Timothy Castleman & Castleman Consulting, LLC v. Internet Money Ltd., 17–0437
Court | Supreme Court of Texas |
Citation | 546 S.W.3d 684 |
Docket Number | No. 17–0437,17–0437 |
Parties | Timothy CASTLEMAN and Castleman Consulting, LLC, Petitioners, v. INTERNET MONEY LIMITED and Kevin O'Connor, Respondents |
Decision Date | 27 April 2018 |
Leif A. Olson, Cokinos & Young, Houston, TX, Jared B. Hall, The Law Office of Jared B. Hall, PLLC, Lubbock TX, for petitioners.
Anna M.W. McKim, J. Paul Manning, Field Manning Stone Hawthorne & Aycock, P.C., Lubbock, TX, for respondents.
The Texas Citizens Participation Act (TCPA) provides for the expedited dismissal of certain legal actions based on, relating to, or responding to a defendant's exercise of the right of free speech. But the TCPA does not apply to actions based on certain commercial speech. Texas courts of appeals are divided on the proper construction of the commercial-speech exemption. Here, the court of appeals held that the exemption applies, so the defendant could not seek expedited dismissal under the TCPA. We disagree, reverse the court of appeals' judgment, and remand the case to that court for further proceedings.
Petitioners Timothy Castleman and Castleman Consulting, LLC (collectively, Castleman) run an online platform that serves as a middleman between consumers and various product suppliers. Customers place orders through Castleman's website, then Castleman orders the items from the suppliers and ships them to the customers. Respondents Kevin O'Connor and Internet Money Limited, d/b/a The Offline Assistant (collectively, O'Connor) provide "virtual assistant" services to businesses. Castleman hired O'Connor to receive and fulfill the customer orders placed through Castleman's website and provided O'Connor with written instructions on how to fill those orders. Castleman later accused O'Connor of failing to follow the instructions and over-ordering products. Castleman demanded compensation for his lost profits (estimated around $8,000) from O'Connor.
When O'Connor refused to pay, Castleman published statements about the dispute on various online platforms including a personal blog, YouTube, and social media. Castleman's posts included statements that O'Connor did not fulfill his obligations to Castleman, had an 80–85% error rate, was unable to follow instructions, "practically stole" from Castleman, and provided terrible service. For instance, Castleman stated, "No one from [O'Connor's] company ... reviewed any of the orders to ensure they were being done correctly despite his assurances they do quality control and project management on all jobs." Castleman also stated that by posting these reviews, his "goal [was] to protect other business owners from losing $8k or having to take a company to court like [he's] doing."
O'Connor sent Castleman a cease-and-desist letter demanding that Castleman erase and retract all statements about O'Connor and his company, publish apologies that O'Connor found "satisfactory," and pay O'Connor $315,000. When Castleman refused, O'Connor sued Castleman for defamation. Castleman moved to dismiss the suit under the TCPA, asserting that the action relates to and is in response to Castleman's exercise of his right to free speech. In response, O'Connor argued that the TCPA does not apply because the action is not based on Castleman's exercise of his free-speech right, and even if it were, the commercial-speech exemption applies. Alternatively, O'Connor argued that the court could not dismiss the suit under the TCPA because he had established a prima facie case of the elements necessary to recover for defamation. The trial court denied Castleman's motion, expressly agreeing with O'Connor's arguments, including the applicability of the commercial-speech exemption. The court of appeals affirmed, agreeing that the commercial-speech exemption applies. 545 S.W.3d 682, 2017 WL 1449224, at *4 (Tex. App.—Amarillo, Apr. 19, 2017). Because of that holding, the court of appeals did not address Castleman's challenges to the trial court's other findings and conclusions in O'Connor's favor.
Id. § 27.010(b).
The Texas courts of appeals are divided on the proper interpretation and application of this exemption. Most have held that the exemption applies only if the plaintiff's action is based on statements or conduct directed to the defendant's actual or potential buyers or customers, as opposed to the plaintiff's buyers or customers or to the "public at large."1 Many have reached this conclusion by relying on a California Supreme Court decision addressing a similar statute. See Newspaper Holdings , 416 S.W.3d at 88–89 ( ).2
Others, including the court of appeals in this case, have refused to follow the California Court's decision because it addressed a commercial-speech exemption that differs in both language and structure from the Texas exemption.3 The court of appeals affirmed the trial court's denial of Castleman's TCPA-dismissal motion because Castleman's statements on which O'Connor bases his claims arise out of "the sale or lease of goods [or] services" or a "commercial transaction in which the intended audience [was] an actual or potential buyer or customer." TEX. CIV. PRAC. & REM. CODE § 27.010(b). According to the court of appeals, the exemption does not require that the statements arise out of Castleman's sale of good or services or a transaction in which the intended audience was Castleman's actual or potential buyer or customer.
Considering the differences between the California and Texas statutes, we agree with the court of appeals' refusal to rely on California's construction of its commercial-speech exemption. But we conclude that the Texas exemption, when construed within its own statutory context, carries the same meaning. See Jose Carreras, M.D., P.A. v. Marroquin , 339 S.W.3d 68, 71 (Tex. 2011) () (citing McIntyre v. Ramirez , 109 S.W.3d 741, 745 (Tex. 2003) ); Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson , 209 S.W.3d 644, 651–52 (Tex. 2006) () (citing McIntyre , 109 S.W.3d at 745 ).
The TCPA's commercial-speech exemption is no model of clarity, but we conclude that it is not ambiguous, at least on the issue presented here. We must analyze statutory language in its context, considering the specific sections at issue as well as the statute as a whole. CHCA Woman's Hosp. v. Lidji , 403 S.W.3d 228, 232 (Tex. 2013). While "it is not for courts to undertake to make laws ‘better’ by reading language into them," we must make logical inferences when necessary "to effect clear legislative intent or avoid an absurd or nonsensical result that the Legislature could not have intended." Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm'n , 518 S.W.3d 318, 338 (Tex. 2017).
Focusing on the text and context of the TCPA's commercial-speech exemption, we construe the exemption to apply when (1) the defendant was primarily engaged in the business of selling or leasing goods, (2) the defendant made the statement or engaged in the conduct on which the claim is based in the defendant's capacity as a seller or lessor of those goods or services, (3) the statement or conduct at issue arose out of a commercial transaction involving the kind of goods or services the defendant provides, and (4) the intended audience of the statement or conduct were actual or potential customers of the defendant for the kind of goods or services the defendant provides.
The exemption expressly provides that the TCPA "does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services," but only "if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction." TEX. CIV. PRAC. & REM. CODE § 27.010(b). While these clauses do not expressly state that the statement or conduct must arise out of "the defendant's" sale or lease of goods or services, or that the defendant be acting in its capacity as a seller or lessor of those goods or services, we believe that is the only reasonable and logical construction of the exemption when considered within its statutory context.
The exemption, of course, is wholly unnecessary unless the TCPA applies. And the TCPA only applies when the claim is based on the defendant's exercise of the right of free speech, association, or to petition. See id. §§ 27.001(1) – (4) ( ); .003(a) (requiring dismissal if the claim is "based on, relates to, or is in response to" the defendant's exercise of those rights). In context, then, the only reasonable...
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