Opinion
Civil Action No. 3:01-CV-1377-AH, Civil Action No. 3:01-CV-1378-AH
October 17, 2002
MEMORANDUM OPINION AND ORDER
Pursuant to the consents of the parties, the provisions of 28 U.S.C. § 636 (c), the District Court's Order of Reassignment filed on December 7, 2001, and this court's Order consolidating the above actions filed on August 6, 2002, came on to be considered Defendants ProSTEP, Inc. and Kevin Lehmann's (collectively "Defendants") Motions for Summary Judgment filed on May 31, 2002 and August 12, 2002, respectively; Plaintiffs Sally Koch and Thomas Klesmit's responses filed on July 8, 2002 and September 3, 2002, respectively; and Defendants' reply to Plaintiff Koch's response filed on August 2, 2002. Having considered the relevant pleadings, including the parties' summary judgment briefs and appendices, as well as applicable authorities, the court, for the reasons stated herein, GRANTS in part and DENIES in part Defendants' Motions for Summary Judgment.
I. Factual Background
Plaintiffs Sally Koch ("Koch") and Dr. Thomas Klesmit ("Klesmit") (collectively referred to as "Plaintiffs") each brought suit in Texas state courts- Dallas and Rockwall Counties, respectively- against Defendants ProSTEP, Inc. ("Prostep") and Kevin A. Lehmann ("Lehmann") (collectively referred to as "Defendants") alleging that Defendants: 1) published libelous statements about Plaintiffs, 2) violated the Texas Free Enterprise and Antitrust Act of 1983, 3) defamed Plaintiffs' character, and 4) tortiously interfered with Plaintiffs' business relationships ( See, e.g., Koch's Original Compl. (Ex. A, Tab 1 attach. to Koch's Mem. in Support of Mot. for Summ. J.) and Klesmit's Original Compl. (Ex. A, Tab 1 attach. to Klesmit's Mot. for Summ. J.)).
Plaintiffs erroneously listed "Lehman" on their respective state court petitions. Defendants have also erroneously listed "Lehman" in their Memorandum in Support of their Motion for Summary Judgment in Koch's action. The court refers to this defendant using the spelling which appears in his affidavits.
The parties each non-suited this cause of action on July 8, 2002 and on September 3, 2002, respectively.
Mr. Lehmann is the founder and president of ProSTEP, an Internet networking and marketing company (Defs.' Mem. in Support of their Mot. for Summ. J. in Koch's action ("Defs.' Mot.- Koch") at 3, ¶¶ 8-9). ProSTEP is a multi-level marketing company which provides various services to its members including written and video training materials, prospective newsletters, handbook brochures, merchandise catalogs, as well as marketing training sessions either in person or via telephone, and proprietary communications technology ( Id. at 4, ¶ 13; Defs.' App.-Klesmit Ex. B, Tab 5 at 3 ¶ 5). ProSTEP also provides its members with business leads, as well as monthly commissions for the recruitment of new "downline" members (Defs.' Mot.-Koch at 5-6, ¶¶ 14-15). ProSTEP also sponsors/hosts various websites including the Wealth Builders Network ("WBN") ( Id. at 3, ¶ 11). Both Koch and Klesmit became members of ProStep in September of 1999 ( Id. at 3, ¶ 10; Defs.' Mem. in Support of Mot. for Summ. J. in Klesmit's action ("Defs.' Mot.-Klesmit") at 3, ¶ 10). On approximately June 7, 2001, Lehmann terminated both Koch and Klesmit's ProSTEP memberships (Defs.' Mot.-Koch at 5, ¶ 16). That same day, Lehmann drafted two e-mails informing all individuals on the ProSTEP listserv of his decision to terminate both Koch and Klesmit as well as the underlying rationale thereof (Klesmit's Resp. at 3, ¶ 17). In his e-mails, Lehmann pointed out that Koch and Klesmit had received training from ProSTEP's home office, solicited assistance from ProSTEP for their WBN website, and downplayed their relationship and/or stature within ProSTEP in an attempt to private-label various facets of ProSTEP (Klesmit's App. at 9-12). Lehmann also noted that Klesmit had publicly indicated a desire to move the entire WBN organization/website from ProSTEP onto "My Smart Networker" ( Id. at 9, 11), another website sponsor/host (Klesmit's Aff at 6, ¶ 8).
