Elite Auto Body LLC, D/B/A Precision Auto Body Rey R. Hernandez Yesica Diaz And David Damian v. Autocraft Body Works, Inc., Now Known as Wasson Road Ventures, Inc. D/B/A Autocraft Bodywerks

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

FILED IN

3rd COURT OF APPEALS

In the Court of Appeals AUSTIN, TEXAS

For the Third Court of Appeals District 3/10/2015 4:45:02 PM

Austin, Texas JEFFREY D. KYLE

Clerk

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 353rd 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

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

FRITZ, BYRNE, HEAD & HARRISON, 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

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

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

[14th Dist.] 2013, pet. denied) .............................................................. 8, 12, 13, 14

Schimmel v. McGregor, 438 S.W.3d 847 (Tex. App.—Houston [1st 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

TEX. CIV. PRAC. & REM. CODE § 27.001 ................................................................1, 6

TEX. CIV. PRAC. & REM. CODE § 27.001(2) ...............................................................9

TEX. CIV. PRAC. & REM. CODE § 27.001(3) ...............................................................9

TEX. CIV. PRAC. & REM. CODE § 27.001(7)(e) ...........................................................9

TEX. CIV. PRAC. & REM. CODE § 27.002 ................................................................5, 8

TEX. CIV. PRAC. & REM CODE § 27.003(a) ................................................................8

TEX. CIV. PRAC. & REM. CODE § 27.005(b) ...............................................................6

iii

TEX. CIV. PRAC. & REM. CODE § 27.005(c)..................................................... 6, 8, 12

TEX. CIV. PRAC. & REM. CODE § 27.006 ..................................................................18

TEX. CIV. PRAC. & REM. CODE § 27.009 ..................................................................16

TEX. CIV. PRAC. & REM. CODE § 27.011(b) ...............................................................9

TEX. CIV. PRAC. & REM. CODE § 51.014(a)(12) .........................................................1

TEX. CIV. PRAC & REM. CODE § 134A.002 ....................................................... 14, 16

TEX. CIV. PRAC. & REM. CODE § 134A.004 .............................................................14

iv

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 TEX. CIV. PRAC. & REM. CODE § 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 TEX. CIV.

PRAC. & REM. CODE § 51.014(a)(12) on January 28, 2015. [CR 50-51]

APPELLANTS’ BRIEF PAGE 1

II. 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

APPELLANTS’ BRIEF PAGE 2

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

APPELLANTS’ BRIEF PAGE 3

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

APPELLANTS’ BRIEF PAGE 4

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. TEX. CIV. PRAC. & REM. CODE § 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

APPELLANTS’ BRIEF PAGE 5

pursuit of their common interest of operating a competitive automobile body repair

business. See TEX. CIV. PRAC. & REM. CODE § 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. TEX. CIV. PRAC. & REM. CODE § 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. TEX. CIV. PRAC. & REM. CODE § 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

APPELLANTS’ BRIEF PAGE 6

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 TEXAS CIVIL PRACTICE AND

REMEDIES CODE, 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

APPELLANTS’ BRIEF PAGE 7

demonstrable injury.” TEX. CIV. PRAC. & REM. CODE § 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 [14th 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:

APPELLANTS’ BRIEF PAGE 8

“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.

APPELLANTS’ BRIEF PAGE 9

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.

APPELLANTS’ BRIEF PAGE 10

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

APPELLANTS’ BRIEF PAGE 11

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 TEX. CIV. PRAC. & REM. CODE § 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

APPELLANTS’ BRIEF PAGE 12

resulting in the dismissal of the plaintiff’s claims. See Schimmel v. McGregor, 438

S.W.3d 847, 860-862 (Tex. App.—Houston [1st 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

APPELLANTS’ BRIEF PAGE 13

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 TEX. CIV. PRAC & REM. CODE § 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

APPELLANTS’ BRIEF PAGE 14

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

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).

APPELLANTS’ BRIEF PAGE 15

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 TEX. CIV. PRAC. & REM.

CODE § 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.”

TEX. CIV. PRAC. & REM. CODE § 27.009. The Precision Parties’ counsel presented

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

APPELLANTS’ BRIEF PAGE 16

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:

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]

APPELLANTS’ BRIEF PAGE 17

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.

