Craig v. Tejas Promotions, LLC

• Decision Date: 03 May 2018
• Docket Number: NO. 03-16-00611-CV,03-16-00611-CV
• Citation: 550 S.W.3d 287
• Parties: Bruce CRAIG; Tyler Craig; and Tejas Vending, LP, Appellants v. TEJAS PROMOTIONS, LLC, Appellee
• Court: Texas Court of Appeals

550 S.W.3d 287

Bruce CRAIG; Tyler Craig; and Tejas Vending, LP, Appellants

v.TEJAS PROMOTIONS, LLC, Appellee

NO. 03-16-00611-CV

Court of Appeals of Texas, Austin.

Filed: May 3, 2018

The Honorable J. Woodfin Jones, Mr. George V. Basham III, Mr. Darryl W. Pruett, Mr. Glenn K. Weichert, Austin, for Appellants.

Mr. Michael L. Navarre, Mr. Matthew R. Beatty, Austin, Ms. Brittney Mollman, for Appellee.

Before Justices Puryear, Pemberton, and Goodwin

OPINION

Bob Pemberton, Justice

This is an appeal from an order denying a motion for relief under the Texas Citizens Participation Act (TCPA), a statute whose features have been analyzed extensively in this Court’s prior decisions.¹ One of those prior decisions— Autocraft —squarely requires reversal of the district court’s denial of the TCPA motion with respect to a common-law civil-conspiracy claim that had been founded on alleged misuse of trade secrets and confidential information.² But another aspect of the appeal presents questions of first impression regarding the use of a TCPA motion to attack claims for declaratory relief under the Uniform Declaratory Judgments Act (UDJA).³ Under the circumstances here, we hold that the district court did not err in denying the TCPA motion as to the challenged declaratory claims.

BACKGROUND

Appellee Tejas Promotions, LLC (which we will term "Promotions" to avoid confusion with its similarly named opponent—a similarity that is also a key point of emphasis in Promotions’s claims) is engaged in what it terms the "electronic sweepstakes" industry. As depicted in the pleadings and affidavits, Promotions’s business entails distributing to retail establishments, such as bars and pool halls, "sweepstakes promotional software" run on electronic games that patrons in such establishments can play for a fee. Promotions is essentially a middleman—it enters into licensing agreements under which it distributes the "sweepstakes promotions" of various software vendors, and in turn enters into sub-licensing agreements with the retail establishments whereby Promotions places the "promotions" in those locations and is compensated with a share of the net revenues generated by those attractions. Promotions asserts that the identities of both its upstream vendors and its sub-licensees, as well as the terms of the agreements governing their respective relationships, are "extremely valuable and confidential." It claims trade secrets in a "unique and valuable business model" and underlying "market research, marketing techniques, ... its software inventory, its customer base, and its pricing strategies."

The genesis of the underlying litigation, according to Promotions, was a series of discussions or negotiations it previously undertook with appellant Bruce Craig regarding Bruce’s possible purchase of Promotions’s assets, either personally or through an affiliated entity.⁴ The transaction ultimately did not go forward,⁵ but the discussions had progressed to an extent that Promotions and Bruce had signed a "Mutual Non-Disclosure Agreement" (NDA) that contemplated the parties' sharing of specified "Confidential Information" with each other and restricted use and dissemination of that information. Promotions alleges that it had subsequently shared with Bruce "Confidential Information" that "included trade secret and proprietary data pertaining to [Promotions’s] vendors, software, and clients" before discussions concluded. Thereafter, Promotions alleges, Bruce teamed up with his son, Tyler, in forming the deceptively named Tejas Vending , L.P. (Vending); divulged to Tyler and Vending Promotions’s trade secrets and other NDA-defined "Confidential Information"; and joined with them in using that information to wrest away from Promotions both a key upstream software vendor and various of Promotions’s sub-licensees.

Based on these factual allegations, Promotions asserted five sets of claims for relief in its original petition, which can be summarized as follows:

(1) Claims for damages and attorney’s fees against Bruce for allegedly breaching the NDA.⁶

(2) Claims for damages under Chapter 134A of the Civil Practice and Remedies Code against Bruce, Tyler, and Vending for alleged "misappropriation" of "trade secrets" in violation of that statute.⁷

(3) Claims for temporary and permanent injunctive relief against Bruce, Tyler, and Vending to restrain their use and dissemination of "Confidential Information" and to compel its return.⁸ Promotions pleaded that these claims were based on both the NDA (which contained a provision entitling a "Discloser to obtain injunctive relief against the threatened breach of this Agreement or the continuation of any such breach by Recipient") and Chapter 134A (which similarly authorized injunctive relief to remedy "actual or threatened misappropriation" of "trade secrets"⁹ ), as well as the general authorizations in Chapter 65 of the Civil Practice and Remedies Code¹⁰ and Rule 680 of the Texas Rules of Civil Procedure.¹¹

(4) A claim for damages against Bruce, Tyler, and Vending based on a common-law theory of "conspiracy to misappropriate trade secrets."

