Derek Gaskamp, Jonathan Miller and Andrew Hunter v. WSP USA, Inc. WSP USA Buildings, Inc. and WSP USA Administration, Inc. ( 2020 )

Opinion issued February 20, 2020
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00079-CV
———————————
DEREK GASKAMP, JONATHAN MILLER, AND ANDREW HUNTER,
Appellants
V.
WSP USA, INC., WSP USA BUILDINGS, INC. AND WSP USA
ADMINISTRATION, INC., Appellees
On Appeal from the 270th District Court
Harris County, Texas
Trial Court Case No. 2017-66686
OPINION ON EN BANC RECONSIDERATION
Derek Gaskamp, Jonathan Miller, and Andrew Hunter have filed a motion for
en banc reconsideration of this Court’s December 20, 2018 opinion and judgment.
See TEX. R. APP. P. 49.7. The Court grants en banc reconsideration. See TEX. R. APP.
P. 41.2, 49.7. We withdraw our opinion and judgment of December 20, 2018, and
we substitute this opinion and judgment in their stead.
WSP USA Administration, Inc. (“WSP Administration”), WSP USA
Buildings, Inc. (“WSP Buildings”), and WSP USA, Inc. (collectively, “WSP”) sued
former employees Derek Gaskamp, Jonathan Miller, and Andrew Hunter for conduct
related to their alleged misappropriation of WSP’s trade secrets and confidential
information. Gaskamp, Miller, and Hunter filed a motion to dismiss WSP’s claims
pursuant to the Texas Citizens’ Participation Act (“TCPA”).1 The trial court denied
the motion, and Gaskamp, Miller, and Hunter filed this interlocutory appeal, raising
three issues challenging the trial court’s denial.2
We affirm.
1
As discussed more fully later in the opinion, the Texas Legislature amended certain
provisions of the TCPA in 2019. Act of May 17, 2019, 86th Leg., R.S., ch. 378,
§§ 1–9, § 12, secs. 27.001, 27.003, 27.005–.007, 27.0075, 27.009–.010, Tex. Sess.
Law Serv. 684, 687. The amendments became effective September 1, 2019. Id. at
§§ 11–12. Because this suit was filed before the effective date of the amendments,
this case is governed by the statute as it existed before the amendments. See id. All
our citations are to the TCPA as it existed prior to September 1, 2019, unless
otherwise stated. For ease of reference, citation to the pre-amendment version of a
section amended in 2019 will be identified as the “Former” section.
2
See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(12) (authorizing interlocutory
appeal of order denying motion to dismiss filed under TCPA Section 27.003).
2
Background
In early October 2017, WSP filed suit against Infinity MEP, a limited liability
company, and against WSP’s former employees, Derek Gaskamp, Jonathan Miller,
Andrew Hunter, and David Sinz.3 A week later, WSP filed its First Amended
Petition. The amended petition described WSP as “a leader in civil engineering, fire
protection and risk, bridge engineering, analysis and strategy, construction design,
environment and sustainability, and . . . electrical, IT, telecommunications,
automation, and HVAC systems[.]” The petition averred that WSP had “developed
several sophisticated, challenging, and substantial projects for clients that include
hospitals, universities, corporations, hotels, and other large-scale commercial and
residential facilities.”
The petition alleged that David Sinz had been an office manager for one of
WSP’s Houston offices. Sinz’s duties included “developing business, contacts, and
opportunities for WSP” and “delegat[ing] the work to engineers in the office.” Sinz
resigned from WSP in late April 2017. WSP stated that, a couple weeks before his
resignation, Sinz founded Infinity MEP, a business providing “mechanical,
electrical, plumbing, fire protection, commissioning, and low voltage/security/IT
services.” WSP averred that these “are the very same services provided by WSP.”
3
Infinity MEP and Sinz are not parties to this appeal.
3
After Sinz’s resignation, Gaskamp, Miller, and Hunter also resigned from
WSP. They joined Sinz at Infinity. WSP stated that “Sinz is the managing member
and president of Infinity MEP, Gaskamp is the associate principal of Infinity MEP,
and Miller is the principal of Infinity MEP. Hunter is an Infinity MEP employee.”
After the employees resigned, WSP learned that Infinity’s website identified
14 different “featured projects,” which Infinity represented were “from [Infinity]
staffs’ previous career at WSP and other firms.” By posting the information on its
website, WSP alleged that Infinity was “attempting to leverage WSP’s successful
projects and WSP’s association with high-profile clients—without WSP’s consent—
into business opportunities, relationships, and contracts of its own.”
WSP then conducted an “an internal investigation and a forensic analysis” of
the hard drives on Sinz’s, Gaskamp’s, Miller’s, and Hunter’s computers “to
determine whether . . . they had taken any trade secret, confidential, or proprietary
information.” WSP claimed that the analysis revealed that “seven USB devices were
plugged into Sinz’s WSP-issued computer between January and April 2017, none of
which were WSP-issued devices.” WSP noted that the last USB device had been
connected to Sinz’s hard drive after Sinz had registered Infinity with the Texas
Secretary of State.
The investigation revealed that, the afternoon before he had resigned, Sinz
had accessed a folder on the computer titled “Potential Projects.” The folder
4
contained “files, data, and information regarding projects and customers that WSP
is actively pursuing.” WSP claimed that “Sinz was retrieving information about
prospective customers—without WSP’s consent—in order to use it to Infinity, Sinz,
Gaskamp, Miller, and Hunter’s advantage and in unfair competition with WSP.”
WSP stated that its forensic analysis also revealed that, not long before he
resigned, Sinz had opened 14 different “project files for projects long-since
completed or otherwise inactive and, for most of them, projects with which Sinz had
no involvement.” WSP claimed that “[t]he folders include customer information,
pricing data, and the project Revit files, among other data and information.” WSP
explained that “Revit is an electronic design software that WSP uses to create
architectural designs embellished with its proprietary mechanical, electrical, and
plumbing standard details, and any other project requirements per customer
specifications.”
WSP averred that “the Revit file for each project incorporates WSP’s
proprietary approach to these services that make it a leader in the field.” WSP
claimed that was the reason it “protects its Revit files as trade secret, proprietary,
and confidential information.” It asserted that “unauthorized access to and use of
Revit files allows competitors to capitalize on WSP’s cache of expertise as
competitors can use WSP’s Revit data to create as-built drawings and renderings for
5
customers, without the burden of time, expenses, and technical knowhow or
experience.”
WSP also alleged that Sinz had posted information to Infinity’s website to
demonstrate Infinity’s qualifications “to engage in work identical to that comprising
the core of WSP’s business.” WSP asserted that “Sinz also accessed files relating to
projects between WSP and its current and potential clients . . . including confidential
and proprietary data relating to those projects.” WSP claimed that “Sinz also
publicly used the information to his, Gaskamp, Miller, Hunter, and Infinity MEP’s
benefit, advertising the projects as evidence of Infinity’s ‘experience’ and ostensibly
to attract clients.”
WSP further alleged that its internal investigation “showed [the former
employees] engaged in off-book projects with WSP resources, in contravention of
their fiduciary duties to WSP and the ethical rules applicable to professional
engineers.” WSP asserted that the “internal investigation also determined that Sinz,
Gaskamp, Miller, and Hunter ha[d] interfered with WSP’s current contractual
relations and have stolen funds from WSP.”
Based on its factual allegations, WSP asserted common law and statutory
causes of action against the four former employees, including a claim based on the
Texas Uniform Trade Secrets Act (“TUTSA”).4 WSP maintained that the former
4
See TEX. CIV. PRAC. & REM. CODE §§ 134A.001–.008.
6
employees violated TUTSA by using and disclosing WSP’s “valuable trade secret,
proprietary, and confidential information in competition with WSP” for the former
employees’ “own financial gain at Infinity MEP.” WSP also claimed that former
employees had violated the Texas Uniform Fraudulent Transfer Act (“TUFTA”).5
And WSP alleged that the former employees had fraudulently transferred WSP’s
trade secret, proprietary, and confidential information to Infinity.
In addition, WSP asserted common-law causes of action against the former
employees and against Infinity. Against the former employees, WSP brought claims
for breach of loyalty, breach of fiduciary duty, tortious interference with existing
contracts and prospective business relations, unjust enrichment, unfair competition,
and civil conspiracy.
