Case Information

*0 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 3/10/2015 4:45:02 PM JEFFREY D. KYLE Clerk

*1 ACCEPTED 03-15-00064-CV 4445641 THIRD COURT OF APPEALS AUSTIN, TEXAS 3/10/2015 4:45:02 PM JEFFREY D. KYLE CLERK CAUSE NO. 03-15-00064-CV In the Court of Appeals For the Third Court of Appeals District Austin, Texas ELITE AUTO BODY LLC, d/b/a PRECISION AUTO BODY, REY R. HERNANDEZ, YESICA DIAZ, AND DAVID DAMIAN, Appellants, v. AUTOCRAFT BODYWERKS, INC., now known as WASSON ROAD VENTURES, INC., d/b/a AUTOCRAFT BODYWERKS, Appellee. Expedited Appeal from the 353 rd Judicial District Court, Travis County, Texas, the Hon. Tim Sulak, Presiding APPELLANTS’ BRIEF Rick Harrison Texas Bar No. 09120000 rharrison@fbhh.com FRITZ, BYRNE, HEAD & HARRISON, PLLC

98 San Jacinto Boulevard, Suite 2000 Austin, Texas 78701 Telephone: (512) 476-2020 Telecopier: (512) 477-5267 COUNSEL FOR APPELLANTS

ORAL ARGUMENT REQUESTED *2 IDENTITY OF PARTIES AND COUNSEL

Pursuant to Rule 38.1(a) of the Texas Rules of Appellate Procedure, Appellant lists the following parties affected by this appeal, and their respective counsel:

APPELLANTS

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

Diaz, and David Damian

Autocraft Bodywerks Trial and Appellate Counsel:

Trial and Appellate Counsel:

Rick Harrison James Ruiz Texas Bar No. 09120000 Texas Bar No. 17385860

rharrison@fbhh.com

jruiz@winstead.com S. King Jacylyn G. Austein Texas Bar No. 24067708 Texas Bar No. 24069760

aking@fbhh.com

Jaustein@winstead.com Dale L. Roberts W INSTEAD , P.C.

Texas Bar No. 24001123

401 Congress Avenue, Suite 2100

droberts@fbhh.com

Austin, Texas 78701 F RITZ , B YRNE , H EAD & H ARRISON , Telephone: (512) 370-2818

PLLC

Facsimile: (512) 370-2850 98 San Jacinto Blvd., Suite 2000 Austin, Texas 78701 Telephone: (512) 476-2020 Facsimile: (512) 477-5267

i *3 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL ......................................................... i

TABLE OF CONTENTS

....................................................................................... ii

I.

STATEMENT OF THE CASE ......................................................................... 1

II.

STATEMENT REGARDING ORAL ARGUMENT ................................. 2

III.

ISSUES PRESENTED ................................................................................... 2

IV.

STATEMENT OF FACTS ............................................................................ 2

V.

SUMMARY OF THE ARGUMENT ............................................................ 5

VI.

ARGUMENT .................................................................................................. 7

A.

The TCPA Applies to Autocraft’s Claims Against the Precision

Parties

.............................................................................................................. 7

1.

The scope of the TCPA and the rights it protects are broad .................. 7

2.

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

Parties’ exercise of their freedoms of association and free speech

.......10

B.

Because Autocraft wholly failed to meet its evidentiary burden, the

trial court was required to dismiss Autocraft’s claims

. ............................ 12

1.

Conclusory statements in affidavits do not constitute “clear and

specific evidence.”

......................................................................................12

2.

Autocraft failed to submit prima facie case for each essential

element of its claims

.................................................................................14

C.

The Precision Parties are entitled to an award of their reasonable

attorneys’ fees and expenses

........................................................................ 16

D.

The trial court erred by refusing to hear live testimony at the

hearing on Motion to Dismiss

...................................................................... 17

CONCLUSION AND PRAYER

...........................................................................18

CERTIFICATE OF SERVICE

............................................................................20

CERTIFICATE OF COMPLIANCE

..................................................................21

ii *4 TABLE OF AUTHORITIES CASES Beck v. Law Offices of Edwin J. (“Ted”) Terry, Jr., P.C. , 284 S.W.3d 416

(Tex. App.—Austin 2009, no pet.) .......................................................................14 Campbell v. Campbell , Cause No. 03-07-00672-CV, 2010 WL 2477782 (Tex. App.—Austin June 18, 2010, no pet.) .........................................................13 Combined Law Enforcement Assocs. of Texas v. Sheffield , Cause No. 03-13- 00105-CV, 2014 WL 411672 (Tex. App.—Austin, January 31, 2014, pet. filed) ............................................................................................................. 8, 9, 10

Rehak Creative Svcs., Inc. v. Witt , 404 S.W.3d 716 (Tex. App. – Houston [14 th Dist.] 2013, pet. denied) .............................................................. 8, 12, 13, 14 Schimmel v. McGregor , 438 S.W.3d 847 (Tex. App.—Houston [1 st Dist.] 2014, pet. filed) .....................................................................................................13 Sprayberry v. Siesta MHC Income Partners, L.P. , Cause No. 03-08-00649- CV, 2010 WL 1404598 (Tex. App.—Austin April 8, 2010, no pet.) ...................13 STATUTES T EX . C IV . P RAC . & R EM . C ODE § 27.001 ................................................................1, 6 T EX . C IV . P RAC . & R EM . C ODE § 27.001(2) ............................................................... 9 T EX . C IV . P RAC . & R EM . C ODE § 27.001(3) ............................................................... 9 T EX . C IV . P RAC . & R EM . C ODE § 27.001(7)(e) ........................................................... 9 T EX . C IV . P RAC . & R EM . C ODE § 27.002 ................................................................5, 8 T EX . C IV . P RAC . & R EM C ODE § 27.003(a) ................................................................ 8 T EX . C IV . P RAC . & R EM . C ODE § 27.005(b) ............................................................... 6

iii

*5 T EX . C IV . P RAC . & R EM . C ODE § 27.005(c) ..................................................... 6, 8, 12 T EX . C IV . P RAC . & R EM . C ODE § 27.006 ..................................................................18 T EX . C IV . P RAC . & R EM . C ODE § 27.009 ..................................................................16 T EX . C IV . P RAC . & R EM . C ODE § 27.011(b) ............................................................... 9 T EX . C IV . P RAC . & R EM . C ODE § 51.014(a)(12) ......................................................... 1 T EX . C IV . P RAC & R EM . C ODE § 134A.002 ....................................................... 14, 16 T EX . C IV . P RAC . & R EM . C ODE § 134A.004 .............................................................14

iv *6 I. STATEMENT OF THE CASE In response to Appellants’ desire to pursue their common interest in operating a competing business, Appellee filed suit against Appellants seeking injunctive relief and damages. [CR 3-11] In particular, Appellee claims that Appellants have misappropriated alleged trade secrets as Appellants engage in a competitive business in the marketplace. These claims are a veiled attempt to thwart Appellants’ exercise of association, both with regard to the internal management of their business as well as with recruiting qualified labor to their company. Appellants filed a Motion to Dismiss Pursuant to Chapter 27 of the Texas Civil Practice and Remedies Code (the “Motion to Dismiss”), because Appellee’s claims are in response to, or are at least related to, Appellants’ exercise of their freedom of association and speech as defined in the Texas Citizens Participation Act (“TCPA”). See T EX . C IV . P RAC . & R EM . C ODE § 27.001, et seq.

[CR 18-31]

The trial court conducted a hearing on the Motion to Dismiss on

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

23, 2015. [CR 49] Appellants filed this expedited appeal pursuant to T EX . C IV . P RAC . & R EM . C ODE § 51.014(a)(12) on January 28, 2015. [CR 50-51] A PPELLANTS ’ B RIEF P AGE 1

II.

*7 STATEMENT REGARDING ORAL ARGUMENT This appeal arises from a relatively new statute that has been a matter of significant debate among the appellate courts as to its scope and application. The trial court’s decision regarding the scope of the statute’s coverage conflicts with decisions made by this Court. Accordingly, Appellants believe that oral argument would likely be helpful in this matter and therefore respectfully requests that oral argument be granted.

III. ISSUES PRESENTED 1. Did the trial court commit reversible error when it denied the Motion to Dismiss on the grounds that the TCPA did not apply to Appellee’s claims despite evidence showing that such claims were in response to, or related to, Appellants’ exercise of their rights of free association? 2. In the absence of clear and specific evidence establishing a prima facie case for each element of Appellee’s claims, was it error for the trial court to deny the Motion to Dismiss and refuse to award the Precision Parties’ their attorneys’ fees and expenses? 3. Was the trial court correct to refuse live testimony at the hearing for the Motion to Dismiss where the statute does not preclude such evidence?

IV. STATEMENT OF FACTS Appellee, Autocraft Bodywerks (“Autocraft”), is an automobile body repair business in Austin. [CR 4] Until recently, John Borek was Autocraft’s owner and

general manager. Borek Affidavit, ¶ 1

[CR 41] By multiple accounts, Borek was A PPELLANTS ’ B RIEF P AGE 2 *8 a harsh manager whose abusive behavior eventually led to key employees leaving

the company to form a competing business. Hernandez Declaration, ¶ 4

[CR 26] ;

Damian Declaration, ¶¶ 3, 5

[CR 29-30] Two Appellants, Rey R. Hernandez (“Hernandez”) and David Damian (“Damian”), are former Autocraft employees. Hernandez Declaration, ¶ 4 [CR 26] ; Damian Declaration, ¶¶ 3-5 [CR 29-30]

Before working for Autocraft, Hernandez gained extensive expertise performing various types of auto bodywork for over nineteen years including several years at a BMW assembly plant in California. Hernandez Declaration, ¶ 2 [CR 25] After coming to Austin in 2008, Hernandez worked for Autocraft for

approximately one year. Hernandez Declaration, ¶ 4

[CR 26] Ultimately, Hernandez resigned from Autocraft due to the hostile work environment created by Borek. Hernandez Declaration, ¶ 6 [CR 26] During his time at Autocraft, Hernandez was never asked to sign a non-competition, non-solicitation or non- disclosure agreement. Hernandez Declaration, ¶ 5 [CR 26]

After leaving Autocraft, Hernandez began operating Precision Automotive (“Precision”) in 2009. Over the years, Precision developed into a successful auto body repair business under Hernandez’s leadership. Hernandez Declaration, ¶¶ 6- 7 [CR 26-27] Through his experience in the auto body repair business, Hernandez

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

A PPELLANTS ’ B RIEF P AGE 3 *9 including the use of forms, checklists and Technical Service Bulletins. Hernandez

Declaration, ¶¶ 3,5

[CR 25, 27]

Damian likewise has many years of experience in the auto body repair industry including several years working for Autocraft as its Production Manager. Before working for Autocraft, Damian worked for many years in his father’s auto body repair shop. Damian Declaration, ¶¶ 2-3 [CR 29] During that time, Damian became aware of the common business practice of using forms and checklists such as those used by Autocraft on which Autocraft’s alleged trade secret and confidential information claims are based. Damian Declaration, ¶¶ 2,4,6 [CR 29-

30]

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

employment and joined Precision. Damian Declaration, ¶¶ 3-5

[CR 29-30] During his time at Autocraft, Damian was never asked to sign a non-competition, non-solicitation or non-disclosure agreement. Damian Declaration, ¶ 4 [CR 30] Likewise, he was not told that any of the business practices employed by Autocraft (which were not unique or secret in the industry) were confidential or trade secrets.

Not long after Damian joined Precision, Joyce Garcia, Autocraft’s office manager, followed. The employees at Precision enjoy a healthy and productive working environment in contrast to the stressful and often hostile environment created by Autocraft’s former manager, Borek. Damian Declaration, ¶¶ 3-5 [CR A PPELLANTS ’ B RIEF P AGE 4 *10 29-30] Hereafter, the Appellants Elite Auto Body, LLC d/b/a Precision Auto, Rey R. Hernandez, Yesica Diaz, and David Damian are referred to collectively as the “Precision Parties.” Autocraft’s claims have impacted their communications among the Precision Parties regarding common business practices that Autocraft now claims constitute proprietary information as well as communications with potential customers and potential employees that are currently employed by Autocraft. Hernandez Declaration, ¶¶ 8-9 [CR 27] ; Damian Declaration, ¶ 6 [CR 30]

V. SUMMARY OF THE ARGUMENT

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

and free speech. T EX . C IV . P RAC . & R EM . C ODE § 27.002. The trial court in this case failed to follow that admonition. The trial court narrowly construed the TCPA and incorrectly concluded that the statute did not apply to Autocraft’s claims. Because the TCPA actually applies to Autocraft’s claims, the trial court incorrectly failed to dismiss the action in the absence of clear and specific evidence of a prima facie case for each element of Autocraft’s claims.

This action was clearly instituted in response to the Precision Parties’ exercise of their rights to freedom of association and free speech under the TCPA. Specifically, Autocraft’s claims target the Precision Parties’ communications in A PPELLANTS ’ B RIEF P AGE 5 *11 pursuit of their common interest of operating a competitive automobile body repair business. See T EX . C IV . P RAC . & R EM . C ODE § 27.001(2-3) (defining the rights of association and free speech under the TCPA). Although cast as trade secret misappropriation, Autocraft’s claims are a thinly veiled attempt to interfere with the Precision Parties’ lawful business competition by preventing them from communicating non-proprietary business practices and communicating with Autocraft’s employees. Notably, there is zero evidence of business information that arguably constitutes trade secret or confidential information. The Precision Parties clearly met their burden and established that Autocraft’s claims “relate to, or [are] in response to” the Precision Parties’ exercise of their rights of association and free speech. T EX . C IV . P RAC . & R EM . C ODE § 27.005(b).

Because the TCPA applies to Autocraft’s claims, Autocraft bore the burden of “establish[ing] by clear and specific evidence a prima facie case for each essential element” of its claims. T EX . C IV . P RAC . & R EM . C ODE § 27.005(c). Autocraft wholly failed to meet that burden. Instead of providing clear and specific evidence, Autocraft submitted a conclusory affidavit that primarily recited allegations from its pleadings. In the absence of clear and specific evidence of each element of Autocraft’s claims, the trial court was required to dismiss this A PPELLANTS ’ B RIEF P AGE 6 *12 action and award the Precision Parties their reasonable attorneys’ fees and expenses.

VI. ARGUMENT A. The TCPA Applies to Autocraft’s Claims Against the Precision Parties Autocraft’s claims are in response to, or at least relate to, the Precision Parties’ exercise of their rights of association and free speech. Those rights, as defined by the TCPA, have broad reach and include the Precision Parties’ communications in pursuit of their common interest – the Precision Parties’ competing business – and regarding the Precision Parties provision of services in the marketplace. Because Autocraft’s claims relate to those communications, the TCPA applies.

1. The scope of the TCPA and the rights it protects are broad. Before the enactment of Chapter 27 of the T EXAS C IVIL P RACTICE AND

R EMEDIES C ODE , there was no means to avoid the significant expense required to defend baseless claims intended to stifle people’s rights to freely associate and communicate. As enacted, the statute’s purpose is to “encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law, and, at the same time protect the rights of a person to file meritorious lawsuits for A PPELLANTS ’ B RIEF P AGE 7 *13 demonstrable injury.” T EX . C IV . P RAC . & R EM . C ODE § 27.002. The statute accomplishes that purpose by requiring Autocraft to produce clear and specific evidence of a prima facie case for each essential element of Autocraft’s claims covered by the statute. Id. § 27.005(c).

Chapter 27 applies to a broad swath of actions to protect people’s rights of association and free speech. The statute applies to any legal action that “is based on, relates to, or is in response to a party’s exercise of the right of free speech . . .

or right of association.”

Id. § 27.003(a) (emphasis added). Thus, the statute

applies to

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

association and free speech.

See Rehak Creative Svcs., Inc. v. Witt , 404 S.W.3d 716, 733 (Tex. App. – Houston [14 th Dist.] 2013, pet. denied) (holding that conversion and misappropriation claims were covered by the TCPA where they had “a connection to” protected communications).

The rights covered by the TCPA are broader than the protections provided by the Constitution for those same rights. See Combined Law Enforcement Assocs.

of Texas v. Sheffield

, Cause No. 03-13-00105-CV, 2014 WL 411672, at *11-12 (Tex. App.—Austin, January 31, 2014, pet. filed). Indeed, the exercise of the right of association is defined by the statute as follows: A PPELLANTS ’ B RIEF P AGE 8

*14 “Exercise of the right of association” means a communication between individuals who join together to collectively express, promote, pursue, or defend common interests.

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

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

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

product, or service in the marketplace.”

Id. § 27.001(7)(e).

In addition to those broad definitions, the TCPA clearly states that it must “be construed liberally to effectuate its purpose and intent fully.” Id. § 27.011(b)(emphasis added). The TCPA’s scope reaches beyond public participation in government and media defendants. See Combined Law

Enforcement Assocs. of Texas v. Sheffield

, Cause No. 03-13-00105-CV, 2014 WL 411672, at *2, n.1 (Tex. App.—Austin, January 31, 2014, pet. filed) (“There is nothing in the plain language of the statute that limits its scope, as Sheffield argues, to a media defendant or solely to public participation in government.”) (emphasis added). Rather, this Court recognized that the TCPA reaches beyond constitutional protections “to require a preliminary substantiation of legal actions relating to a broad range of organizational communications.” Id. , at *12. A PPELLANTS ’ B RIEF P AGE 9 *15 Accordingly, this Court found that communications among an organization’s

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

Id. , at *5.

