In a rare en banc or “entire bench” reconsideration of an appeal decided by a three-judge panel more than a year earlier, all nine justices on the newly reconstituted First Court of Appeals in Houston have reversed course and unanimously held on February 20 that allegations supporting a claim for trade-secret misappropriation and related claims do not implicate (or are exempt from) a prior version of the Texas Citizens Participation Act, also known as the “TCPA” or “Texas Anti-SLAPP statute.”
The TCPA and statutes like it in other jurisdictions are designed to prevent “SLAPPs,” or strategic lawsuits against public participation. Think of the HBO television show Last Week Tonight with John Oliver and the now-dismissed lawsuit filed by disgruntled coal mine owner Murray Energy. Murray Energy and CEO Robert Murray sued HBO after a segment aired addressing chronic safety failures in the wake of a 2007 catastrophic coal mine collapse. HBO invoked a state anti-SLAPP statute and was famously joined by a familiar friend of the court—the American Civil Liberties Union—in colorfully denouncing the lawsuit as frivolous and purely designed to intimidate free speech. The ACLU brief compared the coal mine owner to the fictional Dr. Evil and exclaimed that “Anyone Can Legally Say ‘Eat Shit, Bob!’”
The Texas anti-SLAPP statute similarly “protects citizens . . . from retaliatory lawsuits that seek to intimidate or silence them.” The purpose of the act “is to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.”
The statute provides an early-dismissal process for claims asserted in response three broadly-defined categories of protected conduct: the exercise of the right of association, the right of free speech, and the right to petition. If the statute applies, the party asserting covered claims must support them with enough evidence to survive early dismissal or establish an exemption.
Since it was passed into law in 2011, the statute has gained increasing attention and criticism. Attorneys began invoking its early-dismissal procedure for claims concerning what is not traditionally thought of as constitutionally-protected conduct, such as private conversations and efforts by individuals to compete against their former employers. The Texas Supreme Court routinely rejected efforts by lower courts to limit the practical application of the statute and rigorously relied on its clear (if unpopular) statutory definitions in doing so.
In response, the Texas legislature amended the statute in 2019 to expressly exclude certain types of cases from its purview: namely, cases involving allegations of trade-secret misappropriation.
But before the statute was amended, in late 2018, a three-justice panel at the First Court of Appeals in Houston held that the TCPA early-dismissal procedure could be used to defeat claims based on allegations of trade-secret misappropriation. In that case, Gaskamp v. WSP, several former employees argued the lawsuit was brought by their former employer in response to “communications in the formation, promotion, and pursuit of their common interest”—their competing new startup. While the former employer had framed its lawsuit as one for trade secret misappropriation, the former employees complained the allegations were bogus and that the former employer could not support them to survive dismissal.
The three-justice panel agreed and held that the TCPA applied because the claims were asserted in response to the former employees exercising their right of association and the right of free speech.
But Then What?
For most appeals in Texas, a decision by the three-justice panel like the one in Gaskamp is usually the final word, unless the Texas Supreme Court exercises discretionary review. After a panel decision has been issued, a party may request that the same three justices rehear the case, or that the entire court reconsider the appeal altogether. The latter is a tall order in Houston, where the two sister courts of appeals—the First and Fourteenth Courts of Appeals—comprise nine total justices each. Getting the attention of (and a consensus from) all nine justices is a rare event that sometimes only occurs once every year or every few years.
In an opinion authored by newly-elected Justice Richard Hightower, all nine justices of the First Court of Appeals unanimously concluded that the earlier version of the statute does not, in fact, apply to claims of trade secret misappropriation.
The opinion first acknowledged that other courts of appeals were divided on the question of whether the exercise of the “right of association” over a “common interest” must have a public-participation component for the statute to apply. Such a requirement is not a literal part of the statutory definitions. The court was persuaded that a public-participation component should be required—and the “common interest” of private competition does not qualify.
The court similarly concluded that private communications between alleged tortfeasors in furtherance of private competition do not implicate the statute at all, and external conversations with would-be customers constitute commercial speech, not free speech protected by the statute.
The en banc decision in Gaskamp sets the tone for how the recently reconstituted First Court of Appeals will approach future TCPA appeals, both under the current and prior version of the statute.
Based on the strict timetables for filing motions to dismiss and obtaining an appealable ruling in the trial court, precious few new appeals, if any, will be trickling up under the prior version of the statute analyzed by Gaskamp.
For already-pending appeals initiated in the wake of the original decision by the three-justice panel that has now been re-written, the Houston courts of appeals seem poised to try and bridge the gap between traditional anti-SLAPP principles and the literal text of the original statute.