WSP claimed that the former employees had breached their duty of loyalty
“by purposefully obtaining, disclosing, and using the trade secret, proprietary, and
confidential information of WSP to establish a competing engineering firm, all while
still employed by WSP[.]” WSP asserted that the former employees had breached
their fiduciary duties by using and disclosing WSP’s confidential and trade secret
information to their benefit and to WSP’s detriment. With respect to tortious
interference with existing contracts, WSP alleged that the former employees had
5
See TEX. BUS. & COM. CODE §§ 24.001–.013.
7
“induced” parties with whom WSP had contracts “to reduce” their business with
WSP. WSP also alleged that the former employees’ “taking, sharing, and use of
WSP’s confidential, proprietary, and trade secret information has enabled [the
former employees] to purposefully interfere with these prospective contracts and
business relationships.” WSP further claimed that the former employees’ improper
conduct had unjustly enriched them and constituted unfair competition.
To support its civil conspiracy claim, WSP alleged that the former employees
had “act[ed] in collusion” (1) to “misappropriate WSP’s trade secrets, proprietary,
and confidential information;” (2) to “fraudulently transfer assets and WSP’s trade
secrets, proprietary, and confidential information”; (3) to “tortiously interfere with
WSP’s existing contracts and prospective business relationships;” and (4) “to engage
in unfair competition with WSP.” WSP also alleged that the former employees had
“associated together through a meeting of their minds and for a common purpose of
engaging in a course of conduct, and as an ongoing and continuing organization or
unit, to conduct the unlawful and tortious conduct[.]” WSP alleged that the former
employees had
secretly conspired among themselves, and possibly with others
currently unknown to WSP, to devise and implement wrongful and
unlawful schemes to misappropriate WSP’s trade secrets, proprietary,
and confidential information, fraudulently transfer WSP assets and
trade secrets, proprietary, and confidential information, engage in
unfair competition, and tortiously interfere with WSP’s existing
contracts and prospective business relationships.
8
WSP requested actual and exemplary damages as well as attorneys’ fees. WSP
also sought injunctive relief to restrain Infinity and the former employees from
using, transferring, and disclosing WSP’s trade secret, confidential, and proprietary
information.
The former employees answered the suit, denying WSP’s claims and asserting
affirmative defenses and counterclaims, alleging that WSP filed its misappropriation
claims in bad faith. Gaskamp, Miller, and Hunter (but not Sinz or Infinity) filed a
motion to dismiss the suit pursuant to the TCPA. They asserted, “While framed as a
case to protect confidential information and trade secrets, [WSP’s] lawsuit is little
more than an attempt to stifle competition and impede the growth of a new
competitor some six months after its formation.”
Citing the TCPA, Gaskamp, Miller, and Hunter claimed that WSP’s suit
should be dismissed because it is a “legal action . . . based on [their] exercise of the
right of free association.” They also asserted that WSP’s claims were based on their
“exercise of the right to free speech.” Gaskamp, Miller, and Hunter further claimed
that WSP could not “establish by clear and specific evidence each element of their
claims” against them. They requested the trial court to dismiss the suit and to award
them the statutorily required attorneys’ fees, costs, and sanctions.
9
A few days later, two of the WSP entities—WSP Buildings and WSP
Administration—filed a Second Amended Petition. The Second Amended Petition
differed from the First Amended Petition in several ways.
The Second Amended Petition omitted WSP USA as a plaintiff. A footnote in
the petition stated, “WSP’s Second Amended Petition nonsuit[s] Plaintiff, WSP
USA, Inc.” It also averred that WSP Buildings, not WSP Administration, owns the
trademark, confidential, and proprietary information that is the subject of the
litigation. Concomitant with this ownership, only WSP Buildings (but not WSP
Administration) asserted causes of action dependent on ownership. The petition
stated that WSP Administration was the WSP entity that had employed Sinz,
Gaskamp, Miller, and Hunter. WSP Administration dropped six of the causes of
action it had asserted but continues to assert claims for unjust enrichment, breach of
loyalty, and breach of fiduciary duty.
The Second Amended Petition added detailed allegations, averring that
WSP’s forensic analyses of the former employees’ computers had not only indicated
that Sinz had accessed and removed WSP Buildings’s trade secret and confidential
information before his resignation but so had Gaskamp, Miller, and Hunter.
The Second Amended Petition also indicated that WSP took steps to protect
its trade secret and confidential information. The petition alleged,
WSP Buildings does not disclose or disseminate its Revit models in
native format, which would include the metadata for the algorithms,
10
formulas, and other tools embedded in the file. Rather, in order to allow
the architect to utilize the models, WSP Buildings only provides a PDF
of the design, which includes only that information that is necessary
(and not trade secret or confidential) to allow the architect and other
subcontractors to design and build the structure.
The Second Amended Petition further provided details about an “off-books”
project called “ME Global.” The petition alleged that WSP learned that Sinz,
Gaskamp, Miller, and Hunter, while still employed by WSP Administration, bid on
the ME Global project without WSP’s knowledge by sending a proposal to the
prospective client, Kirksey Architecture. In making the bid, they represented
themselves as WSP employees who were making the bid on behalf of WSP. Kirksey
ostensibly awarded ME Global to WSP, however, the four employees never
informed WSP about the project, keeping it “off the books.”
WSP Administration and WSP Buildings alleged that Sinz, Gaskamp, Miller,
and Hunter worked on the ME Global project using WSP resources, including WSP
Buildings’s trade secret and confidential information, but never informed WSP of
the project or recorded WSP’s resources used on the project. Ultimately, Kirksey
paid WSP Buildings for work completed at “the 10% milestone” on the project.
However, WSP was then informed that another firm would be completing the
project. WSP Administration and WSP Buildings alleged that they received
information indicating that Sinz, Gaskamp, Miller, and Hunter continued to work on
the project after they left WSP and began to work for Infinity.
11
WSP Administration and WSP Buildings also alleged that the former
employees and Infinity interfered with its current and prospective contractual
relationships by sending advertising brochures to WSP Buildings clients. WSP
Buildings claimed that, after receiving the advertising brochures, its clients began to
ask whether the rumor was true that WSP’s Houston’s office was closing.
The Second Amended Petition was verified by Mike Brueggerhoff, as “Vice
President Operations Manager—Houston” for WSP Buildings.6 He attested that he
had read the Second Amended Petition and that “the contents thereof are based on
my personal knowledge and are true and correct.”
The same day that the Second Amended Petition was filed, WSP Buildings
and WSP Administration also filed a response to Gaskamp, Miller, and Hunter’s
TCPA motion to dismiss. WSP USA, Inc.—which had effectively nonsuited its
claims after the motion was filed by not joining in the Second Amended Petition—
did not file a response to the motion. To support their response, WSP Administration
and WSP Buildings relied on the allegations in their Second Amended Petition.
In their response, WSP Buildings and WSP Administration offered four
arguments regarding why the TCPA motion to dismiss should be denied. First, they
asserted that the motion to dismiss was moot because the motion was based on
WSP’s First Amended Petition, which had been superseded by the filing of the
6
Brueggerhoff had also verified WSP’s First Amended Petition.
12
Second Amended Petition. Second, they claimed that the motion should be denied
because their lawsuit was not based on Gaskamp’s, Miller’s, and Hunter’s exercise
of their rights to freely associate or their rights of free speech as required under the
TCPA. Instead, they asserted that the suit was based on the alleged theft and use of
WSP’s trade secrets. Third, the they asserted that the TCPA’s commercial-speech
exemption applied to WSP’s claims. Finally, they claimed that the TCPA motion to
dismiss should be denied because they offered “clear and specific evidence to
present a prima facie showing as to each element of their claims.”
The trial court denied Gaskamp, Miller, and Hunter’s TCPA motion to
dismiss. The trial court’s order did not specify the reason for the denial other than
stating that the motion was “not meritorious.” Gaskamp, Miller, and Hunter
(“Appellants” hereinafter) now appeal the trial court’s order denying their TCPA
motion to dismiss.
Motion to Dismiss Not Moot
As a threshold matter, we first address WSP’s contention in their brief that
“Appellants’ motion to dismiss—premised on WSP’s First Amended Petition—was
mooted by WSP’s subsequently filed Second Amended Petition.” WSP asserts, “By
filing a Second Amended Petition after Appellants filed their dismissal motion, WSP
removed its First Amended Petition from the record and destroyed the sole basis of
Appellants’ motion, precluding TCPA dismissal.”
