robust TX anti-SLAPP law protects critic despite arguments that she was partly competing

ADB Interest, LLC v.
Wallace, 606 S.W.3d 413 (Tex. Ct. App. 2020)

This is an
anti-SLAPP case about statements by a disgruntled customer/alleged competitor.

Black, the managing
member of ADB, invented the FasciaBlaster, which is marketed by ADB. The user is
supposed to roll the product vigorously over his or her body. ADB claimed
benefits for pain reduction, flexibility, joint function, circulation, muscle
definition and performance, nerve activity, posture, and enhanced beauty, “including
the virtual elimination of cellulite.” The product allegedly works by “opening
the fascia,” which is a layer of tissue that encloses muscles and organs.

Blac published a
book that is “an instructional guide to ‘FasciaBlasting’ ” that identifies numerous risks associated with using
the FasciaBlaster, including to people with any history of deep vein thrombosis
or a blood clot (“the consequences could be deadly”), or people with a “severe
connective tissue problem such as fibromyalgia, Ehlers-Danlos Syndrome, or any
issues that makes skin sensitive.” The book lists other symptoms including “
changes in menstrual cycles, spotting, swelling, strange-colored
bruises, hot skin, flu-like symptoms, and in some extreme cases, vomiting….
This is not an all-inclusive list, and to be honest, the product is fairly new
and every day someone experiences something new…. Please check with your
doctor for any issues that set off alarm bells.” The FasciaBlaster
website also had similar (and some additional) warnings.

The FasciaBlaster
has fans and detractors, including in private FB groups; defendant Wallace “is
only one of many people claiming on social media that the FasciaBlaster causes
serious, adverse side effects.”

Wallace “owns a spa
in Corpus Christi, Texas that provides a variety of skin care services to its
clients, including massages.” She bought several FasciaBlasters for personal
use also used the FasciaBlaster on one or more of her clients as part of her
rendition of skin care services. She initially recommended the FasciaBlaster to
her friends, family, and clients, but changed her mind, as announced on FB:

After my own experience and after seeing results from doctors and
specialist[s] [and] [c]ompleting tests and extensive blood work, the tests are
showing that extended use of these products can cause a chain reaction in the
body that starts with inflammation. That inflammation leads to raised cortisol
levels in the body. That raised cortisol causes eventual thyroid dysfunction,
hormone imbalance, increased estrogen, extreme detox, and cellular shutdown in
your body. [etc.]

… So any endorsements I gave this product in the past I sincerely
apologize for without knowing the long term or adverse effects it may be
causing people. As it has caused these adverse effects in myself by using it
long term[,] I HAVE to warn anyone who is using it [o]r anyone who might be
thinking of using it for esthetic reasons to use EXTREME caution.

She became a frequent critical poster on FasciaBlaster-related websites and Facebook groups. She attributed her fibromyalgia diagnosis, other problems, and two miscarriages
on her use of the FasciaBlaster (the last because of high cortisol levels).

In response,
ADB/Black’s social media/cybersecurity firm publicly named Wallace as one of
the “professional trollers” who had written “bad reviews” on Black’s page and
were making “false claims and [using] fake profiles.” Its employee also urged
these Facebook pages to block the named individuals. Black also left a
voicemail for a critic stating, inter alia, “I will prosecute you if this
continues.” Two months before Wallace posted her allegedly defamatory and
disparaging statements on FB, their attorney contacted another critic, stating
that “while the company recognizes that consumers have First Amendment rights
and other consumer rights provided by the Federal Trade Commission (FTC), those
rights are limited by the company’s rights to not be defamed through slander or
libelous actions that include actual malice or negligence regarding the truth of
the statement.” The company also posted on its FB group that “While we welcome
the opportunity to hear from people who feel they have experienced negative
effects from using the FasciaBlaster device, we also need our audience to be
aware that knowingly making false or fraudulent injury or defect claims is
illegal and may subject you to criminal and civil liability.”

Black and ADB then sued
Wallace for business disparagement, defamation and defamation per se, invasion
of privacy, intentional infliction of emotional distress, and violations of the
Lanham Act. Within days of filing suit, the company sent messages to other
participants in the FB groups pointing to the lawsuit.

