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Texas Supreme Court Hears From Competing Waste Companies In Defamation Case

State of Texas
Texas Supreme Court, January 2013.

On Tuesday the Texas Supreme Court heard from attorneys representing competing waste disposal companies in a defamation lawsuit.

The two companies at odds are Waste Management and Texas Disposal System, who runs a landfill in Southeast Travis County and is the source of the defamation case at hand. According to court records, an anonymous action alert fax originating from Waste Management was sent to various groups, pointing to environmental concerns with the TDS landfill.

"This alert was saying that TDS was not in compliance [and] that was false," said Texas Disposal Systems’ attorney Mike McKetta. "It was to the reputation and to the competitive efforts with intent from Waste Management completely."

At that time both companies were competing for contracts with the City of Austin and the City of San Antonio. 

What is being challenged before the court is the amount of money TDS is able to collect from Waste Management based on the argument that the anonymous fax damaged more than just TDS' reputation.

Originally Waste Management was ordered to pay $5 million, but TDS challenged the court to raise that amount because  of what they are calling "extended economic damage."

Chief Justice Nathan Hecht has concerns about how this case could affect future disputes between competing companies who use online review websites or a third party source to attract business.

"It makes me wonder if we haven’t just gotten used to all of these comments about businesses," Hecht said. "You know, you want to go to dinner some night and you get on the internet and you look at the reviews and see one of those reviews and think to yourself, 'I'll probably go somewhere else.'"

Hecht said in a case like that, you wouldn't have to actually prove malice. He said it's hard to see how far reaching the tort was extended wouldn't be fairly far reaching.

Hecht is not the only seated judge on the Texas Supreme Court with those concerns, Justice Eva Guzman also has concerns how this ruling could affect future disputes between competing companies and their first amendment right to free speech -- especially when the case involves online reviews submitted to third-party websites like Yelp.

"There are anonymous communications that show up all over the place and so the question is: Did you prove that they believed the contents of this anonymous communication carried the weight to change their opinion?" Guzman said.

The court is not expected to render a decision until late spring of 2014.