did not dispute—that Ward’s action for libel and slander falls

squarely within Chapter 27’s scope. The BBB exercised its right of free speech as

defined by Chapter 27 when it published its online review, and Ward’s action is based on,

relates to or is in response the BBB’s exercise of the right of free speech. While the BBB

met its initial burden, Ward wholly failed to meet his burden to produce clear and specific

evidence establishing a prima facie case for each and every element of his claims (in

particular, that some or all of the Complained of Statements are defamatory, false, and

were made with the requisite level of fault).

       Based on statements made at the hearing, the trial court apparently concluded that

motions under Chapter 27 may only be filed by individual citizens. (RR 16-17). The trial

court’s conclusion was in error. Nothing in the text of Chapter 27 limits its application to

individual persons. The plain language of the statute allows “a party” to file a motion to

dismiss, and the BBB is unquestionably a party that exercised its right of free speech.


                                                7
Moreover, the United States Supreme Court has recently and repeatedly held that

corporations are “citizens” under the law. Because Chapter 27 applies to this case, the

BBB was entitled to dismissal of Ward’s claims unless he established by clear and

specific evidence a prima facie case for each essential element of his libel, slander, and

negligence causes of action.

       Second, the trial court erred in failing to grant the Motion to Dismiss because the

Complained of Statements were not defamatory as a matter of law. The Complained of

Statements reported the BBB’s efforts to obtain information regarding LWA and LWA’s

refusal to respond. As a matter of law, the Complained of Statements were insufficiently

derogatory, degrading, shocking, or disgraceful to be defamatory. The Complained of

Opinion, the “F” rating, is a constitutionally protected opinion which is not actionable as

a matter of law.

       Ward’s evidence, which consisted solely of his own affidavit, was insufficient to

carry his burden under the statute. The statements in the Ward affidavit were neither

clear nor specific as required by Chapter 27 but, rather, were conclusory, particularly

concerning the elements of falsity and fault. Accordingly, the Ward affidavit had no

probative value and cannot support the trial court’s denial of the BBB’s Motion to

Dismiss.

       Although the BBB had no burden of production, the BBB, nevertheless, produced

evidence which established that the Complained of Statements were, in fact, true; and

that the BBB acted reasonably, and in accordance with its established procedures, when it

published the business review. Because Ward entirely failed to meet his burden, the


                                            8
BBB’s motion to dismiss should have been granted, and the BBB should have been

awarded its reasonable attorneys’ fees incurred in defending the claim.

                                       ARGUMENT

I.     The trial court reversibly erred by denying, and failing to grant, the BBB’s
       Motion to Dismiss.

       A.     The Standard of Review.

       To the extent the Court’s analysis involves statutory construction—a legal

question—the standard of review is de novo. Entergy Gulf States, Inc. v. Summers, 282

S.W.3d 433, 437 (Tex. 2009); In re P.C.S., 320 S.W.3d 525, 532 (Tex. App.—Dallas

2010, pet. denied).    Although no Texas court has addressed the standard of review

applicable to a motion to dismiss under Chapter 27, California law offers helpful

guidance.    California appellate courts review a determination on the merits under

California’s anti-SLAPP statute de novo. See, e.g., Soukup v. Law Offices of Herbert

Hafif, 139 P.3d 30, 36 (Cal. 2006).

       B.     The BBB is entitled to the protections afforded by Chapter 27.

       Chapter 27 of the Texas Civil Practice and Remedies Code took effect on June 17,

2011. It is designed to safeguard the constitutional right of free speech. The plain

language of the statute provides that it applies to any legal action based on, relating to, or

in response to a party’s exercise of the right of free speech. Id. at § 27.005(b). It protects

defendants by providing for a motion to dismiss and interlocutory appeal. Id. at § 27.003,

§ 27.008.

       During the hearing on the BBB’s Motion to Dismiss, the trial court questioned

whether the BBB could take advantage of Chapter 27.             Apparently, the trial court

                                              9
reasoned that, because the legislation is sometimes referred to as the “Citizens

Participation Act,”3 Chapter 27 was only for the benefit of “citizens,” and may have

concluded that the BBB is “not a citizen.” (RR 16-17). The trial court was mistaken.

        The plain language of Chapter 27 reveals nothing that limits who may avail itself

of its protections but, instead, strongly supports the broadest possible application. A

motion to dismiss under Chapter 27 applies to a “party’s” exercise of its First

Amendment-based rights. TEX. CIV. PRAC. & REM. CODE § 27.003(a). There is no

question that the BBB is a “party” to this action.

