Opinion
NO. 14-19-00127-CV
04-07-2020
JEFFREY A. LANGLEY AND ALLIANT INSURANCE SERVICES, INC., Appellants v. INSGROUP, INC., Appellee
On Appeal from the 189th District Court Harris County, Texas
Trial Court Cause No. 2018-82219
MEMORANDUM OPINION
Appellants Jeffrey Langley and Alliant Insurance Services bring this interlocutory appeal of the trial court's order denying their motion to dismiss under the Texas Citizens Participation Act (TCPA). See Tex. Civ. Prac. & Rem. Code Ann. § 27.002 et. seq. In seven issues, Langley and Alliant challenge the trial court's ruling arguing (1) the TCPA is not preempted by the Texas Covenants Not to Compete Act; (2) the challenged claims are related to Langley and Alliant's right of association and are covered by the TCPA; and (3) Insgroup failed to establish by clear and specific evidence a prima facie case for each element of each of its causes of action. Concluding that Insgroup's causes of action fall within the commercial speech exception of the TCPA, we affirm the trial court's order.
BACKGROUND
The plaintiff in this case is an insurance company. The defendants are Langley, who worked for Insgroup from 2015 through 2018, and Alliant, another insurance company for whom Langley began working in November 2018.
In May 2015 Langley began selling insurance for Insgroup. Langley signed a Producer Agreement (the Agreement), which was for a one-year term that would be automatically renewed each year. The Agreement could be terminated by either party giving at least 60 days' written notice. The Agreement provided that Langley would be compensated in the form of salary plus commissions on a sliding salary scale for the first three years. The Agreement also provided a commission schedule under which Langley would be compensated. It is undisputed that after the third year of the Agreement Langley would no longer receive a salary and would be paid on commission alone.
Insgroup agreed to provide Langley with certain confidential information in the form of client lists including what Insgroup called "Restrictive Accounts." In exchange for this information Langley agreed to be bound by a non-compete provision, which stated in material part that he would not solicit business from the Restrictive Accounts, and that he would not divert business from Insgroup. The Agreement bound Langley to these provisions for two years.
In May 2018, when the Agreement was set to automatically renew, Langley discussed his compensation with a supervisor. Langley understood that he would no longer receive a salary from Insgroup and asked whether he would still have health insurance, workers' compensation coverage, and the ability to participate in a 401k plan. A human resources representative did not specifically answer Langley's questions about benefits but told him not to "worry about it." In June 2018, the first month Langley was not a salaried employee, Langley learned that he was unable to contribute to the firm's 401k program. Langley remained unsure about his eligibility for health insurance and other benefits.
In August 2018 Langley was given another Producer Agreement, which changed his employment status to that of an independent contractor. The new agreement also removed undefined "fringe benefits" and workers' compensation benefits. Langley refused to sign the new agreement. Effective June 1, 2018, Insgroup paid Langley as an independent contractor despite the fact that the Agreement had automatically renewed and Insgroup had not given 60 days' notice of termination of the Agreement. Insgroup did not withhold payroll taxes, deduct health insurance premiums, or withhold contributions for a 401k. Insgroup proceeded as if Langley had signed the new agreement, which he had not.
Langley subsequently accepted employment with Alliant in November 2018. Insgroup learned that after Langley began working for Alliant, he approached three of Insgroup's clients from the Restrictive Accounts list. Based on Langley's contact of the clients Insgroup sued Langley for breach of the non-compete agreement and tortious interference with Insgroup's contracted clients. Insgroup subsequently amended its petition to include causes of action alleging tortious interference against Alliant, breach of fiduciary duty against Langley, and violation of the Texas Uniform Trade Secrets Act against Langley.
The trial court denied Insgroup's application for temporary injunction and Insgroup filed a motion for reconsideration. In its motion for reconsideration Insgroup argued that Langley continued as an enrollee in Insgroup's group health insurance plan after May 20, 2018. Insgroup attached the affidavit of Ryan Shinkle, the custodian of records for Insgroup, to the motion for reconsideration. In the affidavit Shinkle stated that Langley was enrolled in Insgroup's health insurance plan at the time he left Insgroup.
