As I have written previously, the Texas Citizens Participation Act (“TCPA”), otherwise known as the “Anti-SLAPP” law, has enjoyed a significant amount of attention since its enactment in 2011. The TCPA’s stated purpose is 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 a person to file meritorious lawsuits for demonstrable injury. Tex. Civ. Prac. & Rem. Code § 27.002.
While at first blush, it may appear the TCPA only narrowly applies to efforts by large corporations or the government to silence individuals from exercising their First Amendment rights in public. Indeed, an argument can be made that this is precisely what the Texas Legislature had in mind when it passed the TCPA, as had many states before. However, as has been seen time and again over the past six years, courts have looked to the broad statutory language of the TCPA and held that the scope of the TCPA extends far beyond the above.
For example, the Texas Supreme Court conclusively held in 2015 that there is no requirement in the TCPA that the form of the communication be public, only that the communication involve a matter of public concern. Lippincott v. Whisenhunt, 462 S.W.3d 507, 509 (Tex. 2015). More recently, the Texas Supreme Court found that internal email communications among employees about a former employee who allegedly failed to properly conduct a safety test in the course of his employment – which led to his termination – fell under the scope of the TCPA because they were at least tangentially related to a matter of public concern. ExxonMobil Pipeline Company v. Coleman, No. 15-0407, 2017 WL 727274, at *4 (Tex. Feb. 24, 2017).
Thus, as stated in my earlier writings, it appeared that after these two rulings by the Texas Supreme Court, if a communication bears even a minimal or tangential relation to (1) health or safety, (2) environmental, economic, or community well-being, (3) the government, (4) a public official or a public figure or (5) a good, product, or service in the marketplace – even if the communication is only made privately and not publicly – it will fall under the scope of the TCPA.
Last week, the Third Court of Appeals in Austin appears to have expanded the scope of the TCPA even further. In Elite Auto Body LLC v. Autocraft Bodywerks, Inc., No. 03-15-00064-CV, 2017 WL 1833495 (Tex. App. – Austin May 5, 2017, no. pet. h.), two former employees left a high-end auto body repair shop – Autocraft – and started a competing auto repair business down the street – Elite Auto Body d/b/a Precision. Id. at *1. Autocraft sued its former employees and their new employer for, among other things, violation of the Texas Uniform Trade Secrets Act and unfair competition, claiming that the employees furnished confidential, proprietary and trade secret information of Autocraft’s to Precision, which in turn used the information to obtain an unfair competitive advantage in the marketplace. Id.
The Defendants moved to dismiss the lawsuit under the TCPA, which was denied by the trial court. The Plaintiff’s argument in response was simple and straightforward: what business does a trade secret lawsuit between a former employer and its former employees have to do with the TCPA? In other words, what “communications” were made by the Defendants that invoked the First Amendment protections that the TCPA was designed to protect? Id. at *2.
But the Austin Court of Appeals reversed the trial court’s ruling and found that under the plain language of the TCPA, “communications” would include the former employees making or submitting statements or documents in any form or medium, including oral, visual, written, audiovisual or electronic, “without regard to whether, as Autocraft insists, their statements effected the misappropriation or misuse of its trade secrets or confidential information, or would be constitutionally unprotected.” Id. at *8. The Court held that because Autocraft’s lawsuit complained, in part, of the former employees’ communications amongst themselves within their new enterprise – Precision – through which they allegedly shared or used the alleged trade secret information of Autocraft’s – then the TCPA was implicated. Id. Specifically:
“Autocraft further complains—indeed, it is the heart of Autocraft’s case—that this alleged conduct by appellants, constituting “communications” within the TCPA definition, is in furtherance of the Precision business enterprise relative to Autocraft’s competitive position. These facts satisfy the remaining elements of the “exercise of the right of association” definition as we are to read them—the “communications” are “between individuals who join together to collectively … promote, pursue, or defend common interests.” Id.
To make matters worse for Autocraft, it spent all of its efforts at the trial court level arguing that the TCPA did not apply at all, but it did not offer clear and specific evidence establishing a prima facie case for each essential element of its claims, as required by the TCPA. Id. at *9. Thus, when the Court of Appeals reversed the trial court and found that the TCPA did apply, it had no choice but to dismiss Autocraft’s case because it did not meet its burden under the TCPA. Id.
The fact pattern in the above case is a familiar one. Employees leave a business to start a competing business, and their former employer goes after them for allegedly taking trade secret information and otherwise unfairly competing. After Autocraft, it is likely that these types of cases, and possibly other similar types of business disputes, will more often involve Anti-SLAPP motions.
Finally, when faced with an Anti-SLAPP motion, the non-movant must tread very carefully if it is going to rest solely on its position that the TCPA does not apply. The risk in such a move if the non-movant is wrong and fails to put forth evidence of each element of its claim, as Autocraft learned, is mandatory dismissal and an award of attorney’s fees, expenses and sanctions in favor of the successful movant.
© Eric C. Wood, 2017