In light of the commonalities between Defendants' Memorandum filed in Koch's action and Defendants' Memorandum filed in Klesmit's action, the court will hereinafter refer generally to the former, unless circumstances require otherwise.
This phrase appears to refer to individuals who join ProSTEP through existing members. By way of an example, if member A solicits B and C to become members and, in turn, member B solicits D and E, while member C solicits F and G, members B through G constitute A's downline members. Thereafter, every new member who is traceable back to member A is in his/her downline.
The assumed name of Preventech, Inc of which Klesmit was the sole shareholder. See Klesmit's App. Ex. 2 at 6, ¶ 4 ("Klesmit's Aff.").
When e-mail is addressed to a listserv mailing list-such as "prostep-info" in the instant case-it is automatically sent to everyone on that list. Listserv at http://www.webopedia.com/TERM/L/Listserv.html.
Another name for SmartNetworker discussed infra.
Klesmit is a principal of the WBN organization/website and is the founder, as well as the president and CEO, of "SmartNetworker, Inc." ("SmartNetworker") (Defs.' Mot.-Klesmit at 5-6, ¶ 18; see also attach. App. ("Defs.' App.- Klesmit") at Ex. A, Tab 12 (internet article)). Koch is a former executive director of the WBN and is a vice president and corporate officer of "SmartNetworker" (Defs.' Mot. — Koch at 5, ¶ 18; see also Defs.' App. — Koch at Ex. A, Tab 4 ("Koch's Dep.") at 9, 13). Koch and Klesmit recruited individuals to join their NFLI downlines. Some of these individuals also joined ProSTEP and become a part of Koch and Klesmit's ProSTEP downlines, while others did not. Those NFLI members who joined ProSTEP were also members of the WBN (Koch's Aff. at ¶¶ 2-4; Klesmit's Aff. at ¶¶ 2-4).
Koch and Klesmit also personally operate Nutrition for Life International ("NFLP"), a multi-level marketing business which provides health products (Koch's Aff. at 1, ¶ 2; Klesmit's Aff. at 5, ¶¶ 2; Defs.' App.-Koch Ex. B, Tab 4 at 2, ¶ 4 (Klesmit's Compl. to American Arbitration Association)).
Following receipts of process in state court, Defendants, on July 17, 2001, removed Plaintiffs' suits to this court on the basis of diversity of citizenship jurisdiction, pursuant to 28 U.S.C. § 1332 ( See, e.g., Defs.' Notice of Removal). Based on the common issues of fact and law underlying Plaintiffs' suits, the same were consolidated pursuant to Federal Rule of Civil Procedure 42(a) (See Order filed on August 6, 2002).
II. Analysis
A. Summary Judgment — Standard of Review
To prevail on a motion for summary judgment, the moving party has the initial burden of showing that there is no genuine issue of any material fact and that judgment should be entered as a matter of law. FED. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10 (1986). The materiality of facts is determined by substantive law. Anderson v. Liberty Lobby, 477 U.S. at 248, 106 S.Ct. at 2510. An issue is "material" if it involves a fact that might affect the outcome of the suit under governing law. See Burgos v. Southwestern Bell Telephone Co., 20 F.3d 633, 635 (5th Cir. 1994) (citing Anderson, 477 U.S. at 248, 106 S.Ct. at 2510). Once the moving party has made an initial showing, the party opposing the motion for summary judgment may not merely rely on his pleadings, but must come forward with competent evidentiary materials that establish a genuine fact issue. Anderson, 477 US at 256-257, 106 S.Ct. at 2514; see also Matsushita Elec. Indus. Co., Ltd v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56 (1986). Neither conclusory allegations nor hearsay statements are competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996) (citation omitted). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports the opponent's claim. Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (citation omitted). Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support a nonmovant's opposition to the motion for summary judgment. Id. (citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 832, 113 S.Ct. 98, 121 L.Ed.2d 59 (1992)). The court must resolve any factual controversies in favor of the non-moving party. Richter v. Merchants Fast Motor Lines, Inc., 83 F.3d 96, 98 (5th Cir. 1996) (citation omitted). Thus, in reviewing all of the evidence, the court must consider it in a light most favorable to Plaintiffs' claims, drawing all factual inferences therefrom and making all credibility determinations related therefrom in their favor. However, summary judgment will be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."