        Chapter 27 provides that it applies to the rights of “persons” to speak freely. TEX.

CIV. PRAC. & REM. CODE § 27.002. Legal entities are “persons” in the eyes of the law.

As defined in the Code Construction Act, “person” includes “corporation” and “any other

legal entity,” TEX. GOV’T CODE § 311.005(2) (West 2005). The United States Supreme

Court has recently and repeatedly “recognized that First Amendment protection extends

to corporations,” citing no less than 23 of its previous decisions. Citizens United v. Fed.

Election Comm’n, 130 S. Ct. 876, 899 (2010).

        In sum, the text of Chapter 27, the Code Construction Act, and precedent from the

United States Supreme Court all dictate that the BBB is entitled to the protections

afforded by Chapter 27. The trial court reversibly erred in concluding otherwise.




3
  Chapter 27 of the Texas Civil Practice and Remedies Code is entitled “Actions Involving the Exercise of Certain
Constitutional Rights.”




                                                      10
              1.     The BBB exercised its right of free speech by publishing the
                     review.

       Chapter 27 defines “[e]xercise of the right of free speech” as “a communication

made in connection with a matter of public concern.” TEX. CIV. PRAC. & REM. CODE

§27.001(3). In turn, it defines a “matter of public concern” to include communicating

about “issues related to . . . a good, product, or service in the marketplace.” TEX. CIV.

PRAC. & REM. CODE § 27.001(7)(E). The BBB’s business review was unquestionably an

exercise of the right of free speech, and Ward did not dispute this in the trial court.

       The BBB provides the general public with consumer alerts, tips, online business

reviews, and complaint processing. The information is provided so that consumers may

make informed decisions in marketplace transactions. The BBB’s communications with

the public regarding LWA and Ward included at least the following: the name, address,

phone number; a categorization of the type of business; identification of the company’s

principal; a rating of the business; and the customer complaint history. (CR 76). The

Complained of Statements relate to the BBB’s rating and commentary explaining the

justification for the rating. Without question, these statements are communications about

services offered in the marketplace which fall within the statute’s protections.

              2.     Ward’s claim is based on the BBB’s business review.

       Not only was it undisputed that the BBB exercised its right of free speech as

defined by Chapter 27, but it was also undisputed that Ward’s claims for statutory libel,

common law libel, slander, negligence and gross negligence were all based on, relate to,

or in response to the BBB’s exercise of its right of free speech. An essential element of



                                              11
any defamation action (both libel and slander) is the publication of a false statement of

fact of and concerning the plaintiff that is defamatory.

       Ward alleges the BBB “published a written statement; that was defamatory” or

was “capable of defamatory meaning” “concerning the Plaintiffs.”                 (CR 18-20).

Similarly, in connection with the negligence allegations, Ward incorporates the prior

allegations of defamation and alleges that the BBB was negligent in making certain

statements in its online review. (CR 20-21). In the application for permanent injunctive

relief, premised on the defamation and negligence causes of action, Ward seeks to force

the BBB to remove any information about him from the BBB website and to permanently

enjoin the BBB from posting or placing any information about him on the website, or

otherwise. (CR 21-22). In short, it cannot be disputed that the entirety of Ward’s lawsuit

is based on, relates to or is in response to the BBB’s exercise of its right of free speech.

       C.     Ward failed to meet his burden to produce clear and specific evidence
              establishing a prima facie case of each element of his claims.

       “Clear and specific evidence” is undefined by Chapter 27.                However, by

qualifying the type of evidence to be produced, the Legislature clearly intended the

plaintiff’s burden to be higher than the type of evidence that could defeat a “no-evidence”

motion for summary judgment. The standard of review for a “no-evidence” motion for

summary judgment requires more than a scintilla of probative evidence. See Abdel-Hafiz

v. ABC, Inc., 240 S.W.3d 492, 504 (Tex. App.—Fort Worth 2007, pet. denied).

       “Clear” means “free from doubt,” “sure,” and “unambiguous,” Black’s Law

Dictionary 268 (8th ed. 2004), and “specific” means “of or relating to a particular named



                                              12
thing.” Id. at 1434. “Clear and specific evidence” cannot be conclusory. “Conclusory”

means “[e]xpressing a factual inference without stating the underlying facts on which the

inference is based,” Black’s Law Dictionary 308, and it “often describes evidence that is

not specific enough to be competent to prove what it addresses.” Gardner’s Modern

Legal Usage 192 (3d ed. 2011).

