U.S. Today v. Ryan, LLC

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USA TODAY A/K/A GANNETT CO., INC., GANNETT PUBLISHING SERVICES, LLC, AND GANNETT SATELLITE INFORMATION NETWORK, LLC, Appellants v. RYAN, LLC, Appellee

No. 09-22-00432-CV

Court of Appeals of Texas, Ninth District, Beaumont

May 2, 2024

Submitted on September 19, 2023

On Appeal from the 284th District Court Montgomery County, Texas Trial Cause No. 22-06-07554-CV

Before Horton, Johnson and Wright, JJ.

MEMORANDUM OPINION

LEANNE JOHNSON Justice

In this accelerated interlocutory appeal, Appellants USA Today a/k/a Gannett Company, Inc., Gannett Publishing Services, LLC, and Gannett Satellite Information Network, LLC (collectively "USA Today," "Appellants," or "Defendants") appeal the trial court's order denying their Texas Citizen's Participation Act ("TCPA") motion to dismiss a claim for defamation filed by Appellee Ryan, LLC ("Ryan," "Appellee," or "Plaintiff'). See Tex. Civ. Prac. &amp Rem. Code Ann. §§ 27.001-27.011 (the TCPA) 51.014(a)(12) (authorizing an interlocutory appeal of an order denying a motion to dismiss filed under the TCPA section 27.003).^[1] As explained below, we affirm.

Background

This dispute concerns articles that USA Today published in print and in other media that Ryan alleges "falsely accused Ryan [] of unlawful and unethical business practices in its efforts to secure legitimate tax savings for its clients." Ryan is a Texas-based tax services provider. The USA Today Defendants are companies engaged in the news media business, including the ownership and publication of a national newspaper, USA Today, and various local newspapers, including The Arizona Republic. We have previously described the parties and this litigation in two other matters challenging trial court rulings, one an interlocutory appeal pertaining to personal jurisdiction as to certain claims and the other a mandamus regarding venue. See USA Today v. Ryan, LLC, No 09-22-00322-CV, 2023 Tex.App. LEXIS 9361 (Tex. App.-Beaumont Dec. 14. 2023, pet. filed) (mem. op.) (finding no specific personal jurisdiction over USA Today as to Ryan's breach of contract claim); In re USA Today, No 09-23-00140-CV, 2023 Tex.App. LEXIS 7963 (Tex. App.-Beaumont Oct. 19, 2023, orig. proceeding) (mem. op.) (finding that when a limited liability company sues for defamation, the county in which the plaintiff resided at the time of the accrual of the cause of action is the county where the limited liability company maintains its principal office, and because the plaintiff did not file its suit for defamation in a county of proper venue, the court conditionally granted mandamus relief).

Ryan's Petition

In June of 2022, Ryan filed its Original Petition against Defendants and in August of 2022, Ryan filed its First Amended Petition.^[2] Ryan asserted several claims against Defendants, however, the only claim at issue in this interlocutory appeal is Ryan's defamation claim.

In its petition, Ryan states that USA Today contracted for Ryan's services, obtained more than $2 million in tax savings, and failed to pay fees owed to Ryan. Then USA published articles that criticized Ryan and described its work as unlawful and "hid the fact" that USA Today had been a client of Ryan's. According to the petition, the articles "falsely claimed that Ryan [] was somehow participating in business practices that were criminal, corrupt and unethical[]" while concealing or not disclosing the fact that USA Today was a client of Ryan's.

According to Ryan, USA Today published defamatory "articles, podcasts, tweets and other false communications about Ryan" across the United States and to a "global internet audience[,]" and the publications contain "demonstrably false assertions of fact or create[] a defamatory impression by misrepresenting material facts, omitting material facts, and juxtaposing facts in a misleading way." Ryan alleged that some of the allegedly defamatory communications pertained to Ryan's work on behalf of a client to seek a tax refund for dyed diesel fuel that was used in mining and processing machinery in Arizona.

The petition states that dyed diesel fuel is used by Ryan's client, Carter Oil Company, as fuel in mining and processing machinery. According to the petition, after doing research, Ryan concluded that the dyed diesel fuel sold by his client to others who incorporated the fuel into the machinery used in mining operations should be exempt from taxation under Arizona statutory law, and Ryan assisted its client, Carter Oil Company, in applying for a refund, but Arizona's Department of Revenue denied the request for a refund in 2014. Ryan's client, Carter Oil Company, subsequently sued the department in Tax Court in 2016 and won. After winning on the issue and entering into a payment plan for receiving refund payments over a period of years, Ryan retained three former state employees as outside consultants to work for Ryan.

