S & S Emergency Training Solutions, Inc. v. Elliott

• Decision Date: 21 December 2018
• Docket Number: NO. 17-0628,17-0628
• Citation: 564 S.W.3d 843
• Parties: S & S EMERGENCY TRAINING SOLUTIONS, INC. d/b/a Emergency Medical Training Services, Petitioner, v. Sheila ELLIOTT, Respondent
• Court: Texas Supreme Court

564 S.W.3d 843

S & S EMERGENCY TRAINING SOLUTIONS, INC. d/b/a Emergency Medical Training Services, Petitioner,

v.Sheila ELLIOTT, Respondent

NO. 17-0628

Supreme Court of Texas.

Argued October 11, 2018

OPINION DELIVERED: December 21, 2018

Kenton J. Hutcherson, Chelsea E. King, Saisha P. Chandrasekaran, Hutcherson Law PLLC, Dallas TX, for Petitioner.

Byron K. Henry, Andrea K. Bouressa, Scheef & Stone, L.L.P., Frisco TX, Casey Sean Erick, Bennett Weston LaJone & Turner, P.C., Dallas TX, for Respondent.

Justice Johnson delivered the opinion of the Court.

S & S Emergency Training Solutions, Inc. d/b/a Emergency Medical Training Services (EMTS) sued a former employee for breaching nondisclosure agreements she signed in connection with her employment. The employee, Sheila Elliott, responded in part with a motion to dismiss under the Texas Citizens Participation Act (TCPA). TEX. CIV. PRAC. & REM. CODE § 27.003. The question is whether, in response to Elliott's motion to dismiss, EMTS provided clear and specific evidence of a prima facie case that she breached the agreements. The trial court answered "yes;" the court of appeals answered "no." Because we agree with the trial court that the answer is "yes," we reverse the judgment of the court of appeals and remand to the trial court for further proceedings.

I. Background

EMTS provides courses and training for emergency medical service providers. One of its courses qualified students to take the National Registry of Emergency Medical Technicians Exam, which is the test required to become a licensed paramedic. A paramedic education program such as that offered by EMTS must be nationally accredited for its graduates to be eligible to take the exam. A program may receive accreditation from an institution accrediting agency recognized by the U.S. Department of Education or through a consortium agreement with an entity that has already been accredited. 25 TEX. ADMIN. CODE § 157.32(f) (2017) (Tex. Dep't of State Health Servs., Emergency Medical Services Education Program and Course Approval); Comm'n on Accreditation of Allied Health Educ. Programs (CAAHEP), Standards & Guidelines for the Accreditation of Educational Programs in the Emergency Medical Services Professions 2–3 (2015), https://www.caahep.org/CAAHEP/media/CAAHEP-Documents/EMSPStandards2015.pdf. To fulfill the accreditation requirement, EMTS entered into a consortium agreement with Arlington Career Institute (ACI), an accredited institution.

In April 2013, EMTS contracted with Elliot for her to be its program director. As program director, Elliott would have access to information EMTS considered to be confidential. Thus, EMTS required her to sign nondisclosure agreements (NDAs). In 2014, Elliott signed an NDA to which both EMTS and ACI were parties. The NDA provided that Elliott would not use or disclose processes, information, records, or specifications of the consortium except in the course of her employment and for the benefit of the consortium. In 2015, Elliott signed another, similar, NDA to which EMTS and ACI were parties. In December 2015, Elliott wrote a letter to EMTS's CEO, Thomas Cellio III, requesting a raise. She claimed that as program director she had kept EMTS "running smooth and profitable." The day after she sent the letter she resigned.

After she resigned, Elliott filed complaints with the Texas Department of State Health Services in which she alleged that EMTS engaged in unlawful business practices. She sent copies of her complaints to ACI's CEO, Jon Vecchio, and notified potential employers of EMTS's graduates, such as police and fire departments, of her pending allegations. Elliott also communicated these allegations to some current and former EMTS students, and publicized this information on the internet. Following Elliott's actions, ACI withdrew from the consortium agreement with EMTS.

EMTS sued Elliott for breach of contract and moved for injunctive relief. It claimed she violated the NDAs by disclosing confidential information covered by the agreements. The trial court granted EMTS's motion and enjoined Elliott from disclosing EMTS's confidential information. Elliott responded with a motion to dismiss pursuant to the TCPA in which she contended that her actions were an exercise of her right to petition and her right of free speech. She maintained that the matters about which she communicated related to the training of emergency medical personnel, which is a matter of public concern. EMTS countered that Elliott contractually agreed to forgo her rights of free speech and petition as to confidential information covered by the NDAs. In the alternative, EMTS argued that it provided clear and specific evidence of a prima facie case of breach of contract, thus it was entitled to maintain its suit. The trial court denied Elliott's motion to dismiss without explanation. Elliott filed an interlocutory appeal. See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(12).

