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Hearst Newspapers, LLC v. Status Lounge Inc.

Court of Appeals of Texas, Fourteenth District

December 19, 2017


         On Appeal from the 164th District Court Harris County, Texas Trial Court Cause No. 2016-51529

          Panel consists of Chief Justice Frost and Justices Busby and Wise.



         Appellants are two media outlets and their reporters. Appellee, a corporation, filed suit against appellants, asserting claims for libel and business disparagement after appellants published articles based on a police report of a shooting at appellee's bar. Two of the appellants filed an answer that included a verified plea in abatement under the Defamation Mitigation Act (DMA). Appellee did not challenge the plea in abatement by filing a controverting affidavit; consequently, the suit was automatically abated "in its entirety" without a court order and "[a]ll statutory and judicial deadlines under the Texas Rules of Civil Procedure" other than those provided in the DMA were stayed. After the sixty-day abatement period ended, appellants moved to dismiss appellee's claims under the Texas Citizens Participation Act (TCPA), 120 days after the earliest date an appellant was served with appellee's lawsuit. The TCPA requires that a motion to dismiss "must be filed" not later than sixty days after the date of service of the suit. The trial court denied appellants' motions to dismiss as untimely. It is undisputed that if the abatement period applied to the TCPA, appellants' motions to dismiss were timely filed.[1]

         On appeal, we address an issue of first impression in a Texas appellate court: whether the DMA's abatement period applies to toll the TCPA's deadline to file a motion to dismiss. We conclude, based on the plain language and complementary purposes of the two statutory schemes, that the Legislature intended the DMA and TCPA to work in tandem to provide plaintiffs the opportunity to mitigate any perceived defamation damages at an early stage in the dispute and then, should the dispute remain unresolved, to permit a defendant to test the merits of the plaintiff's case though a TCPA motion to dismiss.

         Because the DMA abatement period tolled the TCPA's filing deadline, and because appellants' motions to dismiss were timely filed after the abatement period ended, the trial court erred by ruling that the motions were untimely. We therefore reverse and remand the case to the trial court for further proceedings.

         Factual and Procedural Background

         On the night of April 19, 2016, a man was shot at the 3700 block of Dowling Street near downtown Houston. A Houston Police Department (HPD) lieutenant reported information about the shooting to members of the news media, specifically:

About 9:30, a South Central Patrol officer was dispatched to 3700 Dowling to a bar on a shooting. Upon arrival, they found a male who'd been shot in the arm.
Initial indications are that the male that was shot was a member of a band. He got in an argument with the owner of the bar about how long the band was going to play. During the argument, the manager produced a weapon and shot the male one time in the arm. The manager fled the location. Male has been transported to Hermann Hospital in stable condition.

         A bar known as the Status Lounge was located at 3710 Dowling Street.

         A. The Media Articles

         The next day, The Houston Chronicle, a publication of appellant Hearst Newspapers, LLC (the Chronicle), published an article about the shooting written by Dale Lezon on its website The article was titled "Musician shot at bar in south Houston[.]" Among other things, the Chronicle article reported that police were "continuing to search for the person who shot a musician Tuesday night at a nightclub near downtown Houston" and that the victim "was shot about 9:30 outside the Status Lounge, 3708 Dowling." The Chronicle article also reported that "[w]itnesses told police the gunman was the owner of the nightclub" and that according to the witnesses, "the victim and the assailant got into an argument about how long the band was going to play that night." Accompanying the Chronicle article was a photograph of the bar.[2]

         That same day, appellant KHOU-TV, Inc. (KHOU) also published on its website an article titled "HPD: Bar owner accused of shooting band member[.]" The unattributed KHOU article began: "A dispute between a bar owner and a band he hired escalated into a shooting late Tuesday." The KHOU article reported that according to HPD, "an argument ensued between the bar owner and the band he had hired to play at the bar" and "[i]nvestigators said they were arguing over how much the owner paid for, and how long they were supposed to play." The KHOU article continued: "The band started packing up and leaving after an hour, but the owner got mad because he believed they were supposed to play for two hours. The owner got his gun and ended up shooting the lead band member in the arm." The article concluded by stating that "[t]he owner was taken into custody." The KHOU article did not name Status Lounge, but it included a photograph of the bar.

