In 2011, the Texas Legislature passed the Texas Citizens Participation Act (TCPA) also characterized as an anti-SLAPP statute (Strategic Lawsuit Against Public Participation). “The purpose of this [Act] is to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.” Tex. Civ. Prac. & Rem. Code Ann. § 27.002 (West). However, as can be seen from one recent case, due to the broad language within the statute, the TCPA is now being applied to lawsuits arising out of business disputes that appear to exceed the TCPA’s expressed purpose.
In the case of Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 865–71 (Tex. App.—Austin 2018, no pet. h.), the Plaintiff Purchaser Entities sued the Defendant Seller Entity and its principals for breach of contract, tortious interference, breach of fiduciary duty, fraud, misappropriation of trade secrets, civil conspiracy and violations of non-compete agreements. The dispute arose out of an asset purchase agreement entered into between one of the Defendant Purchaser Entities and the Defendant Seller Entity. The Defendant Seller Entity was a technology solutions provider certified by the State of Texas as a Historically Underutilized Business (HUB) allowing it to compete for government contracts that give preferential treatment to HUBs. There was a series of transfers and modifications made in connection with the asset purchase agreement in order to preserve the HUB status of the Defendant Seller Entity.
In the years following the execution of the asset purchase agreeement, the business relationship between the Defendant Seller Entity and Plaintiff Purchaser Entities deteriorated and the underlying lawsuit ensued. The Defendants filed a motion to dismiss under the TCPA. The trial court denied the motion in its entirety and the appeal followed.
The Austin Court of Appeals found that the trial court erred in denying the motion in its entirety because the allegations in the Plaintiffs’ lawsuit fell within the purview of the TCPA. According to the appellate court, the statute applied to Plaintiffs’ lawsuit in that the underlying transactions between the buyer and seller companies and allegations against Defendants were related to the Defendant Seller Entity’s HUB status. The TCPA applies to the “exercise of the right of free speech.” The HUB issues relate to “government”and to “economic well-being.” This is sufficient to make the best TCPA applicable. Grant v. Pivot Technology Solutions, supra, pp. 877–878.
Further, the appellate court found that the TCPA applied because the allegations in Plaintiffs’ lawsuit involved the “exercise of the right of association.” The court stated that many of the Plaintiffs claims were based upon the Defendants’ acting together to share and use Plaintiff’s confidential information. “Consequently, these claims (which are almost identical to those brought by the plaintiffs in Elite Auto ) are “based on, relate[d] to, or [are] in response to” communications “between [the Defendants] who had joined together to pursue a common interest in employment with [the Defendant Seller Entities] and ensuring [Defendant Seller Entity] was able to operate as a HUB,” protected as an “exercise of the right of association.”” Grant v. Pivot Tech. Sols., Ltd., supra, p. 881.The court even seemed to place importance upon the allegations that the Defendants conspired to commit illegal acts.
The appellate court held that the trial court erred by denying the Defendants’ TCPA motion to dismiss “because the [Plaintiffs] failed to present clear and specific evidence of a prima facie case for every essential element of each and every claim for relief.” Grant v. Pivot Tech. Sols., Ltd., supra, p. 884. The only claims of the Plaintiffs that survived were those based upon improper solicitation and competition which are excluded from the TCPA under the commercial-speech exemption.
In conclusion, this opinion seems to be a far reaching opinion in applying the TCPA. Moreover, there seems to be a growing body of Texas case law applying the Act in ways that one would never have imagined when it was first enacted. Thus, business plaintiffs and their attorneys in many types of corporate disputes will have to be prepared at the early stages of litigation to defend against a possible motion to dismiss under the TCPA. Otherwise, they may find their otherwise meritorious cases being dismissed under the Act. This will no doubt increase the costs of litigation in the early stages for business plaintiffs.