Elite Auto Body LLC, D/B/A Precision Auto Body Rey R. Hernandez Yesica Diaz And David Damian v. Autocraft Body Works, Inc., Now Known as Wasson Road Ventures, Inc. D/B/A Autocraft Bodywerks

• Court: Court of Appeals of Texas
• Decided: March 10, 2015
• Docket: 03-15-00064-CV
• Status: Published

Opinion

ACCEPTED 03-15-00064-CV 4445641 THIRD COURT OF APPEALS AUSTIN, TEXAS 3/10/2015 4:45:02 PM JEFFREY D. KYLE CLERK CAUSE NO. 03-15-00064-CV

FILED IN 3rd COURT OF APPEALS In the Court of Appeals AUSTIN, TEXAS For the Third Court of Appeals District 3/10/2015 4:45:02 PM Austin, Texas JEFFREY D. KYLE Clerk

ELITE AUTO BODY LLC, d/b/a PRECISION AUTO BODY, REY R. HERNANDEZ, YESICA DIAZ, AND DAVID DAMIAN, Appellants, v. AUTOCRAFT BODYWERKS, INC., now known as WASSON ROAD VENTURES, INC., d/b/a AUTOCRAFT BODYWERKS, Appellee.

Expedited Appeal from the 353rd Judicial District Court, Travis County, Texas, the Hon. Tim Sulak, Presiding

APPELLANTS’ BRIEF

Rick Harrison Texas Bar No. 09120000 rharrison@fbhh.com FRITZ, BYRNE, HEAD & HARRISON, PLLC 98 San Jacinto Boulevard, Suite 2000 Austin, Texas 78701 Telephone: (512) 476-2020 Telecopier: (512) 477-5267

COUNSEL FOR APPELLANTS

ORAL ARGUMENT REQUESTED IDENTITY OF PARTIES AND COUNSEL

Pursuant to Rule 38.1(a) of the Texas Rules of Appellate Procedure,

Appellant lists the following parties affected by this appeal, and their respective

counsel:

APPELLANTS APPELLEE

Elite Auto Body, LLC d/b/a Precision Autocraft Bodywerks, Inc., now known Auto Body, Rey R. Hernandez, Yesica as Wasson Road Ventures, Inc., d/b/a Diaz, and David Damian Autocraft Bodywerks

Trial and Appellate Counsel: Trial and Appellate Counsel:

Rick Harrison James Ruiz Texas Bar No. 09120000 Texas Bar No. 17385860 rharrison@fbhh.com jruiz@winstead.com S. King Jacylyn G. Austein Texas Bar No. 24067708 Texas Bar No. 24069760 aking@fbhh.com Jaustein@winstead.com Dale L. Roberts W INSTEAD, P.C. Texas Bar No. 24001123 401 Congress Avenue, Suite 2100 droberts@fbhh.com Austin, Texas 78701 FRITZ, BYRNE, HEAD & HARRISON, Telephone: (512) 370-2818 PLLC Facsimile: (512) 370-2850 98 San Jacinto Blvd., Suite 2000 Austin, Texas 78701 Telephone: (512) 476-2020 Facsimile: (512) 477-5267

i TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL ......................................................... i TABLE OF CONTENTS ....................................................................................... ii I. STATEMENT OF THE CASE .........................................................................1 II. STATEMENT REGARDING ORAL ARGUMENT .................................2 III. ISSUES PRESENTED ...................................................................................2 IV. STATEMENT OF FACTS ............................................................................2 V. SUMMARY OF THE ARGUMENT ............................................................5 VI. ARGUMENT ..................................................................................................7 A. The TCPA Applies to Autocraft’s Claims Against the Precision Parties ..............................................................................................................7 1. The scope of the TCPA and the rights it protects are broad ..................7 2. Autocraft’s claims are in response to, or relate to, the Precision Parties’ exercise of their freedoms of association and free speech .......10 B. Because Autocraft wholly failed to meet its evidentiary burden, the trial court was required to dismiss Autocraft’s claims. ............................12 1. Conclusory statements in affidavits do not constitute “clear and specific evidence.” ......................................................................................12 2. Autocraft failed to submit prima facie case for each essential element of its claims .................................................................................14 C. The Precision Parties are entitled to an award of their reasonable attorneys’ fees and expenses ........................................................................16 D. The trial court erred by refusing to hear live testimony at the hearing on Motion to Dismiss ......................................................................17 CONCLUSION AND PRAYER ...........................................................................18 CERTIFICATE OF SERVICE ............................................................................20 CERTIFICATE OF COMPLIANCE ..................................................................21

ii TABLE OF AUTHORITIES

CASES Beck v. Law Offices of Edwin J. (“Ted”) Terry, Jr., P.C., 284 S.W.3d 416 (Tex. App.—Austin 2009, no pet.) .......................................................................14

Campbell v. Campbell, Cause No. 03-07-00672-CV, 2010 WL 2477782 (Tex. App.—Austin June 18, 2010, no pet.) .........................................................13

Combined Law Enforcement Assocs. of Texas v. Sheffield, Cause No. 03-13- 00105-CV, 2014 WL 411672 (Tex. App.—Austin, January 31, 2014, pet. filed) ............................................................................................................. 8, 9, 10

Rehak Creative Svcs., Inc. v. Witt, 404 S.W.3d 716 (Tex. App. – Houston [14th Dist.] 2013, pet. denied) .............................................................. 8, 12, 13, 14

Schimmel v. McGregor, 438 S.W.3d 847 (Tex. App.—Houston [1st Dist.] 2014, pet. filed) .....................................................................................................13

Sprayberry v. Siesta MHC Income Partners, L.P., Cause No. 03-08-00649- CV, 2010 WL 1404598 (Tex. App.—Austin April 8, 2010, no pet.) ...................13 STATUTES

TEX. CIV. PRAC. & REM. CODE § 27.001 ................................................................1, 6

TEX. CIV. PRAC. & REM. CODE § 27.001(2) ...............................................................9

TEX. CIV. PRAC. & REM. CODE § 27.001(3) ...............................................................9

TEX. CIV. PRAC. & REM. CODE § 27.001(7)(e) ...........................................................9

TEX. CIV. PRAC. & REM. CODE § 27.002 ................................................................5, 8

TEX. CIV. PRAC. & REM CODE § 27.003(a) ................................................................8

TEX. CIV. PRAC. & REM. CODE § 27.005(b) ...............................................................6

iii TEX. CIV. PRAC. & REM. CODE § 27.005(c)..................................................... 6, 8, 12

TEX. CIV. PRAC. & REM. CODE § 27.006 ..................................................................18

TEX. CIV. PRAC. & REM. CODE § 27.009 ..................................................................16

TEX. CIV. PRAC. & REM. CODE § 27.011(b) ...............................................................9

TEX. CIV. PRAC. & REM. CODE § 51.014(a)(12) .........................................................1

TEX. CIV. PRAC & REM. CODE § 134A.002 ....................................................... 14, 16

TEX. CIV. PRAC. & REM. CODE § 134A.004 .............................................................14

iv I. STATEMENT OF THE CASE

In response to Appellants’ desire to pursue their common interest in

operating a competing business, Appellee filed suit against Appellants seeking

injunctive relief and damages. [CR 3-11] In particular, Appellee claims that

Appellants have misappropriated alleged trade secrets as Appellants engage in a

competitive business in the marketplace. These claims are a veiled attempt to

thwart Appellants’ exercise of association, both with regard to the internal

management of their business as well as with recruiting qualified labor to their

company. Appellants filed a Motion to Dismiss Pursuant to Chapter 27 of the

Texas Civil Practice and Remedies Code (the “Motion to Dismiss”), because

Appellee’s claims are in response to, or are at least related to, Appellants’ exercise

of their freedom of association and speech as defined in the Texas Citizens

Participation Act (“TCPA”). See TEX. CIV. PRAC. & REM. CODE § 27.001, et seq.

[CR 18-31] The trial court conducted a hearing on the Motion to Dismiss on

January 22, 2015, and entered an order denying the Motion to Dismiss on January

23, 2015. [CR 49] Appellants filed this expedited appeal pursuant to TEX. CIV.

PRAC. & REM. CODE § 51.014(a)(12) on January 28, 2015. [CR 50-51]

APPELLANTS’ BRIEF PAGE 1 II. STATEMENT REGARDING ORAL ARGUMENT

This appeal arises from a relatively new statute that has been a matter of

significant debate among the appellate courts as to its scope and application. The

trial court’s decision regarding the scope of the statute’s coverage conflicts with

decisions made by this Court. Accordingly, Appellants believe that oral argument

would likely be helpful in this matter and therefore respectfully requests that oral

argument be granted.

III. ISSUES PRESENTED

1. Did the trial court commit reversible error when it denied the Motion to Dismiss on the grounds that the TCPA did not apply to Appellee’s claims despite evidence showing that such claims were in response to, or related to, Appellants’ exercise of their rights of free association?

2. In the absence of clear and specific evidence establishing a prima facie case for each element of Appellee’s claims, was it error for the trial court to deny the Motion to Dismiss and refuse to award the Precision Parties’ their attorneys’ fees and expenses?

3. Was the trial court correct to refuse live testimony at the hearing for the Motion to Dismiss where the statute does not preclude such evidence?

IV. STATEMENT OF FACTS

Appellee, Autocraft Bodywerks (“Autocraft”), is an automobile body repair

business in Austin. [CR 4] Until recently, John Borek was Autocraft’s owner and

general manager. Borek Affidavit, ¶ 1 [CR 41] By multiple accounts, Borek was

APPELLANTS’ BRIEF PAGE 2 a harsh manager whose abusive behavior eventually led to key employees leaving

the company to form a competing business. Hernandez Declaration, ¶ 4 [CR 26];

Damian Declaration, ¶¶ 3, 5 [CR 29-30] Two Appellants, Rey R. Hernandez

(“Hernandez”) and David Damian (“Damian”), are former Autocraft employees.

Hernandez Declaration, ¶ 4 [CR 26]; Damian Declaration, ¶¶ 3-5 [CR 29-30]

Before working for Autocraft, Hernandez gained extensive expertise

performing various types of auto bodywork for over nineteen years including

several years at a BMW assembly plant in California. Hernandez Declaration, ¶ 2

[CR 25] After coming to Austin in 2008, Hernandez worked for Autocraft for

approximately one year. Hernandez Declaration, ¶ 4 [CR 26] Ultimately,

Hernandez resigned from Autocraft due to the hostile work environment created by

Borek. Hernandez Declaration, ¶ 6 [CR 26] During his time at Autocraft,

Hernandez was never asked to sign a non-competition, non-solicitation or non-

disclosure agreement. Hernandez Declaration, ¶ 5 [CR 26]

After leaving Autocraft, Hernandez began operating Precision Automotive

(“Precision”) in 2009. Over the years, Precision developed into a successful auto

body repair business under Hernandez’s leadership. Hernandez Declaration, ¶¶ 6-

7 [CR 26-27] Through his experience in the auto body repair business, Hernandez

became aware of the general business practices employed by such repair shops

APPELLANTS’ BRIEF PAGE 3 including the use of forms, checklists and Technical Service Bulletins. Hernandez

Declaration, ¶¶ 3,5 [CR 25, 27]

Damian likewise has many years of experience in the auto body repair

industry including several years working for Autocraft as its Production Manager.

Before working for Autocraft, Damian worked for many years in his father’s auto

body repair shop. Damian Declaration, ¶¶ 2-3 [CR 29] During that time, Damian

became aware of the common business practice of using forms and checklists such

as those used by Autocraft on which Autocraft’s alleged trade secret and

confidential information claims are based. Damian Declaration, ¶¶ 2,4,6 [CR 29-

30] In March, 2014 after several years at Autocraft, David Damian left Autocraft’s

employment and joined Precision. Damian Declaration, ¶¶ 3-5 [CR 29-30]

During his time at Autocraft, Damian was never asked to sign a non-competition,

non-solicitation or non-disclosure agreement. Damian Declaration, ¶ 4 [CR 30]

Likewise, he was not told that any of the business practices employed by Autocraft

(which were not unique or secret in the industry) were confidential or trade secrets.

Not long after Damian joined Precision, Joyce Garcia, Autocraft’s office

manager, followed. The employees at Precision enjoy a healthy and productive

working environment in contrast to the stressful and often hostile environment

created by Autocraft’s former manager, Borek. Damian Declaration, ¶¶ 3-5 [CR

APPELLANTS’ BRIEF PAGE 4 29-30] Hereafter, the Appellants Elite Auto Body, LLC d/b/a Precision Auto, Rey

R. Hernandez, Yesica Diaz, and David Damian are referred to collectively as the

“Precision Parties.” Autocraft’s claims have impacted their communications

among the Precision Parties regarding common business practices that Autocraft

now claims constitute proprietary information as well as communications with

potential customers and potential employees that are currently employed by

Autocraft. Hernandez Declaration, ¶¶ 8-9 [CR 27]; Damian Declaration, ¶ 6 [CR

30]

V. SUMMARY OF THE ARGUMENT

The TCPA must be broadly construed to protect parties’ rights of association

and free speech. TEX. CIV. PRAC. & REM. CODE § 27.002. The trial court in this

case failed to follow that admonition. The trial court narrowly construed the

TCPA and incorrectly concluded that the statute did not apply to Autocraft’s

claims. Because the TCPA actually applies to Autocraft’s claims, the trial court

incorrectly failed to dismiss the action in the absence of clear and specific evidence

of a prima facie case for each element of Autocraft’s claims.

This action was clearly instituted in response to the Precision Parties’

exercise of their rights to freedom of association and free speech under the TCPA.

Specifically, Autocraft’s claims target the Precision Parties’ communications in

APPELLANTS’ BRIEF PAGE 5 pursuit of their common interest of operating a competitive automobile body repair

business. See TEX. CIV. PRAC. & REM. CODE § 27.001(2-3) (defining the rights of

association and free speech under the TCPA). Although cast as trade secret

misappropriation, Autocraft’s claims are a thinly veiled attempt to interfere with

the Precision Parties’ lawful business competition by preventing them from

communicating non-proprietary business practices and communicating with

Autocraft’s employees. Notably, there is zero evidence of business information

that arguably constitutes trade secret or confidential information. The Precision

Parties clearly met their burden and established that Autocraft’s claims “relate to,

or [are] in response to” the Precision Parties’ exercise of their rights of association

and free speech. TEX. CIV. PRAC. & REM. CODE § 27.005(b).

Because the TCPA applies to Autocraft’s claims, Autocraft bore the burden

of “establish[ing] by clear and specific evidence a prima facie case for each

essential element” of its claims. TEX. CIV. PRAC. & REM. CODE § 27.005(c).

Autocraft wholly failed to meet that burden. Instead of providing clear and

specific evidence, Autocraft submitted a conclusory affidavit that primarily recited

allegations from its pleadings. In the absence of clear and specific evidence of

each element of Autocraft’s claims, the trial court was required to dismiss this

APPELLANTS’ BRIEF PAGE 6 action and award the Precision Parties their reasonable attorneys’ fees and

expenses.

VI. ARGUMENT

A. The TCPA Applies to Autocraft’s Claims Against the Precision Parties

Autocraft’s claims are in response to, or at least relate to, the Precision

Parties’ exercise of their rights of association and free speech. Those rights, as

defined by the TCPA, have broad reach and include the Precision Parties’

communications in pursuit of their common interest – the Precision Parties’

competing business – and regarding the Precision Parties provision of services in

the marketplace. Because Autocraft’s claims relate to those communications, the

TCPA applies.

1. The scope of the TCPA and the rights it protects are broad.

Before the enactment of Chapter 27 of the TEXAS CIVIL PRACTICE AND

REMEDIES CODE, there was no means to avoid the significant expense required to

defend baseless claims intended to stifle people’s rights to freely associate and

communicate. As enacted, the statute’s 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

APPELLANTS’ BRIEF PAGE 7 demonstrable injury.” TEX. CIV. PRAC. & REM. CODE § 27.002. The statute

accomplishes that purpose by requiring Autocraft to produce clear and specific

evidence of a prima facie case for each essential element of Autocraft’s claims

covered by the statute. Id. § 27.005(c).

Chapter 27 applies to a broad swath of actions to protect people’s rights of

association and free speech. The statute applies to any legal action that “is based

on, relates to, or is in response to a party’s exercise of the right of free speech . . .

or right of association.” Id. § 27.003(a) (emphasis added). Thus, the statute

applies to any claim that merely relates to a party’s exercise of their freedoms of

association and free speech. See Rehak Creative Svcs., Inc. v. Witt, 404 S.W.3d

716, 733 (Tex. App. – Houston [14th Dist.] 2013, pet. denied) (holding that

conversion and misappropriation claims were covered by the TCPA where they

had “a connection to” protected communications).

The rights covered by the TCPA are broader than the protections provided

by the Constitution for those same rights. See Combined Law Enforcement Assocs.

of Texas v. Sheffield, Cause No. 03-13-00105-CV, 2014 WL 411672, at *11-12

(Tex. App.—Austin, January 31, 2014, pet. filed). Indeed, the exercise of the right

of association is defined by the statute as follows:

APPELLANTS’ BRIEF PAGE 8 “Exercise of the right of association” means a communication between individuals who join together to collectively express, promote, pursue, or defend common interests.

Id. § 27.001(2) (emphasis added). The exercise of free speech has broad reach as

well:

“Exercise of the right of free speech” means a communication made in connection with a matter of public concern.

Id. § 27.001(3). Matters of public concern include “an issue related to . . . a good,

product, or service in the marketplace.” Id. § 27.001(7)(e).

In addition to those broad definitions, the TCPA clearly states that it must

“be construed liberally to effectuate its purpose and intent fully.” Id. §

27.011(b)(emphasis added). The TCPA’s scope reaches beyond public

participation in government and media defendants. See Combined Law

Enforcement Assocs. of Texas v. Sheffield, Cause No. 03-13-00105-CV, 2014 WL

411672, at *2, n.1 (Tex. App.—Austin, January 31, 2014, pet. filed) (“There is

nothing in the plain language of the statute that limits its scope, as Sheffield

argues, to a media defendant or solely to public participation in government.”)

(emphasis added). Rather, this Court recognized that the TCPA reaches beyond

constitutional protections “to require a preliminary substantiation of legal actions

relating to a broad range of organizational communications.” Id., at *12.

APPELLANTS’ BRIEF PAGE 9 Accordingly, this Court found that communications among an organization’s

members to promote the organization’s purpose were covered by the TCPA. Id., at

*5.

