Ryan R. Grant (Individually, and as Trustee of the Ryan R. Grant 2007 Trust) Laura Grant Jana Grimes John E. Grimes (Trustee of the John E. Grimes 2007 Trust) Anne Fielding Scott Sizemore John D. Rowell Herschel Sova v. Pivot Technology Solutions, Ltd. Pivot Acquisition Corp. And ARC Acquisition (US), Inc.

556 S.W.3d 865

• Court: Court of Appeals of Texas
• Decided: August 3, 2018
• Docket: 03-17-00289-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-17-00289-CV

Ryan R. Grant (individually, and as trustee of the Ryan R. Grant 2007 Trust); Laura Grant; Jana Grimes; John E. Grimes (trustee of the John E. Grimes 2007 Trust); Anne Fielding; Scott Sizemore; John D. Rowell; Herschel Sova; Britta Butler; Nathan Tart; Kristin Hunninghake; Susan Robb; Robert Arnett; Claire Gregory; Danna Stedman; Sue Hawk; Blaine Matte; Russell Harris; Ashley Ambroso; Julianne Primeaux; Briana Burt; Kiera Talbott; Marc Ferrari; David Morales; James Friedrich; Jeremy Kling; GTS Technology Solutions, Inc. (formerly ARC Government Solutions, Inc. and Austin Ribbon & Computer Supplies, Inc.), Appellants

v.

Pivot Technology Solutions, Ltd.; Pivot Acquisition Corp.; and ARC Acquisition (US), Inc., Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT NO. D-1-GN-16-005731, HONORABLE DARLENE BYRNE, JUDGE PRESIDING

OPINION

The appellants (collectively, the “GTS Defendants”) appeal from an order signed by

the trial court on April 17, 2017, denying their motion to dismiss filed pursuant to the Texas Citizens

Participation Act (TCPA). See Tex. Civ. Prac. & Rem. Code §§ 27.003 (TCPA motion to dismiss),

51.014(a)(12) (authorizing interlocutory appeal of order denying motion to dismiss filed under

TCPA section 27.003). In two issues, the GTS Defendants challenge the trial court’s determinations

(1) that the GTS Defendants failed to carry their burden to show that the plaintiffs’ “legal action is

based on, relates to, or is in response to” conduct protected by the TCPA, and (2) alternatively, that

the plaintiffs satisfied their burden under the TCPA to establish by “clear and specific evidence a prima facie case for each essential element” of their claims. See id. § 27.005. For the reasons

that follow, with the exception of certain claims made by the Pivots’ Plaintiffs based on improper

solicitation and competition, we conclude that the trial court erred in denying the motion to dismiss

and will reverse, in part, the trial court’s order and remand the case for further proceedings consistent

with this opinion.

BACKGROUND

GTS Technology Solutions, Inc. (“GTS”) is a technology solutions and consulting

business certified by the State of Texas as a Historically Underutilized Business (HUB).1 See

generally Tex. Gov’t Code §§ 2161.001-.253 (“Historically Underutilized Businesses”). In general,

GTS’s status as a HUB allows it to compete for state purchasing and public works contracts with

state and local governments that give preferential treatment to businesses that have been certified

as HUBs. See id. §§ 2161.181-.182 (requiring state agencies to make “good faith effort” to increase

contract awards for goods or services and construction contract awards that agency expects to make

during fiscal year to HUBs). According to GTS, its “core business depends on its status as a

1 “Historically underutilized business” means an entity with its principal place of business in this state that, generally, is owned by one or more “economically disadvantaged persons” who actively participate in the business’s control, operation, and management. Tex. Gov’t Code § 2161.001(2). “‘Economically disadvantaged person’ means a person who (A) is economically disadvantaged because of the person’s identification as a member of a certain group, including: (i) Black Americans; (ii) Hispanic Americans; (iii) women; (iv) Asian Pacific Americans; (v) Native Americans; and (vi) [veterans]; and (B) has suffered the effects of discriminatory practices or other similar insidious circumstances over which the person has no control.” Id. § 2161.001(3). Whether a business operating in Texas qualifies as a HUB is determined and certified by the Texas Comptroller of Public Accounts. Id. §§ 2161.061 (commission certification of historically underutilized businesses), .0011 (powers and duties under chapter 2161 transferred to comptroller).

2 HUB[, and] the vast majority of GTS’s revenue derives from several master purchasing contracts

it was awarded by the Texas Department of Information Resources.”

In August 2011, GTS entered into an Asset Purchase Agreement with another

technology-related business, ARC Acquisition (“Acquisition”), a subsidiary of Pivot Technology

Solutions, Ltd. (“Pivot”).2 Neither Acquisition nor Pivot is, or ever has been, certified as a HUB.

The Asset Purchase Agreement provided for the sale of certain assets by GTS to Acquisition, but

expressly excluded from the sale “those contracts, and assets related thereto, set forth in Section 2

which relate to the operation of a ‘Historically Underutilized Business.’” At the time of the Asset

Purchase Agreement, the shareholder owners in GTS included Ryan R. Grant as trustee for “the

Ryan R. Grant 2007 Trust.” In connection with Acquisition’s purchase of the GTS assets, Ryan

Grant was hired as president of Acquisition.

In the years following execution of the Asset Purchase Agreement, the business

relationship between GTS and Acquisition deteriorated. On November 23, 2016, Acquisition, Pivot,

and Pivot Acquisition Corp. (collectively, the “Pivot Plaintiffs”) sued the GTS Defendants, including

Ryan Grant and his wife Laura Grant, for breach of contract, tortious interference, breach of fiduciary

duty, fraud, unjust enrichment, conversion, theft, misappropriation of trade secrets, civil conspiracy,

unfair competition, and harmful access by computer. The Pivot Plaintiffs allege that Ryan Grant

used his position at Acquisition to acquire confidential information and then engaged in a series of

actions designed to benefit GTS and to cause harm to Acquisition.

2 According to the Pivot Plaintiffs, Acquisition is in the business of “selling and marketing computers, computer-related products and peripherals, as well as providing computer-related services.”

3 In response, the GTS Defendants filed a motion to dismiss pursuant to the Texas

Citizens Participation Act. See Tex. Civ. Prac. & Rem. Code § 27.003(b). Following a hearing, the

trial court denied the motion. This appeal followed. See id. § 51.014(a)(12).

THE TEXAS CITIZENS PARTICIPATION ACT AND STANDARD OF REVIEW

Chapter 27 of the Texas Civil Practice and Remedies Code, also known as the

Texas Citizens Participation Act (TCPA or the “Act”), is often characterized as an anti-SLAPP

statute, meaning a statute designed to limit “Strategic Lawsuits Against Public Participation.”

See id. §§ 27.001-.011; Serafine v. Blunt, 466 S.W.3d 352, 366-67 (Tex. App.—Austin 2015, no

pet.) (Pemberton, J., concurring) (explaining anti-SLAPP concerns revealed in TCPA’s legislative

history). “The purpose of the [Act] is to encourage and safeguard the constitutional rights of persons

to petition, speak freely, associate freely, and otherwise participate in government to the maximum

extent permitted by law and, at the same time, protect the rights of a person to file meritorious

lawsuits for demonstrable injury.” Tex. Civ. Prac. & Rem. Code § 27.002 (“Purpose”). “To effectuate

the statute’s purpose, the Legislature has provided a two-step procedure to expedite the dismissal of

claims brought to intimidate or to silence a defendant’s exercise of these First Amendment rights.”

ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017); see Tex. Civ. Prac. & Rem.

Code §§ 27.003 (“Motion to Dismiss”), .005 (“Ruling”).

Under the first step, a movant seeking to prevail on a motion to dismiss under the

TCPA has the burden to “show[] by a preponderance of the evidence that the [nonmovant’s] legal

action is based on, relates to, or is in response to the [movant’s] exercise of (1) the right of free speech;

(2) the right to petition; or (3) the right of association.” Tex. Civ. Prac. & Rem. Code § 27.005(b).

4 Although the stated purpose of the TCPA is to “encourage and safeguard [certain] constitutional

rights,” it is now well-established that the plain language of the statutory definitions of the terms

“exercise of the right of free speech,” “exercise of the right to petition,” and “exercise of the right

of association” does not limit application of the Act to constitutionally protected conduct. See Cavin

v. Abbott, 545 S.W.3d 47, 61-63 (Tex. App.—Austin 2017, no pet.) (“Any notion that courts should

read implicit limitations into the TCPA definitions derived from broader statutory or jurisprudential

context has been put to rest by the Texas Supreme Court’s precedents.” (discussing ExxonMobil

Pipeline, 512 S.W.3d at 899-902, and Lippincott v. Whisenhunt, 462 S.W.3d 507 (Tex. 2015))); Elite

Auto Body, LLC. v. Autocraft Bodywerks, Inc., 520 S.W.3d 191, 193 (Tex. App.—Austin 2017, pet.

dism’d) (explaining that “‘communications’ protected by TCPA . . . are not confined solely to speech

that enjoys constitutional protection”); see also Serafine, 466 S.W.3d at 377-79 (Pemberton, J.,

concurring) (discussing implications of construing TCPA without regard to stated purpose of Act

or to technical meanings of phrases under constitutional jurisprudence).

