In a case applying the 2019 amendments to the Texas Citizens Participation Act (Ch. 27, CPRC), the Dallas Court of Appeals has thrown out some of the defense’s counterclaims, but not all of them.
LaCore Enterprises, LLC and Link Biosciences, LLC v. Claire Angles, Michael Kearl, Michael Smith, and The Virtual Formula, LLC (No. 05-21-00798-CV; filed March 23, 2023) arose from an employment relationship that went sour. The basic facts in this “he said, she said” case are these. Angles, Kearl, and Smith worked for LaCore and its affiliate Link, a supplier of DNA-based individualized nutritional supplements. Angles and Kearl had a romantic relationship and shared a house. For reasons that are under dispute in the lawsuit, LaCore and Link fired all of them and obtained separation agreements prohibiting them from disclosing confidential and proprietary information and trade secrets, as well as refraining from competitive business activities for a period of time. Subsequently, LaCore and Link alleged that Angles, Kearl, and Smith in various ways violated these agreements and brought suit against them asserting multiple contractual and extracontractual claims. The defendants generally denied the claims and asserted equally numerous counterclaims, including declaratory judgment claims, defamation, tortious interference with business relations, and disparagement. The plaintiffs filed a TCPA motion to dismiss defendants’ counterclaims. The motion was denied by operation of law. Plaintiffs appealed.
The Dallas Court of Appeals reversed in part and affirmed in part. Though the case is fact-intensive and the court’s analysis does not break any new ground, Justice Molberg’s opinion is worth reviewing on account of its thorough discussion of the application of the TCPA to myriad legal theories, most of which responded to plaintiffs’ petition and constituted communications made in a judicial proceeding under the TCPA.
- With respect to defendants’ business disparagement and defamation claims, the court concluded that the defendants had “failed to establish by clear and specific evidence a prima facie case for each element of the claims.” They neither demonstrated that plaintiffs’ statements in the petition were false nor that those statements had caused any damages. It didn’t help defendants’ cause that Smith, who alleged that plaintiffs’ actions had cost him a $1.25 million contract, testified that he broke off the business relationship, not his potential customer. The trial court thus erred in denying dismissal on these claims.
- Next up were defendants’ breach of contract, Texas Uniform Trade Secrets Act, and unfair competition claims. Here the court focused on the damages element in each of these causes of action and found that defendants had failed to present clear and specific evidence. The court also rejected defendants’ assertion that attorney’s fees and defense costs were “actual damages.” These claims, too, should have been dismissed.
- Angles, who claimed to have been fired because of her romantic relationship with Kearl, brought retaliation and wrongful termination claims. These claims, the court held, were not “based on or in response to [plaintiffs’] exercise of its right to free speech on a matter of public concern.” The trial court thus properly denied plaintiffs’ TCPA motion to dismiss.
- Appellants brought an abuse of process claim, which we don’t see very often. The elements of this claim include: (1) an illegal, improper, or perverted use of the process, neither warranted nor authorized by the process, (2) an ulterior motive or purpose in exercising such use, and (3) damages as a result of the illegal act. As the court observed, however, simply filing a lawsuit does not constitute an abuse of process claim, and defendants failed to provide any evidence that plaintiffs’ “made an illegal, improper, or perverted use of the process.”
- Defendants’ alleged anti-trust violations likewise should have been dismissed under the TCPA because plaintiffs failed to produce any evidence of “an adverse effect in the market—an inference of possible effect is not enough.” Again, this claim came within the purview of the TCPA because defendants claimed that plaintiffs used the lawsuit itself to restrain competition.
- Defendants’ tortious interference claim likewise was based on or arose from the lawsuit itself and came within the TCPA. Again, the court found that defendants failed to present clear and specific evidence of damages.
- As to defendants’ declaratory judgment actions seeking a declaration of rights under their separation agreements, the court held that the TCPA does not apply. They were not factually predicated on the petition or communications in the lawsuit. As the court reminded us, “[a] private contract 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” (citations omitted). Furthermore, the court held that “whether something is a trade secret owned by [plaintiff] is a ‘matter of public concern’ within the meaning of the TCPA” (citation omitted). The trial court thus properly denied plaintiffs’ TCPA motion.
The court remanded to the trial court for consideration of plaintiffs’ attorney’s fees, court costs, and sanctions.