TEX. CIV. PRAC. & REM. CODE § 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

APPELLANTS’ BRIEF PAGE 18

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,

FRITZ, BYRNE, HEAD & HARRISON, 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

ATTORNEYS FOR APPELLANTS

APPELLANTS’ BRIEF PAGE 19

CERTIFICATE OF SERVICE

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

ATTORNEYS FOR APPELLEES

/s/ Rick Harrison

Rick Harrison

APPELLANTS’ BRIEF PAGE 20

CERTIFICATE OF COMPLIANCE

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

APPELLANTS’ BRIEF PAGE 21

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

DC BK15044 PG310

Filed In The District Court

of ~ty, Te~as

on flQt,~DI~:

at I \:00 lrM.

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, §

§

Tltird-Party Defendant. § 345th JUDICIAL DISTRICT

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 ~/.

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

ORDERED that the Motion is hereby DENIED in all respects.

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

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

2

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

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

4R£4&&&4Zi&&2SEE&EE I EXHIBIT

1

25

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

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

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

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

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.

3. Between 2008 until March 2014, !.worked as a Production Manager at Autocraft

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

W4E&E&MUMIM 1(1

:a 29

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

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.

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, §

§

Defendants, §

§

vs. §

§

JOHN BOREK, §

§

Third-Party Defendant. § 345th JUDICIAL DISTRICT

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

770588v.l 57457·1 EXHIBIT A

41

1

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

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

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

I 770588v.l 57457-1

43

1

Further, Affiant sayeth naught.

SWORN TO AND SUBSCRIBED before me on this I7 day of January, 2015.

Notary Public, State of Texas

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

SEE TX R RAP RULE 47.2 FOR unconstitutionally overbroad or void for vagueness as applied

DESIGNATION AND SIGNING OF OPINIONS. in present case.

MEMORANDUM OPINION

Court of Appeals of Texas, Affirmed in part, reversed in part, and remanded.

Austin.

COMBINED LAW ENFORCEMENT

West Headnotes (14)

ASSOCIATIONS OF TEXAS

and John Burpo, Appellants

v. [1] Appeal and Error

Mike SHEFFIELD, Appellee. On motions relating to pleadings

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

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

[4] standard of proof for surviving motion to dismiss Frivolous pleading

under TCPA does not violate open-courts provision of state Pleading

constitution; Application and proceedings thereon

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 §§

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

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

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

Practice & Remedies Code §§ 27.001(2), Cases that cite this headnote

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

no allegation of evidence that district attorney Cases that cite this headnote

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

Cases that cite this headnote director under Texas Citizens Participation Act

(TCPA) to dismiss claim as being a response to

their exercise of right of association. V.T.C.A.,

[9] Libel and Slander Civil Practice & Remedies Code § 27.005.

Existence and Effect of Malice

Pleading Cases that cite this headnote

Frivolous pleading

Pleading [11] Constitutional Law

Application and proceedings thereon Conditions, Limitations, and Other

There was no evidence that e-mail from Restrictions on Access and Remedies

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

claimant produce evidence that establishes a Cases that cite this headnote

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

Cases that cite this headnote Frivolous pleading

Definition in Texas Citizens Participation

[12] Constitutional Law Act (TCPA), stating that the exercise of

Conditions, Limitations, and Other the “right of association” encompassed a

Restrictions on Access and Remedies communication between individuals who join

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

potentially meritless case, thus serving TCPA's Cases that cite this headnote

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,

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

Texas Citizens Participation Act (TCPA) does Molly Lawrence, Tanner and Associates, P.C., James Roddy

not mandate fee awards to a defendant that Tanner, Fort Worth, TX, B. Craig Deats, Deats Durst, Owen

prevails on motion to dismiss an action arising & Levy, P.L.L.C., Austin, TX, for appellant.

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

open-courts guarantees on their face. Vernon's MEMORANDUM OPINION

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

CLEAT is a labor union that represents law enforcement Williamson County or federal authorities to investigate. APD

officers. Burpo was its executive director, and Sheffield also referred the issue to the FBI's cybercrimes unit which

worked for CLEAT as a field service representative, having found “no federal [criminal] element” in Sheffield's behavior.

retired from the Austin Police Department. He was assigned Sheffield averred that the Lockhart Police Department (where

to help various local police associations including the Austin he also worked post-CLEAT) also investigated and “likewise

Police Association (APA). After disagreements relating to cleared [him].” The Williamson County grand jury in August

the scope and manner of Sheffield's interactions with APA 2012 declined to indict Sheffield. CLEAT states that in

members, Burpo fired him on July 18, 2011. August 2012 it filed a conversion action against Sheffield in

Williamson County that was transferred to Travis County and

The comments giving rise to the defamation claims in this then nonsuited.