The Act defines “exercise of the right of free speech” as “a communication made in

connection with a matter of public concern.” Tex. Civ. Prac. & Rem. Code § 27.001(3). Similarly,

the Act defines “exercise of the right to petition,” in part, as a “communication in connection with

an issue under consideration or review by a legislative, executive, judicial, other governmental body

or in another governmental or official proceeding,” as well as “any other communication that falls

within the protection of the right to petition government under the Constitution of the United States

or the constitution of this state.” Id. § 27.001(4)(B), (E). Finally, “exercise of the right of association”

is “a communication between individuals who join together to collectively express, promote,

5 pursue, or defend common interests.” Id. § 27.001(2). The term “communication”—a component

of all three forms of protected conduct under the TCPA—is defined as “the making or submitting

of a statement or document in any form or medium, including oral, visual, written, audiovisual, or

electronic.” Id. § 27.001(1).

Under the second step, if the trial court determines that the movant has met his burden

to show that the TCPA applies, the burden shifts to the nonmovant to establish “by clear and specific

evidence a prima facie case for each essential element of the claim in question.” Id. § 27.005(c).

Even if the nonmovant presents a sufficient prima facie case, the trial court must dismiss the legal

action “if the [movant] establishes by a preponderance of the evidence each essential element of a

valid defense to the nonmovant’s claim.” Id. § 27.005(d).

In determining whether to grant a TCPA motion to dismiss, the trial court “shall

consider the pleadings and supporting and opposing affidavits stating the facts on which the liability

or defense is based.” Id. § 27.006(a) (“Evidence”). The court may allow specified and limited

discovery relevant to the motion on a showing of good cause, id. § 27.006(b), but otherwise, all

discovery in the legal action is suspended until the court has ruled on the motion to dismiss,

id. § 27.003(c). In reviewing trial court’s ruling on a motion to dismiss under the TCPA, we apply

a de novo standard of review. Serafine, 466 S.W.3d at 357. That is, we review de novo whether

each party has met its respective burden under the Act’s two-step dismissal mechanism. Long

Canyon Phase II & III Homeowners Ass’n v. Cashion, 517 S.W.3d 212, 217 (Tex. App.—Austin

2017, no pet.).

To the extent resolution of this appeal turns on construction of the TCPA, we also

review these issues de novo. Lippincott, 462 S.W.3d at 509 (citing Molinet v. Kimbrell, 356 S.W.3d

6 407, 411 (Tex. 2011)). When construing the TCPA, as with any other statute, our objective is to give

effect to the legislative intent, looking first to the statute’s plain language. Id. (citing Leland v.

Brandal, 257 S.W.3d 204, 206 (Tex. 2008)). If that language is unambiguous, “we interpret the

statute according to its plain meaning.” Id. “We presume the Legislature included each word in the

statute for a purpose and that words not included were purposefully omitted.” Id. (citing In re M.N.,

262 S.W.3d 799, 802 (Tex. 2008)). “We are also mindful that the Legislature has directed us to

construe [the TCPA] ‘liberally to effectuate its purpose and intent fully.’” Id. (quoting Tex. Civ.

Prac. & Rem. Code § 27.011(b)).

DISCUSSION

In its April 2017 order, the trial court expressly denied the GTS Defendants’ motion

to dismiss for two independent reasons: (1) the GTS Defendants failed to carry their burden to

establish that the TCPA applies to the Plaintiffs’ claims, and (2) even if the TCPA does apply, the

Plaintiffs met their burden to demonstrate a prima facie case for each essential element of their

claims. See Tex. Civ. Prac. & Rem. Code § 27.005. On appeal, the GTS Defendants challenge

each of these conclusions, and we will consider each of these challenges in turn.3

3 Specifically, the trial court’s order states:

(1) The Court finds under [TCPA, section 27.005(b),] that the Defendants have failed to show 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 the right of free speech, the right to petition, or the right of association; and

(2) Alternatively, the Court finds:

a. under [TCPA, section 27.005(c)] that the Plaintiffs have established

7 1. Does the TCPA apply to the Plaintiffs’ suit?

Applying the de novo standard of review, we first examine whether the GTS

Defendants satisfied their initial burden of proving that the TCPA applies to the lawsuit filed by the

Pivot Plaintiffs. To satisfy this burden, the GTS Defendants were required to demonstrate by a

preponderance of the evidence that (1) the Pivot Plaintiffs’ “legal action” (2) “is based on, relates

to, or is in response to” (3) the GTS Defendants’ exercise of their right of free speech, petition, or

association. See id. § 27.005(b).

In support of their motion to dismiss, the GTS Defendants attached the affidavits of

several GTS officers and employees, including Laura Grant (current owner and CEO of GTS),

Ryan Grant (current president of GTS and spouse of Laura Grant), and Anne Fielding (director of

finance and operations at Acquisition from 2011 to 2016), along with supporting documentation.

According to Laura Grant, she acquired the option to purchase GTS in 2014 when then-majority

owner, Jana Grimes, decided to sell her majority-ownership interest in GTS.4 The purchase would

by clear and specific evidence a prima facie case for each essential element of the claim in question; and

b. under [TCPA, section 27.005(d)] that Defendants have failed to establish by a preponderance of the evidence each essential element of a valid defense to the Plaintiffs’ claims.

In this appeal, the GTS Defendants do not challenge the trial court’s finding that they “failed to establish by a preponderance of the evidence each essential element of a valid defense.” See Tex. Civ. Prac. & Rem. Code § 27.005(d). 4 In connection with the 2011 Asset Purchase Agreement, GTS’s owners entered into an option agreement with Pivot, with each owner giving Pivot an assignable right to purchase their interest in GTS, if and when he or she should decide to sell. When Grimes decided to sell her interest in GTS, Pivot assigned its right to purchase Grimes’s interest to Laura Grant.

8 make Laura Grant the owner and CEO of GTS, and the change in ownership would require GTS to

petition the State of Texas for recertification as a HUB. Consequently, before exercising her option

to purchase GTS, Laura Grant wanted “to ensure that GTS’s HUB status would be preserved” and,

consequently, she sought to obtain legal advice on the HUB recertification process.

At Laura Grant’s urging, GTS hired a law firm to review GTS’s business practices

as they related to HUB recertification, including any effect of GTS’s then-existing relationship with

Acquisition and Pivot. On October 31, 2014, the law firm prepared a memo (the “Ozburn Memo”)

identifying a number of areas of concern related to GTS’s HUB status and specifically warning

that “the relationships between [GTS] and [Acquisition],” including the option agreement, “create

significant risks for [GTS]’s HUB status.”

Laura Grant, Ryan Grant, and Ann Fielding later prepared an internal memo (the

“Grant-Fielding Memo”) based on areas of concern identified in the Ozburn Memo. At the time of

the drafting of the Grant-Fielding Memo, Ryan Grant was president of Acquisition and Fielding

was director of finance and operations at Acquisition. The memo, dated October 31, 2014, provided

additional analysis of the identified concerns and made specific recommendations aimed at

separating GTS’s on-going HUB business from the business of Acquisition and Pivot. Among other

things, the Grant-Fielding Memo suggested that GTS maintain separate books from Acquisition and

Pivot and that the parties negotiate fixed rates for Acquisition and Pivot’s contracted services to

GTS.5 In addition, the Grant-Fielding Memo recommended that Acquisition transfer back to GTS’s

5 According to the GTS Defendants, as part of the new structure created by the Asset Purchase Agreement, the parties entered into an Administrative Services Agreement, a Distribution Agreement, and Licensing Agreement “calling for Acquisition to perform much of the back-end

9 payroll certain employees who had been transferred to Acquisition following execution of the

Asset Purchase Agreement.

In the months that followed, the parties began executing the recommendations laid

out in the Ozburn Memo and the Grant-Fielding Memo. In November and December 2014, Fielding

and another Pivot employee executed the transfer of the Acquisition employees to GTS, as

recommended in the Grant-Fielding Memo and, according to Fielding, as approved by GTS. In

January 2015, in exchange for Acquisition’s retention of Fielding as an employee, Pivot and

Acquisition agreed to transfer Ryan Grant to GTS. In October 2015, GTS and Acquisition

renegotiated the terms of the service agreements that were executed by the parties in conjunction

with the Asset Purchase Agreement. As recommended by the memos, the renegotiated agreement

specified the actual fees that Acquisition would charge GTS for certain services provided under the

service agreements and provided that either party could terminate the agreements without cause on

ninety days’ notice.