Celotex Corp. v. Catrett, 477 U.S. at 322.
B. Plaintiffs' Claims and Applicable Law 1. Defamation and Libel
Texas law defines libel as a "defamation expressed in written . . . form that tends to . . . injure a living person's reputation and thereby expose the person to public hatred, contempt or ridicule, or financial injury or to impeach any person's honesty, integrity, . . ., or reputation. . . ." Durkel v. St. Joseph Hospital, 78 S.W.3d 576, 584 (Tex.App.-Hous. [14th Dist.] 2002, no pet.) (citing TEX. CIV. PRAC. REM. CODE § 73.001). A cause of action for libel arises when one publishes a false and defamatory statement of fact of and concerning another. Abbott v. Pollock, 946 S.W.2d 513, 519 (Tex.App.-Austin 1997, writ denied); see also Van v. Anderson, 199 F. Supp.2d 550, 569-70 (N.D. Tex. 2002) (citing Halbert v. City of Sherman, 33 F.3d 526, 530 (5th Cir. 1994) (defamation defined as "a defamatory statement . . . published to a third person without legal excuse"). Publication of defamatory words occurs when such words are communicated either orally or in writing to a third person who is capable of understanding their defamatory import. See id. at 519; Mars, Inc. v. Gonzalez, 71 S.W.3d 434, 436-37 (Tex.App.-Waco 2002, pet. denied) (citing Simmons v. Ware, 920 S.W.2d 438, 444 (Tex.App.-Amarillo 1996, no pet.) (publication of an allegedly libelous letter requires a showing that the letter was received, read, and understood by a third person)). In order to be libelous, a statement must be capable of having a defamatory meaning. See Musser v. Smith Protective Servs., 723 S.W.2d 653, 655 (Tex. 1987). Whether words are capable of a defamatory meaning is a question of law based on how a person of ordinary intelligence would perceive the entire statement in light of the surrounding circumstances. Marshall v. Mahaffey, 974 S.W.2d 942, 950 (Tex.App.-Beaumont 1998, pet. denied).
Accordingly, to prevail on a libel claim, a plaintiff must establish that the defendant: 1) published a false statement; 2) that was defamatory; 3) while acting with either actual malice- if the plaintiff was a public figure- or negligence- if the plaintiff was a private individual- regarding the truth of the statement. WFAA-TV Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998)).
As mentioned above, Lehmann composed two e-mails which were in turn distributed to every individual on ProSTEP's listserv, including individuals on both Koch and Klesmit's respective NFLI and WBN downlines (some of which were and were not also members of ProSTEP), on June 7, 2001 ( See, e.g., Koch's App. at 5-8). According to Koch and Klesmit, the following excerpts from Lehmann's first e-mail form the basis of their defamation and libel claims:
These e-mails appear to convey substantially similar messages.
By now you are probably aware of a new startup company called My Smart Networker which promotes its own autoresponder and network marketing support, along with plans to sell its own leads. What you may not be aware of is that the founders and leaders of this group, Tom Klesmit, Michael Debord, Sally Koch . . ., have been in ProSTEP (some are even Master and Executive Consultants) for quite some time. . . . Although these individuals have been providing support to their ProSTEP downlines, from day one they tried to keep quiet about the following:
1) A great deal of the training presented to their organization has originated from the ProSTEP Home Office.
2) They have, on numerous occasions, visited the Home Office and solicited our help in designing their WBN website, asked for special modifications to our business model to better serve their members, and worked on a one-to-one basis with several staff members in designing a great deal of the material they have made available to their organization.
3) They have requested [sic] we do not send anyone in their downline Hotline News, training information, or other e-mails which go out to all ProSTEP members. Their intent was to try to private-label ProSTEP to their needs and integrate us with their system as fluidly as possible.
4) They have specifically requested that we never feature them in our Prospective magazine, [sic] or even mention the fact that some are Master and Executive Consultants with ProSTEP.
* * * *
. . . . they were . . . exploiting the talents of our Home Office staff; gaining an inner working knowledge of ProSTEP, and covertly hiring one of our own employees to develop their Web site, auto responder, and other components of their system.