2. Autocraft’s claims are in response to, or relate to, the Precision Parties’ exercise of their freedoms of association and free speech.

All of Autocraft’s claims center upon the Precision Parties communications

as they promote and pursue their common interests in developing and maintaining

a competitive auto body repair business. Autocraft’s claims are based on the

alleged disclosure of general business information or the alleged attempts by the

Precision Parties “to convince employees to leave Autocraft and join [Precision].”

Pl.’s Orig. Pet. at ¶ 13 [CR 6]; see also id. at ¶ 16 (seeking injunctive relief

prohibiting communication of alleged confidential information and solicitation of

Autocraft’s employees)[CR 6]; id. at ¶ 21 (alleging that the Precision Parties are

conspiring to use Autocraft’s alleged trade secrets) [CR 7]; id. at ¶ 28 (claiming

that Damian assisted in “unfairly competing with Autocraft,” communicated

business information to the other Precision Parties, and communicated with

Autocraft employees encouraging them to change jobs). [CR 8] Based on

Autocraft’s own pleadings, it is clear that Autocraft’s claims relate to the Precision

Parties’ communication in pursuit of their common interest and regarding their

services in the marketplace.

APPELLANTS’ BRIEF PAGE 10 Beyond the pleadings, the Precision Parties’ evidence likewise establishes

that Autocraft’s claims impinge on the Precision Parties’ exercise of their rights of

association and free speech. Rey Hernandez testified that on multiple occasions he

communicated with Autocraft employees about potential employment

opportunities at Precision and, absent Autocraft’s claims in this lawsuit, he

expected that he would continue to do so. [CR 26] It is obvious that Borek’s

abusive management style was causing Autocraft to hemorrhage employees, with

many seeking employment with the Precision Parties and Autocraft filed this suit

to prevent communications with its employees that could lead to them relocating.

Likewise, Both Hernandez and Damian testified that all of the mundane business

practices claimed to be trade secrets in this case were not kept confidential and

were well known throughout the industry. [CR 25-27, 29-30] Even so,

Autocraft’s claims, if successful, would prevent the Precision Parties from

communicating regarding business procedures that are commonly employed in the

automobile body repair shop industry. [CR 27, 30]

Clearly, the Precision Parties have met their burden establishing that

Autocraft’s claims are in response to, or at least relate to, the Precision Parties’

exercise of their rights of association and free speech. Autocraft’s claims seek to

curtail the Precision Parties’ use and communication of allegedly proprietary

APPELLANTS’ BRIEF PAGE 11 information as they pursue their common interest of their competing business and

recruit potential employees. Yet Autocraft wholly failed to put on evidence of the

proprietary nature of the information or that the Precision Parties ever used it. The

trial court committed reversible error by finding that the TCPA did not apply.

B. Because Autocraft wholly failed to meet its evidentiary burden, the trial court was required to dismiss Autocraft’s claims.

Because the TCPA applies to Autocraft’s claims, the burden shifted to

Autocraft to establish by clear and specific evidence a prima facie case for each

essential element of its claims. See Rehak Creative Svcs., Inc., 404 S.W.3d. at

723-724 (discussing the burden-shifting characteristics of the TCPA). Autocraft

did not come close to meeting its burden. Autocraft’s sole, conclusory affidavit

amounts to no evidence of its claims, and certainly does not provide the clear and

specific evidence required by the TCPA. Therefore dismissal of Autocraft’s

claims was required.

1. Conclusory statements in affidavits do not constitute “clear and specific evidence.”

Conclusory statements without factual foundation do not meet the “clear and

specific evidence” burden required by TEX. CIV. PRAC. & REM. CODE § 27.005(c)

to avoid dismissal. Thus, a party’s conclusory statements regarding causation in a

tortious interference with contract claim failed to meet the TCPA’s burden

APPELLANTS’ BRIEF PAGE 12 resulting in the dismissal of the plaintiff’s claims. See Schimmel v. McGregor, 438

S.W.3d 847, 860-862 (Tex. App.—Houston [1st Dist.] 2014, pet. filed) (“We agree

with Schimmel that the Buy-Out Owners presented only their conclusory

statements, unsupported by any facts, that Schimmel’s actions caused the City of

Galveston to fail to close on the purchases.”). Likewise, conclusory statements

regarding damages are insufficient to meet the TCPA’s burden of clear and

specific evidence. See Rehak Creative Svcs, Inc., 404 S.W.3d at 734 (“This

conclusory assertion does not rise to the level of ‘clear and specific’ evidence

sufficient to make out a prima facie case of damages caused by and attributable to

the alleged misappropriation.”). And this Court has long held that affidavits that

do not provide a basis for the affiant’s conclusions or their personal knowledge are

fatally defective and constitute no evidence. See Campbell v. Campbell, Cause No.

03-07-00672-CV, 2010 WL 2477782, at *4-5 (Tex. App.—Austin June 18, 2010,

no pet.) (finding affidavit insufficient because it did not show the basis for the

affiant’s personal knowledge of facts recited therein); Sprayberry v. Siesta MHC

Income Partners, L.P., Cause No. 03-08-00649-CV, 2010 WL 1404598, at *3-4

(Tex. App.—Austin April 8, 2010, no pet.) (discussing insufficiency of a

conclusory affidavits because it “consists of factual or legal conclusions or

APPELLANTS’ BRIEF PAGE 13 opinions that are not supported by facts”). Thus, Autocraft had to present more

than conclusory evidence to meet its burden and avoid dismissal.

2. Autocraft failed to submit prima facie case for each essential element of its claims.

Autocraft’s sole affidavit submitted in response to the Precision Parties’

Motion to Dismiss misses the mark. Autocraft asserts claims for trade secret

misappropriation, unfair competition, and breach of fiduciary duty. Autocraft was

required to present clear and specific evidence for each element for each of those

claims. See Rehak Creative Svcs, Inc., 404 S.W.3d at 732-734 (analyzing whether

plaintiff had provided prima facie evidence of its claims for tortious interference,

intentional infliction of emotional distress, conspiracy, and conversion and then

dismissing those claims in the absence of evidence).

With regard to misappropriation of trade secrets (as well as Autocraft’s other

claims relying on such allegations), Autocraft was required to establish all of the

elements set forth in TEX. CIV. PRAC & REM. CODE § 134A.002 for both

“misappropriation” and “trade secret.” Likewise, all of Autocraft’s causes of

action require evidence of damages and causation. See id. § 134A.004 (stating that

a claimant seeking damages must prove causation or the amount of a reasonable

royalty for the alleged trade secrets); Beck v. Law Offices of Edwin J. (“Ted”)

Terry, Jr., P.C., 284 S.W.3d 416, 429 (Tex. App.—Austin 2009, no pet.)(listing

APPELLANTS’ BRIEF PAGE 14 elements for breach of fiduciary duty claims including existence of a fiduciary

duty, breach of that duty, causation, and damages). 1

Instead of providing clear and specific evidence for its claims, Autocraft

instead submitted a sole, conclusory affidavit from John Borek. But Borek’s

affidavit is rife with speculation and unsubstantiated conclusions. These include:

• “Autocraft has reason to believe David Damian and other former employees who recently left and joined Rey Hernandez and Precision Auto Body . . . may have used or disclosed Autocraft’s confidential, proprietary, and trade secret information . . ..” [CR 42, ¶ 2] (emphasis added)

• “After David Damian and Joyce Garcia joined Precision Auto . . . Autocraft learned Prevision Auto was using its proprietary business forms and documents . . ..” [CR 42, ¶ 4] (emphasis added)

• “It is my understanding and belief that David Damian and/or Joyce Garcia and possibly others, provided Rey Hernandez with most, if not all, of the above-mentioned confidential, proprietary and trade secret documents and information . . ..” [CR 42, ¶ 6] (emphasis added)

• “It is also my understanding and belief that Precision Auto has used Autocraft’s confidential information, including employee salary information, to recruit and solicit more Autocraft employees to join Precision Auto.” [CR 42, ¶ 7] (emphasis added)

Statements based on Borek’s understanding or belief do not provide any evidence

of Autocraft’s claims and certainly do not provide clear and specific evidence.

Furthermore, Borek provides no factual basis to establish his purported personal 1 In addition to these elements, Autocraft was required to submit clear and specific evidence for each element of Autocraft’s other causes of action as well including its claims for injunctive relief, civil conspiracy, and vicarious liability. See, e.g., Chon Tri v. J.T.T., 162 S.W.2d 552, 556 (Tex. 2005) (listing elements for civil conspiracy).

APPELLANTS’ BRIEF PAGE 15 knowledge of any actions taken by the Precision Parties or any of his conclusions

that the Precision Parties are unfairly competing with him.

In fact, Borek’s affidavit provides absolutely no evidence regarding: (1) the

efforts Autocraft took, if any, to maintain the secrecy of the alleged proprietary

information, (2) the Precision Parties’ appropriation of that information by

improper means, or (3) that the information derives economic value from not being

generally known or ascertainable by proper means. See TEX. CIV. PRAC. & REM.

CODE § 134A.002 (defining the elements to show misappropriation by improper

means and the existence of a trade secret). Similarly, and without limitation,

Autocraft failed to provide any evidence of damages or causation for its claims.

Because Autocraft failed to provide clear and specific evidence for each element of

its claims, all of Autocraft’s claims should have been dismissed.

C. The Precision Parties are entitled to an award of their reasonable attorneys’ fees and expenses.

The trial court likewise erred by failing to award attorneys’ fees and

expenses to the Precision Parties. Upon dismissal of an action pursuant to the

TCPA, the moving party is entitled to an award of its “court costs, reasonable

attorneys’ fees, and other expenses incurred in defending against the legal action.”

TEX. CIV. PRAC. & REM. CODE § 27.009. The Precision Parties’ counsel presented

evidence, without objection, of their reasonable and necessary attorneys’ fees and

APPELLANTS’ BRIEF PAGE 16 expenses incurred at the time of the hearing. [RR 29-30] Because the Precision

Parties were entitled to dismissal of Autocraft’s claims under the TCPA, they are

entitled to an award of their attorneys’ fees and expenses in the amount of $15,250.

D. The trial court erred by refusing to hear live testimony at the hearing on Motion to Dismiss.

Although the Precision Parties’ evidence attached to the Motion to Dismiss

was sufficient to meet their burden, they were nonetheless prepared to present live

testimony at the hearing on the Motion to Dismiss. But the trial court refused to

hear that testimony. [RR 22-24] That testimony would have provided additional

evidence of the impact Autocraft is urging upon the Precision Parties’ freedoms of

association and free speech.2 [RR 24-26] Without limitation, that evidence would

have shown that the forms claimed to be trade secrets by Autocraft are well known

in the industry and can be freely found and ordered online. That evidence would

have also established that the Precision Parties have been restricted from

communicating with potential customers and employees. [RR 25-26]

The trial court excluded this evidence based upon an unduly narrow reading

of section 27.006 which states:

2 The declarations of Hernandez and Damian along with Autocraft’s pleadings provide ample evidence that Autocraft’s claims relate to the Precision Parties’ rights of association and free speech. However, and in the unlikely event that this Court finds that the Precision Parties failed to meet their burden, the proffered but excluded testimony should be considered in that regard. [CR 25-28, 29-31]

APPELLANTS’ BRIEF PAGE 17 In determining whether a legal action should be dismissed under this chapter, the court shall consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based.

TEX. CIV. PRAC. & REM. CODE § 27.006. While that provision requires the trial

court to consider the pleadings and affidavits, it does not restrict the evidence to

pleadings and affidavits. The fact that materials other than the pleadings and

affidavits may be considered is foreshadowed by other portions of the statute.

Indeed, the TCPA allows for other discovery (including depositions or

interrogatories) on a showing of good cause. Id. Such discovery would be

meaningless if the discovery materials could not be considered as evidence relating

to the Motion to Dismiss. The trial court erred by excluding the Precision Parties’

live testimony.

CONCLUSION AND PRAYER

The Precision Parties were entitled to dismissal of this action. Autocraft’s

claims directly impact, and certainly relate to, the Precision Parties’

communications in pursuit of their common interest and regarding their services in

the marketplace. Under these circumstances, Autocraft was required by the TCPA

to present clear and specific evidence of each element of its claims. Autocraft

wholly failed to do so thereby requiring that Autocraft’s action be dismissed and

APPELLANTS’ BRIEF PAGE 18 the Precision Parties be awarded their attorneys’ fees and expenses. Accordingly,

this Court should provide the Precision Parties the relief they deserve.

Accordingly, the Precision Parties respectfully request that this Court

reverse the trial court’s order denying the Motion to Dismiss, order that all of

Autocraft’s claims in this matter shall be dismissed, award the Precision Parties

their attorneys’ fees and expenses described above, and grant the Precision Parties

such other and further relief to which they show themselves justly entitled.

Respectfully submitted,

FRITZ, BYRNE, HEAD & HARRISON, PLLC

BY: /s/ Rick Harrison Rick Harrison Texas Bar No. 09120000 rharrison@fbhh.com S. King Texas Bar No. 24067708 aking@fbhh.com Dale L. Roberts Texas Bar No. 24001123 droberts@fbhh.com

ATTORNEYS FOR APPELLANTS

APPELLANTS’ BRIEF PAGE 19 CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document has this 10th day of March, 2015, been forwarded to counsel of record via electronic service, as follows:

James Ruiz Texas Bar No. 17385860 jruiz@winstead.com Jacylyn G. Austein Texas Bar No. 24069760 Jaustein@winstead.com W INSTEAD, P.C. 401 Congress Avenue, Suite 2100 Austin, Texas 78701 Telephone: (512) 370-2818 Facsimile: (512) 370-2850

ATTORNEYS FOR APPELLEES

/s/ Rick Harrison Rick Harrison

APPELLANTS’ BRIEF PAGE 20 CERTIFICATE OF COMPLIANCE

I certify that this brief complies with the word limit of Tex. R. App. P. 9.4(i)(2)(B) because this brief contains 3,616 words, excluding the parts of the brief exempted by Tex. R. App. P. 9.4(i)(1).

Dated: March 10, 2015

APPELLANTS’ BRIEF PAGE 21 APPENDIX INDEX

ORDER DENYING MOTION TO DISMISS

ROBERTS DECLARATION

FINDINGS OF FACT AND CONCLUSIONS OF LAW

HERNANDEZ DECLARATION

DAMIAN DECLARATION

BOREK AFFIDAVIT

COMBINED LAW ENFORCEMENT ASS’N OF TEXAS V. SHEFFIELD

SCHIMMEL V. McGREGOR

TEX. CIV. PRAC. & REM CODE § 27.001 – 27.006 DC BK15044 PG310

Filed In The District Court of ~ty, Te~as on flQt,~DI~: at I \:00 lrM. CAUSE NO. D-1-GN-14-004535 Velva 1.. Price, District Clerk

AUTOCRAFT BODYWERKS, INC., § IN THE DISTRICT COURT § Plaintiff, § § vs. § § ELITE AUTO BODY LLC, § dba PRECISION AUTO BODY, § REY R. HERNANDEZ, § TRAVIS COUNTY, TEXAS YESICA DIAZ, and § DAVID DAMIAN, § § Defendants, § § vs. § § JOHN BOREK, § § Tltird-Party Defendant. § 345th JUDICIAL DISTRICT

ORDER DENYING DEFENDANTS' MOTION TO DISMISS PURSUANT TO CHAPTER 27 OF THE TEXAS CIVIL PRACTICE AND REMEDIES CODE

On the 22nd day of January, 2015, the Court heard Defendants' Motion to Dismiss

Pursuant to Chapter 27 of the Texas Civil Practice and Remedies Code (the "Motion"). After

considering the pleadings, affidavits, and legal arguments, llle-Gourt lind• tlmt Chopter 27 of tl>e ~/. 'Fexas Civil Prac dee and Remedies Code is inapplicable t6 tb:i~ ~ttit. It is therefore, 'I z.~/'.5 ORDERED that the Motion is hereby DENIED in all respects.

Signed this 2.~"day of January 2015.

49 CAUSE NO. 03-15-00064-CV

In the Court of Appeals For the Third Court of Appeals District Austin, Texas

ELITE AUTO BODY LLC, d/b/a PRECISION AUTO BODY, REY R. HERNANDEZ, YESICA DIAZ, AND DAVID DAMIAN, Appellants, v. AUTOCRAFT BODYWERKS, INC., now known as WASSON ROAD VENTURES, INC., d/b/a AUTOCRAFT BODYWERKS, Appellee.

DECLARATION OF DALE L. ROBERTS

1. My name is Dale L. Roberts. I am fully competent to make this

Declaration. I have personal knowledge of the facts stated in this

Declaration. I am one of the attorneys representing the Appellants in this

matter.

2. The Finding of Fact and Conclusions of Law contained in the Appendix

of Appellants’ Brief is a true and correct copy of that signed by Judge

Sulak on February 20, 2015.

3. My name is Dale L. Roberts. My date of birth is February 6, 1970, and

my address is 1309 Choquette Drive, Austin, Texas 78757. As

authorized by Section 132.001 of the Texas Civil Practice and Remedies

1 Code, I declare under penalty of perjury that the foregoing is true and

correct.

Executed in Travis County, State of Texas, on March 10, 2015.

/s/ Dale L. Roberts Dale L. Roberts

2 CAUSE NO. D-1-GN-14-004535

AUTOCRAFT BODYWERKS, INC., § IN THE DISTRICT COURT now known as WASSON ROAD § VENTURES, INC, dba AUTOCRAFT § · BODYWERKS, § § Plaintiff, § § § vs. § TRAVIS COUNTY, TEXAS § ELITE AUTO BODY LLC, d/b/a PRECISION § AUTO BODY, REY R. HERNANDEZ, § YESICA DIAZ, AND DAVID DAMIAN, § § Defendants. §

DECLARATION OF REY R. HERNANDEZ

1. My name is Rey R. Hernandez. I am fully competent to make this Declaration. I

have personal knowledge of all the facts stated in this Declaration.

2. I have been working in the auto body manufacture or repair industry for over 19

years. I have worked for BMW for over 12 years, achieving a management position overseeing

body work on new BMW vehicles. In addition, I have worked in auto body repair shops for

seven years.

3. Through my experience in the auto body repair industry, I have become aware of

common practices employed by auto body repair shops. It is common practice in the industry to

use forms and checklists for tracking payment receipts, insurance information, workflow

assignments and other information. Although the forms and checklists may follow different

formats, they commonly contain information such as payment, information, authorizations, and

vehicle and customer information.