In addition, Fielding devised a method for separating the accounting records of the

two companies, as proposed in the Grant-Fielding memo. According to Fielding, because GTS held

itself out as a HUB to all Texas customers but not to non-Texas customers, she proposed dividing

the accounting records such that “Texas-based [HUB] customers belonged to GTS and non-Texas

[non-HUB] customers belonged to Acquisition.” Ultimately, Laura Grant purchased Grimes’s

ownership interest in GTS, and on March 31, 2015, GTS was recertified as a HUB by the Texas

Comptroller’s Office.

support work (e.g., billing, accounting, payroll, etc.).”

10 In his affidavit, Ryan Grant, currently president of GTS, states that “[i]n late 2014,

[he] learned that [Pivot] was misrepresenting the relationship between the parties in [Pivot’s] public

financial filing,” specifically that Pivot “improperly recognized GTS’s revenue as its own,

erroneously claiming that GTS was Pivot’s agent, thereby implying a level of control over GTS

that would have been inconsistent with the requirements in the HUB regulations.” According to

Ryan Grant, he and GTS, Laura Grant, and Anne Fielding “repeatedly notified Pivot that its

characterization in public filings was incorrect and should be corrected,” but Pivot refused. Further,

according to Ryan Grant, Pivot incorrectly charged GTS for performance-based commissions that

Acquisition had paid to its employees in 2015. Although GTS informed Pivot of the improper charges,

Pivot refused to reverse the charges.

In 2016, Laura Grant and Ryan Grant made the decision that GTS should end its

relationship with Pivot and Acquisition. According to Ryan Grant, the parties were unable to agree

on the terms of separation, and on June 1, 2016, GTS notified Acquisition and Pivot that it was

terminating the service agreements.

In their original petition, the Pivot Plaintiffs lay out a very different version of the

events leading to the lawsuit. The Pivot Plaintiffs allege that at the time the Asset Purchase Agreement

was executed, the owners of GTS stock, including Ryan Grant, as trustee of the Ryan R. Grant 2007

Trust, signed a Non-Competition and Non-Disclosure Agreement. This agreement provided that

neither GTS nor its shareholders could compete with Acquisition for business that did not require

HUB status for a period of five years and that they could not use any confidential information for

their own use. In addition, when Acquisition hired Ryan Grant as its president, he became bound

to certain restrictive covenants, including covenants of non-disclosure, non-solicitation, and

11 non-competition. “[F]ollowing the Asset sale, [Acquisition] hired the majority of GTS’s former

employees,” and “Pivot largely relied on Mr. Grant in hiring his team at [Acquisition].” The Pivot

Plaintiffs assert that these transferred employees also became bound to non-disclosure, non-

competition, and non-solicitation obligations.

Later, when shareholder Jana Grimes indicated that she wanted to sell her ownership

interest in GTS, Ryan Grant, then president of Acquisition, “put into motion his plan to

misappropriate and convert non-HUB assets that GTS had sold to ARC” by recommending that

Pivot assign its option to purchase Grimes’s interest to his wife, Laura Grant. According to the

Pivot Plaintiffs, Pivot agreed to Ryan Grant’s recommendation only after Ryan Grant represented

that Laura Grant would sign a new option agreement with Acquisition. PTS, a company related to

Pivot, then engaged Laura Grant for a year as a consultant pursuant to a Consulting Agreement for

the purpose of preparing and training her for her new role at GTS. According to the Pivot Plaintiffs,

Ryan Grant’s recommendation that his wife become an owner in GTS was part of the Grants’ scheme

to take over GTS and “convert assets previously sold to [Acquisition].” In their live pleadings, the

Pivot Plaintiffs allege the following:

93. Under the guise of preparing for recertification, [Ryan Grant] requested that [Acquisition] further separate the entities, including that they set up new payroll for GTS, obtain new and separate benefit plans for GTS employees, transfer [Aquisition’s] employees to the GTS payroll, and permit [Laura Grant] to delay executing the option agreement until after GTS has been recertified as a HUB with [Laura Grant] as the owner and [CEO].

94. Pivot and [Acquisition] agreed to some of [Ryan Grant’s] requests, including his requests to maintain separate payroll and benefits and transfer some of the [Acquisition] employees to GTS.

12 ....

96. Pivot and [Acquisition] further agreed to transfer some of [Acquisition’s] employees to the GTS payroll, subject to Pivot’s approval of which employees would be transferred.

97. [Ryan Grant] submitted a list of employees to Pivot that he suggested be transferred from [Acquisition] to GTS. The list of proposed transfers included nearly all of [Acquisition’s] management and profit-generating employees.

98. [Acquisition and Pivot] rejected [Ryan Grant’s] proposed list.

....

100. Without any approval from any other [Aquisition] or Pivot representative, Fielding effectuated the transfers as directed by [Ryan Grant].

105. After surreptitiously moving the Transferred Employees and setting upon GTS’s administrative processes, [Ryan Grant] separated himself from [Acquisition] by representing to Pivot that he needed to be employed by GTS due to the work he performed. Pivot agreed that [Ryan Grant] could transfer to GTS effective January 1, 2015.

The Pivot Plaintiffs go on to allege that “Mr. Grant and the Transferred Employees

misappropriated Acquisition’s existing business with its non-HUB customers, solicited both new

non-HUB work from these existing customers and solicited new non-HUB customers in the

marketplace, now under the GTS name.” “Under the guise of further separating the entities for

HUB purposes, GTS set up an independent payroll, a medical benefit plan, and a 401(k) plan in or

around December 2015.” GTS then changed its name to “ARC Government Solutions, Inc.,” began

using a logo that is nearly identical to Acquisition’s logo, and released a series of misleading press

releases. In short, according to the Pivot Plaintiffs’ allegations, the Defendants used the HUB

13 recertification process, and thus the recommendations laid out in the Ozmun Memo and the Grant-

Fielding Memo, as a means of converting Acquisition’s non-HUB assets and business.

With these competing versions of the factual background in mind, we now turn to

whether these facts, as supported by the relevant record, bring the Pivot Plaintiffs’ claims within the

purview of the TCPA. See Tex. Civ. Prac. & Rem. Code § 27.006(a).

A. “Exercise of the right of free speech”

The GTS Defendants assert that the trial court erred in concluding that the TCPA

does not apply to the Pivot Plaintiffs’ “legal action” because the record on their motion to dismiss

establishes that all of the Pivot Plaintiffs’ claims are “based on, relate[d] to, or [are] in response

to” two categories of communications: (1) communications made in connection with GTS’s

HUB status, petition for recertification of GTS’s HUB status, and need and ability to operate as a

legitimate HUB, and (2) communication between GTS Defendants who had joined together to

pursue a common interest in employment with GTS and in ensuring GTS was able to operate as a

HUB. In determining whether the GTS Defendants met their burden to show that the TCPA applies

to the Pivot Plaintiffs’ claims, we begin our analysis by considering whether these two categories

of communications identified by the GTS Defendants qualify as protected communications under

the TCPA. That is, assuming that at least some of the GTS Defendants’ alleged conduct falls within

the TCPA definition of “communication,” we examine whether these categories of communications

constitute the exercise of (1) the right of free speech; (2) the right of petition; or (3) the right of

association. See id. § 27.001(2)-(4).

14 With respect to first category—communications made in connection with “GTS’s

HUB status, GTS’s petition for recertification of its HUB status, and GTS’s need and ability to

operate as a legitimate HUB”—the GTS Defendants argue that these communications are protected

under the TCPA because they constitute an “exercise of the right of free speech.” As previously

noted, the TCPA broadly defines “exercise of the right of free speech” as “a communication made

in connection with a matter of public concern.” See id. § 27.001(3). A “‘matter of public concern’

includes” but is not limited to “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.” Id. § 27.001(7). According to the GTS Defendants,

GTS’s HUB status is a matter of “public concern,” and as a result, any communication made “in

connection with” GTS’s HUB status constitutes the “exercise of the right of free speech” under the

TCPA. In response, the Pivot Plaintiffs assert that such communications are not an “exercise of the

right of free speech” because GTS’s HUB status is not a “matter of public concern” but instead “is

a matter of one company’s business opportunities.”

