S&S EMERGENCY TRAINING SOLUTIONS, INC. D/B/A EMERGENCY MEDICAL TRAINING SERVICES, PETITIONER, v. SHEILA ELLIOTT, RESPONDENT
No. 17-0628
IN THE SUPREME COURT OF TEXAS
December 21, 2018
Argued October 11, 2018
S&S Emеrgency Training Solutions, Inc. d/b/a Emergency Medical Training Services (EMTS) sued a former employee for breaching nondisclosure agreements she signed in connection with her employment. The employee, Sheila Elliott, responded in part with a motion to dismiss under the Texas Citizens Participation Act (TCPA).
I. Background
EMTS рrovides courses and training for emergency medical service providers. One of its courses qualified students to take the National Registry of Emergency Medical Technicians Exam, which is the test required to become a licensed paramedic. A paramedic education program such as that offered by EMTS must be nationally accredited for its graduates to be eligible to take the exam. A program may receive accreditation from an institution accrediting agency recognized by the U.S. Department of Education or through a consortium agreement with an entity that has already been accredited.
In April 2013, EMTS contracted with Elliot for her to be its program director. As program director, Elliott would have access to information EMTS considered to be confidential. Thus, EMTS required her to sign nondisclosure agreements (NDAs). In 2014, Elliott signed an NDA to which both EMTS and ACI were parties. The NDA provided that Elliott would not use or disclose processes, information, records, or specifications of the consortium except in the course of her employment and for the benefit of the consortium. In 2015, Elliott signed another, similar, NDA to which EMTS and ACI were parties. In December 2015, Elliott wrote a letter to EMTS‘s CEO, Thomas Cellio III, requesting a raise. She claimed that as program director she had kept EMTS “running smooth and profitable.” The day after she sent the letter she resigned.
After she resigned, Elliott filed complaints with the Texas Department of State Health Services in which she alleged that EMTS engaged in unlawful business practices. She sent copies of her complaints to ACI‘s CEO, Jon Vecchio, and notified potential employers of EMTS‘s graduates, such as police and fire departments, of her pending allegations. Elliott also communicated these allegаtions to some current and former EMTS students, and publicized this information on the internet. Following Elliott‘s actions, ACI withdrew from the consortium agreement with EMTS.
EMTS sued Elliott for breach of contract and moved for injunctive relief. It claimed she violated the NDAs by disclosing
The court of appeals reversed and remanded with instructions to the trial court to dismiss the suit and award attorney‘s fees to Elliott. ___ S.W.3d ___ (Tex. App.—Dallas 2017). The court noted that if the TCPA is invoked, reviewing a suit such as EMTS‘s entails a two-step analysis. Id. at ___. The first step requires determining whether the defendant established that the plaintiff‘s suit was in respоnse to the defendant‘s having exercised her constitutional right to free speech, petition, or association. See
In this Court, EMTS contends that the court of appeals applied an erroneous standard regarding the damages element of its claim—the court measured the evidence by whether EMTS produced evidence of the specific amount of damages the disclosures caused instead of properly determining whether EMTS produced prima facie evidence that the disclosures simply caused it some damages. EMTS argues that it met the proper standard by providing evidence that ACI terminated the consortium agreement in response to Elliott‘s disclosures, which in turn caused EMTS to be unable to conduct its profitable paramedic courses. Alternatively, EMTS asserts that it established a prima facie case for specific performance and injunctive relief by clear and specific evidence. EMTS references evidence that it claims shows Elliott‘s disclosures caused ACI to terminate the consortium agreement it had with EMTS, and thus demonstrated imminent harm, irreparаble injury, and lack of an adequate legal remedy.
Elliott argues that the court of appeals applied the correct standard, which requires
II. Law
When a party asserts that claims in a suit against it are “based on, relate[] to, or [are] in response to” its exercise of certain constitutional rights, then it may move for dismissal under the TCPA.
The nonmovant‘s evidence of a prima facie case must be “clear and specific” in order to avoid dismissal,
Appellate review of issues regarding interpretation of the TCPA is de novo. Youngkin v. Hines, 546 S.W.3d 675, 680 (Tex. 2018).
III. Analysis
As noted above, neither party contests the court of appeals’ determination that EMTS sued Elliott in response to her exercise of free speech. See
Elliott claims that EMTS did not establish that it was damaged by the disclosures
EMTS attached affidavits of ACI‘s CEO Jon Vecchio and Cellio to its response to Elliott‘s TCPA Motion. In his affidavit, Vecchio stated that EMTS and ACI were required to enter into the Consortium Agreement for EMTS to be accredited and offer approved paramedic training courses. According to Vecchio‘s affidavit, ACI terminated the agreement “[i]n large part due to Elliott‘s disclosures of information protected by the NDAs.” Cellio averred that the consortium agreement was necessary for EMTS to comply with regulatory guidelines and qualify to offer the paramedic training classes. He also stated in the affidavit that because of EMTS‘s loss of ACI as а consortium partner, EMTS could no longer offer paramedic training courses to new students.