Page I

4R£4&&&4Zi&&2SEE&EE I EXHIBIT

1 25 4. When I came to Austin in 2008, I accepted a job as a production manager at

Autocraft Bodywerks ("AB") and worked there for approximately twelve months. During that

time, the working conditions at AB were very unpleasant and hostile. AB's former owner, and

now manager, John Borek, created that unpleasant working environment. For example, Mr.

Borek frequently used abusive and vulgar language when speaking with employees and

threatened them with reprisals, illegally withheld paychecks, and on occasion, physically

assaulted them. Despite Mr. Borek's behavior, it was my impression that AB's employees were

very competent and often talented.

5. While working at AB, I was never asked to sign or even agree to any limitations

on my ability to compete with AB or solicit AB's employees following my employment.

Likewise, I was never asked to sign a confidentiality agreement nor was I informed that any

information about how AB conducted its business was secret or confidential. In fact, with the

exception of Mr. Borek's behavior, AB's business was conducted similar to other auto body

repair businesses. This included the use and content of AB's forms and checklists as well as

referencing, when necessary, any technical service bulletins relating to a repair. I was never told

by Mr. Borek, or anyone else, that AB's forms, checklists or compilation of technical service

bulletins were secret or confidential, and I did not consider them to be secret because the use of

similar forms, checklists and technical service bulletins is commonplace in the industry.

6. Due in large part to the unhealthy working environment caused by Mr. Borek, I

left AB, and started Precision Auto Body ("Precision") in March, 2009. Over the next several

years and through my experience in the industry, we developed Precision into a successful

business. As part of that business, Precision subscribed to Alldata. That service provides access

to, and the ability to search, all technical service bulletins that have been issued by all automobile

Page2

26 manufacturers. Precision remains a subscriber to that setvice to this day. Whenever a Precision

employee needs to reference a technical setvice bulletin, the materials are obtained from Alldata.

7. By the beginning of 2014, Precision had seven employees and the business was

continuing to grow. In March 2014, Precision hired David Damian to work as body shop

manager. Over the years since leaving AB, I have occasionally been contacted by AB

employees inquiring as to whether Precision could hire them, and on some occasions Precision

has done so. That is how Damian came to work for Precision as well as Joyce Garcia. Mr.

Damian, Ms. Joyce, and I have all expressed a desire to continue to grow Precision's business

and attract experienced and talented individuals to work for Precision.

8. Because it was my impression that many of AB's employees were talented, I

would expect and intend to communicate with AB employees regarding employment

opportunities at Precision just as I would expect to communicate with any other potential

Precision employees that are unrelated to AB. If AB is successful in its lawsuit, or even obtains

a temporary i-qjunction as it has requested, I would not be able to communicate with any other

AB employees about potential employment opportunities.

9. Precision has not used any confidential or secret information in its business that

was disclosed by either Mr. Damian or Joyce Garcia. Precision has not used any AB payroll or

other AB financial information in arty manner. This includes, without limitation, any

employment decisions concerning any current or potential Precision employees. With regard to

the business practices claimed by AB to be confidential or secret, these allegations would

prevent me and others at Precision from communicating regarding mundane business issues such

as using checklists and forms to ensure that office and shop procedures are followed.

Page3

27 10. My name is Rey R. Hemandez. My date of birth is January 4, 1976, and my

address is 1261 Cherrywood, Kyle, Texas 78640. As authorized by Section 132.001 of the

Texas Civil Practice and Remedies Code, I declare under penalty of peljury that the foregoing is

true and correct.

Executed in Travis County, State of Texas on this~O th day of December, 20

Page4

28 CAUSE NO. D-1-GN-14-004535

AUTOCRAFT BODYWERKS, INC., § IN THE DISTRICT COURT now known as WASSON ROAD § VENTURES, INC. dba AUTOCRAFT § BODYWERKS, § § Plaintiff, § § § vs. § TRAVIS COUNTY, TEXAS § ELITE AUTO BODY LLC, d/b/a PRECISION § AUTO BODY, REY R. HERNANDEZ, § YESICA DIAZ, AND DAVID DAMIAN, § § Defendants, §

DECLARATION OF DAVID DAMIAN

1. My name is David Damian. I am fully competent to make this Declaration. I

have personallmowledge of all the facts stated in this Declaration.

2. I have been working in the auto body repair industry for over 16 years. Through

my experience in the auto body repair industry, I have become aware of common practices

employed by auto body repair shops. It is common practice in the indushy to use forms and

checklists for tracking payment receipts, insurance information, workflow assignments and other

information.

3. Between 2008 until March 2014, !.worked as a Production Manager at Autocraft

Bodywerks ("AB"). During that time, the working conditions at AB were very unpleasant and

hostile. AB's former owner, and now manager, John Borek, created that unpleasant working

environment. Mr. Borek constantly cursed at employees and was prone to angry outbursts.

Page 1

EXHIBIT

W4E&E&MUMIM 1(1 :a 29 4. While working at AB, I was never asked to sign, or even agree to, any limitations

on my ability to compete with AB or solicit AB's employees following my employment.

Likewise, I was never asked to sign a confidentiality agreement nor was I informed that any

information about how AB conducted its business was secret or confidential. AB's business was

conducted similar to other auto body repair businesses. This included the use and content of

AB's forms and checklists as well as referencing, when necessary, any technical service bulletins

relating to a repair. I was never told by Mr. Borek, or anyone else, that AB's forms, checklists or

compilation of technical service bulletins were secret or confidential, and I did not consider them

to be secret because the use of similar forms, checklists and technical service bulletins is

commonplace in the industry.

5. Due in large part to the unhealthy working environment caused by Mr. Borek, I

left AB, and joined Precision. Mr. Hernandez, Ms. Garcia, and I have all expressed a desire to

continue to grow Precision's business and attract experienced and talented individuals to work

for Precision.

6. I have not used any AB payroll or other AB financial information in any manner

since leaving the employ of AB, and certainly not in any negotiations or business decisions.

With regard to the business practices claimed by AB to be confidential or secret, these

allegations would prevent me and others at Precision from communicating regarding mundane

business issues such as using checklists and forms to ensure that office and shop procedures are

followed.

Page 2

30 7. My name is David Damian. My date of birth is June 10, 1978, and my address is

11303 Stormy Ridge Road, Austin, Texas 78739. As authorized by Section 132.001 of the

Texas Civil Practice and Remedies Code, I declare under penalty of perjury that the foregoing is

Executed in Travis County, State of Texas on this lOth day of December, 2014.

Page 3

31 CAUSE NO. D-1-GN-14-004535

AUTOCRAFT BODYWERKS, INC., § IN THE DISTRICT COURT § Plaintiff. § § vs. § § ELITE AUTO BODY LLC, § dba PRECISION AUTO BODY, § REY R. HERNANDEZ, § TRAVIS COUNTY, TEXAS YESICA DIAZ, and § DAVID DAMIAN, § § Defendants, § § vs. § § JOHN BOREK, § § Third-Party Defendant. § 345th JUDICIAL DISTRICT

AFFIDAVIT OF JOHN BOREK

STATE OF TEXAS § § (

TRAVIS COUNTY §

Before the undersigned authority, on this day appeared John Borek, who, after being duly

sworn, states as follows:

l. "My name is John Borek. I am over the age of eighteen years, am of sound mind,

and capable of making this affidavit. I am the founder and general manager of Autocraft

Bodywerks, Inc. ("Autocraft"), a full service high-end collision restoration auto-repair shop I

established in 1984. I have personal knowledge of the facts and statements contained in this

affidavit, and they are tme and cotTect. • 2. Over the span of the three decades, during which I built Autocraft's business and

customer base, I have spent substantial time and money developing specific business practices

and forms, and ct·eating a unique compilation of technical setvice bulletins and other information Page I 770588v.l 57457·1 EXHIBIT A 41 1 which have been used in Autocraft's business and have provided Autocraft with an advantage

over its competitors who do not know or use Autocraft's trade secrets and confidential and

proprietary information. Autocraft has reason to believe David Damian and other former

employees who recently left and joined Rey Hernandez and Precision Auto Body ("Precision

Auto") may have used or disclosed Autocraft's confidential, proprietary, and trade secret

infmmation they obtained while employed with Autocraft in the course of their work for

Precision Auto to provide Autocraft's competitor with an unfair competitive advantage. • 3. Although Autocraft welcomes honest and fair competition, it will not tolerate

dishonesty and unfair competition through use of its trade secrets and confidential and

proprietaty information by any of its former employees to provide a competitor with an unfair

competitive advantage in the marketplace. For such reason, Autocraft commenced this suit

against the Defendants to stop their use of Autocraft's trade secrets and proprietary and

confidential information to unfairly compete in the marketplace. Autocraft has not asserted any

claim to interfere with anyone's constitutional rights to free speech or association in this action.

4. Since Rey Hernandez started Precision Auto in the 2009 time frame, a few f01mer

employees of Autocraft joined Rey Hernandez at Precision Auto without incident. After David

Damian and Joyce Garcia joined Precision Auto, however, Autocraft learned Precision Auto was

using its proprietary business fmms and documents, and that a copy of its proprietary

compilation of Technical Service Bulletins had been taken to Precision Auto rather than

Precision Auto spending the time and money subscribing to the various publications and

searching through the tens of thousands of Technical Service Bulletins issued over the years to

create its own compilation of information. I did not give David Damian, Joyce Garcia, or any

other Autocraft employee, consent to take any proprietary work product, confidential

information or trade secret with them when they left. Page2 770588v.l 57457-1

l 42 5. David Damian and Joyce Garcia, while employed at Autocraft and in connection

with their job responsibilities, also had access to personnel information on employees, including

salary inf01mation, and Autocraft's financial information, including profit and loss statements,

which in the hands of a competitor provides it with an unfair competitive advantage.

6. It is my understanding and belief that David Damian and/or Joyce Garcia, and

possibly others, provided Rey Hernandez with most, if not all, of the above-mentioned

confidential, proprietary and trade secret documents and information, and that they are now

using the documents and information to unfairly compete with Autocraft. In fact, I saw a

photograph of the service forms used at Precision Auto and they appear to be identical to

Autocraft's proprietary business forms which have evolved and been tailored based on my thirty

years of experience in the industry.

7. It is also my understanding and belief that Precision Auto has used Autocraft's

confidential information, including employee salary information, to recruit and solicit more

· Autocraft employees to join Precision Auto. Any such use of Autocraft's confidential personnel

and financial information would be improper and unfair.

8. This lawsuit has nothing to do with violating anyone's rights to ft·ee speech or free

association. Instead, the lawsuit is intended to protect Autocraft's trade secrets and proprietary

and confidential information."

'

I 770588v.l 57457-1

43 1 Further, Affiant sayeth naught.

SWORN TO AND SUBSCRIBED before me on this I7 day of January, 2015.

Notary Public, State of Texas

Page4 770588v.l 57457-1

44 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

[5] restrictions on discovery during pendency of a TCPA motion to dismiss do not violate open-courts provision; and 2014 WL 411672 Only the Westlaw citation is currently available. [6] TCPA's definition of “right of association” was not SEE TX R RAP RULE 47.2 FOR unconstitutionally overbroad or void for vagueness as applied DESIGNATION AND SIGNING OF OPINIONS. in present case.

MEMORANDUM OPINION Court of Appeals of Texas, Affirmed in part, reversed in part, and remanded. Austin.

COMBINED LAW ENFORCEMENT West Headnotes (14) ASSOCIATIONS OF TEXAS and John Burpo, Appellants v. [1] Appeal and Error Mike SHEFFIELD, Appellee. On motions relating to pleadings The Court of Appeals had jurisdiction under civil No. 03–13–00105–CV. | Jan. 31, 2014. practices and remedies code over interlocutory appeal from the denial of a motion under Texas Synopsis Citizens Participation Act (TCPA) to dismiss Background: Former employee of labor union representing defamation action, regardless of whether TCPA law enforcement officers filed defamation action against expressly authorized the interlocutory appeal. union and its executive director. Defendants moved to dismiss V.T.C.A., Civil Practice & Remedies Code §§ action pursuant to the Texas Citizens Participation Act 27.008, 51.014(a)(12). (TCPA). The District Court, Travis County, 353rd Judicial District, Amy Clark Meachum, J., denied motion. Defendants 3 Cases that cite this headnote brought interlocutory appeal.

[2] Appeal and Error Constitutional questions Holdings: The Court of Appeals, Jeff Rose, J., held that: Labor union and its executive director could not raise arguments relating to their free speech [1] former employee's defamation allegations related in part or petition rights on interlocutory appeal from to defendants' exercise of right of association, such that the denial of their motion under Texas Citizens former employee was required under TCPA to prove prima Participation Act (TCPA) to dismiss defamation facie case with respect to allegations relating to exercise of action by former employee, though union and that right; executive asserted those rights in an affirmative defense, where their motion to dismiss asserted [2] defamation action arose in context of a labor dispute, such only the right of association. V.T.C.A., Civil that former employee was required to prove actual malice; Practice & Remedies Code §§ 27.005, 51.014.

[3] there was no clear and specific evidence that statements Cases that cite this headnote made in exercise of defendants' right of association were made with actual malice; [3] Pleading [4] standard of proof for surviving motion to dismiss Frivolous pleading under TCPA does not violate open-courts provision of state Pleading constitution; Application and proceedings thereon Former employee's defamation claim against labor union representing law enforcement

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 1 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

officers and against union's executive director officers and against union's executive director related to those defendants' exercise of right related to those defendants' exercise of right of association, such that former employee of association, such that former employee was required to prove prima facie case to was required to prove a prima facie case to survive motion to dismiss under Texas Citizens survive motion to dismiss under Texas Citizens Participation Act (TCPA), to the extent that Participation Act (TCPA), to the extent the claim concerned an e-mail sent by executive claim was based on alleged statements by union director to union's board and staff, stating that officials to president of a constituent local executive board had directed him to file criminal police association that criminal charges could charges against former employee for deleting be filed against former employee by union for computer files that were union's property, and what former employee had done. V.T.C.A., that union's corporate attorney had advised that Civil Practice & Remedies Code §§ 27.001(2), such conduct was a criminal act under state law. 27.005(b, c). V.T.C.A., Civil Practice & Remedies Code §§ 27.001(2), 27.005(b, c). Cases that cite this headnote

Cases that cite this headnote [6] Pleading Frivolous pleading [4] Pleading Pleading Frivolous pleading Application and proceedings thereon Pleading Former employee's defamation claim against Application and proceedings thereon labor union representing law enforcement Former employee's defamation claim against officers and against union's executive director labor union representing law enforcement did not relate to those defendants' exercise of officers and against union's executive director their right of association, so as to require former related to those defendants' exercise of right employee to prove a prima facie case to avoid of association, such that former employee dismissal under the Texas Citizens Participation was required to prove a prima facie case Act (TCPA), to the extent the claim was based to survive motion to dismiss under Texas on an alleged remark by union's corporate Citizens Participation Act (TCPA), to the extent attorney that a local police chief had created the claim related to an alleged comment by a special employment position for the former executive director to a prospective employee, employee after union fired him, where there made while prospective employee was president was no allegation or evidence that counsel made of a constituent local police association, that alleged remark to a member of union. V.T.C.A., executive director and union were still dealing Civil Practice & Remedies Code §§ 27.001(2), with former employee because of former 27.005(b, c). employee's “criminal conduct.” V.T.C.A., Civil Practice & Remedies Code §§ 27.001(2), Cases that cite this headnote 27.005(b, c). [7] Pleading Cases that cite this headnote Frivolous pleading Pleading [5] Pleading Application and proceedings thereon Frivolous pleading Former employee's defamation claim against Pleading labor union representing law enforcement Application and proceedings thereon officers and against union's executive director Former employee's defamation claim against did not relate to those defendants' exercise of labor union representing law enforcement their right of association, so as to require former

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 2 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

employee to prove a prima facie case to avoid necessary for former employee to establish dismissal under the Texas Citizens Participation prima facie case of defamation on motion Act (TCPA), to the extent the claim was based on of union and executive director under Texas alleged remarks by union's corporate attorney to Citizens Participation Act (TCPA) to dismiss a county district attorney attempting to persuade a claim arising from defendants' exercise of the latter to permit corporate attorney to present right of association. V.T.C.A., Civil Practice & evidence to a grand jury in pursuit of an Remedies Code § 27.005. indictment of former employee, where there was no allegation of evidence that district attorney Cases that cite this headnote was a member of union. V.T.C.A., Civil Practice & Remedies Code §§ 27.001(2), 27.005(b, c). [10] Libel and Slander Existence and Effect of Malice Cases that cite this headnote Pleading Frivolous pleading [8] Libel and Slander Pleading Qualified Privilege Application and proceedings thereon Defamation action by former employee against There was no clear and specific evidence labor union and its executive director in that statements by officials of labor connection with alleged statements attributing union representing law enforcement officers criminal conduct to former employee arose in to president of constituent police officer context of a “labor dispute” under National association, that conduct of a former employee Labor Relations Act (NLRA), such that former of union “could go criminal,” that it was “going employee was required to prove actual malice; to court,” and that criminal charges could be former employee invoked NLRA regarding the filed against former employee by union for dispute twice by filing unfair labor practices what he had done were untrue or were made claims with National Labor Relations Board with reckless disregard for the truth of those (NLRB) months after his employment was statements, as necessary for former employee terminated. National Labor Relations Act, § 2(9), to establish prima facie case of defamation and 29 U.S.C.A. § 152(9). thereby survive motion of union and executive Cases that cite this headnote director under Texas Citizens Participation Act (TCPA) to dismiss claim as being a response to their exercise of right of association. V.T.C.A., [9] Libel and Slander Civil Practice & Remedies Code § 27.005. Existence and Effect of Malice Pleading Cases that cite this headnote Frivolous pleading Pleading [11] Constitutional Law Application and proceedings thereon Conditions, Limitations, and Other There was no evidence that e-mail from Restrictions on Access and Remedies executive director of labor union to union's Pleading board and staff, stating that executive board had Application and proceedings thereon directed him to file criminal charges against Texas Citizens Participation Act (TCPA) does former employee for deleting computer files not impose a higher standard of proof, with that were union's property, and that union's respect to surviving a motion to dismiss an corporate attorney had advised that such conduct action filed in response to the exercise of free was a criminal act under state law, was untrue speech, petitioning, or association rights, than or that executive director acted with reckless would be required at trial, and thus does not, disregard for truth of those statements, as under that theory, violate open-courts provision

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 3 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

of state constitution; TCPA requires only that claimant produce evidence that establishes a Cases that cite this headnote prima facie case, and thus does not increase the preponderance-of-evidence standard applicable [14] Constitutional Law at trial, despite characterizing evidence needed Particular Issues and Applications to support prima facie case as “clear and Constitutional Law specific.” Vernon's Ann.Texas Const. Art. 1, § Course and conduct of proceedings in 13; V.T.C.A., Civil Practice & Remedies Code § general 27.005(c). Pleading Cases that cite this headnote Frivolous pleading Definition in Texas Citizens Participation [12] Constitutional Law Act (TCPA), stating that the exercise of Conditions, Limitations, and Other the “right of association” encompassed a Restrictions on Access and Remedies communication between individuals who join together to express, promote, pursue or defend Pretrial Procedure common interests, was not unconstitutionally Objections and protective orders overbroad under First Amendment or void Restrictions on discovery during the pendency for vagueness under due process principles as of a motion to dismiss under Texas Citizens applied in action in which labor union and Participation Act (TCPA) are reasonable and its executive director successfully moved for therefore do not violate a plaintiff's rights dismissal of defamation claims asserted by under open-courts provision of state constitution; former employee in connection with statements provisions staying discovery are tempered regarding alleged criminal conduct on his part. by provisions permitting discovery upon a U.S.C.A. Const.Amends. 1, 14;; V.T.C.A., Civil showing of good cause, and stay provisions Practice & Remedies Code §§ 27.001(2), 27.005. can curtail potentially costly discovery in a potentially meritless case, thus serving TCPA's Cases that cite this headnote goal of keeping litigation from being used to chill exercise of constitutional rights. Vernon's Ann.Texas Const. Art. 1, § 13; V.T.C.A., Civil Practice & Remedies Code §§ 27.003(b), From the District Court of Travis County, 353rd Judicial 27.006(b). District, No. D–1–GN–12–003281; Amy Clark Meachum, Judge Presiding. Cases that cite this headnote Attorneys and Law Firms [13] Constitutional Law Sean E. Breen, Howry, Breen & Herman, L.L.P., Randy T. Costs and fees; indigency Leavitt, The Law Office of Randy T. Leavitt, Austin, TX, for Costs appellee. On dismissal, nonsuit, default, or settlement Texas Citizens Participation Act (TCPA) does Molly Lawrence, Tanner and Associates, P.C., James Roddy not mandate fee awards to a defendant that Tanner, Fort Worth, TX, B. Craig Deats, Deats Durst, Owen prevails on motion to dismiss an action arising & Levy, P.L.L.C., Austin, TX, for appellant. from the exercise of constitutional rights of Before Justices PURYEAR, ROSE, and GOODWIN. expression and association, and, therefore, TCPA's fee award provisions do not violate open-courts guarantees on their face. Vernon's MEMORANDUM OPINION Ann.Texas Const. Art. 1, § 13; V.T.C.A., Civil JEFF ROSE, Justice. Practice & Remedies Code § 27.009(a).

