X's Lawsuit Against Media Matters Can Go Forward

From yesterday’s opinion by Judge Reed O’Connor (N.D. Tex.) in X Corp. v. Media Matters for America:

Plaintiff alleges that Defendants knowingly and maliciously fabricated side-by-side images of various advertisers’ posts on Plaintiff’s social media platform X depicted next to neo-Nazi or other extremist content, and portrayed these designed images as if they were what the average user experiences on the X platform. Plaintiff asserts that Defendants proceeded with this course of action in an effort to publicly portray X as a social media platform dominated by neo-Nazism and anti-Semitism, and thereby alienate major advertisers, publishers, and users away from the X platform, intending to harm it….

As the Court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff, for the reasons that follow, Defendants’ Motion [to Dismiss] is DENIED….

[1.] Tortious Interference with Contract

To allege a prima facie case of tortious interference with existing contractual relations, a plaintiff must plead “(1) an existing contract subject to interference, (2) a willful and intentional act of interference with the contract, (3) that proximately caused the plaintiff’s injury, and (4) caused actual damages or loss.”

Plaintiff has provided sufficient allegations to survive dismissal. Plaintiff has factually alleged: the existence of contracts subject to interference; intentional acts of interference; and proximate causation. It cannot reasonably be disputed that Plaintiff has named parties who contracted for paid ads on X. Media Matters’ reporting has acknowledged as much….

Next, Defendants argue that because there was no breach of contract there can be no interference. This misstates Texas law, since “termination of an at-will contract can give rise to a tortious interference claim, even if that termination was not a breach.” Therefore, Plaintiff has plausibly alleged interference to their advertising contracts. Additionally, at this stage the pleading adequately alleges facts that support the inference the actions were done with the requisite intent.

Finally, Plaintiff plausibly alleges that Defendants proximately caused their harm. Proximate cause requires proof of both cause-in-fact and foreseeability. Defendants present a compelling alternative version of events to Plaintiff’s. However, the Court will not “choose among competing inferences” at this stage. Accordingly, Plaintiff’s Amended Complaint alleges sufficient facts to state a claim of tortious interference with contract….

[2.] Business Disparagement

The elements of a business disparagement claim are: “(1) the defendant published false and disparaging information about it, (2) with malice, (3) without privilege, (4) resulting in special damages to the plaintiff.” Defendants argue this claim does not survive because: (1) Defendants’ statements were true; (2) Defendants did not act with actual malice; and (3) Plaintiff has failed to allege special damages.

First, construing the facts pled by Plaintiff in the light most favorable to it, that Defendants manipulated and intended to deceive Plaintiff’s advertisers is sufficient to support the first element. Plaintiff alleges Defendants acted with malice and without privilege by asserting Defendants’ reporting was false and the “frequency and tenor of Media Matters’ statements disparaging X and the safety of advertising on the X platform” supports an inference of actual malice. And finally, Plaintiff has pled a plausible claim regarding special damages in that Defendants tortious acts undermined “advertisers’ faith in X Corp.’s abilities to monitor and curate content.”

Understandably, many of these facts are disputed. While Defendants again point to other explanations, the Court will not decide between the two inferences at this stage.

[3.] Tortious Interference with Prospective Economic Advantage

Finally, Defendants argue that Plaintiff has not alleged an independent tortious act, which is an essential element of its tortious interference with prospective economic advantage claim. However, business disparagement is independently tortious. To survive a motion to dismiss for failure to state a claim a plaintiff need only allege that the defendant has “do[ne] something independently unlawful or tortious,” that would be “actionable under a recognized tort.” Plaintiff has done that….

There’s also more in the opinion on personal jurisdiction and venue. X is represented by Judd E. Stone II, Christopher D. Hilton, Ari Cuenin & Alexander M. Dvorscak of Stone | Hilton PLLC and John C. Sullivan of S|L Law PLLC.

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