Elite auto body llc v. Autocraft bodywerks, Inc., 520 S.W.3d 191 (Tex. App. – Austin May 5, 201 pet. denied)

This case seemed like a run of the mill trade secret and “confidential, proprietary, and trade secret information” case. The defendants were former employees who opened up a competing business. It was alleged that they had acquired the confidential information through their positions of trust and confidence with their former employer.

In turn, Autocraft complains, Precision and its employees have used the information to “obtain an unfair competitive advantage in the marketplace” and “to convince more employees to leave Autocraft and join [Precision].”

Alongside the more traditional litigation responses of a general denial, affirmative defenses, and a counterclaim seeking attorney’s fees for Autocraft’s alleged bad-faith claim of misappropriation, appellants invoked the TCPA, seeking dismissal of Autocraft’s suit on grounds that this “legal action” “is based on, relates to, or is in response to” appellants’ “exercise of the right of . . . association” and the “exercise of the right of free speech” in their pursuit of Precision’s business. To meet their initial burden of establishing these grounds “by a preponderance of the evidence,” appellants relied on two basic theories. First, citing Autocraft’s petition, appellants urged that each of Autocraft’s claims “is based on, relates to, or is in response to”—in the sense of arising from or being predicated upon factually—either or both the “exercise of the right of association” or the “exercise of the right of free speech,” as the TCPA defines those activities. Second, relying on affidavits from Hernandez and Damian that purport to negate any trade-secret or other protected status of the information at issue, appellants accused Autocraft of also bringing its suit as a groundless pretext calculated only to harass and chill their “association” and “speech”; i.e., with the motives characteristic of “SLAPP” litigation, as opposed to merely being subject to dismissal under the TCPA.

The plaintiffs filed an affidavit in opposition to the motion to dismiss.

The chief thrust of the response and affidavit was to urge that the Autocraft information in question did in fact consist of trade secrets and other legally protected information.  Autocraft urged that its claims for relief were “not a SLAPP suit” and were “no threat to [appellants’] rights to free speech [or] right of association.”

At the hearing on their motion, appellants sought to present live testimony from Hernandez and Damian to further contest the information’s protected status in reply to Autocraft’s affidavit. The district court excluded the testimony, in the view that the TCPA confined the court’s inquiry solely to the “evidence” of pleadings or affidavits that the Act explicitly references.

The trial court denied the motion to dismiss and the appellants appealed. The appeals court reversed in part. It first stated that the petition’s claims were “legal actions”. A term that the TCPA defines to include “a lawsuit, cause of action, petition, . . . or any other judicial pleading or filing that requests legal or equitable relief.

Appellants have urged that Autocraft’s lawsuit complains of their “exercise of the right of association,” so defined, because “[a]ll of Autocraft’s claims center upon [appellants’] communications as they promote and pursue their common interests in developing and maintaining a competitive auto body repair business.” As for the “exercise of the right of free speech” implicated by the suit, appellants have reasoned that the suit complains of their “communications” concerning “a good, product, or service in the marketplace,” subjects that are expressly included in a further TCPA definition of “matter[s] of public concern.”

The court said:

The linchpin of both the “exercise of the right of association” and the “exercise of the right of free speech” definitions (and, for that matter, also the TCPA’s definition of the remaining category of protected expression, the “exercise of the right to petition”) is a “communication,” and it is in regard to this element that the parties have chiefly joined issue.

The court after an exhaustive review of other cases held that the claims by the plaintiff involved “communications”. Once the Texas Anti-Slapp or TCPA applied, the burden shifted to the plaintiff to show by clear and specific evidence each element of their claim. It then held that the plaintiff’s affidavit evidence which limited itself to whether or not the Texas Anti-Slapp or TCPA applied, failed to prove by clear and specific evidence each element of its claim.

Accordingly, the district court erred in failing to dismiss Autocraft’s claims to the extent founded on appellants’ “communications.” In the event of such a holding, appellants request that we render a judgment of dismissal and also proceed to award attorney’s fees, observing that they presented uncontroverted evidence of having incurred $15,250 in reasonable and necessary fees and expenses. While we agree that partial dismissal is appropriate, we remand the issue of attorney’s fees to the district court.

The court in a footnote attached to the last sentence said:

See Serafine v. Blunt, 466 S.W.3d 352, 365-67 (Tex. App.-Austin 2015, no pet.) (similarly remanding issue of attorney’s fees following partial TCPA dismissal on appeal).

Compare this case to the Morales case where the Dallas court in a “partial TCPA dismissal on appeal” required each party to bear their own cost of the appeal.