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 4 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

*1 Combined Law Enforcement Associations of Texas and laptop to CLEAT and says he was assured by the employee John Burpo brought this interlocutory appeal of the denial receiving it that his actions were acceptable. of their motions to dismiss Mike Sheffield's defamation claims. Appellants contend that they triggered the dismissal Appellants assert that CLEAT's practice was always to procedures of the Texas Citizens Participation Act by control the computer-scrubbing process, downloading files showing that Sheffield filed his lawsuit in response to their beforehand to avoid the complete loss of data. CLEAT's exercise of their right of association. See Tex. Civ. Prac. & expert analyzed Sheffield's computer and found some Rem.Code §§ 27.001–.011. Appellants contend that Sheffield data—including some partial documents and emails—that failed to respond with clear and specific evidence showing appellants contend support their reasons for firing Sheffield. a prima facie case for each essential element of his claims Appellants contend that the data was potentially relevant as required to avoid dismissal under the TCPA. They further in legal proceedings relating to the firing that followed— contend that the trial court erred by failing to award them their complaints and suits by both sides that have been rejected, costs, reasonable attorney's fees, and other expenses incurred dismissed, or withdrawn. in defending this suit. *2 The parties have engaged in a series of legal We will reverse the trial court's order denying the motion wranglings. Sheffield filed unfair labor practices grievances to dismiss with respect to claims based on comments made and complaints against CLEAT with his union and the among CLEAT members and will dismiss those claims National Labor Relations Board. The union declined to pursuant to the TCPA. We will affirm the order denying the pursue the grievance in arbitration, and the NLRB dismissed motion to dismiss Sheffield's claim based on comments made one complaint before Sheffield withdrew the other two. to the district attorney and other unnamed persons. We will Meanwhile, Sheffield returned to work at the Austin Police remand the case for further proceedings consistent with this Department, which prompted APD's Special Investigations opinion, including consideration by the trial court of an award Unit to investigate CLEAT's allegations that Sheffield had of costs and fees relating to the motion to dismiss. committed a crime by scrubbing his CLEAT computer's memory. APD found no criminal element in the conduct by Sheffield. According to APD's memo, however, its investigation was limited by CLEAT's decision not to FACTUAL BACKGROUND supply APD with evidence because CLEAT wanted either CLEAT is a labor union that represents law enforcement Williamson County or federal authorities to investigate. APD officers. Burpo was its executive director, and Sheffield also referred the issue to the FBI's cybercrimes unit which worked for CLEAT as a field service representative, having found “no federal [criminal] element” in Sheffield's behavior. retired from the Austin Police Department. He was assigned Sheffield averred that the Lockhart Police Department (where to help various local police associations including the Austin he also worked post-CLEAT) also investigated and “likewise Police Association (APA). After disagreements relating to cleared [him].” The Williamson County grand jury in August the scope and manner of Sheffield's interactions with APA 2012 declined to indict Sheffield. CLEAT states that in members, Burpo fired him on July 18, 2011. August 2012 it filed a conversion action against Sheffield in Williamson County that was transferred to Travis County and The comments giving rise to the defamation claims in this then nonsuited. case relate to Sheffield's conduct with respect to his CLEAT- issued laptop computer in the aftermath of his firing. When he was fired, Sheffield had his CLEAT computer at home. PROCEDURAL BACKGROUND Sheffield asserts by affidavit that the standard practice at CLEAT was to erase a departing employee's computer, Sheffield's defamation suit is based on comments allegedly reprogram it, and then give it to another employee. Sheffield made by Burpo and others associated with CLEAT. The core states that a computer store technician saved his personal files of Sheffield's complaint in his live petition is as follows: to a thumb drive. Sheffield says he then took the computer home and deleted data from the laptop's hard drive intending [O]n one or more occasions, the to prevent disclosure of personal information. He turned in his Defendants defamed Mr. Sheffield by uttering and/or broadcasting

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 5 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

and/or repeating statements and false allegations that Mr. Sheffield (1) An email sent on January 4 from Burpo to the CLEAT committed criminal acts in connection board and staff. 2 Burpo sent the email after the NLRB with his employment with CLEAT. set a hearing on Sheffield's complaint that he was fired Those allegations included that for violating an overly broad limitation on work-related Sheffield inappropriately accessed communications. In the email, Burpo discussed the nature CLEAT's computer system and and consequences of the NLRB's action. Sheffield focuses deleted files with the intention of on this statement, “The Executive Board has directed me harming CLEAT. Upon information to file criminal charges against Sheffield for deleting files and belief, such false accusations were that were the property of CLEAT which [CLEAT attorney] broadcast to 70 plus police officers and Rod Tanner advises is a criminal act under Texas law.” former co-workers of Mr. Sheffield, at least. The statements were made by 2 This is the email that appellants asserted was the sole an officer or agent of CLEAT acting basis of Sheffield's complaint. within his or her scope of authority in publishing the defamatory statement. (2) An alleged comment by Burpo to Corpus Christi Police Officers Association President Mike Staff in the summer. Appellants moved to dismiss this claim under the TCPA, a Staff said in an affidavit that Burpo offered him a job statute enacted by the Texas Legislature in 2011 to “safeguard with CLEAT and discussed an ongoing reshuffling within the constitutional rights of persons to petition, speak freely, CLEAT. According to Staff, Burpo told him that “he and associate freely, and otherwise participate in government to CLEAT were still dealing with Mike Sheffield because the maximum extent permitted by law and, at the same time, of what Mr. Burpo told me was Mr. Sheffield's ‘criminal protect the rights of a person to file meritorious lawsuits conduct’ and that he thought that would end soon.” for demonstrable injury.” 1 Tex. Civ. Prac. & Rem.Code § 27.002. One way the statute seeks to protect those rights is by (3) Alleged statements various CLEAT officials made providing an early dismissal mechanism for certain categories to Laredo Police Association President Luis Dovalina. of lawsuits. If a defendant shows by a preponderance of the In his affidavit, Dovalina states that CLEAT Region 2 evidence that the plaintiff's suit is based on, relates to, or is Director Mark Guerra “would not or could not provide in response to the defendant's exercise of the rights listed in an answer to why Mr. Sheffield was terminated but section 27.002, the TCPA requires dismissal of the suit unless did state to me ‘it could go criminal, for what he the party bringing the legal action “establishes by clear and did.’ “ Although Dovalina said he asked for specifics specific evidence a prima facie case for each essential element on Sheffield's termination, he said he never received of the claim in question.” See id. §§ 27.003, .005(c). The them and was not told that “a grand jury and other TCPA must be “construed liberally to effectuate its purpose investigations had never led to any charges against and intent fully.” Id. § 27.011(b). In their motions to dismiss Mr. Sheffield.” Dovalina said that, when he later asked under the TCPA, appellants asserted that Sheffield's suit was Burpo about Guerra's comments, Dovalina said that in response to a single email Burpo sent to the CLEAT board Burpo “informed me that it was ‘going to court,’ and that and staff. They argued that TCPA applies because Sheffield's he would brief me on it at a later date” but never did. He suit impinges on their right of association and that Sheffield averred that three or four CLEAT officials “stated to me could not establish a prima facie case for defamation. that criminal charges could be filed against Sheffield by CLEAT for what Mr. Sheffield had done.” 1 There is nothing in the plain language of the statute that (4) Statements allegedly made by CLEAT corporate limits its scope, as Sheffield argues, to a media defendant counsel John Curtis that APD chief Art Acevedo or solely to public participation in government. created a special employment position for Sheffield *3 In his response to appellants' motions to dismiss, after CLEAT fired him. Sheffield asserts that this Sheffield listed five communications that he alleges were allegation (a) was false because the positions were made in 2012 and were defamatory: created previously and independent of his employment situation and (b) was “tantamount to an assertion of

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 6 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

conduct violating Section 39 .02 of the Texas Penal Code” governing abuse of official capacity. II. Applicability of the TCPA Appellants contend in their second issue that the trial court (5) Statements Curtis allegedly made to Williamson erred if it denied the motions to dismiss on grounds that County District Attorney John Bradley attempting to the TCPA does not apply in this case. The party seeking persuade him to allow Curtis to present information to dismissal of a legal action under the TCPA must show by a the grand jury in pursuit of an indictment of Sheffield on preponderance of the evidence that the legal action is “based grounds that he had violated Penal Code chapter 33. on, relates to, or is in response to the party's exercise of the right of free speech, the right to petition or the right of The district court denied the motions to dismiss without association.” Tex. Civ. Prac. & Rem.Code § 27.005. “ ‘Legal stating a basis 3 and was not asked to make findings of fact action’ means a lawsuit, cause of action, petition, complaint, or conclusions of law in support of its decision. cross-claim, or counterclaim or any other judicial pleading or 3 Appellants also sought dismissal for want of jurisdiction filing that requests legal or equitable relief.” Id. § 27.001(6). and through special exceptions, but those motions are not Appellants argue that the TCPA does apply to the disputed presented in this appeal because interlocutory appeal is statements. authorized only from the denial of the motion to dismiss under the TCPA. See Tex. Civ. Prac. & Rem.Code §§ As an initial matter, we note that appellants cited only 27.008, 51.014. the right of association in their motions to dismiss, so the trial court's rejection of that theory is the only one of the three rights protected under the TCPA that is preserved DISCUSSION here for appellate review. See Tex.R.App. P. 33.1; Tex. Civ. Prac. & Rem.Code § 27.005. Because interlocutory *4 Appellants contend that the trial court erred in denying appeals are allowed only in limited situations, we strictly their motions to dismiss because the TCPA applies and construe the statute permitting such appeals. See Tex. Civ. Sheffield failed to establish a prima facie case of defamation. Prac. & Rem.Code § 51.014; see also Bally Total Fitness They also contend that the trial court erred by failing to award Corp. v. Jackson, 53 S.W.3d 352, 355 (Tex.2001). Although them attorney's fees. appellants argue on appeal that their statements relating to prosecution are within the TCPA as exercises of the I. Jurisdiction over this appeal rights of free speech or petition, they listed those claims as [1] [2] By their first issue, appellants respond to appellee's their thirteenth affirmative defense but did not raise those motion to dismiss this interlocutory appeal. Sheffield arguments at the trial court in their motions to dismiss. contends that this Court lacks jurisdiction because the TCPA Because they did not raise the free speech or petition rights as does not expressly authorize an interlocutory appeal when the grounds for dismissal under the TCPA, the trial court did not trial court expressly denies the motion. Sheffield contends reject them in denying the motions to dismiss, and arguments that interlocutory appeal is authorized only when the trial relating to those contentions are not properly within the court fails to rule and the motion to dismiss is overruled by limited scope of this interlocutory appeal. See Tex.R.App. P. operation of law under the statute. See Tex. Civ. Prac. & 33.1(a)(1). Further, although the TCPA is intended to protect Rem.Code § 27.008. This Court has determined, however, the exercisers of certain constitutionally protected rights from that regardless of the meaning of the original statute, the unfounded lawsuits, there is no showing that the TCPA's civil practice and remedies code as amended in 2013 confers dismissal process is a fundamental right. We find no statutory jurisdiction over appeals such as this one. See Kinney v. BCG or judicial exception permitting these arguments to be raised Att'y Search, Inc., No. 03–12–00579–CV, 2013 WL 4516106 for the first time in this interlocutory appeal of the denial of at *4 (Tex.App.-Austin Aug.21, 2013, no pet. h.); see also appellants' motions to dismiss. We overrule those portions Tex. Civ. Prac. & Rem.Code § 51.014(a)(12); Act of May of issue two concerning arguments about the exercise of the 24, 2013, 83d Leg., H.B. 2935, ch. 1042, § 4. Based on the rights of free speech and petition. For the same reason, we reasoning in that opinion, we sustain appellants' first issue, will not consider the merits of the remaining appellate issues deny Sheffield's motion to dismiss, and proceed to consider with respect to the free-speech and petition theories but rather the remaining issues raised on appeal. will evaluate appellants' claims under the rights asserted in their motion to dismiss, i.e. the right of association.

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*5 [3] [4] [5] Appellants plainly asserted in their motion unknown persons. We overrule issue two on those claims. to dismiss that Sheffield's claim related to their exercise of Because appellants did not show by a preponderance of the right of association. The TCPA defines the exercise of the evidence that these statements were communications made right of association as “a communication between individuals in the exercise of appellants' right of association as defined who join together to collectively express, promote, pursue, by the TCPA, the burden did not shift to Sheffield to present or defend common interests.” Tex. Civ. Prac. & Rem.Code a prima facie case on these claims to avoid dismissal, and § 27.001(2). Affidavits from Burpo, Staff, and Dovalina we need not consider the propriety of the denial of the show that three of the communications (those set forth above motion to dismiss these claims any further. See Tex. Civ. in numbered paragraphs 1–3) that Sheffield alleges to be Prac. & Rem.Code §§ 27.001(2), .005(b). With respect to defamatory fall within the TCPA's definition of the exercise the communications described in paragraphs 1, 2, and 3 of the right of association. Burpo's email to the CLEAT above, evidence showed that these communications were board and staff regarding Sheffield's NLRB claim as well made between or among CLEAT members and, thus, that as Burpo's and CLEAT staff's comments to two presidents the trial court erred if it dismissed based on a finding that of CLEAT's constituent local police associations (Corpus appellants did not show that Sheffield's claims related to their Christi's Staff and Laredo's Dovalina) were made between or exercise of the right of association. We sustain issue two with among members of CLEAT. In the statute's terms, these were regard to the communications described in paragraphs 1, 2, communications between individuals who joined together and 3 above. in CLEAT to collectively express, promote, or defend the common interests of police officers. See id. § 27.001(2). Sheffield's suit against CLEAT and Burpo for defamation III. Prima facie case through those statements plainly is based on, relates to, or is *6 By their third issue, appellants assert that the trial court in response to these communications made in the exercise of erred if it denied their motions to dismiss by concluding that the right of association, triggering Sheffield's burden to prove Sheffield made a prima facie case on each element of his a prima facie case on these complaints. claims regarding the communications described in paragraphs 1, 2, and 3 above as required to avoid dismissal of those claims [6] [7] Appellants did not show by a preponderance of under the TCPA. To make a prima facie case of defamation, the evidence that two other communications (those set forth the plaintiff must prove that the defendant (1) published a above in numbered paragraphs 4–5) that Sheffield alleged statement (2) that was defamatory concerning the plaintiff (3) were made by CLEAT's corporate attorney were within the while acting with either actual malice or negligence regarding TCPA's definition of the exercise of the right of association: the truth of the statement, depending on the nature of the (1) Curtis's allegations that APD chief Art Acevedo created parties and the dispute. See WFAA–TV, Inc. v. McLemore, a special employment position for Sheffield after CLEAT 978 S.W.2d 568, 571 (Tex.1998). Persons who are not public fired him, and (2) Curtis's conversation with the Williamson figures or involved in public issues typically need show County district attorney when asking that he file charges. only that the defendant knew or should have known that There is no allegation or evidence that Curtis made either set the defamatory statement was false. See Foster v. Laredo of these remarks to a member of CLEAT. Indeed, there is Newspapers, Inc., 541 S.W.2d 809, 819 (Tex.1976). no allegation or evidence regarding to whom Curtis allegedly said that Acevedo created a job for Sheffield. There is also Appellants contend that Sheffield had to meet the higher no allegation or evidence that then-district attorney Bradley intent standard because this dispute arose in the context of was a CLEAT member. Appellants have not shown by a labor dispute. In defamation claims arising out of labor a preponderance of the evidence that Curtis made these disputes, the plaintiff must show that the defendant acted communications to an individual with whom he had joined with actual malice in order to prevail in state court. The together to collectively express, promote, pursue, or defend Supreme Court has held that the National Labor Relations common interests. Act preempts most state laws related to labor disputes and vests exclusive jurisdiction for related formal legal disputes We conclude that the trial court did not err by denying in the NLRB. See San Diego Bldg. Trades Council, Local the motions to dismiss under the TCPA with respect to the 2020 v. Garmon, 359 U.S. 236, 243–44, 79 S.Ct. 773, 3 communications described in paragraphs 4 and 5 above- L.Ed.2d 775 (1959) (cited in Linn v. United Plant Card i.e., Curtis's communications with the district attorney or Workers of Am., Local 114, 383 U.S. 53, 59, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966)). The Garmon court excepted from that

