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RIGUP, INC., Appellant v. SIERRA HAMILTON, LLC, Appellee
Appellant RigUp, Inc. appeals from an interlocutory order denying its motion to dismiss a suit filed by appellee Sierra Hamilton, Inc. A business competitor to RigUp, Sierra sued for tortious interference with contract and for unjust enrichment based on what it contends were wrongful solicitations by RigUp agents to individuals having contracts with Sierra. RigUp moved to dismiss Sierra's suit pursuant to the Texas Citizens Participation Act (TCPA), asserting that the legal action is in response to its exercise of the right of free speech. See Tex. Civ. Prac. & Rem. Code §§ 27.001-.011.1 Because we conclude that the TCPA applies to Sierra's claims against RigUp and that Sierra failed to establish a prima facie case for each essential element of its claims, we reverse the trial court's denial of the motion to dismiss and remand the case to the trial court for further proceedings.
TCPA Legal Framework
The stated purpose of the TCPA is to “encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.” Id. at § 27.002. To effectuate this purpose, the TCPA allows a party to move for expedited dismissal of “claims brought to intimidate or to silence a defendant's exercise of these First Amendment rights.” ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per curiam); see Tex. Civ. Prac. & Rem. Code §§ 27.003, .005
A court reviews a TCPA motion to dismiss using a three-step analysis. Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018). Under the first step, the party moving for dismissal bears the initial burden of showing that the TCPA applies to the nonmovant's legal action against it. See Tex. Civ. Prac. & Rem. Code § 27.005(b). That is, the movant must show “by a preponderance of the evidence” that the nonmovant's claim “is based on, relates to, or is in response to the [movant's] exercise of: (1) the right of free speech; (2) the right to petition; or (3) the right of association.” In re Lipsky, 460 S.W.3d 579, 586-87 (Tex. 2015) (orig. proceeding) (quoting Tex. Civ. Prac. & Rem. Code § 27.005(b)).
If the movant meets its burden to show that the TCPA applies, then under the second step, the burden shifts to the nonmovant to establish “by clear and specific evidence a prima facie case for each essential element of the claim in question.” Tex. Civ. Prac. & Rem. Code § 27.005(c). Alternatively, the nonmovant can avoid its burden of demonstrating a prima facie case entirely by showing that one of the TCPA's several exemptions applies, such as the commercial-speech exemption. See id. § 27.010(b); Morrison v. Profanchik, 578 S.W.3d 676, 680 (Tex. App.—Austin 2019, no pet.) (explaining that “[i]f an action falls under a TCPA exemption, the TCPA does not apply and may not be used to dismiss the action”); Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 887 (Tex. App.—Austin 2018, pet. denied) (“The burden to establish the commercial-speech exemption is on the party relying on it․”). Finally, if the TCPA applies and the nonmovant party satisfies its burden of presenting a prima facie case, the burden shifts back to the movant to prove each essential element of a valid defense to the nonmovant's claim by a preponderance of the evidence. Tex. Civ. Prac. & Rem. Code § 27.005(d).
In determining whether a legal action should be dismissed under the TCPA, the trial court must consider “the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based.” Id. § 27.006(a). The court views the pleadings and the affidavits in the light most favorable to the nonmovant. Stallion Oilfield Servs., Ltd. v. Gravity Oilfield Servs., LLC, 592 S.W.3d 205, 214 (Tex. App.—Eastland 2019, pet. denied); Warner Bros. Entm't, Inc. v. Jones, 538 S.W.3d 781, 814 (Tex. App.—Austin 2017), aff'd No. 18-0068, 611 S.W.3d 1, 2020 Tex. LEXIS 397 (Tex. May 8, 2020). We review a trial court's ruling on a motion to dismiss, including whether each party has met its respective burden, by applying a de novo standard of review. Grant, 556 S.W.3d at 889. To the extent the trial court's ruling turns on issues of statutory construction, we also review these issues de novo, ExxonMobil Pipeline, 512 S.W.3d at 895, always mindful that the Legislature has directed us to construe the TCPA liberally to effectuate its purpose and intent, see Tex. Civ. Prac. & Rem. Code § 27.011(b).
