On January 23, 2020, the Texas Fifth District Court of Appeals in Dallas retracted its previous ruling in the trade secrets dispute Goldberg, et al. v. EMR (USA Holdings) Inc., et al. and issued a new opinion upon rehearing. In doing so, the Court reversed course on its previous ruling that communications with customers and suppliers involved a matter of public concern and were an exercise of free speech.
The Court's new ruling, which was decided under the pre-September 1, 2019, version of the Texas Citizens Participation Act ("TCPA"), makes clear that communications between a company and customers or suppliers that deal only with the sale of a commodity are not protected by the TCPA.1
The August 2019 Ruling
In the Court's original Goldberg ruling, issued on August 22, 2019, the Court of Appeals held that the TCPA did not apply to former employees' communications with actual or potential purchasers of their new employers' products or services under the commercial speech exception. However, before reaching that conclusion, the Court found that "each individual Defendant's communications with the purchasers and suppliers involved a matter of public concern and were exercises of that Defendant's right of free speech...." In other words, the Court found that communications with purchasers and suppliers were subject to the TCPA, but were excepted from the TCPA by virtue of the commercial speech exception.
The January 23, 2020, Ruling
In its new ruling, the Court held that it need not even reach the question of whether the commercial speech exception applied, the emails "were private communications between private parties about purely private economic matters ...." Thus, the emails were not in the purview of the TCPA. To combat this, the defendants argued that the TCPA applied because their business—the scrap metal business—related to a matter of public concern and dealt with health or safety, or environmental, economic, or community well-being. The Court did not accept this argument. While it did note that the business of the defendants may deal with issues related to health or safety, or environmental, economic, or community well-being, the communications themselves did not. Instead, "they were private communications regarding private commercial transactions for the purchase and sale of a commodity, scrap metal." Accordingly, the communications were not subject to the TCPA.
The Court Further Narrows the TCPA
While the result was the same, the Court's new ruling further restricts the application of the pre-September 1, 2019, version of the TCPA. This new ruling does not even require an analysis of whether the commercial speech exception applies to communications that purely relate to a sale of a good; rather, the TCPA simply does not apply to misappropriation of trade secret claims (or any other claims) that are predicated on communications between a business and its potential customers or suppliers that relate to the purchase or sale of a commodity.
Despite remaining a decision related to the prior version of the TCPA, this holding further demonstrates the resolve of Texas courts to limit the application of TCPA. And while the post-September 1, 2019, definition of public concern is even narrower, this case stands as a precedent to the remaining cases wending their way through the system filed before September 1. Ultimately, this ruling, along with others and the revisions to the TCPA, serve as a strong reminder that the TCPA is no longer the weapon (or threat) that it was when first passed.
Footnotes
1 The TCPA is an anti-SLAPP (Strategic Lawsuit Against Public Participation) statute allowing litigants to seek early dismissal of a lawsuit if the legal action is based on, or is in response to, a party's exercise of the right of free speech, right to petition, or right of association. It was amended and restricted for all cases filed after September 1, 2019. For our write-up on the original Goldberg decision and a description of the TCPA pre and post-amendments, see 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/
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.