Marble Ridge Capital LP v. Neiman Marcus Grp., Inc.

611 S.W.3d 113

MARBLE RIDGE CAPITAL LP and Marble Ridge Master Fund LP, Appellants

v.NEIMAN MARCUS GROUP, INC., Mariposa Intermediate Holdings LLC, Neiman Marcus Group LTD LLC, The Neiman Marcus Group LLC, and NMG International LLC, Appellees

No. 05-19-00443-CV

Court of Appeals of Texas, Dallas.

Opinion Filed September 30, 2020

Joshua L. Hedrick, Hedrick Kring, PLLC, 1700 Pacific Avenue Ste. 4650, Dallas, TX 75201, David Elsberg, Caitlin Halligan, Kevin C. Hu, Selendy & Gay PLLC, 1290 Avenue of the Americas, New York, NY 10104, for Appellants.

David S. Coale, Michael P. Lynn, Elizabeth Ryan, Christopher Patton, Chisara Ezie-Boncoeur, Lynn Pinker Cox & Hurst, LLP, 2100 Ross Avenue, Ste. 2700, Dallas, TX 75201, Gavin C. P. Campbell, Josh Greenblatt, Jeffrey J. Zeiger, Kirkland & Ellis LLP, 300 North LaSalle Street, Chicago, IL 60654, for Appellees.

Before Justices Molberg and Partida-Kipness¹

OPINION

Opinion by Justice Molberg Marble Ridge² appeals the denial of its amended motion to dismiss Neiman Marcus's counterclaims under the Texas Citizens Participation Act (TCPA), TEX. CIV. PRAC. & REM. CODE §§ 27.001 –.011.³ We affirm for the reasons that follow.

Marble Ridge asks us to reverse the trial court's denial of its TCPA motion based on two disputed issues. After noting that the issue of TCPA coverage is undisputed,⁴ Marble Ridge argues that under section 27.005(c), Neiman Marcus failed to establish a prima facie showing of three essential elements of its defamation and business-disparagement counterclaims. See TEX. CIV. PRAC. & REM. CODE § 27.005(c). Marble Ridge also argues it satisfied its burden under section 27.005(d) by establishing the judicial-proceedings privilege as a valid defense to those counterclaims. See id. § 27.005(d).

We disagree on both issues. Based on the record before us, reversal is not justified because Neiman Marcus met its burden under § 27.005(c) and Marble Ridge failed to meet its burden under § 27.005(d). See id. § 27.005(c), (d).

BACKGROUND

Parties and Procedural History

Marble Ridge Capital, LP, a hedge fund, specializes in "distressed debt investing and other strategic event-driven investment opportunities" and serves as a registered investment adviser⁵ to Marble Ridge Master Fund, LP, a Cayman Islands limited partnership. Marble Ridge was founded by Daniel Kamensky, its managing partner.

The Neiman Marcus Group is a luxury retailer headquartered in Dallas, Texas. It offers apparel, handbags, shoes, cosmetics, jewelry and other items through various brands to customers around the world. Appellees Neiman Marcus Group, Inc., Mariposa Intermediate Holdings LLC, Neiman Marcus Group LTD LLC, The Neiman Marcus Group LLC, and Neiman Marcus Group International LLC are members of the Neiman Marcus Group.

Neiman Marcus has roughly $4.7 billion of publicly traded debt, which is governed by two credit agreements (one, a term loan; the other, revolving credit) and various unsecured senior notes and debentures that were issued pursuant to three indentures (collectively, the "debt documents"). These debt documents contain covenants limiting some Neiman Marcus subsidiaries from taking certain actions, such as paying dividends, making investments, or disposing of assets.

Unrestricted subsidiaries, however, are generally not subject to the covenants, and various exceptions to the covenants exist. These covenant exceptions are called "baskets." Neiman Marcus can use these baskets to designate subsidiaries as unrestricted or to make transactions that otherwise would be prohibited by the covenants.

On December 10, 2018, Marble Ridge sued Neiman Marcus regarding certain designations and transactions it made under the debt documents, alleging, generally, that Neiman Marcus's actions constituted fraudulent transfers of assets. In its original petition, Marble Ridge included four separate claims: (1) intentional fraudulent transfer, (2) constructive fraudulent transfer, (3) fraudulent transfer, and (4) for appointment of a receiver.

On December 14, 2018, Neiman Marcus filed an answer with general, specific, and verified denials. In that pleading, Neiman Marcus also asserted counterclaims for defamation and business disparagement, seeking relief for alleged harms caused by three allegedly defamatory communications Marble Ridge issued and released to the press: a press release on September 21, 2018; a September 18, 2018 letter that accompanied that release; and a September 25, 2018 letter sent to Neiman Marcus and to the press.

