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Krimbill v. Talarico

Court of Appeals of Oklahoma, Division IV

October 27, 2017

H. MICHAEL KRIMBILL, Plaintiff/Appellee,
LOUIS C. TALARICO, III, an individual; and LCT CAPITAL LLC, a Delaware Limited Liability Company, Defendants/Appellants.

          Mandate Issued: 05/09/2018


          John J. Carwile, Clayton J. Chamberlain, MCDONALD, MCCANN, METCALF & CARWILE, L.L.P., Tulsa, Oklahoma, for Plaintiff/Appellee.

          Joel L. Wohlgemuth, Ryan A. Ray, NORMAN WOHLGEMUTH CHANDLER JETER BARNETT & RAY, P.C., Tulsa, Oklahoma, for Defendants/Appellants.


         Â¶1 Defendants/Appellants, Louis Talarico, III (Talarico), and LCT Capital, LLC (LCT)(collectively, Defendants or Talarico Defendants), appeal from the trial court's order denying their motion to dismiss the petition of Plaintiff/Appellee H. Michael Krimbill (Krimbill), pursuant to the Oklahoma Citizens Participation Act, 12 O.S.Supp. 2014 §§ 1430 through 1440 (OCPA or the Act). For the reasons discussed below, we affirm.


         Â¶2 The parties are involved in protracted litigation in the state of Delaware, where LCT has filed claims of breach of contract, unjust enrichment, and fraudulent misrepresentation against Oklahoma-based, publicly traded NGL Energy Partners, LP, and its general partner, NGL Energy Holdings, LLC (collectively, NGL), resulting from a transaction known as the "TransMontaigne acquisition." In October 2015, Talarico sent the following email to James Kneale, the head of NGL's audit committee:

From: Lou Talarico
Sent: Thursday, October 8, 2015 1:51 PM
Subject: NGL Litigation
Attachments: Amended Complaint (as filed, 9-29-15).pdf Jim,

         I am contacting you regarding a complaint that LCT Capital has filed against NGL Energy Holdings and NGL Energy Partners regarding fees due in connection with the TransMontaigne transaction. An amendment to the original complaint was filed on September 29 and is attached for your review. Given the materiality of the claim as well as the nature of the events detailed in the complaint, I thought it important that the audit committee and board of directors be aware of the complaint.

         We believe the misrepresentations made to LCT Capital, as detailed in the Complaint, are illustrative of broader, more systemic issues at the company under Mike's leadership -- issues that have affected the accuracy of NGL's public filings and Mike's public statements about the business.

         We are available to discuss the complaint or other issues with you and the audit committee or the board at your convenience.

         Regards, Lou Talarico LCT Capital, LLC

         Â¶3 On October 16, 2015, Krimbill filed a petition in Tulsa County District Court alleging the email had libeled him personally. On October 30, 2015, Defendants moved to dismiss Krimbill's petition with prejudice, pursuant to, inter alia, the OCPA. On February 26, 2016, the district court denied this motion. Defendants now appeal.


         Â¶4 There is no established appellate standard of review in this case. [1] It is clear that the OCPA provides a new summary process/dismissal procedure in certain cases, however, and that, traditionally, Oklahoma appellate courts have reviewed decisions pursuant to such procedures by a de novo standard. The OCPA also requires dismissal if a plaintiff fails to show a prima facie case, and is hence similar to a motion for directed verdict. Directed verdict challenges also are reviewed de novo. Finally, Texas, which has an almost identical act, has adopted a de novo standard of review. [2] Hence, we find a de novo standard indicated by existing precedent and persuasive authority, and we adopt that standard here.


         Â¶5 Oklahoma's Act, which became effective in 2014, [3] mirrors that of the Texas Citizens' Participation Act (TCPA or Texas Act), enacted in 2011 under the title, "Actions Involving the Exercise of Certain Constitutional Rights, " Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001 through 27.011. The Texas Act has been the subject of numerous decisions by the Texas courts, [4] which we may look to as persuasive authority in resolving this matter. See, e.g., In re Fletcher's Estate, 1957 OK 7, ¶ 25, 308 P.2d 304 (general rule, with some exceptions, is that a statute adopted by Oklahoma from another state which at the time of adoption has been construed by the highest court of the first state, is presumed adopted as so construed; however, if decisions by the highest court of the other state occurred after adoption of the statute in Oklahoma, such decisions are persuasive only).

         I. "ANTI-SLAPP" ACTS

         Â¶6 The legislature enacted the OCPA "to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of [persons] to file meritorious lawsuits for demonstrable injury." 12 O.S.Supp. 2014 § 1430.

         A. The Purpose of "Anti-SLAPP" Acts

         Â¶7 The legislation is an example of "anti-SLAPP" (Strategic Lawsuit Against Public Participation) legislation, the purpose of which is to curb "lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances." Cal. Civ. Proc. Code § 425.16(a). Anti-SLAPP legislation appears to be the result of an increasing tendency by parties with substantial resources to file meritless lawsuits against legitimate critics, with the intent to silence those critics by burdening them with the time, stress, and cost of a legal action. To carry out this purpose, anti-SLAPP acts typically provide an accelerated dismissal procedure, available immediately after a suit is filed in order to weed out meritless suits early in the litigation process.

