Amalgamated Acme Affiliates v. Minton

• Decision Date: 09 November 2000
• Parties: (Tex.App.-Austin 2000) Amalgamated Acme Affiliates, Inc. and University Sports Publications Co., Inc., Appellants v. Perry Minton and Dean Allen Associates, Ltd., Appellees NO. 03-00-00181-CV
• Court: Texas Court of Appeals

Page 387

33 S.W.3d 387 (Tex.App.-Austin 2000)

Amalgamated Acme Affiliates, Inc. and University Sports Publications Co., Inc., Appellants v. Perry Minton and Dean Allen Associates, Ltd., Appellees

NO. 03-00-00181-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

November 9, 2000

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT NO. 99-12045, HONORABLE MARGARET COOPER, JUDGE PRESIDING

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Chief Justice Aboussie, Justices B. A. Smith and Patterson.

Bea Ann Smith, Justice.

Appellant University Sports Publications Co., Inc. (University Sports) brings this appeal from a temporary injunction ordering it to refrain from making certain representations to customers and advertisers of appellees Dean Allen Associates, Ltd. (Dean Allen) and its founder Perry Minton.¹ University Sports asserts five issues on appeal including constitutional free speech and due process arguments. We overrule these contentions and affirm the trial court's ruling.

FACTUAL AND PROCEDURAL BACKGROUND

University Sports, a New York corporation, sells advertising space in sporting-event programs. Its affiliate, Amalgamated Acme Affiliates, Inc. (Amalgamated Acme), a Texas corporation, conducts market research. Minton worked for Amalgamated Acme until April 23, 1999. On July 8, 1999, Minton formed Dean Allen to sell advertising space for sports-event publications. Dean Allen competes directly with Amalgamated Acme and University Sports.

In October 1999, Minton sued Amalgamated Acme to establish both parties' rights and obligations to one another. In the original petition, Minton alleged that Amalgamated Acme falsely asserted to both Minton and his customers that he was subject to, and in violation of, a non-compete agreement. Minton maintains that he did not sign a non-compete agreement and that the only possible agreement that Amalgamated Acme alludes to is an employee-confidentiality agreement. The record does not include any agreements signed by Minton. In his suit, Minton claimed that Amalgamated Acme's assertions were defamatory and constituted tortious interference with his contracts and business relationships. On February 14, 2000, Minton amended his petition joining Dean Allen as a co-plaintiff and University Sports as a defendant, simultaneously seeking a temporary restraining order (TRO) to prevent the defendants from making certain representations about Minton. The trial court granted the TRO that same day, and set a hearing on the temporary injunction for the afternoon of February 22.

The citation, amended petition, and TRO were served on University Sports at its New York offices on February 16. In the meantime, Amalgamated Acme filed a motion to dissolve the TRO. On February 22, based on information gleaned during a deposition that morning, Minton notified Amalgamated Acme that he had non-suited his claims for injunctive relief against it and would only seek such relief against University Sports. University Sports authorized Ralph Rash, who was representing Amalgamated Acme, to adopt the motion to dissolve the TRO and argue the motion's dissolution on University Sports' behalf at the hearing. Further, University Sports instructed Rash to seek a continuance of the temporary injunction hearing. University Sports did not authorize Rash to address the merits of the temporary injunction itself.

At the hearing on the temporary injunction, the trial court offered to grant the motion for continuance and extend the TRO. Rash opposed extending the TRO, contending that it was overly broad and enjoined legal conduct. The trial court consequently denied the motion for continuance and declined to hear the motion to dissolve the TRO, explaining that a ruling on the temporary injunction would make the motion moot. Because Rash was not authorized to argue the merits of the temporary injunction, he requested leave of the court and was dismissed. The court proceeded with the temporary injunction hearing.

Minton testified that University Sports employees had contacted between forty and fifty of his customers falsely holding themselves out as representatives of the Austin Independent School District (AISD) and the University of Texas. These individuals then proceeded to tell the customers that Minton did not have a contract with either school, that Minton was under investigation, and that the customers should withhold payments to Minton. One set of materials in the record suggests that University Sports drafted letters of complaint on the customers' own letterhead for them to sign and return to University Sports. Minton introduced evidence showing how University Sports circulated these letters to other customers and forwarded the complaints to Pat Forgione, superintendent of AISD, and Dr. Larry Faulkner, president of the University of Texas. Several customers stopped paying and performing under their contracts with Minton after receiving these letters.

