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Tx. Supreme Ct. decision in Neely v. Wilson will have “chilling effect” on Texas newrooms

- By Stacy Allen, Jackson Walker LLP

For the past two decades since the Texas Supreme Court's decision in McIlvain v. Jacobs, 794 S.W.2d 14, 16 (Tex. 1990), Texas appellate courts and the Fifth Circuit have repeatedly held that journalists are insulated from liability for defamation when reporting the allegations of third parties as long as those allegations are reported accurately (even if the allegations themselves later turn out to be false). 

But in a divided decision last Friday concerning the so-called "third-party allegation rule," the Texas Supreme Court reversed a lower court summary judgment in favor of a broadcaster, holding that McIlvain did not insulate news media defendants from application of the traditional common law "republication rule" which holds liable anyone who republishes false and defamatory statements made by third parties.

In Neely v. Wilson (No. 11-0228), an Austin reporter and television station broadcast an investigative report about alleged malpractice and other misconduct by Dr. Byron Neely, an Austin neurosurgeon. 

The anchor lead-in to the story began by asking "[i]f you needed surgery would you want to know if your surgeon had been disciplined for prescribing himself and taking dangerous drugs... ." 

The report stated that Dr. Neely had been suspended by the Texas Medical Board for, among other things, prescribing himself controlled substances that had the potential to interfere with his ability to perform surgery. 

The story also reported on malpractice lawsuits filed against Dr. Neely, and included statements made by former patients and others involved in the lawsuits. 

Although Dr. Neely declined to comment for the story, the report included information his attorneys provided to the reporter that was favorable to his position. 

Neely claimed that the broadcast caused his practice to collapse.

Summary judgment was granted in favor of the broadcaster defendants based in part on the third party allegation rule, and the Third Court of Appeals affirmed in reliance on McIlvain.

McIlvain was a libel suit complaining of a television news report concerning an internal investigation conducted by the City of Houston into complaints that plaintiffs (who were city employees) were drinking liquor on the job and forcing other workers to care for one plaintiff's elderly father on City time.

The trial court granted the media defendants' summary judgment but the court of appeals reversed, finding that it was error to grant summary judgment when "the evidence certainly does not show that the underlying charges were true as a matter of law."

In McIlvain, the Texas Supreme Court reversed the court of appeals, holding that it was enough that a comparison of the facts reported by the media defendants and the City's investigation showed that the report about the investigation and evidence considered was "substantially correct, accurate, and not misleading," without reaching the truth or falsity of the underlying charges being investigated.

The majority in Neely began by noting that unlike the federal Constitution, the Texas Constitution guarantees both the freedom of speech and the right to sue for defamation. 

Acknowledging the tension between these two rights, the Court lists the various common law and statutory protections afforded the press, including the substantial truth defense. 

The Neely Court then explained that its holding in McIlvain did not create a third-party allegation exception to the republication rule:

"Rather, McIlvain stands for the proposition that if a broadcast reports that allegations were made and an investigation proves those allegations to be true, the defamation claim is brought within the scope of the substantial truth defense. Id. In other words, a government investigation that finds allegations to be true is one method of proving substantial truth."   Neely at 17.

Finding that a person of ordinary intelligence could conclude the gist of the broadcast was that Neely was disciplined for operating on patients while taking dangerous drugs or controlled substances, and that the story thus could be found not to be substantially true, the Neely Court held that a genuine issue of fact existed and that summary judgment for the broadcaster defendants was improper. Id. at 2-3.

The Court allowed as how "the media defendants may well prevail on the truth defense or on one or more of these other defenses and privileges" at trial, "but they have not conclusively done so here."  Id. at 3.

Supporters of the third-party allegation rule note the chilling effect that strict adherence to the republication rule would have on the reporting of newsworthy investigations and allegations concerning matters of public interest. 

Appellate courts which adhered to the third-party allegation rule prior to Neely shared such concerns, fearing that:

 "[third-party allegations of misconduct] would never be reported by the media for fear an investigation or other proceeding might later prove the allegations untrue, thereby subjecting the media to suit for defamation. Furthermore, when would an allegation be proven true or untrue for purposes of defamation? After an investigation? After a court trial? After an appeal? Undoubtedly, the volume of litigation and concomitant chilling effect on the media under such circumstances would be incalculable."

 KTRK Television v. Felder, 950 S.W.2d 100, 106 (Tex. App.—Houston [14th Dist.] 1997, no writ).

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