Also on December 14, 2018, Neiman Marcus filed a plea to the jurisdiction and, alternatively, special exceptions that challenged Marble Ridge's standing to proceed with its claims. Marble Ridge filed a response to the plea and an amended petition on January 28, 2019. In its amended petition, Marble Ridge added a new claim for declaratory judgment and repeated the same claims and many of the same facts as in its original pleading. Marble Ridge's amended pleading did not include an answer to or any defenses against Neiman Marcus's counterclaims.

The parties filed an additional response and reply regarding Neiman Marcus's plea to the jurisdiction, and on March 19, 2019, the trial court granted the plea and entered an order dismissing Marble Ridge's amended petition for lack of subject matter jurisdiction.

In the meantime, on January 2, 2019, Marble Ridge filed a TCPA motion to dismiss Neiman Marcus's counterclaims and an amended motion twenty days later. Neiman Marcus filed a response in opposition on March 18, 2019. The trial court heard Marble Ridge's amended motion on March 21, 2019, and denied it on April 9, 2019. The order does not provide any reasons for the court's ruling. Marble Ridge timely appealed.

Marble Ridge's Allegedly Defamatory Communications

Neiman Marcus's counterclaims relate to Marble Ridge's communications on September 18, 21, and 25, 2018, all of which were shared with the press. Neiman Marcus alleges that as a result of these communications, it has been harmed in various ways, such as through downgraded credit ratings, lost business opportunities, lost profits and value, tarnish to its valuable brand, and harm to its relationships with customers and business partners.

Neiman Marcus's counterclaims are based on Marble Ridge's statements about certain designations and transactions made under the debt documents, some of which involved the designation of certain "MyTheresa" subsidiaries⁶ as unrestricted subsidiaries and Neiman Marcus's actions regarding certain real estate (the latter of which is referred to as the "PropCo Transaction").⁷

Specifically, Neiman Marcus alleges the following seven statements by Marble Ridge are defamatory:

1. "[B]ased on our review of all relevant public information, the Transactions appear to have violated the Indentures and, accordingly, [Neiman Marcus] may now be in default thereunder" (original emphasis omitted);

2. The Transactions "may trigger defaults under the Indentures";

3. Marble Ridge has "concerns that the Transactions do not comply with the Indentures";

4. What Marble Ridge knows about the Designation and PropCo Transaction "led us to believe that [Neiman Marcus] may be in default under its Indentures";

5. The Designation and PropCo Transaction "may have caused a default under the Indentures";

6. There was a "theft of assets by" Neiman Marcus's private equity sponsors; and

7. In its September 25, 2018 letter, Marble Ridge again referenced "serious questions" about Neiman Marcus's "potential defaults."

Other Context Regarding Marble Ridge's Communications

On September 21, 2018, Marble Ridge issued a four-page press release through PR Newswire concerning Neiman Marcus and certain designations and transactions under the debt documents. The press release was entitled, "Marble Ridge Capital LP Sends Letter to Neiman Marcus Board Challenging the Validity of Self-Interested Asset Transfers and Asserting Company Is in Default under Bond Indentures." The first paragraph stated that "Marble Ridge is a holder of Neiman Marcus 8.75% Senior Notes and Term Loans" and had sent a letter "expressing concern that [Neiman Marcus] may be in default under its Indentures."

The press release included a copy of Marble Ridge's September 18, 2018 letter to Neiman Marcus and its counsel, quoted certain portions of the letter, and stated that the letter "highlight[ed] the recent transfer of the MyTheresa business without any consideration to Neiman Marcus Group, Inc." as having been "[a]mong several improper transactions." The press release also stated that the letter "asked [Neiman Marcus] to provide information in order to assess whether the transactions complied with the Indentures as well as [its] rationale for entering into the transactions."

The press release quoted Kamensky as stating:

It is clear that [Neiman Marcus Group, Inc.'s private equity sponsors] are looking to line their own pockets at the expense of [Neiman Marcus's] other stakeholders and employees. With management serving at their behest, these recent actions threaten the viability of a storied franchise that includes marquee brands such as Neiman Marcus and Bergdorf Goodman. Rather than allowing the theft of assets by [Neiman Marcus Group, Inc. private equity sponsors], we believe a more responsible Board, given its fiduciary obligations, would have engaged in a strategic review to maximize value for the benefit of all of [Neiman Marcus's] stakeholders. The potential sale of MyTheresa and the premier real estate owned by Neiman Marcus would generate billions of dollars in proceeds that could be used to substantially reduce [its] indebtedness and put [it] on more solid financial footing, enabling it to invest in and grow its core business.

Marble Ridge's four-page, September 18, 2018 letter is printed on Marble Ridge Capital LP's letterhead and signed by Kamensky on behalf of "Marble Ridge Capital." The letter begins with general references to the debt documents and to changes in the corporate structure...