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Plaintiff,
MONTGOMERY COUNTY, TEXAS
USA TODAY aka GANNETT CO., INC.,
GANNETT PUBLISHING SERVICES,
LLC, and GANNETT SATELLITE
INFORMATION NETWORK, LLC
Defendants. JUDICIAL DISTRICT
REPLY IN SUPPORT OF
DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S DEFAMATION CLAIMS
Defendants USA Today aka Gannett Co., Inc., Gannett Publishing Services, LLC, and
Gannett Satellite Information Network, LLC (collectively, “USA Today”) file this Reply in support
of their motion to dismiss the defamation claims (“Defamation Claims’) of Plaintiff Ryan, LLC
(“Ryan”) pursuant to the Texas Citizens Participation Act (“TCPA”), T
§ 27.001 . This reply is made subject to and without waiver of Defendants’ Special
Ryan contends that the “heart” of the news reporting at issue b_ is the purported
“false implication that Ryan og actions in pursuing a state tax refunds for clients in Arizona and
North Dakota were “improper” “unlawful” and that “Ryan engaged in criminal misconduct.”
Response 1, 3. However, USA Today never accused Ryan of improper, unlawful, or criminal
misconduct, and the publications cannot be reasonably understood by the ordinary reader to imply
anything false and defamatory of Ryan. Therefore, dismissal is warranted because Ryan has failed
The dismissal motion addresses only Ryan’s Defamation Claims, not its Contract Claims. The Contract Claims
should be dismissed by Defendants’ Special Appearance, which is currently on appeal.
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to meet its burden to establish the essential elements that the
defamatory meaning, and otherwise actionable.
The Motion should also be granted because Ryan has failed to negate
statutory affirmative defenses and is entitled to judgment as a matter of law. Texas law
expressly protects the news media’s accurate reporting of third-party allegations on matters of
public concern such as those at issue in this case. T § 73.005(b).
Texas’s “fair report” privilege also protects the media’s accurate reporting of allegations,
documents, and developments in official proceedings. § 73.002(b)(1). Nothing in Ryan’s
affirmative defenses.
The Response does not deny that its defamation claim is “based on” or “in response to” the
Defendants’ exercise of the right of free speech protected under the TCPA. Likewise, Ryan does
not contest that reporting of Ryan’s involvement in tax controversies in Arizona and
North Dakota falls squarely within the TCPA’s protections for its exercise of the right of free
speech involving communications made in connection with a matter of public concern. T
RAC
The TCPA Requires Dismissal of Ryan’s Defamation Claims.
Since Ryan concedes application of the TCPA, to avoid dismissal, it bears the burden of
establishing “by clear and specific evidence a prima facie case for each essential element of the
claim in question.”
affirmative defenses and to show that is not entitled to judgment as a matter of law.
To prove a prima facie case of defamation, Ryan must show by “clear and specific
evidence: “(1) [the] publication of a false statement of fact to a third party, (2) that defamed the
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plaintiff, (3) with the requisite degree of fault, and (4) that proximately caused damages.”
649 S.W.3d 415, 423 (Tex. 2022), re h'g denied (Sept. 9, 2022).
Ryan must also make a “clear and specific” showing that these statements are actionable in
defamation. , 460 S.W.3d 579, 590-91 (Tex. 2015).
To be actionable, a challenged statement must be defamatory. A statement is defamatory
only if it exposes the plaintiff to “public hatred, contempt or ridicule, or financial injury or to
impeach any person’s honesty, integrity, virtue, or reputation.
§ 73.001. Statements may be “false, abusive, unpleasant, or objectionable to the plaintiff without
being defamatory.” Rehak Creative Servs., Inc. v. Witt, 404 S.W.3d 716, 728 (Tex. App.—Houston
[14th Dist.] 2013, pet. denied). Moreover, a challenged statement must “point to the plaintiff and
to no one else.” Main v. Royall, 348 S.W.3d 381, 395 (Tex. App.—Dallas, 2011, no pet.) (citati
omitted).
A challenged statement must also be false. The test for falsity “overlooks minor
inaccuracies and concentrat
U.S. 496, 516 (1991). To establish this element, the plaintiff must show that the publication “is
more damaging to the plaintiff's reputation than a truthful broadcast would have been.” KBMT
, 492 S.W.3d 710, 714 (Tex. 2016). The difference between the
challenged publication and the truth must be substantial. An allegedly false statement is not
actionable unless it gives rise to “ ” than would the truth.
Because Ryan does not identify any actionable statements, USA Today’s motion did not address the latter two
elements of its Defamation Claims. Accordingly, the Court need not determine on this motion whether Ryan is a
public figure, whether it has evidence of actual malice or negligence, or whether it has sufficiently alleged and
established damages.
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The element of falsity also requires that the statement be one of fact. Statements that are
not objectively verifiable are not actionable. Dallas Symphony Ass’n v. Reyes, 571 S.W.3d 753,
762 (Tex. 2019). The First Amendment also protects the expression of opinion, especially when
“the facts underlying an opinion are set out in the publication itself[.]” Vecchio v. J ones, No. 01-
12-00442-CV, 2013 WL 3467195, at *7 (Tex. App—Houston [Ist Dist.] July 9, 2013, no pet.);
Dallas Morning News v. Tatum, 554 S.W.3d 614, 638 (Tex. 2018). In addition, commentary by
the media on matters of public concern is protected under Texas’s statutory “fair comment”
RAC
Ryan also has the burden to negate *s statutory affirmative defenses. The news
media’s accurate reporting of third parties’ allegations on matters of public concern is statutorily
protected. T RAC § 73.005(b). Similarly, an accurate account of statements
and allegations made in the context of official proceedings — such as litigation and related official
proceedings of state tax disputes — is statutorily protected by Texas’s “fair report” privilege. §
As to most ofthe statements in issue, Ryan relies on misrepresentations of what
actually reported. When each statement is considered in context, as Texas requires, none of the
nine alleged statements cited in Ryan’s Amended Petition and Response supports a viable
defamation claim and they do not defeat the affirmative defenses.
’s Description of the Behind-the-Scenes Arizona Campaign
Ryan alleges that “deliberately chose language to mislead readers into thinking
that Ryan had pursued the dyed diesel refund .” Amend. Pet. 4 45; Response at 34
(emphasis in original). Ryan cites a January 10, 2022 tweet by Harris, in which Harris refers to
Governor Ducey’s efforts “to help the firm claw back $100 million.”
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Ryan alleges that this tweet is false because Ryan’s efforts in Tax Court and in
the Arizona Court of Appeals were public. Amend. Pet. § 45; Response at 34-35. But Harris did
s litigation efforts
stated that Ryan “filed a lawsu
fuel which might involve proceedings in the Arizona Court of Appeals or Supreme Court. Harris
Decl. Ex. 3 at 12. A reasonable reader would understand that such litigation entails public court
proceedings.
Ryan does not dispute — indeed, its response proves — that Ryan worked with former high-
level staffers of Governor Doug Ducey officials in non-public meetings and communications to
obtain favorable treatment from the Revenue Department for Ryan’s client. The affidavit of
Damon H. Chronis, President of U.S. Operations for Ryan LLC, narrates that during the course of
out-of-court settlement negotiations with the Arizona Department of Revenue, Ryan engaged Mike
Liburdi, former general counsel to Governor Ducey and a current federal district judge, Danny
Seiden, former deputy chief of staff to the governor, and Kirk Adams, former chief of staff to
Governor Ducey. Chronis Aff. 7, 8. Conspicuously absent from the Chronis affidavit and the
Response is any proof that Ryan’s lobbying campaign involved any public hearings, public
meetings, public filings or public communications. Thus, Ryan has failed to prove that USA
’s reporting that Ryan worked “quietly” behind the scenes to settle the dispute is either false
or defamatory.
Ryan also takes issue with Harris’s statements on a podcast called “The Gaggle” and on
the PBS program, . Amend. Pet. § 45 & n.20; Response 41-42. On both, Harris
The Chronis Affidavit is riddled with hearsay, legal conclusions, improper meaning testimony, and other
inadmissible testimony. USA Today is filing evidentiary objections to it concurrent with its filing of this reply.
The Gaggle podcast is produced by Gannett and focuses on Arizona politics. Harris Decl. Ex. 3.
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discussed his reporting in the Series. On the podcast, Harris described the three former senior aides
backchannels, not through the Legislature,
, trying to get the Department of Revenue to sign over
$100 million to all of these clients for Ryan LLC.
(emphasis added).
Ryan’s Response does not dispute that Harris accurately reported emails he obtained by
public information request from the State of Arizona between Ryan CEO Brint Ryan and Ryan
attorney Susan Bittick that fully supports Harris’s account of Ryan’s non-public meetings with
state revenue officials. tt Supplemental Declaration, attached
hereto as Exhibit A, at USAT 0030 (hereafter cited as “USAT 00__”) (“I have Danny and Mike
working to get that meeting [with the Director of the Arizona Department of Revenue] set up
Harris Decl. Ex. 10 at 6-7; USAT 0026 (“Our lobbyists were already about to
request a meeting with the Director to talk about this issue, so the feedback from the Governor’s
Office is coming at a good time.”) Even if it could be defamatory to report that a company’s
advocacy was done “quietly” or “behind the scenes” (which it is not), USA Today’s reporting is
’s Description of a Staggered Settlement Offer
Ryan misrepresents ’s reporting again when it alleges that falsely
claimed that Ryan had asked the Arizona Department of Revenue to spread the refund payments
out over three years in order to “avoid scrutiny.” Amend. Pet. { 46 & n.21; Response at 35.