Side note: the FDA investigated ADB and the FasciaBlaster after it became aware of “over 70 [Medical Device Reporting (MDR) ] reportable
complaints and 04 consumer complaints, filed in the last 12 months (June
2016-June 2017), alleging injury due to your Class I medical device,
FasciaBlaster.” The FDA’s report revealed failures to create procedures for
reviewing and evaluating complaints, despite several specific complaints of
serious bodily injury allegedly caused by the device. Although ADB’s attorney
initially told the FDA inspector that it had evidence of internal
investigations—supposedly represented by pdf attachments to a spreadsheet ADB
provided to the FDA—when the inspector asked for a sample of the attachments, “[i]t
was later determined that these files (investigation results) did not exist.” The court doesn’t explicitly connect this to the legal analysis, but it seems relevant.

Wallace moved to
dismiss the claims based on the Texas anti-SLAPP law (the Texas Citizens
Participation Act); the trial court granted the motion and awarded Wallace
attorney’s fees and imposed sanctions against ADB and Black. Under the TCPA, if
the trial court grants a motion to dismiss, it must award costs, reasonable
attorney’s fees, and other expenses of defending against the action “as justice
and equity may require.” The trial court must sanction the plaintiff in an
amount “sufficient to deter the party who brought the legal action from
bringing similar actions.”

First, ADB/Black
argued that the commercial speech exemption applied to their claims. Not so. 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, 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 in which the intended audience
is an actual or potential buyer or customer.

The Texas Supreme Court
explained that “[c]onstruing the TCPA liberally means construing its exemptions
narrowly,” in part because of “the legislature’s clear instruction to construe
the TCPA liberally to protect citizens’ rights to participate in government.” It
was plaintiffs’ burden to show that the exemption applied. It does when:

(1) the defendant was primarily engaged in the business of selling or
leasing goods [or services], (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 does
not apply when a defendant “speaks of other goods or services in the marketplace,”
i.e., goods or services that the speaker does not sell or lease.

The record showed
that Wallace’s statements were primarily aimed at two overlapping but
nonidentical audiences: ADB’s and Wallace’s actual or potential customers—Wallace
didn’t provide services outside of a limited geographic area, but posted to
reach everyone. To the extent that her statements were directed at her clients,
they could be subject to exemption from the TCPA if the other requirements were
met. But they weren’t. Under the circumstances, her statements about ADB’s
product “cannot reasonably be considered statements about the services that
Wallace provides.” Even though she directed readers to her business FB page to
read her statements about the FasciaBlaster and mentioned that she provides
skincare services in some of her posts, “it is not reasonable to infer from the
record that Wallace was intending to promote her services or enhance her
business by making the allegedly defamatory and disparaging statements about
FasciaBlaster.”  There was “no evidence
of a commercial purpose or motive behind Wallace’s posts.”

Given this,
ADB/Black had to show, by “clear and specific evidence,” a prima facie case on
their causes of action. The TCPA doesn’t “require direct evidence of each essential
element of the underlying claim to avoid dismissal.” For example, pleadings and
evidence that establish “the facts of when, where, and what was said, the
defamatory nature of the statements, and how they damaged the plaintiff should
be sufficient to resist a TCPA motion to dismiss.”

Defamation: Note
that in Texas, corporations can bring defamation claims, since “corporations,
like people, have reputations and may recover for harm inflicted on them.” Plaintiffs
conceded that they were limited-purpose public figures here.

Actual malice
requires knowledge of falsity or reckless disregard for truth. The Texas
Supreme Court has held: “A failure to investigate fully is not evidence of
actual malice; a purposeful avoidance of the truth is.” Also: “[A]ctual malice in defamation is
a term of art that does not include ill will, evil motive, or spite”; none of
that is enough because “the constitutional focus is on the defendant’s attitude
toward the truth, not his attitude toward the plaintiff.”

ADB/Black argued
that they submitted the only medical evidence in the record, allegedly establishing
that there is no biological mechanism by which the FasciaBlaster could have
caused Wallace’s medical issues, and thus the only rational inference from this
evidence is that no medical professional would have told Wallace that the
FasciaBlaster caused her to have two miscarriages and led to the onset of lupus
and fibromyalgia. Therefore, they continued, one could rationally infer that
Wallace knew that her statements were false. This wasn’t enough to infer that
Wallace knew of the falsity or acted with reckless disregard for the truth.
There was no “established body of scientific or medical evidence” about the
FasciaBlaster for Wallace to ignore or proceed in reckless disregard of. ADB’s
proof was an affidavit not available until after the litigation began; it, and
the research it recorded, had not yet occurred when Wallace spoke.

