United States District Court, E.D. Texas, Sherman Division
Craven, Magistrate Judge
ORDER ADOPTING REPORT AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
L. MAZZANT, UNITED STATES DISTRICT JUDGE
above-entitled and numbered civil action was heretofore
referred to United States Magistrate Judge Caroline M. Craven
pursuant to 28 U.S.C. § 636. On April 17, 2019, the
Magistrate Judge issued a Report and Recommendation,
recommending Defendants' Motion to Dismiss Pursuant to
Federal Rule of Civil Procedure 12(b)(6) for Failure to State
a Claim (Dkt. # 25) be denied. National Public Radio, Inc.
(“NPR”), David Folkenflik, Edith Chapin, Leslie
Cook, and Pallavi Gogoi (collectively
“Defendants”) filed objections to the Report and
Recommendation. Plaintiff Ed Butowsky
(“Plaintiff”) filed a response to the objections.
The Court conducts a de novo review of the
Magistrate Judge's findings and conclusions.
an action for defamation, business disparagement, and civil
conspiracy filed by Plaintiff, a Dallas investment advisor,
against NPR, its senior media correspondent, David Folkenflik
(“Folkenflik”), and certain former and current
executive editors at NPR. According to Plaintiff, Defendants
published false and defamatory statements about Plaintiff
online and via Twitter between August 2017 and March 2018 -
statements Plaintiff alleges injured his business and
reputation. Specifically, Plaintiff claims Folkenflik
knowingly and intentionally conspired with Douglas H. Wigdor
(“Wigdor”) to promote, publish, and republish a
demonstrably false and defamatory narrative about Plaintiff.
Joint Report of Attorney Conference (Dkt. # 52) at 2.
Plaintiff alleges Folkenflik actively colluded with Wigdor,
Folkenflik knew he was part of Wigdor's “press
strategy” to extort money from Fox, and Folkenflik
willingly assumed the role of “firecracker” in
the scheme. Id. Plaintiff seeks money damages for
alleged loss and injury to his business, insult, pain and
mental suffering, humiliation, embarrassment, and injury to
his reputation sustained as a result of Defendants'
publication of allegedly false and defamatory statements.
original complaint, Plaintiff alleges four causes of action:
(1) defamation per se (Dkt. # 1, ¶¶
161-168); (2) business disparagement (id.,
¶¶ 169-174); (3) civil conspiracy (id.,
¶¶ 175-179); and (4) intentional infliction of
emotional distress (id., ¶¶
180-185). Defendants contend Plaintiff filed suit
against them for accurately reporting on a publicly filed
lawsuit on a matter of public concern. Defendants moved
to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), asserting Plaintiff's complaint fails to state
a plausible claim for relief for two primary reasons. First,
Defendants argue both Texas law and the First Amendment to
the United States Constitution protect Defendants'
reporting on judicial proceedings and about matters of public
concern. Defendants argue the statements in the NPR articles
at issue in this case are subject to statutory and common law
privileges and defenses that preclude civil liability -
namely the fair report privilege, the fair comment privilege,
and the “third-party allegation” rule. Second,
Defendants argue many of the statements are not “of and
concerning” Plaintiff, are not defamatory or capable of
a defamatory meaning, or are protected expressions of opinion
and should be dismissed for these reasons as well.
April 17, 2019, the Magistrate Judge entered a 98-page Report
and Recommendation (“R&R”) regarding proposed
findings of fact and recommendations that Defendants'
motion to dismiss be denied. Dkt. # 58. The Magistrate Judge
first found Defendants did not establish the common law and
statutory privileges barred Plaintiff's claims.
Id. at 49. Additionally, she found Plaintiff
sufficiently alleged the publications at issue were not
substantially true, and the third-party allegation rule did
not bar Plaintiff's claims as a matter of law at this
stage of the proceeding. Id. at 51. She next
concluded Plaintiff adequately pleaded facts sufficient to
allege a defamation claim. Specifically, she found, at this
stage of the proceedings, accepting the allegations in
Plaintiff's complaint as true, Plaintiff plausibly
alleged the statements at issue were “of and
concerning” Plaintiff. She also found the statements at
issue were not expressions of opinion and were capable of a
defamatory meaning. Id. at 74, 78. She then
considered whether the Defamation Mitigation Act
(“DMA”) barred Plaintiff's defamation claim.
She concluded Plaintiff's failure to follow the DMA did
not require dismissal of the action, and the issue of
recovery of exemplary damages was more appropriate for
consideration in the context of summary judgment.