Susan Bittick, one of Ryan’s tax attorneys, told her boss in an email
that she and her colleagues wanted “what we have asked — pay th
refunds because they are owed. The compromise might be in HOW
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That meant payment of many millions of dollars over three years
rather than all at once, Nulle told . Doing it this way,
as Ryan wanted, would avoid scrutiny from lawmakers or from the
independent Joint Legislative Budget Committee, which likely
would raise questions as to why such a large lump sum was flowi
Harris Decl. Ex. | at 23; Harris Decl. Ex. 10 at 5 (“The compromise might be in HOW
In other words, reported that Nulle that Ryan had been interested in
spreading potential settlement payments out over several years and that claimed that Ryan
The evidence shows Nulle told Harris in an email before the July Series that “Ryan seeks
only settlement as opposed to litigation” and that Ryan “ran a full-court press to pressure ADOR
[Arizona Department of Revenue] into settling.” USAT 0048. The same email conveys Nulle’s
view that Ryan did not want a legislative solution “because it exposes the matter to the legislative
process which brings Ryan out of the shadows. I remember [Ryan consultants and former
gubernatorial senior staffers] Danny [Seiden] and Mike [Liburdi] scoffing at legislation, they really
wanted to avoid publicizing this issue.” ; Harris Decl. § 13, Ex. 1 at 23. None of this reporting
is false or defamatory of Ryan and is protected under Texas law as accurate reporting of Nulle’s
, 579 S.W.3d at 381-82 (t
in denying newspaper’s TCPA motion that asserted third-party allegation rule and statutory fair
report privilege).
tment that initiated the
pay-out proposal does not defeat the substantial truth of the reporting. It was not improper, illegal
or criminal for Ryan to propose a litigation settlement pay-out to the State of Arizona and Ryan
offers no proof or explanation of how it was more damaging to its reputation to report that it did
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the defamation analysis. , 794 §.W.2d 14, 16 (Tex. 1990) (courts disregard any
variance with respect to items of secondary importance in determining substantial truth as a matter
°’s Characterization of R
Ryan also alleges that “falsely reported that ‘there wasn’t any’ basis for Ryan’s
dyed diesel refund request and that the request was ‘contrary to long-standing tax law.’” Amend.
Pet. 47 & n.22; Response at 35. Again, however, Ryan misrepresents what actually
reported, which was that “ changing the rules to issue such a large refund
was bad policy, and contrary to long-standing tax law.” Harris Decl. Ex. 1 at 11 (emphasis added).
Again, the reporting accurately recounts Nulle’s perception that Ryan’s tax court
arguments were lacking. In an email before the July Series, Nulle told reporter Harris that “I am
sure Ryan et al, was overconfident in their ability to force ADOR to capitulate.” USAT 0045.
Nulle went on to say, “I knew ... based on my understanding of Ar
in Carter [i.e., the tax court case] and rulings in other cases that Ryan had reached the limits of the
exemption with lubricants and greases and that dyed diesel was a bridge too far. My suspicions
were confirmed by the intensity of the pressure applied by Ryan et al. to settle the matter — they
did not want the case to move forward and were doing everything to prevent it — which told me
they had a weak hand.”
Ryan’s contention that its position “was confirmed by the Tax Court’s public ruling” or
that legal filings in the Carter Oil case “included citations to some thirty years of Arizona tax c
decisions that supported Ryan’s position” does not prove otherwise. The Series does not take a
position on whether Ryan’s legal position was well supported. merely stated that
” that Ryan was wrong. Again, this is accurate reporting of third-party
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allegations, which is protected under Section 73.005 and privileged under Section 73.002(b)(1).
Moreover, it is not defamatory to characterize a party’s legal position as baseless or
“contrary to long-standing tax law.” , 537 S.W.3d 224, 237 (Tex.
App.—Houston [1st] 2017, pet. denied) (statem ’s conduct constituted a “serious
legal matter” and amounted to a “grave breach of legal ethics” was not capable of defamatory
meaning). Any accusation that Ryan’s legal position was unsupported is subjective opinion,
privileged commentary, and does tempt, or ridicule.” Nor can the
Series reasonably be interpreted as accusing Ryan of litigating in bad faith. repeatedly
notes that Ryan prevailed in Tax Court (“[t]he firm had won its legal case”) and that Ryan’s
position was supported by precedent (“Additional victories in a series of other cases regarding
whether greases and lubricants should be exempt from the same sales taxes further strengthened
’s Reference to the Arizona Case in the January 2022 Article
Ryan also alleges that USA Today’s reference in the January 10, 2022 Article to Ryan’s
refund campaign in Arizona “created a false impression” by omitting the fact that Ryan had
prevailed in Tax Court. Amend. Pet. § 48 & n.23; Response at 53. As discussed above, that Article
focused primarily on Ryan’s work in North Dakota and other states, not on the Arizona events that
had already covered in the Series. Harris Decl. Ex. 8. The Article’s only discussion of
USA TODAY
Any appraisal that Ryan’s position lacked a sound basis is substantially true in light of the Arizona Court of
Appeals’ decision rejecting its argument. Carter Oil Co., Inc. v. Arizona Dep't of Revenue, 248 Ariz. 339, 347 (Ct.
App. 2020).
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Hired three former high-ranking officials in Arizona Gov.
Doug Ducey’s administration a few months after they left
office to pressure the state’s department of revenue to give
$100 million in refunds to mining clients of Ryan.
The company hired the three ex-public employees, including
one whom Trump appointed as a federal judge after working
for Ryan, even though Arizona has a one-year cooling-off
period before ex-employees can lobby the state.
Ryan LLC and Ducey, who received campaign contributions
from G. Brint Ryan, said no laws were broken.
BI investigation last spring.
Ryan LLC said no one from the FBI contacted the company.
Brooke Brennan, an FBI spokeswoman, told USA TODAY
the agency “does not confirm or deny the existence of
at 7-8. The Article did not mention the case, nor would a reasonable reader of the
Article understand it to be implying anything about the results of any tax case in Arizona.
Moreover, the Article contained a link to the Series, at 8, which discussed the case
at length and repeatedly noted that Ryan prevailed in the Tax Court. Harris Decl. Ex. 1 at 21.
Finally, any impression that Ryan lost its tax case in Arizona would be substantially true. As the
Series reported, although Ryan prevailed in Tax Court, its victory was reversed in the Court of
’s Reporting on Governor Ducey’s Firing of Woodruff and Nulle
Ryan also alleges that “deliberately misled readers into thinking that Ryan had
caused Governor Ducey to fire two public servants—Woodruff and Nulle—for opposing Ryan’s
dyed diesel refund request.” Amend. Pet. § 49 & n.24-26; Response at 39. Once again, this
misrepresents USA Today’s reporting. did not accuse Governor Ducey of firing
Woodruff and Nulle for opposing Ryan. Instead, it reported that made that
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allegation, while the Ducey Administration attributed the firings to the Revenue Department’s
ballot measure.
Indeed, Nulle had confirmed in an email exchange with Harris the allegation that he and
Woodruff
had been fired for opposing tax rebates for Ryan’s clients. USAT 0055-59, 65-67. Harris
provided Nulle a timeline of events that included that on Dec. 28, 2019, “Ducey, through his staff,
fires Woordruff and Nulle after the agency appeared to defend a new voter-approved tax to fund
Woodruff and Nulle say Ducey used the education fund issue to fire them over their
opposition to massive tax rebate for Ryan's clients . at 0059 (emphasis added). Nulle provided
Harris with edits to the 2018 entries but stated that “otherwise this [timeline] is looking good.”
The Series included both Ducey’s stated explanation of the firings as well as Nulle’s
At the time, Ducey’s office said it was because the men had all
the agency to take a legal position on a ballot measure Ducey
opposed. When asked again about the firing for this report, Ducey’s
spokesman said only that Woodruff’s dismissal “was totally
Nulle and Woodruff, however, said their opposition to the tax
refunds was the real reason.
Harris Decl. Ex. 1 at 26. Ryan offers no evidence — much clear less clear and specific evidence —
did not accurately report Nulle’s allegations about the firing of he and Woodruff.
is entitled to dismissal. T § 73.005(b);
579 S.W.3d at 381-82.
Ryan complains of a July 19, 2021 tweet by Harris, but ignores that the tweet linked to the
Series. Amend. Pet. § 49 & n.25; Response at 48; Harris Decl. Ex. 2. As such, it functioned
similarly to a headline and must be considered in the context of the entire reporting.
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Ryan’s response incorrectly contends that readers might be misled by Nulle’s allegations
by supposed omission of other facts. However, did not omit the fact that Woodruff
was promoted by Governor Ducey to permanent ADOR director during the dyed diesel case.
