                                       In The

                                 Court of Appeals

                     Ninth District of Texas at Beaumont

                               __________________

                               NO. 09-19-00014-CV
                               __________________

                     ROSELLA LEE CALLISON, Appellant

                                          V.

        C&C PERSONNEL, LLC, DAMERON JOUBERT, AND
                  DAVID STEPHENSON, Appellees
__________________________________________________________________

                On Appeal from the 410th District Court
                     Montgomery County, Texas
                   Trial Cause No. 18-09-11766-CV
__________________________________________________________________

                           MEMORANDUM OPINION

      In this interlocutory appeal, we are once again asked to decide the

applicability of the Texas Citizens’ Participation Act (TCPA) to tort claims in a

business setting. See Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001–.011 (West

2015). In this case, the trial court failed to rule on Appellant Rosella Lee Callison’s

TCPA motion to dismiss Appellees’ wrongful use of trade secrets claims within the

time frame permitted by the statute, and the motion was denied by operation of law.
                                          1
Id. § 27.008(a). 1 On appeal, Callison contends the trial court’s implicit denial of her

TCPA motion to dismiss was error because: (1) the Act applies to the plaintiff’s

allegations being made against her; and (2) once the burden of proof shifted, the

nonmovant failed to present clear and specific evidence establishing a prima facie

case for each of its claims. As part of her second issue, Appellant contends certain

alleged “deemed admissions” and the terms of an agreed temporary injunction

signed by the trial court should not be considered by the trial court as evidence to

meet nonmovant’s threshold burden of proof.

                                   I. Background

      In 2013, Callison started C&C Personnel with Ryan Conley. C&C provided

staffing services for the light industrial business sector. Callison handled sales and

brought in new clients, and Conley handled recruiting, accounting, bookkeeping,

taxes, and company payroll. According to Callison, Conley abruptly left the

business, taking with him critical financial records, passwords to the company’s

bank accounts, as well as key employees, the company CPA and chief recruiter.




      1
          Appellees brought additional claims against Callison, including breach of
bill of sale and indemnity obligation, and fraud in the inducement; however, Callison
only sought dismissal of Appellees’ trade secret claims. These claims included
misappropriation of trade secrets, civil theft of property, and breach of fiduciary duty
causes of action.
                                            2
Conley immediately began a new staffing company, and Callison alleged that several

C&C clients left to sign contracts with Conley’s company.

      Facing an immediate budgetary shortfall and inability to pay C&C’s

employees in the wake of Conley’s departure, Callison agreed to sell C&C Personnel

to Dameron Joubert and David Stephenson at “a deeply discounted valuation” of

$35,000.00.2 Following the sale, Joubert and Stephenson hired Callison to act as

their Director of Sales. Appellees asserted they gave Callison this position as part of

the agreement to purchase the business, which Callison disputed. After the sale,

Callison forfeited her access as an administrator on all company email accounts.

Appellees accused Callison of misappropriating trade secret information obtained

through company emails containing confidential client customer folders and

misusing the information for her personal gain to “unlawfully compete and convert

business of C & C.” Appellees employed the words “use” and “conduct” in their


      2
        The parties dispute what was included in the sale of C&C. Appellees claim
they only purchased C&C’s assets; however, Callison asserts she sold the entire
business, which was not limited to the assets. The “Business Bill of Sale” signed by
the parties indicated it conveyed “[a]ll the assets, property, rights, and interests
(excluding any delinquent tax payments) of C&C Personnel, of every kind and
description, tangible or intangible, and regardless of whether or not carried or
reflected on the books and records used in the operation of said business[.]”The
parties also thereafter entered into a “Membership Assignment Agreement” that
mentioned the “Business Bill of Sale” and described it as “the sale of assets of C&C
Personnel LLC[.]” The Membership Assignment Agreement conveyed Callison’s
membership interests to Damon Joubert and David Stephenson.
                                         3
petition, while avoiding any form of the word “communicate.” They acknowledged

Callison’s misuse involved disclosure.

