Don't Be Surprised When an Employment Case Is SLAPP'ed
Consider a scenario that many in-house lawyers and HR professionals are all-too familiar with: an employee is terminated or leaves the company. After the employee’s departure, the company learns the employee has gone to work for a competitor, and after checking the employee’s computer, the company learns he plugged in a flash drive and downloaded files containing confidential information, including customer lists, just days before leaving. Under this scenario, the employee signed an employment agreement containing non-compete, non-solicit, and confidentiality provisions.
To protect the company’s proprietary and potential trade secret information, and to enforce the employee’s obligations to refrain from unfair competition and solicitation, the company brings a lawsuit. Shortly after filing the petition in Texas state court, the company is blindsided by a motion to dismiss under the Texas Citizens Participation Act (the “TCPA”), Texas’s anti-SLAPP statute, bringing the litigation to a grinding halt, staying discovery, and requiring a hearing and a ruling from the judge before the case can move forward. Anti-SLAPP statutes, like Texas’s, generally seek to protect constitutionally protected speech by affording defendants a procedural vehicle to dismiss claims premised on protected speech.
Although it may come as a surprise, as we discussed here, a broad range of employment claims, including restrictive covenant and trade secret litigation like the example above, may be subject to dismissal under Texas’s anti-SLAPP statute. There is nothing in the TCPA that explicitly exempts these types of lawsuits from dismissal under the statute. While some have pointed to the commercial-speech exemption to the TCPA to argue that Texas’s anti-SLAPP statute should not apply where a defendant’s conduct was related to commercial pursuits, such as joining a competitor and disclosing a former employer’s trade secrets for business gain, the Texas Supreme Court’s recent decision in Castleman v. Internet Money Limited — which interpreted the commercial-speech exemption narrowly — indicates the exemption will not apply to every case involving commercial activities. Despite being a defamation, as opposed to a trade secret or restrictive covenant, case, the Castleman court’s stringent four-part test for whether the commercial-speech exemption applies is likely to narrow the types of cases that fit within the exemption, including many trade secret and employment-contract claims.
This narrow interpretation of a key exemption to the TCPA reiterates how important it is for employers to be mindful of the potential for anti-SLAPP arguments in their cases against employees, even before filing a lawsuit. Once a motion to dismiss under the TCPA is filed, all other activity in the case (other than discovery related to the anti-SLAPP motion) must cease until the court reaches a decision on that motion, which is then subject to immediate appeal. Accordingly, a company should draft its petition with an eye toward whether any allegations are covered by the TCPA. If so, a plaintiff will have to “establish by clear and specific evidence a prima facie case for each essential element of the claim in question” in order to survive anti-SLAPP dismissal. In light on this, companies must be ready to devote significant time and resources to marshalling the evidence necessary to combat a TCPA motion, and should consider the risk of a TCPA motion as part of the analysis for whether to file a lawsuit in the first place.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.