13
WSP avers, “[T]his procedural maneuver [WSP’s amending of the petition]
is not dissimilar to those used to avoid dismissal under Rule [of Civil Procedure] 91a
or to avoid summary judgment under Rule 166a.” See TEX. R. CIV. P. 91a (providing
procedure for dismissal of cause of action with no basis in law or fact); TEX. R. CIV.
P. 166a. They assert that, “[u]nder those frameworks, after a Rule 91a or 166a
motion is filed, a plaintiff may amend its petition to replead, nonsuit, or add claims,
thereby avoiding dismissal or summary judgment.” WSP claims that “[t]he
necessary result of this procedural maneuver is not outlined by Rules 91a or 166a
but, rather, is required by Rules 63 and 65.” See TEX. R. CIV. P. 63 (providing that
parties may amend their pleadings within seven days of trial date without leave of
court); TEX. R. CIV. P. 65 (stating that, once substituted pleading filed, previous
pleading “shall no longer be regarded as a part of the pleading in the record of the
cause”).
Contrary to WSP’s assertion, Rule 91a does, in fact, address the effect of a
nonsuit or amendment of a petition, providing that, in response to a Rule 91a motion,
a plaintiff may nonsuit the challenged cause of action or amend it. See TEX. R. CIV.
P. 91a.5(a), (b). Under Rule 91a.5, a court may not rule on a motion to dismiss if the
plaintiff has, at least three days before the hearing on the motion to dismiss,
nonsuited the challenged cause of action. See TEX. R. CIV. P. 91a.5(a). If the plaintiff
“amends the challenged cause of action at least 3 days before the date of the hearing,
14
the movant may, before the date of the hearing, file a withdrawal of the motion or
an amended motion directed to the amended cause of action.” See TEX. R. CIV. P.
91a.5(b). The rule further provides, “Except by agreement of the parties, the court
must rule on a motion unless it has been withdrawn or the cause of action has been
nonsuited in accordance with (a) or (b). In ruling on the motion, the court must not
consider a nonsuit or amendment not filed as permitted by paragraphs (a) or (b).”
TEX. R. CIV. P. 91a(c). Unlike the TCPA, Rule 91a expressly addresses the filing of
a nonsuit and the amendment of pleadings in the context of a motion to dismiss under
that rule. Thus, Rule 91a is not instructive on WSP’s assertion that the TCPA motion
to dismiss was mooted by the filing of the Second Amended Petition.
The law governing summary-judgment practice is also not instructive. While
a motion to dismiss under the TCPA constitutes a claim for affirmative relief, a
motion for summary judgment does not. The Iola Barker v. Hurst, No. 01-17-00838-
CV, 2018 WL 3059795, at *5 (Tex. App.—Houston [1st Dist.] June 21, 2018, no
pet.) (mem. op.) (holding that TCPA motion to dismiss, seeking dismissal with
prejudice and attorney’s fees, costs, and sanctions, constituted “pending claim for
affirmative relief”); Young v. Villegas, 231 S.W.3d 1, 6 (Tex. App.—Houston [14th
Dist.] 2007, pet. denied) (holding motion for summary judgment is not claim for
affirmative relief).
15
Here, the TCPA dismissal motion’s status as a claim for affirmative relief is
determinative of whether the motion became “moot” when the Second Amended
Petition was filed as WSP claims.
As mentioned, WSP USA, WSP Buildings, and WSP Administration were the
plaintiffs in the First Amended Petition. Each asserted the same nine causes of
against Appellants in that pleading. Appellants then filed their TCPA motion to
dismiss based on the First Amended Petition. They requested (1) dismissal of all
WSP’s claims, (2) attorneys’ fees, and (3) sanctions. A few days later, WSP
Buildings and WSP Administration filed the Second Amended Petition. The Second
Amended Petition indicated that WSP USA’s claims were nonsuited. Thus, WSP
USA was no longer a plaintiff. See Fraud–Tech, Inc. v. Choicepoint, Inc., 102
S.W.3d 366, 375 (Tex. App.—Fort Worth 2003, pet. denied) (recognizing general
rule that parties to suit, including plaintiffs, are dismissed from suit by omitting their
names from amended pleading).
WSP Buildings continued to pursue all nine causes of action against
Appellants, but WSP Administration no longer pursued six of those causes of action.
It pursued only three causes of action against Appellants: unjust enrichment, breach
of loyalty, and breach of fiduciary duty. As a result, WSP Administration effectively
nonsuited its statutory claims against Appellants for violations of TUTSA and
TUFTA and its common law claims for tortious interference, unjust enrichment, and
16
civil conspiracy. See FKM P’ship, Ltd. v. Bd. of Regents of the Univ. of Houston
Sys., 255 S.W.3d 619, 632 (Tex. 2008) (“In civil causes generally, filing an amended
petition that does not include a cause of action effectively nonsuits or voluntarily
dismisses the omitted claims as of the time the pleading is filed.”).
While a plaintiff has an absolute right to nonsuit a claim before resting its
case-in-chief, a nonsuit “shall not prejudice the right of an adverse party to be heard
on a pending claim for affirmative relief.” Abatecola v. 2 Savages Concrete
Pumping, LLC, No. 14-17-00678-CV, 2018 WL 3118601, at *13 (Tex. App.—
Houston [14th Dist.] June 26, 2018, pet. denied) (mem. op.) (citing TEX. R. CIV. P.
162; CTL/Thompson Tex., LLC v. Starwood Homeowner’s Ass’n, Inc., 390 S.W.3d
299, 300 (Tex. 2013)). A motion to dismiss that affords more relief than a nonsuit
provides constitutes a claim for affirmative relief, which survives nonsuit. Id. at *14
(citing Rauhauser v. McGibney, 508 S.W.3d 377, 381 (Tex. App.—Fort Worth
2014, no pet.), overruled on other grounds by Hersh v. Tatum, 526 S.W.3d 462, 467
(Tex. 2017)). “TCPA motions to dismiss survive nonsuit because, unlike a nonsuit,
the TCPA motion to dismiss might also allow the movant to obtain a dismissal with
prejudice, attorney’s fees, and sanctions.” Id.; see Walker v. Hartman, 516 S.W.3d
71, 80 (Tex. App.—Beaumont 2017, pet. denied) (recognizing that TCPA motion to
dismiss survives nonsuit).
17
Here, Appellants’ TCPA motion to dismiss, based on the First Amended
Petition, constitutes an affirmative request for relief. Appellants not only requested
dismissal of all WSP’s claims asserted in the First Amended Petition, but they also
requested the affirmative relief of “attorneys’ fees, expenses and costs associated
with defending against [the claims asserted in the First Amended Petition].” Neither
WSP’s amending of its petition nor the nonsuiting of certain claims can operate to
divest Appellants of their right to affirmative relief. See Abatecola, 2018 WL
3118601, at *14. Thus, Appellants’ TCPA motion to dismiss was not rendered moot
by the filing of the Second Amended Petition. Cf. id. (holding that portion of TCPA
motion asserted by two defendants was not rendered moot by plaintiffs’ nonsuiting
of those defendants).
Dismissal Under the TCPA
We next determine whether the trial court properly denied Appellants’ motion
to dismiss under the TCPA. Appellants raise three issues on appeal, challenging the
trial court’s order.
In their first issue, Appellants question “[w]hether the two-sentence
verification to WSP Buildings’s and WSP Administration’s [second] amended
petition satisfied their evidentiary burden in response to Appellants’ motion to
dismiss.” As a subpoint to this issue, Appellants assert that the TCPA applies to
WSP’s claims. In their second issue, Appellants contend that “the trial court erred in
18
not awarding attorneys’ fees against WSP USA, Inc. after it failed to file a response
to Appellants’ motion to dismiss.” Appellants’ third issue questions “[w]hether WSP
Buildings and WSP Administration presented clear and specific evidence sufficient
to state a prima facie case as to each of [their] claims.”
A. TCPA Statutory Framework
The TCPA protects citizens from retaliatory lawsuits that seek to intimidate
or silence them on matters of public concern. In re Lipsky, 460 S.W.3d 579, 584
(Tex. 2015). We construe the TCPA “liberally to effectuate its purpose and intent
fully.” See TEX. CIV. PRAC. & REM. CODE § 27.011(b); see State ex rel. Best v.
Harper, 562 S.W.3d 1, 11 (Tex. 2018). The stated purpose of the act “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.