In construing the “exercise of the right of free speech” under the TCPA, the Texas

Supreme Court has squarely rejected the notion that the TCPA is limited to speech exercised in a

public forum about purely public matters. In Lippincott v. Whisenhunt, the Texas Supreme Court

considered whether the TCPA applied to allegedly defamatory statements made in private e-mails

about an employee nurse anesthetist. 462 S.W.3d at 509-10. In concluding that the TCPA applied

to the privately made statements, the court explained that while the plain language of the TCPA

“limits its scope to communications involving a public matter,” nothing in the Act requires that

15 the form of the communications be public. Id. at 509. Although the statements at issue in Lippincott

concerned a private employment matter, the statements related to whether the nurse “properly

provided medical services to patients” and therefore were made “in connection with” a matter of

public concern. Id. at 509-10. In other words, although the private communications only directly

concerned a private matter (the manner in which a single employee carried out his job duties), the

communications were made in the context of the provision of healthcare, a “matter of public

concern.” Id. at 510. As the court later explained in ExxonMobil Pipeline Company v. Coleman:

The TCPA does not require that the statements specifically “mention” [the statutorily identified matter of public concern], nor does it require more than a “tangential relationship” to the same; rather, TCPA applicability requires only that the defendant’s statements are “in connection with” “issue[s] related to” health, safety, environmental, economic, and other identified matters of public concern chosen by the Legislature.

512 S.W.3d at 900 (concluding that internal communications regarding pipeline employee’s failure

to follow required fuel-tanks “gauging” procedure constituted “exercise of the right of free speech”

where uncontroverted evidence was that purpose of procedure was, in part, “to reduce the potential

environmental, health, safety and economic risks associated with [fuel spills]”).

Here, the State’s policy of “encourag[ing] the use of historically underutilized

businesses,” 34 Tex. Admin. Code § 20.281 (Tex. Comptroller of Pub. Accounts, Policy and Purpose),

in government purchasing and contracting, Tex. Gov’t Code §§ 2161.181-.183 (requiring state

agencies to use “good faith effort” to increase contract awards to HUBs), the Comptroller’s

administration of the HUB program, and the HUB recertification process are all issues that are

related to “government” and to “economic well-being.” See Tex. Civ. Prac. & Rem. Code § 27.001(7).

16 As a result, the HUB program is a “matter of public concern,” and any communications, public

or private, made by the GTS Defendants “in connection with” the HUB program constitute an

“exercise of the right of free speech” as defined in the TCPA. See id. We therefore conclude that

communications made in the context of GTS’s involvement with the HUB program—including

statements or documents concerning GTS’s HUB status, petition for recertification of GTS’s HUB

status, and the need and ability for GTS to continue to operate as a HUB—qualify as an “exercise

of the right of free speech” under the TCPA.6 See Lippincott, 462 S.W.3d at 510.

B. “Exercise of the right of association”

Next, we consider whether “communications between GTS Defendants who had

joined together to pursue a common interest in employment with GTS and in ensuring GTS was able

to operate as a HUB” are protected communications under the TCPA. The GTS Defendants assert

that communications in this category qualify as an “exercise of the right of association” under the

TCPA because the communications are “between individuals who join together to collectively express,

promote, pursue, or defend common interest.” See Tex. Civ Prac. & Rem. Code § 27.001(2).

In Elite Auto Body LLC v. Autocraft Bodywerks, Inc., this Court considered whether

the TCPA applied to claims that former body shop employees had improperly shared “confidential,

6 The GTS Defendants also argue that communications about GTS’s HUB status qualify as an “exercise of the right to petition.” See Tex. Civ. Prac. & Rem. Code § 27.001(4)(B) (defining “exercise of the right to petition,” in part, as “communications in connection with an issue under consideration or review by legislative, executive judicial, other governmental body or in another governmental or official proceeding,” as well as “any other communication that falls within the protection of the right to petition government under the Constitution of the United States of the constitution of this state”). Because we conclude that the communications are protected under the TCPA as an “exercise of the right of free speech,” we need not decide this issue. See Tex. R. App. P. 47.1.

17 proprietary, and trade secret information” with their new employer, a competing body shop, and that

the information was used by the new employer to “obtain an unfair advantage in the marketplace”

and “to convince more employees to leave” and join the competitor’s business. 520 S.W.3d at 194.

Relying on the plain language of the TCPA’s definitions of protected communications, we rejected

the argument made by Autocraft (the former employer and plaintiff) that the TCPA was limited to

publicly made “communications” protected by the First Amendment. Id. at 199, 204. This Court

concluded that Autocraft’s complaints regarding “‘communications’ among appellants within the

[Elite Auto] enterprise through which they have allegedly shared or used the [Autocraft] information

in question,” as well as communications by Elite Auto “to current Autocraft employees aimed at

luring them to [Elite Auto]” fell within the scope of the TCPA because the communications were

made “in furtherance of the [Elite Auto] business enterprise relative to [Autocraft’s] competitive

position” and were an “exercise of the right of association.” Id. at 205. Based on our holding in

Elite Auto, we agree with the GTS Defendants that any communications “between GTS Defendants

who had joined together to pursue a common interest in employment with GTS and ensuring GTS

was able to operate as a HUB” constitute an “exercise of the right of association.”

C. “[L]egal action . . . based on, relates to, or in response to”

Having concluded that the categories of communications identified by the GTS

Defendants generally qualify as protected communications under the TCPA, we next decide whether

the GTS Defendants met their burden to show that the Pivot Plaintiffs’ “legal action is based on,

relates to, or is in response to” these communications. See Tex. Civ. Prac. & Rem Code § 27.005(b).

The Act defines “legal action” as a “lawsuit, cause of action, petition, complaint, cross-claim, or

18 counterclaim or any other judicial pleading or filing that requests legal or equitable relief.” Id.

§ 27.001(6). As we will discuss later, the Pivot Plaintiffs contend that some of their claims are

exempt under section 27.010 of the TCPA and that some of their claims are excluded from the TCPA

pursuant to the Texas Covenant Not To Compete Act. The Pivot Plaintiffs do not dispute, however,

that each of their claims generally qualifies as a “legal action,” as that phrase is defined in the TCPA.

The phrase “based on, relates to, or is in response to” dictates the nexus that must

exist between the “legal action” and the protected conduct under the TCPA. Although not further

defined in the Act, the phrase serves to capture, at a minimum, a “legal action” that is factually

predicated on the alleged conduct that falls within the scope of TCPA’s definition of “exercise of

the right of free speech,” petition, or association. Cavin, 545 S.W.3d at 59. Moreover, as this Court

recently noted in Cavin v. Abbott, the Texas Supreme Court has rejected the assertion that the plain

language of the phrase, which includes no qualification as to its limits, requires “something more

than a tenuous or remote relationship.” Id. at 63 (citing ExxonMobil, 512 S.W.3d at 901). Instead,

based on the ordinary meaning of the terms, a plaintiff’s claims are “related” to a protected

communication when there is “some sort of connection, reference, or relationship between

them,” and are “in response to” a protected communication when they “react[] to or [are] asserted

subsequently” to the communication. Id. at 69.

From the face of the Pivot Plaintiffs’ live petition, we conclude that the Pivot

Plaintiffs’ claims of fraud and unjust enrichment, in part, are “based on, relate[d] to or [are] in response

to” the GTS Defendants’ “exercise of the right of free speech” (communications in connection with

19 the HUB program).7 Each of these claims is factually predicated on a promise by one or more of the

GTS Defendants to execute a new option agreement after successfully recertifying as a HUB. As

alleged, the promise was made “in connection with” the HUB recertification process and therefore

constitutes an “exercise of the right of free speech.”

Second, we conclude that the Pivot Plaintiffs’ remaining claims are “based on,

relate[d] to or [are] in response to” the GTS Defendants’ “exercise of the right of association” or are

“related to” the GTS Defendants’ “exercise of the right of free speech.” For example, the Pivot

Plaintiffs’ live pleadings include allegations that

(1) GTS, Ryan Grant, and shareholders breached their non-compete agreement, in part, by

(a) “[m]isappropriating [Acquisition’s] confidential information,”

(b) competing directly with [Acquisition] in the “highly competitive [computer market],”

(c) “[u]sing [Acquisition’s] confidential information to unfairly compete with [Acquisition],”

(d) “[s]oliciting and employing [Acquisition] employees who were employed by GTS prior to the Asset sale,” and by

(e) “[i]nterfering with and/or disrupting the relationship between [Acquisition] and its employees and independent contractors”;

7 In their original petition, the Pivot Plaintiffs allege in their fraud claim that Ryan and Laura Grant “fraudulently promised and agreed to execute a new option agreement in favor of [Acquisition] after GTS successfully recertified as a HUB.” Similarly, in support of their unjust enrichment claim, the GTS Defendants allege, in part, that Ryan and Laura Grant “promised and agreed that [Laura Grant] would execute a new option agreement in favor of Pivot or [Acquisition] after GTS successfully recertified as a HUB”; “[b]ased on this promise, Pivot designated [Laura Grant] as Ms. Grime’s successor”; and “following the successful recertification, [Laura Grant] refused to execute the option agreement.”

