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UPDATE: Governor Abbott signed this bill into law on June 2, 2019.
Significant changes to the Texas Citizens Participation Act, or TCPA, are on the horizon. Among other things, if signed into law by the governor, the amendments to the TCPA found in House Bill 2730 may provide some new statutory construction arguments to parties who believe the statute should be more narrowly construed to focus on the protection of freedom of speech and association that involve matters of public concern, akin to similar laws in other jurisdictions.
The evidence necessary to survive a TCPA challenge would be clarified to clearly allow the use of the type of evidence that would be admissible in a summary judgment motion proceeding. And, disputes over trade secrets, nondisparagement contract violations and covenants not to compete would be specifically excluded from its coverage.
By way of background, the purpose of the TCPA is to protect citizens who petition or speak on matters of public concern from retaliatory lawsuits that seek to intimidate or silence them. It allows the movant to file a motion to dismiss a cause of action as long as it is filed within 60 days of the movant being served with the legal action. If the trial court denies the motion to dismiss, the movant has a right to an expedited appeal to a court of appeal.
On May 17, 2019, the Senate passed H.B. 2730 with 31 yeas and 0 nays. The House previously passed the bill with 143 yeas, 1 nay, and 2 present, not voting. Given the overwhelming bipartisan support for this amendment, it seems clear that the Legislature felt compelled to act. This is not the first legislative attempt to modify what is considered by most practitioners to be the broadest anti-SLAPP (strategic lawsuits against public participation) law in the country. In 2017, for example, Rep. J.M. Lozano, R-Texas, introduced a bill to narrow the TCPA to the exercise of constitutional rights; however, the bill did not make it out of the House committee.
If approved by the governor, the amendments to the TCPA will become effective on Sept. 1, 2019. This article provides some notes of interest regarding H.B. 2730 for Texas unfair competition practitioners.
H.B. 2730 amends the definition of a “matter of public concern” by removing the nonexhaustive list of categories that were deemed matters of public concern and replacing it with more generalized defining terms like “a subject of concern to the public.” Basically, it rearranges the words in an attempt to better define the term of art. Given the seemingly purposeful vagueness of the reworded definition, it is unclear whether courts will continue to rely on pre-amendment court decisions deeming certain speech or activity to be matters of public concern. It also remains to be seen whether the exclusion of the nonexhaustive list will be utilized to exclude matters like “services in the marketplace,” which was a listed category in the TCPA that many unfair competition practitioners relied upon to argue the application of the TCPA.
The bill also expands the definition of “matter of public concern” to specifically include “activity,” not just communications. However, the bill narrows the definition of “exercise of the right of association” by requiring communication or activity to relate to a governmental proceeding or a matter of public concern. The bill’s language also narrows the scope of the TCPA by removing the current provision that the action need only “relate to” a party’s right to petition, free speech or right of association as defined by the TCPA.
The bill then proposes to broaden the definition of “legal action” in Texas Civil Practice & Remedies Code §27.001(6) by adding a claim for “declaratory relief” to the definition. Currently, some courts of appeal have held that a claim for declaratory relief does not constitute a “legal action.”
The bill further provides a filing framework timeline that is consistent with Texas and local rules regarding other dispositive motions — the movant must provide 21 days’ notice before the date of the hearing and the nonmovant’s response is due no later than seven days prior to the date of the hearing. The bill allows the stated deadlines to be modified by the agreement of the parties or by order of the court.
Similarly, the bill removes the 60-day bar for filing the motion to dismiss by allowing the parties to extend the deadline by agreement. The inclusion of the filing framework and its recognition of the parties’ and court’s ability to control their own docket, provides practitioners much-needed clarity, flexibility and control. It also extinguishes the movant’s ability to file a motion to dismiss and set it for hearing three days later, a tactic that otherwise would grant a substantial advantage over the nonmovant by requiring it to respond and produce evidence in such an expedited manner.
Importantly, the bill alters the movant’s burdens of proof required under the first and third steps of the TCPA analysis. H.B. 2730 lowers the movant’s burden to prove that the TCPA applies, eliminating the preponderance of the evidence standard and requiring instead that the movant simply “demonstrates” that the legal action in question is covered by the TCPA. The bill heightens the burden to prove an affirmative defense, requiring a party to show it is entitled to judgment as a matter of law.
Currently, the TCPA’s third-step analysis merely requires that an affirmative defense be proven by a preponderance of the evidence. The bill also clarifies that the court may consider evidence that would be admissible under the summary judgment standard, not simply pleadings and affidavits. In addition, the bill changes the TCPA’s mandatory award of sanctions to a noncompulsory award for a successful movant.
Of potential significance to Texas unfair competition lawyers, H.B. 2730 specifically exempts employment-related legal actions seeking “recovery for misappropriation of trade secrets or corporate opportunities” or “to enforce a non-disparagement agreement or a covenant not to compete.” It further exempts deceptive trade practice and common law fraud legal actions. Nonetheless, due to the specificity of these exemptions, but lack of applicable definitions, H.B. 2730 leaves open the question of whether claims based on employee and/or customer nonsolicitation agreements are also exempt.
H.B. 2730 offers many solutions to resolve the substantial impact the TCPA has had on unfair competition lawsuits in Texas. However, several outstanding questions remain regarding the applicability and scope of the TCPA.
This article was first published in Law360.