The court of appeals reversed and remanded with instructions to the trial court to dismiss the suit and award attorney's fees to Elliott. 559 S.W.3d 568, –––– (Tex. App.—Dallas 2017). The court noted that if the TCPA is invoked, reviewing a suit such as EMTS's entails a two-step analysis. Id. at ––––. The first step requires determining whether the defendant established that the plaintiff's suit was in response to the defendant's having exercised her constitutional right to free speech, petition, or association. See TEX. CIV. PRAC. & REM. CODE § 27.005(b). If the defendant establishes that she did, then the second step requires the plaintiff to establish a prima facie case of each essential element of its claim by clear and specific evidence. See id. § 27.005(c). The court of appeals concluded that Elliott was exercising her right to free speech because her communications touched on matters of public concern. 559 S.W.3d at ––––. It rejected EMTS's argument that Elliott could not satisfy the first step of the TCPA process because she had given up the rights on which that process would be based when she entered into the NDAs. Id. It did so on the basis that the NDAs were relevant to the second step of the process, but not to the first step. Id. (citing In re Lipsky , 460 S.W.3d 579, 586 (Tex. 2015) ). The appeals court then turned its analysis to the second step of the TCPA inquiry: did EMTS meet its burden of establishing, by clear and specific evidence, a prima facie case for its breach of contract claim? Id. at ––––. The court of appeals determined that EMTS established all the elements of a breach of contract claim except that EMTS did not show the disclosures caused it to suffer damages. Id. at ––––.

In this Court, EMTS contends that the court of appeals applied an erroneous standard regarding the damages element of its claim—the court measured the evidence by whether EMTS produced evidence of the specific amount of damages the disclosures caused instead of properly determining whether EMTS produced prima facie evidence that the disclosures simply caused it some damages. EMTS argues that it met the proper standard by providing evidence that ACI terminated the consortium agreement in response to Elliott's disclosures, which in turn caused EMTS to be unable to conduct its profitable paramedic courses. Alternatively, EMTS asserts that it established a prima facie case for specific performance and injunctive relief by clear and specific evidence. EMTS references evidence that it claims shows Elliott's disclosures caused ACI to terminate the consortium agreement it had with EMTS, and thus demonstrated imminent harm, irreparable injury, and lack of an adequate legal remedy.

Elliott argues that the court of appeals applied the correct standard, which requires more than the generalized, conclusory testimony of EMTS's CEO on which EMTS relies. Elliott also argues that EMTS's evidence failed to show that the courses it could no longer offer yielded a net profit. As to EMTS's argument regarding nonmonetary relief, Elliott maintains that EMTS failed to preserve error, and even if it preserved error, it did not present a prima facie case of the essential elements of those claims.

II. Law

When a party asserts that claims in a suit against it are "based on, relate[ ] to, or [are] in response to" its exercise of certain constitutional rights, then it may move for dismissal under the TCPA. TEX. CIV. PRAC. & REM. CODE § 27.003(a). If such a movant establishes by a preponderance of the evidence that the suit "is based on, relates to, or is in response to the party's exercise of: (1) the right of free speech; (2) the right to petition; or (3) the right of association," the case shall be dismissed unless the nonmovant "establishes by clear and specific evidence a prima facie case for each essential element of the claim in question." Id. § 27.005. In determining whether such motions to dismiss should be granted, courts are to consider the pleadings and supporting and opposing affidavits on which the claim or defense is based. Id. § 27.006(a).

The nonmovant's evidence of a prima facie case must be "clear and specific" in order to avoid dismissal, id. § 27.005(c), although the statute does not define "clear and specific." In Lipsky , we referenced "clear" as meaning " ‘unambiguous,’ ‘sure,’ or ‘free from doubt,’ " and "specific" as " ‘explicit’ or ‘relating to a particular named thing.’ " 460 S.W.3d at 590. We also determined that "prima facie case" as used in the statute means evidence that is legally sufficient to establish a claim as factually true if it is not countered. Id. In other words, a prima facie case is the "minimum quantum of evidence necessary to support a rational inference that the allegation of fact is true." Id. Direct evidence of damages is not required, but the evidence must be sufficient to allow a rational inference that some damages naturally flowed from the defendant's conduct. See id. at 591, 592 ; Sw. Battery Corp. v. Owen , 131 Tex. 423, 115 S.W.2d 1097,...