(February 8, 2023) Texas grocery giant H-E-B appealed to the Supreme Court of Texas on February 3, 2023, over a business disparagement and defamation lawsuit filed by Maverick International Ltd. back in March of 2021. H-E-B has argued in their appeal to the Supreme Court, which was previously denied by the 9th Court of Appeals in Beaumont, that the comments they are being sued over should have been protected under the Texas Citizen’s Participation Act (TCPA) but that the commercial exception to the act “categorically excludes retailers.” So, what is the TCPA, and how does the commercial exemption exclude major retailers from protection against business disparagement claims?
Did you know?
The Texas Citizen’s Participation Act was first signed into law on June 17, 2011, in response to a growing number of business disparagement lawsuits originating from online reviews.
The Texas Citizen’s Participation Act (TCPA)
The purpose of the TCPA is to protect freedom of speech. After an increase in business disparagement lawsuits resulting from comments made on online review boards, the Texas legislature sought to safeguard an individual’s right to exercise freedom of speech without being sued by businesses seeking to protect their reputations. To receive protection under this act, the defendant must prove that the lawsuit is based on, or in response to, their right to exercise free speech, the freedom of association, or the right to petition. If the defendant proves this, and the plaintiff (the company who is bringing the lawsuit) is unable to disprove this, then the case will be dismissed, and the plaintiff will bear the costs associated with the suit.
If the freedom of speech is protected under the first amendment and safeguarded by the TCPA, then what is business disparagement? While the first amendment ensures that all U.S. Citizens can share their point of view without fear of punishment, it does not protect an individual’s right to disparage or defame a business publicly. Business disparagement is defined by the Texas Supreme Court as the publishing of false and disparaging information, done with malice and without privilege, which results in special damages to the plaintiff. As you can see, the statement cannot simply be untrue to constitute disparagement. It must be made with malice or with the intent to injure the plaintiff financially. Additionally, the truth can always be used as a defense in this context. Next, the damaging statement cannot be made in a protected or “privileged” context, such as when testifying in court. Special damages are what differentiate a disparagement lawsuit from a defamation lawsuit. Special damages result from a business losing customers as a result of malicious words, whereas a defamation lawsuit would be an attack on the business’s reputation. As the Supreme Court clarified in Forbes v. Granada Biosciences, “the two torts differ in that defamation actions chiefly serve to protect the personal reputation of an injured party, while a business disparagement claim protects economic interests.”
The TCPA’s Commercial Exemption
So that the TCPA does not protect businesses attempting to disparage other companies, the commercial exemption was added, which states that it does protect “a legal action brought against a person primarily engaged in the business of selling or leasing goods or services… or a commercial transaction in which the intended audience is an actual or potential buyer or customer.” As H-E-B’s appeal states, this exemption would preclude them from ever speaking negatively about another business or informing the public of potentially dangerous products because everyone is technically a “potential customer” of a major retailer.
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