      Callison admittedly set up an automatic forward of company emails to her

private account while she owned C&C. However, after the sale of the business,

Callison claimed she did not want the emails, but she no longer had the

administrative rights to stop the forwarding of the emails. She averred in her affidavit

that she repeatedly advised Appellees to stop “spamming” her with C&C emails.

Callison further denied that she solicited former clients of C&C or worked on such

accounts for her new employer. Rather, she contended the former clients did not

have exclusive contracts with C&C Personnel for their staffing needs and simply

stopped using C&C due to Joubert and Stephenson’s mismanagement.

      Appellees sent Callison a letter demanding the return of the alleged

misappropriated information, and Callison failed to respond. In the same pleading

as their original petition, Appellees sought a temporary restraining order prohibiting

Callison from “using or disclosing” confidential or proprietary information. Upon

filing their initial pleading, Appellees contemporaneously sought expedited

discovery from Callison, which the trial court allowed, making Callison’s discovery

responses due prior to her answer date. Appellees argued to the trial court they

needed the discovery before the temporary injunction hearing. They claimed they

                                           4
required the discovery to determine, among other things, to what extent Callison

used their “confidential information to perform services for a competitor of Plaintiffs

or for her own personal gain and benefit.” In the trial court, Appellees also filed an

emergency motion for forensic examination of electronically stored information

alleging “Callison used that [confidential] information to acquire Plaintiffs’ former

clients causing Plaintiffs $766,644.42 of lost revenue.” The trial court granted an ex

parte temporary restraining order and scheduled a hearing for a temporary

injunction. Prior to the scheduled hearing date, the parties negotiated and entered

into an agreed temporary injunction. The agreed temporary injunction provided, in

part:

        [w]hile Defendant has not, by entering into this Agreed Temporary
        Injunction, stipulated to any factual findings against Defendant,
        Defendant acknowledges, for purposes of the entry of this Order that
        Plaintiffs have shown a probable right to injunctive relief based on the
        theory of misappropriation of trade secrets, breach of fiduciary duties
        and civil theft of property, and the right to injunctive relief set forth in
        the Texas Uniform Trade Secrets Act[.]

The parties dispute whether these negotiations contained an agreement to “reset

discovery deadlines” in light of the agreed temporary injunction.

        The allegations against Appellant in Appellees’ original petition incorporated

the demand letter’s assertions, including “accessing and forwarding to her personal

email C & C and SWSS company folders of confidential and proprietary information

                                             5
which she has used to unlawfully compete and convert business of C & C and

SWSS[.]” Appellees attached the demand letter to the verified application for TRO

and original petition, which alleged Callison forwarded company emails to herself

“comprised of confidential and proprietary information” and that she “us[ed] that

information to unlawfully compete and convert business[.]” Appellees sought

damages for lost business in the amount of $766,644.42. The overarching theme of

Appellees’ claims is that Callison misappropriated their confidential and proprietary

information contained in emails, then unfairly used that information to acquire their

customers.

      In her TCPA motion to dismiss, Callison asserted “Plaintiffs’ entire basis for

their Trade Secret Claims center upon Callison’s communication with prospective

client companies[.]” Callison also argued the following:

      56. “Sales Tradecraft IS Communication.” In order for Plaintiffs to
      bring a suit against someone in the staffing sales industry for trade
      secret theft, the premise begins with the allegation that the accused is
      engaging in misuse of those secrets. How else does a salesperson
      engage in tradecraft other than by communication, and such
      communication as defined by the TCPA. Not only is the implication
      leveled against Callison for “communicating” with prospective clients
      and others in the staffing industry, but the means by which Callison is
      accused of “stealing” this so-called trade secret information is through
      means of electronic communication. This entire case centers on
      communications of Defendant Callison.



