Texas Introduces Three Bills To Curb Application of Anti-SLAPP Statute in Non-Compete and Trade Secrets Litigation
Austin, Texas (March 14, 2019) - The Texas Citizens Participation Act (TCPA), enacted by the legislature in 2011, has been wreaking havoc in business and employment disputes due to the statute’s overbroad language, confusing and conflicting interpretation by the various courts of appeals and federal courts, and defendants’ persistence in invoking the statute’s dismissal process in trade secrets and non-compete lawsuits.
In late 2018 and early 2019, at least two Texas Courts of Appeals issued scathing opinions criticizing the statute’s dismissal mechanism being used by defendants in run-of-the-mill trade secrets and non-compete disputes. It appears that the legislature heard the complaints from the bench and the business community, which is why in the past week we have seen three new bills that seek to exempt trade secrets and non-compete disputes from the grasp of the TCPA.
Introduced by Rep. Joe Moody (D) on March 6, 2019, this bill reads in pertinent part:
SECTION 1. Sections 27.001(2) and (6), Civil Practice and Remedies Code, are amended to read as follows:
(2) “Exercise of the right of association” means a communication between individuals who join together to collectively express, promote, pursue, or defend common interests. The term does not include a communication that is the basis of a claim asserting a misappropriation of a trade secret or a breach of a covenant not to compete.
SB 2162 & HB 2730
Introduced on March 8, 2019, by Sen. Angela Paxton (R) and Rep. Jeff Leach (R), respectively, these bills seek to amend the TCPA as follows:
SECTION 8. Section 27.010, Civil Practice and Remedies Code, is amended to read as follows:
Sec. 27.010. EXEMPTIONS. [(a)] This chapter does not apply to: …
(7) a legal action to enforce:
(A) a noncompete agreement;
(B) a nondisclosure agreement; or
(C) a non-disparagement agreement.
The bills contain many other amendments to the statute that are unrelated to trade secrets and non-compete litigation and they face tremendous opposition from the press. For example, the Reporters Committee for Freedom of the Press issued a press release stating its concern that “HB 2730 and SB 2162 would, if enacted, significantly undermine key parts of TCPA and, therefore, speech protections in Texas.” Therefore, their passage remains an open question.
We will continue to monitor their progress through the legislature and will provide an update if they pass.
Elisaveta "Leiza" Dolghih, Partner