Le-Vel’s defamation lawsuit against Lazy Man and Money dismissed
Among other things, Le-Vel alleged Lazy Man and Money employed the
business model of using the name of a well-known network marketing company next to the word “scam” in order to drive internet traffic.
(Lazy Man and Money) published and republished numerous written statements to the public on the internet, asserting as fact that Le-Vel: incentivizes its Promoters to make misrepresentations; is violating FTC guidelines and regulations; is illegally violating FDA marketing restrictions; is an illegal pyramid scheme; is a scam; is not a legitimate business; supports Promoters who do not perform any function other than pyramid scheme recruiting; sets up its Promoters for failure as “a [m]athematical [c]ertainty”; is a “Pay to Play scheme”; is overcharging people by fifty times, for hundreds of dollars per year; sells snake oil; sells THRIVE patches that are placebos with no ingredients; sells THRIVE M supplements that are incomplete multivitamins; has never conducted any research to verify that THRIVE works; and has never studied its products in trials using a patch delivery system.
(Lazy Man and Money’s) statements were defamatory per se because they injured (Le-Vel) in (Le-Vel’s) business reputation. Defamation per se entitles (Le-Vel) to a presumption of general damages.
In addition to answering the compliant, Lazy Man and Money cited the Texas Citizens Participation Act and filed a motion to dismiss.
Under the TCPA, “a court shall dismiss a legal action against the moving party if the moving party shows by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the party’s exercise of:
(1) the right of free speech;
(2) the right to petition; or
(3) the right of association.”
A trial court denied the motion in May, 2016. In addition to awarding costs to Le-Vel, the trial court claimed the motion to dismiss was “frivolous or solely intended for delay”.
Lazy Man and Money filed an interlocutory appeal, which was granted by Justices Lang, Brown and Whitehill on March 23rd.
In its appeal, Lazy Man and Money listed ‘ten issues complaining about the trial court’s denial of (the) motion to dismiss‘ (legal note: “Appellee” refers to Le-Vel, “Appellant” refers to Lazy Man and Money).
1. Whether the trial court properly denied Appellant’s Motion to Dismiss pursuant to Chapter 27?
2. Whether the trial court properly awarded Appellees attorneys’ fees, costs, and expenses?
3. Whether the trial court properly determined Appellant’s Motion to Dismiss was frivolous or brought solely for the
purpose of delay?
4. Whether the Post at issue commenting on Appellee, its products and business model was on a matter of public concern, and therefore constituted the exercise of Appellant’s right to freedom of speech under the TCPA?
5. Whether Appellee presented clear and specific evidence that Appellant’s Post is subject to the “commercial speech”
exemption of the TCPA?
6. Whether Appellee presented clear and specific evidence of each element of his defamation claim as required by the TCPA?
7. Whether Appellee presented clear and specific evidence of each element of its business disparagement claim as required by the TCPA?
8. Whether Appellee presented clear and specific evidence that Appellant published false statements concerning Appellee?
9. Whether Appellee is a limited purpose public figure and thus required to prove “actual malice”—which is knowledge of falsity or reckless disregard of the truth that Appellant, in fact, entertained serious doubt about the truth when publishing
10.Whether Appellee presented clear and specific evidence that any of Appellant’s allegedly false statements damaged Appellee?
The Justices considered issues four to ten as sub-issues of the first issue, and addressed them as such.
The Justices ruled the Lazy Man and Money blog post was entitled to protection under the TCPA and ‘decide(d) in favor of (Lazy Man and Money) on (the) fourth issue‘.
Having ruled the TCPA applied to the blog post, the court next examined whether Le-Vel had established “clear and specific evidence to establish a prima facie case.
Lazy Man and Money’s fifth point pertained to whether or not the blog post in question was commercial speech, thus constituting a commercial transaction.
The Justices ruled the Lazy Man and Money post was “not about” selling services (offered elsewhere on the blog).
This pertained to the sixth and seventh issued raised above, which the court felt was also linked to the tenth issue.
The Justices ruled that Le-Vel failed to provide “evidence of pecuniary loss” directly linked “specific lost sales”.
Consequently, we conclude Le-Vel has not met its burden to establish by clear and specific evidence a prima facie case as to business disparagement.
That decision covered the seventh issue. The sixth issue directly pertained to whether or not evidentiary criteria for a defamation case with respect to TCPA had been met.
The court found the same evidence offered by Le-Vel that failed to establish business disparagement, also failed to establish actionable damages.
We conclude Le-Vel has not met its burden to establish by clear and specific evidence a prima facie case for general damages.
The Lazy Man and Money blog post was also ruled to be public speech. Le-Vel had argued the publicly viewable blog post was private speech, however the Justices rejected this argument based on a lack of cited precedent (Le-Vel did cite a legal exception but the Justices ruled it was “inapplicable”).
With respect to malice, Le-Vel cited Lazy Man and Money’s motion to dismiss and argued it
admitted in (its) motion to dismiss that (it)
(1) reviewed Le-Vel’s “Rewards Plan” before publishing the article and
(2) “does not know the contents of [Le-Vel’s proprietary blend] and thus cannot evaluate their value.”
Therefore, according to Le-Vel, evidence in the record shows (Lazy Man and Money) “ignore[d] the results of (its) own factual investigation” and acted with “reckless disregard for the falsity of his statements”.
Additionally, Le-Vel contends the Article and “(Lazy Man and Money’s) own comments” show (Lazy Man and Money) “published (its) statements while entertaining serious doubts about their truth”.
Le-Vel relies solely on portions of that motion to dismiss to support its position as to actual malice.
As per the TCPA Le-Vel was not legally entitled to use Lazy Man and Money’s Motion to Dismiss as evidence.
Consequently, in light of our conclusion above, we further conclude Le-Vel did not meet its burden to establish clear and specific evidence of actual malice.
The court separately addressed malice with respect to Lazy Man and Money’s claim Le-Vel was an “illegal pyramid scheme”.
The court established that Lazy Man and Money based their claim on FTC guidelines with respect to pyramid schemes.
Le-Vel argued that Lazy Man and Money asking readers to provide “details of your retail sales … so we can compare it to the FTC guidelines”, was evidence that the blog “entertained serious doubts that Le-Vel was an illegal pyramid scheme”.
By publishing the claim that Le-Vel was an “illegal pyramid scheme” anyway, malice was inferred.
The Justice’s observed that
the alleged expression of doubt occurred only after the Article was printed and distributed.
Le-Vel does not explain how that evidence shows (Lazy Man and Money’s) state of mind at the time of publication.
Le-Vel cites no authority, and we have found none, in which doubt expressed after distribution, without more, constituted clear and specific evidence
of malice for purposes of a TCPA motion to dismiss.
We conclude Le-Vel did not establish clear and specific evidence of actual malice respecting the statement that Le-Vel is an “illegal pyramid scheme.”
The claim that Le-Vel was a “pay-to-play scheme” was made with malicious intent was also shot down based on a lack of evidence proving the same (at the time of publication).
We conclude Le-Vel did not satisfy its burden respecting damages as to any of the fifteen statements upon which its defamation claim is based.
We decide in favor of (Lazy Man and Money) on his first, sixth, and tenth issues.
Consequently, we need not reach (Lazy Man and Money’s) eighth issue.
The Court of Appeals reversed the trial court’s decision and dismissed Le-Vel’s lawsuit in full.