According to the petition, USA Today falsely misrepresented Ryan's work on the Arizona dyed diesel fuel issue: (1) by falsely suggesting that Ryan's work was done in secret; (2) by falsely suggesting that Ryan asked the refund payments to be made over a period of years in order to avoid the scrutiny of lawmakers; (3) by falsely suggesting that there was no basis for Ryan's request for the refunds and that the request was contrary to longstanding law; (4) by not reporting (or "concealing") that Ryan had prevailed in Tax Court on its refund request; (5) by misleading readers into thinking that the Governor had fired Woodruff and Nulle for opposing Ryan's refund request rather than for opposing the Governor's position on school funding; (6) by falsely accusing Ryan of breaking Arizona's conflict of interest law by hiring consultants who previously worked for Governor Ducey (Mike Liburdi, Danny Seiden, and Kirk Adams), although those individuals had never worked in the Department of Revenue and were never previously involved in the refund request matter, and the conflict of interest law applies only to individuals and not to companies like Ryan; and (7) by falsely claiming there was an FBI investigation of Ryan by the "public corruption unit." The petition further alleges that USA Today also "falsely accuse[d] Ryan of corruption and unethical business practices" by misrepresenting Ryan's work in a separate matter in North Dakota.^[3]

The petition alleges that USA Today falsely misrepresented Ryan's work on the North Dakota equipment refund issue: (1) by falsely claiming that Ryan had filed "questionable" and "frivolous" refund claims that lacked documentation even though the Tax Court's ruling in favor of Ryan's client was publicly available when USA Today published its article; (2) by falsely claiming that Ryan had "issue shopped" various North Dakota tax department employees to obtain inconsistent or ambiguous responses even though a North Dakota senior tax official had apologized to Ryan after an official had mistakenly blamed Ryan for another company's "issue shopping" and the apology had occurred before USA Today's misleading article; and (3) by failing to correct the record when Ryan notified USA Today of the alleged errors.

The petition asserts that the alleged defamatory statements or publications are defamatory individually and as a whole because they "create a defamatory impression by misrepresenting material facts, omitting material facts, and juxtaposing facts in a misleading way [,]" and a person of ordinary intelligence would perceive USA Today to be "accusing Ryan of serious criminal misconduct, corruption, and unethical business practices." Ryan identified nine statements that USA published that were allegedly defamatory communications about Ryan:

a) A July 14, 2021 series by Craig Harris, Michael Braga, and Javier Zarracina, "Untangling Arizona Gov. Ducey's complex network of interests," which was published on usatoday.com and in print editions of USA Today, states that:

"Here's a map of the main players involved in this failed behind the scenes power play and what each had at stake:"

(Image Omitted)

"The entire basis for Ryan's [dyed diesel refund] claim was novel

"But in mid-2016, the tax officials had rejected the whole idea of the [dyed diesel] tax break. So Ryan LLC and its founder, G. Brint Ryan, had an Arizona problem. To turn that problem into a big win, they would need to beat the state Revenue Department. And they would need the help of one of the most powerful men in Arizona..."

Ryan "needed the governor's help persuading the Department of Revenue to abandon [the dyed diesel] legal action . . . and to [issue the] refund."

".. . changing the rules to issue [the dyed diesel refund] was . . . contrary to long-standing tax law?"

"Nulle knew that state conflict-of-interest laws bar government employees from trying to influence their former employers for a year. Yet, here Liburdi and Seiden were representing the interests of [Ryan] before a state agency that they used to oversee."

During settlement negotiations, Ryan requested the "payment of many millions of dollars over three years, rather than all at once, Nulle told The Republic. Doing it this way, as Ryan wanted, would avoid scrutiny from lawmakers or from the independent Joint Legislative Budget Committee, which likely would raise questions as to why such a large lump sum was flowing out of Revenue's coffers," Nulle said.

b) A July 19, 2021 promotional tweet posted by USA Today employee Craig Harris to his official USA Today Twitter account "CraigHarrisUSAT states:

"ICYMI: These two veteran public servants stopped a $100 million tax giveaway to @GBrintRyan, a campaign donor to Gov. @dougducey. Their reward? @dougducey fired them."

c) On July 28, 2021, Craig Harris appeared as an employee of USA Today on the Gaggle podcast, which...