* * * *
. . . [O]ur Home Office employees, respected people in the network marketing industry, and I strongly feel that the methods they used to develop, launch, and deploy My Smart Networker were immoral, deceiving, and insulting to the individuals who put so much time and effort into helping them succeed. . . . I have more than substantial grounds to terminate the individuals mentioned in the first paragraph of this e-mail. . . . My decision to terminate the aforementioned individuals is not based on their offering competing products and services, but solely on the ethics they have displayed in developing, launching, and promoting their venture.
* * * *
We feel that since we have worked closely with the WBN leaders in the past at making their system a success, and let them train their ProSTEP downlines under our umbrella, many of their members are unaware of the impact ProSTEP's training, services, support, and leads are having on their success.
(Koch's Br. in Response to Defs.' Mot. for Summ. J. at 2-4). Klesmit also points to the following statement from Lehmann's e-mail:
At a recent public convention in Dallas, Texas, Tom Klesmit openly stated his intention to move the entire WBN organization from ProSTEP into [sic] My Smart Networker no later than August 25, 2001. In the interim, he told his organization to use ProSTEP leads and services until they have completed their projects and can offer the same services and products themselves.
(Klesmit's Response to Defs.' Mot. for Summ. J. at 5-6).
Plaintiffs contend that the above statements- published to all ProSTEP members as well as to members of Plaintiffs' NFLI and WBN downlines, some of whom were also members of ProSTEP while others were not- are both false and defamatory per se, as they directly injured Plaintiffs' business interests. See Knox v. Taylor, 992 S.W.2d 40, 50 (Tex.App.-Hous. [14th Dist.] 1999, no. pet.) (citation omitted) (defamation is actionable per se if it injures a person in his office, business, profession, or occupation).
With respect to the defamatory nature of Lehmann's statements, Plaintiffs' allegation of defamation per se eliminates the requirement of pleading or proving special damages, but the same does not shift the Plaintiffs' burden of proving the elements of their causes of action. See Swate v. Schiffers, 975 S.W.2d 70, 74 (Tex.App.-San Antonio 1998, pet. denied).
In response, Defendants contend that the above referenced statements are either "literally true" or "substantially true," and, as such, are not actionable, relying on Randall's Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995) and Golden Bear Distrib. Sys. of Texas, Inc. v. Chase Revel, Inc., 708 F.2d 944, 949 (5th Cir. 1983), abrogated on other grounds by, Hiller v. Mfrs. Prod Research Group of North America, Inc., 59 F.3d 1514 (5th Cir. 1995), respectively, and further contend that truth is a defense to libel under Texas state law. See TEX. CIV. PRAC. REM. CODE § 73.005. See Downer v. Amalgamated Meatcutters and Butcher Workman of North America, 550 S.W.2d 744, 747 (Tex.Civ.App.-Dallas 1977, writ ref'd n.r.e.)(". . . the defense of truth does not require proof that the alleged libelous statement is literally true in every detail; substantial truth is sufficient."). Defendants also contend that to the extent that Lehmann's statements are merely statements of opinion the same are protected by the United States and Texas Constitutions and are therefore not actionable. See Howell v. Hecht, 821 S.W.2d 627, 631 (Tex.App.-Dallas 1991, writ denied); U.S. CONST. amend. I; TEX. CONST. art. I, § 8. See also A.H. Belo Corp. v. Rayzor, 644 S.W.2d 71, 79 (Tex.App.-Fort Worth 1982, writ ref'd n.r.e.) (an essential element of a cause of action is that the alleged defamatory statement be a statement of fact rather than an opinion).
Defendants also contend that Lehmann's statements are privileged as they relate to matters of public policy pursuant to Hurlbut v. GulfAtlantic Life Ins. Co., 749 S.W.2d 762 (Tex. 1987) and to matters of public concern pursuant to Connick v. Myers, 461 U.S. 138, 103 S.Ct. 1691, 75 L.Ed.2d 708 (1983). However, their summary judgment evidence does not establish as a matter of law that either privilege applies in these cases.