Harris Decl. Ex. 1 at 24. Furthermore, the fact that a Maricopa County trial court ruled the
education tax ballot measure unconstitutional more than six months after the July Series is
immaterial; readers could not have been misled by an event that had yet to take place at the time
of publication. And Ryan’s assertion that Woodruff acknowledged the governor’s reason for firing
him and Nulle mischaracterizes the Dec. 30, 2020 article that Woodruff’s statement supposedly
arises from. In fact, as the headline indicates, that article in the reported that
the governor’s stated reasons for his termination. Likewise, despite Ryan’s
attempt to mischaracterize a tweet by Harris responding to a post-publication tweet of Brint Ryan,
an ordinary reader could only reasonably understand that Harris stood by his reporting on the firing
Moreover, the reporting by cannot be understood by a reasonable reader to
imply anything defamatory about
responsible for the terminations. Such reporting is not “of and concerning” Ryan, and it certainly
Ryan makes a strained attempt to argue that the “juxtaposition” in Harris’s July 2021 tweet
about Governor Ducey’s firing of “two veteran public servants” and Ryan’s activities demonstrates
libel. Response at 41. But the same argument was summarily rejected by the Texas Supreme Court
- In Dallas Morning News v. Hall, 579 S.W.3d at 380-81, the court recognized that in some
Maria Polletta, Department head ousted over education tax lawsuit disputes governor's reasoning for dismissal
Arizona Republic, (Dec. 30, 2020) https://www.azcentral.com/story/news/politics/arizona/2020/12/30/az-dept-
revenue-head-carlton-woodruff-disputes-reason-firing/4089938001, cited at Response p. 14.
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cases true statements strung together and accompanied by speculative commentary might wrongly
imply that the subject of a publication has committed a crime,
. 529 S.W.3d 429, 431-32 (Tex. 2017).
the Court found that, although a magazine accurately reported certain facts
about an alleged “welfare queen,” it insinuated that she engaged in fraud by reporting that she used
an outdated address, by noting that falsifying documents is a felony, and by running the column
under the heading of “Crime.” But in , the Court rejected the plaintiff's defamation claim
because the newspaper report of a pharmacy involved in an FBI investigation was true and placed
the accusations in the context of a greater controversy. The Court held that a juxtaposition case
fails where the plaintiff “does not cite ... any statements in the [] articles implying that [plaintiff]
is actually guilty of anything.” The same result must obtain here, as Hall makes clear that a
newspaper’s accurate reporting of third-party allegations of public concern about controversial
actions by a libel plaintiff does not amount to a “juxtaposition” implying guilt where, as here, there
is no additional “plus-factor” implying guilt.
’s Reporting on Liburdi, Seiden, and Adams
Ryan also alleges that Harris “falsely accused Ryan of breaking Arizona’s conflict of
interest law, falsely claiming on a podcast that Ryan consultants who had previously worked for
Governor Ducey were ‘supposed to wait a year, according to the state’s conflict of interest laws
and a cooling off period law.’” Amend. Pet. 51 & n.27; Response at 43. Again, Ryan’s allegations
misrepresent the reporting and target statements that said nothing defamatory about Ryan.
On the podcast, Harris was asked by the host:
In Hall, the Supreme Court held that the newspaper defendant had accurately reported third-party allegations of an
FBI investigation, which the plaintiff failed to show was not substantially true.” Id. at 381.
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So these guys who are close to Governor Doug Ducey are working
on behalf of their client. What’s the rub here? What’s the problem?
Harris Decl. Ex. 3. Harris answered: “The problem is that they are supposed to wait a year,
according to the state’s conflict of interest laws and [] cooling off period laws. But the other
problem is, the law is never enforced.”
The gist of this statement is that an Arizona statute restricts former government officials’
lobbying activities during a one-year “cooling off’ period after their departure from state
employment. But neither the Series nor Harris stated or implied that the former senior Ducey
staffers violated that statute. Rather, the Series, which Harris referenced for listeners of the podcast,
explained operation of the statute in the context of the former Ducey senior staffers retained as
Ryan consultants. Harris Decl. Ex. 1 at 14. The Series accurately stated “the law is designed to
address what should happen when government officials leave the fold.” It accurately quoted the
statute that a former public employee “shall not represent another person for compensation before
a public agency by which the officer or employee is or was employed within the preceding twelve
months” or “concerning any matter with which the officer was directly compensated and in which
the officer or employee personally participated.” As the article recounts, the statute “didn’t
apply” in the case of the three former staffers since they had not worked for the Department of
Revenue but rather they all worked for the governor’s office. . As the article also reported, the
The Series further explained that, as hired consultants, the men “weren’t attempting to
influence their former employe were “attempting to influence their
former subordinates” in the Arizona Department of Revenue. Accordingly, as the Series reported,
“the three had no conflict of interest” in the view of the governor’s office, their former employer.
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Harris Decl. Ex. 1 at 15. This exactly captures Ryan’s contention that there was no conflict
involving its consultants because the consultants who came from Governor Ducey’s office had
“never been employed by Arizona’s revenue department” and that the statute “does not apply
unless the former public employee is representing someone before the same public agency that
It is meritless for Ryan to now complain that it was defamed by USA Today’s explanation
of the statute that is consistent with what Ryan itself says about it. Since readers were afforded the
same exonerating information Ryan now advances, it has failed to produce any clear and specific
evidence that the gist of reporting on the statute is substantially false or that defeats
the newspaper’s affirmative defenses. , 797 S.W.2d 66,
69-70 (Tex. App.—Waco 1990, no writ) (“Although it may greatly exaggerate the libel-plaintiff’s
misconduct ... an article is substantially true if an ordinary reader would not attach any more
opprobrium to the plaintiffs conduct merely because of the exa
Further, dispelled any suggestion of unethical or illegal conduct. The
newspaper sought out and included the view of Nancy Greenlee, an ethics expert for the State Bar
of Arizona, that the situation did not violate applicable ethical rules. Harris Decl Ex. 1 at 16.
Robert Maguire, the research director for the Center for Responsive Politics in Washington, D.C.,
was quoted in the Series commenting, not that the law had been violated, but that “the policy needs
to be evaluated and strengthened.” at 15. Although the two experts noted unfavorable
appearances from the situation, neither said or even hinted that Ryan had broken the law or crossed
any ethical lines in retaining the former Ducey staffers. Their commentary, and any attributed to
, certainly fall within the extensive protections under the First Amendment and Texas
nd fair comment on matters of p
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Moreover, Harris’s comments on the podcast concerned Liburdi, Seiden, and Adams, and
did not accuse of violating the Arizona statute. Thus, any issues about Liburdi’s, Seiden’s,
or Adam’s compliance with the “cooling-off’ law is a red herring and cannot support a viable
defamation claim
’s Reporting on an FBI Investigation
Ryan also challenges an August 31, 2021 article in , which reported that the
FBI was investigating the Ducey Administration’s role in the refund campaign. Harris Decl. Ex.
Harris Decl. Ex. 5. The article accurately reported that that the FBI had
contacted him multiple times :
Grant Nulle, former deputy director at the Department of Revenu
said an FBI agent contacted him in mid-July, shortly after an
Arizona Republic and USA TODAY investigation uncovered how
the Ducey administration had pushed the department to agree to
refund sales taxes on fuel for mining companies, even though th
tax had been in place for decades.
Nulle said in a phone interview that an FBI agent had called to check
on the safety of him and his family. The agent, from the Public
Corruption Unit's Phoenix office, wanted to know if Nulle had
the series was published.
Nulle said he told the agent that he was fine, but said that the call
concerned him.
Nulle, who moved his family out of state, also told The
USA TODAY for the first time that the FBI had interviewed
him several times in May regarding the refund campaign.
“They are investigating the whole situation, but I don't know w
The Response offers no evidence that Harris incorrectly reported or quoted Nulle’s
statements or that in any way rebuts Nulle’s account of his contact from an FBI agent. Moreover,
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the article expressly reported the additional context that the FBI’s spokesperson would neither
confirm nor deny the existence of the investigation, that Governor Ducey had denied that his office
had been contacted by the FBI, and that Woodruff stated that the FBI had not reached out to him.
Harris Decl. Ex. 4 at 3-5. Again, Ryan does not offer any clear and specific evidence that such
reporting is false, defamatory, or otherwise actionable. Accordingly, the reporting is protected
against a defamation claim under the Texas third-party allegation rule. T RAC
Moreover, as the Texas Supreme Court recently made clear in another newspaper libel
case, that same rule protects from Ryan’s insupportable contention that accurate
reporting of an investigation or other official proceedings constitutes a defamatory accusation of
violating the law. In 579 S.W.3d 370, 381-82 (Tex. 2019), the
Court rejected the plaintiff's contention that reporting that it was “under investigation” implied
that it was guilty of violating the law. To give credence to that complaint “would ill serve the
public's interest in government activities.” (citation omitted).
’s Reporting of Allegations
Ryan’s claims based on the North Dakota Article suffer from the same flaws as its claims
based on the Arizona Series. Ryan alleges that the Article “falsely claimed that Ryan had filed
‘questionable’ and ‘frivolous’ refund claims in North Dakota just ‘to see what sticks with little to
no effort on [Ryan’s] part to provide meaningful documentation.’” Amend. Pet. § 59. But, again,
Ryan misrepresents
The Article actually stated:
“They are obviously still just throwing stuff at the wall to see what
sticks with little to no effort on their part to provide meanin
documentation,” Ryan Rauschenberger, the state’s tax
commissioner, a Republican, wrote Nov. 29, 2018, in an email to
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top staffers. “If they continue to provide inadequate information or
we decide the claim is baseless we deny.”