         B. The Trial Court Proceedings

         In August 2016, Status Lounge Incorporated (Status Lounge)[3] filed suit against the Chronicle and Dale Lezon (the Chronicle Parties), and KHOU and William Langlois[4] (the KHOU Parties).[5] Status Lounge also sued Gannett Co., Inc., but later nonsuited the claims against that defendant.

         In its petition, Status Lounge represented that it was "a premium lounge and cigar bar located near downtown Houston, Texas." Status Lounge alleged that in April 2016, a musician who was scheduled to perform was shot at a nearby liquor store, not at Status Lounge, but Langlois and Lezon told the public that the musician was shot by the owner of Status Lounge after an argument about the musician's fees. Status Lounge asserted that Langlois and Lezon did not fact check their stories and did not reach out to Status Lounge for comment. Later, a representative of Status Lounge personally contacted them to alert them to the error and to encourage them "to review corporate filings with the Texas Secretary of State." Instead, Status Lounge alleged that Langlois and Lezon "stood by their inaccuracies" and did not report the information it had provided to them. As a result of the stories, Status Lounge claims that its "previously loyal customers stopped frequenting the establishment, and the company's profits took an immediate hit" from which it has not fully recovered. Status Lounge sought actual and exemplary damages based on claims of libel and business disparagement.

         On August 8, 2016, five days after Status Lounge filed its lawsuit, KHOU received a letter from Status Lounge's counsel requesting that KHOU correct, clarify, or retract its article. In the letter, dated August 3, 2016, Status Lounge complained that the article made untrue and defamatory statements that hurt the club's reputation and profits. Specifically, Status Lounge asserted that the shooting did not occur on Status Lounge property, the owner of the club did not shoot anyone, and the musician stated on social media that he had no problems with Status Lounge or its owners or managers. Status Lounge stated that a representative of the club, Raymond Murray, had contacted KHOU and provided the same information, requested appropriate steps to correct the article, and urged KHOU to consult Secretary of State filings to confirm that the owner was not even mentioned in any of the police reports.

         KHOU responded through its counsel on August 23, 2016. KHOU stated that at the time the article was posted, it relied on information provided by law enforcement and accurately conveyed that information. KHOU further stated that it would like to correct any mistaken facts and requested information as to the identity of the shooter and whether there was any affiliation between the shooter and Status Lounge.

         In reply, counsel for Status Lounge sent a letter attaching a Facebook post authored by James Oneal, whom Status Lounge asserted was "the victim of the shooting."[6] Status Lounge also claimed that Oneal wrote the post to "correct what he knew was an inaccurate report by your client and others." Status Lounge asserted that if KHOU had reached out to Oneal, he presumably would have told KHOU the same things he stated in the post. Additionally, Status Lounge complained that the police report made no reference to Status Lounge, and suggested that if KHOU had searched Secretary of State records, it easily would have determined that no one involved in Status Lounge's operations was in any way involved in the shooting.

         The defendants were served with Status Lounge's lawsuit on September 12 and 15, 2016. The defendants filed answers generally denying the allegations in the lawsuit and asserting various defenses. The KHOU Parties filed their answer on October 3, and the Chronicle Parties filed their answer on October 10.

         The KHOU Parties attached numerous exhibits to its answer and alleged, among other things, that Status Lounge did not file a timely and sufficient request for a retraction under the Defamation Mitigation Act (DMA). See Tex. Civ. Prac. & Rem. Code §§ 73.051-.062. The KHOU Parties' answer also included a verified plea in abatement under the DMA. See id. § 73.062(a). The KHOU Parties alleged that Status Lounge filed suit without providing the pre-suit notice required by the DMA, and the request Status Lounge eventually did make was not "timely and sufficient" as required because it did not: (1) state with particularity every statement alleged to be false and defamatory and to the extent known, the time and place of publication, (2) did not allege the defamatory meaning of the statement(s) as to Status Lounge, and (3) did not specify the circumstances causing a defamatory meaning of the statement if it arose from something other than the express language of the publication. See id. § 73.055(d).

         Status Lounge did not file a controverting affidavit in response to KHOU's plea in abatement. See id. ยง 73.062(b). The parties agree that the lawsuit was automatically abated for sixty days, beginning on October 14, 2016, ...

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