2. Autocraft’s claims are in response to, or relate to, the Precision Parties’ exercise of their freedoms of association and free speech. All of Autocraft’s claims center upon the Precision Parties communications as they promote and pursue their common interests in developing and maintaining a competitive auto body repair business. Autocraft’s claims are based on the alleged disclosure of general business information or the alleged attempts by the Precision Parties “to convince employees to leave Autocraft and join [Precision].” Pl.’s Orig. Pet. at ¶ 13 [CR 6] ; see also id . at ¶ 16 (seeking injunctive relief prohibiting communication of alleged confidential information and solicitation of Autocraft’s employees) [CR 6] ; id. at ¶ 21 (alleging that the Precision Parties are

conspiring to use Autocraft’s alleged trade secrets)

[CR 7] ; id. at ¶ 28 (claiming that Damian assisted in “unfairly competing with Autocraft,” communicated business information to the other Precision Parties, and communicated with Autocraft employees encouraging them to change jobs). [CR 8] Based on Autocraft’s own pleadings, it is clear that Autocraft’s claims relate to the Precision Parties’ communication in pursuit of their common interest and regarding their services in the marketplace. A PPELLANTS ’ B RIEF P AGE 10

*16 Beyond the pleadings, the Precision Parties’ evidence likewise establishes that Autocraft’s claims impinge on the Precision Parties’ exercise of their rights of association and free speech. Rey Hernandez testified that on multiple occasions he communicated with Autocraft employees about potential employment opportunities at Precision and, absent Autocraft’s claims in this lawsuit, he expected that he would continue to do so. [CR 26] It is obvious that Borek’s abusive management style was causing Autocraft to hemorrhage employees, with many seeking employment with the Precision Parties and Autocraft filed this suit to prevent communications with its employees that could lead to them relocating. Likewise, Both Hernandez and Damian testified that all of the mundane business practices claimed to be trade secrets in this case were not kept confidential and were well known throughout the industry. [CR 25-27, 29-30] Even so, Autocraft’s claims, if successful, would prevent the Precision Parties from communicating regarding business procedures that are commonly employed in the automobile body repair shop industry. [CR 27, 30]

Clearly, the Precision Parties have met their burden establishing that Autocraft’s claims are in response to, or at least relate to, the Precision Parties’ exercise of their rights of association and free speech. Autocraft’s claims seek to curtail the Precision Parties’ use and communication of allegedly proprietary A PPELLANTS ’ B RIEF P AGE 11 *17 information as they pursue their common interest of their competing business and recruit potential employees. Yet Autocraft wholly failed to put on evidence of the proprietary nature of the information or that the Precision Parties ever used it. The trial court committed reversible error by finding that the TCPA did not apply. B. Because Autocraft wholly failed to meet its evidentiary burden, the trial

court was required to dismiss Autocraft’s claims. Because the TCPA applies to Autocraft’s claims, the burden shifted to

Autocraft to establish by clear and specific evidence a prima facie case for each essential element of its claims. See Rehak Creative Svcs., Inc. , 404 S.W.3d. at 723-724 (discussing the burden-shifting characteristics of the TCPA). Autocraft did not come close to meeting its burden. Autocraft’s sole, conclusory affidavit amounts to no evidence of its claims, and certainly does not provide the clear and specific evidence required by the TCPA. Therefore dismissal of Autocraft’s claims was required.

1. Conclusory statements in affidavits do not constitute “clear and specific evidence.” Conclusory statements without factual foundation do not meet the “clear and specific evidence” burden required by T EX . C IV . P RAC . & R EM . C ODE § 27.005(c) to avoid dismissal. Thus, a party’s conclusory statements regarding causation in a tortious interference with contract claim failed to meet the TCPA’s burden A PPELLANTS ’ B RIEF P AGE 12 *18 resulting in the dismissal of the plaintiff’s claims.

See Schimmel v. McGregor

, 438 S.W.3d 847, 860-862 (Tex. App.—Houston [1 st Dist.] 2014, pet. filed) (“We agree with Schimmel that the Buy-Out Owners presented only their conclusory statements, unsupported by any facts, that Schimmel’s actions caused the City of Galveston to fail to close on the purchases.”). Likewise, conclusory statements regarding damages are insufficient to meet the TCPA’s burden of clear and specific evidence. See Rehak Creative Svcs, Inc. , 404 S.W.3d at 734 (“This conclusory assertion does not rise to the level of ‘clear and specific’ evidence sufficient to make out a prima facie case of damages caused by and attributable to the alleged misappropriation.”). And this Court has long held that affidavits that do not provide a basis for the affiant’s conclusions or their personal knowledge are fatally defective and constitute no evidence. See Campbell v. Campbell , Cause No. 03-07-00672-CV, 2010 WL 2477782, at *4-5 (Tex. App.—Austin June 18, 2010, no pet.) (finding affidavit insufficient because it did not show the basis for the affiant’s personal knowledge of facts recited therein); Sprayberry v. Siesta MHC

Income Partners, L.P.

, Cause No. 03-08-00649-CV, 2010 WL 1404598, at *3-4 (Tex. App.—Austin April 8, 2010, no pet.) (discussing insufficiency of a conclusory affidavits because it “consists of factual or legal conclusions or A PPELLANTS ’ B RIEF P AGE 13 *19 opinions that are not supported by facts”). Thus, Autocraft had to present more than conclusory evidence to meet its burden and avoid dismissal.

2. Autocraft failed to submit prima facie case for each essential element of its claims. Autocraft’s sole affidavit submitted in response to the Precision Parties’ Motion to Dismiss misses the mark. Autocraft asserts claims for trade secret misappropriation, unfair competition, and breach of fiduciary duty. Autocraft was required to present clear and specific evidence for each element for each of those

claims.

See Rehak Creative Svcs, Inc. , 404 S.W.3d at 732-734 (analyzing whether plaintiff had provided prima facie evidence of its claims for tortious interference, intentional infliction of emotional distress, conspiracy, and conversion and then dismissing those claims in the absence of evidence). With regard to misappropriation of trade secrets (as well as Autocraft’s other claims relying on such allegations), Autocraft was required to establish all of the elements set forth in T EX . C IV . P RAC & R EM . C ODE § 134A.002 for both “misappropriation” and “trade secret.” Likewise, all of Autocraft’s causes of action require evidence of damages and causation. See id. § 134A.004 (stating that a claimant seeking damages must prove causation or the amount of a reasonable royalty for the alleged trade secrets); Beck v. Law Offices of Edwin J. (“Ted”)

Terry, Jr., P.C.

, 284 S.W.3d 416, 429 (Tex. App.—Austin 2009, no pet.)(listing A PPELLANTS ’ B RIEF P AGE 14 *20 elements for breach of fiduciary duty claims including existence of a fiduciary duty, breach of that duty, causation, and damages). 1

Instead of providing clear and specific evidence for its claims, Autocraft instead submitted a sole, conclusory affidavit from John Borek. But Borek’s affidavit is rife with speculation and unsubstantiated conclusions. These include:

• “Autocraft has reason to believe David Damian and other former employees who recently left and joined Rey Hernandez and Precision Auto Body . . . may have used or disclosed Autocraft’s confidential,

proprietary, and trade secret information . . ..”

[CR 42, ¶ 2] (emphasis added)

• “After David Damian and Joyce Garcia joined Precision Auto . . .

Autocraft

learned Prevision Auto was using its proprietary business

forms and documents . . ..”

[CR 42, ¶ 4] (emphasis added)

•

“ It is my understanding and belief that David Damian and/or Joyce

Garcia

and possibly others , provided Rey Hernandez with most, if not all, of the above-mentioned confidential, proprietary and trade secret documents and information . . ..” [CR 42, ¶ 6] (emphasis added)

•

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

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

any evidence of Autocraft’s claims and certainly do not provide clear and specific evidence. Furthermore, Borek provides no factual basis to establish his purported personal *21 knowledge of any actions taken by the Precision Parties or any of his conclusions that the Precision Parties are unfairly competing with him.

In fact, Borek’s affidavit provides absolutely no evidence regarding: (1) the efforts Autocraft took, if any, to maintain the secrecy of the alleged proprietary information, (2) the Precision Parties’ appropriation of that information by improper means, or (3) that the information derives economic value from not being generally known or ascertainable by proper means. See T EX . C IV . P RAC . & R EM . C ODE § 134A.002 (defining the elements to show misappropriation by improper means and the existence of a trade secret). Similarly, and without limitation, Autocraft failed to provide any evidence of damages or causation for its claims. Because Autocraft failed to provide clear and specific evidence for each element of its claims, all of Autocraft’s claims should have been dismissed. C. The Precision Parties are entitled to an award of their reasonable

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

expenses to the Precision Parties. Upon dismissal of an action pursuant to the TCPA, the moving party is entitled to an award of its “court costs, reasonable attorneys’ fees, and other expenses incurred in defending against the legal action.” T EX . C IV . P RAC . & R EM . C ODE § 27.009. The Precision Parties’ counsel presented

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

A PPELLANTS ’ B RIEF P AGE 16 *22 expenses incurred at the time of the hearing.

[RR 29-30]

Because the Precision Parties were entitled to dismissal of Autocraft’s claims under the TCPA, they are entitled to an award of their attorneys’ fees and expenses in the amount of $15,250. D. The trial court erred by refusing to hear live testimony at the hearing on

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

was sufficient to meet their burden, they were nonetheless prepared to present live testimony at the hearing on the Motion to Dismiss. But the trial court refused to hear that testimony. [RR 22-24] That testimony would have provided additional

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

association and free speech. 2

[RR 24-26] Without limitation, that evidence would have shown that the forms claimed to be trade secrets by Autocraft are well known in the industry and can be freely found and ordered online. That evidence would have also established that the Precision Parties have been restricted from communicating with potential customers and employees. [RR 25-26]

The trial court excluded this evidence based upon an unduly narrow reading of section 27.006 which states: *23 In determining whether a legal action should be dismissed under this chapter, the court shall consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based.

T EX . C IV . P RAC . & R EM . C ODE § 27.006. While that provision requires the trial court to consider the pleadings and affidavits, it does not restrict the evidence to pleadings and affidavits. The fact that materials other than the pleadings and affidavits may be considered is foreshadowed by other portions of the statute. Indeed, the TCPA allows for other discovery (including depositions or interrogatories) on a showing of good cause. Id. Such discovery would be meaningless if the discovery materials could not be considered as evidence relating to the Motion to Dismiss. The trial court erred by excluding the Precision Parties’ live testimony.

CONCLUSION AND PRAYER The Precision Parties were entitled to dismissal of this action. Autocraft’s claims directly impact, and certainly relate to, the Precision Parties’ communications in pursuit of their common interest and regarding their services in the marketplace. Under these circumstances, Autocraft was required by the TCPA to present clear and specific evidence of each element of its claims. Autocraft wholly failed to do so thereby requiring that Autocraft’s action be dismissed and A PPELLANTS ’ B RIEF P AGE 18 *24 the Precision Parties be awarded their attorneys’ fees and expenses. Accordingly, this Court should provide the Precision Parties the relief they deserve.

Accordingly, the Precision Parties respectfully request that this Court reverse the trial court’s order denying the Motion to Dismiss, order that all of Autocraft’s claims in this matter shall be dismissed, award the Precision Parties their attorneys’ fees and expenses described above, and grant the Precision Parties such other and further relief to which they show themselves justly entitled.

Respectfully submitted, F RITZ , B YRNE , H EAD & H ARRISON , PLLC

BY:

/s/ Rick Harrison

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

A TTORNEYS FOR A PPELLANTS A PPELLANTS ’ B RIEF P AGE 19

CERTIFICATE OF SERVICE

*25 I hereby certify that a true and correct copy of the foregoing document has

this 10th

day of March, 2015, been forwarded to counsel of record via electronic

service

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

/s/ Rick Harrison Rick Harrison

A PPELLANTS ’ B RIEF P AGE 20

CERTIFICATE OF COMPLIANCE

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

/s/ Rick Harrison Rick Harrison

Dated: March 10, 2015

A PPELLANTS ’ B RIEF P AGE 21

*27 APPENDIX INDEX ORDER DENYING MOTION TO DISMISS ROBERTS DECLARATION FINDINGS OF FACT AND CONCLUSIONS OF LAW HERNANDEZ DECLARATION DAMIAN DECLARATION BOREK AFFIDAVIT COMBINED LAW ENFORCEMENT ASS’N OF TEXAS V. SHEFFIELD SCHIMMEL V. McGREGOR TEX. CIV. PRAC. & REM CODE § 27.001 – 27.006

*28 DC BK15044 PG310 Filed In The District Court of ~ty, Te~as flQt,~DI~: on I \:00 lrM. at CAUSE NO. D-1-GN-14-004535 Velva 1.. Price, District Clerk

AUTOCRAFT BODYWERKS, INC.,

§ IN THE DISTRICT COURT

§

Plaintiff, §

§

vs. §

§

ELITE AUTO BODY LLC, § dba PRECISION AUTO BODY, § REY R. HERNANDEZ, § TRAVIS COUNTY, TEXAS YESICA DIAZ, and § DAVID DAMIAN, §

§

Defendants, §

§

§ vs.

§

JOHN BOREK, §

§

345th JUDICIAL DISTRICT Tltird-Party Defendant. § ORDER DENYING DEFENDANTS' MOTION TO DISMISS PURSUANT TO CHAPTER 27 OF THE TEXAS CIVIL PRACTICE AND REMEDIES CODE On the 22nd day of January, 2015, the Court heard Defendants' Motion to Dismiss

Pursuant to Chapter 27 of the Texas Civil Practice and Remedies Code (the "Motion"). After considering the pleadings, affidavits, and legal arguments, llle-Gourt lind• tlmt Chopter 27 of tl>e ~ /.

'I z.~/'.5 'Fexas Civil Prac dee and Remedies Code is inapplicable t6 tb:i~ ~ttit. It is therefore,

ORDERED that the Motion is hereby DENIED in all respects.

*29 Signed this 2.~"day of January 2015. 49 CAUSE NO. 03-15-00064-CV In the Court of Appeals For the Third Court of Appeals District Austin, Texas ELITE AUTO BODY LLC, d/b/a PRECISION AUTO BODY, REY R. HERNANDEZ, YESICA DIAZ, AND DAVID DAMIAN, Appellants, v. AUTOCRAFT BODYWERKS, INC., now known as WASSON ROAD VENTURES, INC., d/b/a AUTOCRAFT BODYWERKS, Appellee. DECLARATION OF DALE L. ROBERTS 1. My name is Dale L. Roberts. I am fully competent to make this *30 Declaration. I have personal knowledge of the facts stated in this Declaration. I am one of the attorneys representing the Appellants in this matter.

2. The Finding of Fact and Conclusions of Law contained in the Appendix of Appellants’ Brief is a true and correct copy of that signed by Judge Sulak on February 20, 2015.

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

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

As authorized by Section 132.001 of the Texas Civil Practice and Remedies

1 Code, I declare under penalty of perjury that the foregoing is true and correct. Executed in Travis County, State of Texas, on March 10, 2015.

/s/ Dale L. Roberts Dale L. Roberts

*31 2 *33 CAUSE NO. D-1-GN-14-004535 AUTOCRAFT BODYWERKS, INC., § IN THE DISTRICT COURT now known as WASSON ROAD

§ VENTURES, INC, dba AUTOCRAFT § · BODYWERKS, § § Plaintiff, § § §

vs. § TRAVIS COUNTY, TEXAS § ELITE AUTO BODY LLC, d/b/a PRECISION § AUTO BODY, REY R. HERNANDEZ, § § YESICA DIAZ, AND DAVID DAMIAN,

§ Defendants. §

DECLARATION OF REY R. HERNANDEZ

1. My name is Rey R. Hernandez. I am fully competent to make this Declaration. I *34 have personal knowledge of all the facts stated in this Declaration. 2. I have been working in the auto body manufacture or repair industry for over 19 years. I have worked for BMW for over 12 years, achieving a management position overseeing body work on new BMW vehicles. In addition, I have worked in auto body repair shops for seven years.

3. Through my experience in the auto body repair industry, I have become aware of common practices employed by auto body repair shops. It is common practice in the industry to use forms and checklists for tracking payment receipts, insurance information, workflow assignments and other information. Although the forms and checklists may follow different formats, they commonly contain information such as payment, information, authorizations, and vehicle and customer information.

Page I I EXHIBIT 1

25

4R£4&&&4Zi&&2SEE&EE 4. When I came to Austin in 2008, I accepted a job as a production manager at Autocraft Bodywerks ("AB") and worked there for approximately twelve months. During that time, the working conditions at AB were very unpleasant and hostile. AB's former owner, and now manager, John Borek, created that unpleasant working environment. For example, Mr. Borek frequently used abusive and vulgar language when speaking with employees and threatened them with reprisals, illegally withheld paychecks, and on occasion, physically assaulted them. Despite Mr. Borek's behavior, it was my impression that AB's employees were very competent and often talented.

5. While working at AB, I was never asked to sign or even agree to any limitations on my ability to compete with AB or solicit AB's employees following my employment. Likewise, I was never asked to sign a confidentiality agreement nor was I informed that any information about how AB conducted its business was secret or confidential. In fact, with the *35 exception of Mr. Borek's behavior, AB's business was conducted similar to other auto body repair businesses. This included the use and content of AB's forms and checklists as well as referencing, when necessary, any technical service bulletins relating to a repair. I was never told by Mr. Borek, or anyone else, that AB's forms, checklists or compilation of technical service bulletins were secret or confidential, and I did not consider them to be secret because the use of similar forms, checklists and technical service bulletins is commonplace in the industry.

6. Due in large part to the unhealthy working environment caused by Mr. Borek, I left AB, and started Precision Auto Body ("Precision") in March, 2009. Over the next several years and through my experience in the industry, we developed Precision into a successful business. As part of that business, Precision subscribed to Alldata. That service provides access to, and the ability to search, all technical service bulletins that have been issued by all automobile

Page2 26 manufacturers. Precision remains a subscriber to that setvice to this day. Whenever a Precision employee needs to reference a technical setvice bulletin, the materials are obtained from Alldata.

7. By the beginning of 2014, Precision had seven employees and the business was continuing to grow. In March 2014, Precision hired David Damian to work as body shop manager. Over the years since leaving AB, I have occasionally been contacted by AB employees inquiring as to whether Precision could hire them, and on some occasions Precision has done so. That is how Damian came to work for Precision as well as Joyce Garcia. Mr. Damian, Ms. Joyce, and I have all expressed a desire to continue to grow Precision's business and attract experienced and talented individuals to work for Precision.

8. Because it was my impression that many of AB's employees were talented, I would expect and intend to communicate with AB employees regarding employment opportunities at Precision just as I would expect to communicate with any other potential *36 Precision employees that are unrelated to AB. If AB is successful in its lawsuit, or even obtains a temporary i-qjunction as it has requested, I would not be able to communicate with any other AB employees about potential employment opportunities.

9. Precision has not used any confidential or secret information in its business that was disclosed by either Mr. Damian or Joyce Garcia. Precision has not used any AB payroll or other AB financial information in arty manner. This includes, without limitation, any employment decisions concerning any current or potential Precision employees. With regard to the business practices claimed by AB to be confidential or secret, these allegations would prevent me and others at Precision from communicating regarding mundane business issues such as using checklists and forms to ensure that office and shop procedures are followed.