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

home and deleted data from the laptop's hard drive intending [O]n one or more occasions, the

to prevent disclosure of personal information. He turned in his Defendants defamed Mr. Sheffield

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

false allegations that Mr. Sheffield (1) An email sent on January 4 from Burpo to the CLEAT

committed criminal acts in connection board and staff. 2 Burpo sent the email after the NLRB

with his employment with CLEAT. set a hearing on Sheffield's complaint that he was fired

Those allegations included that for violating an overly broad limitation on work-related

Sheffield inappropriately accessed communications. In the email, Burpo discussed the nature

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

harming CLEAT. Upon information to file criminal charges against Sheffield for deleting files

and belief, such false accusations were that were the property of CLEAT which [CLEAT attorney]

broadcast to 70 plus police officers and Rod Tanner advises is a criminal act under Texas law.”

former co-workers of Mr. Sheffield,

at least. The statements were made by 2 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.

of lawsuits. If a defendant shows by a preponderance of the In his affidavit, Dovalina states that CLEAT Region 2

evidence that the plaintiff's suit is based on, relates to, or is Director Mark Guerra “would not or could not provide

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

the party bringing the legal action “establishes by clear and did.’ “ Although Dovalina said he asked for specifics

specific evidence a prima facie case for each essential element on Sheffield's termination, he said he never received

of the claim in question.” See id. §§ 27.003, .005(c). The them and was not told that “a grand jury and other

TCPA must be “construed liberally to effectuate its purpose investigations had never led to any charges against

and intent fully.” Id. § 27.011(b). In their motions to dismiss Mr. Sheffield.” Dovalina said that, when he later asked

under the TCPA, appellants asserted that Sheffield's suit was Burpo about Guerra's comments, Dovalina said that

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

suit impinges on their right of association and that Sheffield averred that three or four CLEAT officials “stated to me

could not establish a prima facie case for defamation. that criminal charges could be filed against Sheffield by

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

Code” governing abuse of official capacity. II. Applicability of the TCPA

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 Appellants also sought dismissal for want of jurisdiction filing that requests legal or equitable relief.” Id. § 27.001(6).

and through special exceptions, but those motions are not Appellants argue that the TCPA does apply to the disputed

presented in this appeal because interlocutory appeal is statements.

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

I. Jurisdiction over this appeal rights of free speech or petition, they listed those claims as

[1] [2] By their first issue, appellants respond to appellee's their thirteenth affirmative defense but did not raise those

motion to dismiss this interlocutory appeal. Sheffield arguments at the trial court in their motions to dismiss.

contends that this Court lacks jurisdiction because the TCPA Because they did not raise the free speech or petition rights as

does not expressly authorize an interlocutory appeal when the grounds for dismissal under the TCPA, the trial court did not

trial court expressly denies the motion. Sheffield contends reject them in denying the motions to dismiss, and arguments

that interlocutory appeal is authorized only when the trial relating to those contentions are not properly within the

court fails to rule and the motion to dismiss is overruled by limited scope of this interlocutory appeal. See Tex.R.App. P.

operation of law under the statute. See Tex. Civ. Prac. & 33.1(a)(1). Further, although the TCPA is intended to protect

Rem.Code § 27.008. This Court has determined, however, the exercisers of certain constitutionally protected rights from

that regardless of the meaning of the original statute, the unfounded lawsuits, there is no showing that the TCPA's

civil practice and remedies code as amended in 2013 confers dismissal process is a fundamental right. We find no statutory

jurisdiction over appeals such as this one. See Kinney v. BCG or judicial exception permitting these arguments to be raised

Att'y Search, Inc., No. 03–12–00579–CV, 2013 WL 4516106 for the first time in this interlocutory appeal of the denial of

at *4 (Tex.App.-Austin Aug.21, 2013, no pet. h.); see also appellants' motions to dismiss. We overrule those portions

Tex. Civ. Prac. & Rem.Code § 51.014(a)(12); Act of May of issue two concerning arguments about the exercise of the

24, 2013, 83d Leg., H.B. 2935, ch. 1042, § 4. Based on the rights of free speech and petition. For the same reason, we

reasoning in that opinion, we sustain appellants' first issue, will not consider the merits of the remaining appellate issues

deny Sheffield's motion to dismiss, and proceed to consider with respect to the free-speech and petition theories but rather

the remaining issues raised on appeal. will evaluate appellants' claims under the rights asserted in

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).