One University Sports employee falsely identified himself as Perry Minton to one of Minton's customers; the customer then discovered the caller was not Minton. A heated conversation ensued, and the University Sports employee told the Texas customer that he would have to fly to New York for a seven-hour deposition.

In another incident, University Sports employee Julie Wong impersonated Felicia Martinez. Martinez is the secretary for the athletic director of the Fort Worth Independent School District. Minton and University Sports were competing for a contract with that school district. Wong called Minton, identifying herself as Martinez. She told him that the school district was "looking to start negotiations," but needed references from current projects. Minton began to share his confidential list of customers with Wong until he became suspicious. He asked to speak to the athletic director, but Wong said he was unavailable and quickly hung up. Minton immediately called the athletic director's office, and Martinez denied having just talked with him.

Minton told the court that when he first formed Dean Allen, officers of University Sports told him that it was unfortunate he had chosen to compete with University Sports because it "had just spent $600,000 in 30 something lawsuits on a multi-state level to put the last folks that had tried this business out of business." Minton testified that due to University Sports' conduct his company was already having "serious trouble," losing some customers who received the complaint letters. Further, he stated that University Sports' conduct "makes it impossible for me to seek new business, because naturally the new businesses that I'm prospecting want to speak to the people that I'm currently doing business with." He concluded, "I firmly believe that if I don't receive this injunction, I will be put out of business."

The trial court granted the temporary injunction. University Sports, the only party enjoined, brings this interlocutory appeal asking us to dissolve the temporary injunction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(4) (West Supp. 2000).

STANDARD OF REVIEW

To obtain a temporary injunction, an applicant need only show a probable right to recover on final trial and probable injury in the interim. See Texas Alcoholic Beverage Comm'n v. Amusement & Music Operators of Tex., Inc., 997 S.W.2d 651, 657 (Tex. App.--Austin 1999, pet. dism'd w.o.j.). The applicant seeking a temporary injunction does not have to prove that it will finally prevail in the litigation. Transport Co. of Tex. v. Robertson Transps., Inc., 261 S.W.2d 549, 552 (Tex. 1953). The purpose of a temporary injunction is to preserve the status quo pending a trial on the merits. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993). In an appeal from an order granting or denying a request for a temporary injunction, appellate review is confined to the validity of the order that grants or denies the injunctive relief. Universal Health Servs., Inc. v. Thompson, 24 S.W.3d 570, 576 (Tex. App.--Austin 2000, no pet.). The decision to grant or deny the injunction lies within the sound discretion of the court, and we will not reverse that decision absent a clear abuse of discretion. Id. This Court may neither substitute its judgment for that of the trial court nor consider the merits of the lawsuit. See id. Rather, we view the evidence in the light most favorable to the trial court's order, indulging every reasonable inference in its favor, and determine whether the order was so arbitrary as to exceed the bounds of reasonable discretion. See id.

DISCUSSION

I. Free Speech

A. Prior Restraint

University Sports characterizes the temporary injunction as a prior restraint on its right to free speech, which is prohibited by the United States and Texas Constitutions. See U.S. Const. amend. I; Tex. Const. art. I, § 8; see also Davenport v. Garcia, 834 S.W.2d 4, 10 (Tex. 1992).² The order commands University Sports to desist and refrain from:

(a) communicating to the Austin Independent School District, the University of Texas, Host Communications, Inc., Longhorn Sports Network, the University of Texas--San Antonio, any businesses known to be a customer of Dean Allen, and/or any businesses known to be a potential customer of Dean Allen (including all employees and agents of all of the foregoing businesses) that Dean Allen or Minton has committed fraud, made misrepresentations, engaged in a scam, engaged in unfair competition, hurt the Austin Independent School District, hurt the University of Texas, hurt any other customer, violated any contract or agreement, or violated any law;

(b) communicating to the advertisers on Exhibit A [attached to the temporary injunction], any business known to be an advertiser with Dean Allen, and/or any business known to be a potential advertiser with Dean Allen (including all employees and agents of all the foregoing businesses) that Dean Allen or Minton has committed fraud, made...