USA TODAY obtained Rauschenberger’s email and hundreds of
other documents related to Rya
laws,” which make all government documents open to the public
Interviews and other emails show Rauschenberger and his staff
expressing constant frustration after Ryan began filing refund
requests around 2015. They said filings often are questionable,
incomplete and a time sink of taxpayer resources.
About a week later, [Dee Wald, the North Dakota tax agency’s
general counsel] sent an email to 17 colleagues saying Ryan fil
“questionable refund claims on
fee. In addition to filing these refund claims, Ryan LLC
unsuccessfully “issue shopped’ by contacting different tax
department employees in an attempt to find an inconsistent or
ambiguous answer to their questions.”
The company said it files legally valid claims. It denied that
“shops” for different agency employees and was “disappointed with
this assertion given this misunderstanding had already been
resolved.”
“Just as most taxpayers don’t enjoy receiving deficiency notice
from the IRS, some taxing authority employees may not enjoy
receiving refund requests from taxpayers,” the company said in
statement. “Our obligation is to seek what we ethically believe is the
correct legal outcome for our clients, and we do not take positions
or file claims that are
[Sandy] McMerty, [North Dakota’s] deputy tax commissioner, said
Ryan uses “creativity” in interpreting North Dakota tax laws th
EFENDANTS EPLY ISO EFAMATION LAIMS
Sd
IN
a
Sandy MeMerty, North Dakota's deputy tax commissioner, claims that Ryan LLC files frivolous tax refund claims for its business clients
that usually don't have proper documentation and waste her staffs time.
[NORTH DAKOTA DEPT. OF REVENUE
For example, McMerty said Ryan tried to claim that oil well
production equipment should receive an exemption for gas
equipment, which is intended to incentivize the buildout of gas
transportation infrastructure.
McMerty said the equipment is used in oil production, separatin
“Our interpretation for the equipment they’ve requested does no
qualify for the exemption because it is not part of a system used to
compress, process, collect or gather gas,” she said.
McMerty said her staff has to meticulously examine nearly all of the
refund requests from Ryan because of a lack of supporting
documentation that most taxpayers provide her agency.
see also
As the headline and reporting made clear, it was not that accused Ryan of
submitting “questionable” or “frivolous” claims; instead, as shown by emails obtained by reporter
Harris, the newspaper accurately reported the opinions and allegations of North Dakota officials
that Ryan’s requests often lacked merit and were insufficiently documented. USAT 0015-16,
0052, 0068-77 and 0078-80. These documents fully support the reporting, including:
EFENDANTS EPLY ISO EFAMATION LAIMS
McMerty’s email that Ryan filed “questionable refund claims on behalf of
taxpayers for a contingent fee” and “issue shopped” among different tax
department employees. USAT 0015.
“McMerty said Ryan LLC has tried to use this type of creative i
for oil and gas companies....”” USAT 0052.
“T have zero documentation.” USAT 0073, and
Tax commissioner Rauschenberg told colleagues, “They [Ryan] ar
obviously still just throwing stuffat the wall to see what sticks with little or
no effort to provide meaningful documentation.” USAT 0078.
As discussed above, the truth of this reporting does not depend on whether these officials
are right, but whether their allegations were accurately reported. Again, Ryan produces no
evidence that the official’s statements and allegations were not accurately reported. Furthermore,
as noted above, any characterization of the merits of Ryan’s positions is nonactionable opinion
and privileged commentary.
Ryan’s complaint that omitted reporting a January 7, 2022 North Dakota tax
ruling in favor of its client also misses the mark of establishing defamatory meaning or falsity. As
an initial matter, Ryan offers no proof that the ruling was known to on the eve of
publishing the North Dakota article and its response in fact proves that the newspaper denied
having the decision. Further, the decision was not a vindication of Ryan’s work or of its client but
reversed and remanded for fur
’s Reference to Ryan’s “Issue Shopping”
As noted above, Ryan challenges ’s reporting that North Dakota officials
described Ryan as having “issue shopped” refund claims to them. Amend. Pet. { 60. Ryan does
EFENDANTS EPLY ISO EFAMATION LAIMS
not dispute that this reporting accurately described third-party allegations contained in documents
that Harris received through public records requests. Nor does Ryan claim that Harris ignored any
public documents that retracted these allegations. Instead, Ryan contends that the public official’s
allegation was not limited to Ryan and was based on a “misunderstanding” that was later resolved.
This contention fails as clear and specific evidence supporting a viable defamation claim for
various reasons. First, an allegation that Ryan has strategically sought regulators that it believes
will be more receptive to its arguments is not defamatory because such conduct is not unethical or
illegal. Second, the existence of other firms that have pursued a similar strategy does not make
’s reporting about Ryan false or defamatory. Finally, the Article expressly reported
gation was based on a “misunderstanding.” Harris Decl. Ex. 8 at 9.
CONCLUSION
r hearing, the Court dismiss Ryan’s Defamation
Claims with prejudice and award all allowable court costs, reasonable attorney’s fees,
EFENDANTS EPLY ISO EFAMATION LAIMS
Respectfully submitted,
/s/ Paul C. Watler
Paul C. Watler
State Bar No. 20931600
pwatler@jw.com
State Bar No. 24032210
mfuller@jw.com
JACKSON WALKER LLP
State Bar No. 24102357
JACKSON WALKER LLP
EFENDANTS EPLY ISO EFAMATION LAIMS
CERTIFICATE OF SERVICE
This is to certify that on this 15th day of December, 2022, a true and correct copy of the
foregoing document was served electronically upon:
Constantine Z. Pamphilis
DPamphilis@kasowitz.com
1415 Louisiana Street, Suite 2100
DPamphilis@kasowitz.com
EMcNally@kasowitz.com
/s/ Paul C. Watler
Paul C. Watler
EFENDANTS EPLY ISO EFAMATION LAIMS
34710863v.3
Exhibit A
CAUSE NO. 22 07554
RYAN, LLC, IN THE DISTRICT COURT OF
Plaintiff,
MONTGOMERY COUNTY, TEXAS
USA TODAY aka GANNETT CO., INC.,
GANNETT PUBLISHING SERVICES,
LLC, and GANNETT SATELLITE
INFORMATION NETWORK, LLC
Defendants. JUDICIAL DISTRICT
SUPPLEMENTAL DECLARATION OF BETHANY PICKETT
Bethany Pickett, declare the following:
My name is Bethany Pickett. I am over the age of twenty one years, of sound
mind, have never been convicted of a felony or crime of moral turpitude, and am in all respects
competent to make this Declaration. I am an associate at Jackson Walker LLP, and am one of the
attorneys representing Gannett Co., Inc., Gannett Publishing Services, LLC, and Gannett Satellite
Information Network, LLC (collectively, “USA Today in this lawsuit brought by Ryan, LLC
(“Ryan” or “Plaintiff’). The following facts are within my personal knowledge and are true and
correct.
tached to my Declaration as Exhibit is a true and correct copy of 77 pages of
documents that that USA Today produced to Plaintiff on
December 2, 2022.
Attached to my Declaration as Exhibit 2 is a true and correct copy of the additional
three pages of documents USAT000080 that USA Today produced to Plaintiff
on December 15, 2022.
UPPLEMENTAL ECLARATIONOF ETHANY ICKETT Page
I declare under penalty of perjury that the foregoing statements in this Declaration
are true and correct.
Executed in Harris County, Texas day of December
Bethany Pickett
State Bar No.
UPPLEMENTAL ECLARATIONOF ETHANY ICKETT Page
3/22/2021 Google Vault - FW: Ryan Request - Follow Up Discussions on Propagative Materials Issue
_ 2 _
FW: Ryan Request - Follow Up Discussions on Propagative
Materials Issue
em 'DBriant@azdor.gov Briant, David" Tuesday, January 26, 2016 at 7:23:31 PM Mountain Standard Time
To: email: "GNulle@azdor.gov Nulle, Grant M" , email: "FBoucek@azdor.gov Boucek, Frank”
| need recommendations before noon on Wednesday.
Thanks,
David
From: Henry Darwin [mailto:hdarwin@az.gov]
Sent: Tuesday, January 26, 2016 3:24 PM
To: Briant, David
Subject: Fwd: Ryan Request - Follow Up Discussions on Propagative Materials Issue
Can you check with your team (including the AG's Office) to see if such a meeting is wise and if so,
possible on their schedule?
hitps://ediscovery google. com/discovery/DisplayMessage7h|=en&m=8b32e2b2-8b 18-4 189-a83e-9752d2
1b 11a6at=ACD7ongqYugschL nxHuZyuFnnjw... 6
USAT000001
3/22/2021 Google Vault - FW: Ryan Request - Follow Up Discussions on Propagative Materials Issue
Thanks
Sent from Outlok Mobil
From: Bittick, Susan
Sent: Tuesday, January 26, 3:17 PM
Subject: Fwd: Ryan Request - Follow Up Discussions on Propagative Materials Issue
To: Henry Darwin
Cc: Kirk Adams, Danny Seiden
Henry, | have learned that we have a brief due in our case on Friday and are expecting a
decision sometime in February, so I'd like to move expeditiously to get a meeting set to discuss.
Can you please send me some possible dates today?
Thank you.