To effectuate the statute’s purpose, the TCPA provides a three-step decisional
process to determine whether a lawsuit or claim should be dismissed under the
statute. Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, No. 18-0656, 2019 WL
6971659, at *3 (Tex. Dec. 20, 2019); see also FORMER TEX. CIV. PRAC. & REM.
19
CODE ANN. §§ 27.003 (“Motion to Dismiss”), .005 (“Ruling”).7 The TCPA requires
that a trial court deciding a motion to dismiss “shall consider the pleadings and
supporting and opposing affidavits” filed by the parties. See FORMER TEX. CIV.
PRAC. & REM. CODE § 27.006(a).
Under the first step, a movant must show by a preponderance of the evidence
that the TCPA applies. See id. § 27.005(b). The TCPA applies if the non-movant’s
“legal action”—defined as “a lawsuit, cause of action, petition, complaint, cross-
claim, or counterclaim or any other judicial pleading or filing that requests legal or
equitable relief”—is based on, relates to, or is in response to the movant’s exercise
of (1) the right of free speech; (2) the right to petition; or (3) the right of association.
Id.; In re Lipsky, 460 S.W.3d at 586–87.
If the first step is met—that is, the movant shows that the TCPA applies—
then the burden shifts to the non-movant under the second step to establish by “clear
and specific evidence a prima facie case for each essential element” of his claim.
FORMER TEX. CIV. PRAC. & REM. CODE § 27.005(c); In re Lipsky, 460 S.W.3d at 587.
If the movant meets the first step, but the non-movant does not meet the required
showing of a prima facie case, the trial court must dismiss the non-movant’s claim.
See FORMER CIV. PRAC. & REM. CODE § 27.005. Under the third step, even if the
7
As mentioned, citation to the pre-amendment version of a TCPA section amended
in 2019 will be identified as the “Former” section.
20
non-movant satisfies the second step, the court will nonetheless dismiss the claim if
the movant “‘establishes by a preponderance of the evidence each essential element
of a valid defense’ to the [non-movant’s] claim.” FORMER TEX. CIV. PRAC. & REM.
CODE § 27.005(d)).
If the trial court dismisses the legal action under the TCPA, the court “shall
award” to the moving party:
(1) court costs, reasonable attorney’s fees, and other expenses incurred in
defending against the legal action as justice and equity may require; and
(2) sanctions against the party who brought the legal action as the court
determines sufficient to deter the party who brought the legal action from
bringing similar actions described in this chapter.
Id. § 27.009(a).
A non-movant can avoid the TCPA’s burden-shifting requirements by
showing that one of the act’s several exemptions applies. See id. § 27.010. For
instance, as asserted in this case, the commercial-speech exemption removes certain
commercial speech from the TCPA’s protections. See id. § 27.010(b).
B. Standard of Review
We review de novo the denial of a TCPA motion to dismiss. Better Bus.
Bureau of Metro. Houston, Inc. v. John Moore Servs., Inc., 441 S.W.3d 345, 353
(Tex. App.—Houston [1st Dist.] 2013, pet. denied). In making this determination,
the court views the pleadings and evidence in a light most favorable to the plaintiff
21
non-movant. Schimmel v. McGregor, 438 S.W.3d 847, 855–56 (Tex. App.—
Houston [1st Dist.] 2014, pet. denied).
Whether the TCPA applies to WSP’s claims is an issue of statutory
interpretation that we also review de novo. Youngkin v. Hines, 546 S.W.3d 675, 680
(Tex. 2018). In conducting our analysis, “we ascertain and give effect to the
Legislature’s intent as expressed in the language of the statute.” Harper, 562 S.W.3d
at 1. We construe the statute’s words according to their plain and common meaning,
“unless a contrary intention is apparent from the context, or unless such a
construction leads to absurd results.” Youngkin, 546 S.W.3d at 680.
We are required to consider both the specific statutory language at issue and
the statute as a whole. In re Office of Att’y Gen., 422 S.W.3d 623, 629 (Tex. 2013)
(orig. proceeding); see Youngkin, 546 S.W.3d at 680 (“[L]egislative intent derives
from an act as a whole rather than from isolated portions of it.”). We endeavor to
read the statute contextually, giving effect to every word, clause, and sentence. In re
Office of Att’y Gen., 422 S.W.3d at 629.
C. TCPA’s Application to WSP’s Claims
To obtain dismissal under the TCPA, Appellants had the initial burden to
demonstrate that the TCPA applied to WSP’s claims. This burden required
Appellants to demonstrate by a preponderance of the evidence that (1) WSP’s “legal
22
action”8 (2) “is based on, relates to, or is in response to” (3) an exercise of the right
of free speech or the exercise of the right of association.9 See FORMER TEX. CIV.
PRAC. & REM. CODE § 27.005(b). Appellants contend in their first issue that they met
this burden.
1. Right of Association
In their motion to dismiss, Appellants claimed that WSP’s “lawsuit is based
on [Appellants’] exercise of the right of free association under the TCPA.” At the
time the suit was filed, the TCPA defined the “exercise of the right of association”
as “a communication between individuals who join together to collectively express,
promote, pursue, or defend common interests.” Id. § 27.001(2). To satisfy the right-
of-association prong, Appellants asserted that the lawsuit was “based on
[Appellants’] communications in the formation, promotion, and pursuit of their
common interest—Infinity—and involve[d] alleged communications among
[Appellants]” through which they misappropriated, shared, and used WSP’s trade
secrets and conspired to misappropriate the trade secrets, breach their fiduciary
duties to WSP, and tortiously interfere with WSP’s business relationships.
a. Right-of-association cases involving similar allegations
8
No one disputes that WSP’s claims, seeking damages and injunctive relief,
constitute a “legal action,” a term defined to include “a cause of action.” FORMER
TEX. CIV. PRAC. & REM. CODE § 27.001(6).
9
The right of petition is not involved in this case.
23
When presented with allegations like those made here, involving
misappropriation of trade secrets and conspiracy, courts have split on whether the
TCPA’s right of association applies to protect the alleged tortfeasors’ conduct. The
Third, Twelfth, and Fourteenth Courts of Appeals have held that the TCPA’s right
of association protects alleged conduct by tortfeasors accused of sharing and using
misappropriated trade secrets or conspiring together to advance tortious conduct in
furtherance of their own business interests. See Morgan v. Clements Fluids S. Tex.,
Ltd., 589 S.W.3d 177, 184–86 (Tex. App.—Tyler 2018, no pet.); Grant v. Pivot
Tech. Sols., Ltd., 556 S.W.3d 865, 881 (Tex. App.—Austin 2018, pet. filed);
Abatecola, 2018 WL 3118601, at *8; Craig v. Tejas Promotions, LLC, 550 S.W.3d
287, 296–97 (Tex. App.—Austin 2018, pet. filed); Elite Auto Body LLC v. Autocraft
Bodywerks, Inc., 520 S.W.3d 191, 205 (Tex. App.—Austin 2017, pet. dism’d). In
these cases, the courts focused on whether the complained-of conduct constituted a
TCPA “communication,” which “includes the making or submitting of a statement
or document in any form or medium, including oral, visual, written, audiovisual, or
electronic.” TEX. CIV. PRAC. & REM. CODE § 27.001(1); see Elite Auto Body, 520
S.W.3d at 197 (stating that “[t]he linchpin” of “exercise of the right of association .
. . is a ‘communication’”); see Morgan, 589 S.W.3d at 184–85; Grant, 556 S.W.3d
at 881; Craig, 550 S.W.3d at 294. After determining that the complained-of conduct
was a “communication,” these courts concluded that the conduct was an exercise of
24
the right of association, statutorily defined as a “communication between individuals
who join together to collectively express, promote, pursue, or defend common
interests.” See Morgan, 589 S.W.3d at 185; Grant, 556 S.W.3d at 881; Abatecola,
2018 WL 3118601, at *8; Craig, 550 S.W.3d at 294; Elite Auto Body, 520 S.W.3d
at 205. The courts indicated—without in-depth discussion—that the “common
interests” element of the exercise of the right of association was satisfied by the
private business interests being advanced through the tortfeasors’ tortious conduct.
See Morgan, 589 S.W.3d at 185; Grant, 556 S.W.3d at 881; Abatecola, 2018 WL
3118601, at *8; Craig, 550 S.W.3d at 294; Elite Auto Body, 520 S.W.3d at 205.
In contrast, the Fifth Court of Appeals, in Dyer v. Medoc Health Services,
LLC, held that allegations of conspiring and colluding (1) to misappropriate trade
secrets, (2) to interfere with business relationships, and (3) to breach fiduciary duties
did not trigger the protections of the right of association. 573 S.W.3d 418, 427 (Tex.
