AOL, Inc. v. Malouf/Malouf v. Wood
Dallas Court of Appeals, Nos. 05-13-01637-CV and 05-14-00568 (March 26, 2015)
Justices Fillmore, Stoddart (Opinion) and Brown
Is reporting that an area dentist has been “charged with defrauding state taxpayers of tens of millions of dollars in a Medicaid scam” protected free speech or actionable defamation? Applying the Texas anti-SLAPP statute, the Texas Citizens Protection Act (“TCPA”), the Dallas Court of Appeals came down on the side of free speech in these two consolidated appeals involving dentist Richard Malouf. In so doing, the Court relied heavily on its TCPA decision last year, Shipp v. Malouf (which we summarized here), in which Malouf also saw his claims rejected under the TCPA.

Graham Wood wrote an on-line article headlined, “Dentist Richard Malouf Builds Backyard Water Park While Charged with Massive Fraud,” which AOL published. Malouf sued both, contending the article falsely portrayed him as having been charged with criminal fraud. The defendants filed motions to dismiss the dentist’s defamation claims pursuant to the TCPA, which provides for dismissal if the defendant can show a claim “is based on, relates to, or is in response to the party’s exercise” of “free speech” “made in connection with a matter of public concern.” If the movant makes such a showing, the trial court must dismiss unless the plaintiff “establishes by clear and specific evidence a prima facie case for each essential element of the claim in question.”

In this case, Malouf argued at the threshold that the TCPA does not apply in defamation claims and should not apply to media defendants. But the Court summarily rejected both arguments, holding that the statute applies to all “persons” (including media) and that the determination of whether the claim is related to the defendants’ “free speech” does not depend on the truth or falsity of the statements. The Court also had no difficulty concluding the article addressed “a matter of public concern.” Defendants therefore met their burden under the TCPA, and the burden shifted to Malouf.

Malouf claimed that the defendants’ statements to the effect that Malouf was “charged” with defrauding state taxpayers in a Medicaid scam created a false impression that he was charged with a crime, when the claims against him were actually civil in nature—albeit brought in part by the Texas Attorney General. But the Court rejected this argument as well. The article never expressly stated that the “charges” were criminal in nature (blunting Malouf’s argument for defamation per se). Invoking the “substantial truth doctrine,” the Court held that the gist of the statements was true and that omitting the type of proceeding in which the charges were made—whether civil or criminal—did not “materially alter the essence or sting of the story.” Malouf therefore failed to establish a prima facie case on the necessary element of falsity, and dismissal under the TCPA was appropriate.