Sent from my iPhone
Begin forwarded message:
From: "Bittick, Susan" < Susan.Bittick@ryan.com>
Date: January 25, 2016 at 2:10:50 PM PST
To: Henry Darwin < hdarwin@az.gov>
Ce: " kadams@az.gov" <
kadams@az.gov>, "Danny Seiden ( dseiden@az.gov)" <
dseiden@az.gov>
https://ediscovery. google. com/discovery/DisplayMessage?hi=en&m=8b3
Preview
Plaintiff, MONTGOMERY COUNTY, TEXAS USA TODAY aka GANNETT CO., INC., GANNETT PUBLISHING SERVICES, LLC, and GANNETT SATELLITE INFORMATION NETWORK, LLC Defendants. JUDICIAL DISTRICT REPLY IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S DEFAMATION CLAIMS Defendants USA Today aka Gannett Co., Inc., Gannett Publishing Services, LLC, and Gannett Satellite Information Network, LLC (collectively, “USA Today”) file this Reply in support of their motion to dismiss the defamation claims (“Defamation Claims’) of Plaintiff Ryan, LLC (“Ryan”) pursuant to the Texas Citizens Participation Act (“TCPA”), T § 27.001 . This reply is made subject to and without waiver of Defendants’ Special Ryan contends that the “heart” of the news reporting at issue b_ is the purported “false implication that Ryan og actions in pursuing a state tax refunds for clients in Arizona and North Dakota were “improper” “unlawful” and that “Ryan engaged in criminal misconduct.” Response 1, 3. However, USA Today never accused Ryan of improper, unlawful, or criminal misconduct, and the publications cannot be reasonably understood by the ordinary reader to imply anything false and defamatory of Ryan. Therefore, dismissal is warranted because Ryan has failed The dismissal motion addresses only Ryan’s Defamation Claims, not its Contract Claims. The Contract Claims should be dismissed by Defendants’ Special Appearance, which is currently on appeal. EFENDANTS, EPLY ISO EFAMATION LAIMS to meet its burden to establish the essential elements that the defamatory meaning, and otherwise actionable. The Motion should also be granted because Ryan has failed to negate statutory affirmative defenses and is entitled to judgment as a matter of law. Texas law expressly protects the news media’s accurate reporting of third-party allegations on matters of public concern such as those at issue in this case. T § 73.005(b). Texas’s “fair report” privilege also protects the media’s accurate reporting of allegations, documents, and developments in official proceedings. § 73.002(b)(1). Nothing in Ryan’s affirmative defenses. The Response does not deny that its defamation claim is “based on” or “in response to” the Defendants’ exercise of the right of free speech protected under the TCPA. Likewise, Ryan does not contest that reporting of Ryan’s involvement in tax controversies in Arizona and North Dakota falls squarely within the TCPA’s protections for its exercise of the right of free speech involving communications made in connection with a matter of public concern. T RAC The TCPA Requires Dismissal of Ryan’s Defamation Claims. Since Ryan concedes application of the TCPA, to avoid dismissal, it bears the burden of establishing “by clear and specific evidence a prima facie case for each essential element of the claim in question.” affirmative defenses and to show that is not entitled to judgment as a matter of law. To prove a prima facie case of defamation, Ryan must show by “clear and specific evidence: “(1) [the] publication of a false statement of fact to a third party, (2) that defamed the EFENDANTS, EPLY ISO EFAMATION LAIMS plaintiff, (3) with the requisite degree of fault, and (4) that proximately caused damages.” 649 S.W.3d 415, 423 (Tex. 2022), re h'g denied (Sept. 9, 2022). Ryan must also make a “clear and specific” showing that these statements are actionable in defamation. , 460 S.W.3d 579, 590-91 (Tex. 2015). To be actionable, a challenged statement must be defamatory. A statement is defamatory only if it exposes the plaintiff to “public hatred, contempt or ridicule, or financial injury or to impeach any person’s honesty, integrity, virtue, or reputation. § 73.001. Statements may be “false, abusive, unpleasant, or objectionable to the plaintiff without being defamatory.” Rehak Creative Servs., Inc. v. Witt, 404 S.W.3d 716, 728 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). Moreover, a challenged statement must “point to the plaintiff and to no one else.” Main v. Royall, 348 S.W.3d 381, 395 (Tex. App.—Dallas, 2011, no pet.) (citati omitted). A challenged statement must also be false. The test for falsity “overlooks minor inaccuracies and concentrat U.S. 496, 516 (1991). To establish this element, the plaintiff must show that the publication “is more damaging to the plaintiff's reputation than a truthful broadcast would have been.” KBMT , 492 S.W.3d 710, 714 (Tex. 2016). The difference between the challenged publication and the truth must be substantial. An allegedly false statement is not actionable unless it gives rise to “ ” than would the truth. Because Ryan does not identify any actionable statements, USA Today’s motion did not address the latter two elements of its Defamation Claims. Accordingly, the Court need not determine on this motion whether Ryan is a public figure, whether it has evidence of actual malice or negligence, or whether it has sufficiently alleged and established damages. EFENDANTS, EPLY ISO EFAMATION LAIMS The element of falsity also requires that the statement be one of fact. Statements that are not objectively verifiable are not actionable. Dallas Symphony Ass’n v. Reyes, 571 S.W.3d 753, 762 (Tex. 2019). The First Amendment also protects the expression of opinion, especially when “the facts underlying an opinion are set out in the publication itself[.]” Vecchio v. J ones, No. 01- 12-00442-CV, 2013 WL 3467195, at *7 (Tex. App—Houston [Ist Dist.] July 9, 2013, no pet.); Dallas Morning News v. Tatum, 554 S.W.3d 614, 638 (Tex. 2018). In addition, commentary by the media on matters of public concern is protected under Texas’s statutory “fair comment” RAC Ryan also has the burden to negate *s statutory affirmative defenses. The news media’s accurate reporting of third parties’ allegations on matters of public concern is statutorily protected. T RAC § 73.005(b). Similarly, an accurate account of statements and allegations made in the context of official proceedings — such as litigation and related official proceedings of state tax disputes — is statutorily protected by Texas’s “fair report” privilege. § As to most ofthe statements in issue, Ryan relies on misrepresentations of what actually reported. When each statement is considered in context, as Texas requires, none of the nine alleged statements cited in Ryan’s Amended Petition and Response supports a viable defamation claim and they do not defeat the affirmative defenses. ’s Description of the Behind-the-Scenes Arizona Campaign Ryan alleges that “deliberately chose language to mislead readers into thinking that Ryan had pursued the dyed diesel refund .” Amend. Pet. 4 45; Response at 34 (emphasis in original). Ryan cites a January 10, 2022 tweet by Harris, in which Harris refers to Governor Ducey’s efforts “to help the firm claw back $100 million.” EFENDANTS, EPLY ISO EFAMATION LAIMS Ryan alleges that this tweet is false because Ryan’s efforts in Tax Court and in the Arizona Court of Appeals were public. Amend. Pet. § 45; Response at 34-35. But Harris did s litigation efforts stated that Ryan “filed a lawsu fuel which might involve proceedings in the Arizona Court of Appeals or Supreme Court. Harris Decl. Ex. 3 at 12. A reasonable reader would understand that such litigation entails public court proceedings. Ryan does not dispute — indeed, its response proves — that Ryan worked with former high- level staffers of Governor Doug Ducey officials in non-public meetings and communications to obtain favorable treatment from the Revenue Department for Ryan’s client. The affidavit of Damon H. Chronis, President of U.S. Operations for Ryan LLC, narrates that during the course of out-of-court settlement negotiations with the Arizona Department of Revenue, Ryan engaged Mike Liburdi, former general counsel to Governor Ducey and a current federal district judge, Danny Seiden, former deputy chief of staff to the governor, and Kirk Adams, former chief of staff to Governor Ducey. Chronis Aff. 7, 8. Conspicuously absent from the Chronis affidavit and the Response is any proof that Ryan’s lobbying campaign involved any public hearings, public meetings, public filings or public communications. Thus, Ryan has failed to prove that USA ’s reporting that Ryan worked “quietly” behind the scenes to settle the dispute is either false or defamatory. Ryan also takes issue with Harris’s statements on a podcast called “The Gaggle” and on the PBS program, . Amend. Pet. § 45 & n.20; Response 41-42. On both, Harris The Chronis Affidavit is riddled with hearsay, legal conclusions, improper meaning testimony, and other inadmissible testimony. USA Today is filing evidentiary objections to it concurrent with its filing of this reply. The Gaggle podcast is produced by Gannett and focuses on Arizona politics. Harris Decl. Ex. 3. EFENDANTS, EPLY ISO EFAMATION LAIMS discussed his reporting in the Series. On the podcast, Harris described the three former senior aides backchannels, not through the Legislature, , trying to get the Department of Revenue to sign over $100 million to all of these clients for Ryan LLC. (emphasis added). Ryan’s Response does not dispute that Harris accurately reported emails he obtained by public information request from the State of Arizona between Ryan CEO Brint Ryan and Ryan attorney Susan Bittick that fully supports Harris’s account of Ryan’s non-public meetings with state revenue officials. tt Supplemental Declaration, attached hereto as Exhibit A, at USAT 0030 (hereafter cited as “USAT 00__”) (“I have Danny and Mike working to get that meeting [with the Director of the Arizona Department of Revenue] set up Harris Decl. Ex. 10 at 6-7; USAT 0026 (“Our lobbyists were already about to request a meeting with the Director to talk about this issue, so the feedback from the Governor’s Office is coming at a good time.”) Even if it could be defamatory to report that a company’s advocacy was done “quietly” or “behind