TCPA, Trade Secrets and Discovery

Originally published by Patrick Keating.

In a 2017 blog post, I discussed a Texas appellate court decision that was notable because it applied the Texas Citizens Participation Act (“TCPA”) statute to theft of trade secret lawsuits.  The TCPA provides a defendant who is sued for exercising the First Amendment right to freedom of speech, freedom of association or the right to petition the government the ability to file a motion to dismiss the lawsuit at the outset of the case.  In addition to a potential expedited dismissal, the TCPA places significant limits on the discovery a plaintiff may obtain before a trial court rules on a TCPA motion to dismiss.  The 2017 appellate court decision was the first in Texas to apply the TCPA to a theft of trade secrets claim.

The Dallas Court of Appeals recently issued an opinion in which the TCPA was, once again, applied in a theft of trade secrets claim (the “In re Spex Group” case).  While the Dallas court was not asked to determine whether the TCPA applies in such a case, the court did not question the applicability of the statute.

Chalk up In re Spex Group as another case in the column of those supporting application of the TCPA to theft of trade secret claims.

In re Spex Group does answer two questions about the TCPA: (1) whether the trial court may even consider a plaintiff’s request for pre-trial injunctive relief before ruling on the defendant’s TCPA motion to dismiss and (2) to what extent the plaintiff is entitled to obtain discovery before the court rules on the TCPA motion.

Answer #1: The Dallas Court of Appeals held that the TCPA does not prohibit a trial court from issuing a temporary restraining order or a temporary injunction before resolving a TCPA motion to dismiss.

Answer #2: The answer regarding discovery is not as simple.  The Court merely provided principles to guide trial courts in deciding how much discovery to permit before ruling on a TCPA motion to dismiss.

The TCPA suspends all discovery in the case unless the trial court enters an order permitting discovery. If discovery occurs, the TCPA provides that the discovery must be “specified and limited.”

This is the Dallas Court of Appeals’ guidance regarding the amount of discovery to permit:

1.  Because the discovery must be “specified and limited,” it must be relevant to the motion to dismiss.  Discovery is relevant to the motion to dismiss if it seeks information related to the allegations for dismissal asserted in the TCPA motion.

2.  If the plaintiff is obligated to respond to the motion with evidence establishing a prima facie case for each element of the plaintiff’s claims, then some merit-based discovery may be relevant.  The prima facie standard is low.  Thus, the plaintiff will not need multiple or lengthy depositions or voluminous written discovery.  The discovery must still be “specified and limited.”

Because the amount of discovery that is needed to respond to a motion to dismiss will vary from case to case, the Dallas court could not provide an easy answer for the trial courts – such as, only permit one deposition.  The answer provides the governing principles for the trial courts to follow when deciding how much discovery to permit in each lawsuit.

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