Also attached was the affidavit of Charlene Ulmer, a senior account manager of Insgroup. Ulmer averred that Langley had misrepresented to Apache, a client, that Insgroup and Alliant were merging. According to Ulmer, Langley used this misrepresentation to lure Apache away from Insgroup as a client. William Covington, a vice president at Insgroup, filed an affidavit in which he averred that Langley had also signed Morrell, another client. Covington was able to thwart Langley's attempt to sign a third client by contacting them before Langley could contact them, but averred that "the harm to Insgroup posed by Mr. Langley is imminent."
In its second amended petition, Insgroup sought injunctive relief pursuant to the Texas Uniform Trade Secrets Act (TUTSA). See Tex. Civ. Prac. & Rem. Code Ann. § 134A.003. Insgroup did not present evidence to the trial court as to how the trial court's order denying the temporary injunction ran afoul of the TUTSA. The trial court denied Insgroup's application for temporary injunction and Insgroup appealed. Insgroup's appeal is the subject of another appeal pending in this court. See Insgroup v. Langley and Alliant Ins. Servs., No. 14-18-01071-CV.
Langley and Alliant subsequently moved to dismiss Insgroup's suit under the TCPA. Insgroup filed a response and asserted three independent reasons for denying the motion to dismiss. First, Insgroup argued that the TCPA was preempted by the Texas Covenant Not to Compete Act. Second, Insgroup argued that its legal action fell within the ambit of the TCPA's commercial speech exemption. And third, Insgroup argued that the pleadings and evidence established a prima facie case for every essential element of its causes of action.
Without stating its reasons, the trial court signed an order denying Langley and Alliant's motion. Langley and Alliant now challenge that ruling in this interlocutory appeal.
ANALYSIS
A. Standard of Review and Governing Law
We consider whether the trial court properly refused to dismiss Insgroup's suit under the TCPA, which is codified in Chapter 27 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code §§ 27.001-.011. The TCPA is an anti-SLAPP law; "SLAPP" is an acronym for "Strategic Lawsuits Against Public Participation." Fawcett v. Grosu, 498 S.W.3d 650, 654 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) (op. on reh'g). The TCPA is intended "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 § 27.002; Cox Media Grp., LLC v. Joselevitz, 524 S.W.3d 850, 859 (Tex. App.—Houston [14th Dist.] 2017, no pet.). The TCPA "protects citizens from retaliatory lawsuits that seek to intimidate or silence them" from exercising their First Amendment freedoms and provides a procedure for the "expedited dismissal of such suits." In re Lipsky, 460 S.W.3d 579, 586 (Tex. 2015). We construe the TCPA liberally to effectuate its purpose and intent fully. See Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex. 2018); ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 899 (Tex. 2017); Tex. Civ. Prac. & Rem. Code § 27.011(a).
The Legislature recently amended the TCPA. Those amendments became effective September 1, 2019. In this opinion, all citations to the TCPA refer to the pre-amendment version that was in effect at the time Insgroup filed its suit.
To further its stated goals, the TCPA establishes a mechanism for summary dismissal of lawsuits that unacceptably threaten the rights of free speech, the right to petition, or the right of association. See Lipsky, 460 S.W.3d at 589; Fawcett, 498 S.W.3d at 655. A movant invoking the act's protections must show first, by a preponderance of the evidence, that the plaintiff's legal action is "based on, relates to, or is in response to" the defendant's exercise of one or more of the enumerated rights. Lipsky, 460 S.W.3d at 586. If the movant makes the initial showing, the burden shifts to the nonmovant to establish by clear and specific evidence a prima facie case for each essential element of the claim in question. See id. at 587. "Prima facie case" refers to the quantum of evidence required to satisfy the nonmovant's minimum factual burden and generally refers to the amount of evidence that is sufficient as a matter of law to support a rational inference that an allegation of fact is true. See id. at 590; Deaver v. Desai, 483 S.W.3d 668, 675-76 (Tex. App.—Houston [14th Dist.] 2015, no pet.).