the scenes” (which it is not), USA Today’s reporting is ’s Description of a Staggered Settlement Offer Ryan misrepresents ’s reporting again when it alleges that falsely claimed that Ryan had asked the Arizona Department of Revenue to spread the refund payments out over three years in order to “avoid scrutiny.” Amend. Pet. { 46 & n.21; Response at 35. Susan Bittick, one of Ryan’s tax attorneys, told her boss in an email that she and her colleagues wanted “what we have asked — pay th refunds because they are owed. The compromise might be in HOW EFENDANTS, EPLY ISO EFAMATION LAIMS That meant payment of many millions of dollars over three years rather than all at once, Nulle told . Doing it this way, as Ryan wanted, would avoid scrutiny from lawmakers or from the independent Joint Legislative Budget Committee, which likely would raise questions as to why such a large lump sum was flowi Harris Decl. Ex. | at 23; Harris Decl. Ex. 10 at 5 (“The compromise might be in HOW In other words, reported that Nulle that Ryan had been interested in spreading potential settlement payments out over several years and that claimed that Ryan The evidence shows Nulle told Harris in an email before the July Series that “Ryan seeks only settlement as opposed to litigation” and that Ryan “ran a full-court press to pressure ADOR [Arizona Department of Revenue] into settling.” USAT 0048. The same email conveys Nulle’s view that Ryan did not want a legislative solution “because it exposes the matter to the legislative process which brings Ryan out of the shadows. I remember [Ryan consultants and former gubernatorial senior staffers] Danny [Seiden] and Mike [Liburdi] scoffing at legislation, they really wanted to avoid publicizing this issue.” ; Harris Decl. § 13, Ex. 1 at 23. None of this reporting is false or defamatory of Ryan and is protected under Texas law as accurate reporting of Nulle’s , 579 S.W.3d at 381-82 (t in denying newspaper’s TCPA motion that asserted third-party allegation rule and statutory fair report privilege). tment that initiated the pay-out proposal does not defeat the substantial truth of the reporting. It was not improper, illegal or criminal for Ryan to propose a litigation settlement pay-out to the State of Arizona and Ryan offers no proof or explanation of how it was more damaging to its reputation to report that it did EFENDANTS, EPLY ISO EFAMATION LAIMS the defamation analysis. , 794 §.W.2d 14, 16 (Tex. 1990) (courts disregard any variance with respect to items of secondary importance in determining substantial truth as a matter °’s Characterization of R Ryan also alleges that “falsely reported that ‘there wasn’t any’ basis for Ryan’s dyed diesel refund request and that the request was ‘contrary to long-standing tax law.’” Amend. Pet. 47 & n.22; Response at 35. Again, however, Ryan misrepresents what actually reported, which was that “ changing the rules to issue such a large refund was bad policy, and contrary to long-standing tax law.” Harris Decl. Ex. 1 at 11 (emphasis added). Again, the reporting accurately recounts Nulle’s perception that Ryan’s tax court arguments were lacking. In an email before the July Series, Nulle told reporter Harris that “I am sure Ryan et al, was overconfident in their ability to force ADOR to capitulate.” USAT 0045. Nulle went on to say, “I knew ... based on my understanding of Ar in Carter [i.e., the tax court case] and rulings in other cases that Ryan had reached the limits of the exemption with lubricants and greases and that dyed diesel was a bridge too far. My suspicions were confirmed by the intensity of the pressure applied by Ryan et al. to settle the matter — they did not want the case to move forward and were doing everything to prevent it — which told me they had a weak hand.” Ryan’s contention that its position “was confirmed by the Tax Court’s public ruling” or that legal filings in the Carter Oil case “included citations to some thirty years of Arizona tax c decisions that supported Ryan’s position” does not prove otherwise. The Series does not take a position on whether Ryan’s legal position was well supported. merely stated that ” that Ryan was wrong. Again, this is accurate reporting of third-party EFENDANTS, EPLY ISO EFAMATION LAIMS allegations, which is protected under Section 73.005 and privileged under Section 73.002(b)(1). Moreover, it is not defamatory to characterize a party’s legal position as baseless or “contrary to long-standing tax law.” , 537 S.W.3d 224, 237 (Tex. App.—Houston [1st] 2017, pet. denied) (statem ’s conduct constituted a “serious legal matter” and amounted to a “grave breach of legal ethics” was not capable of defamatory meaning). Any accusation that Ryan’s legal position was unsupported is subjective opinion, privileged commentary, and does tempt, or ridicule.” Nor can the Series reasonably be interpreted as accusing Ryan of litigating in bad faith. repeatedly notes that Ryan prevailed in Tax Court (“[t]he firm had won its legal case”) and that Ryan’s position was supported by precedent (“Additional victories in a series of other cases regarding whether greases and lubricants should be exempt from the same sales taxes further strengthened ’s Reference to the Arizona Case in the January 2022 Article Ryan also alleges that USA Today’s reference in the January 10, 2022 Article to Ryan’s refund campaign in Arizona “created a false impression” by omitting the fact that Ryan had prevailed in Tax Court. Amend. Pet. § 48 & n.23; Response at 53. As discussed above, that Article focused primarily on Ryan’s work in North Dakota and other states, not on the Arizona events that had already covered in the Series. Harris Decl. Ex. 8. The Article’s only discussion of USA TODAY Any appraisal that Ryan’s position lacked a sound basis is substantially true in light of the Arizona Court of Appeals’ decision rejecting its argument. Carter Oil Co., Inc. v. Arizona Dep't of Revenue, 248 Ariz. 339, 347 (Ct. App. 2020). EFENDANTS, EPLY ISO EFAMATION LAIMS Hired three former high-ranking officials in Arizona Gov. Doug Ducey’s administration a few months after they left office to pressure the state’s department of revenue to give $100 million in refunds to mining clients of Ryan. The company hired the three ex-public employees, including one whom Trump appointed as a federal judge after working for Ryan, even though Arizona has a one-year cooling-off period before ex-employees can lobby the state. Ryan LLC and Ducey, who received campaign contributions from G. Brint Ryan, said no laws were broken. BI investigation last spring. Ryan LLC said no one from the FBI contacted the company. Brooke Brennan, an FBI spokeswoman, told USA TODAY the agency “does not confirm or deny the existence of at 7-8. The Article did not mention the case, nor would a reasonable reader of the Article understand it to be implying anything about the results of any tax case in Arizona. Moreover, the Article contained a link to the Series, at 8, which discussed the case at length and repeatedly noted that Ryan prevailed in the Tax Court. Harris Decl. Ex. 1 at 21. Finally, any impression that Ryan lost its tax case in Arizona would be substantially true. As the Series reported, although Ryan prevailed in Tax Court, its victory was reversed in the Court of ’s Reporting on Governor Ducey’s Firing of Woodruff and Nulle Ryan also alleges that “deliberately misled readers into thinking that Ryan had caused Governor Ducey to fire two public servants—Woodruff and Nulle—for opposing Ryan’s dyed diesel refund request.” Amend. Pet. § 49 & n.24-26; Response at 39. Once again, this misrepresents USA Today’s reporting. did not accuse Governor Ducey of firing Woodruff and Nulle for opposing Ryan. Instead, it reported that made that EFENDANTS EPLY ISO EFAMATION LAIMS allegation, while the Ducey Administration attributed the firings to the Revenue Department’s ballot measure. Indeed, Nulle had confirmed in an email exchange with Harris the allegation that he and Woodruff had been fired for opposing tax rebates for Ryan’s clients. USAT 0055-59, 65-67. Harris provided Nulle a timeline of events that included that on Dec. 28, 2019, “Ducey, through his staff, fires Woordruff and Nulle after the agency appeared to defend a new voter-approved tax to fund Woodruff and Nulle say Ducey used the education fund issue to fire them over their opposition to massive tax rebate for Ryan's clients . at 0059 (emphasis added). Nulle provided Harris with edits to the 2018 entries but stated that “otherwise this [timeline] is looking good.” The Series included both Ducey’s stated explanation of the firings as well as Nulle’s At the time, Ducey’s office said it was because the men had all the agency to take a legal position on a ballot measure Ducey opposed. When asked again about the firing for this report, Ducey’s spokesman said only that Woodruff’s dismissal “was totally Nulle and Woodruff, however, said their opposition to the tax refunds was the real reason. Harris Decl. Ex. 1 at 26. Ryan offers no evidence — much clear less clear and specific evidence — did not accurately report Nulle’s allegations about the firing of he and Woodruff. is entitled to dismissal. T § 73.005(b); 579 S.W.3d at 381-82. Ryan complains of a July 19, 2021 tweet by Harris, but ignores that the tweet linked to the Series. Amend. Pet. § 49 & n.25; Response at 48; Harris Decl. Ex. 2. As such, it functioned similarly to a headline and must be considered in the context of the entire reporting. EFENDANTS EPLY ISO EFAMATION LAIMS Ryan’s response incorrectly contends that readers might be misled by Nulle’s allegations by supposed omission of other facts. However, did not omit the fact that Woodruff was promoted by Governor Ducey to permanent ADOR director during the dyed diesel case. Harris Decl. Ex. 1 at 24. Furthermore, the fact that a Maricopa County trial court ruled the education tax ballot measure unconstitutional more than six months after the July Series is immaterial; readers could not have been misled by an event that had yet to take place at the time of publication. And Ryan’s assertion that Woodruff acknowledged the governor’s reason for firing him and Nulle mischaracterizes the Dec. 30, 2020 article that Woodruff’s statement supposedly arises from. In fact, as the headline indicates, that article in the reported that the governor’s stated reasons for his termination. Likewise, despite Ryan’s attempt to mischaracterize a tweet by Harris responding to a post-publication tweet of Brint Ryan, an ordinary reader could only reasonably understand that Harris stood by his reporting on the firing Moreover, the reporting by cannot be understood by a reasonable reader to imply anything defamatory about responsible for the terminations. Such reporting is not “of and concerning” Ryan, and it certainly Ryan makes a strained attempt to argue that the “juxtaposition” in Harris’s July 2021 tweet about Governor Ducey’s firing of “two veteran public servants” and Ryan’s activities demonstrates libel. Response at 41. But the same argument was summarily rejected by the Texas Supreme Court - In Dallas Morning News v. Hall, 579 S.W.3d at 380-81, the court recognized that in some Maria Polletta, Department head ousted over education tax lawsuit disputes governor's reasoning for dismissal Arizona Republic, (Dec. 30, 2020) https://www.azcentral.com/story/news/politics/arizona/2020/12/30/az-dept- revenue-head-carlton-woodruff-disputes-reason-firing/4089938001, cited at Response p. 14. EFENDANTS EPLY ISO EFAMATION LAIMS cases true statements strung together and accompanied by speculative commentary might wrongly imply that the subject of a publication has committed a crime, . 