ADB/Black argued
that it was reckless disregard for the truth for Wallace to make statements
about the source of her symptoms “based on self-administered tests she is not
qualified to perform,” and that it was obviously dubious to blame “a simple
massage tool.” Again, this wasn’t a case involving “a wealth of scientific
literature that is widely available to the medical community, much less the
general public.” Indeed, when Wallace made her allegedly defamatory statements,
“there were no scientific studies addressing whether there was a link between
FasciaBlasting and any of Wallace’s illnesses or symptoms.” It hadn’t been
reviewed or tested by any physician [and one thus has to wonder about whether
those disease claims are ok with the FDA], and based on the statements in ADB’s
terms and conditions, they “had no intention at that time to subject their
product to meaningful scientific or medical review.” An understandable
misinterpretation of ambiguous facts does not show actual malice, even if
Wallace was mad at Black.

Nor are Wallace’s
claims  “inherently improbable” “considering
the fact that ADB acknowledges that the FasciaBlaster’s effects are more than
skin deep.” ADB’s own warnings reinforced that impression; indeed, “Wallace did
what Black advised her book readers to do if they experienced any alarming
symptoms while using the FasciaBlaster—consult a physician.” No actual malice,
no defamation.

Business
disparagement: Although the Restatement isn’t sure this is constitutional,
malice in Texas business disparagement differs from defamation malice because it
can be proved by demonstrating “ill will, evil motive, gross indifference, or
reckless disregard, of the rights of others.” Here the key problem was special
damages. ADB argued that in at least two instances in the record, women stated
that they were going to return their products in response to Wallace’s posts
(e.g., “I watched your videos and heard your story and it convinced me to send
mine back and not let this thing ever touch my body because of what you are
going through.”), along with other instances in which women promised to quit
using the products they’d already purchased. Black also averred that this all the
coincided with a decline in ADB’s sales.

However, neither the
video that attracted these comments nor a transcript was in the record, so we
don’t know what specific statements Wallace made, much less if any of these
statements were defamatory or disparaging. Nor was there any other record
showing of economic damage from returned or lost sales. Likewise, there was no
specicfic evidence that the avowed no-longer-users would otherwise have
purchased related specialty massage creams and ointments from ADB. As for the
general sales decline, it was clear that Wallace’s statements “were not made in
a vacuum,” and no specific evidence supported the inference that her
posts were solely, or even principally, responsible for decreased sales.

Lanham Act: Not
commercial advertising or promotion, given the mismatch between ADB’s business
and Wallace’s.

The court also
upheld the award of attorneys’ fees and $125,000 in sanctions under the TCPA.
“Although the award of sanctions is mandatory, the trial court has broad
discretion with respect to the amount of sanctions awarded.” Relevant factors
include: (1) the plaintiff’s annual net profits; (2) the amount of attorney’s
fees incurred; (3) the plaintiff’s history of filing similar suits; and (4) any
aggravating misconduct, among other factors.

Wallace argued for a
large sanctions award “because both parties were self-described millionaires
who have taken aggressive responses to quiet their online critics,” including
advertising the lawsuit against Wallace.  Along with the measures described above, ADB
subsequently sued at least two other critics who posted negative comments about
the FasciaBlaster on the same Facebook group that Wallace used. ADB sought
between $2,000,000 and $5,000,000, plus injunctive relief requiring both women
to “remove disparaging and defamatory comments,” though it ultimately dismissed
those suits.

ADB/Black argued
that no deterrence was necessary because Black was not party to either of these
suits, Wallace didn’t prove that ADB’s other lawsuits were unsound; and it
non-suited its claims anyway, making sanctions unnecessary. It also argued
that, unlike Wallace, the other two “voluntarily participated in ADB-sponsored
studies, signed contracts that included non-disclosure agreements, and then
breached those agreements by publicly complaining about ADB’s products.”
[Query: were these contract provisions federally illegal under the Consumer
Review Fairness Act?]

But even
disregarding those lawsuits, the other evidence of “a deliberate plan to
discredit and quiet their detractors, prevent or remove negative reviews of
ADB’s products, and threaten those who made negative comments” sufficed to
avoid any abuse of discretion.

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