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preemption those claims that are peripheral to the concerns his publication.” See St. Amant v. Thompson, 390 U.S. 727, articulated in the NLRA and that are based on interests 731, 88 S.Ct. 1323, 20 L.Ed.2d 262 (1968); Huckabee, 19 deeply-rooted in local concerns. Id. The Linn court wrote that S.W.3d at 420. Plaintiffs who must show actual malice have defamation was an issue of such deeply-rooted local interest the burden to prove that the defamatory statement was not that state courts could retain jurisdiction over defamation true. See Huckabee, 19 S.W.3d at 420. cases if the plaintiff showed the defendant had actual malice in making the defamatory statement. 383 U.S. at 64–65. The A timeline of the parties' legal proceedings is helpful to court opined that this approach balances the tensions among provide the context needed to assess whether each alleged preserving expressive leeway for participants in heated labor defamatory statement was made with knowledge of its falsity disputes, limiting use of state-court defamation suits as a or reckless disregard of its truth—i.e., whether Sheffield weapon in labor disputes, and allowing participants in those proved a prima facie case of defamation. Sheffield filed his disputes to defend their reputations from untruthful attacks. unfair labor practices claim with the NLRB on October 20, Id. 2011. On December 30, 2011, the NLRB set one of his labor dispute claims for hearing in early 2012. In February 2012, [8] While the seminal Supreme Court cases involved larger- APD's Special Investigation Unit found no criminal element scale labor disputes and activities like picketing (Garmon, present in Sheffield's behavior and the FBI's cybercrimes unit 359 U.S. at 237) and union organizing (Linn, 383 U.S. found no violations of federal law. Sheffield filed another at 55), this case, too, presents a labor dispute under the NLRB complaint on March 12, 2012, but withdrew it on April law. The NLRA defines “labor dispute” as “any controversy 30, 2012. He withdrew his remaining NLRB complaint on concerning the terms, tenure, or conditions of employment ... July 19, 2012. The Williamson County Grand Jury declined regardless of whether the disputants stand in the proximate to indict Sheffield in August 2012. We will consider each relation of employer or employee.” 29 U.S.C. § 152(9). allegedly defamatory statement in the context of the speaker's Sheffield was a CLEAT employee who had his tenure ended, knowledge at the time of the statement. then disputed the terms of his employment and their role in his termination. Sheffield plainly elevated this controversy above (1) The January 4, 2012 email sent from Burpo to the a standard job-termination case when he invoked the NLRA CLEAT board and staff stating, “The Executive Board regarding this dispute twice by filing unfair labor practices has directed me to file criminal charges against Sheffield claims with the NLRB months after his employment was for deleting files that were the property of CLEAT which terminated. His complaints—first that CLEAT discharged [CLEAT attorney] Rod Tanner advises is a criminal act him for union activities and for violating an overly broad under Texas law.” workplace rule, and then that CLEAT retaliated against him for filing the first unfair labor practices claim—show that the [9] Sheffield produced no evidence that, when Burpo sent circumstances of this case constitute a labor dispute as defined this email, appellants either knew that any aspect of this by the NLRA. See id. statement was false or recklessly disregarded whether it was true. Although Sheffield clearly disagrees that his actions *7 For such cases, the Supreme Court adopted the standard were criminal or warranted criminal charges, he has not of actual malice used in defamation cases brought by public alleged or established a prima facie case that Burpo was officials against media defendants. Linn, 383 U.S. at 65 reckless with the truth of his statement about the board's (citing New York Times Co. v. Sullivan, 376 U.S. 254, 84 direction to him or CLEAT's attorney's advice to him. There S.Ct. 710, 11 L.Ed.2d 686 (1964)). “Actual malice” in the is no showing that the investigations Sheffield cites as defamation context does not necessarily include ill will, spite, exonerating him were complete when Burpo sent the email, or evil motive. Sullivan, 376 U.S. at 279–80; Huckabee v. or that the allegations had been presented to and rejected by Time Warner Entm't Co., 19 S.W.3d 413, 420 (Tex.2000). the district attorney or grand jury. The only indication in the To establish actual malice, a plaintiff must prove that the record is that the investigations and presentation to the grand defendant made the statement “with knowledge that it was jury occurred after January 4, 2012. Sheffield has not shown false or with reckless disregard of whether it was true or not.” that Burpo made an untrue statement or had the requisite Sullivan, 376 U.S. at 279–80; Huckabee, 19 S.W.3d at 420. disregard for the truth of these statements when he sent the To establish reckless disregard, a plaintiff must prove that January 4, 2012 email. the publisher “entertained serious doubts as to the truth of

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 9 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

to the grand jury. The allegations did in fact go “to court”— *8 (2) Burpo's statement in the summer of 2012 to arguably in the grand jury presentation and definitely in the Corpus Christi Police Officers Association President Mike civil action. Sheffield failed to show by clear and specific Staff that Burpo “and CLEAT were still dealing with Mike evidence a prima facie case that appellants' statements to Sheffield because of what Mr. Burpo told me was Mr. Dovalina were not true, much less that appellants either Sheffield's ‘criminal conduct’ and that he thought that knew that Sheffield's conduct was not criminal or entertained would end soon.” serious doubts about the truth of their statements. See id. As such, Sheffield has failed to carry his burden to present The potentially defamatory aspect of this statement is the use a prima facie case that CLEAT defamed him with the of the term “criminal conduct.” APD's February investigation statements made by CLEAT staff. that found no criminal element in Sheffield's conduct does not prove that CLEAT knew this statement was false or recklessly *9 We sustain appellants' third issue with respect to disregarded whether it was true. Given the lack of evidence on the communications described in paragraphs 1, 2, and 3 the scope and purpose of APD's investigation and CLEAT's above. The trial court erred if it concluded that Sheffield alleged lack of cooperation with the investigation, Sheffield made a prima facie case of defamation with respect to the has not set out a prima facie case that APD's conclusion communications described in those three paragraphs. informed appellants that their statements were false or gave them serious doubts about their truth. Appellants, supported by CLEAT's attorney's opinion, insisted at least through the IV. Constitutional challenges August 2012 presentation to the Williamson County grand Sheffield contends that the TCPA is unconstitutional because jury that Sheffield committed a crime, and Sheffield has not its proof requirements unreasonably restrict his right of access presented a prima facie case that Burpo was reckless with to the courts for redress of his defamation claim and because regard to the truth of his statement. Even if the grand jury's the definition of the right to freely associate is vague and no-bill made any subsequent allegation of criminal conduct overbroad on its face or as applied. reckless, Sheffield did not present clear and specific evidence that the statement to Staff occurred after the grand jury's decision. We find no clear and specific evidence that, when Open courts attributing “criminal conduct” to Sheffield in a statement to The Texas Constitution provides that “[a]ll courts shall be Staff, appellants either knew that Sheffield's conduct was not open, and every person for an injury done him, in his criminal or entertained serious doubts about the truth of their lands, goods, person or reputation, shall have remedy by statements. See St. Amant, 390 U.S. at 731. due course of law.” Tex. Const. art. I, § 13. To prove that the statute violates the open-courts provision, Sheffield must (3) Statements to Laredo Police Association President show that (1) a cognizable common-law cause of action Luis Dovalina by CLEAT Region 2 Director Mark Guerra is being restricted and (2) the restriction is unreasonable that “it could go criminal, for what [Sheffield] did.” or arbitrary when balanced with the statute's purpose and Dovalina said Burpo “informed me that it was ‘going to basis. Hebert v. Hopkins, 395 S.W.3d 884, 901 (Tex.App.- court.’ “ Other CLEAT officials “stated to me that criminal Austin 2013, no pet.) (citing Sax v. Votteler, 648 S.W.2d 661, charges could be filed against Sheffield by CLEAT for 666 (Tex.1983)). Defamation is undisputedly a common-law what Mr. Sheffield had done.” cause of action. Cf. Houston Livestock Show & Rodeo, Inc. v. Hamrick, 125 S.W.3d 555, 583 (Tex.App.-Austin 2003, no [10] As with the statements to Staff, Sheffield did not pet.). pinpoint the timing of these alleged communications. It is also not clear exactly what it means for charges to “go criminal.” Sheffield argues that the open courts provision of the Texas This lack of specificity undermines Sheffield's attempt to Constitution guarantees, among other things, that (1) the make a prima facie case of defamation. Reaction to Sheffield's Legislature cannot impede access to the courts through actions “could ” have “go[ne] criminal”—and arguably unreasonable financial barriers, and (2) meaningful remedies did, briefly, in the Williamson County District Attorney's must be afforded so that the Legislature may not abrogate presentation of the allegations to the grand jury. Similarly, the right to assert a well-established common law cause of “criminal charges could [have been] filed,” and appellants action unless the reason for its action outweighs the litigants' attempted to make that happen by pursuing their presentation constitutional right of redress. See Trinity River Auth. v. URS

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Consultants, Inc., 889 S.W.2d 259, 262 (Tex.1994); see also [12] Sheffield also attacks the restrictions on discovery Tex. Const. art. I, §§ 8, 13. “A statute or ordinance that during the pendency of the motions to dismiss. Motions to unreasonably abridges a justiciable right to obtain redress dismiss under the TCPA must be filed, heard, and ruled upon for injuries caused by the wrongful acts of another amounts within 120 days of the service of the lawsuit, with some to a denial of due process under article I, section 13, and leeway upon a showing of good cause by the party (for the is, therefore, void.” Sax, 648 S.W.2d at 665. A claim of motion) or the court (for holding a hearing). The motions to unconstitutionality under the open courts provision will only dismiss under the TCPA must be filed no later than the sixtieth succeed if the claimant (1) has a cognizable common-law day after the action was served, unless the court extends the cause of action being restricted by a statute, and (2) the time to file a motion on a showing of good cause. Tex. Civ. restriction is unreasonable or arbitrary when balanced against Prac. & Rem.Code § 27.003(b). The hearing must be held the purpose and basis of the statute. Id. at 666. In applying not later than thirty days after the motion was served unless this test, we consider both the statute's general purpose and the court's docket requires a later hearing. Id. § 27.004. The the extent to which the claimant's right to bring a common- court must rule no later than thirty days after the hearing. law cause of action is affected. See id. Id. § 27.005(a). The filing of a motion to dismiss under the TCPA automatically stays all discovery. Id. § 27.003(c). The Sheffield contends that the TCPA unreasonably restricts his stay may be lifted—on motion by a party or the court and ability to pursue his claim for defamation in the following a showing of good cause—to permit specific and limited ways: (1) provisions that purport to impose a higher standard discovery relevant to the dismissal motion. Id. § 27.006(b). of proof than would ordinarily be required for the plaintiff/ respondent to prevail at trial; (2) unreasonable prohibitions, Sheffield has not shown that these restrictions are limitations or restrictions on discovery prior to the hearing on unreasonable. The TCPA's express purpose is to balance the motions to dismiss (particularly when coupled with the protections for persons exercising their constitutional rights expedited notice/hearing requirements under the act); and (3) of expression and association with those of persons filing mandatory (non-discretionary) fee awards and sanctions upon meritorious lawsuits for demonstrable injury. Id. § 27.002. dismissal. We will consider these in turn. The provisions staying discovery are tempered by provisions permitting discovery upon a showing of good cause. These *10 [11] We find no provision in the TCPA that purports provisions can curtail potentially costly discovery in a to impose a higher standard of proof than would be required possibly meritless case, thus serving the TCPA's goal of at trial. If the defendant shows by a preponderance of the keeping litigation from being used to chill the exercise evidence that the legal action impinges on a specified right, of constitutional rights, but can permit discovery upon a the TCPA requires only that the claimant produce evidence showing of good cause. They do not on their face violate the that establishes a prima facie case. See Tex. Civ. Prac. & open-courts provision. Our review of the case on appeal does Rem.Code § 27.005(c). “A prima facie case represents the not reveal how the stay of discovery as applied here prevented minimum quantity of evidence necessary to support a rational Sheffield from establishing a prima facie case through clear inference that the allegation of fact is true.” Rodriguez v. and specific evidence and violated the constitution. Printone Color Corp., 982 S.W.2d 69, 72 (Tex.App.-Houston [1st Dist.] 1998, pet. denied) (quoting Rosales v. H.E. Butt *11 [13] Finally, Sheffield has not shown that fees awards Grocery Co., 905 S.W.2d 745, 748 (Tex.App.-San Antonio are mandatory under the TCPA, much less that they violate 1995, writ denied)). That standard does not increase the the open-courts provision. The fees provisions are as follows: burden of proof. The characterization of the evidence needed to support the prima facie case as “clear and specific” does If the court orders dismissal of a legal action under this not alter the burden or cause it to exceed a preponderance of chapter, the court shall award to the moving party: the evidence. This TCPA motion-to-dismiss process imposes (1) court costs, reasonable attorney's fees, and other a burden to produce evidence almost certainly sooner than expenses incurred in defending against the legal action a typical trial, but so do the summary-judgment processes. as justice and equity may require; and See Tex.R. Civ. P. 166a. Sheffield has not shown that the TCPA requires a higher standard of proof, much less one that (2) sanctions against the party who brought the legal violates the open-courts provision of the Texas constitution. action as the court determines sufficient to deter the

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 11 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014)

party who brought the legal action from bringing similar words, an overbroad statute improperly limits protected actions described in this chapter. freedoms. Cf. id. In this case, however, Sheffield complains that the statutory “definition exceeds the scope of the Id. § 27.009(a). While the introductory language of Constitutional right of association”—that is, that the statute subsection (a) uses the seemingly mandatory term “shall provides more protection for freedom of association than award,” the subsequent language tempers the conditions for the constitution does. We do not find support for the making an award with discretionary terms like “justice” and proposition that a statute that provides extra protection for “equity” and “sufficient to deter.” Id. A trial court may decide a right violates the constitutional provision guaranteeing that justice and equity do not require that costs, fees, or that right. See Marquez v. State, 725 S.W.2d 217, 243 expenses be awarded and may determine that no sanctions (Tex.Crim.App.1987) (“[I]t is by now axiomatic that the are needed to deter the plaintiff from bringing similar actions. federal constitution provides only a minimum standard of These provisions do not mandate an award and do not violate protection to be afforded citizens of the several states and the the open-courts guarantees on their face. As no fees were states are free to provide greater protection by constitution or awarded, the provisions as applied here did not violate the statute.”) open-courts provisions. *12 Also, the challenged definition of the exercise of the right of association is not unconstitutionally vague. Sheffield Vagueness and overbreadth complains that the TCPA's definition of the exercise of [14] Sheffield attacks the TCPA's definition that the exercise the right of free association “could literally encompass all of the right of association encompasses “a communication communications or activities of any corporation, partnership, between individuals who join together to express, promote, joint venture, limited liability company, organization agency, pursue or defend common interests.” Tex. Civ. Prac. & association or group.” A statute is void for vagueness if Rem.Code § 27.001(2). He complains that this definition it (1) fails to give a person of ordinary intelligence fair exceeds the actual constitutional right, is overbroad facially notice of the conduct prohibited or (2) is so indefinite and/or as applied, and is unconstitutionally vague because that it encourages arbitrary and discriminatory enforcement. it could encompass all communications or activities of any Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 group. He cites no authority in support of his argument as L.Ed.2d 903 (1983); see also Clark v. State, 665 S.W.2d required. See Tex.R.App. P. 38.1(I), 38.2(a). 476, 482 (Tex.Crim.App.1984). To be void for vagueness, a statute must be so vague and indefinite as really to be no We note first that the TCPA's relationship to First standard at all. Jones v. City of Lubbock, 727 F.2d 364, 373 Amendment protections is somewhat unusual. In relevant (5th Cir.1984). We note initially that the TCPA does not part, the First Amendment prohibits the government from prohibit any activity. Sheffield argues that the plain language making laws abridging freedom of speech or the right of of the statute may invite an interpretation that it applies to an the people to peaceably assemble. See U.S. Const. amend. I. extremely broad right to association, but that does not render The TCPA attempts to shield people exercising certain rights the TCPA's definition improperly vague. The legislature's protected by the First Amendment not from governmental choice to require a preliminary substantiation of legal actions restriction, but from meritless civil claims. See Tex. Civ. relating to a broad range of organizational communications Prac. & Rem.Code §§ 27.002, .005. Rather than imposing does not create difficulty in determining whether or how a governmental limit on speech or association, the TCPA it applies. We need not determine the outer constitutional places preliminary proof requirements on parties to litigation limits of the TCPA, only whether the TCPA's terms are concerning the results of the exercise of those rights. permissible as applied to the statements at issue in this case, each of which generally relate to CLEAT's internal affairs Because of the nature of the relationship between the TCPA which are a common interest among CLEAT's members. and the First Amendment, Sheffield's complaint that the The TCPA's definition of the exercise of free association is definition of the right of association is too broad assumes not unconstitutionally overbroad or void for vagueness as an unusual posture. A statute is considered impermissibly Sheffield contends. overbroad only if, in addition to constitutionally proscribed activities, it restricts speech or conduct protected by the First Amendment. Walker v. State, 222 S.W.3d 707, 713 V. Attorney's fees (Tex.App.-Houston [14th Dist.] 2007, pet. ref'd). In other

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Appellants urge by their fourth issues that the trial court We reverse the trial court's denial of the motions to dismiss erred by failing to award them attorney's fees. As this is Sheffield's claim that Burpo and other CLEAT employees an interlocutory appeal and we have reversed some aspects defamed him in the statements described in numbered of the trial court's denial of appellants' motions to dismiss, paragraphs 1, 2, and 3 set out in section I of the Discussion affirmed other aspects, and determined that the attorney's fees above—namely, the January 4 email to CLEAT board and provisions are not mandatory, we conclude that the trial court staff and alleged statements to Mike Staff and Luis Dovalina. should consider whether attorney's fees are warranted when We conclude that Sheffield did not make the required prima it resumes its consideration of this case. Our resolution of the facie showing under the TCPA on each element of his first three issues has rendered our consideration of appellants' defamation claims relating to the statements in paragraphs 1, fourth issues moot. 2 and 3, and we dismiss those claims.