20 (2) other GTS Defendants breached their employment agreements by

(a) “[m]isappropriating [Acquisition’s] proprietary information,”

(b) “soliciting, accepting business from and doing business with [Acquisition] customers,”

(c) using Acquisition’s proprietary information to unfairly compete,

(d) “[s]oliciting ARC employees to terminate their employment with [Acquisition] to become employed by GTS,”

(e) “transferring, without authorization, [Acquisition’s] revenue generating and executive employees to GTS,”

(f) “[h]iring and/or participating in the hiring of employees previously employed by [Acquisition],” and

(g) “[i]nterfering with and/or disrupting the relationship between ARC and its employees and independent contractors, including [Laura Grant]”;

(3) several GTS Defendants (former employees) that left Acquisition and went to work for GTS breached agreements of non-disclosure, non-competition, and non- solicitation of customers and these employees breached a fiduciary duty owed to Acquisition by engaging in this same conduct;

(4) Laura Grant breached her consulting agreement by, in part, “misappropriating confidential information for her personal benefit and the benefit of GTS,” “using [this confidential information] to unfairly compete with [Acquisition],” “disclosing [this confidential information] to third parties,” and “soliciting, accepting business from and doing business with [Acquisition] customers”; and

(5) GTS “tortiously interfer[ed] with [Acquisition’s and Pivot’s] contractual relationships with” Ryan Grant and Laura Grant.

Further, the Pivot Plaintiffs allege that the GTS Defendants conspired to commit all these “illegal

acts” in order to “unfairly compete with [Acquisition], steal [Acquisition’s] non-HUB business,

customers, and other assets, tortiously interfere with [Acquisition’s] contractual relationships,

21 misappropriate [Acquisition’s] confidential information and trade secrets, and usurp [Acquisition’s]

business opportunities,” and that the GTS Defendants did so with a “common plan.”

Based on these allegations, we conclude that many of the Pivot Plaintiffs’ claims are

factually predicated on GTS’s solicitation and hiring of Acquisition employees and/or on an alleged

sharing and using of Acquisition’s confidential information. Consequently, these claims (which

are almost identical to those brought by the plaintiffs in Elite Auto) are “based on, relate[d] to, or

[are] in response to” communications “between GTS Defendants who had joined together to pursue

a common interest in employment with GTS and ensuring GTS was able to operate as a HUB,”

protected as an “exercise of the right of association.” See Elite Auto, 520 S.W.3d at 205 (concluding

that complaints regarding communications of sharing and or using plaintiff’s information in enterprise

and communications “aimed at luring” competitor’s employees were protected as “exercise of the

right of association”).

In addition, the Pivot Plaintiffs’ remaining claims concern complaints that the GTS

Defendants improperly transferred Acquisition employees and other assets and that the GTS

Defendants “solicited,” “accept[ed] business from,” and “converted” the Pivot Plaintiffs’ customers.

The record demonstrates that these claims stem from the recommendations for separating GTS and

Acquisition set forth in the Ozburn Memo and the Grant-Fielding Memo, communications made in

the context of the HUB certification process and preservation of GTS’s HUB status. As a result, we

conclude that these claims are “relate[d] to” and are “in response to” the GTS Defendants’ “exercise

of the right of free speech.”

Based on the pleadings and the evidence presented by the parties, we conclude that

the GTS Defendants met their burden to show that each of the Pivot Plaintiffs’ claims, or “legal

22 actions,” is “based on, relate[d] to, or in response to” protected communications under the TCPA.

Consequently, the trial court erred in denying the GTS Defendants’ motion to dismiss on this ground.

2. Did the Pivot Plaintiffs establish a prima facie case for their claims?

In their second issue, the GTS Defendants assert that the trial court erred in denying

their motion to dismiss on the alternative ground that the Pivot Plaintiffs satisfied their burden under

the TCPA to establish by “clear and specific evidence a prima facie case for each essential element

of the claim in question.” See Tex. Civ. Prac. & Rem. Code § 27.005(c). A prima facie case “refers

to evidence sufficient as a matter of law to establish a given fact if not rebutted or contradicted.” In

re Lipsky, 460 S.W.3d 579, 590 (Tex. 2015). “It is the ‘minimum quantum of evidence necessary

to support a rational inference that the allegation of fact is true.’” Id. (quoting In re E.I. DuPont de

Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004) (per curiam)); Long Canyon, 517 S.W.3d at 222

(recognizing same). In addition, the TCPA limits the type of evidence from which a prima facie case

may be made to that evidence which is “clear and specific”—“clear” meaning “unambiguous,” “sure

or free from doubt,” and “specific” meaning “‘explicit’ or ‘referring to a particular named thing.’”

In re Lipsky, 460 S.W.3d at 590; see also Black’s Law Dictionary 307 & 1616 (10th ed. 2014). Thus,

the term “‘clear and specific evidence’ refers to the quality of evidence required to establish a prima

facie case, while the term ‘prima facie case’ refers to the amount of evidence required to satisfy the

nonmovant’s minimal factual burden.” Serafine, 466 S.W.3d at 358. “Collectively, these elements

require that a party ‘provide enough detail to show the factual basis for its claim,’ and thus

effectively abrogate the utility of mere notice pleading as ‘evidence’ to that end.” Cavin, 545 S.W.3d

at 72 (quoting In re Lipsky, 460 S.W.3d at 590-91). Conclusory statements and bare baseless opinions

23 are not probative and accordingly do not establish a prima facie case. Long Canyon, 517 S.W.3d

at 222 (citing In re Lipsky, 460 S.W.3d at 592-93).

In response to the motion to dismiss, the Pivot Plaintiffs chose not to support their

claims or supplement their pleadings with affidavits and instead relied solely on the allegations in

their petition and the documents attached to their petition. See Tex. Civ. Prac. & Rem. Code § 27.006.

On appeal, the GTS Defendants assert that although these pleadings and supporting documents are

lengthy, they are ultimately “characterized by an utter lack of evidence and an insurmountable lack

of specificity.” According to the GTS Defendants, the “Plaintiffs have failed to plead basic who-

what-where-when facts, and have not supported their pleadings with evidence.” In part, the GTS

Defendants assert that a showing of actual damages or injury is required as an essential element of

each of the Pivot Plaintiffs’ claims for compensatory damages against the GTS Defendants and that

with regard to every claim, the Pivot Plaintiffs have failed to make a “clear and specific prima facie

case” that they have, in fact, suffered actual damages or injury.

With respect to actual damages or injury stemming from their claims for breach of

contract, tortious interference with contract, and breach of fiduciary duty, the Pivot Plaintiffs allege

in their response to the motion to dismiss and in their live pleadings that they have suffered, and will

continue to suffer damages, such as lost profits, lost revenue, lost opportunities, loss of goodwill,

loss of customers, and a diminution in the value of their assets. The Pivot Plaintiffs also allege that

the GTS Defendants’ “tortious conduct has caused—and will continue to cause damages” to the

Pivot Plaintiffs “in an amount exceeding $1,000,000, to be proven at trial.” Similarly, in support of

their claims for conversion, theft, trade secret misappropriation, unfair competition, harmful access

24 by computer, and conspiracy, the Pivot Plaintiffs generally allege that they “have suffered and will

continue to suffer damages, including deprivation as to the use and value of such property, lost

profits, lost revenue, lost opportunities, loss of goodwill and compensatory damages” and that the

acts of the GTS Defendants “have caused and will continue to cause damages to [Acquisition] in an

amount exceeding $1,000,000, to be proven at trial.”

Assuming without deciding that the Pivot Plaintiffs’ live pleadings otherwise provide

adequate specificity with regard to the wrongful actions taken by the GTS Defendants, we conclude

the pleadings fail to describe with the requisite detail how the alleged actions resulted in any actual

damages or injuries. See In re Lipsky, 460 S.W.3d at 593 (explaining that “general averments of direct

losses and lost profits,” even in specified dollar amounts, do not satisfy minimum requirements of

TCPA). For example, the Pivot Plaintiffs’ pleadings fail to identify any particular lost customer, lost

sale, or lost business opportunity caused by the GTS Defendants’ conduct. In addition, although the

Pivot Plaintiffs generally describe property and confidential information allegedly taken or improperly

disclosed by the GTS Defendants, the Pivot Plaintiffs do not describe any factual basis for

determining the value of the allegedly taken property or for calculating the loss of its use. In short,

based on the relevant record before us, we conclude that the Pivot Plaintiffs pleadings fail to provide

the element-by-element, claim-by-claim factual specificity required by the Act with regard to

damages. See Peterson v. Overlook at Lake Austin, L.P., No. 03-16-00557-CV, 2018 WL 1321532,

at *3-4 (Tex. App.—Austin Mar. 15, 2018, no pet.) (mem. op.) (concluding that trial court erred in

denying motion to dismiss on claims for breach of contract and tortious interference with contract

because plaintiff did not establish prima facie case for damages element of claims); see also In re

25 Lipsky, 460 S.W.3d at 592 (explaining that “[b]are, baseless opinions do not create fact questions,

and neither are they a sufficient substitute for clear and specific evidence required to establish a

prima facie case under the TCPA”).

