The Texas Supreme Court will hear a case raising the issue of whether a motion for discovery sanctions alleging that defendants improperly withheld certain evidence constitutes a “legal action” to which the Texas Citizens Participation Act (Ch. 27, CPRC) applies.
Whataburger Restaurants LLC and Crystal Krueger v. Sadok Ferchichi and Martina Coronado (No. 04-22-00020-CV; No. 23-0569; granted August 30, 2024) arose from a personal injury suit. Plaintiffs Ferchichi and Coronado were struck from behind by a vehicle driven by Krueger, an employee of Whataburger who was driving in the course and scope of her employment. Plaintiffs sued Krueger and Whataburger on a theory of respondeat superior. They also alleged the usual negligent hiring, training, supervising, and retention claims that we see in every commercial vehicle case. During mediation, the mediator allegedly disclosed to Plaintiffs that Whataburger had an investigative video that it had not produced in discovery. Plaintiffs immediately filed a motion to compel and for sanctions. Defendants moved to dismiss Plaintiffs’ sanctions motion under the TCPA, while at the same time informing Plaintiffs through counsel that the video would be turned over as part of the “raw data on which the attorney work product was based.” Following the subsequent hearing on the TCPA motion, the trial court denied Defendants’ motion to dismiss. Defendants sought interlocutory relief.
In an opinion by Justice Rodriguez, the court of appeals reversed and rendered. The issue before the court was whether Plaintiffs’ motion for sanctions constituted a “legal action” that “was based on or in response to” Defendants’ right to petition. The TCPA defines “legal action” as “a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal, declaratory, or equitable relief.” § 27.001(6), CPRC. The term, however, does not include: “(A) a procedural action taken or motion made in an action that does not amend or add a claim for legal, equitable, or declaratory relief; (B) alternative dispute resolution proceedings, or (C) post-judgment enforcement actions.” Id. The court determined that because Plaintiffs’ motion sought monetary relief, it fell within the definition.
The question then became whether Defendants demonstrated that the motion for sanctions was based on or was in response to their exercise of the right to petition. The court determined that Defendants made this showing because “the motion for sanctions was filed in response to a communication made by [Defendants’] counsel during a judicial proceeding, i.e. his letter to Plaintiffs offering to “show” the video in “a joint session with defense counsel and representatives of the Defendant and their insurers, ostensibly so that [the defense team] could see how Plaintiffs would react to the evidence.” In the event, Plaintiffs declined to do that and requested monetary sanctions, including reasonable attorney’s fees. The court further rejected Plaintiffs’ argument that the trial court properly denied Defendants’ motion to dismiss because the matter was moot, since by that time the parties had entered into a Rule 11 agreement under which the video was disclosed.
Finally, the court held that Plaintiffs failed to establish a prima facie case for sanctions because they failed to present any evidence regarding attorney’s fees. Citing SCOTX authority that a trial court can’t shift attorney’s fees before “some evidence of reasonableness” has been adduced, the court concluded that since Plaintiffs “failed to attach any affirmative evidence of reasonableness of the attorney’s fees incurred or how those fees resulted from or were caused by the alleged sanctionable conduct,” they failed to establish by “clear and specific evidence a prima facie case for each essential element of their claim for discovery.” The court reversed and rendered judgment on behalf of Defendants and remanded the case to the trial court for a determination of Defendants’ costs and attorney’s fees from their successful TCPA motion.
Though, of course, we cannot ever be sure of what catches the eye of enough SCOTX justices to grant review, we suspect that the Court wants to take a look at whether the court of appeals’ analysis of the definition of “legal action” is correct, specifically, perhaps, whether Plaintiffs’ motion for sanctions constitutes an TCPA-exempt “procedural action taken or motion made in an action that does not amend or add a claim for legal, equitable, or declaratory relief.” SCOTX has scheduled oral arguments on December 3.