Page3 27 10. My name is Rey R. Hemandez. My date of birth is January 4, 1976, and my address is 1261 Cherrywood, Kyle, Texas 78640. As authorized by Section 132.001 of the Texas Civil Practice and Remedies Code, I declare under penalty of peljury that the foregoing is true and correct.

Executed in Travis County, State of Texas on this~O th day of December, 20 *37 Page4 28

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

AUTOCRAFT BODYWERKS, INC., § IN THE DISTRICT COURT § now known as WASSON ROAD VENTURES, INC. dba AUTOCRAFT § BODYWERKS, §

§ Plaintiff, § § §

vs. § TRAVIS COUNTY, TEXAS § ELITE AUTO BODY LLC, d/b/a PRECISION § AUTO BODY, REY R. HERNANDEZ, § YESICA DIAZ, AND DAVID DAMIAN, §

§ Defendants, §

DECLARATION OF DAVID DAMIAN

1. My name is David Damian. I am fully competent to make this Declaration. I *38 have personallmowledge of all the facts stated in this Declaration. 2. I have been working in the auto body repair industry for over 16 years. Through my experience in the auto body repair industry, I have become aware of common practices employed by auto body repair shops. It is common practice in the indushy to use forms and checklists for tracking payment receipts, insurance information, workflow assignments and other information.

Between 2008 until March 2014, !.worked as a Production Manager at Autocraft 3. Bodywerks ("AB"). During that time, the working conditions at AB were very unpleasant and hostile. AB's former owner, and now manager, John Borek, created that unpleasant working environment. Mr. Borek constantly cursed at employees and was prone to angry outbursts.

Page 1

EXHIBIT

:a

29

W4E&E&MUMIM 1(1 4. While working at AB, I was never asked to sign, or even agree to, any limitations on my ability to compete with AB or solicit AB's employees following my employment. Likewise, I was never asked to sign a confidentiality agreement nor was I informed that any information about how AB conducted its business was secret or confidential. AB's business was conducted similar to other auto body repair businesses. This included the use and content of AB's forms and checklists as well as referencing, when necessary, any technical service bulletins relating to a repair. I was never told by Mr. Borek, or anyone else, that AB's forms, checklists or compilation of technical service bulletins were secret or confidential, and I did not consider them to be secret because the use of similar forms, checklists and technical service bulletins is commonplace in the industry.

5. Due in large part to the unhealthy working environment caused by Mr. Borek, I left AB, and joined Precision. Mr. Hernandez, Ms. Garcia, and I have all expressed a desire to *39 continue to grow Precision's business and attract experienced and talented individuals to work for Precision.

6. I have not used any AB payroll or other AB financial information in any manner since leaving the employ of AB, and certainly not in any negotiations or business decisions. With regard to the business practices claimed by AB to be confidential or secret, these allegations would prevent me and others at Precision from communicating regarding mundane business issues such as using checklists and forms to ensure that office and shop procedures are followed.

Page 2 30 7. My name is David Damian. My date of birth is June 10, 1978, and my address is 11303 Stormy Ridge Road, Austin, Texas 78739. As authorized by Section 132.001 of the Texas Civil Practice and Remedies Code, I declare under penalty of perjury that the foregoing is true and correct.

Executed in Travis County, State of Texas on this lOth day of December, 2014. *40 Page 3 31

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

AUTOCRAFT BODYWERKS, INC., § IN THE DISTRICT COURT

§

Plaintiff. § § vs. § §

ELITE AUTO BODY LLC, § dba PRECISION AUTO BODY, § REY R. HERNANDEZ, § TRAVIS COUNTY, TEXAS YESICA DIAZ, and §

DAVID DAMIAN,

§

§

*41 § Defendants, § vs. § §

JOHN BOREK, §

§

§ 345th JUDICIAL DISTRICT Third-Party Defendant. AFFIDAVIT OF JOHN BOREK STATE OF TEXAS § § (</ TRAVIS COUNTY § Before the undersigned authority, on this day appeared John Borek, who, after being duly sworn, states as follows: l. "My name is John Borek. I am over the age of eighteen years, am of sound mind, and capable of making this affidavit. I am the founder and general manager of Autocraft Bodywerks, Inc. ("Autocraft"), a full service high-end collision restoration auto-repair shop I established in 1984. I have personal knowledge of the facts and statements contained in this affidavit, and they are tme and cotTect.

• 2. Over the span of the three decades, during which I built Autocraft's business and customer base, I have spent substantial time and money developing specific business practices and forms, and ct·eating a unique compilation of technical setvice bulletins and other information

Page I EXHIBIT A 770588v.l 57457·1 41 1 • *42 which have been used in Autocraft's business and have provided Autocraft with an advantage over its competitors who do not know or use Autocraft's trade secrets and confidential and proprietary information. Autocraft has reason to believe David Damian and other former employees who recently left and joined Rey Hernandez and Precision Auto Body ("Precision Auto") may have used or disclosed Autocraft's confidential, proprietary, and trade secret infmmation they obtained while employed with Autocraft in the course of their work for Precision Auto to provide Autocraft's competitor with an unfair competitive advantage.

• 3. Although Autocraft welcomes honest and fair competition, it will not tolerate dishonesty and unfair competition through use of its trade secrets and confidential and proprietaty information by any of its former employees to provide a competitor with an unfair competitive advantage in the marketplace. For such reason, Autocraft commenced this suit against the Defendants to stop their use of Autocraft's trade secrets and proprietary and confidential information to unfairly compete in the marketplace. Autocraft has not asserted any claim to interfere with anyone's constitutional rights to free speech or association in this action.

4. Since Rey Hernandez started Precision Auto in the 2009 time frame, a few f01mer employees of Autocraft joined Rey Hernandez at Precision Auto without incident. After David Damian and Joyce Garcia joined Precision Auto, however, Autocraft learned Precision Auto was using its proprietary business fmms and documents, and that a copy of its proprietary *43 compilation of Technical Service Bulletins had been taken to Precision Auto rather than Precision Auto spending the time and money subscribing to the various publications and searching through the tens of thousands of Technical Service Bulletins issued over the years to create its own compilation of information. I did not give David Damian, Joyce Garcia, or any other Autocraft employee, consent to take any proprietary work product, confidential information or trade secret with them when they left.

Page2 770588v.l 57457-1 l

42

5. David Damian and Joyce Garcia, while employed at Autocraft and in connection with their job responsibilities, also had access to personnel information on employees, including salary inf01mation, and Autocraft's financial information, including profit and loss statements, which in the hands of a competitor provides it with an unfair competitive advantage.

6. It is my understanding and belief that David Damian and/or Joyce Garcia, and possibly others, provided Rey Hernandez with most, if not all, of the above-mentioned confidential, proprietary and trade secret documents and information, and that they are now using the documents and information to unfairly compete with Autocraft. In fact, I saw a *44 photograph of the service forms used at Precision Auto and they appear to be identical to Autocraft's proprietary business forms which have evolved and been tailored based on my thirty years of experience in the industry.

7. It is also my understanding and belief that Precision Auto has used Autocraft's confidential information, including employee salary information, to recruit and solicit more · Autocraft employees to join Precision Auto. Any such use of Autocraft's confidential personnel and financial information would be improper and unfair. 8. This lawsuit has nothing to do with violating anyone's rights to ft·ee speech or free association. Instead, the lawsuit is intended to protect Autocraft's trade secrets and proprietary and confidential information."

' Page3 770588v.l 57457-1 43 1

Further, Affiant sayeth naught.

*45 SWORN TO AND SUBSCRIBED before me on this I 7 day of January, 2015.

Notary Public, State of Texas *46 Page4 770588v.l 57457-1 44 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) [5] restrictions on discovery during pendency of a TCPA motion to dismiss do not violate open-courts provision; and

2014 WL 411672

Only the Westlaw citation is currently available. [6] TCPA's definition of “right of association” was not unconstitutionally overbroad or void for vagueness as applied

SEE TX R RAP RULE 47.2 FOR

in present case. DESIGNATION AND SIGNING OF OPINIONS. MEMORANDUM OPINION Affirmed in part, reversed in part, and remanded. Court of Appeals of Texas, Austin.

COMBINED LAW ENFORCEMENT

West Headnotes (14)

ASSOCIATIONS OF TEXAS

and John Burpo, Appellants [1] Appeal and Error

v. On motions relating to pleadings Mike SHEFFIELD, Appellee. The Court of Appeals had jurisdiction under civil No. 03–13–00105–CV. | Jan. 31, 2014. practices and remedies code over interlocutory appeal from the denial of a motion under Texas

Synopsis Citizens Participation Act (TCPA) to dismiss Background: Former employee of labor union representing defamation action, regardless of whether TCPA law enforcement officers filed defamation action against expressly authorized the interlocutory appeal. union and its executive director. Defendants moved to dismiss V.T.C.A., Civil Practice & Remedies Code §§ action pursuant to the Texas Citizens Participation Act 27.008, 51.014(a)(12). (TCPA). The District Court, Travis County, 353rd Judicial District, Amy Clark Meachum, J., denied motion. Defendants

3 Cases that cite this headnote brought interlocutory appeal. [2] Appeal and Error Constitutional questions Holdings: The Court of Appeals, Jeff Rose, J., held that: Labor union and its executive director could not raise arguments relating to their free speech

[1] former employee's defamation allegations related in part or petition rights on interlocutory appeal from to defendants' exercise of right of association, such that *47 the denial of their motion under Texas Citizens former employee was required under TCPA to prove prima Participation Act (TCPA) to dismiss defamation facie case with respect to allegations relating to exercise of action by former employee, though union and that right; executive asserted those rights in an affirmative defense, where their motion to dismiss asserted

[2] defamation action arose in context of a labor dispute, such only the right of association. V.T.C.A., Civil that former employee was required to prove actual malice; Practice & Remedies Code §§ 27.005, 51.014. [3] there was no clear and specific evidence that statements Cases that cite this headnote made in exercise of defendants' right of association were made with actual malice;

[3] Pleading Frivolous pleading [4] standard of proof for surviving motion to dismiss Pleading under TCPA does not violate open-courts provision of state Application and proceedings thereon constitution;

Former employee's defamation claim against labor union representing law enforcement

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 1 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) officers and against union's executive director officers and against union's executive director related to those defendants' exercise of right related to those defendants' exercise of right of association, such that former employee of association, such that former employee was required to prove prima facie case to was required to prove a prima facie case to survive motion to dismiss under Texas Citizens survive motion to dismiss under Texas Citizens Participation Act (TCPA), to the extent that Participation Act (TCPA), to the extent the claim concerned an e-mail sent by executive claim was based on alleged statements by union director to union's board and staff, stating that officials to president of a constituent local executive board had directed him to file criminal police association that criminal charges could charges against former employee for deleting be filed against former employee by union for computer files that were union's property, and what former employee had done. V.T.C.A., that union's corporate attorney had advised that Civil Practice & Remedies Code §§ 27.001(2), such conduct was a criminal act under state law. 27.005(b, c). V.T.C.A., Civil Practice & Remedies Code §§

Cases that cite this headnote 27.001(2), 27.005(b, c). Cases that cite this headnote

[6] Pleading Frivolous pleading [4] Pleading Pleading Frivolous pleading Application and proceedings thereon Pleading Former employee's defamation claim against Application and proceedings thereon labor union representing law enforcement Former employee's defamation claim against officers and against union's executive director labor union representing law enforcement did not relate to those defendants' exercise of officers and against union's executive director their right of association, so as to require former related to those defendants' exercise of right employee to prove a prima facie case to avoid of association, such that former employee dismissal under the Texas Citizens Participation was required to prove a prima facie case Act (TCPA), to the extent the claim was based to survive motion to dismiss under Texas on an alleged remark by union's corporate Citizens Participation Act (TCPA), to the extent attorney that a local police chief had created the claim related to an alleged comment by a special employment position for the former executive director to a prospective employee, employee after union fired him, where there *48 made while prospective employee was president was no allegation or evidence that counsel made of a constituent local police association, that alleged remark to a member of union. V.T.C.A., executive director and union were still dealing Civil Practice & Remedies Code §§ 27.001(2), with former employee because of former 27.005(b, c). employee's “criminal conduct.” V.T.C.A., Civil

Cases that cite this headnote Practice & Remedies Code §§ 27.001(2), 27.005(b, c).

[7] Pleading Cases that cite this headnote Frivolous pleading Pleading [5] Pleading Application and proceedings thereon Frivolous pleading Former employee's defamation claim against Pleading labor union representing law enforcement Application and proceedings thereon officers and against union's executive director Former employee's defamation claim against did not relate to those defendants' exercise of labor union representing law enforcement their right of association, so as to require former

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 2 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) employee to prove a prima facie case to avoid necessary for former employee to establish dismissal under the Texas Citizens Participation prima facie case of defamation on motion Act (TCPA), to the extent the claim was based on of union and executive director under Texas alleged remarks by union's corporate attorney to Citizens Participation Act (TCPA) to dismiss a county district attorney attempting to persuade a claim arising from defendants' exercise of the latter to permit corporate attorney to present right of association. V.T.C.A., Civil Practice & evidence to a grand jury in pursuit of an Remedies Code § 27.005. indictment of former employee, where there was

Cases that cite this headnote no allegation of evidence that district attorney was a member of union. V.T.C.A., Civil Practice & Remedies Code §§ 27.001(2), 27.005(b, c).

[10] Libel and Slander Existence and Effect of Malice Cases that cite this headnote Pleading Frivolous pleading [8] Libel and Slander Pleading Qualified Privilege Application and proceedings thereon Defamation action by former employee against There was no clear and specific evidence labor union and its executive director in that statements by officials of labor connection with alleged statements attributing union representing law enforcement officers criminal conduct to former employee arose in to president of constituent police officer context of a “labor dispute” under National association, that conduct of a former employee Labor Relations Act (NLRA), such that former of union “could go criminal,” that it was “going employee was required to prove actual malice; to court,” and that criminal charges could be former employee invoked NLRA regarding the filed against former employee by union for dispute twice by filing unfair labor practices what he had done were untrue or were made claims with National Labor Relations Board with reckless disregard for the truth of those (NLRB) months after his employment was statements, as necessary for former employee terminated. National Labor Relations Act, § 2(9), to establish prima facie case of defamation and

29 U.S.C.A. § 152(9).

thereby survive motion of union and executive director under Texas Citizens Participation Act

Cases that cite this headnote (TCPA) to dismiss claim as being a response to their exercise of right of association. V.T.C.A.,

*49 [9] Libel and Slander Civil Practice & Remedies Code § 27.005. Existence and Effect of Malice Cases that cite this headnote Pleading Frivolous pleading Pleading [11] Constitutional Law Application and proceedings thereon Conditions, Limitations, and Other Restrictions on Access and Remedies There was no evidence that e-mail from executive director of labor union to union's Pleading board and staff, stating that executive board had Application and proceedings thereon directed him to file criminal charges against

Texas Citizens Participation Act (TCPA) does former employee for deleting computer files not impose a higher standard of proof, with that were union's property, and that union's respect to surviving a motion to dismiss an corporate attorney had advised that such conduct action filed in response to the exercise of free was a criminal act under state law, was untrue speech, petitioning, or association rights, than or that executive director acted with reckless would be required at trial, and thus does not, disregard for truth of those statements, as under that theory, violate open-courts provision © 2014 Thomson Reuters. No claim to original U.S. Government Works. 3 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) of state constitution; TCPA requires only that Cases that cite this headnote claimant produce evidence that establishes a prima facie case, and thus does not increase the preponderance-of-evidence standard applicable

[14] Constitutional Law at trial, despite characterizing evidence needed Particular Issues and Applications to support prima facie case as “clear and Constitutional Law specific.” Vernon's Ann.Texas Const. Art. 1, § Course and conduct of proceedings in 13; V.T.C.A., Civil Practice & Remedies Code § general 27.005(c). Pleading Frivolous pleading Cases that cite this headnote Definition in Texas Citizens Participation Act (TCPA), stating that the exercise of

[12] Constitutional Law the “right of association” encompassed a Conditions, Limitations, and Other communication between individuals who join Restrictions on Access and Remedies together to express, promote, pursue or defend Pretrial Procedure common interests, was not unconstitutionally Objections and protective orders overbroad under First Amendment or void Restrictions on discovery during the pendency for vagueness under due process principles as of a motion to dismiss under Texas Citizens applied in action in which labor union and Participation Act (TCPA) are reasonable and its executive director successfully moved for therefore do not violate a plaintiff's rights dismissal of defamation claims asserted by under open-courts provision of state constitution; former employee in connection with statements provisions staying discovery are tempered regarding alleged criminal conduct on his part. by provisions permitting discovery upon a U.S.C.A. Const.Amends. 1, 14;; V.T.C.A., Civil showing of good cause, and stay provisions Practice & Remedies Code §§ 27.001(2), 27.005. can curtail potentially costly discovery in a Cases that cite this headnote potentially meritless case, thus serving TCPA's goal of keeping litigation from being used to chill exercise of constitutional rights. Vernon's Ann.Texas Const. Art. 1, § 13; V.T.C.A., Civil Practice & Remedies Code §§ 27.003(b),

From the District Court of Travis County, 353rd Judicial 27.006(b). District, No. D–1–GN–12–003281; Amy Clark Meachum, *50 Judge Presiding. Cases that cite this headnote Attorneys and Law Firms [13] Constitutional Law Sean E. Breen, Howry, Breen & Herman, L.L.P., Randy T. Costs and fees; indigency Leavitt, The Law Office of Randy T. Leavitt, Austin, TX, for Costs appellee. On dismissal, nonsuit, default, or settlement Molly Lawrence, Tanner and Associates, P.C., James Roddy Texas Citizens Participation Act (TCPA) does Tanner, Fort Worth, TX, B. Craig Deats, Deats Durst, Owen not mandate fee awards to a defendant that & Levy, P.L.L.C., Austin, TX, for appellant. prevails on motion to dismiss an action arising from the exercise of constitutional rights of

Before Justices PURYEAR, ROSE, and GOODWIN. expression and association, and, therefore, TCPA's fee award provisions do not violate

MEMORANDUM OPINION

open-courts guarantees on their face. Vernon's Ann.Texas Const. Art. 1, § 13; V.T.C.A., Civil

JEFF ROSE, Justice. Practice & Remedies Code § 27.009(a). © 2014 Thomson Reuters. No claim to original U.S. Government Works. 4 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) *1 Combined Law Enforcement Associations of Texas and laptop to CLEAT and says he was assured by the employee John Burpo brought this interlocutory appeal of the denial receiving it that his actions were acceptable. of their motions to dismiss Mike Sheffield's defamation claims. Appellants contend that they triggered the dismissal Appellants assert that CLEAT's practice was always to procedures of the Texas Citizens Participation Act by control the computer-scrubbing process, downloading files showing that Sheffield filed his lawsuit in response to their beforehand to avoid the complete loss of data. CLEAT's exercise of their right of association. See Tex. Civ. Prac. & expert analyzed Sheffield's computer and found some Rem.Code §§ 27.001–.011. Appellants contend that Sheffield data—including some partial documents and emails—that failed to respond with clear and specific evidence showing appellants contend support their reasons for firing Sheffield. a prima facie case for each essential element of his claims Appellants contend that the data was potentially relevant as required to avoid dismissal under the TCPA. They further in legal proceedings relating to the firing that followed— contend that the trial court erred by failing to award them their complaints and suits by both sides that have been rejected, costs, reasonable attorney's fees, and other expenses incurred dismissed, or withdrawn. in defending this suit.