App.—Dallas 2019, pet. denied). In reaching a different result than the Third,
Twelfth, and Fourteenth Courts of Appeals, the Dyer court also focused on the
meaning of the term “communication.”
The Dyer court adopted its prior analysis in ExxonMobil Pipeline Co. v.
Coleman regarding what conduct constitutes an exercise of the right of association.
Id. (citing Coleman, 464 S.W.3d 841, 847 (Tex. App.—Dallas 2015) (Coleman I),
rev’d on other grounds, 512 S.W.3d 895, 899 (Tex. 2017) (Coleman II)). In Coleman
25
I, the court interpreted the TCPA’s definition of “exercise of the right of association”
in light of the purpose of the statute and determined that “it would be illogical for
the [TCPA] to apply to situations in which there is no element of public
participation.” Id. The Coleman I court concluded that to “constitute an exercise of
the right of association under the [TCPA], the nature of the ‘communication between
individuals who join together’ must involve public or citizen’s participation.”10
Coleman I, 464 S.W.3d at 848.
The Dyer court adopted Coleman I’s conclusion, requiring public or citizen
participation before a communication received protection under the right of
association. The court determined that it would be “illogical” to apply the TCPA to
communications involving an alleged conspiracy to misappropriate trade secrets.
Dyer, 573 S.W.3d at 426 (citing Coleman I, 464 S.W.3d at 847). The court concluded
that “construing the statute such that appellants would have a ‘right of association’
based solely on [tortfeasors’] private communications allegedly pertaining to the
misappropriation of [trade secrets] is an absurd result that would not further the
10
The Coleman I court held that the communications at issue there were not made in
the exercise of the right of free speech or in the exercise of the right association as
defined by the TCPA. 464 S.W.3d at 845–46. The Supreme Court of Texas reversed
the Coleman I court’s judgment on the ground that the communications, although
private, related to a matter of public concern and, thus, constituted the exercise of
the right of free speech under the TCPA. Coleman II, 512 S.W.3d at 901–01. The
supreme court “express[ed] no opinion on whether the challenged communications
were made in the exercise of the right of association under the TCPA.” Id. at 902.
26
purpose of the TCPA to curb strategic lawsuits against public participation.” Id. at
426–27 (citing Youngkin, 546 S.W.3d at 681; Coleman I, 464 S.W.3d at 848).
In Kawcak v. Antero Resources Corporation, the Second Court of Appeals
also determined that, by conspiring to commit a tortious act against another party for
personal financial gain, the alleged tortfeasors had not exercised their right of
association. 582 S.W.3d 566, 569 (Tex. App.—Fort Worth 2019, pet. denied). The
court did not focus on whether the alleged tortious conduct constituted a
“communication”; instead, the court focused on the phrase “common interests”
found in the definition of “exercise of the right of association.” Id.; see FORMER TEX.
CIV. PRAC. & REM. CODE § 27.001(2).
The Kawcak court discussed several dictionary definitions of the word
“common” in the context of the TCPA’s stated purpose. Id. at 575–79. The court
found Webster’s definition of “common” to be the most suitable, defining
“common” as “of or relating to a community at large,” “known to the community,”
or “belonging to or typical of all mankind.” Id. at 576 (citing WEBSTER’S THIRD NEW
INT’L DICTIONARY 458 (2002)). The court stated, “Webster’s definition of ‘common’
supports a plain meaning of the word that embraces interests broader than the narrow
interest shared by two people who engage in a conspiracy where one conspirator
allegedly breaches his fiduciary duty to profit himself and his co-conspirator.” Id. at
576. The Kawcak court held that, because “the plain meaning of the word ‘common’
27
in TCPA section 27.001(2)’s definition of ‘the right of association’ requires more
than two tortfeasors conspiring to act tortiously for their own selfish benefit,” the
TCPA did not apply to the claims in that case. Id. at 588. Because only two
tortfeasors were involved in Kawcak, the court held their alleged conduct was not
protected by the right of association. Id.
b. Defining “common interests”
To determine whether a plaintiff’s allegations implicate a party’s exercise of
his right of association, we agree with the Kawcak court that it is necessary to
determine what definition the legislature intended to ascribe to the word “common”
in the phrase “common interests.” See FORMER TEX. CIV. PRAC. & REM. CODE
§ 27.001(2) (defining “exercise of the right of association” as “a communication
between individuals who join together to collectively express, promote, pursue, or
defend common interests”). Kawcak held that “common” in TCPA section
27.001(2)’s definition of “the right of association” requires more than two tortfeasors
conspiring to act tortiously for their own selfish benefit. Kawcak left unanswered
whether allegations of three or more tortfeasors acting together (as here) for their
own benefit fits the definition of “common.” See Kawcak, 582 S.W.3d at 588.
Because the TCPA does not define the word “common,” we give it its ordinary
meaning. See TGS–NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex.
28
2011). “We often look to dictionary definitions to shed light on the ordinary meaning
of a statutory term.” Silguero v. CSL Plasma, Inc., 579 S.W.3d 53, 60 (Tex. 2019).
The word “common” has a variety of meanings. These meanings include:
(1) “of or relating to a community at large: public”; (2) “belonging to or shared by
two or more individuals or things or by all members of a group”; (3) “occurring or
appearing frequently: familiar”; (4) “widespread, general”; and (5) “falling below
ordinary standards: second-rate.” Common, MERRIAM-WEBSTER ONLINE,
https://www.merriam-webster.com/dictionary/common (last visited Feb. 12, 2020)
(capitalization omitted); see Common, WEBSTER’S NEW COLLEGIATE DICTIONARY
(1981) (providing similar definitions for “common”).
Appellants assert that they exercised their right of association in furtherance
of their common interests, which they identify as their new business venture,
Infinity. The second definition (above) of “common” fits Appellants’ use of the
word, that is, “belonging to or shared by two or more individuals or things or by all
members of a group.” But we cannot agree that this was the meaning of “common”
intended by the Legislature when it enacted the TCPA.
“We will not give an undefined term a meaning that is out of harmony or
inconsistent with other terms in the statute.” State v. $1,760.00 in U.S. Currency,
406 S.W.3d 177, 180 (Tex. 2013). If an undefined term has multiple meanings, we
recognize and apply only the meanings that are consistent with the statutory scheme
29
as a whole. Greater Houston P’ship v. Paxton, 468 S.W.3d 51, 58 (Tex. 2015); see
Combs, 340 S.W.3d at 441 (“It is a fundamental principle of statutory construction
and indeed of language itself that words’ meanings cannot be determined in isolation
but must be drawn from the context in which they are used.”). Here, the first meaning
of common—“of or relating to a community at large: public”—is the closest to the
intended meaning of the term when considered in the context of the TCPA’s
statutory scheme.
Defining “common” to include a public component is in line with the TCPA’s
statutory scheme because it corresponds to the express purpose of the TCPA to
protect constitutional rights, while at the same time protecting the rights of persons
to file meritorious lawsuits for demonstrable injury. See TEX. CIV. PRAC. & REM.
CODE § 27.002. Requiring a public component also harmonizes the definition with
the other two exercises of rights—right of free speech and right to petition—defined
in the TCPA, which both “have some public component.” Kawcak, 582 S.W.3d at
579. The “exercise of the right to free speech” requires a “communication made in
connection with a matter of public concern.” TEX. CIV. PRAC. & REM. CODE
§ 27.001(3). And the “exercise of the right to petition” requires a communication
that pertains to governmental or at a minimum, public, proceedings. Id. § 27.001(4).
It would be “incongruous to conclude” that the word “common,” as used in the
30
definition of exercise of the right of association, does not require a public
component. Kawcak, 582 S.W.3d at 579.
Finally, the recent amendments to the TCPA also support defining “common”
to mean “of or relating to a community at large: public.” In 2019, the Texas
Legislature passed House Bill 2730, amending numerous TCPA provisions and
providing clarification for its application. Act of May 17, 2019, 86th Leg., R.S., ch.
378, §§ 1–12, 2019 TEX. SESS. LAW SERV. 684 (current version TEX. CIV. PRAC. &
REM. CODE §§ 27.001–27.011). A bill analysis, prepared by the Senate Research
Center, provides insight into the reasons behind the 2019 amendments:
Certain statutory provisions relating to expedited dismissal procedures
for lawsuits involving the exercise of free speech, the right of
association, and the right to petition lend themselves to unexpected
applications because they are overly broad or unclear. H.B. 2730 seeks
to remedy this issue by clarifying the scope and applicability of those
provisions.