In response, the Pivot Plaintiffs claim that they should not be required to plead

additional specific facts regarding damages at this early stage of the proceedings and that it is

impossible for them to know the exact scope of their damages because “Defendants intentionally hid

data and made damages difficult to prove in this case.” The Pivot Plaintiffs assert that “extensive

factual and expert discovery, examination of Defendants’ witnesses, and analysis by experts in fields

such as accounting forensics and computer forensics, will be necessary to determine damages.”

We understand that additional evidence may be necessary for the Pivot Plaintiffs to

ultimately convince the trier of fact of its claims and of its exact damages and that such evidence

may only be obtained through the course of lengthy investigation and discovery. Nevertheless, the

plain language of the TCPA requires at this stage “clear and specific evidence” of a “prima facie

case” as to every essential element of each and every claim, including damages. See Tex. Civ. Prac.

& Rem. Code § 27.005(c). Although the Pivot Plaintiffs were not required at this stage of the litigation

to prove the exact amount of their damages, they were required to provide “clear and specific”

evidence of some damages suffered. See Long Canyon, 517 S.W.3d at 224 (noting that trial court

erred in denying motion to dismiss because plaintiffs did not specify damages caused by alleged

negligence, “much less supply clear and specific evidence of those damages”). To the extent the

Pivot Plaintiffs needed additional discovery to meet this burden, the Act provides that the trial court

may allow “specified and limited discovery relevant to the motion” upon a showing of good cause.

26 Tex. Civ. Prac. & Rem. Code § 27.006(b). The Pivot Plaintiffs never filed a motion or otherwise

asserted that good cause existed to permit limited discovery in this case.

The Pivot Plaintiffs also argue that their claims cannot be dismissed based on a

lack of specific allegations supporting damages because, in addition to actual damages, they

are seeking equitable relief in the form of an accounting, constructive trust, and a permanent

injunction. See T.F.W. Mgmt., Inc. v. Westwood Shores Prop. Owners Ass’n, 79 S.W.3d 712, 717

(Tex. App.—Houston [14th Dist.] 2002, pet. denied) (“A suit for an accounting is generally founded

in equity.”). Generally, a party seeking equitable relief must demonstrate, among other things, that

he has no adequate remedy at law—such as when, with respect to a request for an injunction,

monetary damages would be inadequate to compensate the aggrieved party, Universal Health Servs.,

Inc. v. Thompson, 24 S.W.3d 570, 577 (Tex. App.—Austin 2000, no pet.), or with respect to a

request for an accounting, the party cannot obtain the information through the use of standard

discovery procedures, T.F.W. Mgmt., 79 S.W.3d at 717.

In support of their request for an accounting, the Pivot Plaintiffs claim that “GTS

converted [Acquisition’s] customers, unlawfully received and retained monies paid by [Acquisition’s]

customers, and diverted [Acquisition’s] business to a third party so that it receives revenue from the

staff augmentation business.” Similarly, the Pivot Plaintiffs claim that the imposition of constructive

trust is necessary to preserve wrongfully diverted funds. With respect to their request for injunctive

relief, the Pivot Plaintiffs assert that an injunction against the GTS Defendants is necessary “to prevent

them from continuing to violate the terms of their non-competition covenants and all other restrictive

covenant agreements with [Acquisition].” Further, the Pivot Plaintiffs allege that ‘[t]he resulting

harm will be irreparable due to the nature of the wrong, and no adequate remedy at law exists.”

27 Based on the evidence and pleadings, we conclude that the Pivot Plaintiffs have failed

to meet their burden to provide clear and specific evidence sufficient to support their claims for

equitable relief. Like their claims for compensatory damages, the Pivot Plaintiffs fail to identify any

actual loss or injury, such as a specific lost customer or business opportunity, an essential element

of many of their underlying causes of action. See In re Lipsky, 460 S.W.3d at 593. Moreover, the

Pivot Plaintiffs fail to allege specific facts demonstrating that compensatory damages would be

inadequate or that the requested accounting information could not be obtained through ordinary

discovery procedures. See Long Canyon, 517 S.W.3d at 224 (concluding that plaintiffs failed to

establish prima facie case for injunctive relief seeking to prevent homeowners association from

harassing and causing emotional distress because plaintiffs did not provide evidence of irreparable

injury or inadequate remedy at law).

Because the Pivot Plaintiffs failed to present clear and specific evidence of a prima

facie case for every essential element of each and every claim for relief, the trial court erred in

denying the GTS Defendants’ motion to dismiss on this ground.

3. Are there alternative grounds to support the trial court’s denial of the motion to dismiss?

In their responsive briefing on appeal, the Pivot Plaintiffs argue that the trial court

could have properly denied the GTS Defendants’ motion to dismiss, in whole or in part, for three

additional, independent reasons: (1) the motion to dismiss was untimely filed under the deadline

imposed by the TCPA as to GTS, Ryan Grant, and Laura Grant; (2) some or all of the Pivot Plaintiffs’

claims are exempt from the TCPA under the statutory exemption for commercial speech; and (3) the

Texas Covenants Not to Compete Act (CNCA) precludes application of the TCPA with respect to

28 their claims for enforcement of covenants not to compete. Although the trial court did not expressly

rule on these alternative grounds when it denied the motion, because “no additional trial-level

proceedings are necessary for the issues to be judicially determined,” we will examine whether these

grounds support the trial court’s decision to deny the GTS’s motion to dismiss. See Cavin, 545

S.W.3d at 71 (concluding that appellate court could decide additional issue of whether movants

established each essential element of valid defense under section 27.005(d), even though trial court

did not reach this issue).

A. TCPA filing deadline

We turn first to the Pivot Plaintiffs’ contention that certain GTS Defendants (GTS,

Laura Grant, and Ryan Grant) failed to timely file their motion to dismiss under the deadline

imposed by the TCPA, and thus the motion was not properly before the trial court. Section 27.003(b)

provides that a motion to dismiss must be filed “not later than the 60th day after the date of service

of the legal action.” Tex. Civ. Prac. & Rem. Code § 27.003(b). The court may, however, “extend

the time to file a [motion to dismiss] on a showing of good cause.” Id.

With regard to “the date of service of the legal action,” Rule 119 of the Texas Rules

of Civil Procedure states:

The defendant may accept service of process, or waive the issuance of service thereof by a written memorandum signed by him, or by his duly authorized agent or attorney, after suit is brought, sworn to before a proper officer other than an attorney in the case, and filed among the papers of the cause, and such waiver or acceptance shall have the same force and effect as if the citation had been issued and served as provided by law. . . .

29 Tex. R. Civ. P. 119 (emphasis added). Under the plain language of this rule and of section 27.003(b),

when service of process is accepted or waived and a memorandum of service in compliance with

Rule 119 is filed with the trial court clerk, the deadline for filing a TCPA motion to dismiss is

calculated from the date of the waiver or acceptance of service as evidenced by the memorandum.

In this case, however, nothing in the record suggests, and the Pivot Plaintiffs do not

contend, that they obtained or even attempted to obtain a formal written memorandum for service

of process in compliance with Rule 119. Instead, in support of their argument, the Pivot Plaintiffs

attached the affidavit of Erin McLaughlin, an attorney for Pivot and Acquisition, to their response

to the GTS Defendants’ motion to dismiss. In her affidavit, McLaughlin avers that an attorney for

GTS “advised [her] by telephone on December 2, 2016, that he was accepting service on behalf

of GTS, Mr. Grant, and Mrs. Grant.” The Pivot Plaintiffs argue that section 27.003’s sixty-day

deadline is mandatory, and that because these three defendants waited to file their motion to dismiss

until seventy-four days from the date their attorney accepted service, the TCPA motion to dismiss

is time barred with respect to these defendants.

In response to the Pivot Plaintiffs’ argument that their TCPA motion to dismiss was

untimely, the GTS Defendants submitted to the trial court the declaration of David Weaver, an

attorney representing many of the GTS Defendants, including GTS, Laura Grant, and Ryan Grant.

According to Weaver:

Between November 23, 2016, and December 16, 2016, I engaged in a series of e-mail exchanges and telephone calls with Attorney McLaughlin. In each of these conversations, Attorney McLaughlin and I discussed which of the approximately 30 defendants I represented and whether I had accepted service on behalf of any defendants. My understanding was that Attorney McLaughlin was planning to initiate the formal and costly procedures to effect personal service on any defendant who I did not represent.

30 Weaver goes on to state:

Prior to December 16, 2016, to the best of my recollection, I did not agree—orally or in writing—to formally accept service on behalf of any defendants. Rather, before December 16, 2016, Attorney McLaughlin and I were still discussing when GTS (and any other defendants I would eventually represent) would file a response to the Plaintiffs’ petition. . . . .