*13 We reject Sheffield's arguments that the TCPA is CONCLUSION unconstitutional and return the issue of costs and attorney's fees to the trial court. The case may proceed in the trial court We affirm the trial court's denial of the motions to dismiss consistent with our resolution of these issues on interlocutory Sheffield's claims that CLEAT defamed him through John appeal. The stay of discovery imposed by this Court's order Curtis's statements in numbered paragraphs 4 and 5 set out dated February 26, 2013, will expire on the same date as this in section I of the Discussion above. We find that appellants Court's plenary power over this appeal expires. did not make the required showing under the TCPA that those claims are within the scope of the exercise of appellants' right of association, which was the only constitutional basis for Sheffield's objection preserved for appeal.

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© 2014 Thomson Reuters. No claim to original U.S. Government Works. 13 Schimmel v. McGregor, 438 S.W.3d 847 (2014)

Application and proceedings thereon 438 S.W.3d 847 A “prima facie case” within meaning of Texas Court of Appeals of Texas, Citizens Participation Act (TCPA) prohibiting Houston (1st Dist.). dismissal if plaintiff establishes by clear and specific evidence a prima facie case for Bruce I. SCHIMMEL, Appellant each essential element represents the minimum v. quantity of evidence necessary to support a Gary McGREGOR, Teri McGregor, Kris rational inference that the allegation of fact is Hall, Soledad Pineda, Larry Bishop, true. V.T.C.A., Civil Practice & Remedies Code Cynthia Bishop, George Clark, Deborah § 27.005(c). Clark, and Carol Severance, Appellees. 1 Cases that cite this headnote

No. 01–13–00721–CV. | July 10, 2014. | Rehearing Overruled Sept. 18, 2014. [2] Pleading Application and proceedings thereon Synopsis Although attorney filed his motion to dismiss Background: Homeowners sued homeowners' association's homeowners' tortious interference lawsuit, under attorney for tortious interference with prospective business Texas Citizens Participation Act (TCPA), one relations in connection with the sale of their respective day late, in making a statement concerning the beachfront properties to city. Attorney moved to dismiss timeliness of the motion, trial court implicitly under Texas Citizens Participation Act (TCPA). The 113th ruled that if attorney technically filed the motion District Court, Harris County, denied motion. Attorney late he had good cause for the late filing, appealed. therefore, motion was timely filed. V.T.C.A. Civil Practice and Remedies Code § 27.003(b).

Holdings: The Court of Appeals, Evelyn V. Keyes, J., held Cases that cite this headnote that: [3] Pleading [1] motion was timely filed; Frivolous pleading Statements allegedly made by attorney to city, [2] attorney's statements did not come within “commercial which homeowners alleged tortiously induced speech” exemption from application of Act; city to back out of its agreements to purchase homeowners' properties, did not arises out of [3] attorney's statements were “matters of public concern,” the sale or lease of goods, services, or an supporting motion to dismiss; insurance product, or a commercial transaction, as required to come within commercial speech [4] homeowners failed to establish a prima facie case on their exception to application of Texas Citizens claim; Participation Act (TCPA); when attorney made the statements he was undisputedly working [5] remand on issue of attorney fees was warranted. as an attorney for homeowners association, attorney did not represent the city, nor was the Reversed and remanded. city a “potential buyer or customer” of his legal services. V.T.C.A. Civil Practice and Remedies Code § 27.010(b).

West Headnotes (12) 1 Cases that cite this headnote

[1] Pleading [4] Pleading

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Frivolous pleading [7] Torts Statements of homeowners' association's Improper means; wrongful, tortious or attorney, forming basis of homeowners' illegal conduct action for tortious interference with sale of their respective beachfront properties to city, Conduct that is merely “sharp” or unfair is were “matters of public concern,” supporting not actionable and cannot be the basis for an attorney's motion to dismiss under Texas action for tortious interference with prospective Citizens Participation Act (TCPA); challenged relations. statements, regardless of to whom the statements Cases that cite this headnote were made, were related to the dispute between homeowners and association about city's purchase of properties, and were made “in [8] Pleading connection with an issue under consideration or Frivolous pleading review” by the city and the Texas Department Pleading of Public Safety. V.T.C.A. Civil Practice and Application and proceedings thereon Remedies Code § 27.001(7). Torts Attorneys Cases that cite this headnote Homeowners' conclusory statements, unsupported by any facts, that actions of [5] Pleading homeowner associations' attorney caused city to Application and proceedings thereon fail to close on the purchases of their properties, Attorney's affidavits, in support of his motion did not establish, by clear and specific evidence, under Texas Citizens Participation Act (TCPA), a prima facie case on the essential element of stating that he was “personally acquainted with causation, as required to prevail on a claim for facts stated therein,” instead of stating that tortious interference with prospective business they were based on personal knowledge, were, relations, and, therefore, trial court erroneously nonetheless, competent and admissible. denied attorney's motion to dismiss under Texas Citizens Participation Act (TCPA); even if Cases that cite this headnote attorney had induced the city not to close on the purchase of the properties, the homeowners [6] Torts would have no cause of action against him for Prospective advantage, contract or relations; inducing city to do that which it had a right to expectancy do, which was not to purchase the homeowners' To prevail on a claim for tortious interference properties. V.T.C.A., Civil Practice & Remedies with prospective business relations, the plaintiffs Code § 27.005(b, c). must establish that (1) a reasonable probability 1 Cases that cite this headnote existed that the plaintiffs would have entered into a business relationship with a third party; (2) the defendant either acted with a conscious desire to [9] Torts prevent the relationship from occurring or knew Contracts the interference was certain or substantially Merely inducing a contract obligor to do what it certain to occur as a result of the conduct; (3) the has a right to do is not actionable interference. defendant's conduct was independently tortious or unlawful; (4) the interference proximately Cases that cite this headnote caused the plaintiffs injury; and (5) the plaintiffs suffered actual damage or loss as a result. [10] Appeal and Error Ordering New Trial, and Directing Further Cases that cite this headnote Proceedings in Lower Court

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When an appellate court determines that the trial court erroneously denied a defendant's motion to dismiss under the Texas Citizens Participation OPINION Act (TCPA), the appropriate disposition of the case is to reverse the trial court's denial of the EVELYN V. KEYES, Justice. motion and remand for the trial court to conduct In this interlocutory appeal, appellees Gary McGregor, further proceedings to determine damages and Teri McGregor, Kris Hall, Soledad Pineda, Larry Bishop, costs and to order dismissal of the suit. V.T.C.A., Cynthia Bishop, George Clark, Deborah Clark, and Carol Civil Practice & Remedies Code § 27.009(a)(1). Severance (collectively, “the Buy–Out Owners”), sued Bruce 1 Cases that cite this headnote Schimmel, an attorney hired by The Sands of Kahala Beach HOA, Inc. (“SOKB”), the homeowners' association for the subdivision in which the Buy–Out Owners lived, for tortious [11] Costs interference with prospective business relations, specifically, Evidence as to items the sale of their respective beachfront properties to the City Proof of attorney's fees should include the basic of Galveston. Schimmel moved to dismiss the Buy–Out facts underlying the lodestar, which are: (1) Owners' tortious interference claim pursuant to the Texas the nature of the work, (2) who performed the Citizens Participation Act (“TCPA”). 1 The trial court denied services and their rate, (3) approximately when Schimmel's motion to dismiss. In two issues, Schimmel the services were performed, and (4) the number contends that the trial court erroneously (1) found that of hours worked. Schimmel's complained-of actions did not involve “matters of Cases that cite this headnote public concern” and did not implicate the exercise of his right to petition, right of free speech, or right of association and thus erroneously denied his motion to dismiss; and (2) refused to [12] Appeal and Error award Schimmel court costs, reasonable attorney's fees, and Ordering new trial of certain issues only other expenses incurred in defending the action against him. Remand for further proceedings on issue of amount of attorney fees was warranted, 1 See TEX. CIV. PRAC. & REM.CODE ANN. §§ given that appellant was entitled to attorney 27.001–.011 (Vernon Supp.2013). fees and costs by establishing his entitlement We reverse and remand for further proceedings. to dismissal of tortious interference with prospective business relations suit under Texas Citizens Participation Act (TCPA). V.T.C.A., Civil Practice & Remedies Code § 27.009(a)(1). Background

Cases that cite this headnote The Buy–Out Owners all own beachfront property in the Sands of Kahala Beach, a small, gated subdivision located on Galveston Island. In September 2008, Hurricane Ike made landfall in the region and caused extensive property Attorneys and Law Firms damage to numerous homes, including those of the Buy– Out Owners. Because their homes were allegedly more than *849 Daniel Goldberg, Houston, TX, for Appellant. fifty percent damaged, the Buy–Out Owners sought to sell their properties to the City of Galveston under a Federal Wayne H. Paris, Paris Law Group, PLLC, Houston, TX, for Emergency Management Agency (“FEMA”) program called Appellees. the Hazard Mitigation Grant Program (“HMGP”). The Texas Panel consists of Justices KEYES, BLAND, and BROWN. Department of Public Safety assists in administering this program. The Buy–Out Owners and an attorney for the City of Galveston signed agreements in September 2009 concerning the purchase of the respective properties.

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SOKB and the remaining owners who owned property in the with prospective business relations. 2 The Buy–Out Owners subdivision but did not wish to sell their property to the City alleged that a reasonable probability existed that they would of Galveston (“the Remaining Owners”) opposed the Buy– have entered into a business relationship with the City of Out Owners' plans to sell. Under the HMGP, the properties Galveston, that Schimmel intentionally interfered with the that the City of Galveston purchased “were to be kept as open relationship, and that Schimmel's conduct was independently space in perpetuity.” *850 This requirement concerned the tortious and unlawful “in that Defendant Schimmel made SOKB, the entity in charge of collecting assessments and fraudulent statements about these Plaintiffs to third parties fees from the property owners within the subdivision, and the and persuaded others to illegally boycott these Plaintiffs.” Remaining Owners, who believed that the required public use of the purchased land and the loss of a private roadway and 2 SOKB did not join the homeowners in asserting this utility easement would cause the value of their properties to claim against Schimmel, and SOKB is not a party to drop. this appeal, which concerns only the Buy–Out Owners' tortious interference claim. Due to the dispute between the Buy–Out Owners, SOKB, The Buy–Out Owners alleged that Schimmel made several and the Remaining Owners, in October 2009, the City of misrepresentations that interfered with the purchase of their Galveston added a condition to the purchase of the Buy– properties by the City of Galveston. For example, in response Out Owners' properties: the president of SOKB's Board of to an article in the Houston Chronicle about the potential sale Directors (“the Board”) needed to sign a document releasing of the properties, Schimmel allegedly wrote to the author of the City from paying future homeowners' dues and other fees the article and stated that if the City purchased the properties and assessments to SOKB once it purchased the properties. the Remaining Owners would lose their access to a nearby In December 2009, SOKB hired Schimmel, an attorney, to state highway because the private road in the subdivision represent its interests and those of the Remaining Owners would be demolished. He also allegedly misrepresented to the in the dispute with the Buy–Out Owners. SOKB refused to author that all of the properties were behind the vegetation sign the releases and the Board voted to amend SOKB's by- line and “repairable for less than 50% of *851 their value,” laws to raise the voting requirement to remove directors from which would preclude them from participation in the HMGP. the Board, purportedly on Schimmel's advice. The Buy–Out Schimmel also allegedly made misrepresentations to the Owners subsequently held a special meeting of the Board Board concerning how the HMGP's definition of “substantial and elected new directors, including Kris Hall, one of the appellees, as the new President. Hall then signed the releases damage” to the properties was calculated; 3 to lot owners for the Buy–Out Owners' properties and delivered them to the in the subdivision that the buyout would not include the City of Galveston. opportunity to buy out all of the properties in the subdivision; and to various individuals that he “had no intention of Schimmel continued to work on behalf of SOKB and the changing any more By–Laws,” that the SOKB had been Remaining Owners to convince the City of Galveston not to working with the Buy–Out Owners to settle the dispute, and buy the Buy–Out Owners' properties until February 1, 2011, that developers no longer owned lots in the subdivision, even when he withdrew from representation. Ultimately, the time though they did. period to participate in the HMGP expired without the City of Galveston's having closed on the purchases of the Buy–Out 3 The Buy–Out Owners alleged that Schimmel told the Owners' properties. Board that “the definition of Substantial Damage is damages that total at least 50% of the pre-event fair The Buy–Out Owners, joined by SOKB, sued Schimmel on value of the property,” but he allegedly knew that the January 28, 2013, asserting claims for breach of fiduciary fair market value of the property was based on the local duty and equitable fee forfeiture. Neither of those claims is at appraisal district's value for the structure, which did not issue in this interlocutory appeal. include the value of the land. According to the Buy–Out Owners, “This is a significant distinction which the BOD later misrepresented to FEMA when they alleged false On March 28, 2013, the Buy–Out Owners and SOKB filed damage estimates.” their first amended petition. In addition to the breach of fiduciary duty and fee forfeiture claims, the Buy–Out Owners The Buy–Out Owners also alleged that Schimmel had asserted a claim against Schimmel for tortious interference “systematically excluded members from voting [at resident

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meetings] in order to boycott the Buyout owners,” such as by With respect to his alleged statements to the Board, Schimmel quickly setting a voting eligibility date to prevent owners who argued that those statements were “an exercise of the right had not paid their annual assessments from voting at meetings of association” and thus were entitled to protection under the and by recommending the elimination of voting by proxy, TCPA. which would affect the Buy–Out Owners who used their properties as vacation homes but did not live permanently Schimmel also argued that he was entitled to mandatory in the subdivision. The Buy–Out Owners further alleged that court costs, reasonable attorney's fees, and other expenses Schimmel had stated that neither SOKB nor its Board had incurred in defending the claim pursuant to Civil Practice the power to waive assessments as required by the City of and Remedies Code section 27.009(a). Schimmel attached Galveston to purchase the properties, and “[w]ithout releases, an affidavit setting out the amount of attorney's fees he had the [City] would not close on the properties and [Schimmel] incurred in defending against the Buy–Out Owners' claims. had the [Board] refuse to sign [the] release[s] which was an This affidavit set out the billing rate, the date tasks were unreasonable restraint or alienation. Defendant Schimmel's performed, the hours spent, and a description of the tasks position was that the Buy-[O]ut owners would not be allowed completed. to sell to the [City] under any circumstances.” The Buy–Out Owners alleged that they had suffered economic damages Schimmel attached numerous exhibits to his motion to consisting of the difference between the proposed buy-out dismiss. One of these exhibits was an order of dismissal in a values and the market values of their properties. suit filed by the Buy–Out Owners in the Southern District of Texas against the City of Galveston and several Department On May 28, 2013, Schimmel filed a motion to dismiss under of Public Safety officials involved in the administration of the TCPA. In this motion, Schimmel stated that the Buy– the HMGP. The Buy–Out Owners had raised claims under Out Owners served him with their first amended petition on the Fourteenth Amendment and Section 1983, 4 arguing that March 28, 2013, and that this motion to dismiss addressed the City of Galveston's failure to close on the purchase of only the tortious interference claim raised for the first time in their properties deprived them of funds under the HMGP that amended petition. without due process of law. The district court granted the defendants' motion to dismiss pursuant to Federal Rule of Schimmel stated that he advised the Board and the Remaining Civil Procedure 12(b)(1) and, in its order, noted that state Owners that he thought the issue concerning the value of agencies involved with administering the HMGP have “wide the repairs to the Buy–Out Owners' properties, which was discretion in administering the program.” The court stated, relevant to their eligibility to participate in the HMGP, was “Nothing in the regulations [governing the HMGP] dictates “a matter between [the Buy–Out Owners] and governmental that qualified property owners are entitled to participate in agencies” and should not be pursued by SOKB, “but that if the program or limits the State's discretion in determining a any lot owner wanted to pursue that issue on his or her own, property owner's qualifications for the program or reviewing it would aid [SOKB] by distracting [the Buy–Out Owners].” those qualifications at any time in the process.” The court Schimmel argued that the TCPA protected these statements concluded that the Buy–Out Owners “have no entitlement to because they involved his right of association and right to HMGP funds or a property right to such funds” and ultimately petition regarding a matter of public concern. He argued that dismissed their suit. his statements to the Houston Chronicle reporter were “a ‘communication’ which is ‘an exercise of the right of free 4 See 42 U.S.C. § 1983 (2006) (providing civil cause of speech’ and related to an exercise of the right of petition” action for deprivation of rights). and were made “in connection with a matter of public concern” because the statements related to the expenditure In response to Schimmel's motion to dismiss, the Buy– of government money and “interference with the community Out Owners argued that their claim fell within a statutory of the Subdivision and economic concerns.” He asserted that exemption to the TCPA because Schimmel was engaged in those statements were also “reasonably likely to encourage the business of selling his legal services, he was paid to consideration or review *852 of an issue by” an executive render legal services by SOKB and the Remaining Owners, or other governmental body or were “reasonably likely to and his conduct at issue in the suit occurred while he was enlist public participation in an effort to effect consideration rendering legal services. The Buy–Out Owners also argued of an issue by” an executive or other governmental body. that Schimmel had not timely filed his motion to dismiss

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because the TCPA required such motions to be filed not later signed contracts with the City of Galveston to purchase than the sixtieth day after service of the legal action and the properties for specified amounts. Schimmel filed his motion to dismiss on the sixty-first day after the homeowners served him with their amended petition. But for Schimmel's misrepresentations and conduct there is a reasonable probability that all of our buy-out The Buy–Out Owners further stated, contracts would have closed.... Schimmel's independent misrepresentations and boycott, set out above, prevented The individual Plaintiffs['] claims are our agreements from closing and the purchase of our not based on, related to, or in response property by the [City]. Schimmel's acts, set out above, to a right of Schimmel to voice free were done with a conscious desire to prevent our sales and speech, have a right of association or purchases from occurring. I, as well as the other Buy–Out a right to petition. It is totally about Owners, have suffered actual damages as a result of this his tortious interference with Plaintiffs' interference of Schimmel. We have incurred thousands of prospective business and contractual dollars in legal fees and have lost the difference between relations which caused the individual the buy-out values that we were to be paid and the lesser Plaintiffs money damages. Plaintiffs' amounts that our properties now are valued at. There was claims are based upon the independent a reasonable probability that I, as well as the rest of the torts of fraud, misrepresentations and Buy–Out Owners, would have entered into a business illegal boycott. relationship and closed our contracts with the [City]. The Buy–Out Owners did not attach affidavits from They further argued, “Schimmel's conduct is at issue here, not attorneys with the City of Galveston or from personnel anyone's free speech, right to associate, or to file a lawsuit.” with the Department of Public Safety, which assisted in The Buy–Out Owners also challenged the affidavits that administering the HMGP, nor did they attach any other Schimmel had submitted *853 with his motion to dismiss evidence from persons involved with the City's decision on the ground that Schimmel stated that he is “personally not to close on the purchase of the Buy–Out Owners' acquainted with the facts stated herein, except where I state properties. that I am testifying on information and belief, in which Schimmel filed a reply and asserted that he had timely filed case I am testifying based on information and my belief his motion to dismiss. He argued that although the Buy– thereof.” The Buy–Out Owners argued that these affidavits Out Owners filed their amended petition with the trial court did not constitute competent evidence because “personal on March 28, 2013, the Buy–Out Owners did not serve acquaintance” is not “personal knowledge.” The homeowners him with a copy of the petition. He did not see a copy also challenged Schimmel's attorney's fees affidavit on the of the petition until April 1, when a legal assistant to his ground that it did not meet the requirements for establishing attorney in the case downloaded the petition from the ProDoc reasonable and necessary attorney's fees as set out by the eFiling service. In the alternative, Schimmel moved the trial Texas Supreme Court in El Apple I, Ltd. v. Olivas. court to allow late filing of the motion to dismiss, as is permitted by the TCPA. Schimmel also argued that the Buy– The Buy–Out Owners attached their own affidavits to their Out Owners' supporting affidavits were conclusory and not response and argued that these affidavits established a prima supported by evidence that a reasonable probability existed facie case for tortious interference with prospective business that their buy-out contracts with the City of Galveston would relations. 5 The affidavits were substantively identical. The have closed but for Schimmel's allegedly tortious actions. affidavits set out numerous representations allegedly made by He further argued that the Buy–Out Owners did not provide Schimmel that, according to the Buy–Out Owners, caused the “any evidence that any act of Schimmel's caused the [Texas City of Galveston to fail to purchase their properties. As an Department *854 of Public Safety] to order the City not to example, Kris Hall, one of the Buy–Out Owners, averred: close the alleged contracts.”