Factual Background and Procedural History
Sierra is a staffing firm that provides personnel to the oil and gas industry. According to its original petition, Sierra's business “involves two contractual relationships—one with the personnel and the other with the customer.” Sierra contracts with personnel, whom it refers to as “consultants,” for services such as engineering, technology solutions, and on-site supervision. In general, when an oil and gas company contacts Sierra about a personnel need, Sierra identifies a qualified consultant and then hires that consultant to provide the requested services at the company client's worksite. The consultant and Sierra enter into an independent-contractor agreement, which contains a non-compete provision that prohibits the consultant from providing or continuing to provide services to a company client for one year after termination of the agreement. In addition, the independent-contractor agreement provides that the consultant will not disclose Sierra'a confidential information and that a consultant seeking to terminate his or her independent-contractor agreement will provide thirty days' written notice to Sierra.
Sierra also contracts with its oil and gas company clients to provide personnel with specific skillsets. Under these contracts, called master-service agreements, when a consultant is placed at a company client worksite, Sierra agrees to provide invoicing and other administrative services. According to Sierra, these services include “providing credit, managing risk, and matching talent to work, in order to facilitate payment to the consultant for the work performed for the client.” Under certain agreements, Sierra may also provide additional benefits, such as insurance coverage. Sierra is paid a percentage, or “split,” of the fees generated by the consultant's work.
RigUp is a competitor of Sierra that, like Sierra, connects independent consultants with oil and gas companies through an on-line platform and provides administrative services in exchange for a “split.” In its live pleadings, Sierra alleges that since forming in 2014, RigUp has “engaged in a pattern of wrongful conduct to raid Sierra's contractors” and to “induce[ ] Sierra's contractors to break their contracts and go to work with RigUp.” In October 2017, Sierra sent RigUp a cease-and-desist letter demanding that it stop soliciting Sierra consultants. Unsatisfied with RigUp's response, Sierra filed suit against RigUp in January 2019, asserting claims of tortious interference with contract and unjust enrichment and seeking monetary damages as well as permanent injunctive relief.
After answering in the suit, RigUp filed a motion seeking dismissal of the suit under the TCPA. See id. § 27.003 (outlining TCPA motion procedure). In response, Sierra asserted that the motion to dismiss should be denied for three independent reasons: (1) the TCPA does not apply because the speech at issue falls within the commercial-speech exemption of the TCPA; (2) the TCPA does not apply because the TCPA is preempted by the Texas Covenants Not to Compete Act; and (3) even if the TCPA applies, Sierra established a prima facie case for each element of its claims by clear and specific evidence. In support of its response, Sierra presented an affidavit from Keith Grimes—Sierra's former chief executive officer and current chief operations officer—along with attached supporting documents, including copies of two independent-contractor agreements and a copy of the October 2017 cease-and-desist letter.
The trial court denied RigUp's motion to dismiss without stating its reasons. This appeal followed. See id. § 51.014(a)(12) (allowing for interlocutory appeal of denial of TCPA motion to dismiss).
In one issue on appeal, RigUp asserts that the trial court erred in denying its motion to dismiss Sierra's suit.2 Applying the previously described TCPA burden-shifting framework, we first examine whether the TCPA applies to the claims brought by Sierra against RigUp. The answer to this question implicates three potential grounds for the trial court's decision: (1) whether RigUp met its initial burden to show that the TCPA applies to the claims brought against it by Sierra; (2) whether, as Sierra asserts, the Texas Covenants Not to Compete Act precludes application of the TCPA in this case; and (3) whether Sierra has shown that its claims fall within the commercial-speech exemption. We will begin by examining whether RigUp met its initial burden to show that the TCPA applies to Sierra's claims.
RigUp's Initial Burden under the TCPA
In its motion to dismiss, RigUp asserts that the TCPA applies to Sierra's suit because it is a legal action based on the exercise of its right of free speech under the TCPA. See id. § 27.005(b). In analyzing whether the TCPA applies to a suit, we begin by determining the basis of the legal action as reflected in the plaintiff's petition, which is the “best and all-sufficient evidence of the nature of the action.” Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017) (quoting Stockyards Nat'l Bank v. Maples, 127 Tex. 633, 95 S.W.2d 1300, 1302 (1936)). In its motion to dismiss, and now in its appellant's brief, RigUp argues that both of Sierra's substantive claims—tortious interference with contract and unjust enrichment—stem from alleged communications made by RigUp recruiters to consultants with independent-contractor agreements with Sierra. Sierra's petition describes these communications as follows:
RigUp sent recruiters to Sierra's jobsites to hand out business cards and other marketing materials․ RigUp also targeted Sierra's contractors by telephone, email and other electronic means․ RigUp's recruiters induced Sierra's contractors to break their contracts and go to work with RigUp. They told Sierra's contractors that their “non-competes” are “unethical” and they do not need to worry about breaching their contracts with Sierra.