                                         6
Callison further contended that after she showed the TCPA applies, Appellees failed

to meet their burden to present clear and specific evidence of each element of their

trade Secret Claims and that she could establish an affirmative defense. In her

affidavit in support of her TCPA motion to dismiss, Callison denied soliciting

business from specific former C&C customers. The trial court’s failure to rule on

Callison’s motion within thirty days from the date of filing functioned as a denial by

operation of law. See Tex. Civ. Prac. & Rem. Code Ann. §§ 27.003(a), 27.008(a)

This interlocutory appeal followed. See id. §§ 27.008(b), 51.014(a)(12) (West Supp.

2018).

                              II. Standard of Review

      We review the trial court’s denial of a TCPA motion to dismiss de novo. See

Smith v. Crestview NuV, LLC, 565 S.W.3d 793, 796 (Tex. App.—Fort Worth 2018,

pet. denied) (citations omitted); Walker v. Hartman, 516 S.W.3d 71, 79–80 (Tex.

App.—Beaumont 2017, pet. denied) (citation omitted) (“The issue of whether

[defendant] met his burden of establishing that [plaintiff]’s case related to

[defendant]’s exercise of his First Amendment rights is a legal question that we

review de novo on appeal.”); see also Adams v. Starside Custom Builders, LLC, 547

S.W.3d 890, 897 (Tex. 2018) (citations omitted) (“In TCPA appeals, we have

decided whether communications are matters of public concern under a de novo

                                          7
standard of review[.]”). We consider the pleadings and affidavits stating facts upon

which liability or any defense is based. Tex. Civ. Prac. & Rem. Code Ann. §

27.006(a); Smith, 565 S.W.3d at 796–97 (citations omitted).

                                   III. Analysis

A. TCPA Generally

      The TCPA “protects citizens who petition or speak on matters of public

concern from retaliatory lawsuits that seek to intimidate or silence them.” In re

Lipsky, 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding). The TCPA is meant

“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.” See Tex. Civ. Prac. & Rem. Code

Ann. § 27.002. Courts construe the TCPA liberally to ensure its stated purpose and

intent are fully effectuated. Id. § 27.011(b); ExxonMobil Pipeline Co. v. Coleman,

512 S.W.3d 895, 898 (Tex. 2017).

      A TCPA motion to dismiss involves a multi-step process. See Youngkin v.

Hines, 546 S.W.3d 675, 679 (Tex. 2018); Coleman, 512 S.W.3d at 898; Lipsky, 460

S.W.3d at 586–87; see also Tex. Civ. Prac. & Rem. Code Ann. § 27.005(b)–(d).

First, the defendant-movant bears the initial burden “to show ‘by a preponderance

                                         8
of the evidence’ that the plaintiff’s claim ‘is based on, relates to, or is in response to

the [movant’s] exercise of: (1) the right of free speech; (2) the right to petition; or

(3) the right of association.’” Lipsky, 460 S.W.3d at 586 (quoting Tex. Civ. Prac. &

Rem. Code Ann. § 27.005(b)). If the movant establishes that the plaintiff’s lawsuit

implicates one of these rights, the second step shifts the burden to the plaintiff to

“‘establish[ ] by clear and specific evidence a prima facie case for each essential

element of the claim in question.’” Id. at 587 (quoting Tex. Civ. Prac. & Rem. Code

Ann. § 27.005(c)). Finally, if the non-movant establishes their prima facie case, the

burden shifts back to the movant to establish each essential element of an affirmative

defense by a preponderance of the evidence. Tex. Civ. Prac. & Rem. Code Ann. §

27.005(d); Youngkin, 546 S.W.3d at 679; Coleman, 512 S.W.3d at 898. However, a

plaintiff can avoid the TCPA’s burden-shifting requirements by showing an

exemption applies. See Tex. Civ. Prac. & Rem. Code Ann. § 27.010; Gaskamp v.

WSP, Inc., No. 01-18-00079-CV, 2018 WL 6695810, at *6 (Tex. App.—Houston

[1st Dist.] Dec. 20, 2018, no pet.).