5 Although the Buy–Out Owners pleaded a claim for After an oral hearing, the trial court issued an order denying tortious interference with prospective relations, the Buy– Schimmel's motion to dismiss. The order stated: Out Owners admit in their affidavits submitted in opposition to Schimmel's motion to dismiss that they had The parties announced on the record their stipulation that the Motion relates only to the Plaintiffs' cause of action

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for damages resulting from an alleged tortious interference In enacting the TCPA, the Legislature stated that the purpose with a prospective relationship between Plaintiffs and the of the statute “is to encourage and safeguard the constitutional City of Galveston.... rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum The Court finds that the Motion was timely filed. extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable The Court finds that the docket conditions in the court injury.” TEX. CIV. PRAC. & REM.CODE ANN. § 27.002 prevented the scheduling of the hearing on the Motion (Vernon Supp.2013); KTRK Television, Inc. v. Robinson, 409 within 30 days following the date of its filing. S.W.3d 682, 688 (Tex.App.-Houston [1st Dist.] 2013, pet. The Court finds that the Plaintiffs' tortious interference denied). The TCPA created “an avenue at the early stage of claim does not affect Schimmel's right to participate in litigation for dismissing unmeritorious suits that are based government. on the defendant's exercise” of certain constitutional rights. In re Lipsky, 411 S.W.3d 530, 539 (Tex.App.-Fort Worth The Court finds that Schimmel's actions alleged as the 2013, orig. proceeding). The Legislature has directed courts basis of the tortious interference claim concerned matters to construe the statute liberally “to effectuate its purpose disputed between individual parties, and the statements and intent fully.” TEX. CIV. PRAC. & REM.CODE ANN. alleged as a basis of the claim were not made in connection § 27.011(b) (Vernon Supp.2013); Robinson, 409 S.W.3d at with a matter of public concern. 688.

The Court finds that Schimmel's actions alleged as the Under the TCPA, if a party files a legal action that is basis of the tortious interference claim were not a part of “based on, relates to, or is in response to” the defendant's Schimmel's exercise of the right of association defined in exercise of *855 the right of free speech, right to petition, TEX. CIV. PRACT. & REM.CODE § 27.001(2). or right of association, the defendant may file a motion to dismiss the action. TEX. CIV. PRAC. & REM.CODE ANN. The Court finds that Schimmel's actions alleged as the § 27.003(a) (Vernon Supp.2013). The TCPA statutorily basis of the tortious interference claim do not concern defines “exercise of the right of association,” “exercise of Schimmel's right to petition defined in TEX. CIV. PRACT. the right of free speech,” and “exercise of the right to & REM.CODE § 27.001(4). petition.” See id. § 27.001(2)-(4) (Vernon Supp.2013). The The Court finds that the tortious interference claim was TCPA defines “exercise of the right of association” as “a not brought to deter or prevent Schimmel's exercise of communication between individuals who join together to his constitutional rights, for an improper purpose, for collectively express, promote, pursue, or defend common harassment, to cause unnecessary delay, or to increase interests.” Id. § 27.001(2). “Communication” is further litigation costs. defined as “the making or submitting of a statement or document in any form or medium, including oral, visual, The trial court did not award attorney's fees or costs to either written, audiovisual, or electronic.” Id. § 27.001(1). The party. This interlocutory appeal followed. TCPA defines “exercise of the right of free speech” as “a communication made in connection with a matter of public concern.” Id. § 27.001(3). “Matter of public concern” Texas Citizens Participation Act includes issues relating to health or safety; environmental, economic, or community well-being; the government; a In his first issue, Schimmel contends that the trial court public official or public figure; or a good, product, or service erroneously determined that his communications that are the in the marketplace. Id. § 27.001(7). The statutory definition basis of the Buy–Out Owners' tortious interference claim did of “exercise of the right to petition” includes, among other not involve “matters of public concern” and did not implicate things, “a communication in connection with an issue under his “exercise of the right to petition,” “exercise of the right of consideration or review by a legislative, executive, judicial, free speech,” or “exercise of the right of association.” or other governmental body or in another governmental or official proceeding.” Id. § 27.001(4)(B).

A. Standard of Review and Applicable Law

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A party filing a motion to dismiss under the TCPA must file and specific” evidence to support each element of their the motion “not later than the 60th day after the date of service tortious interference claim. See Robinson, 409 S.W.3d at 689. of the legal action.” Id. § 27.003(b). The trial court may extend the time to file a motion to dismiss upon a showing of good cause. Id. B. Applicability of TCPA to the Buy–Out Owners' Claim

When deciding whether to grant a motion to dismiss a 1. Timeliness of Motion to Dismiss lawsuit pursuit to the TCPA, the trial court must “consider the pleadings and supporting and opposing affidavits stating The Buy–Out Owners argue that this Court should affirm the the facts on which the liability or defense is based.” Id. trial court's ruling denying Schimmel's motion to dismiss on § 27.006(a) (Vernon Supp.2013); Robinson, 409 S.W.3d at the basis that he did not timely file the motion. 688. The court must determine, after a hearing, whether the moving defendant has demonstrated by a preponderance of Section 27.003(b) provides that a party filing a motion to the evidence that the legal action is “based on, relates to, dismiss must file the motion “not later than the 60th day after or is in response to the party's exercise of the right of free the date of service of the legal action.” TEX. CIV. PRAC. & speech, the right to petition, or the right of association.” TEX. REM.CODE ANN. § 27.003(b). The statute further provides, CIV. PRAC. & REM.CODE ANN. § 27.005(b) (Vernon however, that the trial court may extend the time to file a Supp.2013); Robinson, 409 S.W.3d at 688. We review de motion to dismiss “on a showing of good cause.” Id.; see novo the trial court's determination whether the defendant also Newspaper Holdings, 416 S.W.3d at 79 (“The TCPA sets carried this burden. Robinson, 409 S.W.3d at 688. strict deadlines for filing, hearing, and ruling on a motion to dismiss. Absent a showing of good cause, the defendant must [1] If the trial court determines that the defendant has met move to dismiss pursuant to the TCPA ‘not later than the 60th his burden, the burden then shifts to the plaintiff to establish day after the date of service of the legal action.’ ”). “by clear and specific evidence a prima facie case for each essential element of the claim in question.” TEX. CIV. PRAC. [2] Here, the Buy–Out Owners' first amended petition, & REM.CODE ANN. § 27.005(c); Robinson, 409 S.W.3d at which was the first pleading in which the Buy–Out Owners 688. The Legislature's use of “prima facie case” in the second raised the tortious interference claim against Schimmel, bears step of the inquiry implies a minimal factual burden: “[a] a file-stamped date of March 28, 2013. Schimmel filed his prima facie case represents the minimum quantity of evidence motion to dismiss on May 28, 2013, sixty-one days later. In necessary to support a rational inference that the allegation his initial motion to dismiss, Schimmel stated, “On March of fact is true.” Robinson, 409 S.W.3d at 688; Rodriguez v. 28, 2013, Plaintiffs served Schimmel with their Plaintiffs' Printone Color Corp., 982 S.W.2d 69, 72 (Tex.App.-Houston Amended Petition, in which, for the first time, Natural [1st Dist.] 1998, pet. denied). The statute requires that the Plaintiffs added a separate cause of action against Schimmel plaintiff's proof address and support each “essential element” alleging tortious interference with prospective relations.” of every claim and that the proof constitute “clear and specific evidence.” Robinson, 409 S.W.3d at 688. Because In response to the motion to dismiss, the Buy–Out Owners the statute does not define “clear and specific,” we apply the argued that the motion was untimely because Schimmel filed ordinary meaning of these terms. Id. at 689. “Clear” means his motion on the sixty-first day after he had been served “unambiguous,” “sure,” or “free from doubt,” and “specific” with the action and he could not demonstrate that good cause means “explicit” or “relating to a particular named thing.” Id. existed for his late filing. In reply, Schimmel asserted that his We review the pleadings and evidence in the light *856 most motion was not untimely because, although he received notice favorable to the plaintiffs. Newspaper Holdings, Inc. v. Crazy that the first amended petition had been filed on March 28, Hotel Assisted Living, Ltd., 416 S.W.3d 71, 80–81 (Tex.App.- 2013, the Buy–Out Owners did not serve him with a copy of Houston [1st Dist.] 2013, pet. denied). Accordingly, here, the petition on that date. Instead, he did not receive a copy if we determine that Schimmel carried his initial burden of the petition until April 1, 2013, when his counsel's legal of proof, we must examine the pleadings and the evidence assistant downloaded the amended petition from the ProDoc presented in response to Schimmel's motion to dismiss to eFiling service. In the alternative, Schimmel sought leave of determine whether the Buy–Out Owners marshaled “clear court to allow the late filing of his motion.

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In the order ruling on the motion to dismiss, the trial court The El Paso Court of Appeals addressed a similar situation explicitly stated, “The Court finds that the Motion was timely in Pena. In that case, Pena, who had been indicted on two filed.” We conclude that, although Schimmel filed his motion counts of intoxicated manslaughter and two counts of failure to dismiss one day late, in making a statement concerning the to stop and render aid, hired Dolph Quijano to represent timeliness of the motion, the trial court implicitly ruled that if him. Pena, 417 S.W.3d at 553. A jury ultimately convicted Schimmel technically filed the motion late he had good cause Pena, assessed punishment at confinement in the Texas for the late filing. We therefore decline to dismiss this suit Department of Criminal Justice, and imposed a total of on the ground that Schimmel did not timely file his motion $30,000 in fines. Id. at 553–54. Pena and his wife then began to dismiss. running advertisements that were critical of Quijano. Id. at 554. Quijano hired Bobby Perel to represent him, and Perel sent letters to local newspapers and to the Texas Board of Pardons and Paroles to inform it of Pena's conduct. Id. One of 2. Applicability of Services Exclusion Perel's letters to the Board of Pardons and Paroles informed The Buy–Out Owners also argue that the TCPA does not it that he believed Pena had not taken responsibility for his apply to this case because this case falls under the statutory underlying criminal actions and that Pena was responsible *857 exemption for commercial speech found in section for “vicious ads” attacking Quijano, and he requested that 27.010(b). the Board consider this information when making decisions about Pena's parole. Id. Pena filed suit against Quijano and Section 27.010(b) states: Perel, asserting, among other things, that they had conspired to slander and defame him by sending the letter to the Board. [The TCPA] does not apply to a Id. The trial court granted Perel's motion to dismiss pursuant legal action brought against a person to the TCPA. Id. primarily engaged in the business of selling or leasing goods or services, On appeal, Pena argued that the trial court erred in dismissing if the statement or conduct arises out his claims because his claims fell within the “commercial of the sale or lease of goods, services, speech” exemption to the TCPA. Id. at 555. The El Paso Court or an insurance product, insurance of Appeals noted that Pena's suit was based on the letter that services, or a commercial transaction Perel had sent to the Board. Id. The court reasoned, “The letter in which the intended audience is an does not arise out of the sale or lease of goods, services, or an actual or potential buyer or customer. insurance product or a commercial transaction. Further, the Board of Pardons and Parole is not an actual or potential buyer TEX. CIV. PRAC. & REM.CODE ANN. § 27.010(b) or customer of any goods or services sold by Perel.” Id. The (Vernon Supp.2013). The party asserting the exemption court held that Pena failed to establish the applicability of the bears the burden of proving its applicability. See Newspaper exemption. Id. Holdings, 416 S.W.3d at 89; see also Pena v. Perel, 417 S.W.3d 552, 555 (Tex.App.-El Paso 2013, no pet.) (“The [3] Here, Schimmel allegedly made statements that, burden of proving the applicability of an exemption under according to the Buy–Out Owners, induced the City of Section 27.010 is on the party asserting it.”). Galveston to back out of its agreements to purchase the Buy–Out Owners' properties. When Schimmel made the The Buy–Out Owners argue that their tortious interference statements at issue, he *858 was undisputedly working claim falls within this exemption because (1) Schimmel as an attorney for SOKB and the Remaining Owners. The was primarily engaged in the business of selling his legal ultimate intended audience for his statements, however, was services; (2) the Buy–Out Owners' cause of action arose the City of Galveston. Schimmel did not represent the City of from Schimmel's conduct consisting of representations of fact Galveston, nor was the City a “potential buyer or customer” about Schimmel's services; (3) Schimmel's conduct occurred of Schimmel's legal services. See TEX. CIV. PRAC. & in the course of delivering his legal services; and (4) the REM.CODE ANN. § 27.010(b). We therefore conclude, as intended audience of his conduct was a potential buyer, the the El Paso Court of Appeals did in Pena, that the Buy– City of Galveston. We disagree that Schimmel's conduct falls Out Owners have failed to establish the applicability of the within this exemption. “commercial speech” exemption. See id.; see also Pena,

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417 S.W.3d at 555; Newspaper Holdings, 416 S.W.3d at 89 to, or is in response to” Schimmel's exercise of the right to (“With respect to the newspaper, it is undisputed that NHI was petition on behalf of his clients. See id. § 27.003(a) (providing in the business of reporting community events, but the Hotel's that defendant may move to dismiss legal action that is based complained—of statements do not arise out of the lease or on, relates to, or is in response to exercise of right to petition). sale of the goods or services that NHI sells—newspapers.”). Moreover, the Buy–Out Owners' claim implicates not just Schimmel's exercise of the right to petition on behalf of his clients but also Schimmel's exercise of his right to 3. Whether the Buy–Out Owners' freedom of speech on behalf of his clients. See id. § Claim Falls Under the TCPA 27.001(3) (defining “exercise of the right of free speech” The Buy–Out Owners complain about numerous actions and as “a communication made in connection with a matter of statements allegedly made by Schimmel during the course of *859 public concern”); id. § 27.001(7) (defining “matter of his representation of SOKB and the Remaining Owners. All public concern”). Contrary to the trial court's determination, of these statements, whether they were made to a journalist at in its order denying Schimmel's motion to dismiss, that the Houston Chronicle, attorneys with the City of Galveston, the dispute at issue “concerned matters disputed between or members of the Board, concerned or were related to the individual parties” and thus “were not made in connection City's plan to purchase the Buy–Out Owners' properties and with a matter of public concern,” Schimmel's statements all were made to further Schimmel's clients' interest in ensuring related to and were made in connection with the purchase that should the purchase of the properties go forward SOKB by the City of Galveston, a governmental entity, of five would receive compensation for the loss of future assessments properties in a small subdivision, the purchase of which on the purchased properties. would allegedly damage the values of the neighboring properties and would damage the future revenue stream of The TCPA defines “exercise of the right to petition” as SOKB, the homeowners' association, by denying it the ability including “a communication in connection with an issue to collect future assessments on the bought-out properties. In under consideration or review by a legislative, executive, addition to relating to the government, the dispute at issue also judicial, or other governmental body ....” TEX. CIV. PRAC. relates to “economic or community well-being,” all of which & REM.CODE ANN. § 27.001(4)(B). The statute defines are issues included in the statutory definition of “matter of “exercise of the right of free speech” as “a communication public concern” under the TCPA. See id. § 27.001(7). made in connection with a matter of public concern.” Id. § 27.001(3). And a “matter of public concern” is further In arguing that their claim is not based on, does not defined as “an issue related to health or safety; environmental, relate to, and is not in response to Schimmel's exercise of economic, or community well-being; the government; a constitutionally protected rights, the Buy–Out Owners focus public official or public figure; or a good, product, or service on the fact that their claims “are based upon the independent in the marketplace.” Id. § 27.001(7). None of these statutory torts of fraud, misrepresentations and illegal boycott,” which definitions includes a requirement that the communications do not implicate constitutional protections. That argument, be made to a particular individual or entity, such as a however, is relevant to the second step of the inquiry— governmental body, to constitute protected conduct. whether the Buy–Out Owners have demonstrated a prima facie case for relief on every essential element of their [4] SOKB and the Remaining Owners retained Schimmel tortious interference claim. See In re Lipsky, 411 S.W.3d to represent their interests during the dispute concerning at 543 (“But chapter 27 dictates that we should review the buy-out of the Buy–Out Owners' properties. All of evidence concerning whether [the defendants'] statements Schimmel's challenged statements, regardless of to whom the were defamatory and thus actionable in the second part of our statements were made, related to this dispute and were made review, in which [the plaintiff] has the burden of establishing “in connection with an issue under consideration or review” ‘by clear and specific evidence a prima facie case for each by the City of Galveston and the Texas Department of Public essential element of the claim in question.’ ”). Safety, both of which are governmental bodies. See id. § 27.001(4)(B) (defining “exercise of the right to petition”). [5] The Buy–Out Owners also argue that Schimmel's The Buy–Out Owners' action for tortious interference with affidavits supporting his motion to dismiss are incompetent prospective business relations is therefore “based on, relates and inadmissible because they state that he is “personally