         Â¶8 Anti-SLAPP acts may be generally characterized as "narrow" or "broad." See Shannon Hartzler, Protecting Informed Public Participation: Anti-SLAPP Law and the Media Defendant, 41 Val. U.L. Rev. 1235, 1236 (2007). A narrow act protects only certain speech made in limited circumstances, often when the speech is discussing a political or municipal issue. [5] The acts of Texas, Oklahoma and California are, by comparison, "broad" acts, directed at protecting a wide spectrum of First Amendment speech, with limited exceptions. [6]

         B. The OCPA Procedure

         Â¶9 In an OCPA proceeding, the initial burden is on the defendant seeking dismissal to show that the plaintiff's claim "is based on, relates to, or is in response to the [defendant's] exercise of the right of free speech, the right to petition, or the right of association." 12 O.S.Supp. 2014 § 1434 (B). The burden then shifts to the plaintiff to show "by clear and specific evidence a prima facie case for each essential element of the claim in question." Id., § 1434(C). If § 1434(C) is satisfied, the burden shifts back to the defendant to show "by a preponderance of the evidence" a defense to the plaintiff's claims. Id., § 1434(D). If the plaintiff's prima facie case fails, or the defendant shows a defense by a preponderance of the evidence, the suit is dismissed.

         Â¶10 The three basic issues thus presented by the text of the Act, and by this appeal, are (1) whether the defendant has shown the plaintiff's action is based on, relates to, or is in response to the defendant's exercise of rights protected by the Act; (2) whether the plaintiff has demonstrated a prima facie case; and (3) if so, whether the defendant shown a "valid defense by a preponderance of the evidence."


         Â¶11 Interpreting the OCPA requires balancing the unusual judgment/dismissal provisions of § 1434 against two other OCPA provisions, §§ 1430 and 1440. The tension between these sections is immediately evident.

         Â¶12 Section 1434(C) appears to introduce a new evidentiary standard of "clear and specific evidence" that has no prior history in Oklahoma. Section 1434(D) appears to allow a court to dismiss a case with prejudice based on the judge's weighing of the evidence on the merits of the case. Read in isolation, § 1434 appears to provide for a summary form of bench trial on the merits before a defendant has answered.

         Â¶13 However, OCPA § 1440 provides that the Act "shall not abrogate or lessen any other defense, remedy, immunity or privilege available under other constitutional, statutory, case or common law or rule provisions, " and § 1430 states the legislative purpose of the OCPA is to weed out meritless suits while protecting "the rights of a person to file meritorious lawsuits for demonstrable injury." Tension between the § 1434 procedure and the Act's statements of legislative intent is inescapable, and requires the resolution of several issues in a manner giving effect to legislative intent before we can analyze the facts in this case. The first such issue is the requirement that a plaintiff establish "a prima facie case for each essential element of the claim in question" by "clear and specific evidence."


         Â¶14 Once a defendant has shown that the Act applies, the burden shifts to the plaintiff to show "by clear and specific evidence" the requirements of § 1434(C). The Act does not define "clear and specific evidence, " and that phrase has not previously appeared in published Oklahoma appellate case law.

         A. Prima Facie Case Under the Act

         Â¶15 Oklahoma jurisprudence does define prima facie case. See, e.g., Hill v. State, 1983 OK CR 161, ¶ 3, 672 P.2d 308, quoting Black's Law Dictionary, 4th Rev. Ed., 1968, and defining "prima facie case" as, "Such as will suffice until contradicted and overcome by other evidence. A case which has proceeded upon sufficient proof to that stage where it will support finding if evidence to contrary is disregarded." Because the Legislature would not have stated two contradictory standards in the same sentence, we presume that its definition of "clear and specific evidence" in § 1434(C) is in harmony with the established standard for prima facie case.

         Â¶16 The Texas courts have recognized this issue, and reached the same conclusion regarding the TCPA. In In re Lipsky, 460 S.W.3d 579 (Tex. 2015), the Texas Supreme Court noted:

The statute... requires not only "clear and specific evidence" but also a " prima facie case." In contrast to "clear and specific evidence, " a " prima facie case" has a traditional legal meaning. It refers to evidence sufficient as a matter of law to establish a given fact if it is not rebutted or contradicted.

Id. at 590.

         Â¶17 We find such reasoning consistent with Oklahoma law. We hold that, even though the Oklahoma Act initially demands more information about a plaintiff's underlying claim by requiring a showing of a prima facie case, "the Act does not impose an elevated evidentiary standard or categorically reject circumstantial evidence." Id. at 591.

         B. What Evidence Should the Court Consider while Examining for a Prima Facie Case?

         Â¶18 Defendants argue that, in determining whether a prima facie case has been shown, the court may not consider the pleadings. We disagree.

         Â¶19 The OCPA is clear that a district court "shall consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based." 12 O.S.Supp. 2014 § 1435. In contrast, the minimal requirements of notice pleading do not mandate that a petition state sufficient facts to establish a prima facie case, but only an allegation of general facts supporting the elements of a cause of action. Hence, a petition, if pled to the minimum standard of notice pleading, may not provide sufficient "clear and specific evidence" for purposes of the OCPA. Nevertheless, the Act clearly contemplates that the pleadings may be considered. [7]


         Â¶20 One of the most unique features of the Act is the structure of § 1434(D), which allows dismissal if "valid defenses" are shown by a "preponderance of the evidence" even if a prima face case has been established. This section appears to provide for a pre-answer bench trial on the merits. Such a procedure would be unprecedented in Oklahoma law.

         Â¶21 The Legislature stated in § 1440 of the Act that it did not intend to "abrogate or lessen any other defense, remedy, immunity or privilege available under other constitutional, statutory, case or common law or rule provisions." Unless we interpret the Act as transforming any action at law that may be subject to the OCPA -- and there are likely many affected actions [8] -- into a case that would allow the trial judge to decide disputed questions of material fact in a dismissal procedure, § 1434(D) must be more narrowly construed. ...

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