*2 The parties have engaged in a series of legal We will reverse the trial court's order denying the motion wranglings. Sheffield filed unfair labor practices grievances to dismiss with respect to claims based on comments made and complaints against CLEAT with his union and the among CLEAT members and will dismiss those claims National Labor Relations Board. The union declined to pursuant to the TCPA. We will affirm the order denying the pursue the grievance in arbitration, and the NLRB dismissed motion to dismiss Sheffield's claim based on comments made one complaint before Sheffield withdrew the other two. to the district attorney and other unnamed persons. We will Meanwhile, Sheffield returned to work at the Austin Police remand the case for further proceedings consistent with this Department, which prompted APD's Special Investigations opinion, including consideration by the trial court of an award Unit to investigate CLEAT's allegations that Sheffield had of costs and fees relating to the motion to dismiss. committed a crime by scrubbing his CLEAT computer's

memory. APD found no criminal element in the conduct by Sheffield. According to APD's memo, however, its investigation was limited by CLEAT's decision not to

FACTUAL BACKGROUND

supply APD with evidence because CLEAT wanted either Williamson County or federal authorities to investigate. APD

CLEAT is a labor union that represents law enforcement also referred the issue to the FBI's cybercrimes unit which officers. Burpo was its executive director, and Sheffield found “no federal [criminal] element” in Sheffield's behavior. worked for CLEAT as a field service representative, having Sheffield averred that the Lockhart Police Department (where retired from the Austin Police Department. He was assigned he also worked post-CLEAT) also investigated and “likewise *51 to help various local police associations including the Austin cleared [him].” The Williamson County grand jury in August Police Association (APA). After disagreements relating to 2012 declined to indict Sheffield. CLEAT states that in the scope and manner of Sheffield's interactions with APA August 2012 it filed a conversion action against Sheffield in members, Burpo fired him on July 18, 2011. Williamson County that was transferred to Travis County and then nonsuited.

The comments giving rise to the defamation claims in this case relate to Sheffield's conduct with respect to his CLEAT- issued laptop computer in the aftermath of his firing. When he was fired, Sheffield had his CLEAT computer at home.

PROCEDURAL BACKGROUND

Sheffield asserts by affidavit that the standard practice at CLEAT was to erase a departing employee's computer, Sheffield's defamation suit is based on comments allegedly reprogram it, and then give it to another employee. Sheffield made by Burpo and others associated with CLEAT. The core states that a computer store technician saved his personal files of Sheffield's complaint in his live petition is as follows: to a thumb drive. Sheffield says he then took the computer

[O]n one or more occasions, the home and deleted data from the laptop's hard drive intending Defendants defamed Mr. Sheffield to prevent disclosure of personal information. He turned in his by uttering and/or broadcasting © 2014 Thomson Reuters. No claim to original U.S. Government Works. 5 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) and/or repeating statements and (1) An email sent on January 4 from Burpo to the CLEAT false allegations that Mr. Sheffield board and staff. 2 Burpo sent the email after the NLRB committed criminal acts in connection with his employment with CLEAT. set a hearing on Sheffield's complaint that he was fired for violating an overly broad limitation on work-related Those allegations included that communications. In the email, Burpo discussed the nature Sheffield inappropriately accessed CLEAT's computer system and and consequences of the NLRB's action. Sheffield focuses deleted files with the intention of on this statement, “The Executive Board has directed me to file criminal charges against Sheffield for deleting files harming CLEAT. Upon information that were the property of CLEAT which [CLEAT attorney] and belief, such false accusations were broadcast to 70 plus police officers and Rod Tanner advises is a criminal act under Texas law.” former co-workers of Mr. Sheffield, 2 at least. The statements were made by

This is the email that appellants asserted was the sole an officer or agent of CLEAT acting basis of Sheffield's complaint. within his or her scope of authority in publishing the defamatory statement.

(2) An alleged comment by Burpo to Corpus Christi Police Officers Association President Mike Staff in the summer.

Appellants moved to dismiss this claim under the TCPA, a Staff said in an affidavit that Burpo offered him a job statute enacted by the Texas Legislature in 2011 to “safeguard with CLEAT and discussed an ongoing reshuffling within the constitutional rights of persons to petition, speak freely, CLEAT. According to Staff, Burpo told him that “he and associate freely, and otherwise participate in government to CLEAT were still dealing with Mike Sheffield because the maximum extent permitted by law and, at the same time, of what Mr. Burpo told me was Mr. Sheffield's ‘criminal protect the rights of a person to file meritorious lawsuits conduct’ and that he thought that would end soon.” for demonstrable injury.” 1 Tex. Civ. Prac. & Rem.Code § 27.002. One way the statute seeks to protect those rights is by (3) Alleged statements various CLEAT officials made providing an early dismissal mechanism for certain categories to Laredo Police Association President Luis Dovalina. In his affidavit, Dovalina states that CLEAT Region 2 of lawsuits. If a defendant shows by a preponderance of the Director Mark Guerra “would not or could not provide evidence that the plaintiff's suit is based on, relates to, or is in response to the defendant's exercise of the rights listed in an answer to why Mr. Sheffield was terminated but section 27.002, the TCPA requires dismissal of the suit unless did state to me ‘it could go criminal, for what he did.’ “ Although Dovalina said he asked for specifics the party bringing the legal action “establishes by clear and on Sheffield's termination, he said he never received specific evidence a prima facie case for each essential element of the claim in question.” See id. §§ 27.003, .005(c). The them and was not told that “a grand jury and other *52 TCPA must be “construed liberally to effectuate its purpose investigations had never led to any charges against Mr. Sheffield.” Dovalina said that, when he later asked and intent fully.” Id. § 27.011(b). In their motions to dismiss Burpo about Guerra's comments, Dovalina said that under the TCPA, appellants asserted that Sheffield's suit was in response to a single email Burpo sent to the CLEAT board Burpo “informed me that it was ‘going to court,’ and that and staff. They argued that TCPA applies because Sheffield's he would brief me on it at a later date” but never did. He averred that three or four CLEAT officials “stated to me suit impinges on their right of association and that Sheffield that criminal charges could be filed against Sheffield by could not establish a prima facie case for defamation.

CLEAT for what Mr. Sheffield had done.” 1 There is nothing in the plain language of the statute that (4) Statements allegedly made by CLEAT corporate limits its scope, as Sheffield argues, to a media defendant counsel John Curtis that APD chief Art Acevedo or solely to public participation in government. created a special employment position for Sheffield *3 In his response to appellants' motions to dismiss, after CLEAT fired him. Sheffield asserts that this Sheffield listed five communications that he alleges were allegation (a) was false because the positions were made in 2012 and were defamatory: created previously and independent of his employment situation and (b) was “tantamount to an assertion of

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 6 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) conduct violating Section 39 .02 of the Texas Penal II. Applicability of the TCPA Code” governing abuse of official capacity. Appellants contend in their second issue that the trial court (5) Statements Curtis allegedly made to Williamson erred if it denied the motions to dismiss on grounds that County District Attorney John Bradley attempting to the TCPA does not apply in this case. The party seeking persuade him to allow Curtis to present information to dismissal of a legal action under the TCPA must show by a the grand jury in pursuit of an indictment of Sheffield on preponderance of the evidence that the legal action is “based grounds that he had violated Penal Code chapter 33. on, relates to, or is in response to the party's exercise of

the right of free speech, the right to petition or the right of The district court denied the motions to dismiss without association.” Tex. Civ. Prac. & Rem.Code § 27.005. “ ‘Legal stating a basis 3 and was not asked to make findings of fact action’ means a lawsuit, cause of action, petition, complaint, or conclusions of law in support of its decision. cross-claim, or counterclaim or any other judicial pleading or 3 filing that requests legal or equitable relief.” Id. § 27.001(6). Appellants also sought dismissal for want of jurisdiction Appellants argue that the TCPA does apply to the disputed and through special exceptions, but those motions are not statements. presented in this appeal because interlocutory appeal is authorized only from the denial of the motion to dismiss under the TCPA. See Tex. Civ. Prac. & Rem.Code §§ As an initial matter, we note that appellants cited only 27.008, 51.014. the right of association in their motions to dismiss, so the

trial court's rejection of that theory is the only one of the three rights protected under the TCPA that is preserved

DISCUSSION

here for appellate review. See Tex.R.App. P. 33.1; Tex. Civ. Prac. & Rem.Code § 27.005. Because interlocutory

*4 Appellants contend that the trial court erred in denying appeals are allowed only in limited situations, we strictly their motions to dismiss because the TCPA applies and construe the statute permitting such appeals. See Tex. Civ. Sheffield failed to establish a prima facie case of defamation. Prac. & Rem.Code § 51.014; see also Bally Total Fitness They also contend that the trial court erred by failing to award Corp. v. Jackson, 53 S.W.3d 352, 355 (Tex.2001). Although them attorney's fees. appellants argue on appeal that their statements relating to prosecution are within the TCPA as exercises of the rights of free speech or petition, they listed those claims as

I. Jurisdiction over this appeal their thirteenth affirmative defense but did not raise those [1] [2] By their first issue, appellants respond to appellee's arguments at the trial court in their motions to dismiss. motion to dismiss this interlocutory appeal. Sheffield

Because they did not raise the free speech or petition rights as contends that this Court lacks jurisdiction because the TCPA grounds for dismissal under the TCPA, the trial court did not does not expressly authorize an interlocutory appeal when the *53 reject them in denying the motions to dismiss, and arguments trial court expressly denies the motion. Sheffield contends relating to those contentions are not properly within the that interlocutory appeal is authorized only when the trial

limited scope of this interlocutory appeal. See Tex.R.App. P. court fails to rule and the motion to dismiss is overruled by 33.1(a)(1). Further, although the TCPA is intended to protect operation of law under the statute. See Tex. Civ. Prac. & the exercisers of certain constitutionally protected rights from Rem.Code § 27.008. This Court has determined, however, unfounded lawsuits, there is no showing that the TCPA's that regardless of the meaning of the original statute, the

dismissal process is a fundamental right. We find no statutory civil practice and remedies code as amended in 2013 confers or judicial exception permitting these arguments to be raised jurisdiction over appeals such as this one. See Kinney v. BCG for the first time in this interlocutory appeal of the denial of Att'y Search, Inc., No. 03–12–00579–CV, 2013 WL 4516106 appellants' motions to dismiss. We overrule those portions at *4 (Tex.App.-Austin Aug.21, 2013, no pet. h.); see also

of issue two concerning arguments about the exercise of the Tex. Civ. Prac. & Rem.Code § 51.014(a)(12); Act of May rights of free speech and petition. For the same reason, we 24, 2013, 83d Leg., H.B. 2935, ch. 1042, § 4. Based on the will not consider the merits of the remaining appellate issues reasoning in that opinion, we sustain appellants' first issue, with respect to the free-speech and petition theories but rather deny Sheffield's motion to dismiss, and proceed to consider

will evaluate appellants' claims under the rights asserted in the remaining issues raised on appeal. their motion to dismiss, i.e. the right of association. © 2014 Thomson Reuters. No claim to original U.S. Government Works. 7 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) *5 [3] [4] [5] Appellants plainly asserted in their motion unknown persons. We overrule issue two on those claims. to dismiss that Sheffield's claim related to their exercise of Because appellants did not show by a preponderance of the right of association. The TCPA defines the exercise of the evidence that these statements were communications made right of association as “a communication between individuals in the exercise of appellants' right of association as defined who join together to collectively express, promote, pursue, by the TCPA, the burden did not shift to Sheffield to present or defend common interests.” Tex. Civ. Prac. & Rem.Code a prima facie case on these claims to avoid dismissal, and § 27.001(2). Affidavits from Burpo, Staff, and Dovalina we need not consider the propriety of the denial of the show that three of the communications (those set forth above motion to dismiss these claims any further. See Tex. Civ. in numbered paragraphs 1–3) that Sheffield alleges to be Prac. & Rem.Code §§ 27.001(2), .005(b). With respect to defamatory fall within the TCPA's definition of the exercise the communications described in paragraphs 1, 2, and 3 of the right of association. Burpo's email to the CLEAT above, evidence showed that these communications were board and staff regarding Sheffield's NLRB claim as well made between or among CLEAT members and, thus, that as Burpo's and CLEAT staff's comments to two presidents the trial court erred if it dismissed based on a finding that of CLEAT's constituent local police associations (Corpus appellants did not show that Sheffield's claims related to their Christi's Staff and Laredo's Dovalina) were made between or exercise of the right of association. We sustain issue two with among members of CLEAT. In the statute's terms, these were regard to the communications described in paragraphs 1, 2, communications between individuals who joined together and 3 above. in CLEAT to collectively express, promote, or defend the common interests of police officers. See id. § 27.001(2).

III. Prima facie case Sheffield's suit against CLEAT and Burpo for defamation *6 By their third issue, appellants assert that the trial court through those statements plainly is based on, relates to, or is erred if it denied their motions to dismiss by concluding that in response to these communications made in the exercise of Sheffield made a prima facie case on each element of his the right of association, triggering Sheffield's burden to prove claims regarding the communications described in paragraphs a prima facie case on these complaints. 1, 2, and 3 above as required to avoid dismissal of those claims under the TCPA. To make a prima facie case of defamation,

[6] [7] Appellants did not show by a preponderance of the plaintiff must prove that the defendant (1) published a the evidence that two other communications (those set forth statement (2) that was defamatory concerning the plaintiff (3) above in numbered paragraphs 4–5) that Sheffield alleged while acting with either actual malice or negligence regarding were made by CLEAT's corporate attorney were within the the truth of the statement, depending on the nature of the TCPA's definition of the exercise of the right of association: parties and the dispute. See WFAA–TV, Inc. v. McLemore, (1) Curtis's allegations that APD chief Art Acevedo created 978 S.W.2d 568, 571 (Tex.1998). Persons who are not public a special employment position for Sheffield after CLEAT figures or involved in public issues typically need show fired him, and (2) Curtis's conversation with the Williamson *54 only that the defendant knew or should have known that County district attorney when asking that he file charges. the defamatory statement was false. See Foster v. Laredo There is no allegation or evidence that Curtis made either set Newspapers, Inc., 541 S.W.2d 809, 819 (Tex.1976). of these remarks to a member of CLEAT. Indeed, there is no allegation or evidence regarding to whom Curtis allegedly

Appellants contend that Sheffield had to meet the higher said that Acevedo created a job for Sheffield. There is also intent standard because this dispute arose in the context of no allegation or evidence that then-district attorney Bradley a labor dispute. In defamation claims arising out of labor was a CLEAT member. Appellants have not shown by disputes, the plaintiff must show that the defendant acted a preponderance of the evidence that Curtis made these with actual malice in order to prevail in state court. The communications to an individual with whom he had joined Supreme Court has held that the National Labor Relations together to collectively express, promote, pursue, or defend Act preempts most state laws related to labor disputes and common interests. vests exclusive jurisdiction for related formal legal disputes in the NLRB. See San Diego Bldg. Trades Council, Local

We conclude that the trial court did not err by denying 2020 v. Garmon, 359 U.S. 236, 243–44, 79 S.Ct. 773, 3 the motions to dismiss under the TCPA with respect to the L.Ed.2d 775 (1959) (cited in Linn v. United Plant Card communications described in paragraphs 4 and 5 above- Workers of Am., Local 114, 383 U.S. 53, 59, 86 S.Ct. 657, 15 i.e., Curtis's communications with the district attorney or L.Ed.2d 582 (1966)). The Garmon court excepted from that © 2014 Thomson Reuters. No claim to original U.S. Government Works. 8 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) preemption those claims that are peripheral to the concerns his publication.” See St. Amant v. Thompson, 390 U.S. 727, articulated in the NLRA and that are based on interests 731, 88 S.Ct. 1323, 20 L.Ed.2d 262 (1968); Huckabee, 19 deeply-rooted in local concerns. Id. The Linn court wrote that S.W.3d at 420. Plaintiffs who must show actual malice have defamation was an issue of such deeply-rooted local interest the burden to prove that the defamatory statement was not that state courts could retain jurisdiction over defamation true. See Huckabee, 19 S.W.3d at 420. cases if the plaintiff showed the defendant had actual malice in making the defamatory statement. 383 U.S. at 64–65. The A timeline of the parties' legal proceedings is helpful to court opined that this approach balances the tensions among provide the context needed to assess whether each alleged preserving expressive leeway for participants in heated labor defamatory statement was made with knowledge of its falsity disputes, limiting use of state-court defamation suits as a or reckless disregard of its truth—i.e., whether Sheffield weapon in labor disputes, and allowing participants in those proved a prima facie case of defamation. Sheffield filed his disputes to defend their reputations from untruthful attacks. unfair labor practices claim with the NLRB on October 20, Id. 2011. On December 30, 2011, the NLRB set one of his labor

dispute claims for hearing in early 2012. In February 2012, [8] While the seminal Supreme Court cases involved larger- APD's Special Investigation Unit found no criminal element scale labor disputes and activities like picketing ( Garmon, present in Sheffield's behavior and the FBI's cybercrimes unit 359 U.S. at 237) and union organizing ( Linn, 383 U.S. found no violations of federal law. Sheffield filed another at 55), this case, too, presents a labor dispute under the NLRB complaint on March 12, 2012, but withdrew it on April law. The NLRA defines “labor dispute” as “any controversy 30, 2012. He withdrew his remaining NLRB complaint on concerning the terms, tenure, or conditions of employment ... July 19, 2012. The Williamson County Grand Jury declined regardless of whether the disputants stand in the proximate to indict Sheffield in August 2012. We will consider each relation of employer or employee.” 29 U.S.C. § 152(9). allegedly defamatory statement in the context of the speaker's Sheffield was a CLEAT employee who had his tenure ended, knowledge at the time of the statement. then disputed the terms of his employment and their role in his

