Dyer v. Medoc Health Servs., LLC
| Decision Date | 08 March 2019 |
| Docket Number | No. 05-18-00472-CV,05-18-00472-CV |
| Citation | 573 S.W.3d 418 |
| Parties | Todd DYER, PHRK Intervention, Inc., PHRK Intervention, LLC, and Southside Device, LLC, Appellants v. MEDOC HEALTH SERVICES, LLC and Total Rx Care, LLC, Appellees |
| Court | Texas Court of Appeals |
Joseph H. Gillespie, Gillespie Sanford LLP, Dallas, TX, for Appellants.
Robert M. Hoffman, James C. Bookhout, Marc D. Katz, Michael Mobley, Adam Pierson, Allison Reddoch, DLA Piper LLP, Dallas, TX, for Appellees.
Before Justices Whitehill, Molberg, and Reichek
Opinion by Justice Molberg
Appellees Medoc Health Services, LLC and Total Rx Care, LLC sued appellants Todd Dyer, PHRK Intervention, Inc., PHRK Intervention, LLC, and Southside Device, LLC, alleging causes of action for misappropriation of trade secrets, tortious interference, civil conspiracy, and conversion.1 Appellants filed a motion to dismiss pursuant to the Texas Citizens Participation Act, TEX. CIV. PRAC. & REM. CODE ANN . §§ 27.001 –.011 (the TCPA). Following a hearing, the trial court denied the motion.
In four issues, appellants assert the trial court erred by denying the motion to dismiss because the TCPA applies to appellees' claims; appellees failed to produce clear and specific evidence of a prima facie case for each essential element of their causes of action; and appellants produced evidence of each essential element of a valid defense and, if the motion to dismiss should have been granted, appellants are entitled to an award of attorneys' fees, costs, and sanctions. In a fifth issue, appellants argue that, included within the first four issues, is the "broader issue of whether the trial court committed error in denying Appellants' TCPA motion to dismiss."
We conclude appellants failed to carry their burden of establishing the TCPA applies to appellees' claims. Accordingly, we affirm the trial court’s denial of appellants' motion to dismiss.
Medoc is a healthcare management services company whose customers include pharmacies, laboratories, healthcare imaging providers, surgical device and durable equipment providers, and practice management service providers. Total Rx is a community pharmacy that provides medications and complex pharmaceutical products to patients. Total Rx is an affiliate and customer of Medoc. Medoc manages the "administrative side" of Total Rx’s business, including human resources, marketing, accounting, and information technology.
Appellees use a proprietary software management system to efficiently process prescriptions from physicians, as well as orders and shipments of pharmaceuticals. Kevin Kuykendall, the chief executive officer of Medoc and manager of Total Rx, is aware of no other software that has the state-of-the-art capabilities of appellees' software. Appellees also possess a significant amount of confidential business information, including customer lists, sales data, pharmacy orders for medicines, and patient prescription data.
Appellees do not publicly sell, share, or disclose their proprietary software. They also take steps to protect their proprietary software and confidential business information, including requiring valid login credentials to access this information and implementing network and computer security protocols.
Nicolas Basiti, Medoc’s former chief technology officer, was one of the Medoc employees who developed the proprietary software. Between July 2017 and October 2017, Basiti and Dyer, the principal owner and primary manager of the PHRK Intervention entities and Southside, exchanged over 1,000 text messages. Some of those messages discussed "a business thing" proposed by Basiti that might be "worth something." Basiti told Dyer the proposal included an "entire infrastructure," and he was "ready to transfer it all." Basiti indicated he was "duplicating every database file folder system," as well as "[e]very email every file every scripts every contract." Basiti and Dyer discussed how to divide the "gross revenue" they would receive "off this."
After Basiti told Dyer they needed a "server or two" to "handle" the information, Dyer purchased two servers. Basiti "set up" the servers and indicated he would "show [Dyer] how to look at the data on them." Dyer unsuccessfully attempted to access the information on the servers with a user name and password provided by Basiti. He also requested that Basiti "search" for specific information and send it to Dyer’s email address. Finally, Dyer asked Basiti if the software could be used by Southside for case reporting and inventory "exactly" how Medoc was using it.