Regardless of any such defenses, a nonmovant can avoid dismissal by establishing that its legal action is exempt from the TCPA under a specific statutory exemption. Tex. Civ. Prac. & Rem. Code Ann. § 27.010. Whether the parties have met these respective burdens is a question of law that we review de novo. See Dallas Morning News, Inc. v. Hall, 579 S.W.3d 370, 377 (Tex. 2019).
In the trial court, Langley and Alliant were the TCPA movants, and they argued that Insgroup's legal action was a retaliatory suit based on their exercise of the right of association. For the sake of argument, we assume without deciding that Langley and Alliant were correct and that they satisfied their initial burden. The question then becomes whether Insgroup satisfied its burden as the nonmovant.
B. Commercial Speech Exemption of the TCPA
Attacking the TCPA motion on multiple fronts, Insgroup argued that it established a prima facie case for its legal action, that its legal action was exempt under the TCPA's commercial speech exemption, and that the TCPA was preempted by another statute. We need only address the commercial speech exemption because it is dispositive. See Hieber v. Percheron Holdings, LLC, 591 S.W.3d 208, 213 (Tex. App.—Houston [14th Dist.] 2019, pet. denied).
Langley and Alliant argue that the commercial speech exception only applies to their claims for tortious interference, not their other causes of action. For this proposition they cite this court's opinion in Abatecola v. 2 Savages Concrete Pumping LLC, No. 14-17-00678-CV, 2018 WL 3118601 (Tex. App.—Houston [14th Dist.] Jun. 26, 2018, pet. denied) (mem. op.), in which this court found the commercial speech exemption applied to a tortious interference cause of action based on alleged intentional interference with customers but did not apply to a tortious interference claim based on hiring. Id. at *9. Contrary to Langley and Alliant's argument, this court did not determine that the commercial speech exemption only applies to tortious interference claims. Under the facts of the Abatecola case, the commercial speech exemption did not apply to a third-party tortious interference claim based on normal hiring practices as opposed to a claim based on alleged knowing interference with customers. Id. Indeed, this court recently determined that the commercial speech exemption applied to a breach-of-contract claim premised on a former employee's breach of a non-compete clause. See Hieber, 591 S.W.3d at 213. Langley and Alliant further argue that Insgroup did not assert in the trial court that the commercial speech exemption applied to claims other than its claims of tortious interference. To the contrary, in Insgroup's response to the motion to dismiss filed in the trial court Insgroup focused on Langley and Alliant's conduct rather than its individual claims: "Insgroup has shown that Langley's (and Alliant's) conduct falls within the commercial speech exemption to the TCPA, and therefore the TCPA is inapplicable."
The commercial speech exemption provides that the TCPA "does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or potential buyer or customer." See Tex. Civ. Prac. & Rem. Code § 27.010(b).
To establish this exemption, the nonmovant must prove each of the following elements: (1) the movant was primarily engaged in the business of selling or leasing goods, services, or an insurance product or services; (2) the movant made the statement or engaged in the conduct on which the claim is based in the movant's capacity as a seller or lessor of those goods, services, or insurance product or services; (3) the statement or conduct at issue arose out of a commercial transaction involving the kind of goods, services, or insurance product the movant provides; and (4) the intended audience of the statement or conduct was an actual or potential customer of the movant for the kind of goods, services, or insurance product the movant provides. See Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018) (per curiam).
The nonmovant must prove these elements by a preponderance of the evidence. See Abatecola, 2018 WL 3118601, at *10. In deciding whether the nonmovant has satisfied that burden, the scope of our review includes the pleadings and any supporting affidavits, both of which are taken as evidence in the TCPA context. See Tex. Civ. Prac. & Rem. Code Ann. § 27.006; Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017). We also review this evidence in the light most favorable to the nonmovant. See Brugger v. Swinford, No. 14-16-00069-CV, 2016 WL 4444036, at *2 (Tex. App.—Houston [14th Dist.] Aug. 23, 2016, no pet.) (mem. op.).