       Chapter 27, therefore, must require more than a showing of some probative

evidence. The Court, however, need not attempt to lay out the contours of “clear and

specific evidence” here. On this record, as shown below, Ward wholly failed to carry his

burden under any evidentiary standard, much less under Chapter 27’s heightened

standard.

       The failure to establish clear and specific evidence of any required element

requires dismissal. Ward failed to establish by clear and specific evidence a prima facie

case for each and every element of the libel and slander causes of action. The elements

of both libel and slander require (1) publication of a false statement of fact; (2) that is

defamatory; (3) of and concerning the plaintiff; and (4) the requisite mental state (actual

malice or negligence). See WFAA-TV v. McLemore, 978 S.W.2d 568, 571 (Tex. 1988).

       In the amended petition, Ward identified the Complained of Statements as follows:

(1) the BBB does not have sufficient information to determine how long this business has

been operating; (2) the BBB has made two or more requests for background information

from the business; (3) the BBB has not received a response from the business and/or has

not been able to verify information received from this business; and (4) the BBB does not

have sufficient background information on this business. (CR 17). The Complained of


                                            13
Opinion was the “F” rating. (CR 17). For the reasons set forth below, Ward failed to

meet his burden.

             1.     The Complained of Statements are not defamatory.

      Ward cannot satisfy his burden because the Complained of Statements are not

defamatory as a matter of law. The initial question of law is for the court to determine

whether the language complained of was reasonably capable of a defamatory meaning.

See Musser v. Smith Protective Servs., Inc., 723 S.W.2d 653, 655 (Tex. 1987); see also

Turner v. KTRK Television, Inc., 38 S.W.3d 103, 114 (Tex. 2000). A statement is

defamatory if it tends to injure the person’s reputation, exposing the person to public

hatred, contempt, ridicule, or financial injury, or it if tends to impeach that person’s

honesty, integrity, or virtue. See TEX. CIV. PRAC. & REM.CODE ANN. § 73.001

(addressing libel). “To be defamatory, a statement should be derogatory, degrading, and

somewhat shocking, and contain elements of personal disgrace.” Means v. ABCABCO,

Inc., 315 S.W.3d 209, 214 (Tex. App.—Austin 2010, no pet.)(internal citations omitted).

The Court should construe the statements as a whole in light of the surrounding

circumstances based upon how a person of reasonable intelligence would perceive them.

Musser, supra, at 654-55. Although Ward complains about them, a person of ordinary

intelligence would not perceive the Complained of Statements to be derogatory,

degrading, or shocking.

      In an analogous case, the Houston Court of Appeals held that reporting a person’s

refusal to answer questions was not defamatory as a matter of law.         Dolcefino v.

Randolph, 19 S.W.3d 906, 921 (Tex. App.—Houston [14th Dist.] 2000, pet. denied). In


                                          14
Dolcefino, the city controller held a news conference in which he was questioned about

the hiring of an employee. Id. It was undisputed that the city controller refused to

answer questions regarding the employee’s qualifications at the press conference. Id. A

television correspondent reported that the city controller could not answer questions

regarding the employee’s qualifications.      After finding that the discrepancy in the

reporter’s story (refused to answer vs. could not answer) was immaterial, the Court of

Appeals held that the gist of the statement was true: the city controller refused to disclose

the employee’s qualifications. Importantly, the Court further held that publication of the

fact that the plaintiff refused to answer questions regarding qualifications was not so

egregious that it impeached the plaintiff’s “honesty, integrity, virtue, or reputation” by

subjecting him to “public hatred, contempt, or ridicule, or financial injury.” Id. As a

result, the Court held the statement was not defamatory as a matter of law. Id. at 922.

       In this case, just as in Dolcefino, the gist of the allegedly defamatory statement is

that Ward declined to answer background-type questions. Like Dolcefino, the BBB’s

evidence establishes, and Ward does not dispute, that he did not respond to the BBB’s

inquiry. This was precisely the information Ward alleged the BBB disseminated when it

published that the “BBB has made two or more requests for background information

from the business” and the “BBB has not received a response from the business.” CR

17). As the Dolcefino Court recognized, a statement publicizing a person’s decision not

to respond to questions does not sufficiently impeach that person’s character or reputation

such that the statement can be perceived as defamatory. See Dolcefino at 922.




