Go to Part 4 – A decision in Schlumberger

Go to Part 3 – The Schlumberger case and employment disputes

Go to Part 2 – In Practice

Go to Part 1 – The basics of the Texas Anti-SLAPP law

To conclude the series, we look at one more opinion — Serafine v. Blunt, No. 03-12-00726-CV, 2015 WL 2061922 (Tex. App.—Austin May 1, 2015).  This case dealt with a property dispute, but the real interest comes from the lengthy concurring opinion that is worth your read if you are studying the broad applicability of the Anti-SLAPP law.

In this property dispute amongst neighbors, Serafine asserted claims for trespass to try title, trespass, nuisance, negligence, and fraud by nondisclosure, and sought declaratory and injunctive relief, in addition to damages and attorneys’ fees. The Blunts answered Serafine’s suit and also filed counterclaims, asserting that Serafine tortiously interfered with their contract with the drainage and foundation company and that Serafine violated Chapter 12 of the Texas Civil Practice and Remedies Code by fraudulently filing a lis pendens in the Travis County Real Property Records.  Serafine moved to dismiss the Blunts’ counterclaims under the TCPA which the trial court denied.

Serafine contends that she established that the Blunts filed their counterclaims in response to her exercise of her right to petition, i.e., in response to her filing suit against them, because the two counterclaims on their face complained of her filing of the lawsuit and her filing of the lis pendens notice based on her claims related to the property boundary. The Blunts argued that their tortious-interference counterclaim was not based solely on Serafine’s filing of the lawsuit, but also on her harassing and threatening conduct before and after the lawsuit. They further argued that Serafine incorrectly argued that a lis pendens cannot serve as the basis for a fraudulent-lien claim.

The appellate court held the TCPA applied in part because the Blunts’ tortious interference counterclaim was, in part based on, related to, or in response to Serafine’s filing of the suit and that their fraudulent-lien counterclaim is based on, related to, or in response to Serafine’s filing of the lis pendens, both of which filings are exercises of Serafine’s “right to petition.”  However, to the extent that the Blunts’ tortious-interference counterclaim was based, in part, on Serafine’s alleged threats made outside the context of the lawsuit, then the TCPA did not apply.  The appellate court therefore dismissed the majority of the tortious interference and false lien claims and remanded the claim back to the trial court for consideration of the attorneys’ fee awards and the remaining claim related to threats as opposed to the filing of the suit.

The lengthy concurring opinion found the TCPA should apply in this case, but raised concerns that the TCPA was being used too broadly.  The Houston Court of Appeals may agree.  In Jardin v. Marklund, 431 S.W.3d 765 (Tex. App.-Houston [14th Dist.] 2014, no pet.), the court attacked at length the notion that the TCPA’s protections for the “exercise of the right to petition” can be invoked “simply by filing a petition in a lawsuit between private parties.” It found the TCPA incorporates, and must be construed in light of the purpose of the act and its First Amendment underpinnings.  The Jardin majority reasoned courts should draw lines between “public” versus “private” issues, such that merely filing a lawsuit would not invoke the constitutional right to petition (and, in turn, the TCPA) unless the suit’s subject matter independently concerned government or “the public interest.”

This would appear to be more in line with the ExxonMobil v. Coleman decision in Part 2.  The Dallas court considered the purpose of the TCPA and concluded that “to constitute an exercise of the right of association under the Act, the nature of the ‘communication between individuals who join together’ must involve public or citizen’s participation.” Id. at 12.  The court continued that reading the definition of the right “right of association” in isolation “would lead to absurd results” and would apply the TCPA to “to virtually any private communication between two people about a shared interest.” Id. at 10.

Erica Badu – music management and Anti-SLAPP

Another case to watch is Levatino v. Apple Tree Café Touring, Inc., No. 05-15-00614-CV in the Dallas Court of Appeals. In that case, the defendant had claimed he was the manager for Erica Badu.  He and his counsel sent Rule 408 demand letters to Badu and her company.  Badu and the company filed a declaratory judgment action.  The defendant, Levatino, then filed a TCPA motion to dismiss claiming his pre-suit demand were both the exercise of the right to petition and the right to associate.  The trial court, before the more recent Supreme Court of Texas decisions, denied the motion.

