SLAPPs (Strategic Lawsuits Against Public Participation) are often filed with the primary intent to censor, intimidate, or silence a defendant. By burdening the defendant with the costs of litigation, SLAPP suits seek to dissuade a defendant from exercising his or her First Amendment rights. To guard against the chilling effect of SLAPPs, 28 states, the District of Columbia, and Guam have enacted anti-SLAPP statutes, which allow for expedited review of alleged SLAPPs.
Texas’s anti-SLAPP statute, the Texas Citizens Participation Act (TCPA), is one of the strongest anti-SLAPP statutes in the United States, allowing for early dismissal of frivolous lawsuits expansively related to the exercise of the right of free speech, the right to petition, or the right of association. A conspiracy claim, brought by an electronic bar game company alleging trade secret theft by a rival, was struck under the TCPA in a recent appellate decision, Craig v. Tejas Promotions, LLC, No. 03-16-00611-CV (Tex. App.—Austin May 3, 2018).
Tejas Promotions, LLC distributes fee-based “sweepstakes promotional software” that runs on electronic games in bars and pool halls. According to the underlying suit, Bruce Craig entered into negotiations to purchase Tejas Promotions’ assets and signed a mutual non-disclosure agreement restricting the use and dissemination of any confidential information that was shared in the negotiation process. The deal fell through, and Craig subsequently teamed up with his son, Tyler Craig, to form the deceptively named Tejas Vending, LP. The suit claims that the elder Craig used confidential information that was shared with him to wrestle away some of Tejas Promotions’ business.
Tejas Promotions sued the Craigs and Tejas Vending claiming breach of the non-disclosure agreement, misappropriation of trade secrets, conspiracy to misappropriate trade secrets, claims for injunctive relief to stop the spread of the confidential information, and several claims for declaratory judgment. Both Craigs and Tejas Vending joined in a motion under the TCPA seeking dismissal of only two of the five sets of claims—the conspiracy claim and the declaratory claims. The district court denied the TCPA motion, which led to this appeal.
The appellate panel unanimously decided to grant the motion to dismiss the conspiracy claim, relying on another case, Elite Auto Body LLC v. Autocraft Bodywerks, Inc., 520 S.W.3d 191 (Tex. App.—Austin 2017), which is “materially identical” to the case brought by Tejas Promotions. Considering the “plain-meaning” construction of the TCPA’s broad terms, the panel found that “communication” is not explicitly limited to expression that is constitutionally protected. Rather, it includes “the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic.” The panel further reasoned that the “exercise of the right of association” is a communication defined as “between individuals who join together to collectively express, promote, pursue, or defend common interests.”
Applying this definition, the appellate panel overturned the district court’s ruling as to the conspiracy claim, finding that the “communication” that took place between Craig and Tejas Promotions before the proposed buyout fell through qualifies as the “exercise of the right of association” for the purposes of the TCPA. As for the declaratory claims, the panel upheld the district court’s ruling, noting that the defendants failed to timely file TCPA motions against the other three remaining claims.
Anti-SLAPP motions are common in major fraud cases, but success of those motions largely depends on what state you are in. The scope of protected activity varies among states with anti-SLAPP statutes, although all aim to prevent the chilling effect of SLAPP suits by providing defendants with a means to expeditiously dismiss meritless claims before the defendants incur large legal fees. Some states, like Texas and California, have very strong anti-SLAPP laws that protect a wide variety of First Amendment activity, while other states have much narrower anti-SLAPP statutes that only protect certain types of speech or have “without malice” exceptions. If you are working in a state that has an anti-SLAPP statute, be aware of what activity is protected under that statute as early dismissal of a frivolous claim could save you both money and time in the litigation process.
If you have further questions regarding anti-SLAPP statutes or need defense counsel for a frivolous claim, contact the experienced insurance fraud attorneys at Parker, LLP Attorneys at Law today.