(1) The January 4, 2012 email sent from Burpo to the termination. Sheffield plainly elevated this controversy above CLEAT board and staff stating, “The Executive Board a standard job-termination case when he invoked the NLRA has directed me to file criminal charges against Sheffield regarding this dispute twice by filing unfair labor practices for deleting files that were the property of CLEAT which claims with the NLRB months after his employment was [CLEAT attorney] Rod Tanner advises is a criminal act terminated. His complaints—first that CLEAT discharged under Texas law.” him for union activities and for violating an overly broad workplace rule, and then that CLEAT retaliated against him

[9] Sheffield produced no evidence that, when Burpo sent for filing the first unfair labor practices claim—show that the this email, appellants either knew that any aspect of this circumstances of this case constitute a labor dispute as defined *55 statement was false or recklessly disregarded whether it was by the NLRA. See id. true. Although Sheffield clearly disagrees that his actions were criminal or warranted criminal charges, he has not

*7 For such cases, the Supreme Court adopted the standard alleged or established a prima facie case that Burpo was of actual malice used in defamation cases brought by public reckless with the truth of his statement about the board's officials against media defendants. Linn, 383 U.S. at 65 direction to him or CLEAT's attorney's advice to him. There (citing New York Times Co. v. Sullivan, 376 U.S. 254, 84 is no showing that the investigations Sheffield cites as S.Ct. 710, 11 L.Ed.2d 686 (1964)). “Actual malice” in the exonerating him were complete when Burpo sent the email, defamation context does not necessarily include ill will, spite, or that the allegations had been presented to and rejected by or evil motive. Sullivan, 376 U.S. at 279–80; Huckabee v. the district attorney or grand jury. The only indication in the Time Warner Entm't Co., 19 S.W.3d 413, 420 (Tex.2000). record is that the investigations and presentation to the grand To establish actual malice, a plaintiff must prove that the jury occurred after January 4, 2012. Sheffield has not shown defendant made the statement “with knowledge that it was that Burpo made an untrue statement or had the requisite false or with reckless disregard of whether it was true or not.” disregard for the truth of these statements when he sent the Sullivan, 376 U.S. at 279–80; Huckabee, 19 S.W.3d at 420. January 4, 2012 email. To establish reckless disregard, a plaintiff must prove that the publisher “entertained serious doubts as to the truth of

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 9 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) to the grand jury. The allegations did in fact go “to court”— *8 (2) Burpo's statement in the summer of 2012 to arguably in the grand jury presentation and definitely in the Corpus Christi Police Officers Association President Mike civil action. Sheffield failed to show by clear and specific Staff that Burpo “and CLEAT were still dealing with Mike evidence a prima facie case that appellants' statements to Sheffield because of what Mr. Burpo told me was Mr. Dovalina were not true, much less that appellants either Sheffield's ‘criminal conduct’ and that he thought that knew that Sheffield's conduct was not criminal or entertained would end soon.” serious doubts about the truth of their statements. See id. As such, Sheffield has failed to carry his burden to present

The potentially defamatory aspect of this statement is the use a prima facie case that CLEAT defamed him with the of the term “criminal conduct.” APD's February investigation statements made by CLEAT staff. that found no criminal element in Sheffield's conduct does not prove that CLEAT knew this statement was false or recklessly

*9 We sustain appellants' third issue with respect to disregarded whether it was true. Given the lack of evidence on the communications described in paragraphs 1, 2, and 3 the scope and purpose of APD's investigation and CLEAT's above. The trial court erred if it concluded that Sheffield alleged lack of cooperation with the investigation, Sheffield made a prima facie case of defamation with respect to the has not set out a prima facie case that APD's conclusion communications described in those three paragraphs. informed appellants that their statements were false or gave them serious doubts about their truth. Appellants, supported by CLEAT's attorney's opinion, insisted at least through the IV. Constitutional challenges August 2012 presentation to the Williamson County grand Sheffield contends that the TCPA is unconstitutional because jury that Sheffield committed a crime, and Sheffield has not its proof requirements unreasonably restrict his right of access presented a prima facie case that Burpo was reckless with to the courts for redress of his defamation claim and because regard to the truth of his statement. Even if the grand jury's the definition of the right to freely associate is vague and no-bill made any subsequent allegation of criminal conduct overbroad on its face or as applied. reckless, Sheffield did not present clear and specific evidence that the statement to Staff occurred after the grand jury's

Open courts decision. We find no clear and specific evidence that, when The Texas Constitution provides that “[a]ll courts shall be attributing “criminal conduct” to Sheffield in a statement to open, and every person for an injury done him, in his Staff, appellants either knew that Sheffield's conduct was not lands, goods, person or reputation, shall have remedy by criminal or entertained serious doubts about the truth of their due course of law.” Tex. Const. art. I, § 13. To prove that statements. See St. Amant, 390 U.S. at 731. the statute violates the open-courts provision, Sheffield must (3) Statements to Laredo Police Association President show that (1) a cognizable common-law cause of action *56 Luis Dovalina by CLEAT Region 2 Director Mark Guerra is being restricted and (2) the restriction is unreasonable that “it could go criminal, for what [Sheffield] did.” or arbitrary when balanced with the statute's purpose and Dovalina said Burpo “informed me that it was ‘going to basis. Hebert v. Hopkins, 395 S.W.3d 884, 901 (Tex.App.- court.’ “ Other CLEAT officials “stated to me that criminal Austin 2013, no pet.) (citing Sax v. Votteler, 648 S.W.2d 661, charges could be filed against Sheffield by CLEAT for 666 (Tex.1983)). Defamation is undisputedly a common-law what Mr. Sheffield had done.” cause of action. Cf. Houston Livestock Show & Rodeo, Inc.

v. Hamrick, 125 S.W.3d 555, 583 (Tex.App.-Austin 2003, no [10] As with the statements to Staff, Sheffield did not pet.). pinpoint the timing of these alleged communications. It is also not clear exactly what it means for charges to “go criminal.” Sheffield argues that the open courts provision of the Texas This lack of specificity undermines Sheffield's attempt to Constitution guarantees, among other things, that (1) the make a prima facie case of defamation. Reaction to Sheffield's Legislature cannot impede access to the courts through actions “ could ” have “go[ne] criminal”—and arguably unreasonable financial barriers, and (2) meaningful remedies did, briefly, in the Williamson County District Attorney's must be afforded so that the Legislature may not abrogate presentation of the allegations to the grand jury. Similarly, the right to assert a well-established common law cause of “criminal charges could [have been] filed,” and appellants action unless the reason for its action outweighs the litigants' attempted to make that happen by pursuing their presentation constitutional right of redress. See Trinity River Auth. v. URS

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 10 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) Consultants, Inc., 889 S.W.2d 259, 262 (Tex.1994); see also [12] Sheffield also attacks the restrictions on discovery Tex. Const. art. I, §§ 8, 13. “A statute or ordinance that during the pendency of the motions to dismiss. Motions to unreasonably abridges a justiciable right to obtain redress dismiss under the TCPA must be filed, heard, and ruled upon for injuries caused by the wrongful acts of another amounts within 120 days of the service of the lawsuit, with some to a denial of due process under article I, section 13, and leeway upon a showing of good cause by the party (for the is, therefore, void.” Sax, 648 S.W.2d at 665. A claim of motion) or the court (for holding a hearing). The motions to unconstitutionality under the open courts provision will only dismiss under the TCPA must be filed no later than the sixtieth succeed if the claimant (1) has a cognizable common-law day after the action was served, unless the court extends the cause of action being restricted by a statute, and (2) the time to file a motion on a showing of good cause. Tex. Civ. restriction is unreasonable or arbitrary when balanced against Prac. & Rem.Code § 27.003(b). The hearing must be held the purpose and basis of the statute. Id. at 666. In applying not later than thirty days after the motion was served unless this test, we consider both the statute's general purpose and the court's docket requires a later hearing. Id. § 27.004. The the extent to which the claimant's right to bring a common- court must rule no later than thirty days after the hearing. law cause of action is affected. See id. Id. § 27.005(a). The filing of a motion to dismiss under the

TCPA automatically stays all discovery. Id. § 27.003(c). The Sheffield contends that the TCPA unreasonably restricts his stay may be lifted—on motion by a party or the court and ability to pursue his claim for defamation in the following a showing of good cause—to permit specific and limited ways: (1) provisions that purport to impose a higher standard discovery relevant to the dismissal motion. Id. § 27.006(b). of proof than would ordinarily be required for the plaintiff/ respondent to prevail at trial; (2) unreasonable prohibitions, Sheffield has not shown that these restrictions are limitations or restrictions on discovery prior to the hearing on unreasonable. The TCPA's express purpose is to balance the motions to dismiss (particularly when coupled with the protections for persons exercising their constitutional rights expedited notice/hearing requirements under the act); and (3) of expression and association with those of persons filing mandatory (non-discretionary) fee awards and sanctions upon meritorious lawsuits for demonstrable injury. Id. § 27.002. dismissal. We will consider these in turn. The provisions staying discovery are tempered by provisions

permitting discovery upon a showing of good cause. These *10 [11] We find no provision in the TCPA that purports provisions can curtail potentially costly discovery in a to impose a higher standard of proof than would be required possibly meritless case, thus serving the TCPA's goal of at trial. If the defendant shows by a preponderance of the keeping litigation from being used to chill the exercise evidence that the legal action impinges on a specified right, of constitutional rights, but can permit discovery upon a the TCPA requires only that the claimant produce evidence showing of good cause. They do not on their face violate the that establishes a prima facie case. See Tex. Civ. Prac. & open-courts provision. Our review of the case on appeal does Rem.Code § 27.005(c). “A prima facie case represents the not reveal how the stay of discovery as applied here prevented *57 minimum quantity of evidence necessary to support a rational Sheffield from establishing a prima facie case through clear inference that the allegation of fact is true.” Rodriguez v. and specific evidence and violated the constitution. Printone Color Corp., 982 S.W.2d 69, 72 (Tex.App.-Houston [1st Dist.] 1998, pet. denied) (quoting Rosales v. H.E. Butt *11 [13] Finally, Sheffield has not shown that fees awards Grocery Co., 905 S.W.2d 745, 748 (Tex.App.-San Antonio are mandatory under the TCPA, much less that they violate 1995, writ denied)). That standard does not increase the the open-courts provision. The fees provisions are as follows: burden of proof. The characterization of the evidence needed

If the court orders dismissal of a legal action under this to support the prima facie case as “clear and specific” does chapter, the court shall award to the moving party: not alter the burden or cause it to exceed a preponderance of the evidence. This TCPA motion-to-dismiss process imposes

(1) court costs, reasonable attorney's fees, and other a burden to produce evidence almost certainly sooner than expenses incurred in defending against the legal action a typical trial, but so do the summary-judgment processes. as justice and equity may require; and See Tex.R. Civ. P. 166a. Sheffield has not shown that the TCPA requires a higher standard of proof, much less one that

(2) sanctions against the party who brought the legal violates the open-courts provision of the Texas constitution. action as the court determines sufficient to deter the © 2014 Thomson Reuters. No claim to original U.S. Government Works. 11 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) party who brought the legal action from bringing similar words, an overbroad statute improperly limits protected actions described in this chapter. freedoms. Cf. id. In this case, however, Sheffield complains

that the statutory “definition exceeds the scope of the Id. § 27.009(a). While the introductory language of Constitutional right of association”—that is, that the statute subsection (a) uses the seemingly mandatory term “shall provides more protection for freedom of association than award,” the subsequent language tempers the conditions for the constitution does. We do not find support for the making an award with discretionary terms like “justice” and proposition that a statute that provides extra protection for “equity” and “sufficient to deter.” Id. A trial court may decide a right violates the constitutional provision guaranteeing that justice and equity do not require that costs, fees, or that right. See Marquez v. State, 725 S.W.2d 217, 243 expenses be awarded and may determine that no sanctions (Tex.Crim.App.1987) (“[I]t is by now axiomatic that the are needed to deter the plaintiff from bringing similar actions. federal constitution provides only a minimum standard of These provisions do not mandate an award and do not violate protection to be afforded citizens of the several states and the the open-courts guarantees on their face. As no fees were states are free to provide greater protection by constitution or awarded, the provisions as applied here did not violate the statute.”) open-courts provisions. *12 Also, the challenged definition of the exercise of the right of association is not unconstitutionally vague. Sheffield

Vagueness and overbreadth complains that the TCPA's definition of the exercise of [14] Sheffield attacks the TCPA's definition that the exercise the right of free association “could literally encompass all of the right of association encompasses “a communication communications or activities of any corporation, partnership, between individuals who join together to express, promote, joint venture, limited liability company, organization agency, pursue or defend common interests.” Tex. Civ. Prac. & association or group.” A statute is void for vagueness if Rem.Code § 27.001(2). He complains that this definition it (1) fails to give a person of ordinary intelligence fair exceeds the actual constitutional right, is overbroad facially notice of the conduct prohibited or (2) is so indefinite and/or as applied, and is unconstitutionally vague because that it encourages arbitrary and discriminatory enforcement. it could encompass all communications or activities of any Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 group. He cites no authority in support of his argument as L.Ed.2d 903 (1983); see also Clark v. State, 665 S.W.2d required. See Tex.R.App. P. 38.1(I), 38.2(a). 476, 482 (Tex.Crim.App.1984). To be void for vagueness, a statute must be so vague and indefinite as really to be no

We note first that the TCPA's relationship to First standard at all. Jones v. City of Lubbock, 727 F.2d 364, 373 Amendment protections is somewhat unusual. In relevant (5th Cir.1984). We note initially that the TCPA does not part, the First Amendment prohibits the government from prohibit any activity. Sheffield argues that the plain language making laws abridging freedom of speech or the right of of the statute may invite an interpretation that it applies to an *58 the people to peaceably assemble. See U.S. Const. amend. I. extremely broad right to association, but that does not render The TCPA attempts to shield people exercising certain rights the TCPA's definition improperly vague. The legislature's protected by the First Amendment not from governmental choice to require a preliminary substantiation of legal actions restriction, but from meritless civil claims. See Tex. Civ. relating to a broad range of organizational communications Prac. & Rem.Code §§ 27.002, .005. Rather than imposing does not create difficulty in determining whether or how a governmental limit on speech or association, the TCPA it applies. We need not determine the outer constitutional places preliminary proof requirements on parties to litigation limits of the TCPA, only whether the TCPA's terms are concerning the results of the exercise of those rights. permissible as applied to the statements at issue in this case, each of which generally relate to CLEAT's internal affairs

Because of the nature of the relationship between the TCPA which are a common interest among CLEAT's members. and the First Amendment, Sheffield's complaint that the The TCPA's definition of the exercise of free association is definition of the right of association is too broad assumes not unconstitutionally overbroad or void for vagueness as an unusual posture. A statute is considered impermissibly Sheffield contends. overbroad only if, in addition to constitutionally proscribed activities, it restricts speech or conduct protected by the First Amendment. Walker v. State, 222 S.W.3d 707, 713

V. Attorney's fees (Tex.App.-Houston [14th Dist.] 2007, pet. ref'd). In other © 2014 Thomson Reuters. No claim to original U.S. Government Works. 12 Combined Law Enforcement Ass'n of Texas v. Sheffield, Not Reported in S.W.3d (2014) Appellants urge by their fourth issues that the trial court

We reverse the trial court's denial of the motions to dismiss erred by failing to award them attorney's fees. As this is Sheffield's claim that Burpo and other CLEAT employees an interlocutory appeal and we have reversed some aspects defamed him in the statements described in numbered of the trial court's denial of appellants' motions to dismiss, paragraphs 1, 2, and 3 set out in section I of the Discussion affirmed other aspects, and determined that the attorney's fees above—namely, the January 4 email to CLEAT board and provisions are not mandatory, we conclude that the trial court staff and alleged statements to Mike Staff and Luis Dovalina. should consider whether attorney's fees are warranted when We conclude that Sheffield did not make the required prima it resumes its consideration of this case. Our resolution of the facie showing under the TCPA on each element of his first three issues has rendered our consideration of appellants' defamation claims relating to the statements in paragraphs 1, fourth issues moot. 2 and 3, and we dismiss those claims. *13 We reject Sheffield's arguments that the TCPA is

CONCLUSION

unconstitutional and return the issue of costs and attorney's fees to the trial court. The case may proceed in the trial court

We affirm the trial court's denial of the motions to dismiss consistent with our resolution of these issues on interlocutory Sheffield's claims that CLEAT defamed him through John appeal. The stay of discovery imposed by this Court's order Curtis's statements in numbered paragraphs 4 and 5 set out dated February 26, 2013, will expire on the same date as this in section I of the Discussion above. We find that appellants Court's plenary power over this appeal expires. did not make the required showing under the TCPA that those claims are within the scope of the exercise of appellants' right of association, which was the only constitutional basis for Sheffield's objection preserved for appeal. End of Document © 2014 Thomson Reuters. No claim to original U.S. Government Works.

*59 © 2014 Thomson Reuters. No claim to original U.S. Government Works. 13 Schimmel v. McGregor, 438 S.W.3d 847 (2014) Application and proceedings thereon A “prima facie case” within meaning of Texas 438 S.W.3d 847 Citizens Participation Act (TCPA) prohibiting Court of Appeals of Texas, dismissal if plaintiff establishes by clear and Houston (1st Dist.). specific evidence a prima facie case for Bruce I. SCHIMMEL, Appellant each essential element represents the minimum quantity of evidence necessary to support a v. rational inference that the allegation of fact is Gary McGREGOR, Teri McGregor, Kris true. V.T.C.A., Civil Practice & Remedies Code Hall, Soledad Pineda, Larry Bishop, § 27.005(c). Cynthia Bishop, George Clark, Deborah Clark, and Carol Severance, Appellees.

