Astoria Industries of Iowa v. Snf, Inc.

• Decision Date: 29 March 2007
• Docket Number: No. 2-05-315-CV.,2-05-315-CV.
• Citation: 223 S.W.3d 616
• Parties: ASTORIA INDUSTRIES OF IOWA, INC., Appellant v. SNF, INC. d/b/a Brand FX Body Company, Appellee.
• Court: Texas Court of Appeals

223 S.W.3d 616

ASTORIA INDUSTRIES OF IOWA, INC., Appellant v. SNF, INC. d/b/a Brand FX Body Company, Appellee.

No. 2-05-315-CV.

Court of Appeals of Texas, Fort Worth.

March 29, 2007.

Rehearing Overruled April 26, 2007.

Law Offices of Michael W. Minton, P.L.L.C., Michael W. Minton, Irving, and Renwick & Associates, PC, Malcolm G. Renwick, Carrollton, for Appellant.

Kelly, Hart & Hallman, LLP, Hugh G. Connor, II, Michael D. Anderson, Fort Worth, for Appellee.

Panel A: CAYCE, C.J.; LIVINGSTON and McCOY, JJ.

OPINION ON REHEARING

JOHN CAYCE, Chief Justice.

We withdraw our opinion and judgment of October 19, 2006 and substitute the following. We grant in part and deny in part the motion for rehearing filed by Astoria Industries of Iowa, Inc. (Astoria) and deny the motion for attorney's fees and costs filed by SNF, Inc. d/b/a Brand FX Body Company (Brand FX).

I. INTRODUCTION

In this interlocutory appeal, Astoria appeals from the trial court's denial of its motions for summary judgment on Brand FX's claims for business disparagement, false advertising, and tortious interference with prospective business relations, among other causes of action. Astoria contends that we have jurisdiction over this appeal under section 51.014(a)(6) of the civil practice and remedies code because its motions for summary judgment were based in whole or in part on a claim or defense arising under the First Amendment.¹ In ten issues, Astoria complains that the trial court improperly denied its summary judgment motions. Brand FX disagrees that we have jurisdiction over the appeal and urges us to dismiss it. We hold that we have jurisdiction over part, but not all, of the appeal under section 51.014(a)(6). We affirm in part, reverse and render in part, and dismiss in part.

II. BACKGROUND FACTS AND PROCEDURAL HISTORY

Astoria and Brand FX are business competitors. They manufacture and sell fiberglass utility and service bodies and toppers² for commercial vehicles. Brand FX's topper utilizes a stair-step roof line that Brand FX claims is unique and brand-distinguishing. Initially, Astoria's only topper design had a rounded or domed roof line. In late 2002, however, Astoria developed a topper with a stair-step design virtually identical to Brand FX's topper for Cook's Pest Control. Astoria's chief engineer, Randy Thole, acknowledged that Astoria developed the stair-step design topper for Cook's Pest Control as similar to Brand FX's design as possible.

Brand FX contends that Astoria switched to the stair-step topper design to take Cook's Pest Control's business from Brand FX by offering the topper for over $1000 less than the price that Brand FX charged. Brand FX further contends that Astoria used illegal methods to design its stair-step topper, including "nefariously" obtaining Brand FX's design drawings and using a Brand FX topper to assist Astoria in making the mold for its replica topper.

Thereafter, in February 2003, Astoria began running a "DARE TO COMPARE" advertisement in an industry trade journal (the Advertisement). The Advertisement ran ten times over the course of fourteen months. The Advertisement begins, "When choosing fiberglass utility bodies, Astoria Industries of Iowa should be your supplier!" Then the Advertisement compares "High Quality Astoria Bodies vs. Low Quality Brand X Bodies." Regarding the latter, the Advertisement states, (1) "No Engineering and built with sub-standard materials"; (2) "Short term cost with long term expenses"; (3) "Built to their standard"; and (4) "1-year warranty."

Brand FX contends that Astoria's reference to "Brand X Bodies" is a poorly-disguised reference to Brand FX's business name of Brand FX Body Company. Brand FX further contends that three of the statements in the Advertisement are statements of fact that are demonstrably false: (1) "No Engineering and built with sub-standard materials"; (2) "Short term cost with long term expenses"; and (3) "Built to their standard." Brand FX also asserts that Astoria knew the statements were false when it ran the ad, or at least failed to perform any sort of investigation regarding the truthfulness of the statements.

In late May 2003, Brand FX notified Astoria of Brand FX's belief that the Advertisement was defamatory and asked Astoria to stop running it. Astoria continued to run the Advertisement through April 2004.

