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AUSTIN, Texas (Legal Newsline) – The Supreme Court of Texas has reversed an appellate court's ruling and dismissed a defamation case against the Dallas Morning News.
On May 10, Associate Justice Jeffrey V. Brown opined that the 2nd District Court of Appeals erred when it denied dismissal to the Dallas Morning News under the Texas Participation Act.
"We hold that the respondents have not carried their burden to survive dismissal under the Act. We also determine that the News’s coverage of third-party judicial allegations is statutorily protected," Brown wrote.
The case will now be remanded back to trial court to enter the judgment of dismissal.
Reporter Kevin Krause and the Dallas Morning News were sued by Lewis Hall and Richard Hall, individually and doing business as Rxpress Pharmacies and Express Compounding, after publishing a series of articles about the Halls and their business.
Rxpress, a compounding pharmacy, was named within some of those articles stating that federal authorities were investigating the company for allegedly paying "kickbacks" to doctors and other alleged wrongdoings, the ruling states.
The ruling states Rxpress' former bookkeeper alleged that the company "paid kickbacks to physicians, schemed with other physicians to circumvent anti-kickback laws, and committed tax evasion and stock fraud" totaling millions of dollars, and that the News had covered the Halls' lawsuit against the bookkeeper over her allegations. Rxpress contends that the articles proved to be defaming and denied being guilty of any misconduct.
Attorneys for the Dallas Morning News argued that the search warrant issued by federal authorities involving a pharmaceutical marketer with ties to the owners of Rxpress establishes its substantial truth. Within the text of the search warrant, at least one of Rxpress' owners was named regarding obtaining information.
The justices ruled Rxpress and the Halls failed to carry their burden to survive dismissal under the Texas Participation Act.
"We also determine that the News’s coverage of third-party judicial allegations is statutorily protected," Brown wrote.
The Court of Appeals had previously ruled that the News did not establish a substantial truth defense and that Rxpress had met its burden to state a case of defamation.