Id. at 95. Lastly, the Magistrate Judge found
Plaintiff pleaded facts sufficient to state a claim for civil
conspiracy. Id. at 97.
filed objections to both the R&R's statement of facts
and the conclusions of law, more specifically described
to the R&R's Statement of Facts
argue the statement of facts in the R&R omits significant
accusations against Plaintiff from the Wheeler
lawsuit. Dkt. # 63 at 5. Defendants claim these missing
allegations are relevant to Defendants' motion because
this Court must compare the Reports and the Wheeler
complaint to accurately assess whether privileges apply.
to the R&R's Conclusions of Law
also assert eight main objections to the R&R's
conclusions of law. These objections and all sub-parts to any
objection are set out below.
their first objection, Defendants argue the R&R errs by
relying on overturned case law to conclude the third-party
allegation rule did not bar Plaintiff's claims at this
stage of the case and under the facts alleged in the
complaint. Id. at 7-8. According to Defendants, the
Texas Legislature and the Texas Supreme Court recognize the
third-party allegation rule as an exception to the
republication rule, allowing the media to truthfully and
accurately report on allegations made by a third party
regarding a matter of public concern. Id. Defendants
state because the Reports at issue here were just a
republication of the Wheeler complaint, the
third-party allegation rule bars Plaintiff's defamation
second objection argues the R&R fails to correctly
analyze whether common law and statutory privileges bar
Plaintiff's defamation claim. Id. at 8-14.
Defendants' second objection is broken into four
sub-arguments: (1) the R&R erroneously relies on the
Restatement (Second) of Torts as a guide for interpreting
Texas privilege law; (2) the R&R uses comments to the
Restatement in its analysis, even though there is ample
reason to believe the Texas Supreme Court would reject the
Restatement and its comments; (3) the R&R intermingles
the different constitutional, common law, and statutory
privileges in its analysis; and (4) the R&R uses the
public-interest privilege standard to analyze whether the
fair report and fair comment privileges apply. Id.
their third objection, Defendants argue the R&R wrongly
concludes Plaintiff's allegations were sufficiently
pleaded under Iqbal/Twombly. Id. at 14-15.
Specifically, Defendants state Plaintiff's allegations
regarding collusion and actual malice are conclusory and
unsupported by any facts. Id.
their fourth objection, Defendants claim the R&R errs in
relying on supplemental allegations found in Plaintiff's
response to Defendants' motion to dismiss (Dkt. # 32) and
Plaintiff's proposed amended complaint (Dkt. # 54).
Id. at 15-17. Defendants argue the R&R uses
facts not found in the operative pleading (the original
complaint) and considers the un-pleaded cause of action,
defamation per quod. Id.
argue in their fifth objection the R&R improperly
analyzes Plaintiff's defamation per se claim.
Id. at 17-23. Defendants break the fifth objection
into five discrete sub-arguments as follows: (1) the R&R
incorrectly analyzes the falsity of the publications at
issue; (2) the R&R incorrectly concludes the alleged
defamatory statements were “of and concerning”
Plaintiff; (3) the R&R wrongly finds the statements at
issue were statements of fact and not opinion; (4) the
R&R erroneously concludes the allegations did not support
finding Plaintiff was a public figure; and (5) the R&R
improperly finds Plaintiff's allegations plausibly
alleged actual malice. Id. Sub-argument five is
identical to Defendants' third objection.
their sixth objection, Defendants argue Plaintiff's
failure to comply with the Texas DMA is a bar to litigation
or at least a bar to exemplary damages, as opposed to the
findings in the R&R that this issue should be raised and
decided at summary judgment. Id. at 23-24.
their seventh objection, Defendants argue the R&R's
business disparagement analysis is erroneous. Id. at
24. The R&R finds Plaintiff's business disparagement
claim survives for the same reasons Plaintiff's
defamation claims survive. Id. Defendants argue that
because the R&R's defamation analysis is wrong, so is
the R&R's conclusion that Plaintiff's business
disparagement survives. Id.
their last objection, Defendants object to the R&R's
civil conspiracy analysis. Id. While Defendants
agree the R&R correctly identifies the applicable law,
they argue Plaintiff failed to allege sufficient facts to
give rise to a plausible claim for relief for a conspiracy.
Id. This argument is also raised by Defendants in
their third objection.