The TCPA defines “exercise of the right of free speech” as a “communication made in connection with a matter of public concern.” Tex. Civ. Prac. & Rem. Code § 27.001(3). There is no dispute that Sierra's pleadings describe “communications” by RigUp, both oral and written, as that term is used in the TCPA. See id. § 27.001(1). Consequently, whether RigUp met its initial burden to show that the TCPA applies to Sierra's legal action—that is, whether Sierra's claims are based on RigUp's “exercise of [its] right of free speech”—turns on whether these communications were “made in connection with a matter of public concern.” See id. § 27.001(3).
A “matter of public concern' includes” but is not limited to “an issue related to: (A) health or safety; (B) environmental, economic, or community well-being; (C) the government; (D) a public official or public figure; or (E) a good, product, or service in the marketplace.” Id. § 27.001(7). The TCPA “casts a wide net,” Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex. 2018), and nothing in the plain language of the TCPA requires that the communication be made in a public forum, so long as the substance of the communication involves a public matter, Lippincott v. Whisenhunt, 462 S.W.3d 507, 509-510 (Tex. 2015) (holding that TCPA applies to privately made communications). Further, the TCPA does not require that the communication at issue specifically mention any of the listed matters in the categories of “matter[s] of public concern”; rather, a ‘tangential relationship” to the matter is sufficient to establish that the communication is protected speech under the TCPA. ExxonMobil Pipeline, 512 S.W.3d at 900. However, “not every communication related somehow to one of the broad categories set out in section 27.001(7) always regards a matter of public concern.” Creative Oil & Gas, LLC v. Lona Hills Ranch, 591 S.W.3d 127, 136 (Tex. 2019). The communications must still concern matters that have “public relevance beyond the pecuniary interests of the private parties involved.” Id.
RigUp asserts that based on Sierra's allegations, the communications by RigUp recruiters relate to the market for oil and gas services and, thus, were “made in connection with” a “service in the marketplace,” as that term is used in section 27.001(7). See Tex. Civ. Prac. & Rem. Code § 27.001(3), (7). With respect to this category of “matter[s] of public concern” under section 27.001(7), the Texas Supreme Court has recognized that the in-the-marketplace modifier “suggests that the goods or services must have some relevance to a wider audience of potential buyers or sellers in the marketplace, as opposed to communications of relevance only to the parties to a particular transaction.” Creative Oil & Gas, 591 S.W.3d at 135. Otherwise, the TCPA's reference to “ ‘a good, product, or service’ [would] swallow up every contract dispute arising from a communication about the contract.” Id. at 134.
While the alleged communications that are the basis of Sierra's claims relate to the oil and gas industry, the communications more specifically concern the enforceability of the non-compete provision in Sierra's independent-contractor agreements. These agreements are between private parties, affecting private pecuniary interests, and ordinarily would not constitute a “matter of public concern.” See id. at 136: Ridge Petrol. v. Energy Ops., LLC, 611 S.W.3d 36, 47–48, No. 08-19-00078-CV, 2020 Tex. App. LEXIS 3489, at *26-27 (Tex. App.—El Paso Apr. 24, 2020, no pet. h.) (concluding that communications in form of “statements, checks and division orders” related only to calculations of royalties owed to private party pursuant to agreement and “not a matter of public concern”); see also Goldberg v. EMR (USA Holdings), Inc., 594 S.W.3d 818, 828 (Tex. App.—Dallas 2020, no pet. h.) (concluding that communications to purchasers and suppliers offering to buy or sell scrap metal did not involve “a matter of public concern” because they were “private communications between private parties about purely private economic matters”). Nevertheless, the record in this case reveals that Sierra's independent-contractor agreements have been made part of a broader public debate regarding the use of non-competes in the oil and gas industry.
Sierra's response to RigUp's motion to dismiss includes, as an attachment to Grimes's affidavit, a printout from a website titled “Coalition for Energy Jobs.” According to Grimes's affidavit, “Coalition for Energy Jobs” is a nonprofit corporation, and RigUp's in-house lawyers are its directors. The “Coalition for Energy Jobs” website describes the imposition of non-competes on independent contractors in the oil and gas industry as “unfair” and designed to “hold independent contractors hostage.” Further, the website asks readers to support “house bill 1552,” which would “protect oil and gas workers and economic freedom by stopping unfair practices” and to “stand up for Texas workers, economic freedom and one of the strongest job creating industries in our state.” According to the website, the bill would “prohibit the use of non-compete clauses in agreements with oilfield independent contractors.” In his affidavit, Grimes states that House Bill 1552 was “spearheaded” by RigUp “to change Texas law on the enforceability of non-competes for independent contractors in the oil and gas staffing industry.”
