the Dallas Morning News, Inc. and Kevin Krause v. Lewis Hall and Richard Hall, Individually and on Behalf of Rxpress Pharmacies and Xpress Compounding ( 2017 )

FILED
17-0637
12/21/2017 3:18 PM
tex-21442581
SUPREME COURT OF TEXAS
BLAKE A. HAWTHORNE, CLERK
NO. 17-0637
__________________________________________________________________
IN THE SUPREME COURT OF TEXAS
__________________________________________________
THE DALLAS MORNING NEWS, INC. AND KEVIN KRAUSE,
PETITIONERS
V.
LEWIS HALL AND RICHARD HALL, INDIVIDUALLY AND ON
BEHALF OF RXPRESS
PHARMACIES AND XPRESS COMPOUNDING,
RESPONDENTS
__________________________________________________________________
ON APPEAL FROM THE SECOND COURT OF APPEALS
FORT WORTH, TEXAS
NO. 02-16-00371-CV
TRIAL COURT CAUSE NO. CV16-0309
rd
43 JUDICIAL DISTRICT COURT OF PARKER COUNTY, TEXAS
__________________________________________________________________
RESPONDENTS’ RESPONSE TO MOTION FOR JUDICIAL NOTICE
______________________________________________________________
I. PETITIONERS’ MOTION SHOULD BE DENIED
Petitioners’ motion for judicial notice should be denied for the following
reasons: 1) under the procedures and deadlines established by the TCPA, the court
records could not have been considered by the trial court and should not be
considered by the court of appeals pursuant to the TCPA; and 2) the facts
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Petitioners appear to request notice of are not part of the record and not the type of
facts that are subject to notice.
“An appellate court may take judicial notice of a relevant fact that is either
(1) generally known within the territorial jurisdiction of the trial court or (2)
capable of accurate and ready determination by resort to sources whose accuracy
cannot reasonably be questioned.” Freedom Communications, Inc. v. Coronado,
372 S.W.3d 621, 623 (Tex. 2012) (citing Tex. R. Evid. 201(b) and Office of Pub.
Util. Counsel v. Pub. Util. Comm'n of Tex., 878 S.W.2d 598, 600 (Tex.1994) (per
curiam) (internal quotes omitted). “Under this standard, a court will take judicial
notice of another court's records if a party provides proof of the records.” Freedom,
372 S.W.3d at 623. However, even where court records themselves are properly
before a court under this rule, a court “may not take judicial notice of the truth of
factual statements and allegations contained in the pleadings, affidavits, or other
documents in the file.” Guyton v. Monteau, 332 S.W.3d 687, 693 (Tex. App.—
Houston [14th Dist.] 2011, no pet.); cf. In re C.S., 208 S.W.3d 77, 81 (Tex.App.-
Fort Worth 2006, pet. denied) (“It is appropriate for a court to take judicial notice
of a file in order to show that the documents in the file are a part of the court's files,
that they were filed with the court on a certain date, and that they were before the
court at the time of the hearing.”)
Further, “appellate courts are reluctant to take judicial notice of evidence
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when the trial court was not afforded the opportunity to examine and take into
consideration that evidence.” Tran v. Fiorenza, 934 S.W.2d 740, 742 (Tex. App.—
Houston [1st Dist.] 1996, no writ); see also Sparkman v. Maxwell, 519 S.W.2d
852, 855 (Tex. 1975) (declining to take judicial notice in part stating reluctance of
appellate courts to take notice of matters when the trial court was not requested to
do so and had no opportunity to examine the source material). Thus, “[a]s a general
rule, appellate courts take judicial notice of facts outside the record only to
determine jurisdiction over an appeal or to resolve matters ancillary to decisions
which are mandated by law.” Freedom, 372 S.W.3d at 623 (citing SEI Bus. Sys.,
Inc. v. Bank One Tex., N.A., 803 S.W.2d 838, 841 (Tex. App.—Dallas 1991, no
writ)). No one has questioned this Court’s jurisdiction, and judicial notice for the
reasons urged by Petitioners is not proper.