Response to Defendants' Objections
argues the Magistrate Judge adequately reviewed
Plaintiff's factual allegations, correctly finding the
allegations sufficient to state a claim for relief. Dkt. #
64. Plaintiff asserts the R&R does not rely heavily on
one decision but considers the entire body of Texas law
applicable to all claims. Id. at 2. Additionally,
Plaintiff responds the R&R relies only on the well-plead
complaint in its analysis, and it only references other
pleadings in the docket. Id. at 8. According to
Plaintiff, any reference to other pleadings does not change
the overall analysis of the R&R. Id. Plaintiff
also argues the R&R was right to find Plaintiff's
allegations were not conclusory, and each finding in the
R&R is supported by facts alleged in Plaintiff's
complaint. Id. Specifically, Plaintiff argues the
R&R correctly concludes:
• Plaintiff adequately alleged the statements at issue
were defamatory per se.
• The fair report privilege did not apply because of the
exception found in the Restatement (Second) Torts.
• Plaintiff alleges facts showing Defendants acted with
• Plaintiff sufficiently alleged facts that
Defendants' reports were not fair, true, or impartial.
• Plaintiff sufficiently alleged material falsity.
• The statements at issue are capable of a defamatory
• The statements are “of and concerning”
• The statements are statements of fact, not opinion.
• The DMA does not bar Plaintiff's claims.
• Plaintiff sufficiently alleged a claim for business
• Plaintiff pleaded sufficient facts to show conspiracy
between Folkenflik and Wigdor.
Id. at 2-8. Plaintiff urges this Court to adopt the
R&R in its entirety.
Federal Rule of Civil Procedure 8(a)(2), a pleading must
contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). Each claim must include enough factual
allegations “to raise a right to relief above the
speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
Federal Rule of Civil Procedure 12(b)(6), the Court utilizes
a “two-pronged approach” in considering a motion
to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009). First, the Court identifies and excludes legal
conclusions that “are not entitled to the assumption of
truth.” Id. Second, the Court considers the
remaining “well-pleaded factual allegations.”
Id. All allegations must be accepted as true and
viewed in the light most favorable to a plaintiff. In re
Katrina Canal Breaches Litig., 495 F.3d 191,
205 (5th Cir. 2007). A plaintiff's complaint survives a
defendant's Rule 12(b)(6) motion to dismiss if it
includes facts sufficient “to raise a right to relief
above the speculative level.” Id. (quotations
and citations omitted).
ultimate inquiry must consider whether a plaintiff has
pleaded “enough facts to state a claim to relief that
is plausible on its face.” Twombly, 550 U.S.
at 570. “‘[D]etailed factual
allegations'” are not required. Iqbal, 556
U.S. at 678 (quoting Twombly, 550 U.S. at 555).
However, a complaint must allege “sufficient factual
matter, accepted as true, to ‘state a claim that is
plausible on its face.'” Id. (quoting
Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the pleaded factual content allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). This
determination is a “context-specific task that requires
the reviewing court to draw on its judicial experience and
common sense.” Id. at 679. The Court may
consider “the complaint, any documents attached to the
complaint, and any documents attached to the motion to
dismiss that are central to the claim and referenced by the
complaint.” Lone Star Fund V (U.S.), L.P. v.
Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
of Defendants' Objection to the R&R's Findings of
agree the majority of the factual background identified in
the R&R is correct, but they argue the R&R fails to
consider certain sections of the Wheeler complaint
in its analysis.
Magistrate Judge specifically states she considered the
Wheeler complaint in the analysis. Dkt. # 58 at 4,
n. 5. The R&R examines the Wheeler complaint as
a whole in analyzing Defendants' motion to dismiss. After
reviewing the Wheeler complaint and comparing it to
the alleged defamatory allegations pleaded by Plaintiff, the
R&R concludes significant differences exist between the
two. The Court agrees and finds Defendants' objection to
the R&R's findings of fact without merit. The
comparison of the Wheeler complaint and the Reports
in the R&R is discussed in further detail below in
response to Defendants' first and fifth objections.
of Defendants' Objections to the R&R's
Conclusions of Law
of the first main objection
first argue the R&R utilizes reversed precedent and
misapplies the third-party allegation rule. Dkt. # 63 at 7-8.
Defendants maintain the R&R “relies heavily”
on the Fort Worth Court of Appeals holding in Dallas
Morning News, Inc. v. Hall, 524 S.W.3d 369 (Tex. App. -
Fort Worth 2017), which was recently reversed by the Texas
Supreme Court. Dallas Morning News, Inc. v.