529 S.W.3d 429, 431-32 (Tex. 2017). the Court found that, although a magazine accurately reported certain facts about an alleged “welfare queen,” it insinuated that she engaged in fraud by reporting that she used an outdated address, by noting that falsifying documents is a felony, and by running the column under the heading of “Crime.” But in , the Court rejected the plaintiff's defamation claim because the newspaper report of a pharmacy involved in an FBI investigation was true and placed the accusations in the context of a greater controversy. The Court held that a juxtaposition case fails where the plaintiff “does not cite ... any statements in the [] articles implying that [plaintiff] is actually guilty of anything.” The same result must obtain here, as Hall makes clear that a newspaper’s accurate reporting of third-party allegations of public concern about controversial actions by a libel plaintiff does not amount to a “juxtaposition” implying guilt where, as here, there is no additional “plus-factor” implying guilt. ’s Reporting on Liburdi, Seiden, and Adams Ryan also alleges that Harris “falsely accused Ryan of breaking Arizona’s conflict of interest law, falsely claiming on a podcast that Ryan consultants who had previously worked for Governor Ducey were ‘supposed to wait a year, according to the state’s conflict of interest laws and a cooling off period law.’” Amend. Pet. 51 & n.27; Response at 43. Again, Ryan’s allegations misrepresent the reporting and target statements that said nothing defamatory about Ryan. On the podcast, Harris was asked by the host: In Hall, the Supreme Court held that the newspaper defendant had accurately reported third-party allegations of an FBI investigation, which the plaintiff failed to show was not substantially true.” Id. at 381. EFENDANTS EPLY ISO EFAMATION LAIMS So these guys who are close to Governor Doug Ducey are working on behalf of their client. What’s the rub here? What’s the problem? Harris Decl. Ex. 3. Harris answered: “The problem is that they are supposed to wait a year, according to the state’s conflict of interest laws and [] cooling off period laws. But the other problem is, the law is never enforced.” The gist of this statement is that an Arizona statute restricts former government officials’ lobbying activities during a one-year “cooling off’ period after their departure from state employment. But neither the Series nor Harris stated or implied that the former senior Ducey staffers violated that statute. Rather, the Series, which Harris referenced for listeners of the podcast, explained operation of the statute in the context of the former Ducey senior staffers retained as Ryan consultants. Harris Decl. Ex. 1 at 14. The Series accurately stated “the law is designed to address what should happen when government officials leave the fold.” It accurately quoted the statute that a former public employee “shall not represent another person for compensation before a public agency by which the officer or employee is or was employed within the preceding twelve months” or “concerning any matter with which the officer was directly compensated and in which the officer or employee personally participated.” As the article recounts, the statute “didn’t apply” in the case of the three former staffers since they had not worked for the Department of Revenue but rather they all worked for the governor’s office. . As the article also reported, the The Series further explained that, as hired consultants, the men “weren’t attempting to influence their former employe were “attempting to influence their former subordinates” in the Arizona Department of Revenue. Accordingly, as the Series reported, “the three had no conflict of interest” in the view of the governor’s office, their former employer. EFENDANTS EPLY ISO EFAMATION LAIMS Harris Decl. Ex. 1 at 15. This exactly captures Ryan’s contention that there was no conflict involving its consultants because the consultants who came from Governor Ducey’s office had “never been employed by Arizona’s revenue department” and that the statute “does not apply unless the former public employee is representing someone before the same public agency that It is meritless for Ryan to now complain that it was defamed by USA Today’s explanation of the statute that is consistent with what Ryan itself says about it. Since readers were afforded the same exonerating information Ryan now advances, it has failed to produce any clear and specific evidence that the gist of reporting on the statute is substantially false or that defeats the newspaper’s affirmative defenses. , 797 S.W.2d 66, 69-70 (Tex. App.—Waco 1990, no writ) (“Although it may greatly exaggerate the libel-plaintiff’s misconduct ... an article is substantially true if an ordinary reader would not attach any more opprobrium to the plaintiffs conduct merely because of the exa Further, dispelled any suggestion of unethical or illegal conduct. The newspaper sought out and included the view of Nancy Greenlee, an ethics expert for the State Bar of Arizona, that the situation did not violate applicable ethical rules. Harris Decl Ex. 1 at 16. Robert Maguire, the research director for the Center for Responsive Politics in Washington, D.C., was quoted in the Series commenting, not that the law had been violated, but that “the policy needs to be evaluated and strengthened.” at 15. Although the two experts noted unfavorable appearances from the situation, neither said or even hinted that Ryan had broken the law or crossed any ethical lines in retaining the former Ducey staffers. Their commentary, and any attributed to , certainly fall within the extensive protections under the First Amendment and Texas nd fair comment on matters of p EFENDANTS EPLY ISO EFAMATION LAIMS Moreover, Harris’s comments on the podcast concerned Liburdi, Seiden, and Adams, and did not accuse of violating the Arizona statute. Thus, any issues about Liburdi’s, Seiden’s, or Adam’s compliance with the “cooling-off’ law is a red herring and cannot support a viable defamation claim ’s Reporting on an FBI Investigation Ryan also challenges an August 31, 2021 article in , which reported that the FBI was investigating the Ducey Administration’s role in the refund campaign. Harris Decl. Ex. Harris Decl. Ex. 5. The article accurately reported that that the FBI had contacted him multiple times : Grant Nulle, former deputy director at the Department of Revenu said an FBI agent contacted him in mid-July, shortly after an Arizona Republic and USA TODAY investigation uncovered how the Ducey administration had pushed the department to agree to refund sales taxes on fuel for mining companies, even though th tax had been in place for decades. Nulle said in a phone interview that an FBI agent had called to check on the safety of him and his family. The agent, from the Public Corruption Unit's Phoenix office, wanted to know if Nulle had the series was published. Nulle said he told the agent that he was fine, but said that the call concerned him. Nulle, who moved his family out of state, also told The USA TODAY for the first time that the FBI had interviewed him several times in May regarding the refund campaign. “They are investigating the whole situation, but I don't know w The Response offers no evidence that Harris incorrectly reported or quoted Nulle’s statements or that in any way rebuts Nulle’s account of his contact from an FBI agent. Moreover, EFENDANTS EPLY ISO EFAMATION LAIMS the article expressly reported the additional context that the FBI’s spokesperson would neither confirm nor deny the existence of the investigation, that Governor Ducey had denied that his office had been contacted by the FBI, and that Woodruff stated that the FBI had not reached out to him. Harris Decl. Ex. 4 at 3-5. Again, Ryan does not offer any clear and specific evidence that such reporting is false, defamatory, or otherwise actionable. Accordingly, the reporting is protected against a defamation claim under the Texas third-party allegation rule. T RAC Moreover, as the Texas Supreme Court recently made clear in another newspaper libel case, that same rule protects from Ryan’s insupportable contention that accurate reporting of an investigation or other official proceedings constitutes a defamatory accusation of violating the law. In 579 S.W.3d 370, 381-82 (Tex. 2019), the Court rejected the plaintiff's contention that reporting that it was “under investigation” implied that it was guilty of violating the law. To give credence to that complaint “would ill serve the public's interest in government activities.” (citation omitted). ’s Reporting of Allegations Ryan’s claims based on the North Dakota Article suffer from the same flaws as