Senate Research Ctr., Bill Analysis, Tex. H.B. 2730, 86th Leg., R.S. (2019).
Among the provisions the Legislature remedied “by clarifying the scope and
applicability” was the definition of “exercise of right of association.” The amended
definition provides that “exercise of the right of association” “means to join together
to collectively express, promote, pursue, or defend common interests relating to a
governmental proceeding or a matter of public concern.” Act of May 17, 2019, 86th
Leg., R.S., ch. 378, § 1, sec. 27.001(2), 2019 TEX. SESS. LAW SERV. 684, 684
(emphasis added). In other words, to constitute an exercise of the right of association
31
under the 2019 amendments, the object or purpose of the protected conduct must
relate to a governmental proceeding or a matter of public concern. See id. The 2019
amendments define “matter of public concern” as “a statement or activity regarding:
(A) a public official, public figure, or other person who has drawn substantial public
attention due to the person’s official acts, fame, notoriety, or celebrity; (B) a matter
of political, social, or other interest to the community; or (C) a subject of concern to
the public.” Act of May 17, 2019, 86th Leg., R.S., ch. 378, § 1, sec. 27.001(7), 2019
TEX. SESS. LAW SERV. 684, 685.
We acknowledge that the amended definition of “exercise of the right of
association” does not apply to this suit. See id. § 11. But we are mindful that, “[w]hen
the meaning of an existing law is uncertain, the Legislature’s later interpretation of
it is highly persuasive.”11 Texas Water Comm’n v. Brushy Creek Mun. Util. Dist.,
11
This precept is more fully described in Stanford v. Butler, 181 S.W.2d 269, 274
(Tex. 1944):
There is a very well-established rule that where a later act implies a
particular construction of an existing law, and particularly where the
existing law is ambiguous or its meaning uncertain, interpretation of
the prior act by the Legislature as contained in the later act is
persuasive when a court is called upon to interpret the prior law. 39
TEX. JUR., p. 239. In the case of Cannon’s Adm’r v. Vaughan, 12
Tex. 399, this Court said: “It is another established rule that all acts
in pari materia are to be taken together, as if they were one law, and
that if it can be gathered from a subsequent statute, in pari materia,
what meaning the Legislature attached to the words of a former
statute, this will amount to a legislative declaration, of its meaning,
and will govern the construction of the first statute.”
32
917 S.W.2d 19, 21 (Tex. 1996); see Calvert v. Marathon Oil Co., 389 S.W.2d 153,
158 (Tex. App.—Austin 1965, writ ref’d n.r.e.) (considering amendment to statute
in construing statutory language because Legislature’s stated purpose in amending
statute was to clarify existing law and express original intention of Legislature).
Here, the pre-amendment meaning of “exercise of the right of association” is
uncertain. Not only does the bill analysis indicate that the amendments were
necessary to clarify “overly broad or unclear” provisions in the TCPA, the caselaw
interpreting what conduct constitutes an “exercise of the right of association” reflects
the uncertainty of the phrase. As discussed, Texas courts have reached divergent
conclusions when tasked with determining whether alleged tortfeasors, by
conspiring and colluding with one another to commit torts in furtherance of their
own pecuniary interests, had exercised their right of association.
We presume that the Legislature was aware of the conflicting holdings in the
caselaw when it enacted the 2019 amendments. See In re Allen, 366 S.W.3d 696,
706 (Tex. 2012) (orig. proceeding) (explaining that courts presume Legislature “is
aware of relevant case law when it enacts or modifies statutes”). With this awareness,
the Legislature elected to limit the object of the exercise of the right of association
to “common interests, relating to a governmental proceeding or a matter of public
concern.” Act of May 17, 2019, 86th Leg., R.S., ch. 378, § 1, sec. 27.001(2), 2019
TEX. SESS. LAW SERV. 684, 684 (codified at TEX. CIV. PRAC. & REM. CODE
33
§ 27.001(2)). In amending the statute, the Legislature chose to define “common
interests” in a manner most in line with the holdings in Kawcak and Dyer, which
determined that tortfeasors, conspiring and colluding for their own private financial
gain, are not entitled to protection under the right of association. See Dyer, 573
S.W.3d at 427; Kawcak, 582 S.W.3d at 588. By limiting “common interests” to those
interests related to government proceedings or matters of public concern (as defined
in the amended statute), the Legislature clarified that the exercise of the right of
association was never intended to include an alleged tortfeasor’s acts taken in
furtherance of private interests.
We conclude that, with respect to the pre-amendment version of the TCPA,
the proper definition of “common” in the phrase “common interests” is “of or
relating to a community at large: public.” Here, Appellants assert that the “common
interest” that they allegedly “join[ed] together to collectively express, promote,
pursue, or defend” was their new business venture, Infinity. See FORMER TEX. CIV.
PRAC. & REM. CODE § 27.001(2). As pleaded by WSP, Appellants’ conduct and
communications, involved in misappropriating WSP’s trade secrets and conspiring
to commit related torts, benefitted only the five alleged tortfeasors. There are no
allegations that the tortfeasors “join[ed] together to collectively express, promote,
pursue, or defend” any public or community interests. Therefore, we hold that
Appellants did not meet their burden of showing, by a preponderance of the
34
evidence, that WSP’s suit was based on, relates to, or is in response to an exercise
of their right of association. See FORMER TEX. CIV. PRAC. & REM. CODE
§ 27.005(b)(3).
2. Right of Free Speech
In their motion to dismiss, Appellants also claimed that the lawsuit was based
on Appellants’ exercise of the right to free speech. The definition of “exercise of the
right to free speech” is “a communication made in connection with a matter of public
concern.” TEX. CIV. PRAC. & REM. CODE § 27.001(3). At the time this suit was filed,
a “matter of public concern” included an issue related to health or safety,
environmental, economic, or community well-being, the government, a public
official or public figure, or a good, product, or service in the marketplace.” FORMER
TEX. CIV. PRAC. & REM. CODE § 27.001(7)(E).
a. Communications among the alleged tortfeasors
Appellants assert that the exercise of their free-speech rights was implicated
by WSP’s allegations that Appellants and the other alleged tortfeasors (Sinz and
Infinity) engaged in “communications” with one another. Appellants assert that
these communications were comprised of the tortfeasors’ alleged conduct of
misappropriating, sharing, and using WSP’s trade secrets and conspiring with one
another in furtherance of their tortious actions. Appellants claim that these alleged
35
“communications” were made “in connection with a matter of public concern”
because they related to “a good, product, or service in the marketplace.” Id.
Contrary to Appellants’ reading of the statute, “not every communication
related somehow to one of the broad categories set out in section 27.001(7) always
regards a matter of public concern.” Creative Oil & Gas, 2019 WL 6971659, at *7.
“The words ‘good, product, or service in the marketplace’ . . . do not paradoxically
enlarge the concept of ‘matters of public concern’ to include matters of purely
private concern.” Id. at *5. “[T]he ‘in the marketplace’ modifier suggests that the
communication must have some relevance to a public audience of potential buyers
or sellers.” Id. Although the Supreme Court of Texas has “previously held that
private communications are sometimes covered by the TCPA[,] . . . [t]hese prior
cases involved environmental, health, or safety concerns that had public relevance
beyond the pecuniary interests of the private parties involved.” Id. at *7 (citing
Coleman II, 512 S.W.3d at 898, 901; Lippincott v. Whisenhunt, 462 S.W.3d 507,
509–10 (Tex. 2015).
Here, the internal communications among the Appellants and the other
tortfeasors—through which they allegedly misappropriated, shared, and used WSP’s
trade secrets, breached their fiduciary duties, and conspired to further their business
venture—had no potential impact on the wider community or a public audience of
potential buyers or sellers. In short, the communications had no public relevance
36
beyond the pecuniary interests of the private parties. See id. (explaining that private
“dispute affecting only the fortunes of the private parties involved is simply not a
‘matter of public concern’ under any tenable understanding of those words”).
