On May 5, 2017, the Austin Court of Appeals issued a first of its kind opinion holding that Texas Citizens Participation Act (TCPA)—also known as the Texas anti-SLAPP statute—can potentially be invoked to successfully defend against Texas Uniform Trade Secrets Act (TUTSA) claims.  In Elite Auto Body LLC, d/b/a Precision Auto Body v. Autocraft Bodywerks, Inc., No. 03-15-00064-CV, 2017 WL 1833495 (Tex. App.—Austin May 5, 2017, no pet. h.), plaintiff Autocraft Bodywerks sued Precision (Elite) Auto Body and several former Autocraft employees alleging that the employees provided Precision with Autocraft’s trade secrets.  In particular, Autocraft alleged:

  1. The former employee breached a fidicuary duty by misappropriating Autocraft’s trade secrets;
  2. Defendants are using Autocraft’s trade secrets;
  3. The defendant former employee have communicated Autocraft trade secret information within Precision;
  4. Defendants have communicated with Autocraft employees to induce them to leave Autocraft and work for Precision.

In response, Precision asserted the TCPA, which requires Defendants to show by a preponderance of the evidence (1) Autocraft asserted a legal action (2) that is based on, relates to, or is in response to (3) either the exercise of the right of association or the exercise of the right of free speech.  If Defendants meet their burden, then Autocraft, as plaintiff has to establish by clear and specific evidence of a prima facie case for each element of its claims.  Autocraft, however, did not focus on presenting this evidence, choosing instead to argue that the TCPA did not apply.  The trial court agreed with Autocraft.

The Austin Court of Appeals reversed in part, focusing its analysis on the right of association.  The right of association under the TCPA requires a “communication,” which includes the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic.  Because the first two allegations did not necessarily involve communications, the Austin Court held that the trial did not err in denying Defendants’ TCPA motion.

But the latter two allegations did involve communications.  Thus, the question became whether the TCPA was broad enough to apply to apply to the allegations.  Specifically, Autocraft argued that the First Amendment did not protect unauthorized disclosure of trade secrets or otherwise confidential information.  Defendants argued that the plain language of the TCPA was broader than the First Amendment.  The Austin Court ultimately agreed with Defendants, applying the plain language of the statute and holding that Defendants met their burden of showing that Autocraft’s legal action (at least with respect to the latter two claims) was based on, relates to, or is in response to Defendants’ exercise of the right of association.  And because Autocraft’s whole defense was based on the TCPA not applying, it failed to submit the required clear and specific evidence of a prima facie case for each element of its claims, and, therefore, the district court erred in failing to dismiss Autocraft’s latter two claims.

So what does this mean for TUTSA litigants?  First, defendants have a new weapon—the TCPA—to use against plaintiffs.  Second, plaintiffs must be especially careful not to base their TUTSA claims entirely on “communications,” as that term is defined in the TCPA.  The problem, however, is that several of the paths to liability under TUTSA impose liability for disclosure of a trade secret, and you cannot disclose a trade secret without some sort of communication.  Thus, if a plaintiff’s claim is based on disclosure of a trade secret to another party, then the plaintiff must be prepared to provide clear and convincing evidence of a prima facie case for each element of its claims or risk having its claims dismissed by the trial court.