                                             15
         Moreover, it is not defamatory to accuse a person of doing that which he has a

legal right to do. Associated Press v. Cook, 17 S.W.3d 447, 456 n. 8 (Tex.App.—

Houston [1st Dist.] 2000, no pet.) (“[E]xercising a legal right is not defamatory as a

matter of law”); see also Musser, 723 S.W.2d at 655 (accusing someone of doing that

which they had right to do is not defamatory); San Antonio Express News v. Dracos, 922

S.W.2d 242, 248 (Tex. App.—San Antonio 1996, no writ) (statement that employee

“walked off the job ... without any excuse” is not defamatory because it does not suggest

he did anything illegal or unethical). Ward had no duty, legal or otherwise, to respond to

the BBB’s requests for information. Thus, the BBB’s statements were not capable of a

defamatory meaning as a matter of law. Because the Complained of Statements were not

defamatory as a matter of law, Ward did not, and cannot, establish by clear and specific

evidence each element of the causes of action alleged.4

                  2.       The Complained of Statements are true.

         Even assuming, arguendo, that the statements are defamatory, the Complained of

Statements were true or substantially true.                   The Complained of Statements were as

follows: (1) that the “BBB does not have sufficient information to determine how long

this business has been operating,” (2) that the “BBB has made two or more requests for

background information from the business,” (3) that the “BBB has not received a


4
  Any cause of action based on the Complained of Statements is also barred by the applicable one year statute of
limitations because the statements, or substantially similar statements, were first published in January 2010. (CR 69,
75). See TEX. CIV. PRAC. & REM. CODE § 16.002(a) (establishing one-year statute of limitation for defamation
claims); Nationwide Bi-Weekly Admin., Inc. v. Belo Corp., 512 F.3d 137, 146 (5th Cir. 2007) (applying Texas law
and holding the statute of limitations for a defamation claim based on an internet posting begins to run on the date of
posting). Evidence related to the BBB’s 2010 business review, therefore, cannot establish by clear and specific
evidence a prima facie case for his claims.



                                                         16
response from the business and/or has not been able to verify information received from

this business,” and (4) that the “BBB does not have sufficient background information on

this business.” (CR16-17). Ward, however, produced no evidence, much less clear and

specific evidence, that any of these statements was actually false. (CR 72).

      The test is whether the statements were false when made. McIlvain v. Jacobs, 794

S.W.2d 14 (Tex. 1990). If the facts underlying the gist of the statement are true or

undisputed, the Court can “disregard any variance with respect to items of secondary

importance.” McIlvain, 794 S.W.2d at 16; Rogers v. Dallas Morning News, Inc., 889

S.W.2d 467 (Tex. App.—Dallas 1994, writ denied).

      Regarding the first Complained of Statement—that the BBB does not have

sufficient information to determine how long the business has been operating—Ward

produced no evidence demonstrating that this statement was false, i.e., that the BBB did

have sufficient information. Instead, Ward’s affidavit identified the State Bar of Texas

website and the Texas Comptroller of Public Accounts website as sources where

information on the longevity of LWA could be obtained. (CR 71). The BBB, on the

other hand, offered the affidavits of two corporate representatives which confirmed that

the BBB believed that the Complained of Statements were true at the time they were

published. (CR 34-42).

      As to the second and third Complained of Statements—that the BBB requested

information from LWA and that LWA did not respond to some of those requests—

Ward’s response concedes that such statements were true. (CR 55-56). Ward’s affidavit

states that the BBB contacted him at least three times (CR 69-70); therefore, the


                                            17
Complained of Statements that the BBB made two or more requests for information and

that LWA did not respond is, at the very least, substantially true, if not literally true.

McIlvain, 794 S.W.2d at 16 (“If the underlying facts as to the gist of the defamatory

charge are undisputed, then we can disregard any variance with respect to items of

secondary importance and determine substantial proof as a matter of law”); see also

Patton v. United Parcel Serv., Inc., 910 F. Supp. 1250, 1273 (S.D. Tex. 1995) (“A

showing of substantial truth will defeat the plaintiff’s cause of action”).

        Ward offered no clear and specific evidence that the fourth Complained of

Statement – that the BBB lacked background information on LWA – was false when

published.5 Ward declined to provide information in response to the BBB’s written

request; therefore, the Complained of Statements that the BBB did not receive a response

and did not have sufficient background information on the business are substantially true,

if not literally true.

