Antitrust Law Daily Wrap Up, ADVERTISING—5th Cir.: Law firm’s advertising not protected by anti-SLAPP statute, (Mar 12, 2014)

By Jody Coultas, J.D.

A district court properly held that law firm Mauze & Bagby, P.L.L.C. (M&B) could not invoke Texas’ anti-SLAPP statute in a Lanham Act false advertising case filed by NCDR, L.L.C., d.b.a. Kool Smiles, the U.S. Court of Appeals in New Orleans has held (NCDR, L.L.C. v. Mauze & Bagby, P.L.L.C., March 11, 2014, Prado, E.).

M&B engaged in an advertising campaign to solicit former dental patients from Kool Smiles dental clinics as potential clients. The television, radio, and Internet advertisements strongly implied, or even accused, Kool Smiles of performing unnecessary and harmful dental work on children to obtain government reimbursements.

The Texas Citizen’s Participation Act (TCPA) is an anti-SLAPP statute that allows a claim to be dismissed when the defendant can show that the claim was brought to chill the exercise of First Amendment rights. M&B sought dismissal of Kool Smiles’ claims based on the TCPA. The district court determined that M&B’s speech fell within a commercial speech exemption to the TCPA, and that the TCPA did not apply to Kool Smiles’s Lanham Act claims.

Jurisdiction. The collateral order doctrine, on which M&B based jurisdiction, requires: (1) conclusivity, (2) separability, and (3) unreviewability. The three requirements were evaluated against the TCPA. Because the TCPA satisfied all three requirements, the court held that the collateral order doctrine supplied jurisdiction.

Kool Smiles’ argument on appeal that the TCPA did not apply in federal court because it conflicted with both the Federal Rule of Civil Procedure 12(d) and Federal Rule of Appellate Procedure was waived because it did not raise the argument before the district court. An argument not raised before the district court cannot be asserted for the first time on appeal.

TCPA. The court concluded that the Supreme Court of Texas would most likely hold that M&B’s ads were exempt from TCPA protection. The Supreme Court of Texas had not interpreted the TCPA, and only four intermediate Texas state courts have interpreted the commercial speech exemption. In one recent decision, the court looked at whether: (1) the cause of action is against a person primarily engaged in the business of selling or leasing goods or services; (2) the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person’s or a business competitor’s business operations, goods, or services; (3) the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services or in the course of delivering the person’s goods or services; and (4) the intended audience for the statement or conduct is an actual or potential buyer or customer. Based on those four factors, M&B could not invoke the TCPA’s protection because the speech at issue arose from the sale of services where the intended audience was an actual or potential customer.

The case is No. 12-41243.

Attorneys: Darren Lee McCarty (Alston & Bird, LLP) for NCDR, LLC., Dentistry of Brownsville, PC and KS2 TX, PC. Kimberly S. Keller (Keller Stolarczyk PLLC) for Mauze & Bagby, PLLC.

Companies: NCDR, L.L.C.; Mauze & Bagby, P.L.L.C.

Cases: Advertising LouisianaNews MississippiNews TexasNews