Day on Torts
TPPA dismissal of a defamation claim related to news stories about an orthodontic business was recently affirmed.
In SmileDirectClub, Inc. v. NBCUniversal Media, LLC, No. M2021-01491-COA-R3-CV (Tenn. Ct. App. Sept. 19, 2024), plaintiff teledentistry business offered teeth straightening services. The business model operated on minimal dentist/orthodontist involvement, and therefore cost significantly less than traditional braces. Defendant news organization published an online article and a television news story that included claims that some of plaintiff’s clients had experienced painful problems and suffered permanent damage. The news story asserted that employees told customers that the initial visit with a dentist was not required, and it discussed a confidentiality agreement required in order to obtain a refund from plaintiff.
Based on these print and television stories, plaintiff filed defamation and Tennessee Consumer Protection Act (“TCPA”) claims against defendant. Defendant filed a petition to dismiss under the Tennessee Public Protection Act (“TPPA”), which the trial court granted. On appeal, dismissal was affirmed.
After denying plaintiff’s constitutional challenge to the TPPA, the Court considered plaintiff’s defamation claims, which were based on both allegedly false statements and defamation by implication. The Court first looked at each of the allegedly false statements identified by plaintiff.
Plaintiff claimed that the statement that a patient had been diagnosed with other conditions by an orthodontist and that the patient could not get in touch with her plaintiff-assigned dentist were defamatory. While the Court found that plaintiff had presented some evidence of falsity for these statements, it nonetheless ruled that plaintiff failed to make a prima facie case because it had no evidence of actual malice. In a public-figure defamation case, “actual malice must be proved by clear and convincing evidence.” (internal citation omitted). Plaintiff asserted that defendant’s decision to not tell plaintiff that two patients would be included in the story showed actual malice, but the Court disagreed. Because plaintiff could not prove this element, the Court affirmed the ruling that plaintiff failed to make a prima facie case of defamation based on these statements.
Next, plaintiff alleged that the report said that California had passed a law requiring x-rays before a person could get this type of treatment, but that the new law actually required “bone imaging.” The Court found this “distinction immaterial because a statement of the truth would not have a different effect on the reader or viewer,” and it therefore ruled that the statement was not materially false. The Court also found that plaintiff failed to show that the statement that a new California law would prohibit its confidentiality agreements was false.
Plaintiff further alleged that the statement that employees told clients they would not have to see a dentist was untrue. While hidden camera footage showed some employees saying that seeing a dentist was technically required, the Court ruled that the statement was not materially false, as the “gist or sting of this part of the Article is that [plaintiff’s] employees were contradicting” alleged policy. The Court therefore ruled that plaintiff failed to make a prima facie case of defamation by false statement to survive the TPPA petition.
Next, the Court considered plaintiff’s defamation by implication claim. Under this theory, “a true statement of fact may support a defamation claim if the statement reasonably conveys a defamatory meaning.” (internal citation omitted). “The test is whether the statements made are capable of implicitly bearing a defamatory meaning when read by a reasonable person.” (internal citation omitted). First, plaintiff alleged that the stories implied that dentists were not actually involved in the process. While the Court agreed that the stories made this implication, it disagreed that this implication was false. Dentists had no contact with patients unless there was a clinical question, so the Court ruled that this implication was not materially false.
Plaintiff also alleged that the stories implied that the treatment could cause permanent harm. The Court found that plaintiff pointed to no evidence that the treatment could not cause permanent injuries, so this implication was also not materially false.
Plaintiff’s allegation that the stories implied that the treatment was not effective was ruled to be tied into the analysis of whether the treatment could cause harm. Further, although plaintiff asserted that the stories implied plaintiff was a dishonest company, the Court ruled that such an inference would be a matter of opinion and therefore not grounds for a defamation claim. Accordingly, plaintiff did not make a prima facie case of any of its claims for defamation.
Next, the Court analyzed plaintiff’s TCPA claim. While the trial court ruled that the TCPA did not apply, the Court of Appeals disagreed. The Court wrote that, to make a TCPA claim, plaintiff would need to show that “(1) another person, i.e. the defendant, engaged in an unfair or deceptive act or practice described in § 47-18-104(b), and (2) that the defendant’s conduct caused an ascertainable loss of money or property.” (internal citation omitted). Notably, the TCPA includes “disparaging the goods, services, or business of another by false or misleading representations of fact” as an unfair or deceptive act. (internal citation omitted). Because plaintiff could make a showing that at least some statements in the report were false, it could satisfy this burden. However, because plaintiff’s claim was based on disparagement of a public figure, plaintiff also had to show actual malice to succeed. “[P]laintiffs cannot avoid the First Amendment limitations on defamation claims by seeking publication damages under non-reputational tort claims, while holding to the normal state law proof standards for those torts.” (internal citation omitted). Because plaintiff could not show actual malice, then, its TCPA claim also failed.
The Court of Appeals affirmed dismissal of all claims under the TPPA, and ruled that defendant was entitled to appellate attorney fees under the statute.
As this case illustrates, more and more defamation plaintiffs are being faced with petitions to dismiss under the TPPA. When filing a defamation claim, litigants should consider whether the TPPA applies and how it might impact their case.
This opinion was released nineteen months after oral arguments.