Preliminarily, the court must determine whether Lehmann's statements were merely statements of opinion or, rather, statements of fact, because as a threshold matter a defamatory expression is not actionable unless it constitutes a statement of false fact. See Phila. Newspapers, Inc. v. Hepps, 475 U.S. 767, 768-69, 106 S.Ct. 1558, 1559, 89 L.Ed.2d 783 (1986); see also Milkovich v. Lorain Journal Co., 497 U.S. 1, 18-20, 110 S.Ct. 2695, 2705-06, 111 L.Ed.2d 1 (1990) (holding that falsity must be based upon whether the statement carries a "provably false factual connotation"). Falsity "for constitutional purposes [depends upon] the meaning a reasonable person would attribute to a publication, and not on a technical analysis of each individual statement." See Turner v. KTRK Television, Inc., 38 S.W.3d 103, 116 (Tex. 2000). Whether a publication makes a statement of fact that is false and defamatory depends upon a reasonable person's perception of the entirety of the publication, not merely on individual statements. See id. at 114 (citing Musser v. Smith Protective Servs., 723 S.W.2d 653, 655 (Tex. 1987)).
Texas defamation law embraces the view recognized by the United States Supreme Court in Milkovich that opinions or ideas, which include implied assertions of objective fact, may be actionable. Shearson Lehman Hutton, Inc. v. Tucker, 806 S.W.2d 914, 920 (Tex.App.-Corpus Christi 1991, writ dismissed w.o.j.) (citing Milkovich, 497 U.S. at 18-20, 110 S.Ct. at 2705-07). Hence, an opinion may be actionable in a defamation case if the statement contains an implied assertion of fact. Id. (citing First State Bank v. Ake, 606 S.W.2d 696, 699 (Tex.Civ.App.-Corpus Christi 1980, writ ref'd n.r.e.)). In the present instance it cannot be said that the statements at pages 7-8 supra are mere opinions rather than statements constituting implied assertions of fact, i.e., genuine issues of fact exist as to the character of the statements contained in Lehmann's e-mails.
As mentioned above, a defendant can defeat a libel claim by establishing the truth of the alleged libelous statements. However, truth is an affirmative defense for which Defendants bear the burden of proof Garcia v. Allen, 28 S.W.3d 587, 593-94 (Tex.App.-Corpus Christi 2000, pet. denied).
Plaintiffs deny that the alleged libelous statements in Lehmann's e-mails were true (Koch's Aff. at ¶¶ 8, 10, 12-15; Klesmit's Aff. at ¶ 8, 10, 12-16). Whether the statements were true or false is in turn informed by the affidavits of Jeremy Vaught ( see, e.g., Defs.' App. at Tab C) and of Michael DeBord ( see, e.g., Klesmit's App. at Ex. 1). An examination of these two affidavits discloses conflicting material factual assertions, thus foreclosing establishment of the defense of truth as a matter of law. As such, summary judgement is not appropriate on this issue.
Plaintiff's own affidavits likewise demonstrate the existence of genuine issues of fact.
With respect to the issue of fault, the same is a constitutional prerequisite for defamation liability. McLemore, at 571 (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 347, 94 S.Ct. 2997, ___, 41 L.Ed.2d 789 (1974)). To determine the degree of fault a plaintiff must prove to render a defendant liable for defamation/libel, a court must consider Plaintiffs' respective status (i.e., whether they are public figures or private individuals). The question of public figure status is one of constitutional law for courts to decide. See Rosenblatt v. Baer, 383 U.S. 75, 88, 86 S.Ct. 669, ___, 15 L.Ed.2d 597 (1966); Trotter v. Jack Anderson Enters., Inc., 818 F.2d 431, 433 (5th Cir. 1987); WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998).
Public figures fall into two categories: (1) all-purpose, or general-purpose, public figures and (2) limited-purpose public figures. General-purpose public figures are those individuals who have achieved such pervasive fame or notoriety that they become public figures for all purposes and in all contexts. McLemore, 978 S.W.2d at 571 (citing Gertz, 418 U.S. at 351, 94 S.Ct. 2997, ___). Limited-purpose public figures, on the other hand, are only public figures for a limited range of issues surrounding a particular public controversy. See id.
To determine whether an individual is a limited-purpose public figure, the Fifth Circuit has adopted a three-part test: (1) the controversy at issue must be public both in the sense that people are discussing it and people other than the immediate participants in the controversy are likely to feel the impact of its resolution, (2) the plaintiff must have more than a trivial or tangential role in the controversy; and (3) the alleged defamation must be germane to the plaintiff's participation in the controversy. Id. (citing Trotter, supra, 818 F.2d at 433).
