Justice WILLETT delivered the opinion of the Court.
This defamation case specifically concerns libel (defamation in written form), but Socrates' perception of slander (defamation in spoken form) applies with no less force.
In 1995, Waste Management of Texas, Inc. (WMT) and Texas Disposal Systems Landfill, Inc. (TDS) competed for waste-disposal and landfill-services contracts with the cities of Austin and San Antonio. Fearing it was losing the bidding debate, WMT anonymously published a community "Action Alert" claiming that TDS's landfills were less environmentally sensitive than they actually were.
The right to speak freely is, of course, an enumerated right enshrined in
Today's case distills to this question: To what degree is WMT liable for libel? To answer that question, we consider three separate inquiries:
The amici curiae
In May 1995, TDS and the City of San Antonio began negotiating a contract for TDS to assume operations of San Antonio's Starcrest Transfer Station. The contract would have allowed TDS to haul San Antonio's waste from the Starcrest Station to TDS's landfill, starting in 1997. In 1996, the San Antonio City Council passed an ordinance authorizing the city manager to negotiate and execute a contract in accordance with the proposed agreement between San Antonio and TDS, which was attached and incorporated into the ordinance. But the parties had not yet executed a final contract by 1997 — the originally proposed start date.
Concurrently with the San Antonio negotiations in 1996, the City of Austin issued a request for proposals, seeking bids from waste-disposal and landfill-services companies. TDS and WMT submitted bids and were selected to proceed to Phase II of the bidding process.
In early 1997, WMT anonymously published a community "Action Alert" memorandum, which was distributed to environmental and community leaders in Austin, including several Austin City Council members. WMT had hired a consultant, Don Martin, to draft the document. Martin gathered information from several WMT officials, who then approved, as TDS alleged, the document for publication. Martin sent the document to an Austin environmental advocate who then faxed it to a designated group of recipients. Martin focused the Alert on TDS's proposal with San Antonio regarding Starcrest Station.
The Alert effectively claimed that TDS's landfill was less environmentally sensitive than it actually was and as compared to other area landfills. Specifically, the Alert claimed that TDS's landfill in Travis County (1) had received an exception to federal environmental rules, (2) was operating without a fully synthetic liner, and (3) did not have a leachate collection system to prevent water that had come into contact with waste from contaminating groundwater. The Alert closed by urging readers to contact San Antonio city officials, Travis County officials, and the San Antonio Express News with any concerns.
TDS sued WMT in late 1997 for defamation, tortious interference with an existing or prospective contract, and business disparagement. TDS alleged that the Alert caused economic damages by delaying the execution of the San Antonio and Austin waste disposal contracts.
After TDS filed suit, WMT published a number of communications concerning TDS and its business. WMT sent a memorandum to the San Antonio Public Works Department, questioning whether the zoning ordinance of the Starcrest Station even permitted TDS to operate the Station. WMT also anonymously issued a memorandum to the San Antonio City Council
The trial court considered motions for summary judgment and dismissed all of TDS's claims except for defamation.
At trial, TDS requested an instruction on defamation per se and the related issue of presumed damages, but the trial court declined to charge the jury on either. The jury found that WMT's statements were false and that TDS had shown by clear and convincing evidence that WMT knew of their falsity or had serious doubts about their truth. The jury thus made an affirmative finding on actual malice, but it determined that TDS had suffered no actual damages as a result of the publication. The trial court entered a take-nothing judgment against TDS, which TDS appealed.
In a first appeal,
In the second trial, the trial court charged the jury on defamation per se and gave related instructions on presumed damages. The jury returned a verdict in favor of TDS, awarding it $450,592.03 for reasonable and necessary expenses, $0 for lost profits, $5 million for injury to reputation, and $20 million as exemplary damages based on the jury's finding that WMT published the defamatory statements with malice. The trial court applied the statutory cap to the jury's award of exemplary damages, treating the $5 million award for injury to reputation as non-economic damages,
The parties filed cross-petitions in this Court. In one issue, TDS contends the trial court erred by categorizing its reputation damages as non-economic damages for purposes of the statutory cap on exemplary damages. In ten issues, WMT asserts evidentiary and procedural defects. We first consider whether a for-profit corporation may recover for injury to reputation.
