M&B, a Texas law firm, solicited former dental patients
from plaintiff Kool Smiles’ dental clinics as potential clients. Allegedly, “M&B ran television, radio,
and internet advertisements, and developed a website that strongly implied, or
even accused, Kool Smiles of performing unnecessary, and at times harmful,
dental work on children to obtain government reimbursements.” Kool Smiles sued
for trademark infringement, false advertising (standing?), and “cyber-piracy”
(I assume cybersquatting) under the Lanham Act.
Kool Smiles also sued under state law for defamation, business
disparagement, injury to business reputation, and “trade name and service mark
dissolution” (dilution?). The district
court denied M&B’s anti-SLAPP motion, determining that M&B’s speech was
within the commercial speech exemption to Texas’s anti-SLAPP statute, the Texas
Citizen’s Participation Act. The court
of appeals affirmed the only issue on appeal: the applicability of the TCPA to
the state claims (M&B didn’t appeal the rejection of its attempt to apply
the TCPA to the federal claims as well).
A structural comment: while I have no objection to M&B’s
interlocutory appeal, which does address an important question, merely listing
plaintiff’s claims makes clear that there are bigger problems with this case,
which should be cut down to the disparagement/defamation claims that could,
depending on the facts, potentially be sustained, and the junk should be
kicked out pronto. M&B brought “several”
motions to dismiss, but the district court rejected them all—according to the
district court, the motions just generally attacked the plausibility/particularity
of the complaints, without getting into the doctrinal reasons that the Lanham
Act/trademark claims could not succeed.
The court of appeals had jurisdiction over this
interlocutory appeal because, under the collateral order doctrine, the district
court’s order conclusively determined the disputed question; resolved an
important issue separate from the merits; and was effectively unreviewable on
appeal from a final judgment.
The TCPA provides an expedited means to kick out claims
relating to protected speech and suspend discovery on such claims. The party bringing the claim must establish
“by clear and specific evidence a prima facie case for each essential element
of the claim in question” to avoid dismissal.
Kool Smiles waived the argument that the TCPA doesn’t apply in federal
court because it conflicts with the Federal Rules of Civil Procedure, so that
remains unresolved.
The district court held that M&B’s conduct was within
the “commercial speech” exception to the TCPA, in that M&B is primarily
engaged in selling legal services to clients and that the challenged ads
offered those services to potential customers.
The statute says that it: “[D]oes 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 or a commercial transaction in which
the intended audience is an actual or potential buyer or customer.”
There are no state supreme court cases interpreting the TCPA. Four intermediate cases have analyzed the
commercial speech exemption, but none were exactly on point. One involved a defamation case arising from a
series of articles in a newspaper. The court in that case borrowed the California
anti-SLAPP standard for determining whether the exemption applied, including
whether “the cause of action arises from a statement or conduct by that person
consisting of representations of fact about that person’s or a business
competitor’s business operations, goods, or services.” The stories didn’t arise
out of the sale of newspapers, so the
exemption didn’t apply.
Here, the challenged language arose directly from the
solicitation of M&B’s services. “The
solicitation of a service or good is inherent in the sale of the service.
Otherwise, there would be a mostly arbitrary distinction created. For example,
statements made while fixing a customer’s roof would be exempted, but
statements made while convincing a customer to hire the roofer to fix the roof
would not.”
Two other cases concerned businesses upset with their BBB
ratings. Both held that the commercial speech exemption didn’t apply, so the
BBB’s speech was protected, because the BBB’s intended audience was not an
actual or potential buyer or customer; the BBB sells its services to
businesses, not to the general public, and the latter was the intended audience
of the reviews at issue. Here, though, M&B’s intended audience was its
potential customers—potential legal clients.
M&B relied on California precedent protecting attorney
ads. But there’s a clause in the
California statute not present in Texas’s.
California’s statute’s commercial speech exemption requires that the
speech “consists of representations of fact about that person’s or a business competitor’s business operations, goods, or services.” Soliciting
clients by using statements about noncompetitors doesn’t fall within that
description. But Texas’s commercial speech exemption contains no such
limitation. Thus, M&B’s ads and other
client solicitation are exempted from the TCPA’s protection because M&B’s
speech arose from the sale of services where the intended audience was an actual
or potential customer.
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