Having considered the pleadings and the affidavit evidence, viewed in the light most favorable to Sierra, we conclude that the alleged communications by RigUp recruiters concerning Sierra's independent-contractor agreements have “some relevance to a wider audience of potential buyers or sellers in the marketplace.” Creative Oil & Gas, 591 S.W.3d at 136. That is, the alleged communications relate to a “service in the marketplace,” within the meaning of section 27.001(7), and therefore qualify as an “exercise of the right of free speech” under the TCPA. See Tex. Civ. Prac. & Rem. Code § 27.001(3). RigUp met its initial burden under the TCPA to demonstrate that the statute applies to the claims brought by Sierra.
Preemption by the Covenants Not To Compete Act
Next, to determine whether the TCPA applies to Sierra's suit, we consider Sierra's argument that application of the TCPA is preempted in this case by the Texas Covenants Not to Compete Act (CNCA). See Tex. Bus. & Com. Code §§ 15.50-.52. The CNCA states in relevant part:
The criteria for enforceability of a covenant not to compete provided by Section 15.50 of this code and the procedures and remedies in an action to enforce a covenant not to compete provided by Section 15.51 of this code are exclusive and preempt any other criteria for enforceability of a covenant not to compete or procedures and remedies in an action to enforce a covenant not to compete under common law or otherwise.
Id. § 15.52. In its response to RigUp's motion to dismiss, Sierra asserted that under the plain language of this provision, the CNCA preempts any other procedures and remedies in an action to enforce a covenant not to compete and that the CNCA “does not allow for a procedure that permits the dismissal of claims in an action to enforce a non-compete with little or no discovery (at the beginning of the case).” Thus, Sierra reasons, the CNCA preempts the TCPA because the TCPA allows early dismissal of an action to enforce a covenant not to compete and the CNCA does not. Assuming that Sierra's tortious-interference-with-contract claim based on a non-compete provision qualifies as an “action to enforce a covenant not to compete,” we disagree that the CNCA preempts the TCPA. See Gage Van Horn & Assocs., Inc. v. Tatom, 26 S.W.3d 730, 732 (Tex. App.—Eastland 2000, pet. denied) (concluding that preemption under CNCA did not apply to declaratory judgment seeking to prevent enforcement of covenant not to compete).
As one of our sister courts of appeals recently observed, the CNCA provides “procedures the trial court may take, and remedies that the trial court may grant, when adjudicating whether a covenant not to compete has been breached.” Reeves v. Harbor Am. Cent., Inc., ––– S.W.3d ––––, ––––, 2020 WL 2026527, at *6, No. 14-18-00584-CV, 2020 Tex. App. LEXIS 3533, at *13 (Tex. App.—Houston [14th Dist.] Apr. 28, 2020, no pet. h.); see Tex. Bus. & Comm. Code § 15.51 (“Procedures and Remedies in Actions to Enforce Covenants Not to Compete”). Conversely, when invoked, the TCPA provides procedures and remedies allowing for summary dismissal of cases—of all types—before a full adjudication of the merits takes place, Reeves, ––– S.W.3d at ––––, 2020 WL 2026527, at *6, 2020 Tex. App. LEXIS 3533, at *13, similar to that of a summary-judgment proceeding, see Tex. R. Civ. P. 166a. Based on these statutory differences, the Fourteenth Court of Appeals concluded that “the TCPA and CNCA govern different stages of litigation” and that it could “discern no friction between the two statutory schemes.” Reeves, ––– S.W.3d at ––––, 2020 WL 2026527, at *6, 2020 Tex. App. LEXIS 3533, at *13.
Based on the plain language of the TCPA and the CNCA, we agree with our sister court. While both statutes establish procedures applicable to actions to enforce covenants not to compete, the statutes govern different stages of the proceedings. See id.; see also Neurodiagnostic Consultants, LLC v. Nallia, No. 03-18-00609-CV, 2019 WL 4231232, at *7, 2019 Tex. App. LEXIS 8156, at *7 (Tex. App.—Austin Sept. 6, 2019, no pet.) (mem. op.) (concluding that limitation on damages in section 15.51 of CNCA did not prevent plaintiff from establishing prima facie case for damages because CNCA governs only final remedies) (citing Primary Health Physicians P.A. v. Sarver, 390 S.W.3d 662, 665 (Tex. App.—Dallas 2012, no pet) (CNCA does not preempt requirements for temporary injunctive relief because CNCA governs only final remedies)). Consequently, we fail to see any conflict between the procedures required by the CNCA and the summary-dismissal procedure provided by the TCPA. Accordingly, we cannot conclude that the CNCA preempts the TCPA such that Sierra's claims are precluded from the protections provided by the TCPA.
