Effective on September 1, 2019, the 86th Texas Legislature’s amendments to the Texas Citizen’s Participation Act, Texas Civil Practices and Remedies Code Chapter 27 (“TCPA”) essentially removed the vast majority trade secret claims from the TCPA’s grasp.[1] These amendments intentionally sought to eliminate the application of the TCPA, an anti-SLAPP statute[2] to certain run-of-the-mill trade secret cases with fact patters arising from independent contractor relationships and departing employees. Nevertheless, the TCPA may apply in light of past precedent to other, less common fact patterns. This article explores other trade secret claims that may still be “slapped” under the TCPA.

It is important to note that at the time of publication, no cases interpreting the new TCPA amendments have yet progressed to the reported appellate level. Texas courts previously applying the TCPA to trade secrets claims,[3] however, generally concluded that the TCPA’s protection of the right of association applied to claims for the misappropriation of trade secrets, conversion, and tortious interference based on (1) communications between the alleged tortfeasors and with individuals they were attempting to hire, and (2) the “common interest” of a competing business enterprise that was allegedly using the misappropriated confidential information.

As such, the subset of claims that survive the amendments will likely involve a “communication” (e.g., disclosure of trade secrets) made in an effort by two or more people to “promote, pursue, or defend” “common interests” (i.e., to advance a competing business) that does not arise in an officer-director, employee-employer, or independent contractor relationship. Trade secret claims that defendants seek dismissal under the TCPA will also need to fall outside the “commercial speech” exception, which has long been a release valve for courts of appeals to allow purely commercial litigation cases to escape from the TCPA’s grasp.[4]

With all of this in mind, examples of some trade secret claims and fact patterns which may fall outside the amendment language and remain potentially subject to the TCPA even post amendment, include:

  • Claims for declaratory relief;[5]
  • Formalized mutual information exchanges (e.g. two companies or individuals sharing trade secret information in the letter of intent or due diligence context who do not consummate the deal);
  • Idea theft by a potential employee or business partner;
  • Corporate espionage; and
  • Computer hacking.

As demonstrated by the commonality of facts between the pre-amendment cases both applying and rejecting the TCPA, no one set of facts will definitively allow for a trade secret claim to fall within the target zone of the TCPA. After all, the amendments were specifically designed to reduce the number and trade secret lawsuits to which the TCPA applied, thus allowing such cases to proceed through litigation.

That said, businesses faced with potential trade secret claims that fall outside of the traditional “departing employee” construct would do well to consider that a slim window exists under which they may still be “slapped” by the TCPA.

[1] Specifically, the amendments state the TCPA does not apply to “a legal action arising from an officer-director, employee-employer, or independent contractor relationship that seeks recovery for misappropriation of trade secrets or corporate opportunities.” Tex. Civ. Prac. & Rem. Code § 27.010(a)(5)(A). Less directly, the amendments also revise the definitions of “exercise of the right of association” and “matter of public concern” to reduce the events that qualify for the TCPA. Tex. Civ. Prac. & Rem. Code § 27.001(2) (“‘Exercise of the right of association’ means to join together to collectively express, promote, pursue, or defend common interests relating to a governmental proceeding or a matter of public concern.”); Tex. Civ. Prac. & Rem. Code § 27.001(7) (“‘Matter of public concern’ means a statement or activity regarding: (A) a public official, public figure, or other person who has drawn substantial public attention due to the person’s official acts, fame, notoriety, or celebrity; (B) a matter of political, social, or other interest to the community; or (C) a subject of concern to the public.”)

[2] SLAPP refers to “Strategic Lawsuit Against Public Participation.”

[3] Notably, several Texas courts refused to apply the TCPA to trade secret claims before the amendments and pushed back against the TCPA’s overly literal application to trade secret cases. See Dyer v. Medoc Health Services, LLC, 573 S.W.3d 418, 426 (Tex. App.—Dallas 2019, pet. denied) (holding it would be “illogical” to declare that an alleged conspiracy to steal trade secrets was the type of “citizens participation” the statute contemplated); Kawcak v. Antero Res. Corp., 582 S.W.3d 566, 588 (Tex. App.—Fort Worth 2019, pet. denied) (holding that the TCPA’s broad definition of “right of association” does not include a conspiracy between a departing employee and a single alleged co-conspirator); Mulcahy v. Cielo Prop. Group, LLC, 03-19-00117-CV, 2019 WL 4383960, at *3 (Tex. App.—Austin Sept. 13, 2019, no pet. h.) (declining to hold that “any exchange of information owned by a real-estate enterprise is a matter of public concern” where the nature of the information contained on the disputed hard drive was not presented); Pinghua Lei v. Nat. Polymer Int’l Corp., 578 S.W.3d 706, 715 (Tex. App.—Dallas 2019, no pet.) (“We cannot conclude that these alleged ‘communications’ are tangentially related to a matter of public concern simply because the proprietary and confidential information at issue belonged to a company in the business of selling pet treats that promote health “or because the alleged tortfeasors hoped to profit from their conduct.”).

[4] For more on application of the “commercial speech” exception to the TCPA, please see our previous blog post at https://www.tradesecretslaw.com/2019/12/articles/trade-secrets/the-halcyon-days-are-over-texas-courts-of-appeals-narrow-the-application-of-the-tcpas-commercial-speech-exception-even-as-the-legislature-narrows-its-definitions/.

[5] Note that the new TCPA expands the definition of “legal action” to cover claims for “declaratory relief,” while expressly excluding actions such as alternative dispute resolution proceedings and post-judgment enforcement actions.  See Tex. Civ. Prac. & Rem. Code. 27.001(6).