A. The records could not have been considered by the trial court within the
TCPA deadlines
The matter before this Court is an interlocutory appeal from an order
denying a motion to dismiss under the TCPA. The TCPA sets forth a specific
procedural framework for dismissal of unmeritorious claims to which the statute
applies. That framework includes specific mandatory deadlines for filing a motion
to dismiss, hearing the motion, and ruling on the motion. The TCPA also
establishes what the courts must consider when ruling on a motion to dismiss and,
suspends all discovery.
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When a trial court permits limited discovery, as happened in this case, the
hearing on the motion must occur no later than 120 days after the motion was filed.
Tex. Civ. Prac. & Rem. Code § 27.003. Petitioners filed their motion to dismiss on
May 23, 2017. CR 48. The trial court held the hearing on Petitioners’ motion to
dismiss 116 days later on September 15, 2016. CR 647. The statute requires the
trial court to rule on the motion no more than 30 days after the hearing, which, in
this case, was Monday October 17, 2016.
By law, the trial court could not have considered any additional evidence
after October 17, 2016, even if it wanted to. Nor could the trial court issue any kind
of ruling relative to the motion to dismiss after October 17, 2016, whether or not it
ruled on the motion. The 30-day deadline for the trial court to rule is mandatory
and gives the trial court no discretion to grant extensions of time. Inwood Forest
Cmty. Improvement Ass'n v. Arce, 485 S.W.3d 65, 70 (Tex. App.—Houston [14th
Dist.] 2015, pet. denied). The trial court’s options are to rule to dismiss or not
dismiss the legal action. Id. If the trial court does not rule within 30 days, the
TCPA mandates the motion is denied by operation of law. Tex. Civ. Prac. & Rem.
Code Ann. § 27.008(a) (West).
Given the deadlines, the actual court records filed in a separate case five and
seven months after the hearing deadline could not have been before the trial court.
That the documents contain pleading allegations of an entity affiliated with
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Respondents that may raise a fact question as to the knowledge or belief of
Respondents’ positions or arguments in this case makes no difference. This is not a
case in which an unjust judgment has been entered. Respondents are quite certain
that Petitioners will be free to explore these court records and the factual inferences
they raise in the normal course of discovery and trial upon remand should they
choose. But these matters are neither for this Court’s consideration nor appropriate
for remand to the trial court for a second bite at the TCPA apple.1 See SEI Bus.
Sys., Inc. v. Bank One Tex., N.A., 803 S.W.2d 838, 841 (Tex. App.—Dallas 1991,
no writ) (denying request for judicial notice of certified records of the Secretary of
State that were not before the trial court as doing so would essentially make the
court of appeals a court of general, rather than appellate, jurisdiction). Had it not
been for Respondents’ request for discovery, which resulted in Petitioners
acquiring an allegedly authenticated version of the entire search warrant, this
hearing and ruling would have come well before September 15, 2016. It appears
Petitioners will stop at nothing to avoid facing Respondents’ meritorious claims on
even playing field without the benefit of a statutory shield from discovery to hide
behind.
B. The “Fact(s)” do not meet the standard for judicial notice
1
If Respondents’ allegations regarding Petitioners’ role in publishing the stories with knowledge
that the initial search warrant was essentially false prove to be true after discovery, Respondents
doubt they could claim that Petitioners withheld material information during the TCPA phase.
Petitioners chose to utilize the TCPA and its discovery stay then vehemently opposed a request
to depose Krause as was their right under the statute.
5
Although veiled in allegations of misrepresentations and failure to disclose,
it appears that the primary fact Petitioners request judicial notice of is that
Respondents are under federal investigation. To be the proper subject of judicial
notice, a fact must be “capable of accurate and ready determination by resort to
sources whose accuracy cannot reasonably be questioned.” Office of Pub. Util.
Counsel v. Pub. Util. Com'n of Texas, 878 S.W.2d 598, 600 (Tex. 1994) (quoting
Tex. R. Evid. 201(b)(2)). Tellingly, Petitioners do not outright argue that the
September search warrant establishes that Respondents were under investigation at
the time the articles were published. They repeatedly state that clearly Respondents
knew they were under investigation [in September] while referring to the court
records and state Respondent Richard Hall’s testimony to the contrary has tainted
these proceedings. However, their argument surrounding the September search
warrant suffers the same infirmity as the February search warrant—it only raises
an inference that Respondents are under investigation.
Furthermore, Petitioners cannot credibly argue that pleading allegations of a
separate entity not party to this matter establish a fact capable of accurate and
ready determination by resort to sources whose accuracy cannot reasonably be
questioned. See Guyton, 332 S.W.3d at 693 (holding court may not take judicial
notice of the truth of factual statements and allegations contained in the pleadings,
affidavits, or other documents in the file). There is absolutely no evidence that the
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statement is or can be directly attributed to Richard Hall or any of the named
parties in this case. It is a pleading allegation of an entity not before the court. On
its face, the fact is incapable of ready determination as different persons are
asserting competing statements.
While court records are generally considered a reliable source for the
purpose of judicial notice to establish things such as the existence of court records,
entry of a judgment or other order, and when a document was filed, that does not
mean that this Court may judicially notice the truth of allegations found in
pleadings, motions, and briefs. Courts may not take judicial notice of the truth of
allegations contained in pleadings and motions. See Guyton v. Monteau, 332
S.W.3d at 693. Petitioners clearly believe, for their purposes, that any government
record or court record, judicially noticed or not, establish not just facts, but
indisputably true facts. Just because the “facts” are contained in a court record
does not automatically establish that they are true. Id.
C. Petitioners’ Current Arguments and Representations are Contrary to
their Pre-Opinion Representations to the court of appeals
Petitioners have gone to great length to cast Respondents in a less than
favorable light under the guise that the September search warrant establishes that
they are under investigation, thus disproving Respondents’ affidavits.
Petitioners do not expressly state that this “new” evidence establishes the
truth of their reporting. In fact, they state that Respondents have known they were
7
under investigation since at least September 15, 2016. Assuming only for the sake
of argument that the court records establish that Respondents are under
investigation, it does not follow or establish that the same was true eight months
earlier when Petitioners reported such. In fact, Petitioners expressly represented to
the court of appeals:
Notably, the record does not contain any evidence relating to the
current status of the investigation, including whether Respondents
have been searched or raided. The declaration testimony supporting
the statements in their Response Brief that they have not been
searched or raided was submitted in July 2016. CR 760-63. Because
the determination of whether the DMN Articles’ reporting was true
must be made as of the date of the Articles’ publication in February
the current status of the investigation does not affect the issues
raised here.
(Appellants’ Reply Br. at 13 n.3) (emphasis added).
It appears that Petitioners are being opportunistic in what they represent to
the courts in the same manner they accuse Respondents. The quote above is surely
premised on Petitioners’ argument that the February search warrant left no room to
doubt that Respondents were under federal investigation (at the time the articles
were published). The court of appeals dispensed with the cornerstone of
Petitioners’ case holding that, given the procedural posture of this case and
Respondents burden under the TCPA, Petitioners’ argument is wrong and that the
“trial court properly rejected Petitioners’ faulty search-warrant argument.” Opinion
at 17. Only one week later, Petitioners do an about-face and argue that the
execution of a subsequent search warrant not only affects the matters raised here,
8
but establishes that Respondents knew they were under investigation and that they
therefore mislead or tainted the proceedings here and below as a result.
Respondents vehemently deny any wrongdoing, but assuming Respondents had an
obligation to disclose or actually disclosed a search and seizure at their office the
day of the hearing, according to Petitioners, it would not affect the issues in this
case.2
Now that the court has dispensed with Petitioners’ only argument and
evidence, Petitioners are clearly trying to use alleged wrongdoing by Respondents
to get a second shot at dismissal. Based upon Petitioners’ own admissions and
briefing, evidence related to the current status of an investigation Petitioners
argued was ongoing in February 2016 does not affect the issues in this case. If so,
how can Petitioners now claim that the court of appeals and the trial court’s
decisions have been “tainted” by Respondents’ alleged misconduct? They cannot.
If the February search warrant, the only piece of evidence Petitioners relied on in
these proceedings, does not affirmatively establish that Respondents were in fact
under investigation at the time of publication, another search warrant issued and
executed six months after the final article was published surely suffers the same
2
If some “investigation” began after publication of the defamatory articles at issue in this case, it
is an entirely permissible inference that the publication of the defamatory articles was what
prompted the subsequent “investigation”. It is reasonable to assume that the publication of the
scurrilous accusations in a newspaper with one of the largest circulations in Texas and which is
the very epitome of “mainstream media” would prompt the government to at least “look into” the
matter. Petitioners argue that the “self-fulfilling prophecy” should exonerate them. This
argument is neither logical nor compelling.
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infirmities. One reasonable inference to be drawn is that the articles became a self-
fulfilling prophecy of sorts. That is, Petitioners’ false publications associating
Respondents with the very criminals and criminal conduct of those the federal
authorities had actually investigated, arrested, and indicted, caused the authorities
to execute a search warrant months later.
Even assuming the September search warrant affected the issues in this
proceeding under the TCPA, which Petitioners represented it would not, the
temporal gap between Petitioners’ publication and a search of Respondents’ office
alone leads to competing factual inferences and is not proper for judicial notice.
The bulk of Petitioners evidence in the trial court consisted of articles from news
outlets nationwide that reported on the general investigation of the compounding
pharmacy industry aimed at rooting out potential fraud. Given this general industry
investigation and the almost nine months that passed between Petitioners’
publications and execution of a warrant for Respondents’ offices, one strong
factual inference is that the purpose of the September search warrant was issued in
furtherance of the general investigation, not a targeted investigation of
Respondents or anyone else listed in the September Search Warrant.
II. CONCLUSION AND PRAYER
The court records and facts Petitioners request judicial notice of are outside
the appellate record and were not considered by the trial court. Under the deadlines
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and procedures established by the TCPA, the trial court could never have
considered the court records. Even if the records were available before the TCPA
deadlines had passed, the “facts” Petitioners request notice of do not meet the
standard for judicial notice as are pleading allegations of an entity not party to this
case. Finally, Petitioners’ own briefing admits that the status of any investigation
or subsequent searches of Respondents does not affect the issues raised in this
matter. Respondents pray this Court deny Petitioners’ Motion for Judicial Notice
of Court Filings and pray for other relief to which they may be entitled.
Respectfully submitted,
__________________________________
Robert J. Myers, SBN 14765380
John J. Shaw, SBN 24079312
MYERS ✯LAW
2525 Ridgmar Blvd., Ste. 150
Fort Worth, TX 76116
Tel: (817) 731-2500
Fax: (817) 731-2501
rmyers@myerslawtexas.com
jshaw@myerslawtexas.com
Counsel for Respondents
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CERTIFICATE OF COMPLIANCE
I certify that the foregoing document contains 2,509 words, excluding the
portions excluded by Texas Rule of Appellate Procedure 9.4(i)(1). It was prepared
in Microsoft Word using 14-point typeface for body text and 12-point typeface for
footnotes. In making this certificate of compliance, I am relying on the word count
provided by the software used to prepare the document.
_____________________________
John J. Shaw
CERTIFICATE OF SERVICE
The undersigned certifies that on December 21, 2017, a true and correct
copy of the foregoing instrument was served on all counsel of record using the
Court’s electronic case filing system.
_____________________________
John J. Shaw
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