A final note on “clear and specific evidence”

In In Re Lipsky, __S.W.3d__, No. 13-0928, 2015 WL 1870073 (Tex. Apr. 24, 2015, orig. proceeding), Lipsky moved to dismiss a multimillion-dollar defamation suit the plaintiff, Range, filed against him after he criticized the company’s hydraulic fracturing activities near his home. Lipsky argued Range failed to prove that he said anything defamatory and has only offered a “conclusory” affidavit alleging the company suffered $3 million in damages, which is insufficient to meet the TCPA’s evidentiary standard.

The Supreme Court of Texas ruled the defendant is allowed to rely upon circumstantial evidence to satisfy its burdens under the TCPA writing:

 In a defamation case that implicates the TCPA, pleadings and evidence that establishes the facts of when, where, and what was said, the defamatory nature of the statements, and how they damaged the plaintiff should be sufficient to resist a TCPA motion to dismiss.

 Though the TCPA initially demands more information about the underlying claim, the Act does not impose an elevated evidentiary standard or categorically reject circumstantial evidence.   In short, it does not impose a higher burden of proof than that required of the plaintiff at trial.

The point of this series is that the Anti-SLAPP provisions aren’t just for us defamation lawyers anymore.  All litigators should have a basic understanding of how this works and ask of the opposing side’s claims have anything to do with: (1) the right of free speech; (2) the right to petition; or (3) the right of association.petitioning the government as those are broadly defined.

Go to Part 3 – The Schlumberger case and employment disputes

Go to Part 2 – In Practice

Go to Part 1 – The basics of the Texas Anti-SLAPP law

tjb-seal-144Since we published Part 3 that discussed the details of an interesting case here in Houston, Schlumberger v. Rutherford, the First Court of Appeals issued its opinion on Tuesday. The best description of the decision is a punt.  The court found it does not have jurisdiction to consider a partial granting of a motion to dismiss under the Anti-SLAPP provisions or TCPA and summarily affirmed the denial of the part of the motion related to the breach of contract claim. You can read the opinion here: Schlumberger v. Rutherford

While disappointing for Schlumberger and practitioners like us, it may be the right decision.  The Anti-SLAPP statute allows for an appeal of order that “denies a motion to dismiss filed under Section 27.003.” TEX. CIV. PRAC. & REM. CODE § 51.014(a)(12). As pointed out by the court, “[b]y contrast, no statute expressly provides for interlocutory appeal of an order that grants such a motion.”

Because the court only dismissed some of the claims and the case is still proceeding, it is considered an “interlocutory order” which is not subject to an appeal under these circumstances.  For Schlumberger to appeal, it has to proceed to trial on the parts of the case that remain, such as breach of contract, and then decide whether or not to appeal after a final trial or other resolution of the entire case.

What about the breach of contract claim?

As you may recall, the trial court denied Rutherford’s Anti-SLAPP motion to dismiss as it related to her breach of contract claim.  Because that was a denial of the motion to dismiss, the court of appeals determined it could consider only that part of the decision.

The court stated that standard that the party moving to dismiss, in this case Rutherford, had to establish that she was engaged in one of the three protected activities: (1) the right of free speech; (2) the right to petition; or (3) the right of association.  If the moving party does this, then the party trying to defeat the motion to dismiss, Sclumberger, has to establish “by clear and specific evidence a prima facie case for each essential element of the claim in question” — in this case, breach of contract.

Unfortunately, the court of appeals glossed over the important first issue – does the TCPA even apply in this case and went straight to a consideration of whether Schlumberger could provide clear and specific evidence of each element of its breach of contract claim. There was no discussion from the court as to whether Rutherford was engaged in: (1) the right of free speech; (2) the right to petition; or (3) the right of association.  Can we assume that the court of appeals found she did engage in one of those activities in light of the fact that they glossed over it and went straight to the second step of the analysis? Maybe, that’s what lawyers are likely to argue if they want a broad application of the act.

As a result, we may now have to wait to see if the case goes to trial and is then subsequently appealed to determine whether the trial court got it wrong or right. Until then, the case goes back to the trial court and the large sanction penalty related to the granting of the motion to dismiss on the misappropriation of trade secrets, conversion, breach of fiduciary duty, and violation of the Texas Theft Liability Act claims stays in tact.