        At most, Ward’s evidence shows only that information regarding the Complained

of Statements could have been discovered; that, however, does not demonstrate by clear

and specific evidence that the Complained of Statements were actually false. Ward’s

affidavit does describe two phone calls in which he claims to have told the BBB that

background information could be found on certain websites. (CR 71). Even assuming

that the phone calls occurred, Ward did not identify with whom he spoke. He did not say


5
  In his Response to the BBB’s Motion to Dismiss, Ward appears to argue that he could not respond to complaints
from the BBB due to the attorney-client privilege. (CR 73). Ward failed to explain how this argument supported
any of his claims. Moreover, the evidence refutes his argument. LWA responded to eleven of the twelve
complaints forwarded by the BBB as of February 11, 2011, failing to respond to one.




                                                     18
when the conversations took place. He did not explain how the LWA website would

have adequately answered the BBB’s informational inquiry. Chapter 27 requires “clear

and specific evidence” of falsity, and Ward produced no specific information whatsoever

that the BBB had the background information it sought.

       Otherwise, Ward’s evidence consisted entirely of his own conclusory legal

opinion that, “[t]here is no basis in law or in fact for the posting of any rating by

Defendant BBBD.”        (CR 72-73) (“The actions of Defendant BBBD were done

intentionally and with malicious intent, or were made with malice or reckless disregard

for its truth, and the information provided on Defendant BBBD’s web site was and is,

[sic] untruthful, inaccurate, intentionally misleading, and damaging to Plaintiff’s

reputation and business.”). Such legal conclusions are “without probative value and

cannot raise a fact issue or support a finding of fact.” Robertson Tank Lines, Inc. v. Van

Cleave, 468 S.W.2d 354, 361 (Tex. 1971). As a matter of law, Ward’s conclusory

opinion was not probative evidence of falsity. See City of San Antonio v. Pollock, 284

S.W.3d 809, 816 (Tex. 2009)(unsupported conclusory opinions do not constitute

evidence of probative force). Ward’s unsupported conclusions do not satisfy his burden

to establish by clear and specific evidence a prima facie case for each element of its cause

of action, and Ward’s conclusory affidavit did not provide “clear and specific”

evidentiary support to establish that the BBB’s statements were false.




                                            19
              3.     The Complained of Opinion is not actionable as a matter of law.

       The “F” rating assigned to LWA is a statement of opinion. Ward cannot rely on a

statement of opinion to support his defamation causes of action because statements of

opinion are constitutionally protected. Carr v. Brasher, 776 S.W.2d 567, 570 (Tex.

1989); Delta Air Lines Inc. v. Norris, 949 S.W.2d 422, 426 (Tex. App.—Waco 1997, writ

denied). Whether a statement is an opinion is a question of law. Carr, 776 S.W.2d at

570. A letter grade rating, whether it be A or F, is not an objectively verifiable fact. In

other words, no amount of due diligence could produce evidence that would prove or

disprove the “F” rating, because it is the BBB’s opinion. As a statement of opinion, the

“F” rating is not actionable as a matter of law. See Carr, 776 S.W.2d at 570.

       Moreover, the BBB’s evidence demonstrated that the “F” rating was based on true

facts which Ward did not dispute. Between June 2010 and February 11, 2011, the BBB

received a total of 18 complaints about LWA. (CR 41). The evidence was undisputed

that the BBB forwarded 12 complaints to LWA, and LWA responded to eleven of those

complaints. It was further undisputed that eight complaints were closed as resolved or

assumed resolved. (CR 41). One complaint went unanswered; two others were closed as

unresolved. (CR 41). Based on the one or more unanswered and unresolved complaints

in the LWA file, the BBB generated an “F” rating for LWA in February 2011. (CR 35-

36). Ward’s lawsuit did not allege that the BBB’s reporting of the complaint history was

inaccurate. (CR 12). Ward did not produce any evidence, much less clear and specific

evidence, that demonstrated that the BBB’s statements about the complaint history were

false or that the rating system did not generate an “F” rating.


                                             20
                  4.       Ward failed to produce clear and specific evidence of negligence.

         The negligence6 element of either libel or slander action requires a showing that

the defendant knew or should have known the alleged defamatory statement was false.