As a result of Astoria's conduct, Brand FX sued Astoria for business disparagement and defamation per se, false advertising under the Lanham Act,³ tortious interference with prospective relations, trade dress infringement, unfair competition, common-law misappropriation, and trade secret misappropriation. In five motions, Astoria moved for traditional and/or no-evidence summary judgments on Brand FX's business disparagement, trade dress infringement, false advertising, tortious interference, unfair competition, and common-law misappropriation claims. After a hearing, the trial court denied the motions in a single order. This appeal followed.

III. JURISDICTION

A. Availability of Interlocutory Appeal

Because an order denying a motion for summary judgment is interlocutory and generally not appealable,⁴ we must first determine whether we have jurisdiction over this appeal.

Astoria contends that the trial court's order is appealable under section 51.014(a)(6) of the civil practice and remedies code, because Astoria's no-evidence motion for summary judgment on Brand FX's business disparagement, false advertising, and tortious interference claims is based on a claim or defense arising under the Free Speech Clauses of the First Amendment and article I, section 8 of the Texas Constitution. Section 51.014(a)(6) provides that a person may appeal an interlocutory order that

denies a motion for summary judgment that is based in whole or in part upon a claim against or a defense by . . . a person whose communication appears in or is published by the electronic or print media, arising under the free speech or free press clause of the First Amendment to the United States Constitution, or Article I, Section 8, of the Texas Constitution[.]⁵

Brand FX contends that section 51.014(a)(6) does not apply here because its business disparagement, false advertising, and tortious interference claims do not arise under the federal or state Free Speech Clauses and because Astoria did not, and could not, raise the issue of free speech as a defense in its no-evidence motion for summary judgment.

In its no-evidence motion for summary judgment, Astoria expressly alleged that it was entitled to summary judgment on Brand FX's business disparagement, false advertising, and tortious interference claims because there was no evidence that the statements in the Advertisement were false, disparaging statements of fact rather than mere statements of opinion protected by the federal and state Free Speech Clauses. Specifically, Astoria asserted as follows:

Astoria is entitled to summary judgment as a matter of law on [Brand FX's] claims for business disparagement, false advertising under the Lanham Act, and tortious interference with prospective business relations for the following reasons:

1. Astoria's statements in its advertisement were nondefamatory statements, or in the alternative, statements of opinion protected under the First Amendment of the United States Constitution and Tex. Const. Art. I, § 8 of the Texas Constitution.

. . . .

B. Business disparagement claim.

Astoria is entitled to summary judgment on BFX's claim because there is no evidence giving rise to a fact question as to the following elements necessary to establish business disparagement:

a. Publication of false and disparaging information about the plaintiff;

. . . .

With regard to the published information, BFX must present competent, admissible evidence that the advertising or any other statements made the basis of this suit were false, defamatory statements of fact about BFX. Statements of opinion are not actionable because opinions are protected by the First Amendment of the United States Constitution and Art. I, § 8 of the Texas Constitution.

. . . .

D. Lanham Act false advertising claims.

Astoria is entitled to summary judgment on BFX's false advertising claims under the Lanham Act because there is no evidence giving rise to a fact question as to each of the following elements:

(1) A false or misleading statement of fact about a product;

. . . .

The first element requires . . . a showing of misleading statements of fact. . . . Statements of opinion are not actionable under the Lanham Act.

Thus, the record clearly shows that Astoria's no-evidence motion for summary judgment was, indeed, based on a defense arising under the federal and state Free Speech Clauses.

Brand FX asserts, however, that Astoria's free speech defense is not the proper subject of a no-evidence motion for summary judgment because it is an affirmative defense on which Astoria had the burden of proof, and rule 166a(i) prohibits a party from moving for a no-evidence summary judgment on claims or defenses on which it has the burden of proof.⁶

Whether Astoria was entitled to challenge Brand FX's business disparagement, false advertising, and tortious interference claims in its no-evidence motion for summary judgment depends upon which party had the burden of proving the alleged falsity of the Advertisement. A business disparagement claim and a false advertising claim are similar in some respects to a defamation claim.⁷ All three claims involve the imposition of liability for injuries sustained by the plaintiff through publications to third parties of false statements of fact.⁸ One significant difference among the three torts, however, is the party who has the burden of proving the truth or falsity of the publication at issue. In a defamation action, the publication is presumed to be false, and truth is an affirmative defense on which the defendant has the burden of proof.⁹ In a business disparagement or...