Because they did not meet their burden of showing that their internal
communications were “made in connection with a matter of public concern,” we
hold that Appellants did not meet their burden of showing, by a preponderance of
the evidence, that WSP’s suit was based on, relates to, or is in response to an exercise
of their right of free speech regarding those communications. See id.; see also
FORMER TEX. CIV. PRAC. & REM. CODE § 27.005(b)(1).
b. Communications to parties outside the tortfeasor group
Appellants also claim that their right of free speech was implicated by alleged
communications they made to parties outside the tortfeasor group.
i. Allegations in the First Amended Petition
To support their TCPA motion to dismiss, Appellants relied on WSP’s First
Amended Petition. In their motion, Appellants asserted that WSP alleged in the First
Amended Petition that Appellants had posted information regarding WSP’s projects
on Infinity’s website. Regardless of whether this conduct constituted an exercise of
their free-speech rights, the First Amended Petition did not allege that Appellants
had posted the information on Infinity’s website. Rather, the pleading alleged that
Infinity and Sinz had posted the information.
37
Relatedly, to show an exercise of their right of free speech, Appellants
asserted in their motion that, “in [WSP’s] claim for tortious interference with
existing contract, [WSP] allege[d] Defendants interfered with contracts by ‘inducing
or attempting to induce WSP’s existing clients to reduce their business relationship
with WSP.’” However, the only specific factual allegations in the First Amended
Petition possibly related to tortious interference with existing contracts pertain to the
actions of Infinity and Sinz. WSP alleged that Infinity posted information about
WSP’s projects on its website and alleged that Sinz had “publicly used” WSP’s
proprietary information to advertise the projects as Infinity’s experience “ostensibly
to attract clients” but does not implicate Appellants in this conduct.
We note that the First Amended Petition mentions that Sinz and Appellants
engaged in “off-book projects.” However, the pleading does not provide any
additional information from which it can be determined whether the conduct
involved communications protected by Appellants’ right of free speech. See Rossa
v. Mahaffey, No. 11-18-00347-CV, 2019 WL 5800283, at *6 (Tex. App.—Eastland
Nov. 7, 2019, no pet.) (determining that, because plaintiff’s petition did not “contain
any specific allegations about when, where, and to whom the allegedly defamatory
statements were made,” the petition, viewed “holistically,” “[did] not demonstrate
that the defamation claim [fell] within the TCPA”); Staff Care, Inc. v. Eskridge
Enters., No. 05-18-00732-CV, 2019 WL 2121116, at *5 n.3 (Tex. App.—Dallas
38
May 15, 2019, no pet.) (mem. op.) (concluding that, without knowing content of
communication, “a court cannot determine whether the alleged communication falls
under the statutory definitions of the TCPA”).
Appellants further cited WSP’s request for injunctive relief as evidence that
WSP’s claims were based on Appellants’ exercise of their freedom of speech.
Specifically, Appellants pointed to WSP’s request that all defendants be prohibited
“from disclosing or using [WSP’s] alleged confidential information or proprietary
information” and from identifying WSP’s projects in Infinity’s marketing materials
or on its website. Because it pertains to possible future conduct, rather than past
conduct, the requested relief did not demonstrate an exercise of Appellants’ right of
free speech.
We conclude that Appellants did not demonstrate in their motion to dismiss
that the claims asserted in the First Amended Petition were based on, related to, or
in response to Appellants’ exercise of their free-speech rights. Because the First
Amended Petition was the last pleading in which WSP USA was a plaintiff, the
inquiry ended regarding the applicability of the TCPA to WSP USA’s claims.
ii. Allegations in the Second Amended Petition
After Appellants filed their motion to dismiss, WSP Administration and WSP
Buildings (but not WSP USA) filed a response to Appellants’ motion to dismiss.
That same day, WSP Administration and WSP Buildings filed their verified Second
39
Amended Petition, which they offered to support their response. The Second
Amended Petition contained additional, specific allegations not made in the First
Amended Petition. Among these were allegations that (1) Appellants had submitted
a proposal for, and were awarded, an “off the books” project—the ME Global
project—from Kirksey Architecture and (2) Appellants had sent advertising
brochures to WSP’s clients on behalf of Infinity.
Appellants claim that these specific allegations demonstrate that WSP
Administration’s and WSP Buildings’s claims related to Appellants’ exercise of
their free-speech rights. Appellants contend that the alleged conduct—soliciting and
procuring the ME Global project and sending advertising brochures—were
“communications” made “in connection with a matter of public concern” because
the communications related to “a good, product, or service in the marketplace.” See
FORMER TEX. CIV. PRAC. & REM. CODE § 27.001(7)(E).
ME Global Project. WSP Administration and WSP Buildings alleged that,
while still employed by WSP Administration, Appellants bid on the ME Global
project without WSP’s knowledge by sending a proposal to Kirksey Architecture. In
making the bid, they represented themselves as WSP employees bidding on behalf
of WSP. Kirksey ostensibly awarded the ME Global project to WSP; however,
Appellants never informed WSP about the project, keeping it “off the books.” The
Second Amended Petition alleged that Appellants worked on the project using WSP
40
resources, including WSP Buildings’s trade secret and confidential information, but
never informed WSP of the project or recorded the WSP resources used on the
project. WSP was ultimately paid for work on the project done by Appellants, but
the remainder of the project was awarded to another company. WSP later learned
information indicating that Appellants continued to work on the ME Global project
after joining Infinity.
In their TCPA response, WSP Administration and WSP Buildings claimed
that the commercial-speech exemption applied to remove Appellants’ alleged
conduct related to the ME Global project from the TCPA’s protection. Appellants
replied, asserting that WSP Administration and WSP Buildings did not meet their
burden to prove application of the commercial-speech exemption.
We need not determine whether the commercial-speech exemption applied to
alleged communications involved in the ME Global project because the
communications were not an exercise of Appellants’ free-speech rights. Specifically,
the communications were not made “in connection with a matter of public concern”
because they were not related to “a good, product, or service in the marketplace.”
Id.; see Creative Oil & Gas, 2019 WL 6971659, at *7.
Any communications by Appellants to Kirksey in soliciting and procuring the
ME Global project do not have relevance to a public audience of buyers or sellers
but instead were limited to “the pecuniary interests of the private parties involved.”
41
Creative Oil & Gas, 2019 WL 6971659, at *7. The allegations relating to the ME
Global project are “simply not a ‘matter of public concern’ under any tenable
understanding of those words.” Id. Therefore, Appellants’ conduct relating to the
ME Global project was not an exercise of their free-speech rights. See id.
Advertising Brochures. The Second Amended Petition also alleged that
Appellants sent advertising brochures to WSP’s clients, leading WSP’s clients to ask
whether the rumor was true that WSP’s Houston office was closing. Assuming
without deciding that Appellants’ conduct of sending advertising brochures to
WSP’s clients was an exercise of their free-speech rights, the conduct is excluded
from the TCPA’s protection under the commercial-speech exemption.
The commercial-speech exemption provides that the TCPA
does not apply to a legal action brought against a person primarily
engaged in the business of selling or leasing goods or services, if the
statement or conduct arises out of the sale or lease of goods, services,
or an insurance product, insurance services, or a commercial
transaction in which the intended audience is an actual or potential
buyer or customer.
FORMER TEX. CIV. PRAC. & REM. CODE § 27.010(b). The Supreme Court of Texas
has determined that the commercial-speech exemption applies when the following
four elements are shown:
(1) the defendant was primarily engaged in the business of selling or
leasing goods [or services],
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(2) the defendant made the statement or engaged in the conduct on
which the claim is based in the defendant’s capacity as a seller or lessor
of those goods or services,
(3) the statement or conduct at issue arose out of a commercial
transaction involving the kind of goods or services the defendant
provides, and
(4) the intended audience of the statement or conduct were actual or
potential customers of the defendant for the kind of goods or services
the defendant provides.
Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018).
The party asserting the commercial-speech exemption has the burden to prove
its application. Schimmel, 438 S.W.3d at 857. When determining whether a party
has met its burden, we consider the pleadings and record evidence. See FORMER TEX.
CIV. PRAC. & REM. CODE § 27.006(a).
Appellants contend that WSP Administration and WSP Buildings needed to
offer more than their verified pleadings to prove application of the commercial-
speech exemption. We disagree.