Having determined that RigUp met its initial burden under the TCPA and that the TCPA is not preempted by the CNCA, we now turn to RigUp's argument that the trial court erred to the extent it denied its motion to dismiss based on the TCPA's commercial-speech exemption.
The commercial-speech exemption provides that the TCPA does not apply “to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services ․ or a commercial transaction in which the intended audience is an actual or potential buyer or customer.” Tex. Civ. Prac. & Rem. Code § 27.010(b). In Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018), the Texas Supreme Court summarized the commercial-speech exemption as consisting of four elements. First, the defendant was primarily engaged in the business of selling or leasing goods or services. Id. Second, the defendant made the statement or engaged in the conduct on which the claim is based in the defendant's capacity as a seller or lessor of those goods or services. Id. Third, the statement or conduct at issue arose out of a commercial transaction involving the kind of goods or services the defendant provides. Id. Finally, the intended audience of the statement or conduct were actual or potential customers of the defendant for the kind of goods or services the defendant provides. Id.
The burden of establishing the commercial-speech exemption is on the nonmovant, the party relying on the exemption. Grant, 556 S.W.3d at 887. Because a claim falls within the commercial-speech exemption only when all four elements are satisfied, the failure to establish any one element is sufficient to prevent the exemption from applying to a claim. See Castleman, 546 S.W.3d at 690-91. On appeal, RigUp does not dispute that the first and second elements of the commercial-speech exemption under Castleman are satisfied. See id. Instead, RigUp asserts that the trial court erred to the extent it concluded that Sierra's claims fall within the commercial-speech exemption because, in RigUp's view, Sierra failed to meet its burden to demonstrate that the fourth element and, alternatively, the third element are satisfied.
We turn first to RigUp's argument that Sierra failed to demonstrate that the fourth element under Castleman is satisfied. As previously discussed, the alleged communications on which Sierra's claims are based were statements made by RigUp recruiters and directed to consultants with independent-contractor agreements with Sierra. See VetMoves v. Lone Star Veterinarian Mobile Surgical Specialists PC, No. 02-19-00340-CV, 2020 WL 1887770, at *3, 2020 Tex. App. LEXIS 3195, at *7 (Tex. App.—Fort Worth Apr. 16, 2020, no pet.) (mem. op.) (“In determining whether the commercial-speech exemption applies, we look to the communications on which the challenged claim is based.”). Thus, as to the fourth element, the issue becomes whether Sierra has met its burden to establish that the consultants, as the “intended audience” of the RigUp recruiters' statements, were “actual or potential customers” of RigUp. See Tex. Civ. Prac. & Rem. Code § 27.010(b).
In support of its assertion that it met its burden to satisfy the fourth element, Sierra relies on statements made by Grimes in his affidavit describing Sierra's business model and the contractual relationship between oil and gas staffing firms, such as Sierra and RigUp, and the consultants. According to Grimes's affidavit, Sierra (and other staffing firms like Sierra, including RigUp) have two types of customers—“the client companies and the consultant.” While some consultants “are placed with client customers,” other consultants “bring oil and gas companies to Sierra,” meaning they contact Sierra about providing administrative services for a company with whom the contractor has already established a working relationship. Although, in this situation, Sierra does not place the consultant with the client company, it provides the same administrative services, and fees are paid under the same “split” arrangement. That is, “the staffing firm is paid a percentage of the fees generated by the consultant's work and paid by the client.” Finally, Grimes states that staffing firms like Sierra and RigUp “rely on their business transactions with both workers and clients to operate and receive consideration from both in exchange for their services in the form of split fee.” In Sierra's view, this evidence demonstrates that consultants hired by staffing firms like Sierra and RigUp are in fact “customers” and that, consequently, the intended audience of the RigUp recruiters' statements were “actual or potential customers” of RigUp's services.