its claims based on the Arizona Series. Ryan alleges that the Article “falsely claimed that Ryan had filed ‘questionable’ and ‘frivolous’ refund claims in North Dakota just ‘to see what sticks with little to no effort on [Ryan’s] part to provide meaningful documentation.’” Amend. Pet. § 59. But, again, Ryan misrepresents The Article actually stated: “They are obviously still just throwing stuff at the wall to see what sticks with little to no effort on their part to provide meanin documentation,” Ryan Rauschenberger, the state’s tax commissioner, a Republican, wrote Nov. 29, 2018, in an email to EFENDANTS EPLY ISO EFAMATION LAIMS top staffers. “If they continue to provide inadequate information or we decide the claim is baseless we deny.” USA TODAY obtained Rauschenberger’s email and hundreds of other documents related to Rya laws,” which make all government documents open to the public Interviews and other emails show Rauschenberger and his staff expressing constant frustration after Ryan began filing refund requests around 2015. They said filings often are questionable, incomplete and a time sink of taxpayer resources. About a week later, [Dee Wald, the North Dakota tax agency’s general counsel] sent an email to 17 colleagues saying Ryan fil “questionable refund claims on fee. In addition to filing these refund claims, Ryan LLC unsuccessfully “issue shopped’ by contacting different tax department employees in an attempt to find an inconsistent or ambiguous answer to their questions.” The company said it files legally valid claims. It denied that “shops” for different agency employees and was “disappointed with this assertion given this misunderstanding had already been resolved.” “Just as most taxpayers don’t enjoy receiving deficiency notice from the IRS, some taxing authority employees may not enjoy receiving refund requests from taxpayers,” the company said in statement. “Our obligation is to seek what we ethically believe is the correct legal outcome for our clients, and we do not take positions or file claims that are [Sandy] McMerty, [North Dakota’s] deputy tax commissioner, said Ryan uses “creativity” in interpreting North Dakota tax laws th EFENDANTS EPLY ISO EFAMATION LAIMS Sd IN a Sandy MeMerty, North Dakota's deputy tax commissioner, claims that Ryan LLC files frivolous tax refund claims for its business clients that usually don't have proper documentation and waste her staffs time. [NORTH DAKOTA DEPT. OF REVENUE For example, McMerty said Ryan tried to claim that oil well production equipment should receive an exemption for gas equipment, which is intended to incentivize the buildout of gas transportation infrastructure. McMerty said the equipment is used in oil production, separatin “Our interpretation for the equipment they’ve requested does no qualify for the exemption because it is not part of a system used to compress, process, collect or gather gas,” she said. McMerty said her staff has to meticulously examine nearly all of the refund requests from Ryan because of a lack of supporting documentation that most taxpayers provide her agency. see also As the headline and reporting made clear, it was not that accused Ryan of submitting “questionable” or “frivolous” claims; instead, as shown by emails obtained by reporter Harris, the newspaper accurately reported the opinions and allegations of North Dakota officials that Ryan’s requests often lacked merit and were insufficiently documented. USAT 0015-16, 0052, 0068-77 and 0078-80. These documents fully support the reporting, including: EFENDANTS EPLY ISO EFAMATION LAIMS McMerty’s email that Ryan filed “questionable refund claims on behalf of taxpayers for a contingent fee” and “issue shopped” among different tax department employees. USAT 0015. “McMerty said Ryan LLC has tried to use this type of creative i for oil and gas companies....”” USAT 0052. “T have zero documentation.” USAT 0073, and Tax commissioner Rauschenberg told colleagues, “They [Ryan] ar obviously still just throwing stuffat the wall to see what sticks with little or no effort to provide meaningful documentation.” USAT 0078. As discussed above, the truth of this reporting does not depend on whether these officials are right, but whether their allegations were accurately reported. Again, Ryan produces no evidence that the official’s statements and allegations were not accurately reported. Furthermore, as noted above, any characterization of the merits of Ryan’s positions is nonactionable opinion and privileged commentary. Ryan’s complaint that omitted reporting a January 7, 2022 North Dakota tax ruling in favor of its client also misses the mark of establishing defamatory meaning or falsity. As an initial matter, Ryan offers no proof that the ruling was known to on the eve of publishing the North Dakota article and its response in fact proves that the newspaper denied having the decision. Further, the decision was not a vindication of Ryan’s work or of its client but reversed and remanded for fur ’s Reference to Ryan’s “Issue Shopping” As noted above, Ryan challenges ’s reporting that North Dakota officials described Ryan as having “issue shopped” refund claims to them. Amend. Pet. { 60. Ryan does EFENDANTS EPLY ISO EFAMATION LAIMS not dispute that this reporting accurately described third-party allegations contained in documents that Harris received through public records requests. Nor does Ryan claim that Harris ignored any public documents that retracted these allegations. Instead, Ryan contends that the public official’s allegation was not limited to Ryan and was based on a “misunderstanding” that was later resolved. This contention fails as clear and specific evidence supporting a viable defamation claim for various reasons. First, an allegation that Ryan has strategically sought regulators that it believes will be more receptive to its arguments is not defamatory because such conduct is not unethical or illegal. Second, the existence of other firms that have pursued a similar strategy does not make ’s reporting about Ryan false or defamatory. Finally, the Article expressly reported gation was based on a “misunderstanding.” Harris Decl. Ex. 8 at 9. CONCLUSION r hearing, the Court dismiss Ryan’s Defamation Claims with prejudice and award all allowable court costs, reasonable attorney’s fees, EFENDANTS EPLY ISO EFAMATION LAIMS Respectfully submitted, /s/ Paul C. Watler Paul C. Watler State Bar No. 20931600 pwatler@jw.com State Bar No. 24032210 mfuller@jw.com JACKSON WALKER LLP State Bar No. 24102357 JACKSON WALKER LLP EFENDANTS EPLY ISO EFAMATION LAIMS CERTIFICATE OF SERVICE This is to certify that on this 15th day of December, 2022, a true and correct copy of the foregoing document was served electronically upon: Constantine Z. Pamphilis DPamphilis@kasowitz.com 1415 Louisiana Street, Suite 2100 DPamphilis@kasowitz.com EMcNally@kasowitz.com /s/ Paul C. Watler Paul C. Watler EFENDANTS EPLY ISO EFAMATION LAIMS 34710863v.3 Exhibit A CAUSE NO. 22 07554 RYAN, LLC, IN THE DISTRICT COURT OF Plaintiff, MONTGOMERY COUNTY, TEXAS USA TODAY aka GANNETT CO., INC., GANNETT PUBLISHING SERVICES, LLC, and GANNETT SATELLITE INFORMATION NETWORK, LLC Defendants. JUDICIAL DISTRICT SUPPLEMENTAL DECLARATION OF BETHANY PICKETT Bethany Pickett, declare the following: My name is Bethany Pickett. I am over the age of twenty one years, of sound mind, have never been convicted of a felony or crime of moral turpitude, and am in all respects competent to make this Declaration. I am an associate at Jackson Walker LLP, and am one of the attorneys representing Gannett Co., Inc., Gannett Publishing Services, LLC, and Gannett Satellite Information Network, LLC (collectively, “USA Today in this lawsuit brought by Ryan, LLC (“Ryan” or “Plaintiff’). The following facts are within my personal knowledge and are true and correct. tached to my Declaration as Exhibit is a true and correct copy of 77 pages of documents that that USA Today produced to Plaintiff on December 2, 2022. Attached to my Declaration as Exhibit 2 is a true and correct copy of the additional three pages of documents USAT000080 that USA Today produced to Plaintiff on December 15, 2022. UPPLEMENTAL ECLARATIONOF ETHANY ICKETT Page I declare under penalty of perjury that the foregoing statements in this Declaration are true and correct. Executed in Harris County, Texas day of December Bethany Pickett State Bar No. UPPLEMENTAL ECLARATIONOF ETHANY ICKETT Page 3/22/2021 Google Vault - FW: Ryan Request - Follow Up Discussions on Propagative Materials Issue _ 2 _ FW: Ryan Request - Follow Up Discussions on Propagative Materials Issue em 'DBriant@azdor.gov Briant, David" Tuesday, January 26, 2016 at 7:23:31 PM Mountain Standard Time To: email: "GNulle@azdor.gov Nulle, Grant M" , email: "FBoucek@azdor.gov Boucek, Frank” | need recommendations before noon on Wednesday. Thanks, David From: Henry Darwin [mailto:hdarwin@az.gov] Sent: Tuesday, January 26, 2016 3:24 PM To: Briant, David Subject: Fwd: Ryan Request - Follow Up Discussions on Propagative Materials Issue Can you check with your team (including the AG's Office) to see if such a meeting is wise and if so, possible on their schedule? hitps://ediscovery google. com/discovery/DisplayMessage7h|=en&m=8b32e2b2-8b 18-4 189-a83e-9752d2 1b 11a6at=ACD7ongqYugschL nxHuZyuFnnjw... 6 USAT000001 3/22/2021 Google Vault - FW: Ryan Request - Follow Up Discussions on Propagative Materials Issue Thanks Sent from Outlok Mobil From: Bittick, Susan Sent: Tuesday, January 26, 3:17 PM Subject: Fwd: Ryan Request - Follow Up Discussions on Propagative Materials Issue To: Henry Darwin Cc: Kirk Adams, Danny Seiden Henry, | have learned that we have a brief due in our case on Friday and are expecting a decision sometime in February, so I'd like to move expeditiously to get a meeting set to discuss. Can you please send me some possible dates today? Thank you. Sent from my iPhone Begin forwarded message: From: "Bittick, Susan" < Susan.Bittick@ryan.com> Date: January 25, 2016 at 2:10:50 PM PST To: Henry Darwin < hdarwin@az.gov> Ce: " kadams@az.gov" < kadams@az.gov>, "Danny Seiden ( dseiden@az.gov)" < dseiden@az.gov> https://ediscovery. google. com/discovery/DisplayMessage?hi=en&m=8b3