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

Holdings: The Court of Appeals, Evelyn V. Keyes, J., held that:

[3] Pleading [1] motion was timely filed; Frivolous pleading Statements allegedly made by attorney to city, [2] attorney's statements did not come within “commercial which homeowners alleged tortiously induced speech” exemption from application of Act; city to back out of its agreements to purchase *60 homeowners' properties, did not arises out of

[3] attorney's statements were “matters of public concern,” the sale or lease of goods, services, or an supporting motion to dismiss; insurance product, or a commercial transaction, as required to come within commercial speech

[4] homeowners failed to establish a prima facie case on their exception to application of Texas Citizens claim; Participation Act (TCPA); when attorney made the statements he was undisputedly working

[5] remand on issue of attorney fees was warranted. as an attorney for homeowners association, attorney did not represent the city, nor was the city a “potential buyer or customer” of his legal

Reversed and remanded. services. V.T.C.A. Civil Practice and Remedies Code § 27.010(b). 1 Cases that cite this headnote

West Headnotes (12) [4] Pleading [1] Pleading © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Schimmel v. McGregor, 438 S.W.3d 847 (2014) Frivolous pleading [7] Torts Statements of homeowners' association's Improper means; wrongful, tortious or attorney, forming basis of homeowners' illegal conduct action for tortious interference with sale of Conduct that is merely “sharp” or unfair is their respective beachfront properties to city, not actionable and cannot be the basis for an were “matters of public concern,” supporting action for tortious interference with prospective attorney's motion to dismiss under Texas relations. Citizens Participation Act (TCPA); challenged statements, regardless of to whom the statements

Cases that cite this headnote were made, were related to the dispute between homeowners and association about [8] Pleading city's purchase of properties, and were made “in Frivolous pleading connection with an issue under consideration or review” by the city and the Texas Department Pleading of Public Safety. V.T.C.A. Civil Practice and

Application and proceedings thereon Remedies Code § 27.001(7). Torts Attorneys Cases that cite this headnote Homeowners' conclusory statements, unsupported by any facts, that actions of

[5] Pleading homeowner associations' attorney caused city to Application and proceedings thereon fail to close on the purchases of their properties, Attorney's affidavits, in support of his motion did not establish, by clear and specific evidence, under Texas Citizens Participation Act (TCPA), a prima facie case on the essential element of stating that he was “personally acquainted with causation, as required to prevail on a claim for facts stated therein,” instead of stating that tortious interference with prospective business they were based on personal knowledge, were, relations, and, therefore, trial court erroneously nonetheless, competent and admissible. denied attorney's motion to dismiss under Texas Citizens Participation Act (TCPA); even if

Cases that cite this headnote attorney had induced the city not to close on the purchase of the properties, the homeowners

[6] Torts would have no cause of action against him for Prospective advantage, contract or relations; inducing city to do that which it had a right to *61 expectancy do, which was not to purchase the homeowners' properties. V.T.C.A., Civil Practice & Remedies To prevail on a claim for tortious interference Code § 27.005(b, c). with prospective business relations, the plaintiffs must establish that (1) a reasonable probability

1 Cases that cite this headnote existed that the plaintiffs would have entered into a business relationship with a third party; (2) the defendant either acted with a conscious desire to [9] Torts Contracts prevent the relationship from occurring or knew the interference was certain or substantially

Merely inducing a contract obligor to do what it certain to occur as a result of the conduct; (3) the has a right to do is not actionable interference. defendant's conduct was independently tortious Cases that cite this headnote or unlawful; (4) the interference proximately caused the plaintiffs injury; and (5) the plaintiffs suffered actual damage or loss as a result.

[10] Appeal and Error Ordering New Trial, and Directing Further Cases that cite this headnote Proceedings in Lower Court © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Schimmel v. McGregor, 438 S.W.3d 847 (2014) When an appellate court determines that the trial court erroneously denied a defendant's motion to dismiss under the Texas Citizens Participation

OPINION

Act (TCPA), the appropriate disposition of the EVELYN V. KEYES, Justice. case is to reverse the trial court's denial of the motion and remand for the trial court to conduct

In this interlocutory appeal, appellees Gary McGregor, further proceedings to determine damages and Teri McGregor, Kris Hall, Soledad Pineda, Larry Bishop, costs and to order dismissal of the suit. V.T.C.A., Cynthia Bishop, George Clark, Deborah Clark, and Carol Civil Practice & Remedies Code § 27.009(a)(1). Severance (collectively, “the Buy–Out Owners”), sued Bruce Schimmel, an attorney hired by The Sands of Kahala Beach

1 Cases that cite this headnote HOA, Inc. (“SOKB”), the homeowners' association for the subdivision in which the Buy–Out Owners lived, for tortious

[11] Costs interference with prospective business relations, specifically, Evidence as to items the sale of their respective beachfront properties to the City Proof of attorney's fees should include the basic of Galveston. Schimmel moved to dismiss the Buy–Out facts underlying the lodestar, which are: (1) Owners' tortious interference claim pursuant to the Texas the nature of the work, (2) who performed the Citizens Participation Act (“TCPA”). 1 The trial court denied services and their rate, (3) approximately when Schimmel's motion to dismiss. In two issues, Schimmel the services were performed, and (4) the number contends that the trial court erroneously (1) found that of hours worked. Schimmel's complained-of actions did not involve “matters of public concern” and did not implicate the exercise of his right

Cases that cite this headnote to petition, right of free speech, or right of association and thus erroneously denied his motion to dismiss; and (2) refused to

[12] Appeal and Error award Schimmel court costs, reasonable attorney's fees, and Ordering new trial of certain issues only other expenses incurred in defending the action against him. Remand for further proceedings on issue of amount of attorney fees was warranted, 1

See TEX. CIV. PRAC. & REM.CODE ANN. §§ given that appellant was entitled to attorney 27.001–.011 (Vernon Supp.2013). fees and costs by establishing his entitlement We reverse and remand for further proceedings. to dismissal of tortious interference with prospective business relations suit under Texas Citizens Participation Act (TCPA). V.T.C.A., *62 Civil Practice & Remedies Code § 27.009(a)(1). Background Cases that cite this headnote The Buy–Out Owners all own beachfront property in the

Sands of Kahala Beach, a small, gated subdivision located on Galveston Island. In September 2008, Hurricane Ike made landfall in the region and caused extensive property damage to numerous homes, including those of the Buy–

Attorneys and Law Firms Out Owners. Because their homes were allegedly more than *849 Daniel Goldberg, Houston, TX, for Appellant. fifty percent damaged, the Buy–Out Owners sought to sell their properties to the City of Galveston under a Federal

Wayne H. Paris, Paris Law Group, PLLC, Houston, TX, for Emergency Management Agency (“FEMA”) program called Appellees. the Hazard Mitigation Grant Program (“HMGP”). The Texas Department of Public Safety assists in administering this

Panel consists of Justices KEYES, BLAND, and BROWN. program. The Buy–Out Owners and an attorney for the City of Galveston signed agreements in September 2009 concerning the purchase of the respective properties.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Schimmel v. McGregor, 438 S.W.3d 847 (2014) SOKB and the remaining owners who owned property in the with prospective business relations. 2 The Buy–Out Owners subdivision but did not wish to sell their property to the City

alleged that a reasonable probability existed that they would of Galveston (“the Remaining Owners”) opposed the Buy– have entered into a business relationship with the City of Out Owners' plans to sell. Under the HMGP, the properties Galveston, that Schimmel intentionally interfered with the that the City of Galveston purchased “were to be kept as open relationship, and that Schimmel's conduct was independently space in perpetuity.” *850 This requirement concerned the tortious and unlawful “in that Defendant Schimmel made SOKB, the entity in charge of collecting assessments and fraudulent statements about these Plaintiffs to third parties fees from the property owners within the subdivision, and the and persuaded others to illegally boycott these Plaintiffs.” Remaining Owners, who believed that the required public use of the purchased land and the loss of a private roadway and

2 SOKB did not join the homeowners in asserting this utility easement would cause the value of their properties to claim against Schimmel, and SOKB is not a party to drop. this appeal, which concerns only the Buy–Out Owners' tortious interference claim.

Due to the dispute between the Buy–Out Owners, SOKB, The Buy–Out Owners alleged that Schimmel made several and the Remaining Owners, in October 2009, the City of misrepresentations that interfered with the purchase of their Galveston added a condition to the purchase of the Buy– properties by the City of Galveston. For example, in response Out Owners' properties: the president of SOKB's Board of to an article in the Houston Chronicle about the potential sale Directors (“the Board”) needed to sign a document releasing of the properties, Schimmel allegedly wrote to the author of the City from paying future homeowners' dues and other fees the article and stated that if the City purchased the properties and assessments to SOKB once it purchased the properties. the Remaining Owners would lose their access to a nearby In December 2009, SOKB hired Schimmel, an attorney, to state highway because the private road in the subdivision represent its interests and those of the Remaining Owners would be demolished. He also allegedly misrepresented to the in the dispute with the Buy–Out Owners. SOKB refused to author that all of the properties were behind the vegetation sign the releases and the Board voted to amend SOKB's by- line and “repairable for less than 50% of *851 their value,” laws to raise the voting requirement to remove directors from which would preclude them from participation in the HMGP. the Board, purportedly on Schimmel's advice. The Buy–Out Schimmel also allegedly made misrepresentations to the Owners subsequently held a special meeting of the Board Board concerning how the HMGP's definition of “substantial and elected new directors, including Kris Hall, one of the damage” to the properties was calculated; 3 to lot owners appellees, as the new President. Hall then signed the releases in the subdivision that the buyout would not include the for the Buy–Out Owners' properties and delivered them to the opportunity to buy out all of the properties in the subdivision; City of Galveston. and to various individuals that he “had no intention of changing any more By–Laws,” that the SOKB had been

Schimmel continued to work on behalf of SOKB and the *63 working with the Buy–Out Owners to settle the dispute, and Remaining Owners to convince the City of Galveston not to that developers no longer owned lots in the subdivision, even buy the Buy–Out Owners' properties until February 1, 2011, though they did. when he withdrew from representation. Ultimately, the time period to participate in the HMGP expired without the City of

3 Galveston's having closed on the purchases of the Buy–Out The Buy–Out Owners alleged that Schimmel told the Owners' properties. Board that “the definition of Substantial Damage is damages that total at least 50% of the pre-event fair value of the property,” but he allegedly knew that the

The Buy–Out Owners, joined by SOKB, sued Schimmel on fair market value of the property was based on the local January 28, 2013, asserting claims for breach of fiduciary appraisal district's value for the structure, which did not duty and equitable fee forfeiture. Neither of those claims is at include the value of the land. According to the Buy–Out issue in this interlocutory appeal. Owners, “This is a significant distinction which the BOD later misrepresented to FEMA when they alleged false

On March 28, 2013, the Buy–Out Owners and SOKB filed damage estimates.” their first amended petition. In addition to the breach of The Buy–Out Owners also alleged that Schimmel had fiduciary duty and fee forfeiture claims, the Buy–Out Owners “systematically excluded members from voting [at resident asserted a claim against Schimmel for tortious interference © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 Schimmel v. McGregor, 438 S.W.3d 847 (2014) meetings] in order to boycott the Buyout owners,” such as by With respect to his alleged statements to the Board, Schimmel quickly setting a voting eligibility date to prevent owners who argued that those statements were “an exercise of the right had not paid their annual assessments from voting at meetings of association” and thus were entitled to protection under the and by recommending the elimination of voting by proxy, TCPA. which would affect the Buy–Out Owners who used their properties as vacation homes but did not live permanently Schimmel also argued that he was entitled to mandatory in the subdivision. The Buy–Out Owners further alleged that court costs, reasonable attorney's fees, and other expenses Schimmel had stated that neither SOKB nor its Board had incurred in defending the claim pursuant to Civil Practice the power to waive assessments as required by the City of and Remedies Code section 27.009(a). Schimmel attached Galveston to purchase the properties, and “[w]ithout releases, an affidavit setting out the amount of attorney's fees he had the [City] would not close on the properties and [Schimmel] incurred in defending against the Buy–Out Owners' claims. had the [Board] refuse to sign [the] release[s] which was an This affidavit set out the billing rate, the date tasks were unreasonable restraint or alienation. Defendant Schimmel's performed, the hours spent, and a description of the tasks position was that the Buy-[O]ut owners would not be allowed completed. to sell to the [City] under any circumstances.” The Buy–Out Owners alleged that they had suffered economic damages Schimmel attached numerous exhibits to his motion to consisting of the difference between the proposed buy-out dismiss. One of these exhibits was an order of dismissal in a values and the market values of their properties. suit filed by the Buy–Out Owners in the Southern District of

Texas against the City of Galveston and several Department On May 28, 2013, Schimmel filed a motion to dismiss under of Public Safety officials involved in the administration of the TCPA. In this motion, Schimmel stated that the Buy– the HMGP. The Buy–Out Owners had raised claims under Out Owners served him with their first amended petition on the Fourteenth Amendment and Section 1983, 4 arguing that March 28, 2013, and that this motion to dismiss addressed

the City of Galveston's failure to close on the purchase of only the tortious interference claim raised for the first time in their properties deprived them of funds under the HMGP that amended petition. without due process of law. The district court granted the defendants' motion to dismiss pursuant to Federal Rule of

Schimmel stated that he advised the Board and the Remaining Civil Procedure 12(b)(1) and, in its order, noted that state Owners that he thought the issue concerning the value of agencies involved with administering the HMGP have “wide the repairs to the Buy–Out Owners' properties, which was discretion in administering the program.” The court stated, relevant to their eligibility to participate in the HMGP, was “Nothing in the regulations [governing the HMGP] dictates “a matter between [the Buy–Out Owners] and governmental that qualified property owners are entitled to participate in agencies” and should not be pursued by SOKB, “but that if the program or limits the State's discretion in determining a any lot owner wanted to pursue that issue on his or her own, *64 property owner's qualifications for the program or reviewing it would aid [SOKB] by distracting [the Buy–Out Owners].” those qualifications at any time in the process.” The court Schimmel argued that the TCPA protected these statements concluded that the Buy–Out Owners “have no entitlement to because they involved his right of association and right to HMGP funds or a property right to such funds” and ultimately petition regarding a matter of public concern. He argued that dismissed their suit. his statements to the Houston Chronicle reporter were “a ‘communication’ which is ‘an exercise of the right of free

4 See 42 U.S.C. § 1983 (2006) (providing civil cause of speech’ and related to an exercise of the right of petition” action for deprivation of rights). and were made “in connection with a matter of public In response to Schimmel's motion to dismiss, the Buy– concern” because the statements related to the expenditure Out Owners argued that their claim fell within a statutory of government money and “interference with the community exemption to the TCPA because Schimmel was engaged in of the Subdivision and economic concerns.” He asserted that the business of selling his legal services, he was paid to those statements were also “reasonably likely to encourage render legal services by SOKB and the Remaining Owners, consideration or review *852 of an issue by” an executive and his conduct at issue in the suit occurred while he was or other governmental body or were “reasonably likely to rendering legal services. The Buy–Out Owners also argued enlist public participation in an effort to effect consideration that Schimmel had not timely filed his motion to dismiss of an issue by” an executive or other governmental body. © 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 Schimmel v. McGregor, 438 S.W.3d 847 (2014) because the TCPA required such motions to be filed not later signed contracts with the City of Galveston to purchase the properties for specified amounts. than the sixtieth day after service of the legal action and Schimmel filed his motion to dismiss on the sixty-first day But for Schimmel's misrepresentations and conduct there after the homeowners served him with their amended petition.

is a reasonable probability that all of our buy-out contracts would have closed.... Schimmel's independent

The Buy–Out Owners further stated, misrepresentations and boycott, set out above, prevented The individual Plaintiffs['] claims are our agreements from closing and the purchase of our not based on, related to, or in response property by the [City]. Schimmel's acts, set out above, to a right of Schimmel to voice free were done with a conscious desire to prevent our sales and speech, have a right of association or purchases from occurring. I, as well as the other Buy–Out a right to petition. It is totally about Owners, have suffered actual damages as a result of this his tortious interference with Plaintiffs' interference of Schimmel. We have incurred thousands of prospective business and contractual dollars in legal fees and have lost the difference between relations which caused the individual the buy-out values that we were to be paid and the lesser Plaintiffs money damages. Plaintiffs' amounts that our properties now are valued at. There was claims are based upon the independent a reasonable probability that I, as well as the rest of the torts of fraud, misrepresentations and Buy–Out Owners, would have entered into a business illegal boycott. relationship and closed our contracts with the [City]. The Buy–Out Owners did not attach affidavits from

They further argued, “Schimmel's conduct is at issue here, not attorneys with the City of Galveston or from personnel anyone's free speech, right to associate, or to file a lawsuit.” with the Department of Public Safety, which assisted in The Buy–Out Owners also challenged the affidavits that administering the HMGP, nor did they attach any other Schimmel had submitted *853 with his motion to dismiss evidence from persons involved with the City's decision on the ground that Schimmel stated that he is “personally not to close on the purchase of the Buy–Out Owners' acquainted with the facts stated herein, except where I state properties. that I am testifying on information and belief, in which Schimmel filed a reply and asserted that he had timely filed case I am testifying based on information and my belief his motion to dismiss. He argued that although the Buy– thereof.” The Buy–Out Owners argued that these affidavits Out Owners filed their amended petition with the trial court did not constitute competent evidence because “personal on March 28, 2013, the Buy–Out Owners did not serve acquaintance” is not “personal knowledge.” The homeowners him with a copy of the petition. He did not see a copy also challenged Schimmel's attorney's fees affidavit on the of the petition until April 1, when a legal assistant to his ground that it did not meet the requirements for establishing attorney in the case downloaded the petition from the ProDoc *65 reasonable and necessary attorney's fees as set out by the eFiling service. In the alternative, Schimmel moved the trial Texas Supreme Court in El Apple I, Ltd. v. Olivas . court to allow late filing of the motion to dismiss, as is permitted by the TCPA. Schimmel also argued that the Buy–

The Buy–Out Owners attached their own affidavits to their Out Owners' supporting affidavits were conclusory and not response and argued that these affidavits established a prima supported by evidence that a reasonable probability existed facie case for tortious interference with prospective business that their buy-out contracts with the City of Galveston would relations. 5 The affidavits were substantively identical. The have closed but for Schimmel's allegedly tortious actions. affidavits set out numerous representations allegedly made by He further argued that the Buy–Out Owners did not provide Schimmel that, according to the Buy–Out Owners, caused the “any evidence that any act of Schimmel's caused the [Texas City of Galveston to fail to purchase their properties. As an Department *854 of Public Safety] to order the City not to example, Kris Hall, one of the Buy–Out Owners, averred: close the alleged contracts.” 5 After an oral hearing, the trial court issued an order denying Although the Buy–Out Owners pleaded a claim for Schimmel's motion to dismiss. The order stated: tortious interference with prospective relations, the Buy– Out Owners admit in their affidavits submitted in

The parties announced on the record their stipulation that opposition to Schimmel's motion to dismiss that they had the Motion relates only to the Plaintiffs' cause of action © 2015 Thomson Reuters. No claim to original U.S. Government Works. 6 Schimmel v. McGregor, 438 S.W.3d 847 (2014) for damages resulting from an alleged tortious interference In enacting the TCPA, the Legislature stated that the purpose with a prospective relationship between Plaintiffs and the of the statute “is to encourage and safeguard the constitutional City of Galveston.... rights of persons to petition, speak freely, associate freely,

and otherwise participate in government to the maximum The Court finds that the Motion was timely filed. extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable

The Court finds that the docket conditions in the court injury.” TEX. CIV. PRAC. & REM.CODE ANN. § 27.002 prevented the scheduling of the hearing on the Motion (Vernon Supp.2013); KTRK Television, Inc. v. Robinson, 409 within 30 days following the date of its filing. S.W.3d 682, 688 (Tex.App.-Houston [1st Dist.] 2013, pet. denied). The TCPA created “an avenue at the early stage of

The Court finds that the Plaintiffs' tortious interference litigation for dismissing unmeritorious suits that are based claim does not affect Schimmel's right to participate in on the defendant's exercise” of certain constitutional rights. government. In re Lipsky, 411 S.W.3d 530, 539 (Tex.App.-Fort Worth The Court finds that Schimmel's actions alleged as the 2013, orig. proceeding). The Legislature has directed courts basis of the tortious interference claim concerned matters to construe the statute liberally “to effectuate its purpose disputed between individual parties, and the statements and intent fully.” TEX. CIV. PRAC. & REM.CODE ANN. alleged as a basis of the claim were not made in connection § 27.011(b) (Vernon Supp.2013); Robinson, 409 S.W.3d at with a matter of public concern.