See Foster v. Laredo Newspapers, 541 S.W.2d 809, 819 (Tex. 1976). Negligent conduct

is determined by asking “whether the defendant acted reasonably in checking the truth or

falsity or defamatory character of the communication before publishing it.” Scripps Texas

Newspapers, L.P. v. Belalcazar, 99 S.W.3d 829, 837 (Tex. App.—Corpus Christi 2003,

pet. denied)(citing Restatement (Second) of Torts § 580B cmt. g (1977).

         The relevant focus is the BBB’s state of mind on the date it published the review.

McIlvain, supra; see also Nationwide Bi-Weekly Admin., Inc. v. Belo Corp., 512 F.3d

137, 146 (5th Cir. 2007) (holding internet article was published on the day it was posted

online, even when the article remained available on the publisher’s website). Here, Ward

produced no evidence of the BBB’s state of mind at the time of publication. Moreover,

the BBB’s evidence refuted the requisite mental state. (CR 36; 42). The BBB followed

its policies and procedures in its dealings with LWA. (CR 41). As explained above, the

Complained of Statements were true at the time they were published; therefore, the BBB

did not know nor should it have known the statements were false. Ward did not establish

by clear and specific evidence otherwise.




6
  The BBB assumes for purposes of this appeal only that Ward is a private actor such that the requisite fault standard
is negligence; however, the BBB reserves the right to argue that Ward (and/or LWA) are public figures subject to
the actual malice standard.




                                                         21
             5.     Because the defamation claims fail, the negligence claim fails.

      Ward’s negligence claims are based on the same allegations as the defamation

claims. Because Ward did not establish the libel and slander claims by clear and specific

evidence, the negligence claim fails as well. See KTRK Television v. Felder, 950 S.W.2d

100, 108 (Tex. App.—Houston [14th Dist.] 1997, no writ). Ward cannot circumvent free

speech protections by creative pleading. See Hustler Magazine v. Falwell, 485 U.S. 46,

57 (1988).

II.   Ward filed his action after the effective date of Chapter 27; therefore,
      Chapter 27 applies to his claim.

      In the trial court, Ward alleged that Chapter 27 did not apply to his claim because

the lawsuit was filed May 13, 2011, before the effective date of the statute. (CR 59). The

statute applies to any “legal action” filed after June 17, 2011. 2011 Tex. Sess. Law Serv.

Ch. 341 §§ 3-4 (H.B. 2973) (West). Ward’s argument was misplaced because the BBB

only sought dismissal of Ward’s legal action in his individual capacity. The term “legal

action” must be construed liberally to effectuate the statute’s purpose. TEX. CIV. PRAC.

REM. CODE § 27.001(b). While LWA filed its lawsuit before the effective date, Ward did

not. Ward did not file his action until January 25, 2012. (CR 12). Thus, Ward’s “legal

action” was not filed until after Chapter 27’s effective date. Ward’s argument that

Chapter 27 does not apply to his action should be rejected.

                                        PRAYER

      The BBB respectfully asks the Court to reverse and render judgment that Ward

take nothing. In addition, section 27.009 mandates that upon dismissal of a legal action




                                            22
under Chapter 27 that the trial court “shall award” court costs, attorneys fees, and

expenses incurred in defense of the action. Accordingly, the Court should remand to the

trial court solely for a determination of the amount of costs, fees and other expenses to be

awarded from Ward to the BBB. The BBB also asks for such other and further relief to

which it may be justly entitled.




Dated: June 6, 2012.                          Respectfully submitted,

                                              JACKSON WALKER L.L.P.


                                                   /s/ David C. Myers
                                              DAVID C. MYERS
                                              State Bar No. 14759400
                                              STEPHANIE C. SPARKS
                                              State Bar No. 24042900

                                              JACKSON WALKER L.L.P.
                                              901 Main Street, Suite 6000
                                              Dallas, Texas 75202
                                              214-953-6000
                                              214-953-5822 – facsimile


                                              ATTORNEYS FOR APPELLANT




                                            23
                            CERTIFICATE OF SERVICE

       I hereby certify that, on the 6th day of June, 2012, a true and correct copy of the
foregoing Appellant’s Brief was served on all counsel of record listed below in
accordance with Rule 9.5(c) of the Texas Rules of Appellate Procedure via electronically:

Lloyd E. Ward
Lloyd Ward & Associates, P.C.
12655 N. Central Expressway, Suite 1000
Dallas, Texas 75243

ATTORNEY FOR APPELLEE




                                                       /s/ David C. Myers




8183429v.1 006540/00038




                                           24

				
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