The nature of the legal action is revealed by the factual allegations in the
pleadings. See Hersh, 526 S.W.3d at 467 (observing that court has often said that
plaintiff’s petition is “the best and all-sufficient evidence of the nature of the action”
to show TCPA applies to plaintiff’s claims). It follows that the factual allegations
contained in the pleadings may alone be sufficient to demonstrate that the nature of
the claims is such that the claims are statutorily exempt without need of additional
43
proof. See Hawkins v. Fox Corp. Hous., LLC, No. 01-19-00394-CV, 2020 WL
425121, at *3 (Tex. App.—Houston [1st Dist.] Jan. 28, 2020, no pet. h.) (“We may
rely on the factual allegations in a plaintiff’s petition, alone, to meet the [Castleman]
elements.”); Rose v. Scientific Mach. & Welding, Inc., No. 03-18-00721-CV, 2019
WL 2588512, at *4 (Tex. App.—Austin June 25, 2019, no pet.) (mem. op.) (stating
factual allegations in plaintiff’s petition may alone demonstrate exemption); see also
The Pinkerton Law Firm, PLLC v. Univ. Cancer Ctr., No. 01-19-00089-CV, 2020
WL 97173, at *3–*4 (Tex. App.—Houston [1st Dist.] Jan. 9, 2020, no pet. h.)
(analyzing allegations in live pleading to determine application of commercial-
speech exemption); Giri v. Estep, No. 03-17-00759-CV, 2018 WL 2074652, at *4
(Tex. App.—Austin May 4, 2018, pet. denied) (mem. op.) (relying on live petition
to determine whether first Castleman element was satisfied); Dickens v. Jason C.
Webster, P.C., No. 05-17-00423-CV, 2018 WL 6839568, at *7 (Tex. App.—Dallas
Dec. 31, 2018, no pet.) (mem. op.) (determining whether commercial-speech
exemption applies by examining plaintiff’s petition); Grant, 556 S.W.3d at 889
(stating that, to determine whether claims fall within the commercial-speech
exemption, court examined “‘evidence,’” which, there, “consist[ed] of the plaintiffs’
pleadings”).
With these principles in mind, we apply the Castleman elements.
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Regarding the first Castleman element, the pleadings show that Appellants
were primarily engaged in the business of selling or leasing goods or services. See
Castleman, 546 S.W.3d at 688. The First and Second Amended Petitions alleged
that Infinity is “a provider of mechanical, electrical, plumbing, fire protection,
commissioning, and low voltage/security/IT services, which are the very same
services provided by WSP.” The pleadings identify Miller as Infinity’s principal,
Gaskamp as Infinity’s associate principal, and Hunter as its employee.
“Notably, the exemption’s plain text requires the defendant to be primarily
engaged in the business of selling goods or services, not primarily engaged in the act
of selling.” Rose, 2019 WL 2588512, at *4. Based on their respective positions with
the company, it is reasonable to conclude that Appellants were “primarily engaged”
in Infinity’s business of providing “mechanical, electrical, plumbing, fire protection,
commissioning, and low voltage/security/IT services.” See Hieber v. Percheron
Holdings, LLC, No. 14-19-00505-CV, 2019 WL 6001153, at *4 (Tex. App.—
Houston [14th Dist.] Nov. 14, 2019, pet. filed) (“[T]he exemption can apply even
though the movant is just an employee.”); Rose, 2019 WL 2588512, at *5
(concluding that “high-level executive of a company that primarily designs and sells
manufactured items to customers is also ‘primarily engaged’ in that type of
business”).
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The second Castleman element requires that Appellants engaged in the
complained-of conduct in their capacity as sellers of Infinity’s services. Castleman,
546 S.W.3d at 688. To determine whether Appellants engaged in the conduct in this
capacity, we consider the context in which the conduct was performed. See Rose,
2019 WL 2588512, at *4 (considering context in which statements were made to
determine if defendant made them in capacity as seller). The Second Amended
Petition alleged that Appellants sent advertising brochures to WSP’s clients while
working for Infinity, WSP’s competitor. The petition implies that the advertising
brochures generated a rumor that WSP’s Houston office was closing. Because the
allegations complain about conduct in the context of furthering Infinity’s business
for the purpose of securing sales for Infinity, we conclude that Appellants engaged
in the complained-of conduct in their capacity as sellers of Infinity’s services. See
id. at *6 (concluding that second element satisfied because appellant contacted
former employer’s customers in attempt to solicit sales for his own financial gain);
see also Staff Care, 2019 WL 2121116, at *8 (noting that in Castleman, supreme
court “implied the exemption applies when communications involve business
pursuits for oneself or a business stands to profit from the statements at issue”).
The closely related third Castleman element, requiring that the complained-
of statement or conduct arise out of a commercial transaction involving the kind of
goods or services the defendant provides, is also satisfied. See Castleman, 546
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S.W.3d at 688, 690; see also Giri, 2018 WL 2074652, at *4 (noting requirement that
statement or conduct at issue “arose out of” commercial transaction means that it
“results, issues, or proceeds” from sale or commercial transaction). Because the
conduct targeted WSP’s clients with the apparent objective of securing customers
for Infinity, the complained-of conduct of sending advertising brochures to WSP’s
clients also “arose out of a commercial transaction involving the kind of goods or
services” that Infinity provides. See Callison v. C&C Personnel, LLC, No. 09-19-
00014-CV, 2019 WL 3022548, at *6 (Tex. App.—Beaumont July 11, 2019, pet.
denied) (mem. op.) (“Utilizing confidential or proprietary information from a
previous employer while working for a new employer to target and secure the same
customers satisfies this element.”).
The last element requires that “the intended audience of the statement or
conduct were actual or potential customers of the defendant for the kind of goods or
services the defendant provides.” Castleman, 546 S.W.3d at 688. By sending
advertising brochures to WSP’s clients, Appellants were seeking to market Infinity’s
services (which were alleged to be the same as WSP’s services) to potential clients.
Therefore, the fourth Castleman element is satisfied. We conclude that WSP
Administration’s and WSP Buildings’s claims in the Second Amended Petition,
based on Appellants’ conduct of sending advertising brochures to WSP’s clients, fall
within the commercial-speech exemption.
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Conclusion
In sum, we conclude that the complained-of communications between
Appellants, Sinz, and Infinity—through which they allegedly misappropriated,
shared, and used WSP’s trade secrets, breached their fiduciary duties, and conspired
to further their business venture—are not protected under the TCPA as either an
exercise of Appellants’ right of association or an exercise of their right of free
speech. We also reject Appellants’ assertion that they met their burden to show that
allegations in the First Amended Petition involved communications to third parties
that constitute an exercise of their free-speech rights. The additional allegations, in
the Second Amended Petition, regarding Appellants’ conduct related to the ME
Global project also did not trigger free-speech protections.
We further conclude that, by relying on the pleadings (which is permissible),
WSP Buildings and WSP Administration proved that, under the commercial-speech
exemption, the TCPA did not apply to Appellants’ conduct of sending advertising
brochures to WSP’s customers. Therefore, we hold that the TCPA does not apply to
WSP’s claims, and the trial court did not err when it denied Appellants’ motion to
dismiss. We overrule Appellants’ first issue to the extent it asserts that the TCPA
applies to WSP’s claims and to the extent it challenges the use of only the pleadings
to support application of the commercial-speech exemption.
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In their second issue, Appellants assert that, because WSP USA did not file a
response to Appellants’ motion to dismiss, the trial court erred by not awarding
Appellants attorneys’ fees against WSP USA. Appellants base this assertion on the
premise that they met their burden to show that the First Amended Petition (the last
pleading in which WSP USA was a plaintiff) contained claims based on, related to,
or in response to conduct protected by the TCPA. As discussed, Appellants did not
meet this burden, and the burden never shifted to WSP USA to file a response or to
prove a prima facia case. See In re Lipsky, 460 S.W.3d at 587. Therefore, we
overrule Appellants’ second issue.
In their third issue and in a portion of their first issue, Appellants assert that
WSP Buildings and WSP Administration did not meet their burden to prove a prima
facie case as to each of their claims. However, because the TCPA does not apply to
any of WSP’s claims, the burden never shifted to WSP Buildings and WSP
Administration to prove a prima facia case, and we need not address these assertions.
See Sullivan v. Tex. Ethics Comm’n, 551 S.W.3d 848, 856 n.6 (Tex. App.—Austin
2018, pet. denied) (“Because we hold that the TCPA does not apply, we do not reach
the second step in the TCPA analysis of whether [the non-movant] met its burden to
prove a prima facie case.”).
We affirm the trial court’s order denying Appellants’ motion to dismiss.
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Richard Hightower
Justice
En banc court consists of Chief Justice Radack and Justices Keyes, Lloyd, Kelly,
Goodman, Landau, Hightower, and Countiss.
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