688. The Court finds that Schimmel's actions alleged as the Under the TCPA, if a party files a legal action that is basis of the tortious interference claim were not a part of “based on, relates to, or is in response to” the defendant's Schimmel's exercise of the right of association defined in exercise of *855 the right of free speech, right to petition, TEX. CIV. PRACT. & REM.CODE § 27.001(2). or right of association, the defendant may file a motion to dismiss the action. TEX. CIV. PRAC. & REM.CODE ANN.

The Court finds that Schimmel's actions alleged as the § 27.003(a) (Vernon Supp.2013). The TCPA statutorily basis of the tortious interference claim do not concern defines “exercise of the right of association,” “exercise of Schimmel's right to petition defined in TEX. CIV. PRACT. the right of free speech,” and “exercise of the right to & REM.CODE § 27.001(4). petition.” See id. § 27.001(2)-(4) (Vernon Supp.2013). The TCPA defines “exercise of the right of association” as “a The Court finds that the tortious interference claim was communication between individuals who join together to not brought to deter or prevent Schimmel's exercise of

collectively express, promote, pursue, or defend common his constitutional rights, for an improper purpose, for interests.” Id. § 27.001(2). “Communication” is further harassment, to cause unnecessary delay, or to increase defined as “the making or submitting of a statement or *66 litigation costs.

document in any form or medium, including oral, visual, The trial court did not award attorney's fees or costs to either written, audiovisual, or electronic.” Id. § 27.001(1). The party. This interlocutory appeal followed. TCPA defines “exercise of the right of free speech” as “a communication made in connection with a matter of public concern.” Id. § 27.001(3). “Matter of public concern” includes issues relating to health or safety; environmental,

Texas Citizens Participation Act economic, or community well-being; the government; a In his first issue, Schimmel contends that the trial court public official or public figure; or a good, product, or service erroneously determined that his communications that are the in the marketplace. Id. § 27.001(7). The statutory definition basis of the Buy–Out Owners' tortious interference claim did of “exercise of the right to petition” includes, among other not involve “matters of public concern” and did not implicate things, “a communication in connection with an issue under his “exercise of the right to petition,” “exercise of the right of consideration or review by a legislative, executive, judicial, free speech,” or “exercise of the right of association.” or other governmental body or in another governmental or

official proceeding.” Id. § 27.001(4)(B). A. Standard of Review and Applicable Law © 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 Schimmel v. McGregor, 438 S.W.3d 847 (2014) A party filing a motion to dismiss under the TCPA must file and specific” evidence to support each element of their the motion “not later than the 60th day after the date of service tortious interference claim. See Robinson, 409 S.W.3d at 689. of the legal action.” Id. § 27.003(b). The trial court may extend the time to file a motion to dismiss upon a showing of

B. Applicability of TCPA to the Buy–Out Owners' Claim good cause. Id. When deciding whether to grant a motion to dismiss a

1. Timeliness of Motion to Dismiss lawsuit pursuit to the TCPA, the trial court must “consider The Buy–Out Owners argue that this Court should affirm the the pleadings and supporting and opposing affidavits stating trial court's ruling denying Schimmel's motion to dismiss on the facts on which the liability or defense is based.” Id. § 27.006(a) (Vernon Supp.2013); Robinson, 409 S.W.3d at the basis that he did not timely file the motion. 688. The court must determine, after a hearing, whether the Section 27.003(b) provides that a party filing a motion to moving defendant has demonstrated by a preponderance of dismiss must file the motion “not later than the 60th day after 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 the date of service of the legal action.” TEX. CIV. PRAC. & REM.CODE ANN. § 27.003(b). The statute further provides, speech, the right to petition, or the right of association.” TEX. however, that the trial court may extend the time to file a CIV. PRAC. & REM.CODE ANN. § 27.005(b) (Vernon motion to dismiss “on a showing of good cause.” Id.; see Supp.2013); Robinson, 409 S.W.3d at 688. We review de novo the trial court's determination whether the defendant also Newspaper Holdings, 416 S.W.3d at 79 (“The TCPA sets strict deadlines for filing, hearing, and ruling on a motion to carried this burden. Robinson, 409 S.W.3d at 688.

dismiss. Absent a showing of good cause, the defendant must move to dismiss pursuant to the TCPA ‘not later than the 60th [1] If the trial court determines that the defendant has met his burden, the burden then shifts to the plaintiff to establish day after the date of service of the legal action.’ ”). “by clear and specific evidence a prima facie case for each [2] Here, the Buy–Out Owners' first amended petition, essential element of the claim in question.” TEX. CIV. PRAC. which was the first pleading in which the Buy–Out Owners & REM.CODE ANN. § 27.005(c); Robinson, 409 S.W.3d at 688. The Legislature's use of “prima facie case” in the second raised the tortious interference claim against Schimmel, bears a file-stamped date of March 28, 2013. Schimmel filed his step of the inquiry implies a minimal factual burden: “[a] motion to dismiss on May 28, 2013, sixty-one days later. In prima facie case represents the minimum quantity of evidence his initial motion to dismiss, Schimmel stated, “On March necessary to support a rational inference that the allegation of fact is true.” Robinson, 409 S.W.3d at 688; Rodriguez v. 28, 2013, Plaintiffs served Schimmel with their Plaintiffs' Amended Petition, in which, for the first time, Natural Printone Color Corp., 982 S.W.2d 69, 72 (Tex.App.-Houston Plaintiffs added a separate cause of action against Schimmel [1st Dist.] 1998, pet. denied). The statute requires that the *67 alleging tortious interference with prospective relations.” plaintiff's proof address and support each “essential element” of every claim and that the proof constitute “clear and In response to the motion to dismiss, the Buy–Out Owners specific evidence.” Robinson, 409 S.W.3d at 688. Because argued that the motion was untimely because Schimmel filed the statute does not define “clear and specific,” we apply the his motion on the sixty-first day after he had been served ordinary meaning of these terms. Id. at 689. “Clear” means “unambiguous,” “sure,” or “free from doubt,” and “specific” with the action and he could not demonstrate that good cause existed for his late filing. In reply, Schimmel asserted that his means “explicit” or “relating to a particular named thing.” Id. motion was not untimely because, although he received notice We review the pleadings and evidence in the light *856 most that the first amended petition had been filed on March 28, favorable to the plaintiffs. Newspaper Holdings, Inc. v. Crazy Hotel Assisted Living, Ltd., 416 S.W.3d 71, 80–81 (Tex.App.- 2013, the Buy–Out Owners did not serve him with a copy of the petition on that date. Instead, he did not receive a copy Houston [1st Dist.] 2013, pet. denied). Accordingly, here, of the petition until April 1, 2013, when his counsel's legal if we determine that Schimmel carried his initial burden assistant downloaded the amended petition from the ProDoc of proof, we must examine the pleadings and the evidence presented in response to Schimmel's motion to dismiss to eFiling service. In the alternative, Schimmel sought leave of court to allow the late filing of his motion. determine whether the Buy–Out Owners marshaled “clear

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8 Schimmel v. McGregor, 438 S.W.3d 847 (2014) In the order ruling on the motion to dismiss, the trial court The El Paso Court of Appeals addressed a similar situation explicitly stated, “The Court finds that the Motion was timely in Pena. In that case, Pena, who had been indicted on two filed.” We conclude that, although Schimmel filed his motion counts of intoxicated manslaughter and two counts of failure to dismiss one day late, in making a statement concerning the to stop and render aid, hired Dolph Quijano to represent timeliness of the motion, the trial court implicitly ruled that if him. Pena, 417 S.W.3d at 553. A jury ultimately convicted Schimmel technically filed the motion late he had good cause Pena, assessed punishment at confinement in the Texas for the late filing. We therefore decline to dismiss this suit Department of Criminal Justice, and imposed a total of on the ground that Schimmel did not timely file his motion $30,000 in fines. Id. at 553–54. Pena and his wife then began to dismiss. running advertisements that were critical of Quijano. Id. at

554. Quijano hired Bobby Perel to represent him, and Perel sent letters to local newspapers and to the Texas Board of Pardons and Paroles to inform it of Pena's conduct. Id. One of

2. Applicability of Services Exclusion Perel's letters to the Board of Pardons and Paroles informed it that he believed Pena had not taken responsibility for his

The Buy–Out Owners also argue that the TCPA does not underlying criminal actions and that Pena was responsible apply to this case because this case falls under the statutory for “vicious ads” attacking Quijano, and he requested that *857 exemption for commercial speech found in section the Board consider this information when making decisions 27.010(b). about Pena's parole. Id. Pena filed suit against Quijano and Perel, asserting, among other things, that they had conspired

Section 27.010(b) states: to slander and defame him by sending the letter to the Board. [The TCPA] does not apply to a Id. The trial court granted Perel's motion to dismiss pursuant legal action brought against a person to the TCPA. Id. primarily engaged in the business of selling or leasing goods or services, On appeal, Pena argued that the trial court erred in dismissing if the statement or conduct arises out his claims because his claims fell within the “commercial of the sale or lease of goods, services, speech” exemption to the TCPA. Id. at 555. The El Paso Court or an insurance product, insurance of Appeals noted that Pena's suit was based on the letter that services, or a commercial transaction Perel had sent to the Board. Id. The court reasoned, “The letter in which the intended audience is an does not arise out of the sale or lease of goods, services, or an actual or potential buyer or customer. insurance product or a commercial transaction. Further, the

Board of Pardons and Parole is not an actual or potential buyer TEX. CIV. PRAC. & REM.CODE ANN. § 27.010(b) or customer of any goods or services sold by Perel.” Id. The (Vernon Supp.2013). The party asserting the exemption court held that Pena failed to establish the applicability of the *68 bears the burden of proving its applicability. See Newspaper exemption. Id. Holdings, 416 S.W.3d at 89; see also Pena v. Perel, 417 S.W.3d 552, 555 (Tex.App.-El Paso 2013, no pet.) (“The

[3] Here, Schimmel allegedly made statements that, burden of proving the applicability of an exemption under according to the Buy–Out Owners, induced the City of Section 27.010 is on the party asserting it.”). Galveston to back out of its agreements to purchase the Buy–Out Owners' properties. When Schimmel made the

The Buy–Out Owners argue that their tortious interference statements at issue, he *858 was undisputedly working claim falls within this exemption because (1) Schimmel as an attorney for SOKB and the Remaining Owners. The was primarily engaged in the business of selling his legal ultimate intended audience for his statements, however, was services; (2) the Buy–Out Owners' cause of action arose the City of Galveston. Schimmel did not represent the City of from Schimmel's conduct consisting of representations of fact Galveston, nor was the City a “potential buyer or customer” about Schimmel's services; (3) Schimmel's conduct occurred of Schimmel's legal services. See TEX. CIV. PRAC. & in the course of delivering his legal services; and (4) the REM.CODE ANN. § 27.010(b). We therefore conclude, as intended audience of his conduct was a potential buyer, the the El Paso Court of Appeals did in Pena, that the Buy– City of Galveston. We disagree that Schimmel's conduct falls Out Owners have failed to establish the applicability of the within this exemption. “commercial speech” exemption. See id. ; see also Pena, © 2015 Thomson Reuters. No claim to original U.S. Government Works. 9 Schimmel v. McGregor, 438 S.W.3d 847 (2014) 417 S.W.3d at 555; Newspaper Holdings, 416 S.W.3d at 89 to, or is in response to” Schimmel's exercise of the right to (“With respect to the newspaper, it is undisputed that NHI was petition on behalf of his clients. See id. § 27.003(a) (providing in the business of reporting community events, but the Hotel's that defendant may move to dismiss legal action that is based complained—of statements do not arise out of the lease or on, relates to, or is in response to exercise of right to petition). sale of the goods or services that NHI sells—newspapers.”).

Moreover, the Buy–Out Owners' claim implicates not just Schimmel's exercise of the right to petition on behalf of his clients but also Schimmel's exercise of his right to

3. Whether the Buy–Out Owners' freedom of speech on behalf of his clients. See id. § Claim Falls Under the TCPA 27.001(3) (defining “exercise of the right of free speech” as “a communication made in connection with a matter of

The Buy–Out Owners complain about numerous actions and *859 public concern”); id. § 27.001(7) (defining “matter of statements allegedly made by Schimmel during the course of public concern”). Contrary to the trial court's determination, his representation of SOKB and the Remaining Owners. All in its order denying Schimmel's motion to dismiss, that of these statements, whether they were made to a journalist at the dispute at issue “concerned matters disputed between the Houston Chronicle, attorneys with the City of Galveston, individual parties” and thus “were not made in connection or members of the Board, concerned or were related to the with a matter of public concern,” Schimmel's statements all City's plan to purchase the Buy–Out Owners' properties and related to and were made in connection with the purchase were made to further Schimmel's clients' interest in ensuring by the City of Galveston, a governmental entity, of five that should the purchase of the properties go forward SOKB properties in a small subdivision, the purchase of which would receive compensation for the loss of future assessments would allegedly damage the values of the neighboring on the purchased properties. properties and would damage the future revenue stream of SOKB, the homeowners' association, by denying it the ability

The TCPA defines “exercise of the right to petition” as to collect future assessments on the bought-out properties. In including “a communication in connection with an issue addition to relating to the government, the dispute at issue also under consideration or review by a legislative, executive, relates to “economic or community well-being,” all of which judicial, or other governmental body ....” TEX. CIV. PRAC. are issues included in the statutory definition of “matter of & REM.CODE ANN. § 27.001(4)(B). The statute defines public concern” under the TCPA. See id. § 27.001(7). “exercise of the right of free speech” as “a communication made in connection with a matter of public concern.” Id.

In arguing that their claim is not based on, does not § 27.001(3). And a “matter of public concern” is further relate to, and is not in response to Schimmel's exercise of defined as “an issue related to health or safety; environmental, constitutionally protected rights, the Buy–Out Owners focus economic, or community well-being; the government; a on the fact that their claims “are based upon the independent *69 public official or public figure; or a good, product, or service torts of fraud, misrepresentations and illegal boycott,” which in the marketplace.” Id. § 27.001(7). None of these statutory do not implicate constitutional protections. That argument, definitions includes a requirement that the communications however, is relevant to the second step of the inquiry— be made to a particular individual or entity, such as a whether the Buy–Out Owners have demonstrated a prima governmental body, to constitute protected conduct. facie case for relief on every essential element of their tortious interference claim. See In re Lipsky, 411 S.W.3d

[4] SOKB and the Remaining Owners retained Schimmel at 543 (“But chapter 27 dictates that we should review to represent their interests during the dispute concerning evidence concerning whether [the defendants'] statements the buy-out of the Buy–Out Owners' properties. All of were defamatory and thus actionable in the second part of our Schimmel's challenged statements, regardless of to whom the review, in which [the plaintiff] has the burden of establishing statements were made, related to this dispute and were made ‘by clear and specific evidence a prima facie case for each “in connection with an issue under consideration or review” essential element of the claim in question.’ ”). by the City of Galveston and the Texas Department of Public Safety, both of which are governmental bodies. See id. §

[5] The Buy–Out Owners also argue that Schimmel's 27.001(4)(B) (defining “exercise of the right to petition”). affidavits supporting his motion to dismiss are incompetent The Buy–Out Owners' action for tortious interference with and inadmissible because they state that he is “personally prospective business relations is therefore “based on, relates © 2015 Thomson Reuters. No claim to original U.S. Government Works. 10 Schimmel v. McGregor, 438 S.W.3d 847 (2014) acquainted with facts stated therein,” instead of stating that Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 they are based on personal knowledge, and that some portions (Tex.2013); Wal–Mart Stores, Inc. v. Sturges, 52 S.W.3d state that Schimmel is testifying based on information 711, 726 (Tex.2001) (holding that plaintiff must establish that and belief. We first note that, in making a determination defendant's conduct was independently tortious or wrongful, on a motion to dismiss, the trial court is not limited to meaning that defendant's conduct “would be actionable under considering only supporting and opposing affidavits, but a recognized tort”). “Conduct that is merely ‘sharp’ or unfair the court “shall consider the pleadings” as well. See TEX. is not actionable and cannot be the basis for an action for CIV. PRAC. & REM.CODE ANN. § 27.006(a). Thus, tortious interference with prospective relations ....” Sturges, even if Schimmel's affidavits do not constitute competent 52 S.W.3d at 726. and admissible evidence, his motion to dismiss does not necessarily fail. Secondly, we agree with Schimmel that there One of the essential elements for which the Buy–Out Owners is no meaningful distinction between “personal knowledge” had to establish a prima facie case is causation, that is, and “personal acquaintance,” and to hold otherwise is whether Schimmel's interference proximately caused their to impose an unduly restrictive reading on the personal injury, which, in this case, is the City of Galveston's failure knowledge requirement for affidavits. See WEBSTER'S to close on the purchase of their properties. See Coinmach NEW COLLEGIATE DICTIONARY 8 (1956) (defining Corp., 417 S.W.3d at 923 (listing causation as element of “acquaintance” as “[p]ersonal knowledge (of a person tortious interference with prospective relations claim). As or thing) which results from becoming acquainted”). We evidence to support their contention that they are entitled therefore conclude that Schimmel's affidavits are competent to relief on their tortious interference claim, the Buy–Out and admissible to support his motion to dismiss. Owners presented to the trial court identical affidavits from

each property owner as well as copies of several e-mails We hold that Schimmel met his initial burden to show, by between Schimmel and members of the Board. They did a preponderance of the evidence, that the Buy–Out Owners' not present any affidavits or other admissible evidence claim is based on, relates to, or is in response to his exercise of from any individual at the City of Galveston, the city the right to petition and his exercise of the right of free speech. attorney's office, the Texas Department of Public Safety, See TEX. CIV. PRAC. & REM.CODE ANN. § 27.005(b)(1)- which allegedly informed the City to put a hold on the (2). transactions while officials conducted a new “substantial

damage determination” of the Buy–Out Owners' properties, or any other official or agency with decision-making authority concerning the City's purchase of the properties. Instead,