Defendants contend that Koch is a limited-purpose public figure because she has sought publicity by marketing (i.e., selling business leads) on the internet, has hosted public and telephonic conferences, has conducted training sessions, and has publicly expressed her opinions in an effort to influence the outcome of events of public interest (Defs.' Mot.- Koch at 27-28). Defendants further contend that Klesmit is likewise a limited-purpose public figure for these same reasons, as well as that he is "well-known in the internet marketing business," he has made statements about the profitability of internet marketing, he is a "well-known speaker," he has international expertise, and he has offered three minute presentations regarding internet marketing via phone (Defs.' Mot.-Klesmit at 29-31).
Defendants, however, do not cite any case authority which is either pertinent to, or supportive of, their proposition that Plaintiffs are limited-purpose public figures. As a threshold matter, the court notes that Defendants have wholly failed to show how the instant dispute between an internet marketing business — ProSTEP and Lehmann, its president — and its members/independent contractors-Koch and Klesmit — constitutes a public controversy. As such, the court finds that Plaintiffs are private individuals — for defamation purposes — and, therefore, need only show that Lehmann was negligent with respect to the truth of his statements. See WFAA-TV, Inc. v. McLemore, supra, 978 S.W.2d at 571.
". . .[A] private individual may recover damages from a publisher . . . of a defamatory falsehood as compensation for actual injury upon a showing that the publisher . . . knew or should have known that the defamatory statement was false." Doe v. Mobile Video Tapes, Inc., 43 S.W.3d 40, 51 (Tex.App.-Corpus Christi 2001, no pet.) (citing Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809, 819-20 (Tex. 1976)) (emphasis added).
As discussed in detail above, to the extent that the parties have each proffered controverting evidence on the issue of the truth/falsity of Lehmann's statements, genuine issues of material fact exist regarding whether Lehmann knew or should have known that his statements were false. As such, summary judgement is likewise not appropriate on this issue.
With respect to imputing liability to ProSTEP for Lehmann's statements, it is clear that a corporation may be held liable for defamation by its agent if such defamation is referable to the duty owing by the agent to the corporation and was made in the discharge of that duty. Mars, Inc. v. Gonzalez, 71 S.W.3d 434, 437 (Tex.App.-Waco 2002, pet. denied) (citing Cotton Belt R.R v. Hendricks, 768 S.W.2d 865, 870 (Tex.App.-Texarkana 1989, no writ). In Mars, Inc. v. Gonzalez, the court applied the following test for holding a corporate entity guilty of libel for its agents acts: 1) an agent of the corporation, 2) acting "on behalf of the corporation" (in the course and scope of their duties); 3) communicated a false statement; 4) to a person a) other than a corporate employee or b) to a corporate employee whose course and scope of their duties for the corporation did not require receipt of the false communication; 5) and that communication proximately caused; 6) damages to plaintiff. See id. at 437.
Plaintiffs have proffered the following evidence with respect to each of the above elements: that Lehmann is the president and CEO of ProSTEP (his emails also bear this out); that Lehmann's e-mails were generated for the purpose of discharging his duties to ProSTEP and its members; that Lehmann's e-mails contained false statements; that persons both within, as well as outside of, ProSTEP (i.e., Plaintiffs' NFLI and WBN downline members some of whom were not ProSTEP members) received Lebmann's e-mails; and that Lehmann's e-mails caused Plaintiffs financial injuries (some recipients of the e-mails refused to join Plaintiffs' respective downlines) ( See, e.g., Koch's Aff. and Klesmit's Aff). To the extent that Defendants have not proffered any controverting evidence, pertinent to the issue of ProSTEP's liability- with the exception of the falsity/truth of Lehmann's statements which was discussed at length supra- the court finds that ProSTEP is not entitled to summary judgment on the alleged libelous statements of Kevin Lehmann.
2. Tortious Interference with a Business Relationship
The court identifies Plaintiffs' cause of action as such based on Plaintiffs own denomination of the same. However, the actual text of Plaintiffs' respective pleadings indicate that they are alleging a cause of action for tortious interference with a contract ( See Koch's Orig. Pet. at ¶ 19 and Klesmit's Orig. Pet. at ¶ 19). Plaintiffs' respective responsive briefs also bear this out.