(5) Several distinct claims for declaratory relief under the UDJA, the details of which we will reserve until they become relevant to the analysis.

Bruce, Tyler, and Vending joined in a motion under the TCPA seeking dismissal, attorney’s fees, and sanctions as to only two of Promotions’s five sets of claims—the damages claim based on a common-law conspiracy theory and the declaratory claims. The motion thus did not attack Promotions’s claims for damages or injunctive relief that were founded on its alleged causes of action for breach of the NDA or Chapter 134A violations, nor otherwise attack Promotions’s claims for injunctive relief. The predicate for appellants' motion—the asserted basis for meeting their "initial burden" of showing the TCPA’s "applicability" as to the two sets of challenged claims¹² —was that Promotions’s pleading allegations demonstrated that those claims were "based on, relate[d] to, or [were] in response to" appellants' "exercise of the right of association"—namely, Bruce’s "communications" (a term the TCPA defines to "include[ ] the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic"¹³ ) of the alleged trade secrets and other "Confidential Information" to and among the other appellants in furtherance of the group’s alleged joint wrongdoing.¹⁴ Assuming so, appellants further disputed that Promotions could meet its burden to establish "by clear and specific evidence a prima facie case for each essential element of the claim[s] in question,"¹⁵ and that, regardless, the record established defenses to each of those claims.¹⁶ Among these asserted defenses were that Promotions’s common-law "conspiracy to misappropriate trade secrets" claim was preempted by Chapter 134A¹⁷ and that the district court "lacked jurisdiction" to award the declaratory relief Promotions had requested.¹⁸

After appellants filed their TCPA motion, Promotions amended its petition to nonsuit by omission its common-law conspiracy claim and to amend some of the declaratory claims. Promotions also filed a response to appellants' TCPA motion that joined issue—contesting whether appellants had met their initial burden, presenting affidavits and documentary evidence purporting to establish a "prima-facie case," and attacking appellants' "defenses"—only with respect to Promotions’s declaratory claims. It made no such attempt with respect to the now-nonsuited conspiracy claim, perceiving that the claim was "no longer part of this case." However, Promotions viewed appellants' TCPA motion and its response as addressing both the amended versions of its declaratory claims and the prior versions, perceiving the amended versions to be nonsubstantive refinements of the prior ones. Promotions further prayed for the award of attorney’s fees and costs that TCPA Section 27.009 authorizes upon a finding that a motion "is frivolous or solely intended to delay."¹⁹

Following a hearing at which the parties presented only argument, the district court signed an order denying appellants' TCPA motion but reserving for further hearing Promotions’s request for attorney’s fees under Section 27.009.²⁰ Before that hearing was held, however, appellants filed a notice of appeal from the order denying their TCPA motion,²¹ triggering an automatic statutory stay of all trial-level proceedings in their then-existing state.²²

ANALYSIS

The three appellants collectively present two issues on appeal. In their first issue, appellants insist that the district court erred in denying their TCPA motion as to Promotions’s now-nonsuited common-law conspiracy claim. In the second issue, Tyler Craig and Vending—but not Bruce Craig—challenge the district court’s denial of the TCPA motion as to the claims that Promotions has asserted under the UDJA in either their amended or original forms.

As appellants' issues presume, and Promotions seems to acknowledge on appeal, any nonsuit of claims by Promotions did not entirely moot appellants' TCPA motion challenging those claims—appellants could continue to pursue their requests for attorney’s fees incurred in defending those claims prior to their voluntary dismissal, as well as for the sanctions the Act would prescribe.²³ Consequently, appellants can properly complain on appeal of not only the district court’s denial of their motion as to Promotions’s declaratory claims, but also its denial with respect to Promotions’s now-nonsuited conspiracy claim. Conversely, because appellants did not challenge any other claims through timely TCPA motion, they have failed to preserve, and therefore have waived, any potential entitlement to TCPA relief as against Promotions’s claims for damages or injunctive relief that were founded on its causes of action for breach of the NDA or for Chapter 134A violations, or any other claims by Promotions for...