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Scripps NP Operating, LLC v. Carter

Supreme Court of Texas

May 24, 2019

Scripps NP Operating, LLC, a Wisconsin Limited Liability Company, Successor in Interest to Scripps Texas Newspapers, LP d/b/a CorpusChristi Caller-Times, Petitioners,
Terry Carter, Respondent

          Argued February 20, 2019

          On Petition for Review from the Court of Appeals for the Thirteenth District of Texas



         At issue in this interlocutory appeal is whether a newspaper was entitled to summary judgment in a defamation case. The former chief executive officer of the Corpus Christi Chamber of Commerce sued the Corpus Christi Caller-Times, asserting that articles reporting he had been accused of financial improprieties were defamatory. The Newspaper filed a motion for summary judgment claiming that the allegedly defamatory articles were substantially true and that an editorial was protected opinion. The trial court disagreed and denied the Newspaper's motion. The Newspaper filed an interlocutory appeal. The court of appeals agreed with the trial court that the Newspaper was not entitled to summary judgment on those grounds. 567 S.W.3d 1, 20-21 (Tex. App.-Corpus Christi-Edinburg 2016).

         In this Court, the Newspaper again asserts that the trial court should have granted summary judgment because the articles at issue were substantially true. It argues that no fact issue regarding substantial truth exists because it accurately reported the allegations of others and because statements in an editorial, which tied together the previous reporting, were non-actionable opinions. Because we agree with the court of appeals that the Newspaper was not entitled to summary judgment, we affirm.

         I. Background

         Terry Carter began working for the Corpus Christi Chamber of Commerce (chamber) as the president and CEO in 2004. On February 15, 2008, the Newspaper published an article online entitled "Financial, management questions raised at CC Chamber." The article stated that three chamber officials "raised what they describe as serious financial and management issues." No chamber officials would discuss the nature of the issues, but the concerns arose after the chamber chairman-elect "recommended a raise, bonus and contract extension for Carter" and the executive committee treasurer, Damon Bentley, was asked to review the chamber's financial standing. The article also noted that an emergency meeting had taken place that day from which Carter could be heard shouting.

         The next day, the Newspaper printed another article in the print version of the newspaper with additional details about the meeting the day before. The article stated that three of the chamber's five executive committee members had demanded the meeting to address concerns about the chamber's "financial and management practices, which Carter oversees." But before the meeting started, two of those members were informed that they were no longer eligible to serve on the committee, "meaning they can't participate in the committee's recommendation to the full board on matters involving Carter's contract." The Newspaper quoted Bentley as saying "I was saddened and I'm still confused on why two chamber executive board members had been removed from the executive committee after being asked to assist in the evaluation process of our CEO." The article again noted that the "financial concerns" arose after a raise, bonus, and contract extension were recommended for Carter.

         Over the next four months, the Newspaper published over twenty more articles about the chamber and Carter. The next article was entitled "CC Chamber meeting to discuss financial irregularities" and stated that irregularities were discovered "during a performance review of president Terry Carter after a raise and bonus for Carter had been proposed." The Newspaper next reported on a special called meeting, stating that the chamber decided to conduct a full audit "after what have been described as financial irregularities were uncovered while reviewing a proposed raise and bonus for . . . Carter." The article also noted "significant developments" about two of three executive committee members who brought the financial concerns to the full committee's attention and were informed by Carter and the chamber's attorney that they were no longer eligible to serve on the committee.

         The headline of the next article was "Chamber CEO shifted funds, letter says," with the subtitle "Move makes loss appear to be profit, treasurer writes." The article reported on a letter from Bentley to board members and stated that Carter, "whose bonus is based on financial performance, shifted funds to make a loss look like a profit, according to [the] letter." The letter also stated that Carter deferred part of his salary and that the chamber executive vice president was also asked to defer his salary because the chamber was in a "cash crunch" and the chamber "showed a $40, 425 profit when it should have shown a $61, 782 loss." According to Bentley's letter, Carter also used $18, 312 from the chamber's building funds to pay operating expenses which, according to the chamber's accountant, could "possibly forfeit the (chamber) foundation's (nonprofit) status because of the link between the CEO's bonus to the financial performance of the chamber." The article described the February 15 meeting of the executive committee as including "a shouting match with Carter and the dismissal of two committee members" and stated that, according to Bentley's letter and witness accounts, Carter "seized" the tape recording of the meeting and left the building. The article quoted from Bentley's letter: "In the end . . . this comes down to trust and accountability. Removing executive committee members who voice sincere concerns, keeping taped meetings from other board members, yelling in an attempt to intimidate board volunteers . . . and attempting to justify a raise based on disputable numbers do not change my fiduciary responsibility." The article reported that Carter, also in a letter to board members, said that he deferred part of his salary for tax purposes and that the failure to record the deferral was a bookkeeping error. Carter also stated in the letter that he had discussed moving funds from the chamber's building funds with Bentley and the chamber's accountant before he did so.

         In another article, the Newspaper reported on a letter to board members from one of the board members who had been removed. She had concerns the Chamber had not taken sufficient steps to address the financial concerns raised by Bentley and that Carter's letter to board members "gloss[ed] over financial irregularities and the declining membership numbers." The article again noted that Carter "seized" the tape of the February 15 meeting and shouted at the board members who were removed that day. The article also stated that after Bentley reviewed the chamber's finances in anticipation of a raise, bonus, and contract extension for Carter, "Bentley found that Carter had shifted funds among accounts and deferred $19, 992 of his 2007 salary. Without those moves, the chamber's cash flow would have been negative, according to Bentley, adding that Carter's bonus is based on the chamber's financial performance." The article additionally said that according to Bentley, the chamber's accountant told him that "the chamber foundation's nonprofit status could be in jeopardy because Carter shifted chamber foundation funds to pay operating expenses and Carter's bonus is linked to the chamber's financial performance."