Beginning with the first element—whether Langley and Alliant were primarily engaged in the business of selling goods, services, or insurance products or services—Insgroup produced evidence about Langley's professional responsibilities at his former job and his actions at his current job. Insgroup and Alliant are firms engaged in the business of selling insurance. In its pleadings, Insgroup averred that Langley was hired as a producer "to solicit potential clients, consult with them regarding their insurance coverage, locate coverage for them, and negotiate with insurance providers on their behalf[.]" Insgroup further pleaded that Langley continued to sell insurance when he joined Alliant. Specifically, Insgroup alleged, "Langley, through the prodding by Alliant, contacted the confidential contact for Apache Services in person, asking Insgroup's client contact at Apache Services to sign a Broker of Record letter appointing Alliant its exclusive insurance broker with respect to its property and casualty insurance programs."
In addition to its pleadings, Insgroup relied on affidavits from Charlene Ulmer and William Covington. Ulmer and Covington attested that Langley met with three of Insgroup's clients on its Restricted Accounts list and succeeded in obtaining at least one of those clients for Alliant. When combined with the pleadings, this evidence is more than sufficient to establish that Langley and Alliant were primarily engaged in the business of selling insurance products or services.
For the second element, Insgroup was required to show that its claim was based on either a statement that Langley made in his capacity as a seller of insurance products or services, or on conduct in which he engaged as a seller of those services. The pleadings and attached affidavits establish both bases. Insgroup's pleadings allege that Langley used its Restricted Accounts list to solicit Insgroup's clients on behalf of Alliant. The affidavits aver that Langley solicited potential customers for Alliant from Insgroup's Restricted Accounts list.
For the third element, Insgroup was required to show that the statement or conduct at issue arose out of a commercial transaction involving the kind of services Langley and Alliant provide. Each of Insgroup's causes of action arose out of a commercial transaction that Langley and Insgroup provide, i.e., sale of insurance products and services. See Callison v. C & C Personnel, LLC, No. 09-19-00014-CV, 2019 WL 3022548, at *6 (Tex. App.—Beaumont July 11, 2019, pet. filed) (mem. op.) ("Utilizing confidential or proprietary information from a previous employer while working for a new employer to target and secure the same customers satisfies this element.").
For the fourth element, Insgroup was required to show that the intended audience of Langley and Alliant's conduct was an actual or potential customer for the kind of services that Insgroup provides. Again, Insgroup established through its pleadings and evidence that, since joining Alliant, Langley has targeted at least three of Insgroup's existing customers as potential customers for Langley and Alliant.
Langley and Alliant assert in their brief that Insgroup's breach of fiduciary duty, breach of contract, and misappropriation of trade secrets claims are not based on conduct or statements with an intended audience of Langley and Alliant's actual or potential customers. This assertion is contrary to the pleadings and evidence that were before the trial court. Insgroup's causes of action are based on Langley's conduct and statements in allegedly competing with Insgroup in violation of the non-compete clause in Langley's contract. By pleading a breach of the non-compete provision and Langley's fiduciary duties that accompany that provision Insgroup has established that the intended audience of Langley and Alliant's conduct was an actual or potential customer for the kind of services Insgroup provides. The evidence attached to Insgroup's pleadings establishes that the intended audience of Langley and Alliant's statements and conduct was potential customers for their insurance products; therefore, Insgroup has shown that Langley's (and Alliant's) complained of conduct falls within the commercial speech exemption to the TCPA.
Viewing the evidence in the light most favorable to Insgroup, we conclude the evidence establishes by a preponderance of the evidence that Insgroup's legal action is exempt under the TCPA's commercial speech exemption. Because this conclusion fully supports the trial court's ruling, we need not consider the parties' remaining arguments. See Tex. R. App. P. 47.1.
CONCLUSION
The trial court's order denying the motion to dismiss is affirmed.
/s/ Jerry Zimmerer
Justice Panel consists of Justices Zimmerer, Spain, and Hassan.