After appellees learned Basiti was attempting to misappropriate their proprietary software and other confidential information, they conducted an investigation and discovered the text messages between Basiti and Dyer. Basiti subsequently signed an acknowledgment stating he had conspired with Dyer to use and disclose Medoc’s confidential information, proprietary software, and intellectual property for the purpose of aiding and abetting a competitive business. A forensic analysis of the servers purchased by Dyer showed that information belonging to Medoc was on the servers.
Appellees sued appellants, asserting claims for misappropriation of trade secrets, see TEX. CIV. PRAC. & REM. CODE ANN . §§ 134A.001 –.008, tortious interference with existing contract and with prospective business relations, civil conspiracy, and conversion. As a factual basis for their claims, appellees relied on the text messages, as well as "discussions" and "negotiations," between Basiti and Dyer.2 Appellees sought both damages and injunctive relief.3
Appellants filed a motion to dismiss under the TCPA, asserting (1) the text messages between Basiti and Dyer were communications that constituted the exercise of the right of free speech, of association, and to petition; (2) appellees could not produce clear and specific evidence of each essential element of their claims; and (3) appellees could not overcome appellants' valid defenses. In support of their motion, appellants relied on Dyer’s declaration in which he stated he was not in competition with appellees and never used the proprietary software. Although Dyer admitted he explored the possibility of having Basiti create software for Southside, he stated he believed Basiti would use his personal knowledge to create the software and would not copy appellees' software.
Dyer also stated he learned in April or May of 2017 that a former partner of Medoc had been contacted by an FBI agent. The agent asked questions about Medoc, and Dyer’s name "came up" during the questioning. Dyer stated he "later" learned from Basiti that Kuykendall had directed Basiti to delete data and communications from Medoc’s computer system in response to the federal investigation and "upon information and belief" Basiti used Dyer’s servers to preserve that information. Dyer also stated he had seen comments on an internet site indicating Medoc was being investigated by the FBI.
On February 16, 2018, Dyer was served with a subpoena from a federal grand jury requiring him to produce a "copy of any electronic computer image or server copy relating to Medoc Health Services, LLC, and/or Total Rx Care, LLC, including any electronic files provided to Todd Dyer by Nicolas Basiti." Dyer complied with this subpoena.
Appellees responded to the motion to dismiss, arguing the TCPA did not apply to any of their claims against appellants and, even if it did, they could establish a prima facie case against appellants on each of the claims. As relevant here, appellees relied on a declaration from Kuykendall in which he described appellees' proprietary software and confidential business information and the investigation into whether Basiti was misappropriating appellees' information, Basiti’s acknowledgment that he conspired with Dyer to use and disclose appellees' software and information, and the text messages between Basiti and Dyer.
After conducting a hearing, the trial court denied the motion to dismiss, and appellants brought this interlocutory appeal.
The TCPA "protects citizens ... from retaliatory lawsuits that seek to intimidate or silence them." In re Lipsky , 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding).
The stated purpose of the statute 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." TEX. CIV. PRAC. & REM. CODE ANN . § 27.002 ; see also ExxonMobil Pipeline Co. v. Coleman , 512 S.W.3d 895, 898 (Tex. 2017) (per curiam) ( Coleman II ). We construe the TCPA "liberally to effectuate its purpose and intent fully." TEX. CIV. PRAC. & REM. CODE ANN . § 27.011(b) ; see also State ex rel. Best v. Harper , 562 S.W.3d 1, 11 (Tex. 2018).
"To effectuate the statute’s purpose, the Legislature has provided a two-step procedure to expedite the dismissal of claims brought to intimidate or to silence a defendant’s exercise of [the] First Amendment Rights" protected by the statute. Coleman II , 512 S.W.3d at 898 ; see also TEX. CIV. PRAC. & REM. CODE ANN . §§ 27.003(a), .005(b); Youngkin v. Hines , 546 S.W.3d 675, 679 (Tex. 2018). The movant bears the initial burden of showing by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the movant’s exercise of the right of free speech, the right of association, or the right to petition. TEX. CIV. PRAC. & REM. CODE ANN . § 27.005(b) ; see also S & S Emergency Training Sols., Inc. v. Elliott , 564 S.W.3d 843, 847 (Tex. 2018). If the movant makes this showing, the burden shifts to the non-movant to establish by clear and specific evidence a prima facie case for each essential element of its claims. TEX. CIV. PRAC. & REM. CODE ANN . § 27.005(c) ; see Elliott , 564 S.W.3d at 847. However, even if the non-movant satisfies this...
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