Because the TCPA does not define “customer,” we give the term its “common and ordinary remaining.” See Texas State Bd. of Exam'rs of Marriage & Family Therapists v. Texas Med. Ass'n, 511 S.W.3d 28, 34-35 (Tex. 2017) (explaining that where statute does not define key term, we must apply “common, ordinary meaning unless a contrary meaning is apparent”). Under this standard, “customer” means “one that purchases a commodity or service.” See Customer, Merriam-Webster's Collegiate Dictionary 10th ed. (2000); Silguero v. CSL Plasma, 579 S.W.3d 53, 59 (Tex. 2019) (noting that “[t]he Texas Supreme Court often looks to dictionary definitions to shed light on the ordinary meaning of a statutory term”). Applying this meaning to the record in this case, we cannot conclude that Sierra met its burden to show that the Sierra consultants—“the audience of the statement or conduct at issue”—were “actual or potential customers” of RigUp.
Despite statements in Grimes's affidavit characterizing Sierra's consultants as “customers,” the pleadings and evidence establish that consultants are individuals with whom staffing firms like Sierra and RigUp contract for services. Specifically, these staffing firms hire consultants, pursuant to independent-contractor arrangements, to provide oil and gas services to its company clients. In exchange, the staffing firms provide certain administrative services to facilitate the company client's payment to the consultants for their work, and the staffing firm is paid a percentage of the fees generated. To prevent a consultant from later competing with Sierra directly for its company client's business, effectively eliminating Sierra's split from the arrangement, Sierra's independent-contractor agreement includes a non-compete provision. Under the arrangement between staffing firms and their consultants, as described by Sierra in its pleadings and by Grimes in his affidavit, consultants do not “purchase” services from staffing firms like Sierra and RigUp but instead agree to provide services on the staffing firm's behalf and are compensated for these services. See Customer, Merriam-Webster's Collegiate Dictionary 10th ed. In effect, consultants are the providers of labor, akin to employees or personnel, whom staffing firms like Sierra utilize to fulfill the requests of their customers and who agree not to compete with the firm for these customers in the future. Although staffing firms may, in some instances, obtain a company client's business as a result of its relationship with a particular consultant, we disagree with Sierra's contention that the consultants in these instances are “customers.”
Sierra has not met its burden to show that its consultants—the “intended audience” of the communications at issue—were “customers,” as that term is used in the commercial-speech exemption of the TCPA.3 Consequently, we cannot conclude that Sierra's claims fall within the commercial-speech exemption. See Tex. Civ. Prac. & Rem. Code § 27.010(b).
Sierra's Burden to Establish a Prima Facie Case
Because we have determined that the TCPA applies to Sierra's suit, we next consider RigUp's assertion that the trial court erred in denying its motion to dismiss because, according to RigUp, Sierra failed to carry its burden of establishing by clear and specific evidence a prima facie case for each essential element of the claims at issue. See id. § 27.005(c).
In the context of the TCPA, the phrase “clear and specific evidence” refers to the quality of evidence required, and the phrase “prima facie case” refers to the amount of evidence required to satisfy the nonmovant's burden. Grant, 556 S.W.3d at 883 (citing Serafine v. Blunt, 466 S.W.3d 352, 358 (Tex. App.—Austin 2015, no pet.)). A “prima facie case” “refers to evidence sufficient as a matter of law to establish a given fact if not rebutted or contradicted.” Lipsky, 460 S.W.3d at 590. “It is the ‘minimum quantum of evidence necessary to support a rational inference that the allegation of fact is true.’ ” Id. (quoting In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004) (orig. proceeding) (per curiam)); Grant, 556 S.W.3d at 882 (recognizing same). The terms “clear and specific,” given their ordinary meaning, mean the evidence used to support a prima facie case under the TCPA should be “free from doubt,” “sure,” “unambiguous,” and “explicit.” See Lipsky, 460 S.W.3d at 590. Although the trial court may consider pleadings as evidence under the TCPA, see Tex. Civ. Prac. & Rem. Code § 27.006(a); Serafine, 466 S.W.3d at 360, and the nonmovant plaintiff may satisfy its prima-facie burden using circumstantial evidence, the Act does require more than “mere notice pleading,” Lipsky, 460 S.W.3d at 590-91. Consequently, “clear and specific evidence” means that “the plaintiff must provide enough detail to show the factual basis for its claim.” Bedford v. Spassoff, 520 S.W.3d 901 (Tex. 2017) (quoting Lipsky, 460 S.W.3d at 591).
