NCDR, L.L.C. v. Mauze & Bagby, P.L.L.C., 12-41243

• Decision Date: 11 March 2014
• Docket Number: No. 12-41243,12-41243
• Parties: NCDR, L.L.C.; DENTISTRY OF BROWNSVILLE, P.C., doing business as Kool Smiles; KS2 TX, P.C., Plaintiffs-Appellees v. MAUZE & BAGBY, P.L.L.C.; GEORGE WATTS MAUZE, II; JAMES THOMAS BAGBY, III, Defendants-Appellants
• Court: U.S. Court of Appeals — Fifth Circuit

NCDR, L.L.C.; DENTISTRY OF BROWNSVILLE,P.C., doing business as Kool Smiles; KS2 TX, P.C., Plaintiffs-Appellees v. MAUZE & BAGBY, P.L.L.C.; GEORGE WATTS MAUZE,II; JAMES THOMAS BAGBY, III, Defendants-Appellants

No. 12-41243

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

FILED: March 11, 2014

Appeal from the United States District Court

for the Southern District of Texas

Before STEWART, Chief Judge, KING, and PRADO, Circuit Judges.

EDWARD C. PRADO, Circuit Judge:

I. INTRODUCTION

Defendant—Appellant M&B¹, a Texas law firm, engaged in an advertising campaign to solicit former dental patients from Kool Smiles² dental clinics as potential clients. M&B appeals the district court's denial of its Texas "anti-SLAPP" motion to dismiss a claim brought against them by Plaintiff—Appellee Kool Smiles. The district court determined that M&B's speech fell within a commercial speech exemption to Texas's anti-SLAPP statute—the Texas Citizen's Participation Act ("TCPA"). While M&B challenges that determination and asks this Court to render judgment in its favor, Kool Smiles challenges this court's jurisdiction and argues that the Texas statute at issue does not apply in federal court.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

Kool Smiles runs a national chain of dental clinics that provide care primarily to economically disadvantaged children. M&B is a Texas law firm that engaged in an advertising campaign soliciting former Kool Smiles patients to represent. M&B contends that Kool Smiles has been the subject of multiple media reports and government investigations regarding allegations of Medicaid fraud and bad medical provision. As part of the campaign, M&B ran television, radio, and internet advertisements, and developed a website that strongly implied, or even accused, Kool Smiles of performing unnecessary, and at times harmful, dental work on children to obtain government reimbursements.

B. Procedural Background

Based on M&B's ads and website, Kool Smiles brought causes of action under federal law for trademark infringement, false advertising, and cyber-piracy under the Lanham Act. Kool Smiles also brought state claims for defamation, business disparagement, injury to business reputation, and trade name and service mark dissolution.

M&B brought several motions to dismiss. One was brought pursuant to the TCPA. See Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001—27.011 (West 2011). The TCPA is an anti-SLAPP³ statute that allows a claim to be dismissed when the defendant can show that the claim was brought to chill the exercise of First Amendment rights. Id. § 27.003(a); see also infra Part II.C. M&B also brought motions to dismiss pursuant to Federal Rule of Civil Procedure ("FRCP") 8(a) for failure to plead with sufficient particularity and FRCP 12(b)(6) for failure to state a claim on which relief may be granted.

The district court's order contained four holdings. First, the court held that the TCPA does not apply to Kool Smiles's three federal claims brought under the Lanham Act. Second, the court held that the TCPA does not protect M&B's speech because its advertisements and website fall into the "commercial speech" excemption to the TCPA. Third, Kool Smiles's pleadings were sufficient such that M&B's FRCP 8(a) motion failed. Fourth, Kool Smiles stated a claim, such that M&B's FRCP 12(b)(6) motion failed.

M&B brought this appeal. M&B does not appeal the district court's rulings on its motions to dismiss based on FRCP 8(a) or FRCP 12. Thus, M&B only seeks interlocutory review of the denial of its TCPA motion. As to this TCPA appeal, M&B does not appeal the district court's first ruling regarding Kool Smiles's federal causes of action. Instead, M&B's only argument on appeal is that the district court erred in concluding that M&B's speech fell into the "commercial speech" exemption such that the anti-SLAPP motion to dismiss was not available. However, Kool Smiles, in their brief, raises other issues on appeal, discussed below.

C. The Statute at Issue: The TCPA

The purpose of the TCPA is "to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury." Tex. Civ. Prac. & Rem. Code Ann. § 27.002. To achieve this, the TCPA provides a means for a defendant, early in the lawsuit, to seek dismissal of certain claims in the lawsuit. See id. § 27.003.