4. Buy–Out Owners' Prima Facie Case the only evidence of this element that the Buy–Out Owners produced is the statements in their identical affidavits

[6] [7] Because we have held that Schimmel's statements that “[b]ut for Schimmel's misrepresentations and conduct *70 forming the basis of the Buy–Out Owners' tortious there is a reasonable probability that all of our buy-out interference *860 claim constitute protected conduct under contracts would have closed,” that “Schimmel's independent the TCPA, we must now determine whether the Buy–Out misrepresentations and boycott, set out above, prevented our Owners met their burden to establish, by clear and specific agreements from closing and the purchase of our properties evidence, a prima facie case for every essential element of by the [City],” and that “Schimmel's action and conduct, set their tortious interference claim. See id. § 27.005(c). To out above, caused me and the other Buy–Out Owners money prevail on a claim for tortious interference with prospective losses ... that would not have occurred, but for [Schimmel's] business relations, the plaintiffs must establish that (1) a conduct.” reasonable probability existed that the plaintiffs would have entered into a business relationship with a third party;

[8] We agree with Schimmel that the Buy–Out Owners (2) the defendant either acted with a conscious desire presented only their conclusory statements, unsupported to prevent the relationship from occurring or knew the by any facts, that Schimmel's actions caused the City of interference was certain or substantially certain to occur Galveston to fail to close on the purchases. Evidence of as a result of the conduct; (3) the defendant's conduct Schimmel's conduct, by itself, is not evidence that, with was independently tortious or unlawful; (4) the interference respect to communications made to other individuals and proximately caused the plaintiffs injury; and (5) the plaintiffs entities, that conduct caused the City not to purchase the Buy– suffered actual damage or loss as a result. See Coinmach © 2015 Thomson Reuters. No claim to original U.S. Government Works. 11 Schimmel v. McGregor, 438 S.W.3d 847 (2014) Out Owners' properties. The fact that Schimmel's alleged Department to do that which they had a right to do—not to conduct occurred roughly contemporaneously with the City purchase the Buy–Out Owners' houses. of Galveston's and the Department of Public *861 Safety's consideration of whether to move forward with the purchases We also note that, in this regard, the Buy–Out Owners have does not establish that Schimmel's conduct caused the made no argument, with citation to authority, that SOKB governmental agencies to act as they did. and the Board were legally required or obligated to sign the

releases that the City of Galveston required to close on the Furthermore, in October 2009, the City of Galveston purchases, and they have produced no evidence on such a required the Buy–Out Owners to obtain a release from point. The Buy–Out Owners have thus presented no evidence future assessments, signed by SOKB, as a condition for that Schimmel induced the Board to take an action that it the purchases to close, two months before SOKB and was not legally authorized to take. This is, therefore, not a the Remaining Owners hired Schimmel to represent their situation in which Schimmel, as a corporate agent, induced interests. The Buy–Out Owners contend that Schimmel the corporation, SOKB, to breach a contractual obligation. tortiously interfered with their prospective contracts with the See, e.g., Holloway v. Skinner, 898 S.W.2d 793, 796 City of Galveston because he urged the Board not to sign the (Tex.1995) (noting that “a party cannot tortiously interfere required releases, and, as a result of the Board's refusal to with its own contract” and holding that even when corporate sign the releases, the City did not proceed with the purchases. agent induces corporation to breach contractual obligation, Ultimately, however, one of the appellees, Kris Hall, signed agent will not be held liable for tortious interference with the releases on behalf of SOKB once he became president corporation's contract unless plaintiff can demonstrate that of the Board, but the City of Galveston did not close on the agent “acted in a fashion so contrary to the corporation's best purchases. interests that his actions could only have been motivated by

personal interests”). Additionally, in the federal suit between the Buy–Out Owners and the City of Galveston and several Department of Public *862 We conclude that the Buy–Out Owners' supporting Safety employees the district court ruled that governmental evidence does not establish, by clear and specific evidence, entities have “wide discretion” in administering the HMGP a prima facie case on the essential element of causation. See and that nothing in the regulations governing the HMGP TEX. CIV. PRAC. & REM.CODE ANN. § 27.005(c) (“The “dictates that qualified property owners are entitled to court may not dismiss a legal action under this section if participate in the program or limits the State's discretion in the party bringing the legal action establishes by clear and determining a property owner's qualifications for the program specific evidence a prima facie case for each essential element or reviewing those qualifications at any time in the process.” of the claim in question.”) (emphasis added); Coinmach The court thus concluded that the Buy–Out Owners had no Corp., 417 S.W.3d at 923 (stating that interference as “entitlement to HMGP funds or a property right to such proximate cause of plaintiff's injury is essential element of *71 funds.” Thus, a court has already determined during the tortious interference with prospective relations claim). litigation arising out of this dispute that the City of Galveston and the Department of Public Safety acted within their We therefore hold that because Schimmel established by a discretionary authority when they declined to close on the preponderance of the evidence that the Buy–Out Owners' purchase of the Buy–Out Owners' properties. tortious interference claim is based on, relates to, or is in

response to his exercise of his right to petition on behalf of [9] As the Texas Supreme Court has held, “merely inducing his clients and his right of free speech and because the Buy– a contract obligor to do what it has a right to do is not Out Owners failed to establish a prima facie case on every actionable interference.” ACS Investors, Inc. v. McLaughlin, essential element of their tortious interference claim, the trial 943 S.W.2d 426, 430 (Tex.1997); Newspaper Holdings, court erroneously denied Schimmel's motion to dismiss under 416 S.W.3d at 87. Even if Schimmel induced the City of the TCPA. See TEX. CIV. PRAC. & REM.CODE ANN. § Galveston and the Department of Public Safety not to close 27.005(b), (c). on the purchase of the Buy–Out Owners' properties, as the Buy–Out Owners allege, the Buy–Out Owners would have We sustain Schimmel's first issue. no cause of action against him for inducing the City or the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12 Schimmel v. McGregor, 438 S.W.3d 847 (2014) their respective billing rates without further indicating how they spent their time, Schimmel's attorney's fees affidavits

Award of Costs and Attorney's Fees stated the date on which work was performed, the number of hours spent, the particular tasks involved, and the applicable

In his second issue, Schimmel contends that because the billing rate. See id. at 763 (“[P]roof [of attorney's fees] trial court erroneously denied his motion to dismiss it also should include the basic facts underlying the lodestar, which erroneously failed to award him mandatory costs, reasonable are: (1) the nature of the work, (2) who performed the attorney's fees, and expenses incurred in defending against the services and their rate, (3) approximately when the services claim, as required by the TCPA. were performed, and (4) the number of hours worked.”); see also City of Laredo v. Montano, 414 S.W.3d 731, 736

[10] Section 27.009(a)(1) provides that if the court orders (Tex.2013) (“In El Apple , we said that a lodestar calculation dismissal of a legal action pursuant to the TCPA, the court requires certain basic proof, including itemizing specific “shall award to the moving party court costs, reasonable tasks, the time required for those tasks, and the rate charged attorney's fees, and other expenses incurred in defending by the person performing the work.”). We therefore do not against the legal action as justice and equity may require.” agree with the homeowners that Schimmel's attorney's fees TEX. CIV. PRAC. & REM.CODE ANN. § 27.009(a)(1) affidavits are insufficient under Olivas . (Vernon Supp.2013). When an appellate court determines that the trial court erroneously denied a defendant's motion

[12] Finally, even if Schimmel's attorney's fees evidence to dismiss under the TCPA, the appropriate disposition of presented with his motion to dismiss were insufficient to the case is to reverse the trial court's denial of the motion establish the reasonableness and necessity of the fee amount, and remand for the trial court to conduct further proceedings because Schimmel is statutorily entitled to an award of pursuant to section 27.009(a) and to order dismissal of the attorney's fees, the appropriate disposition of this case would suit. See Newspaper Holdings, 416 S.W.3d at 90. be to remand the attorney's fees issue back to the trial court for further proceedings. See Alphonso v. Deshotel, 417 S.W.3d

The Buy–Out Owners contend that, even if the trial court 194, 202 (Tex.App.-El Paso 2013, no pet.) (“[G]iven that erroneously denied Schimmel's motion to dismiss, remand is Appellees are entitled to attorney's fees and costs under not appropriate in this case because Schimmel's affidavit on the [TCPA] because the trial court granted their motion to attorney's fees was “incompetent evidence of reasonableness dismiss and we have upheld that ruling on appeal, the proper and necessity” under the Texas Supreme Court's decision in disposition in this case is to reverse the award of attorney's El Apple I, Ltd. v. Olivas . fees and costs [which was not supported by an affidavit admitted into evidence] and remand that issue back to the

Olivas involved a claim for sex discrimination and retaliation trial court for a new trial.”); see also Uhl v. Uhl, 524 S.W.2d pursuant to the Texas Commission on Human Rights Act, 534, 538 (Tex.Civ.App.-Fort Worth 1975, no writ) (“When a *72 under which courts calculate attorney's fees using the [party] is clearly entitled to attorney's fees in some amount but lodestar method, or the number of hours worked multiplied where there had been no proof in the trial court of the amount by prevailing hourly rates. See 370 S.W.3d 757, 758–59 there may be severance of that issue with remand to the trial (Tex.2012). The court explained that the lodestar method of court for a new trial on that issue.”). calculating attorney's fees involves two steps: (1) the court first determines the reasonable number of hours spent by

We hold that because Schimmel has established his counsel in the case and a reasonable hourly rate for such work; entitlement to dismissal under the TCPA, he is entitled to and (2) the court then multiples the number of such hours “court costs, reasonable attorney's fees, and other expenses by the applicable rate, which yields the lodestar, which may incurred in defending against the legal action as justice and then be adjusted up or down to reach a reasonable fee for the equity may require.” TEX. CIV. PRAC. & REM.CODE case. Id. at 760. The court held that a party seeking attorney's ANN. § 27.009(a)(1); see also Newspaper Holdings, 416 fees when the lodestar method is used “bears the burden of S.W.3d at 90 (“We therefore reverse the trial court's denial of documenting the hours expended on the litigation and the the defendants' motions to dismiss, and we remand the case value of those hours.” Id. at 761. to the trial court for further proceedings as required by the statute and to order dismissal of the suit.”).

*863 [11] Unlike the attorneys in Olivas , who presented only their aggregate number of hours spent on the case and

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13 Schimmel v. McGregor, 438 S.W.3d 847 (2014) We reverse the trial court's order denying Schimmel's motion We sustain Schimmel's second issue. to dismiss and remand the case to the trial court for further proceedings relating to Schimmel's attorney's fees, costs, and expenses and to order dismissal of the suit.

Conclusion End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. *73 © 2015 Thomson Reuters. No claim to original U.S. Government Works. 14 Tex. Civ. Prac. & Rem. Code § 27.001

This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS

INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.001. Definitions

In this chapter: (1) "Communication" includes the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic. (2) "Exercise of the right of association" means a communication between individuals who join together to collectively express, promote, pursue, or defend common interests. (3) "Exercise of the right of free speech" means a communication made in connection with a matter of public concern. (4) "Exercise of the right to petition" means any of the following: (A) a communication in or pertaining to: (i) a judicial proceeding; (ii) an official proceeding, other than a judicial proceeding, to administer the law; (iii) an executive or other proceeding before a department of the state or federal government or a subdivision

of the state or federal government; (iv) a legislative proceeding, including a proceeding of a legislative committee; (v) a proceeding before an entity that requires by rule that public notice be given before proceedings of that

entity; (vi) a proceeding in or before a managing board of an educational or eleemosynary institution supported directly or indirectly from public revenue; *74 (vii) a proceeding of the governing body of any political subdivision of this state; (viii) a report of or debate and statements made in a proceeding described by Subparagraph (iii), (iv), (v), (vi),

or (vii); or (ix) a public meeting dealing with a public purpose, including statements and discussions at the meeting or other matters of public concern occurring at the meeting; (B) a communication in connection with an issue under consideration or review by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding; (C) a communication that is reasonably likely to encourage consideration or review of an issue by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding; (D) a communication reasonably likely to enlist public participation in an effort to effect consideration of an issue by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding; and

(E) any other communication that falls within the protection of the right to petition government under the Page 2 of 2 Tex. Civ. Prac. & Rem. Code § 27.001 Constitution of the United States or the constitution of this state. (5) "Governmental proceeding" means a proceeding, other than a judicial proceeding, by an officer, official, or body of this state or a political subdivision of this state, including a board or commission, or by an officer, official, or body of the federal government.

(6) "Legal action" means a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal or equitable relief. (7) "Matter of public concern" includes an issue related to: (A) health or safety; (B) environmental, economic, or community well-being; (C) the government; (D) a public official or public figure; or (E) a good, product, or service in the marketplace.

(8) "Official proceeding" means any type of administrative, executive, legislative, or judicial proceeding that may be conducted before a public servant. (9) "Public servant" means a person elected, selected, appointed, employed, or otherwise designated as one of the following, even if the person has not yet qualified for office or assumed the person's duties: (A) an officer, employee, or agent of government; (B) a juror; (C) an arbitrator, referee, or other person who is authorized by law or private written agreement to hear or

determine a cause or controversy; (D) an attorney or notary public when participating in the performance of a governmental function; or (E) a person who is performing a governmental function under a claim of right but is not legally qualified to do so.

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

*75 Tex. Civ. Prac. & Rem. Code § 27.002

This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS

INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.002. Purpose The purpose of this chapter is to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury. History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved.

*76 Tex. Civ. Prac. & Rem. Code § 27.003

This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS

INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.003. Motion to Dismiss

(a) If a legal action is based on, relates to, or is in response to a party's exercise of the right of free speech, right to petition, or right of association, that party may file a motion to dismiss the legal action. (b) A motion to dismiss a legal action under this section must be filed not later than the 60th day after the date of service of the legal action. The court may extend the time to file a motion under this section on a showing of good cause. (c) Except as provided by Section 27.006(b), on the filing of a motion under this section, all discovery in the legal action is suspended until the court has ruled on the motion to dismiss. History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved.

*77 Tex. Civ. Prac. & Rem. Code § 27.004

This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS

INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.004. Hearing

(a) A hearing on a motion under Section 27.003 must be set not later than the 60th day after the date of service of the motion unless the docket conditions of the court require a later hearing, upon a showing of good cause, or by agreement of the parties, but in no event shall the hearing occur more than 90 days after service of the motion under Section 27.003, except as provided by Subsection (c).

(b) In the event that the court cannot hold a hearing in the time required by Subsection (a), the court may take judicial notice that the court's docket conditions required a hearing at a later date, but in no event shall the hearing occur more than 90 days after service of the motion under Section 27.003, except as provided by Subsection (c).

(c) If the court allows discovery under Section 27.006(b), the court may extend the hearing date to allow discovery under that subsection, but in no event shall the hearing occur more than 120 days after the service of the motion under Section 27.003.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011; am. Acts 2013, 83rd Leg., ch. 1042 (H.B. 2935), § 1, effective June 14, 2013. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved.

*78 Tex. Civ. Prac. & Rem. Code § 27.005

This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS

INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.005. Ruling

(a) The court must rule on a motion under Section 27.003 not later than the 30th day following the date of the hearing on the motion. (b) Except as provided by Subsection (c), on the motion of a party under Section 27.003, a court shall dismiss a legal action against the moving party if the moving party shows by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the party's exercise of: (1) the right of free speech; (2) the right to petition; or (3) the right of association.

(c) The court may not dismiss a legal action under this section if the party bringing the legal action establishes by clear and specific evidence a prima facie case for each essential element of the claim in question. (d) Notwithstanding the provisions of Subsection (c), the court shall dismiss a legal action against the moving party if the moving party establishes by a preponderance of the evidence each essential element of a valid defense to the nonmovant's claim.

History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011; am. Acts 2013, 83rd Leg., ch. 1042 (H.B. 2935), § 2, effective June 14, 2013. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved.

*79 Tex. Civ. Prac. & Rem. Code § 27.006

This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > CIVIL PRACTICE AND REMEDIES CODE > TITLE 2. TRIAL, JUDGMENT, AND APPEAL > SUBTITLE B. TRIAL MATTERS > CHAPTER 27. ACTIONS

INVOLVING THE EXERCISE OF CERTAIN CONSTITUTIONAL RIGHTS

§ 27.006. Evidence

(a) In determining whether a legal action should be dismissed under this chapter, the court shall consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based. (b) On a motion by a party or on the court's own motion and on a showing of good cause, the court may allow specified and limited discovery relevant to the motion. History Enacted by Acts 2011, 82nd Leg., ch. 341 (H.B. 2973), § 2, effective June 17, 2011. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved.

NOTES

[1] In addition to these elements, Autocraft was required to submit clear and specific evidence for each element of Autocraft’s other causes of action as well including its claims for injunctive relief, civil conspiracy, and vicarious liability. See, e.g., Chon Tri v. J.T.T. , 162 S.W.2d 552, 556 (Tex. 2005) (listing elements for civil conspiracy). A PPELLANTS ’ B RIEF P AGE 15

[2] The declarations of Hernandez and Damian along with Autocraft’s pleadings provide ample evidence that Autocraft’s claims relate to the Precision Parties’ rights of association and free speech. However, and in the unlikely event that this Court finds that the Precision Parties failed to meet their burden, the proffered but excluded testimony should be considered in that regard. [CR 25-28, 29-31] A PPELLANTS ’ B RIEF P AGE 17