To prevail on a claim of tortious interference with a contract a plaintiff must demonstrate the following: (1) an existing contract subject to interference, (2) a willful and intentional act of interference with the contract, (3) which proximately caused, (4) the plaintiff to suffer actual damages or loss. See Prudential Ins. v. Financial Review Serv's., 29 S.W.3d 74, 77 (Tex. 2000) (citation omitted).
The court notes that even if the plaintiff establishes all the elements of a claim for tortious interference with a contract, the defendant may avoid liability if it establishes the elements of the defense of justification. Prudential, 29 S.W.3d at 77-78. A party is privileged to interfere with the contractual relations of another if: (1) it acts in the bona fide exercise of its own rights, or (2) the interfering party has an equal or superior right in the subject matter to that of the party to the contract. Id. at 80. However, to the extent that Defendants have not invoked the defense of privilege, with respect to the conduct of which Plaintiffs complain of as tortious interference, the court will not examine this issue.
Plaintiffs point to the following conduct as constituting tortious interference by Defendants: 1) the fact that Lehmann sent his e-mails to all of ProSTEP's members including members of Plaintiffs' respective NFLI and WBN downlines, some of whom were members of ProSTEP while other were not, and 2) the fact that Plaintiffs' WBN website was shut down, effectively disabling both the NFLI and the WBN. Plaintiffs also contend that they had contractual relationships with their downline members and that Defendants' conduct was financial injurious, to wit: Plaintiffs lost potential downline members ( See Koch's Aff at ¶ 17 and Klesmit's Aff. at ¶ 17).
To establish that a defendant acted intentionally with respect to an existing contract a plaintiff must prove that the defendant had knowledge of that contract. Steinmetz Assocs., Inc. v. Crow, 700 S.W.2d 276, 277-78 (Tex. App-San Antonio 1985, writ ref'd n.r.e.) (citation omitted). C.f GAIA Techs., Inc. v. Recycled Prods. Corp., 175 F.3d 365, 377 (5th Cir. 1999) (citation omitted) (knowledge of a prospective contractual relationship is a necessary element to demonstrate intent to interfere therewith).
Even taking the evidence in the light most favorable to Plaintiffs as the court must, the court finds no direct evidence that Koch and Klesmit had entered into contracts with any of their NFLI or WBN downline members. In fact, the only evidence of a contractual relationship are the contracts both Koch and Klesmit entered into with ProSTEP. As such, to the extent that Plaintiffs have not presented evidence of contractual relationships with their respective downline members, they cannot demonstrate that the Defendants had any knowledge thereof Moreover, assuming arguendo that Koch and Klesmit could demonstrate the existence of contractual relationships between themselves and their respective NFLI or WBN downline members, which were interfered with by Defendants, Plaintiffs have failed to proffer any evidence that Defendants acted intentionally (i.e., that Defendants had any knowledge of these contractual relationships between Plaintiffs and their downlines). As such, Plaintiffs cannot sustain their burden of proof and Defendants are entitled to summary judgment on this cause of action.
Both Koch and Klesmit averred in their respective affidavits that they had "numerous members" in their downlines. However, absent some documentation (i.e., a copy of a contract) or affidavit testimony from their "members," evincing the existence of a contractual relationship, the court finds Plaintiffs' conclusory statements to be insufficient to demonstrate the existence of a contract.
DeBord's statement that Lehmann learned what Klesmit and the WBN were doing and then "took specific action" in response thereto is not enough to demonstrate that Defendants acted either willfully or intentionally ( See DeBord's Aff. at ¶ 30), as the same is wholly conclusory. Moreover, even assuming arguendo that Defendants acted willfully or intentionally, Defendants would likely have a strong argument that their conduct was justified- they arguably have a right to keep their members abreast of issues and they have a right to conduct their business (i.e., support/not support the WBN website) as they see fit. See n. 9, supra.
Defendants, alternatively contend that Plaintiffs cause of action for tortious interference must be submitted to arbitration pursuant to the terms of Plaintiffs' membership contracts with ProSTEP, each of which contain arbitration provisions. However, to the extent that this issue is now moot, the court need not consider the same.