Texas Citizens Participation Act/TCPA Archives

Breach of Confidentiality Claim Survives Motion to Dismiss under Anti-SLAPP Law

The Court of Appeals of Texas (Fourth District) upheld a trial court’s order denying a motion to dismiss a breach of confidentiality agreement claim pursuant to the Texas Citizens Participation Act (TCPA), which is designed to protect people from strategic lawsuits against public participation (SLAPP). Harper v. Crédito Real Bus. Cap., Case No. 21-0212 (Tex. App. July 20, 2022) (Martinez, Chapa, Watkins, JJ.)

Crédito Real Business Capital (CRBC) leases equipment and provides financing services to companies in the construction industry. CRBC provides its services through two limited liability companies: CR-FED and CR-FED Leasing. Earl Harper previously worked for CRBC as executive vice president and was required to sign a confidentiality agreement with CR-FED stipulating that he would not share its confidential information with third parties.

CRBC advanced money and leased equipment to Ontrack Site Services, a site grading contractor and customer with whom Harper worked. As part of his employment, Harper was provided with confidential information regarding CRBC’s plans and projections for its relationship with Ontrack, including CRBC’s willingness to extend additional financing or leasing services to the contractor. Harper allegedly used this information to help Ontrack negotiate better lease rates and financing terms to CRBC’s detriment. CRBC terminated Harper’s employment. Harper subsequently joined a new company and advised Ontrack to obtain financing from that company instead of CRBC.

CRBC sued Harper for breach of fiduciary duty and breach of contract for misappropriating CRBC’s trade secrets and breaching the confidentiality agreement. Harper filed a motion to dismiss the breach of contract claim pursuant to the TCPA, under which a party can file a motion to dismiss a lawsuit if it “is based on or is in response to a party’s exercise of the right of free speech, right to petition, or right of association.” The trial court denied the motion. Harper appealed, contending the following:

CRBC’s breach of contract claim related to Harper’s exercise of free speech.
CRBC did not establish a prima facie case of its breach of contract claim.
The trial court improperly considered CRBC’s amended petition.

A motion to dismiss pursuant to the TCPA is evaluated under a three-step burden shifting framework:

The movant must first demonstrate that the legal action is based on the movant’s exercise of the right to free speech, the right to petition or the right to association.
The nonmovant must then establish a prima facie case of its claim.
If the nonmovant satisfies its burden, the action must still be dismissed if the movant establishes grounds on which it is entitled to judgment as a matter of law.

The Texas Court of Appeals first addressed whether the trial court was permitted to consider CRBC’s amended petition when it ruled on the motion to dismiss. CRBC’s amended petition merely clarified that “CRBC” was the assumed name for both CR-FED and CR-FED Leasing, rather than just CR-FED. Because the amended petition was filed well before the hearing date and did not include any element of surprise, the Court concluded that [...]

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Texas Citizens Participation Act Does Not Protect Communications About Private Transactions

The Texas Court of Appeals in the 14th Circuit denied an interlocutory appeal from the trial court’s denial of a motion to dismiss under the Texas Citizens Participation Act (TCPA), holding that TCPA does not protect communications concerning a private transaction between private parties. Post Acute Medical, LLC v. Meridian Hospital Systems Corporation, No. 14-19-00546-CV (Tex. App. – Houston [14th Distr.], May 18, 2021) (Wise, J.)

Meridian Hospital Systems developed and licensed web-based medical software to Post Acute Medical, PAM Physician Enterprise and Clear Lake Institute for Rehabilitation (collectively, PAM). Under the license, Meridian retained ownership of the software and reverse-engineering, as well as providing login information to third parties, were both prohibited. Meridian filed a complaint against PAM, alleging that PAM misappropriated Meridian’s trade secrets by entering into a contract with a third party to develop new software, and more specifically, by providing log-in information to the third party and “documenting” Meridian’s software to replicate its features. PAM moved to dismiss under the TCPA, but the trial court denied the motion. PAM filed an interlocutory appeal.

The Court of Appeals cited several cases to the effect that TCPA does not apply if the defendants’ communications concern a private transaction between private parties. The Court characterized PAM’s communications (among PAM entities and with the third party) as misappropriating Meridian’s software and breaching its contract with Meridian. Thus, it reasoned that the communications related to PAM’s entities reflected only a “common business interest,” not to “common interests” under TCPA, which are limited to public interests that relate to the community at large. Because Meridian could not meet its burden to show by a preponderance of the evidence that TCPA applied to Meridian’s claims, the court affirmed the denial of the motion to dismiss.

Practice Note: In this case, PAM advanced the same legal theory (i.e., that “common business interests” qualify as “common interests” under TCPA) that the same Texas appeals court had embraced in prior cases. It’s also a legal theory that a panel of the Texas Court of Appeals [1st Dist.] had embraced in the Gaskamp opinion that was subsequently vacated en banc (the Court here agreed with the en banc opinion in Gaskamp). The issue may still be appealed (whether in this case or another) to the Texas Supreme Court.

Breach of Confidentiality Claim Survives Motion to Dismiss under Anti-SLAPP Law

Texas Citizens Participation Act Does Not Protect Communications About Private Transactions

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