Sheffield's suit against CLEAT and Burpo for defamation III. Prima facie case

through those statements plainly is based on, relates to, or is *6 By their third issue, appellants assert that the trial court

in response to these communications made in the exercise of erred if it denied their motions to dismiss by concluding that

the right of association, triggering Sheffield's burden to prove Sheffield made a prima facie case on each element of his

a prima facie case on these complaints. claims regarding the communications described in paragraphs

1, 2, and 3 above as required to avoid dismissal of those claims

[6] [7] Appellants did not show by a preponderance of under the TCPA. To make a prima facie case of defamation,

the evidence that two other communications (those set forth the plaintiff must prove that the defendant (1) published a

above in numbered paragraphs 4–5) that Sheffield alleged statement (2) that was defamatory concerning the plaintiff (3)

were made by CLEAT's corporate attorney were within the while acting with either actual malice or negligence regarding

TCPA's definition of the exercise of the right of association: the truth of the statement, depending on the nature of the

(1) Curtis's allegations that APD chief Art Acevedo created parties and the dispute. See WFAA–TV, Inc. v. McLemore,

a special employment position for Sheffield after CLEAT 978 S.W.2d 568, 571 (Tex.1998). Persons who are not public

fired him, and (2) Curtis's conversation with the Williamson figures or involved in public issues typically need show

County district attorney when asking that he file charges. only that the defendant knew or should have known that

There is no allegation or evidence that Curtis made either set the defamatory statement was false. See Foster v. Laredo

of these remarks to a member of CLEAT. Indeed, there is Newspapers, Inc., 541 S.W.2d 809, 819 (Tex.1976).

no allegation or evidence regarding to whom Curtis allegedly

said that Acevedo created a job for Sheffield. There is also Appellants contend that Sheffield had to meet the higher

no allegation or evidence that then-district attorney Bradley intent standard because this dispute arose in the context of

was a CLEAT member. Appellants have not shown by a labor dispute. In defamation claims arising out of labor

a preponderance of the evidence that Curtis made these disputes, the plaintiff must show that the defendant acted

communications to an individual with whom he had joined with actual malice in order to prevail in state court. The

together to collectively express, promote, pursue, or defend Supreme Court has held that the National Labor Relations

common interests. Act preempts most state laws related to labor disputes and

vests exclusive jurisdiction for related formal legal disputes

We conclude that the trial court did not err by denying in the NLRB. See San Diego Bldg. Trades Council, Local

the motions to dismiss under the TCPA with respect to the 2020 v. Garmon, 359 U.S. 236, 243–44, 79 S.Ct. 773, 3

communications described in paragraphs 4 and 5 above- L.Ed.2d 775 (1959) (cited in Linn v. United Plant Card

i.e., Curtis's communications with the district attorney or Workers of Am., Local 114, 383 U.S. 53, 59, 86 S.Ct. 657, 15

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

termination. Sheffield plainly elevated this controversy above (1) The January 4, 2012 email sent from Burpo to the

a standard job-termination case when he invoked the NLRA CLEAT board and staff stating, “The Executive Board

regarding this dispute twice by filing unfair labor practices has directed me to file criminal charges against Sheffield

claims with the NLRB months after his employment was for deleting files that were the property of CLEAT which

terminated. His complaints—first that CLEAT discharged [CLEAT attorney] Rod Tanner advises is a criminal act

him for union activities and for violating an overly broad under Texas law.”

workplace rule, and then that CLEAT retaliated against him

for filing the first unfair labor practices claim—show that the [9] Sheffield produced no evidence that, when Burpo sent

circumstances of this case constitute a labor dispute as defined this email, appellants either knew that any aspect of this

by the NLRA. See id. statement was false or recklessly disregarded whether it was

true. Although Sheffield clearly disagrees that his actions

*7 For such cases, the Supreme Court adopted the standard were criminal or warranted criminal charges, he has not

of actual malice used in defamation cases brought by public alleged or established a prima facie case that Burpo was

officials against media defendants. Linn, 383 U.S. at 65 reckless with the truth of his statement about the board's