         On March 2, 2008, the Newspaper published an editorial with the headline "Chamber CEO's actions raise serious questions," and a subtitle stating "Funds were shifted that made a loss look like a profit, entitling CEO to a bonus." The unsigned editorial stated that the Newspaper had resigned from the chamber the prior year, a decision prompted by "the divisive leadership of Terry Carter" because the Newspaper could not be part of an organization whose president "engages in name calling and shows favoritism toward one business over another." The editorial noted that reports of "highly questionable stewardship of the financial affairs of the chamber by Carter" had been laid out in a series of stories and that these "news accounts describe duplicitous dealings by Carter in his relations with the membership and the executive committee." It stated that a letter by Bentley laid out "the questionable shifting of funds" and "[t]he fund shifting, including the deferring of Carter's salary, allowed the chamber to show a profit, thus qualifying Carter for a bonus." The editorial stated that Carter had explained he had discussed using chamber foundation money for operating expenses with the chamber accountant, but that the accountant had "warned that the use of foundation money in such a way would threaten the chamber's nonprofit status." The editorial closed with

The chamber can be an effective and creditable voice for the business community only if its leadership conducts itself in an ethical and professional manner, accountable to its members and holding itself to the same businesslike standards that its members expect of themselves. Intimidation, secrecy and duplicity discredit a vital organization. The question mark remains over Carter until he fully explains his actions, or until the chamber chooses to move on without him.

         After the editorial, the Newspaper published additional articles regarding chamber members signing a petition for the chamber to address the financial practices and provide membership rosters, and the chamber meetings held to address those concerns. The Newspaper also reported on the chamber putting Carter on paid leave and his eventual resignation and severance agreement. Finally, the Newspaper published articles regarding a lawsuit filed by Carter against the chamber and Bentley and court proceedings related to the tape of the February 15 meeting.

         Six months after the articles were published, an outside accounting firm completed an audit of the chamber's finances. The audit stated that "[t]he staff-prepared financial statements had material misstatements. The misstatements are due to omissions, accounting applications and or lack of current accounting requirements." The audit also noted that the "misstatements" had been "corrected by management."

         Carter filed suit against Scripps Texas Newspapers (the predecessor in interest to Scripps NP Operating, LLC) d/b/a Corpus Christi Caller-Times for (1) tortious interference with a contract, (2) tortious interference with prospective relationship, (3) defamation, and (4) conspiracy. He asserted that the Newspaper published false statements about him alleging wrongful and deceitful conduct by engaging in financial and managerial irregularities to obtain an undeserved bonus and as a result, he suffered loss of employment and past and future income. The Newspaper filed a combined motion for traditional and no-evidence summary judgment, arguing that there was no evidence of actual malice, which the Newspaper alleged to be an element of Carter's defamation claims because he was a public figure. The Newspaper also asserted that in the absence of actual malice, Carter's non-defamation claims failed. The trial court denied the motion, and the Newspaper pursued an interlocutory appeal. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(6) (permitting an interlocutory appeal from the denial of a motion for summary judgment by a member of the 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, or Chapter 73 [of the Texas Civil Practice and Remedies Code]").

         The court of appeals affirmed the trial court's order denying the Newspaper's motion for summary judgment. Scripps Tex. Newspaper, LP v. Carter, 13-09-00655-CV, 2012 WL 5948955, at *8 (Tex. App.-Corpus Christi-Edinburg Nov. 21, 2012, pet. denied).[1] The court concluded Carter was not required to prove the Newspaper's actual malice because he was not a public figure. Id. at *5. The court then affirmed the denial of the Newspaper's summary-judgment motion, concluding that fact issues remained regarding the Newspaper's liability for publishing allegedly defamatory statements. Id. at *7-8.

         On remand, the Newspaper filed a second motion for summary judgment on traditional and no-evidence grounds. This time it argued that the articles were (1) true, (2) not defamatory, (3) non-actionable opinion, (4) privileged as fair reports of judicial proceedings, and (5) published without negligence or actual malice. The Newspaper also asserted there was no evidence to support Carter's non-libel claims. The trial court again denied the Newspaper's motion for summary judgment, and the Newspaper filed a second interlocutory appeal. The court of appeals agreed with the Newspaper that there was no evidence supporting Carter's non-defamation claims and rendered judgment granting the Newspaper's motion for summary judgment as to those claims. 567 S.W.3d at 26. The court also held that the relevant articles were protected by the fair-report privilege, id. at 21, and that there was no evidence of actual malice as to any of the articles. Id. at 25. But the court concluded the articles were defamatory. Id. at 18. The court further concluded that the Newspaper failed to establish that the articles were published without negligence, id. at 24-25, or that the editorial was non-actionable opinion. Id. at 21. Finally, the court concluded that the Newspaper failed to conclusively prove that the gist of the articles was substantially true. Id. at 20. The court rejected the Newspaper's claim that the articles were substantially true reports of allegations, observing that the statements went beyond mere "allegation reporting." Id.

         In this Court, the Newspaper challenges the court of appeals conclusion as to the substantial truth of the statements at issue. The Newspaper claims that it accurately reported third-party allegations against Carter, meeting the substantial truth test, and additionally that there are no fact issues regarding substantial truth. The Newspaper also asserts that the court of appeals incorrectly determined that the editorial was not a protected expression of opinion. And finally, the Newspaper argues that the court of ...

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