To prevail on its claim for tortious interference with contract, Sierra must establish: (1) the existence of a valid contract subject to interference; (2) that RigUp willfully and intentionally interfered with the contract; (3) that the interference proximately caused Sierra's injury; and (4) that it incurred actual damages or loss. See Community Health Sys. Prof'l Servs. Corp. v. Hansen, 525 S.W.3d 671, 689 (Tex. 2017); Prudential Ins. Co. of Am. v. Financial Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). Moreover, to prevail on a claim for tortious interference with contract, “a plaintiff must present evidence that the defendant interfered with a specific contract,” Amini v. Spicewood Springs Animal Hosp., LLC, No. 03-18-00272-CV, 2019 WL 5793115, at *7, 2019 Tex. App. LEXIS 9722, at *19 (Tex. App.—Austin Nov. 7, 2019, no pet.) (mem. op.); McDonald Oilfield Operations, LLC v. 3B Insp., LLC., 582 S.W.3d 732, 750 (Tex. App.—Houston [1st Dist.] 2019, no pet.), and “that some obligatory provision of the contract has been breached,” Better Bus. Bureau of Metro. Houston, Inc. v. John Moore Servs., Inc., 441 S.W.3d 345, 361 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (quoting Funes v. Villatoro, 352 S.W.3d 200, 213 (Tex. App.—Houston [14th Dist.] 2011, pet. denied)).
In its pleadings, Sierra generally alleges that RigUp recruiters approached unidentified Sierra consultants and that these recruiters induced the Sierra consultants to breach their independent-contractor agreements by telling them “that their ‘non-competes’ are ‘unethical’ and they do not need to worry about breaching their contracts with Sierra.” In its response to RigUp's motion to dismiss, however, Sierra presented evidence concerning two specific independent-contractor agreements that Sierra maintains were breached as a result of RigUp's conduct. Specifically, Sierra attached as an exhibit to Grimes's affidavit a copy of an independent-contractor agreement with a consultant named Christian Garrett and a copy of an independent-contractor agreement with a consultant named Mark Mulkern. In his affidavit, Grimes explains that he was informed through a Sierra supervisor that Garrett left Sierra in April 2018 without providing thirty days' written notice as required and then violated the non-compete provision in his agreement by joining RigUp and working at the same client company worksite that he had worked for when he was with Sierra. According to Grimes, Garrett's manager later learned that before leaving Sierra, a representative of RigUp had solicited Garrett at his worksite and through LinkedIn. Similarly, Grimes states in his affidavit that Mulkern notified his manager that RigUp had solicited him and that he intended to leave Sierra. After leaving Sierra in April 2018, Mulkern then continued working for the same company client through RigUp.
In sum, the pleadings and the evidence presented by Sierra show that RigUp solicited certain consultants—Garrett and Mulkern—to use the RigUp platform, that these consultants had independent-contractor agreements with Sierra, that each agreement contained a non-compete provision and a notice-of-termination requirement, and that Garrett and Mulkern breached these obligations. Therefore, Sierra offered clear and specific evidence as to the existence of specific contracts “subject to interference.” See Prudential Ins., 29 S.W.3d at 77. To maintain its claim that RigUp tortiously interfered with these contracts, however, Sierra was required to also present clear and specific evidence that RigUp acted “willfully and intentionally.” That is, Sierra was required to show that RigUp knowingly induced Garrett and Mulkern to breach their contractual obligations. See COC Servs. Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 671 (Tex. App.—Dallas 2004, pet. denied) (plaintiff must show that defendant knowingly induced one of contracting parties to breach its contractual obligations). Consequently, as part of establishing its prima facie case, Sierra was required to plead or present evidence of specific facts showing that when the RigUp recruiters engaged in the complained-of conduct, RigUp had knowledge of the existence of Garrett's and Mulkern's agreements with Sierra, or at least had knowledge of facts and circumstances that would lead a reasonable person to believe that these specific agreements existed. See Amigo Broad., LP v. Spanish Broad. Sys., 521 F.3d 472, 490 (5th Cir. 2008) (applying Texas law); Kelly v. Galveston County, 520 S.W.2d 507, 513 (Tex. Civ. App.—Houston [14th Dist.] 1975, no writ); see Restatement (Second) of Torts § 766 cmt. i (1979) (“Although the actor's conduct is in fact the cause of another's failure to perform a contract, the actor does not induce or otherwise intentionally cause that failure if he has no knowledge of the contract.”).