(citing New York Times Co. v. Sullivan, 376 U.S. 254, 84 direction to him or CLEAT's attorney's advice to him. There

S.Ct. 710, 11 L.Ed.2d 686 (1964)). “Actual malice” in the is no showing that the investigations Sheffield cites as

defamation context does not necessarily include ill will, spite, exonerating him were complete when Burpo sent the email,

or evil motive. Sullivan, 376 U.S. at 279–80; Huckabee v. or that the allegations had been presented to and rejected by

Time Warner Entm't Co., 19 S.W.3d 413, 420 (Tex.2000). the district attorney or grand jury. The only indication in the

To establish actual malice, a plaintiff must prove that the record is that the investigations and presentation to the grand

defendant made the statement “with knowledge that it was jury occurred after January 4, 2012. Sheffield has not shown

false or with reckless disregard of whether it was true or not.” that Burpo made an untrue statement or had the requisite

Sullivan, 376 U.S. at 279–80; Huckabee, 19 S.W.3d at 420. disregard for the truth of these statements when he sent the

To establish reckless disregard, a plaintiff must prove that January 4, 2012 email.

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

decision. We find no clear and specific evidence that, when Open courts

attributing “criminal conduct” to Sheffield in a statement to The Texas Constitution provides that “[a]ll courts shall be

Staff, appellants either knew that Sheffield's conduct was not open, and every person for an injury done him, in his

criminal or entertained serious doubts about the truth of their lands, goods, person or reputation, shall have remedy by

statements. See St. Amant, 390 U.S. at 731. due course of law.” Tex. Const. art. I, § 13. To prove that

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

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

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

to support the prima facie case as “clear and specific” does If the court orders dismissal of a legal action under this

not alter the burden or cause it to exceed a preponderance of chapter, the court shall award to the moving party:

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

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.

© 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

438 S.W.3d 847 A “prima facie case” within meaning of Texas

Court of Appeals of Texas, Citizens Participation Act (TCPA) prohibiting

Houston (1st Dist.). dismissal if plaintiff establishes by clear and

specific evidence a prima facie case for

Bruce I. SCHIMMEL, Appellant each essential element represents the minimum

v. quantity of evidence necessary to support a

Gary McGREGOR, Teri McGregor, Kris rational inference that the allegation of fact is

Hall, Soledad Pineda, Larry Bishop, true. V.T.C.A., Civil Practice & Remedies Code

Cynthia Bishop, George Clark, Deborah § 27.005(c).

Clark, and Carol Severance, Appellees. 1 Cases that cite this headnote

No. 01–13–00721–CV. | July 10, 2014.

| Rehearing Overruled Sept. 18, 2014. [2] Pleading

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).

Holdings: The Court of Appeals, Evelyn V. Keyes, J., held Cases that cite this headnote

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

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

Reversed and remanded. city a “potential buyer or customer” of his legal

services. V.T.C.A. Civil Practice and Remedies

Code § 27.010(b).

West Headnotes (12) 1 Cases that cite this headnote

[1] Pleading [4] 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

their respective beachfront properties to city, Conduct that is merely “sharp” or unfair is

were “matters of public concern,” supporting not actionable and cannot be the basis for an

attorney's motion to dismiss under Texas action for tortious interference with prospective

Citizens Participation Act (TCPA); challenged relations.

statements, regardless of to whom the statements

Cases that cite this headnote

were made, were related to the dispute

between homeowners and association about

city's purchase of properties, and were made “in [8] Pleading

connection with an issue under consideration or Frivolous pleading

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

expectancy do, which was not to purchase the homeowners'

To prevail on a claim for tortious interference properties. V.T.C.A., Civil Practice & Remedies

with prospective business relations, the plaintiffs Code § 27.005(b, c).

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

prevent the relationship from occurring or knew Contracts

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

or unlawful; (4) the interference proximately Cases that cite this headnote

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

case is to reverse the trial court's denial of the EVELYN V. KEYES, Justice.

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

1 Cases that cite this headnote Schimmel, an attorney hired by The Sands of Kahala Beach

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

Cases that cite this headnote public concern” and did not implicate the exercise of his right

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.,

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

Attorneys and Law Firms damage to numerous homes, including those of the Buy–

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

Panel consists of Justices KEYES, BLAND, and BROWN. Department of Public Safety assists in administering this

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

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