WMT makes three arguments regarding reputation damages:
WMT argues in its brief that corporations cannot suffer reputation damages because corporations are not people. But WMT's position has not been entirely consistent. At oral argument WMT urged that corporations can never suffer reputation damages, but its Response Brief concedes that corporations may suffer some types of reputation damages: "lost profits, rehabilitative expenses, and diminished value of the corporation — are the only damages a corporate entity's reputation can sustain." In any event, we discern WMT's contention to be that defamation per se is an inherently personal tort, and that it was designed to address harm that only natural persons may suffer, such as mental anguish, sleeplessness, or embarrassment. We have never adopted such an interpretation. On the contrary, it is well settled that corporations, like people, have reputations and may recover for harm inflicted on them.
Our 1943 decision in Bell Publishing Co. v. Garrett Engineering Co. concerned similar facts. In that case, the corporate plaintiff, Garrett, sued an individual, Dr. Gober, and Bell Publishing Company for publishing an allegedly libelous article.
Dr. Gober addressed his article to the residents of Temple, and generally suggested a call to action to "thresh[] out and definitely determin[e] whether or not Temple really needs this proposed utility."
Garrett sued Gober and Bell for libel, alleging that statements in the article were false, made with malice, damaged its reputation, and injured the company financially.
We agreed with the court of appeals that the statements were libelous per se.
We have reaffirmed three times Bell's holding that a corporation may be libeled,
In its sole issue, TDS argues that the trial court erred by categorizing the jury's award of injury to reputation as non-economic damages instead of economic damages, which would result in a higher allowable statutory cap on exemplary damages. TDS contends that reputation damages of a for-profit corporation are economic damages because the text of the 1995 version of the statutory cap did not specifically define non-economic damages, and because it did not expressly exclude reputation damages from the definition of economic damages. TDS says the Legislature defined economic damages as "compensatory damage for pecuniary loss," and several courts of appeals have defined pecuniary loss as "including money and everything that can be valued in money." Even Black's Law Dictionary defines the term as "[a] loss of money or of something having monetary value."
Section 41.008(b) states:
Section 41.008(b) remained unchanged as a result of a 2003 amendment.
The crux of TDS's argument is that Section 41.001 did not specifically define "non-economic damage" — nor did it expressly exclude injury to reputation from economic damage.
In 2003, the Legislature amended Section 41.001(4) and added an entirely new subsection:
TDS avers that the 2003 amendment "recharacterized reputation damages as non-economic," and that we should focus on what the 1995 statute intended — that a for-profit corporation's injury to reputation must be economic because those damages are pecuniary loss and not expressly excluded by the statute's text. We decline to adopt such an interpretation.
Section 41.001(4) defines "economic damages" as "compensatory damages for pecuniary loss." Compensatory damages may be divided into two other categories: pecuniary harm and non-pecuniary harm.
Injury to one's person, by pain or humiliation, is not analogous to pecuniary loss.
Non-pecuniary harm includes damages awarded for bodily harm or emotional distress.
Professor Dobbs's first two categories concern pecuniary losses, while his third involves non-pecuniary losses. Applying his categorical delineations for a personal injury to this case, injury to reputation falls into the third category as a non-pecuniary loss, because it is neither time lost nor an expense incurred.
The Second Restatement, in defamation per se cases, also considers injury to reputation to be a non-pecuniary harm.
Finally, the draft Third Restatement also classifies injury to reputation as a non-economic harm. The draft Third defines "economic loss" as the "pecuniary damage not arising from injury to the plaintiff's person...."
According to the draft Third, if harm to one's reputation is "a kind of personal injury," it may not be considered an economic loss "because the law takes an expansive view of what counts as a personal injury."
Thus, both the Restatements and commentators recognize the distinction between the non-pecuniary injury and the pecuniary remedy.
Our cases likewise treat an individual's reputation damages as non-economic.
Though the plaintiff in Bentley was an individual, our conclusion focused on the nature of the damage suffered, not on whether the plaintiff was an individual or a corporation. We did not strictly cabin our opinion to an individual's reputation damages. We said generally: "Non-economic damages like these [mental anguish, character, and reputation damages] cannot be determined by mathematical precision; by their nature, they can be determined only by the exercise of sound judgment."