Part 2 – In Practice

Go to Part 1 – The basics of the Texas Anti-SLAPP law.

The exercise of the right to free speech on matters of public concern

             It is easy to see how this applies to your straightforward defamation case assuming the defendant engaged in the “exercise of the right of free speech” which means “a communication made in connection with a matter of public concern.” A “matter of public concern” is an issue related to:

  • health or safety;
  • environmental, economic, or community well-being;
  • the government;
  • a public official or public figure; or
  • a good, product, or service in the marketplace.

If the defendant who has been sued can show the allegedly defamatory speech was about a “matter of public concern,” then the burden shifts to the defendant to come up clear and convincing prima facie evidence of a valid defamation claim.  A lot of the litigation concerns whether the speech is a matter of public concern and whether the plaintiffs can provide the clear and convincing evidence to avoid dismissal.

What about the right to petition and the right to association? How broad are those?

            The Act also covers the right to petition and the right to association which greatly broadens its application as courts struggle with the definitions noting that only the “exercise of free speech” is limited to “matters of public concern.”  The TCPA defines “exercise of the right of association” to mean “a communication between individuals who join together to collectively express, promote, pursue, or defend common interests.” Tex. Civ. Prac. & Rem Code § 27.001(2).  The “exercise of the right to petition” is defined with reference to a specified list of communications that have a nexus to participation in government. Id. at § 27.001(2)-(4).

Are internal emails matters of public concern and do they have to be?

            Earlier this year, the Dallas Court of Appeals held that the law did not apply to internal communications within a company about an employee’s performance because that was not a matter of public concern despite the claim by the employer (ExxonMobil) that the issues touched on matters of public safety.  See ExxonMobil v. Coleman, 2015 WL2206466 (Tex.App.—Dallas May 12, 2015), rule 53.7(f) motion granted May 29, 2015.  Of more interest is that ExxonMobil also moved to dismiss the claim because it argued it was engaged in the right of association.

            ExxonMobil claimed that the plaintiff failed to “gauge” one of the storage tanks and after an investigation ExxonMobil terminated him.  The plaintiff denied all wrongdoing and sued ExxonMobil and the employees who participated in the investigation for publishing defamatory statements about him during the internal investigation bringing the TCPA into a typical employment dispute.

            Both the trial court and the court of appeals held the TCPA did not apply and refused to dismiss the suit.  Despite the defendants’ efforts to claim it was a matter of public safety, the court found the investigation focused on job performance and not the results that could happen if the storage tanks were not properly maintained.  Therefore, the statements “involve nothing more than an internal personnel matter at Exxon” and therefore “were not a matter of public concern.”

            With regard to the right to the association, Exxon argued the communications were made between Exxon employees regarding issues in which they shared a common interest, specifically Coleman’s job performance and his compliance with the safety guidelines.  In response, the Court of Appeals wrote:

Although these commuinications seem to fall within the plain language of the Act’s definition of the exercise of the right of association, we decline to read the statute so broadly, concluding it would lead to absurd results.

Id. at *4.  The court then spent numerous pages explaining that reading the definition of the right to association in a vacuum without considering the purpose of the act would encompass any private communications between two people about any shared interest.  The court, therefore, reasoned the “public participation” had to apply to the defendant’s engagement in the right to association and the right to petition as well.

Can the right of association govern every corporate email?

            The court relied in part on the First Court of Appeals decision in See Cheniere Energy, Inc. v. Lotfi, 449 S.W.3d 210, 216–17 (Tex.App.–Houston [1st Dist.] 2014, no pet.). In that case, the plaintiff sued her former employer for wrongful termination and sued two former coworkers for tortious interference.   449 S.W.3d at 211–12.   The coworkers moved to dismiss the claim against them under the Act, asserting the plaintiff’s lawsuit was brought in response to their exercise of the right of association.  Id. at 212.   The plaintiff filed a response, but neither side filed any affidavit evidence.   With only the pleadings to go on, the trial court denied the motion to dismiss.  Id.  The court of appeals upheld the trial court’s ruling, concluding the coworkers failed to meet their burden to show they were entitled to dismissal because the limited allegations in the plaintiff’s pleadings did not show the coworkers had a communication, acted in furtherance of a common interest, or that the claim against them is related to their exercise of the right of association.  Id. at 214–15.