Based on our review of the pleadings and evidence, viewed in the light most favorable to Sierra, we cannot conclude that Sierra met its burden to present clear and specific evidence that RigUp was aware or should have been aware of Garrett's and Mulkern's contractual obligations to Sierra. For example, Sierra has not alleged or presented evidence of specific facts suggesting that RigUp recruiters told Garrett and Mulkern that their “ ‘non-competes’ are ‘unethical’ and they do not need to worry about breaching their contracts with Sierra.”4 In addition, we cannot agree with Sierra's contention that the October 2017 cease-and-desist letter establishes that it notified RigUp of its independent-contractor agreements as to Garrett and Mulkern. Although the October 2017 letter shows that Sierra informed RigUp that it believed RigUp was interfering with its independent-contractor agreements with its consultants, Sierra did not specifically identify by name any individuals with existing independent-contractor agreements with Sierra or otherwise provide information from which RigUp could have concluded that Garrett and Mulkern were Sierra consultants. In short, Sierra has not offered any factual details suggesting that RigUp was aware, or should have been aware, of the existence of Garrett's and Mulkern's agreements with Sierra when it solicited them to work for RigUp. As a result, Sierra has failed to establish a prima facie case for the essential element that RigUp “willfully and intentionally interfered” with specific contracts. Because Sierra has failed to present a prima facie case for each essential element of its claim for tortious interference with contract, we conclude that the trial court erred in denying RigUp's motion to dismiss as to that claim.
Finally, to maintain its unjust enrichment claim, Sierra was required to prove that RigUp obtained a benefit from Sierra by fraud, duress, or the taking of undue advantage. See Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). To prevail on its request for permanent injunctive relief, Sierra was required to demonstrate (1) a wrongful act, (2) imminent harm, (3) irreparable injury, and (4) no adequate remedy at law. See Long Canyon Phase II & III Homeowner's Ass'n v. Cashion, 517 S.W.3d 212, 224 (Tex. App.—Austin 2017, no pet.). In its response to RigUp's motion, Sierra does not explain what evidence and factual allegations, if any, support its claim of unjust enrichment or its request for a permanent injunction. Instead, Sierra asserts that its “evidence and factual allegations as to RigUp's wrongful interference with its consultants contracts form the basis of Sierra's requests for equitable relief” and that “for the same reasons the elements of tortious interference are established with clear and specific evidence, the elements of Sierra's equitable claims are likewise established.” As previously discussed, we have concluded that Sierra failed to establish with clear and specific evidence a prima facie case for its tortious-interference-with-contract claim. Accordingly, based on the record before us, we cannot conclude that Sierra established by clear and specific evidence a prima facie case for each essential element of its claim of unjust enrichment or its request for injunctive relief based on tortious interference.
Having determined that RigUp was entitled to dismissal under the TCPA, we reverse the trial court's order denying RigUp's motion to dismiss. We remand the case for the trial court to order dismissal of Sierra's claims and to consider any request for relief, including attorney's fees, consistent with section 27.009 of TCPA and with this opinion. See Tex. Civ. Prac. & Rem. Code § 27.009.
1. The Legislature recently amended the TCPA. See Act of May 17, 2019, 86th Leg., R.S., ch. 378, 2019 Tex. Gen Laws 684 (current version at Tex. Civ. Prac. & Rem. Code §§ 27.001-.011). The prior version, however, governs cases filed before September 1, 2019. See id. §§ 11-12, 2019 Tex. Gen. Laws at 687. Because this case was filed before September 1, 2019, all citations in this opinion to the TCPA are to the prior version.
2. RigUp contends that the trial court erred in denying its motion because (1) it met its initial burden to show that the TCPA applies to Sierra's claims; (2) the TCPA is not preempted by the Texas Covenants Not to Compete Act; (3) Sierra failed to show that its claims fall within the TCPA's commercial-speech exemption; and (4) Sierra failed to meet its burden to establish a prima facie case for each essential element of its claims.
3. Having concluded that Sierra has failed to meet its burden to show that the fourth element of the commercial-speech exemption is satisfied, we need not address RigUp's alternative argument that Sierra failed to meet its burden to show that the third element is satisfied because the statements are “about Sierra and not about RigUp.” See Tex. R. App. P. 47.1.
4. We recognize that in its live pleadings, Sierra alleges that RigUp recruiters approached unidentified Sierra consultants on some unspecified date and that these recruiters induced the Sierra consultants to breach their independent-contractor agreements by telling them “that their ‘non-competes’ are ‘unethical’ and they do not need to worry about breaching their contracts with Sierra.” While these allegations suggest that RigUp was at least aware that some consultants had existing agreements with Sierra and that these agreements included a non-compete provision, they stop short of showing that RigUp was aware that Garrett and Mulkern had existing agreements with Sierra.
Chari L. Kelly, Justice
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Docket No: NO. 03-19-00399-CV
Decided: July 16, 2020
Court: Court of Appeals of Texas, Austin.
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