In an affidavit filed in support of her motion to dismiss, Elliott acknowledged that under the consortium agreement, EMTS conducted approximately ten paramedic training classes of thirty students each and that each student paid tuition of $4,950. She also acknowledged that, “[w]ithout a сonsortium agreement, EMTS was not going to be able to offer future Paramedic courses.” A letter Elliott wrote while she was the program director and in which she asked for a raise was attached as an exhibit to Cellio‘s affidavit, which was in turn attached to EMTS‘s Brief in Support of its Application for Ex Parte Temporary Restraining Order and Application for Temporary Injunсtion. In the letter, Elliott stated that when she worked there EMTS was “running smooth and [was] profitable.”
Elliott‘s pre-resignation letter and the affidavits of Vecchio and Cellio support, at minimum, rational inferences that (1) EMTS‘s paramedic classes were profitable before Elliott‘s disclosures of confidential information; (2) the disclosures were a cause of ACI‘s terminating the cоnsortium agreement; and (3) termination of the consortium agreement caused EMTS to lose the ability to conduct the profitable paramedic training classes. See id. at 590. Thus, EMTS provided prima facie evidence that Elliott‘s disclosures caused EMTS to lose profits. That evidence was sufficient to preclude dismissal of EMTS‘s suit. See id. at 593; Turner v. PV Int‘l Corp., 765 S.W.2d 455, 465 (Tex. App.—Dallas 1988), writ denied, 778 S.W.2d 865 (Tex. 1989) (рer curiam).
The court of appeals analogized the evidence in this case to the “general averments” of pecuniary loss and lost profits that failed to establish prima facie damages in Lipsky. ___ S.W.3d at ___; see 460 S.W.3d at 593. But EMTS‘s pleadings and the record here reflect more than was present in Lipsky. This record demonstrates that EMTS‘s lost revenues were susceptible to calculatiоn with reasonable certainty based on data regarding what classes were provided under the consortium agreement and how much revenue EMTS was taking in per student. Moreover, Elliott managed the program and stated in her December 2015 letter that EMTS was “profitable,” not that it simply had students. The trial court could have reasonably inferred that as program director shе had personal knowledge of both revenues and expenses, and thus whether EMTS‘s operation was profitable. See
The court of appeals also stated that EMTS “did not attempt to explain how any damages might have been the natural, probable, and foreseeable result of Elliott‘s disclosures.” ___ S.W.3d at ___. In Lipsky, we determined that the plaintiff‘s affidavit was too uncertain to meet the TCPA threshold for a prima facie case. See 460 S.W.3d at 593. There the plaintiff averred that it had suffered economic harm, but did not set out specific facts showing how the defendant‘s conduct caused the harm. See id. Here, in contrast, EMTS provided Vecchio‘s affidavit in which he specifically related termination of the consortium agreement to Elliott‘s breach of the NDAs.
Elliott argues that EMTS cannot establish a prima facie case because a simple loss of revenue is not enough to show damages. This argument stems from Better Bus. Bureau of Metro. Hous., Inc. v. John Moore Servs., Inc., in which the court held that a business‘s showing of declining general revenue in the wake of a negative review from BBB is not sufficient evidence for the dаmages element of a tortious interference claim where the TCPA is involved. 441 S.W.3d 345, 361 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). As noted above, however, the evidence in the record here went beyond demonstrating revenues. The content of Elliott‘s December 2015 letter evidenced the fact that EMTS‘s classes were profitable, given her position as program director.
Elliott further argues that EMTS could have, but did not, satisfy its burden by demonstrating a decline from its pre-breach revenues and course bookings to its post-breach revenues and course bookings in the same way the plaintiffs did in Moldovan v. Polito, No. 05-15-01052, 2016 WL 4131890, *10-11 (Tex. App.—Dallas Aug. 2, 2016, no pet.) (mem. op.) (photographer showed approximately $180,000 in revenues and seventy-five bookings a year in months bеfore defamatory statement and $38,000 in revenues and two bookings in the six months after the statement). However, Polito is consistent with our conclusion in this case. The record contains evidence of EMTS‘s revenues before Elliott‘s disclosures, the number of classes it offered, and the approximate number of students enrolled in each class. There is no dispute that after her disclоsures caused ACI to withdraw from the consortium agreement, EMTS was unable to continue the paramedic training courses.
Lastly, Elliott claims that the court of appeals should not be faulted for failing to consider the evidence in Elliott‘s affidavit and pre-resignation letter because EMTS did not specifically point out this evidence to either the trial court or the court of appeals. But the referenced evidence was in pleadings and affidavits that were before the trial court, and which the TCPA required the trial court to consider in determining whether to dismiss Elliott‘s case. See
Because, in response to Elliott‘s TCPA motion to dismiss, EMTS established a prima facie case by clear and specific evidence of each essential element of a breach of contract cause of action, we need not address whether EMTS established a prima facie case of entitlement to injunctive relief or specific performance.
IV. Conclusion
The court of appeals erred by dismissing EMTS‘s suit. We reverse the court of appeals’ judgment and remand the case to the trial court for further proceedings.
Phil Johnson
Justice
OPINION DELIVERED: December 21, 2018