            Referring to the title of the Act, the court noted that the terms “citizen” and “participation” contemplate a larger public purpose.  Id. at 216.   It further stated the plaintiff’s lawsuit did not implicate the legislature’s express declaration of the purpose behind the Act, which indicates that a nexus is required between the communication and the generally recognized parameters of First Amendment protection.  Id.  “Otherwise, any communication that is part of the decision-making process in an employment dispute—to name just one example—could be used to draw within the [Act’s] summary dismissal procedures private suits implicating only private issues.”   Cheniere Energy, 449 S.W.3d at 216–17.

            Two members of the three-judge panel concurred, writing separately to emphasize that the Act did not apply to the plaintiff’s tortious interference claim against her coworkers.  Id. at 217 (Jennings, J., concurring).   The concurrence stated that, standing alone, the Act’s definition of the “exercise of the right of association” in section 27.001(2) appears to include communications that are not constitutionally protected and do not concern citizen or public participation.  Id. at 219.   The concurrence stated that reading section 27.001(2) in isolation would lead to absurd results and would “actually thwart any meritorious lawsuit for demonstrable injury in which a plaintiff alleges that two or more persons engaged in a civil wrong involving a communication.”  Id.  At a minimum, such a reading would add unnecessary delay and expense to a plaintiff’s lawsuit.  Id.

But, the Texas Supreme Court says don’t amend the Act.

            This decision followed the Supreme Court of Texas’s opinion in Lippincott v. Whisenhunt, __ S.W.3d __, No. 13-0926, 2015 WL1967025 (Tex. April 24, 2015).  In that case, the defendants allegedly made disparaging comments about the plaintiff, who was a certified registered nurse anesthetist contracted to provide anesthesiology services, in emails internally to the company.  The allegedly defamatory emails included allegations that the plaintiff represented himself to be a doctor, endangered patients for his own financial gain, and sexually harassed employees.

            The plaintiff sued for defamation, tortious interference with existing and prospective business relations, and conspiracy to interfere in business relations.  The defendants moved to dismiss all of the claims based on the TCPA.  The trial court dismissed all of the claims except for defamation because the plaintiff was able to provide prima facie evidence of the defamation claim, but not the others.

            The court of appeals reversed and remanded holding the act does not apply to “private” communications such as internal emails thereby reviving all of the plaintiff’s claims.  The Supreme Court ruled there is no requirement that the communications themselves have to be public.  Instead, the statute only requires that the communication be made in connection with a matter of public concern.

            With regard to whether the communications involved matters of public concern, the court wrote:

The allegations include claims that Whisenhunt “failed to provide adequate coverage for pediatric cases,” administered a “different narcotic than was ordered prior to pre-op or patient consent being completed,” falsified a scrub tech record on multiple occasions, and violated the company’s sterile protocol policy. We have previously acknowledged that the provision of medical services by a health care professional constitutes a matter of public concern. See Neely v. Wilson, 418 S.W.3d 52, 70 n.12 & 26 (Tex. 2013) (determining that the public had a right to know about a doctor’s alleged inability to practice medicine due to a mental or physical condition); see also TEX. CIV. PRAC. & REM. CODE § 27.001(7) (defining “matter of public concern” to include issues related to health or safety, community well-being, and the provision of services in the marketplace, among other things). Thus, we conclude these communications were made in connection with a matter of public concern.

Id. at *2. The court concluded that because the defendant had demonstrated the applicability of the act, the court of appeals had to consider whether the plaintiffs had met his prima facie burden of proof.

            In the decision the Supreme Court of Texas said that courts should not “judicially amend” the act by adding words that are not there.  Id. at *1.  The Dallas Court of Appeals considered the instruction from the higher court, but wrote:  “Although we are aware that in Lippincott, the supreme court cautioned against “judicially amending” the Act by adding words that are not there, we agree that the legislature could not have intended for section 27.001(2) to be read in isolation.  We conclude that, to constitute an exercise of the right of association under the Act, the nature of the “communication between individuals who join together” must involve public or citizen’s participation.”  ExxonMobil, 2015 WL 2206466 at *6.

Part 3 will look at the impending Schlumberger decision.