Just last year, we reaffirmed that an individual's reputation damages are non-economic
Regarding damages, we held: "Actual or compensatory damages are intended to compensate a plaintiff for the injury she incurred and include general damages (which are non-economic damages such as for loss of reputation or mental anguish) and special damages (which are economic damages such as for lost income)."
Our decisions in business disparagement cases bolster our conclusion here.
We have previously noted the distinction between business disparagement and defamation cases. To recover for business disparagement "a plaintiff must establish that (1) the defendant published false and disparaging information about it, (2) with malice, (3) without privilege, (4) that resulted in special damages to the plaintiff."
As we explained in Hancock, and reaffirm today, general damages in defamation cases "are non-economic damages such as for loss of reputation" while special damages "are economic damages such as for lost income."
We see no sound basis to depart from our settled precedent treating reputation damages as non-economic damages. Thus, in line with our prior decisions, and the consensus of the Restatement and other commentators on the nature of reputation damages, we hold that, for purposes of the previous version of Section 41.001(4),
WMT contends that the evidence was legally insufficient to support the jury's award to TDS of $5 million in reputation damages, $450,592.03 in remediation costs, and $20 million in exemplary damages.
A party will prevail on its legal-sufficiency challenge of the evidence supporting an adverse finding on an issue for which the opposing party bears the burden of proof if there is a complete absence of evidence of a vital fact or if the evidence offered to prove a vital fact is no more than a scintilla.
In conducting a legal-sufficiency review, we consider the evidence in the light most favorable to the judgment, crediting evidence that a reasonable fact finder could have considered favorable and disregarding unfavorable evidence unless the reasonable fact finder could not.
In Gertz v. Robert Welch, Inc., the United States Supreme Court held that the First Amendment restricts the damages that a private individual can obtain from a media defendant for defamation that involves a matter of public concern.
As a public figure, TDS was required to prove that WMT published the Action Alert with actual malice.
WMT raises several points against the jury's actual malice finding. It contends that (1) the record shows TDS failed to establish the Action Alert's authors' subjective states of mind regarding their reckless disregard for the falsity; (2) the technical, jargon-filled statements, without an explanation of their meaning, cannot be reasonably understood, and thus cannot form a basis for actual malice; and (3) ambiguous semantical differences in the language cannot form a basis for actual malice.
First, WMT argues that TDS did not carry its burden in establishing by
Second, WMT contends that the technical, jargon-filled statements in the Alert cannot form a basis to establish actual malice. WMT cites two cases in support of its argument.
Finally, WMT asserts that ambiguous semantical differences in the language
We think the evidence is legally sufficient on the issue of whether WMT published the Alert with knowledge of the falsities it contained. We now turn to the sufficiency of the evidence to support the damages awarded by the jury based on its finding of actual malice.
The damages issue is one of constitutional dimension. In Gertz, the Supreme Court cautioned that "[t]he largely uncontrolled discretion of juries to award damages where there is no loss unnecessarily compounds the potential of any system of liability for defamatory falsehood to inhibit the vigorous exercise of First Amendment freedoms."
Although the Court's analysis only considered such damages where the defendant was not shown to have acted with actual malice,
In today's case, we must determine whether there was any evidence to support the jury's award in favor of TDS for $450,592.03 in remediation costs and $5 million in reputation damages, and $20 million in exemplary damages, which the trial court statutorily reduced to $1,651,184.06. We hold that the evidence is sufficient to support the award of remediation costs and exemplary damages, but there is no evidence to support the amount awarded for reputation damages.
The extent of TDS's evidence of injury to its reputation was the testimony of its chief executive officer, Bob Gregory, who testified that TDS's reputation was "priceless." Gregory later estimated that the value of TDS's reputation was in the range of $10 million. At oral argument, when asked what evidence would quantify TDS's reputation damages, TDS directed us to three separate exhibits in the record that it contended support the $10 million figure. We can find no relationship between the exhibits and the $10 million estimation.
The first exhibit cited by TDS contains 271 pages of invoices for consulting and attorney expenses, carrying costs and depreciation expenses on equipment,
The second and third exhibits are similarly uninstructive. They concern only the alleged decrease in TDS's "base business" — TDS's business irrespective of the Austin and San Antonio contracts. But none of these exhibits evidences any actual injury to TDS's reputation either; instead,
We recognize that assessing injury to reputation is an inexact measurement, but the jury is not unconstrained in its discretion.