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acquainted with facts stated therein,” instead of stating that Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 they are based on personal knowledge, and that some portions (Tex.2013); Wal–Mart Stores, Inc. v. Sturges, 52 S.W.3d state that Schimmel is testifying based on information 711, 726 (Tex.2001) (holding that plaintiff must establish that and belief. We first note that, in making a determination defendant's conduct was independently tortious or wrongful, on a motion to dismiss, the trial court is not limited to meaning that defendant's conduct “would be actionable under considering only supporting and opposing affidavits, but a recognized tort”). “Conduct that is merely ‘sharp’ or unfair the court “shall consider the pleadings” as well. See TEX. is not actionable and cannot be the basis for an action for CIV. PRAC. & REM.CODE ANN. § 27.006(a). Thus, tortious interference with prospective relations ....” Sturges, even if Schimmel's affidavits do not constitute competent 52 S.W.3d at 726. and admissible evidence, his motion to dismiss does not necessarily fail. Secondly, we agree with Schimmel that there One of the essential elements for which the Buy–Out Owners is no meaningful distinction between “personal knowledge” had to establish a prima facie case is causation, that is, and “personal acquaintance,” and to hold otherwise is whether Schimmel's interference proximately caused their to impose an unduly restrictive reading on the personal injury, which, in this case, is the City of Galveston's failure knowledge requirement for affidavits. See WEBSTER'S to close on the purchase of their properties. See Coinmach NEW COLLEGIATE DICTIONARY 8 (1956) (defining Corp., 417 S.W.3d at 923 (listing causation as element of “acquaintance” as “[p]ersonal knowledge (of a person tortious interference with prospective relations claim). As or thing) which results from becoming acquainted”). We evidence to support their contention that they are entitled therefore conclude that Schimmel's affidavits are competent to relief on their tortious interference claim, the Buy–Out and admissible to support his motion to dismiss. Owners presented to the trial court identical affidavits from each property owner as well as copies of several e-mails We hold that Schimmel met his initial burden to show, by between Schimmel and members of the Board. They did a preponderance of the evidence, that the Buy–Out Owners' not present any affidavits or other admissible evidence claim is based on, relates to, or is in response to his exercise of from any individual at the City of Galveston, the city the right to petition and his exercise of the right of free speech. attorney's office, the Texas Department of Public Safety, See TEX. CIV. PRAC. & REM.CODE ANN. § 27.005(b)(1)- which allegedly informed the City to put a hold on the (2). transactions while officials conducted a new “substantial damage determination” of the Buy–Out Owners' properties, or any other official or agency with decision-making authority concerning the City's purchase of the properties. Instead, 4. Buy–Out Owners' Prima Facie Case the only evidence of this element that the Buy–Out Owners [6] [7] Because we have held that Schimmel's statements produced is the statements in their identical affidavits forming the basis of the Buy–Out Owners' tortious that “[b]ut for Schimmel's misrepresentations and conduct interference *860 claim constitute protected conduct under there is a reasonable probability that all of our buy-out the TCPA, we must now determine whether the Buy–Out contracts would have closed,” that “Schimmel's independent Owners met their burden to establish, by clear and specific misrepresentations and boycott, set out above, prevented our evidence, a prima facie case for every essential element of agreements from closing and the purchase of our properties their tortious interference claim. See id. § 27.005(c). To by the [City],” and that “Schimmel's action and conduct, set prevail on a claim for tortious interference with prospective out above, caused me and the other Buy–Out Owners money business relations, the plaintiffs must establish that (1) a losses ... that would not have occurred, but for [Schimmel's] reasonable probability existed that the plaintiffs would have conduct.” entered into a business relationship with a third party; (2) the defendant either acted with a conscious desire [8] We agree with Schimmel that the Buy–Out Owners to prevent the relationship from occurring or knew the presented only their conclusory statements, unsupported interference was certain or substantially certain to occur by any facts, that Schimmel's actions caused the City of as a result of the conduct; (3) the defendant's conduct Galveston to fail to close on the purchases. Evidence of was independently tortious or unlawful; (4) the interference Schimmel's conduct, by itself, is not evidence that, with proximately caused the plaintiffs injury; and (5) the plaintiffs respect to communications made to other individuals and suffered actual damage or loss as a result. See Coinmach entities, that conduct caused the City not to purchase the Buy–

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Out Owners' properties. The fact that Schimmel's alleged Department to do that which they had a right to do—not to conduct occurred roughly contemporaneously with the City purchase the Buy–Out Owners' houses. of Galveston's and the Department of Public *861 Safety's consideration of whether to move forward with the purchases We also note that, in this regard, the Buy–Out Owners have does not establish that Schimmel's conduct caused the made no argument, with citation to authority, that SOKB governmental agencies to act as they did. and the Board were legally required or obligated to sign the releases that the City of Galveston required to close on the Furthermore, in October 2009, the City of Galveston purchases, and they have produced no evidence on such a required the Buy–Out Owners to obtain a release from point. The Buy–Out Owners have thus presented no evidence future assessments, signed by SOKB, as a condition for that Schimmel induced the Board to take an action that it the purchases to close, two months before SOKB and was not legally authorized to take. This is, therefore, not a the Remaining Owners hired Schimmel to represent their situation in which Schimmel, as a corporate agent, induced interests. The Buy–Out Owners contend that Schimmel the corporation, SOKB, to breach a contractual obligation. tortiously interfered with their prospective contracts with the See, e.g., Holloway v. Skinner, 898 S.W.2d 793, 796 City of Galveston because he urged the Board not to sign the (Tex.1995) (noting that “a party cannot tortiously interfere required releases, and, as a result of the Board's refusal to with its own contract” and holding that even when corporate sign the releases, the City did not proceed with the purchases. agent induces corporation to breach contractual obligation, Ultimately, however, one of the appellees, Kris Hall, signed agent will not be held liable for tortious interference with the releases on behalf of SOKB once he became president corporation's contract unless plaintiff can demonstrate that of the Board, but the City of Galveston did not close on the agent “acted in a fashion so contrary to the corporation's best purchases. interests that his actions could only have been motivated by personal interests”). Additionally, in the federal suit between the Buy–Out Owners and the City of Galveston and several Department of Public *862 We conclude that the Buy–Out Owners' supporting Safety employees the district court ruled that governmental evidence does not establish, by clear and specific evidence, entities have “wide discretion” in administering the HMGP a prima facie case on the essential element of causation. See and that nothing in the regulations governing the HMGP TEX. CIV. PRAC. & REM.CODE ANN. § 27.005(c) (“The “dictates that qualified property owners are entitled to court may not dismiss a legal action under this section if participate in the program or limits the State's discretion in the party bringing the legal action establishes by clear and determining a property owner's qualifications for the program specific evidence a prima facie case for each essential element or reviewing those qualifications at any time in the process.” of the claim in question.”) (emphasis added); Coinmach The court thus concluded that the Buy–Out Owners had no Corp., 417 S.W.3d at 923 (stating that interference as “entitlement to HMGP funds or a property right to such proximate cause of plaintiff's injury is essential element of funds.” Thus, a court has already determined during the tortious interference with prospective relations claim). litigation arising out of this dispute that the City of Galveston and the Department of Public Safety acted within their We therefore hold that because Schimmel established by a discretionary authority when they declined to close on the preponderance of the evidence that the Buy–Out Owners' purchase of the Buy–Out Owners' properties. tortious interference claim is based on, relates to, or is in response to his exercise of his right to petition on behalf of [9] As the Texas Supreme Court has held, “merely inducing his clients and his right of free speech and because the Buy– a contract obligor to do what it has a right to do is not Out Owners failed to establish a prima facie case on every actionable interference.” ACS Investors, Inc. v. McLaughlin, essential element of their tortious interference claim, the trial 943 S.W.2d 426, 430 (Tex.1997); Newspaper Holdings, court erroneously denied Schimmel's motion to dismiss under 416 S.W.3d at 87. Even if Schimmel induced the City of the TCPA. See TEX. CIV. PRAC. & REM.CODE ANN. § Galveston and the Department of Public Safety not to close 27.005(b), (c). on the purchase of the Buy–Out Owners' properties, as the Buy–Out Owners allege, the Buy–Out Owners would have We sustain Schimmel's first issue. no cause of action against him for inducing the City or the

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their respective billing rates without further indicating how they spent their time, Schimmel's attorney's fees affidavits Award of Costs and Attorney's Fees stated the date on which work was performed, the number of In his second issue, Schimmel contends that because the hours spent, the particular tasks involved, and the applicable trial court erroneously denied his motion to dismiss it also billing rate. See id. at 763 (“[P]roof [of attorney's fees] erroneously failed to award him mandatory costs, reasonable should include the basic facts underlying the lodestar, which attorney's fees, and expenses incurred in defending against the are: (1) the nature of the work, (2) who performed the claim, as required by the TCPA. services and their rate, (3) approximately when the services were performed, and (4) the number of hours worked.”); [10] Section 27.009(a)(1) provides that if the court orders see also City of Laredo v. Montano, 414 S.W.3d 731, 736 dismissal of a legal action pursuant to the TCPA, the court (Tex.2013) (“In El Apple, we said that a lodestar calculation “shall award to the moving party court costs, reasonable requires certain basic proof, including itemizing specific attorney's fees, and other expenses incurred in defending tasks, the time required for those tasks, and the rate charged against the legal action as justice and equity may require.” by the person performing the work.”). We therefore do not TEX. CIV. PRAC. & REM.CODE ANN. § 27.009(a)(1) agree with the homeowners that Schimmel's attorney's fees (Vernon Supp.2013). When an appellate court determines affidavits are insufficient under Olivas. that the trial court erroneously denied a defendant's motion to dismiss under the TCPA, the appropriate disposition of [12] Finally, even if Schimmel's attorney's fees evidence the case is to reverse the trial court's denial of the motion presented with his motion to dismiss were insufficient to and remand for the trial court to conduct further proceedings establish the reasonableness and necessity of the fee amount, pursuant to section 27.009(a) and to order dismissal of the because Schimmel is statutorily entitled to an award of suit. See Newspaper Holdings, 416 S.W.3d at 90. attorney's fees, the appropriate disposition of this case would be to remand the attorney's fees issue back to the trial court for The Buy–Out Owners contend that, even if the trial court further proceedings. See Alphonso v. Deshotel, 417 S.W.3d erroneously denied Schimmel's motion to dismiss, remand is 194, 202 (Tex.App.-El Paso 2013, no pet.) (“[G]iven that not appropriate in this case because Schimmel's affidavit on Appellees are entitled to attorney's fees and costs under attorney's fees was “incompetent evidence of reasonableness the [TCPA] because the trial court granted their motion to and necessity” under the Texas Supreme Court's decision in dismiss and we have upheld that ruling on appeal, the proper El Apple I, Ltd. v. Olivas. disposition in this case is to reverse the award of attorney's fees and costs [which was not supported by an affidavit Olivas involved a claim for sex discrimination and retaliation admitted into evidence] and remand that issue back to the pursuant to the Texas Commission on Human Rights Act, trial court for a new trial.”); see also Uhl v. Uhl, 524 S.W.2d under which courts calculate attorney's fees using the 534, 538 (Tex.Civ.App.-Fort Worth 1975, no writ) (“When a lodestar method, or the number of hours worked multiplied [party] is clearly entitled to attorney's fees in some amount but by prevailing hourly rates. See 370 S.W.3d 757, 758–59 where there had been no proof in the trial court of the amount (Tex.2012). The court explained that the lodestar method of there may be severance of that issue with remand to the trial calculating attorney's fees involves two steps: (1) the court court for a new trial on that issue.”). first determines the reasonable number of hours spent by counsel in the case and a reasonable hourly rate for such work; We hold that because Schimmel has established his and (2) the court then multiples the number of such hours entitlement to dismissal under the TCPA, he is entitled to by the applicable rate, which yields the lodestar, which may “court costs, reasonable attorney's fees, and other expenses then be adjusted up or down to reach a reasonable fee for the incurred in defending against the legal action as justice and case. Id. at 760. The court held that a party seeking attorney's equity may require.” TEX. CIV. PRAC. & REM.CODE fees when the lodestar method is used “bears the burden of ANN. § 27.009(a)(1); see also Newspaper Holdings, 416 documenting the hours expended on the litigation and the S.W.3d at 90 (“We therefore reverse the trial court's denial of value of those hours.” Id. at 761. the defendants' motions to dismiss, and we remand the case to the trial court for further proceedings as required by the *863 [11] Unlike the attorneys in Olivas, who presented statute and to order dismissal of the suit.”). only their aggregate number of hours spent on the case and

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13 Schimmel v. McGregor, 438 S.W.3d 847 (2014)

We reverse the trial court's order denying Schimmel's motion We sustain Schimmel's second issue. to dismiss and remand the case to the trial court for further proceedings relating to Schimmel's attorney's fees, costs, and expenses and to order dismissal of the suit. Conclusion

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14 Tex. Civ. Prac. & Rem. Code § 27.001 This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.001. Definitions In this chapter: (1) "Communication" includes the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic. (2) "Exercise of the right of association" means a communication between individuals who join together to collectively express, promote, pursue, or defend common interests. (3) "Exercise of the right of free speech" means a communication made in connection with a matter of public concern. (4) "Exercise of the right to petition" means any of the following: (A) a communication in or pertaining to: (i) a judicial proceeding; (ii) an official proceeding, other than a judicial proceeding, to administer the law; (iii) an executive or other proceeding before a department of the state or federal government or a subdivision of the state or federal government; (iv) a legislative proceeding, including a proceeding of a legislative committee; (v) a proceeding before an entity that requires by rule that public notice be given before proceedings of that entity; (vi) a proceeding in or before a managing board of an educational or eleemosynary institution supported directly or indirectly from public revenue; (vii) a proceeding of the governing body of any political subdivision of this state; (viii) a report of or debate and statements made in a proceeding described by Subparagraph (iii), (iv), (v), (vi), or (vii); or (ix) a public meeting dealing with a public purpose, including statements and discussions at the meeting or other matters of public concern occurring at the meeting; (B) a communication in connection with an issue under consideration or review by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding; (C) a communication that is reasonably likely to encourage consideration or review of an issue by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding; (D) a communication reasonably likely to enlist public participation in an effort to effect consideration of an issue by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding; and (E) any other communication that falls within the protection of the right to petition government under the Page 2 of 2 Tex. Civ. Prac. & Rem. Code § 27.001 Constitution of the United States or the constitution of this state. (5) "Governmental proceeding" means a proceeding, other than a judicial proceeding, by an officer, official, or body of this state or a political subdivision of this state, including a board or commission, or by an officer, official, or body of the federal government. (6) "Legal action" means a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal or equitable relief. (7) "Matter of public concern" includes an issue related to: (A) health or safety; (B) environmental, economic, or community well-being; (C) the government; (D) a public official or public figure; or (E) a good, product, or service in the marketplace. (8) "Official proceeding" means any type of administrative, executive, legislative, or judicial proceeding that may be conducted before a public servant. (9) "Public servant" means a person elected, selected, appointed, employed, or otherwise designated as one of the following, even if the person has not yet qualified for office or assumed the person's duties: (A) an officer, employee, or agent of government; (B) a juror; (C) an arbitrator, referee, or other person who is authorized by law or private written agreement to hear or determine a cause or controversy; (D) an attorney or notary public when participating in the performance of a governmental function; or (E) a person who is performing a governmental function under a claim of right but is not legally qualified to do so.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved. Tex. Civ. Prac. & Rem. Code § 27.002 This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.002. Purpose The purpose of this chapter 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.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved. Tex. Civ. Prac. & Rem. Code § 27.003 This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.003. Motion to Dismiss (a) If a legal action is based on, relates to, or is in response to a party's exercise of the right of free speech, right to petition, or right of association, that party may file a motion to dismiss the legal action. (b) A motion to dismiss a legal action under this section must be filed not later than the 60th day after the date of service of the legal action. The court may extend the time to file a motion under this section on a showing of good cause. (c) Except as provided by Section 27.006(b), on the filing of a motion under this section, all discovery in the legal action is suspended until the court has ruled on the motion to dismiss.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved. Tex. Civ. Prac. & Rem. Code § 27.004 This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.004. Hearing (a) A hearing on a motion under Section 27.003 must be set not later than the 60th day after the date of service of the motion unless the docket conditions of the court require a later hearing, upon a showing of good cause, or by agreement of the parties, but in no event shall the hearing occur more than 90 days after service of the motion under Section 27.003, except as provided by Subsection (c). (b) In the event that the court cannot hold a hearing in the time required by Subsection (a), the court may take judicial notice that the court's docket conditions required a hearing at a later date, but in no event shall the hearing occur more than 90 days after service of the motion under Section 27.003, except as provided by Subsection (c). (c) If the court allows discovery under Section 27.006(b), the court may extend the hearing date to allow discovery under that subsection, but in no event shall the hearing occur more than 120 days after the service of the motion under Section 27.003.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011; am. Acts 2013, 83rd Leg., ch. 1042 (H.B. 2935), § 1, effective June 14, 2013. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved. Tex. Civ. Prac. & Rem. Code § 27.005 This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.005. Ruling (a) The court must rule on a motion under Section 27.003 not later than the 30th day following the date of the hearing on the motion. (b) Except as provided by Subsection (c), on the motion of a party under Section 27.003, a court shall dismiss a legal action against the moving party if the moving party shows by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the party's exercise of: (1) the right of free speech; (2) the right to petition; or (3) the right of association. (c) The court may not dismiss a legal action under this section if the party bringing the legal action establishes by clear and specific evidence a prima facie case for each essential element of the claim in question. (d) Notwithstanding the provisions of Subsection (c), the court shall dismiss a legal action against the moving party if the moving party establishes by a preponderance of the evidence each essential element of a valid defense to the nonmovant's claim.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011; am. Acts 2013, 83rd Leg., ch. 1042 (H.B. 2935), § 2, effective June 14, 2013. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved. Tex. Civ. Prac. & Rem. Code § 27.006 This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.006. Evidence (a) In determining whether a legal action should be dismissed under this chapter, the court shall consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based. (b) On a motion by a party or on the court's own motion and on a showing of good cause, the court may allow specified and limited discovery relevant to the motion.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved.