TPPA Motion to Dismiss Required Trial Court to Engage in Three-Step Analysis.

Where defendant moved to dismiss a defamation suit under the Tennessee Public Participation Act (“TPPA”), and the trial court failed to take into account the third step of the TPPA burden-shifting framework which considers whether a defendant can establish a valid defense to the claims, the case was remanded for further consideration of the third step in the analysis.

In Pragnell v. Franklin, No. E2022-00524-COA-R3-CV (Tenn. Ct. App. April 18, 2023), plaintiffs filed a defamation suit against defendants, who were plaintiffs’ former employer. Plaintiffs were financial advisors, and when they left defendants’ company, SEC regulations required defendants to file a U5 form online as to plaintiffs’ departure. Plaintiffs asserted that the U5 forms initially filed by defendants stated that plaintiffs left the company voluntarily, but that after a dispute arose and plaintiffs filed suit against defendants in chancery court, defendants changed the U5 forms to state that plaintiffs were discharged for violating “client privacy rights, misrepresentation, and selling away.” Plaintiffs thus filed this defamation suit based on the statements in the revised U5 forms.

Defendants filed a motion to dismiss based on the TPPA, Tenn. Code Ann. § 20-17-101, et seq. Defendants argued that they were required to file the amended U5 forms upon discovering additional information about plaintiffs’ employment, that the statements contained therein were true, and that the case was subject to dismissal under the TPPA.

When considering defendant’s TPPA motion to dismiss, the trial court first determined that defendants had made a prima facie showing that the action was “based on, relates to, or is in response to [defendants’] exercise of the right to free speech.” (quoting Tenn. Code Ann. § 20-17-105(b)). The trial court then looked at plaintiffs’ allegations and found that they had “established a prima facie case that Defendants intentionally published false statements about Plaintiffs that caused them harm.” The trial court therefore denied the TPPA motion to dismiss, but it also denied plaintiffs’ request for attorneys’ fees, finding that the motion was not frivolous. Defendants appealed.

The TPPA is designed to prevent “meritless suits aimed at silencing opponents, or at least diverting their resources.” (internal citation omitted). The statute “provides relief for parties who partake in protected activity constituting either the exercise of free speech, or the exercise of the right to petition.” (internal citation omitted). When a defendant moves to dismiss a claim under the TPPA, the court engages in a burden shifting framework to determine whether dismissal is appropriate. First, the petitioning party must show that “the claim falls within the TPPA’s parameters.” If the claim falls under the TPPA, the plaintiff must then “establish a prima facie case for each essential element of the claim in the legal action.” (internal citation omitted). Finally, the trial court must also consider whether the defendant/petitioning party can “establish[] a valid defense to the claims in the legal action.” (internal citation). On appeal, defendants argued that plaintiffs “failed to establish a prima facie case of defamation because the record demonstrates that Defendants’ statements were true and the court gave no consideration to Defendants’ belief that their speech was true.” To determine whether the trial court properly analyzed the TPPA motion to dismiss, the Court of Appeals considered each step of the burden-shifting analysis.

As stated above, the first step when a motion to dismiss is made under the TPPA is to consider whether the claim falls within the scope of the TPPA. The Court of Appeals quickly affirmed the trial court’s ruling on this point. Notably, plaintiff attempted to argue on appeal that “Defendants’ statements constituted commercial speech” and thus were not subject to First Amendment protection, but because plaintiffs failed to make that argument at the trial court level, it was deemed waived.

The second step of the analysis is to determine whether the plaintiff established “a prima face case for each essential element of the claim in the legal action.” (internal citation omitted). In this defamation case, plaintiffs made at least a prima facie showing that defendants made false statements with knowledge of their falsity, and that plaintiffs were damaged by the false statements, so plaintiffs met their burden here.

While defendants argued that their assertion that the statements on the U5 forms were true should have been considered during step two of the analysis, the Court of Appeals explained that this argument “actually relate[d] to the third step of the TPPA’s dismissal procedure—whether Defendants could ‘establish a valid defense to the claims in the legal action.’” (citing Tenn. Code Ann. § 20-17-105(c); additional citations omitted). The Court wrote that Tenn. Code Ann. § 20-17-105(c) “provides that the court shall dismiss the legal action if the petitioning party establishes a valid defense to the claims in the legal action. In the case at bar, however, the trial court never addressed this third and final step in the dismissal analysis.” (internal quotation omitted). Providing further guidance on this third step, the Court wrote:

To the extent that the initial two steps of the dismissal procedure require only a prima facie showing pursuant to the express statutory language, see Tenn. Code Ann. § 20-17-105(a) and (b), and the third step does not contain that qualifying “prima facie” language, see Tenn. Code Ann. § 20- 17-105(c), the rules of statutory construction instruct that we should infer ‘that if the Legislature had intended to enact a certain provision missing from the statute, then the Legislature would have included the provision. Thus, the missing statutory provision is missing for a reason—the Legislature never meant to include it.’ In other words, with respect to establishing a defense to the defamation claim, Defendants would be required to make more than a prima facie demonstration in order to achieve dismissal of the defamation claim.

(internal citation omitted).

The Court accordingly held that the trial court correctly analyzed the first two steps of the TPPA dismissal analysis, but it remanded the case for consideration of the third step. The Court of Appeals also affirmed the denial of attorneys’ fees to plaintiff, finding that the trial court did not abuse its discretion in ruling that the petition to dismiss was not frivolous.

The TPPA is a developing area of Tennessee law. This case adds an additional explanation of the burden shifting analysis required to consider a motion to dismiss made under the TPPA, with a special emphasis on the consideration of whether a defendant can show a defense to the claim.

This opinion was released three months after oral arguments in this case.

Note:  Chapter 28, Section 14 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.

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