On December 16, 2016, via e-mail, I informed Attorney McLaughlin that I represented all the defendants except for Brandie Reed, Jana Grimes, John Grimes and Dallas Grant. Accordingly, on January 13, 2017, I filed an answer and counterclaims on behalf of the defendants who I represented.

Rule 119 provides the sole method for establishing a valid acceptance or waiver of

service of process prior to a voluntary appearance by a defendant, presumably to prevent the kind

of factual disputes concerning acceptance or waiver of service presented here. See id. (stating that

“waiver or acceptance [in compliance with Rule 119] shall have the same force and effect as if the

citation had been issued and served as provided by law”); Spivey v. Holloway, 902 S.W.2d 46, 48

(Tex. App.—Houston [1st Dist.] 1995, no writ) (noting that “[a]n appearance constitutes a waiver

of service”). Had the Pivot Plaintiffs filed a memorandum of service in compliance with Rule 119,

there would be no doubt as to whether and when opposing counsel accepted or waived service of

process on behalf of GTS, Laura Grant, and Ryan Grant. In the absence of such a memorandum of

service, however, the trial court could not have concluded that these defendants, or their attorney on

their behalf, ever agreed to accept or waive service of process prior to the filing of their answer. See

Approximately $58,641.00 v. State, 331 S.W.3d 579, 583-84 (Tex. App.—Houston [14th Dist.]

2011, no pet.); see also Tex. R. Civ. P. 121 (“An answer shall constitute an appearance of the

defendant so as to dispense with the necessity for the issuance or service of citation upon him.”).

31 The record before us establishes as a matter of law that GTS, Laura Grant, and Ryan

Grant validly waived service on January 13, 2017, when they voluntarily appeared and filed their

answer, but not before. See Tex. R. Civ. P. 121. Consequently, the deadline for these defendants

to file their motion to dismiss under Section 27.003(b) began to run from that date. See Tex. Civ.

Prac. & Rem. Code § 27.003; Jordan v. Hall, 510 S.W.3d 194, 198 (Tex. App.—Houston [1st Dist.]

2016, no pet.) (holding that 60-day window to file TCPA motion began to run from date on which

defendant voluntarily appeared by filing answer). The GTS Defendants’ motion to dismiss, filed on

February 14, 2017, was timely as to these defendants.

B. Commercial-speech exemption

Next, we consider whether some or all of the Pivot Plaintiffs’ claims are exempt from

the TCPA under the commercial-speech exemption, which states:

This chapter does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or potential buyer or customer.

Tex. Civ. Prac. & Rem. Code § 27.010(b). The burden to establish the commercial-speech exemption

is on the party relying on it—in this case, the Pivot Plaintiffs. Better Bus. Bureau of Metro. Dallas,

Inc. v. BH DFW, Inc., 402 S.W.3d 299, 309 (Tex. App.—Dallas 2013, pet. denied).

The Texas Supreme Court has recently construed the scope of the commercial-

speech exemption in the context of a commercial dispute. See Castleman v. Internet Money Ltd.,

546 S.W.3d 684, 685-91 (Tex. 2018) (per curiam). In that case, the plaintiff Castleman ran an online

32 platform in which Castleman received orders from consumers on the platform, then ordered the

items from suppliers, and shipped the orders to the consumer. Id. The defendant, O’Connor, was hired

by Castleman to “to receive and fulfill the customer orders placed through Castleman’s website.”

Id.at 685. After a dispute arose over O’Connor’s performance in fulfilling orders, Castleman

published statements about the dispute on various online platforms including on a blog, YouTube,

and social media. Id. O’Connor sued Castleman for defamation, and in response, Castleman filed

a motion to dismiss under the TCPA. The trial court denied the motion, agreeing with O’Connor’s

assertion that the claims were exempt from the TCPA under the commercial-speech exemption. Id.

After the court of appeals affirmed the decision of the trial court, the Texas Supreme Court reversed

the court of appeals’ judgment. Id. at 686.

In holding that the commercial-speech exemption did not apply to O’Connor’s

defamation claims, the court construed the statute and held that the commercial-speech exemption

applies when:

(1) the defendant was primarily engaged in the business of selling or leasing goods [or services];

(2) the defendant made the statement or engaged in the conduct on which the claim is based in the defendant’s capacity as a seller or lessor of those goods or services;

(3) the statement or conduct at issue arose out of a commercial transaction involving the kind of goods or services the defendant provides; and

(4) the intended audience of the statement or conduct were actual or potential customers of the defendant for the kind of goods or services the defendant provides.

33 Id. at 688.

The Pivot Plaintiffs argue that all of their claims are exempt under what they refer to

as the “sales-exemption prong” of the commercial-speech exemption—that is, that their legal action

was brought “against a person primarily engaged in the business of selling or leasing goods or

services” and that “the statement or conduct arises out of the sale or lease of goods [or] services.”

See Tex. Civ. Prac. & Rem. Code § 27.010(b). According to the Pivot Plaintiffs, the commercial-

speech exemption applies because (1) the GTS Defendants are primarily engaged in the business

of selling “computers, peripherals, and computer-related services”; (2) the 2011 Asset Purchase

Agreement and related administrative service agreements “effectuated the sale of goods and

services” by the GTS Defendants to Pivot Plaintiffs; and (3) the GTS Defendants’ conduct and

statements that are the basis of all of the Pivot Plaintiffs’ claims “arise out of these Agreements.”8

In other words, under their sales-exemption theory, the Pivot Plaintiffs argue their claims are

exempt because “[a]ll of the agreements and duties that Plaintiffs allege were breached arise from

the August 12, 2011 Asset Purchase Agreement and the related August 12, 2011 Administrative

Services Agreement.”

8 The GTS Defendants contend that the Pivot Plaintiffs failed to preserve for appellate review any argument with respect to these Agreements. See Tex. R. App. P. 33.1 (preservation of error). The GTS Defendants point out that before the trial court, the Pivot Plaintiffs asserted that the commercial-speech exemption applied to their claims related “to the solicitation of Plaintiffs’ customers in violation of specific non-compete and non-solicitation provisions [and to] attempts by Defendants to tortiously interfere with Plaintiffs’ customer relations for the sole purpose of stealing those customers.” Now, in post-submission briefing in this appeal, the Pivot Plaintiffs argue for the first time that, in fact, all of their claims fall within the commercial-speech exemption due to the Asset Purchase Agreement and the Administrative Services Agreement. For purposes of this appeal, we will assume without deciding that the issue of commercial-speech exemption has been adequately preserved by the Pivot Plaintiffs in all respects.

34 As the GTS Defendants point out, the Pivot Plaintiffs do not allege that the

Agreements themselves effectuated a sale or lease of computer-related goods or services—the

business that the Pivot Plaintiffs have identified as the business in which GTS is “primarily engaged”

and which forms the basis of their claim to the commercial-speech exemption.9 Cf. Epperson v.

Mueller, No. 01-15-00231-CV, 2016 WL 4253978, at *11 (Tex. App.—Houston [1st Dist.] Aug. 11,

2016, no pet.) (mem. op.) (noting that defendant was “in the authentication business” and “the

complained of statements arose out of those services”). Instead, in their live pleadings, the Pivot

Plaintiffs describe the assets purchased by Acquisition under the Asset Purchase Agreement as “all

of GTS’s assets, except for a small portion of its business that required HUB status,” including

“[a]ll rights and benefits accruing to [GTS] under any leases, contracts or other Agreements”; “[t]he

proprietary right of [GTS] related to the Business”; “[a]ll inventory”; “[a]ll receivables”; “[a]ll

prepaid and deferred items of [GTS]”; “machinery, equipment, furniture, fixtures and other personal

property used in the Business”; “[b]ooks of account, files, papers, records, and customer, supplier,

employee and production information”; “[c]ash and cash equivalents”; “benefits under any insurance

policies”; and “[t]he good will of the Business.” The Pivot Plaintiffs do not specifically describe the

nature of the administrative services required by GTS to Acquisition or Pivot under the “related

August 12, 2011, Administrative Services Agreement,” nor do they allege that the GTS Defendants

failed to provide any computer-related services required by this Service Agreement.

9 In their live pleadings, the Pivot Plaintiffs allege that “[a]t the time of the Asset Sale, GTS’s business included the analysis, planning, design, procurement, installation and consultation related to technology products and systems.”

35 There is no dispute that the GTS Defendants are primarily engaged in the business

of selling or leasing goods or services and that, as alleged, the GTS Defendants engaged in the

conduct or made the statements at issue in its capacity as a seller or lessor of goods or services.