If a legal action is based on, relates to, or is in response to a party's exercise of the right of free speech, right to petition, or right of association, that party may file a motion to dismiss the legal action. Id. § 27.003(a). The motion to dismiss generally must be filed no later than sixty days after service of the legal action, although the TCPA provides that a court can extend the filing deadline on a showing of good cause. Id. § 27.003(b). On the filing of a motion to dismiss pursuant to § 27.003(a), all discovery in the legal action is suspended until the court has ruled on the motion to dismiss, except as provided by § 27.006(b). Id. § 27.003(c). Section 27.006(b) states, "[o]n a motion by a party or on the court's own motion and on a showing of good cause, the court may allow specified and limited discovery relevant to the motion." Id. § 27.006(b).

Section 27.005, entitled "Ruling," sets out the burden shifting scheme:

(a) The court must rule on a motion under Section 27.003 not later than the 30th day following the date of the hearing on the motion.

(b) Except as provided by Subsection (c), on the motion of a party under Section 27.003, a court shall dismiss a legal action against the moving party if the moving party shows by a preponderance ofthe evidence that the legal action is based on, relates to, or is in response to the party's exercise of:

(1) the right of free speech;

(2) the right to petition; or

(3) the right of association.

Id. § 27.005(a)—(b) (emphasis added). However, the motion to dismiss may not be granted "if the party bringing the legal action establishes by clear and specific evidence a prima facie case for each essential element of the claim in question." Id. § 27.005(c).

"In determining whether a legal action should be dismissed under [the TCPA], the court shall consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based." Id. § 27.006(a).

The Section entitled "Appeal" provides:

(a) If a court does not rule on a motion to dismiss under Section 27.003 in the time prescribed by Section 27.005, the motion is considered to have been denied by operation of law and the moving party may appeal.

(b) An appellate court shall expedite an appeal or other writ, whether interlocutory or not, from a trial court order on a motion to dismiss a legal action under Section 27.003 or from a trial court's failure to rule on that motion in the time prescribed by Section 27.005.

(c) An appeal or other writ under this section must be filed on or before the 60th day after the date the trial court's order is signed or the time prescribed by Section 27.005 expires, as applicable.

Id. § 27.008.⁴

III. DISCUSSION

A. Jurisdiction

Because the district court's order denying the motion to dismiss was not a final judgment resolving all the issues of the suit, we must first determine whether this court has jurisdiction. M&B invokes the collateral order doctrine as a basis for jurisdiction before this court. Kool Smiles argues that this court lacks jurisdiction over this interlocutory appeal because it does not fall within the "independent, immunity-style right" that the collateral order doctrine recognizes as immediately appealable. We disagree.

Where the district court's order is not a final judgment ending the action, the collateral order doctrine can confer limited appellate jurisdiction. Will v. Hallock, 546 U.S. 345, 349 (2006). The following three conditions must be met for a collateral order appeal: (1) the order must conclusively determine the disputed question; (2) it must resolve an important issue completely separate from the merits of the case; and (3) it must be effectively unreviewable on appeal from a final judgment. Id.

In Henry v. Lake Charles American Press, 566 F.3d 164 (5th Cir. 2009), this Court analyzed a district court's denial of a motion to dismiss pursuant to Louisiana's anti-SLAPP statute, Article 971, under the main requirements of the collateral order doctrine: (1) conclusivity, (2) separability, and (3) unreviewability.⁵ 566 F.3d at 171—78. Before so doing, the court noted thatdetermining whether an order is appealable should be done not on a case-by-case basis, but on a type-of-order-by-type-of-order basis. Id. at 173. "Thus, for our present purposes, we do not look to whether the order in the context of this particular case is immediately appealable, but to whether orders denying motions brought under anti-SLAPP statutes such as [Louisiana's] satisfy the conditions of the collateral order doctrine." Id. The court ultimately held that "a district court's denial of a motion brought under an anti-SLAPP statute such as [Louisiana's] is an immediately-appealable collateral order," such that this Court had jurisdiction over the appeal. Id. at 181.

Whether a denial of a motion to dismiss pursuant to the TCPA is immediately reviewable under the collateral order doctrine is an issue of first impression. Although Henry used broad language ("statutes such as Article 971 satisfy the conditions of the collateral order doctrine"), because Texas's anti-SLAPP statute is not identical to Louisiana's, this Court conducts its own collateral order doctrine inquiry to determine whether the denial of an anti-SLAPP motion to dismiss satisfies the three requirements of the collateral order doctrine. All three must be satisfied for the Ccourt to have jurisdiction. Below, the three requirements...