Hall, No. 17-0637, --- S.W.3d ---, 2019 WL 2063576, at
*5 (Tex. May 10, 2019) (unpublished). The R&R uses
Hall I to find the third-party allegation rule does
not apply, according to Defendants. Defendants state the
Texas Supreme Court holding in Hall II supports
application of the third-party allegation rule in this case
because Defendants merely republished the allegations
contained in the Wheeler complaint.
the Court would note Hall II was decided after the
R&R was entered. Secondly, the Court is not convinced the
R&R, by relying on Hall I, incorrectly
interprets Texas law regarding privileges and defenses
afforded to media defendants. Although Hall I is
cited in the R&R (see Dkt. # 58 at 24-25), the
R&R thoroughly reviews all relevant Texas case law and
accurately identifies the law on the third-party allegation
this case is distinguishable from Hall II. The
Hall II plaintiffs sued the Dallas Morning News (the
“News”) and Kevin Krause for allegedly defaming
them and their pharmaceutical business. 2019 WL 2063576, at
*1. According to the plaintiffs, the News published numerous
articles on the pharmacy compounding industry, including
specifically the plaintiff's compounding pharmacy,
Rxpress. Id. at *1-*2. The articles mentioned
accusations against Rxpress, including that it was under
federal investigation for possible violations of the
anti-kickback law. Id. at *2-*3. The News moved to
dismiss these claims under the Texas Citizens Participation
Act, arguing, among other things, Rxpress could not meet its
burden to show the articles were not substantially true and
that the articles' reporting of the third party
allegations in the civil lawsuits and other official
proceedings was both true and privileged. Id. at *3.
trial court denied the motion, and the News filed an
interlocutory appeal. Id. The court of appeals
upheld the trial court, holding first the News had not
established its substantial-truth defense. The court of
appeals then held Rxpress had met its burden to state a prima
facie case that the gists of the articles were not
substantially true. Id. at *4. The News appealed
Hall I to the Texas Supreme Court, which granted the
News's petition for review. Id.
Texas Supreme Court first set forth the applicable law in a
case brought pursuant to the Texas Citizens Participation Act
(the “Act”), which specifically provides that a
defendant in a case that “is based on, relates to, or
is in response to a party's exercise of the right of free
speech” may move for dismissal under the Act.
Id. (quoting Tex. Civ. Prac. & Rem. Code §
27.003(a)). According to the court in Hall II,
dismissal under the Act requires two steps. First, the party
moving for dismissal must show, by a preponderance of the
evidence, that the “legal action is based on, relates
to, or is in response to a [movant]'s exercise of the
right of free speech.” Id. (internal
punctuation omitted). The burden then shifts to the plaintiff
to establish “by clear and specific evidence a prima
facie case for each essential element of the claim in
question.” Hall II, 2019 WL 2063576, at *4 (quoting
§ Tex. Civ. Prac. & Rem. Code § 27.005(c)).
Additionally, subsection (d) requires a court to dismiss the
legal action if “the moving party establishes by a
preponderance of the evidence each essential element of a
valid defense to the nonmovant's claim.” Hall II,
2019 WL 2063576, at *4 (quoting Tex. Civ. Prac. & Rem.
Code § 27.005(d)). If the plaintiff fails to carry its
burden-or if the movant establishes the essential elements of
a valid defense under § 27.005(d) -the trial court must
dismiss the suit. Hall II, 2019 WL 2063576, at *5.
In deciding if dismissal is warranted, the court considers
all the “pleadings and supporting and opposing
affidavits stating the facts on which the liability or
defense is based.” Id. (quoting Tex. Civ.
Prac. & Rem. Code § 27.006(a). The Texas Supreme
Court reviewed de novo the court of appeals'
determinations that the parties met or failed to meet their
burdens of proof under § 27.005. Hall II, 2019 WL
2063576, at *5 (generally citing Tex. Civ. Prac. & Rem.
Code § 27.005).
court first considered whether, under the Act, Rxpress had
satisfied its burden to establish-by clear and specific
evidence-a prima facie case for every essential element of
the defamation claim, including falsity. Hall II,
2019 WL 2063576, at *5 (citing Tex. Civ. Prac. & Rem.
Code § 27.005(c); Neely v. Wilson, 418 S.W.3d
52, 62 (Tex. 2013)). At issue in Hall II were two
allegedly defamatory meanings - that Rxpress was “under
investigation” (which was plainly and expressly set out
in the articles) and that Rxpress actually violated
healthcare laws (which was implied). 2019 WL 2063576, at *5.
the first alleged defamatory meaning, the court held Rxpress
failed to carry its burden under the Act because it had not
established a prima facie case that the News falsely reported
that Rxpress was “under investigation.” Hall II,
2019 WL 2063576, at *7 (citing Tex. Civ. Prac. & Rem.
Code § 27.005(c)). Because the court held Rxpress failed
to carry its burden to survive dismissal under §
27.005(c), the court did not need to ...