Here, we cannot say that the amount awarded by the jury any more fairly and reasonably compensates TDS for its injury to reputation than it appears to be disapproval of WMT's conduct. There was no evidence that $5 million would reasonably and fairly compensate TDS for damage to its reputation, and we accordingly hold that this award cannot be sustained.
WMT also challenges the sufficiency of the evidence of TDS's remediation costs. Specifically, WMT contends that TDS cannot show that the Alert caused TDS's remediation costs. On the contrary, TDS's evidence of damages consisted of 271 pages of invoices, expenses, time spent on curative work, supplies, mileage, etc. This type of evidence does not support the award for reputation damages, as we discussed above, but it does provide some evidence of the remediation costs TDS incurred as a result of the Alert. TDS's witnesses, including its chief executive officer, Bob Gregory, testified that TDS's staff devoted more than $700,000-worth of time
Although the Alert failed in its purpose to compensably tarnish TDS's image, its publication and the resulting fallout still caused TDS to incur out-of-pocket consultant expenses — expenses that would not have been incurred but for the Alert — which are detailed by the invoices submitted by the consultants. These are exactly the type of special damages one would incur in remedying the effects of a publication similar to the one present here. Therefore, we hold that evidence is sufficient to support the jury's award of remediation costs and affirm that portion of the verdict.
Because the evidence was sufficient to support the jury's finding of actual malice and because TDS established actual damages
We now turn to the trial court's award of both pre- and post-judgment interest. Because we determine here that the amount of the final judgment rendered by the trial court is not supported by the evidence, we also remand this case to the court of appeals for it to revisit the issue of judgment interest. One might think the recalculation is relatively straightforward, but more is involved. The answer becomes more complicated where, as here, the trial court awarded both pre- and post-judgment interest — both of which are affected by the amount of the final judgment. Another important factor comes into play and asks whether, on appeal, TDS moved for and was granted any extensions of time, because judgment interest does not accrue for the period of any extension.
Summing up:
Accordingly, we affirm in part and reverse in part the court of appeals' judgment. TDS is entitled to actual damages of $450,592.03 for its remediation costs, and nominal damages for injury to its reputation. Moreover, because the jury's finding of actual malice is amply supported by the evidence and because TDS submitted sufficient evidence of actual damages, TDS is entitled to exemplary damages. We remand to the court of appeals for it to reconsider the amount of exemplary damages and pre- and post-judgment interest awards in light of this decision.
We have noted that this type of defamation is one "of the owner of the business and not of the business itself," and that the damages are "of the owner, whether the owner be an individual, partnership or a corporation." Matthews, 339 S.W.2d at 893. Our most instructive piece on the distinction between the owner and the business may be found in Matthews in which we analyzed the two in light of the libel statute at issue in that case. There, the libel statute defined defamation as affecting "the memory of the dead," "one who is alive," "him," "any one," and "such person." Id. (citation omitted). Relying on our prior precedent and the Restatement, we held that while the very wording of the libel statute precluded its application to a business, it did not change the applicability to a corporation. Id. (citing Bell Publ'g Co., 170 S.W.2d 197; RESTATEMENT OF TORTS § 561 (1938)). We further noted that the defamation specifically injures the reputation of the owner, id. — in other words, not the owner's business. Thus, applying our prior holdings to this case we discern the publication to be defamatory of TDS (the owner) and not the landfill-services operations (the business), and the resulting damages are those TDS suffered as the owner of the business.
Sections 1 through 5 of the draft Restatement Third were approved by the membership of the American Law Institute at the 2012 Annual Meeting, subject to the discussion at the Meeting and to editorial prerogative. Proceedings at 89th Annual Meeting: American Law Institute, 89 A.L.I. PROC. 22-47 (2012). According to the Institute: "Once it is approved by the membership at an Annual Meeting, a Tentative Draft or a Proposed Final Draft represents the most current statement of the American Law Institute's position on the subject and may be cited in opinions or briefs ... until the official text is published." Overview, Project Development, THE AMERICAN LAW INSTITUTE, http://www.ali.org/index.cfm?fuseaction=projects.main (last visited April 25, 2014). Section 2 of the draft Third is consistent with our analysis today.