See Castleman, 546 S.W.3d, at 688. Consequently, only the third and fourth elements of the

commercial-speech exemption are at issue. The third element of the exemption requires the plaintiff

to establish, in part, that “the statement or conduct at issue arose out of a commercial transaction

involving the kind of goods or services the defendant provides.” Id. Assuming without deciding that

the alleged statements or conduct at issue (i.e., conduct amounting to breach) “arose out of” the

Agreements themselves, as the Pivot Plaintiffs assert, the Pivot Plaintiffs have nevertheless failed

to establish that the Agreements are “commercial transaction[s] involving” computer-related goods

or services, “the kind of goods or services the defendant provides.” See id. Similarly, with respect

to the fourth element, the Pivot Plaintiffs have failed to demonstrate that the intended audience of

the GTS Defendants’ alleged statements or conduct were actual or potential customers of the GTS

Defendants “for the kind of goods or services the defendant provides.” See id. Consequently, the

Pivots Plaintiffs’ have failed to establish that their claims fall within the commercial-speech

exemption as a result of the 2011 Agreements.

In their second argument related to the commercial-speech exemption, the Pivot

Plaintiffs assert that many of their claims fall within the commercial-speech exemption because they

are based on the GTS Defendants’ “improper solicitations of Plaintiffs’ actual or potential buyers

or customers,” which constitute “commercial transaction[s]” within the meaning of the Act. See

Tex. Civ. Prac. & Rem. Code § 27.010 (“if the statement or conduct arises out of . . . a commercial

36 transaction”). According to the Pivot Plaintiffs, their petition is based on allegations that the GTS

Defendants wrongfully pursued sales of their computer-related products and services to existing and

potential customers of the Pivot Plaintiffs. Specifically, the Pivot Plaintiffs allege that the GTS

Defendants “solicited new non-HUB work from these existing customers and solicited new non-

HUB customers in the marketplace” and that this conduct constitutes a breach of non-compete and

non-solicitation provisions in the parties’ agreements. In addition, according to the Pivot Plaintiffs,

the GTS Defendants improperly solicited customers by misappropriating a public website; confusing

customers with misleading logos, names, and press releases; transferring employees to reach those

employees’ customer contacts; and misdirecting customers to send payments to a GTS account.

In determining whether some of the Pivot Plaintiffs’ claims fall within the

commercial-speech exemption, we examine the “evidence,” which in this case consists of the

plaintiffs’ pleadings. See id. § 27.006. Viewing this evidence in the light most favorable to the Pivot

Plaintiffs, see Serafine, 466 S.W.3d at 369 n.28, we conclude that the commercial-speech exemption

applies to the Pivot Plaintiffs’ claims of improper solicitation and competition to the extent they

have alleged that the GTS Defendants engaged in communications with actual or potential Pivot

customers for the purpose of securing sales of GTS goods or services. See Abatecola v. 2 Savages

Concrete Pumping, LLC, 2018 WL 3118601, at * 9 (Tex. App.—Houston [14th Dist.] June 26, 2018,

no pet. h.) (mem. op.) (concluding that commercial-speech exemption applied to tortious-interference

claims based upon interference with customers where pleadings and evidence demonstrated that

“alleged communications with customers took place so that [defendant] could sell concrete pumping

services for compensation”). However, to the extent the Pivot Plaintiffs’ claims of improper

37 solicitation and competition are based on allegations that the GTS Defendants transferred employees

to reach customer contacts; misappropriated a website; and confused consumers with misleading

logos, names, and press releases, we conclude that the Pivot Plaintiffs’ allegations fail to establish

that “actual or potential customers” were the “intended audience” of these communications and that

these communications “arose out of a commercial transaction.” See Castleman, 546 S.W.3d at 688

(requiring that “statement or conduct at issue arose out of a commercial transaction” and that

“intended audience of the statement or conduct were actual or potential customers of the defendant”);

see also Better Bus. Bureau of Metro. Dallas, 402 S.W.3d at 303-04 (holding that commercial-

speech exemption did not apply because “intended audience of the business review was the general

public,” not an entity seeking the defendant’s services). Consequently, with respect to claims based

on these “solicitations,” the Pivot Plaintiffs have failed to meet their burden to show that the claims

fall within the commercial-speech exemption.

C. Preemption under the Covenants Not to Compete Act

Lastly, the Pivot Plaintiffs assert that the Covenants Not to Compete Act (CNCA)

precludes application of the TCPA to the extent they are seeking to enforce noncompete agreements

against the GTS Defendants. See Tex. Bus. & Com. Code §§ 15.50-.52. The Pivot Plaintiffs argue

that section 15.52 makes clear that the CNCA preempts and excludes any other procedures and

remedies, including the TCPA, in an action to enforce a Texas covenant not to compete.10

10 Section 15.52 of the CNCA, entitled “Preemption of Other Law,” provides:

The criteria for enforceability of a covenant not to compete provided by Section 15.50 and the procedures and remedies in an action to enforce a covenant not to compete

38 The GTS Defendants assert, in part, that the Pivot Plaintiffs have waived the right to

make this argument on appeal because they never presented it to the trial court. See Tex. R. App.

P. 33.1 (preservation of appellate complaints). In response, the Pivot Plaintiffs contend that their

argument that the CNCA preempts the TCPA with respect to certain claims has been adequately

preserved for appeal because they were not required to present this specific argument to the trial

court. According to the Pivot Plaintiffs, their preemption argument is encompassed in the issue of

whether the TCPA applies to the Pivot Plaintiffs’ claims. See Adams v. Starside Custom Builders,

LLC, 547 S.W.3d 890, 896 (Tex. 2018) (holding that TCPA movant was not required on appeal or

at trial to “rely precisely on the same case law or statutory subpart” found persuasive by court).

Appellate courts do not consider issues that were not raised in the court below, but

parties may construct new arguments on appeal in support of issues properly preserved. Greene v.

Farmers Ins. Exch., 446 S.W.3d 761, 764 n.4 (Tex. 2014). In this case, the Pivot Plaintiffs generally

argued to the trial court that the GTS Defendants’ TCPA motion to dismiss should be denied because

(1) the Pivot Plaintiffs’ claims were not based on conduct protected by the terms of the TCPA;

(2) alternatively, they carried their burden under the TCPA to establish a prima facie case; (3) the

GTS Defendants did not meet the time requirements for filing their motion to dismiss set forth in the

TCPA; and (4) their claims fell within a statutory exemption under the TCPA. Here, for the first

provided by Section 15.51 of this code are exclusive and preempt any other criteria for enforceability of a covenant not to compete or procedures and remedies in an action to enforce a covenant not to compete under common law or otherwise.

Tex. Bus. & Com. Code § 15.52.

39 time on appeal, the Pivot Plaintiffs assert that the TCPA does not apply to at least some of their

claims because the claims are instead governed exclusively by a different statute, the CNCA. In

other words, the Pivot Plaintiffs’ preemption argument is not that a different case or subpart of the

TCPA dictates a different outcome, see Starside Custom Builders, 547 S.W.3d at 896, but that

some of their claims are governed by a different body of law altogether. See Entergy Gulf States,

Inc. v. Public Util. Comm’n, 173 S.W.3d 199, 210 (Tex. App.—Austin 2005, pet. denied) (noting

that preemption argument that affects choice of law can be waived) (citing Gorman v. Life Ins. Co.

of N. Am., 811 S.W.2d 542, 545 (Tex. 1991) (noting that preemption argument that affects choice

of forum rather than choice of law is not waivable and can be raised for first time on appeal)). To

preserve their argument that preemption by the CNCA serves as an alternative basis for denying the

GTS Defendants’ motion to dismiss, the Pivot Plaintiffs were required to present the argument to

the trial court. Because they did not, we will not consider this argument on appeal.

CONCLUSION

We conclude that the trial court erred in deciding that the TCPA does not apply to the

Pivot Plaintiffs’ claims. In addition, the Pivot Plaintiffs failed to meet their burden to establish a

prima facie case “by clear and specific evidence” for each essential element of their claims, see Tex.

Civ. Prac. & Rem. Code § 27.005(b), and the GTS Defendants’ motion to dismiss was not untimely

filed as to any of the GTS Defendants, see id. § 27.003(b).

We also conclude, however, that the Pivot Plaintiffs met their burden to establish that

some of their claims against the GTS Defendants based on improper solicitation and competition are

excluded from the TCPA under the commercial-speech exemption. See id. § 27.010(b). We affirm

40 the trial court’s denial of the GTS Defendants’ motion to dismiss with respect to these claims.

In all other respects, we reverse the trial court’s order denying the GTS Defendants’ motion to

dismiss and remand the case to the trial court to order dismissal of these claims and for further

proceedings, including consideration of an award of costs, attorney’s fees, and other expenses. See

id. § 27.009.

__________________________________________

Scott K. Field, Justice

Before Justices Puryear, Field, and Bourland

Affirmed in Part; Reversed and Remanded in Part

Filed: August 3, 2018