Smear Factor

TOWARD THE END OF SHAKESPEARE'S play “Macbeth,” the eponymous character, whose wife has died, speaks grimly of the transience of life as “a tale … full of sound and fury, signifying nothing.”

And when a Texas jury effectively said the same thing about a spat between competing waste companies, the state's Court of Appeals agreed.

Both Creedmoor, Texas-based Texas Disposal Systems (TDS) and Houston-based Waste Management (WM) provide waste collection and landfill services in the Austin and San Antonio markets. In 1995, TDS and San Antonio began negotiating a contract where, starting in early 1997, TDS would operate a transfer station and haul local waste to its landfill. Around the same time, TDS responded to an Austin request for proposal for waste collection and disposal.

In 1997, a WM consultant faxed an “Action Alert” to environmental and community leaders in Austin, questioning the environmental integrity of TDS's landfill and urging the recipients to contact officials in San Antonio and convince them to stay clear of the TDS landfill.

San Antonio awarded the waste disposal services contract to TDS in 1998. A year later, TDS signed a service contract with Austin.

TDS sued WM in state court in 1997, alleging defamation, anti-competitive practices and illegal interference with the city contracts. While the suit was pending, WM issued a series of disparaging communications: a letter to the San Antonio Public Works Department questioning zoning and other issues relating to the TDS transfer station; an anonymous letter to the state environmental agency criticizing TDS, copies of which were also sent to San Antonio council members; a WM document comparing TDS's landfill to an unlined trench; and a press release that TDS claimed falsely accused it of attempting to discredit WM.

When, two years later, TDS filed an amended complaint, adding claims based on the released documents, the trial court dismissed the allegations, which were barred by the one-year statute of limitations for defamation, along with the antitrust and contract interference claims. As a result, only the Action Alert defamation claim remained.

The judge ruled that the Action Alert was a defamatory statement, and the jury found that WM either knew the Action Alert was false or recklessly disregarded its truth. Nevertheless, the jury awarded TDS zero dollars in damages.

TDS failed to convince the Texas Court of Appeals to overturn the jury's zero damage award. “A jury could reasonably conclude that Texas Disposal had not satisfied its burden” to prove the Action Alert had directly caused its injuries, the opinion stated. “The evidence was … sufficient to support … zero damages … .”

The appeals court also upheld the lower court dismissal of the claims that were filed too late. As for TDS's claim that WM intended and was capable of achieving monopoly power in the waste market, TDS's failure to “challenge the … finding that [WM] lacked the necessary intent to monopolize” justified the dismissal. Finally, the appeals court said that TDS did not prove interference with an existing contract, nor could it recover for injury based only on a delay in signing a contract.

[Texas Disposal Systems Inc. v. Waste Management Holdings Inc., No. 03-03-00631-CV (Tex.App. Dist.3, June 23, 2005)]

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].

The columnist is a Rockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.