B. Applicability

      We turn first to the TCPA’s applicability. See Morrison v. Profanchik, No.

03-17-00593-CV, 2019 WL 2202210, at *2 (Tex. App.—Austin, May 22, 2019, no

pet. h.) (citing Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018))

                                            9
(noting a “court must consider an exemption’s applicability after and in the context

of the movant having met its initial burden under the first step of the dismissal

process”). In the present case, Callison asserts the exercise of her right to free speech

and her right of association is implicated by Appellees’ lawsuit. To decide whether

a legal action warrants dismissal under the TCPA, the court must consider the

pleadings and affidavits stating the facts on which liability is based. See Tex. Civ.

Prac. & Rem. Code Ann. § 27.006(a). Determining the legal action’s basis in the

first step of the dismissal analysis requires us to consider the plaintiffs’ petition,

which is “the ‘best and all-sufficient evidence of the nature of the action.’” Hersh v.

Tatum, 526 S.W.3d 462, 467 (Tex. 2017) (quoting Stockyards Nat’l Bank v. Maples,

95 S.W.2d 1300, 1302 (Tex. 1936)). A legal action’s basis is determined by the

plaintiff’s allegations rather than the defendant’s admissions or denials. Id. When a

plaintiff’s pleadings make clear that the action is covered by the TCPA, a defendant

need not show more. Id.

      1. Right to Free Speech

      Exercising one’s right of free speech includes any “communication made in

connection with a matter of public concern.” See Tex. Civ. Prac. & Rem. Code Ann.

§ 27.001(3); Adams, 547 S.W.3d at 894. “Communication” is defined by the statute

to include “the making or submitting of a statement or document in any form or

                                           10
medium, including oral, visual, written, audiovisual, or electronic.” See Tex. Civ.

Prac. & Rem. Code Ann. § 27.001(1). “Matter[s] of public concern” include issues

pertaining to health or safety, environmental, economic, or community well-being,

the government, a public official or public figure, or a good, product or service in

the marketplace. See id. § 27.001(7). Accordingly, Callison must establish by a

preponderance of evidence that the communications were made in connection with

a matter of public concern. Id. § 27.001(3); Adams, 547 S.W.3d at 892–94.

             a. Communications

      In her motion to dismiss and on appeal, Callison contends that the alleged

“use” of the complained of information necessarily required her to communicate

with her current employer and potential customers. Appellees attempt to draw a

distinction without a difference by characterizing Callison’s actions as “conduct”

rather than “communication;” however, Appellees cannot circumvent the TCPA by

artful pleading. See Smith, 565 S.W.3d at 798 (citing Garton v. Shiloh Vill. Partners,

LLC, No. 12-16-00286-CV, 2017 WL 6884451, at *4–5 (Tex. App.—Tyler Aug. 23,

2017, no pet.) (mem. op.)). The Texas Supreme Court has interpreted

communications under the TCPA to mean public and private communication. See

Lippincott v. Whisenhunt, 462 S.W.3d 507, 509. (Tex. 2015). In Appellees’

combined original petition and application for temporary restraining order, they seek

                                         11
to prevent Callison from “using or disclosing any confidential and proprietary

information” and seek to prohibit Callison’s “further unauthorized disclosure and

use of Plaintiffs’ Protected Information.”

      The TCPA defines “communication” broadly. See Tex. Civ. Prac. & Rem.

Code Ann. § 27.001(1). The Texas Supreme Court recently explained that “[a]lmost

every imaginable form of communication, in any medium, is covered.” Adams, 547

S.W.3d at 894 (citing Tex. Civ. Prac. & Rem. Code Ann. § 27.001(1)). A

“disclosure” necessarily constitutes communication, whether that is oral or via

email. The Austin Court of Appeals previously determined that misappropriation of

trade secret claims were based at least in part on communications where a party

shared or utilized information that the other party considered protected as a trade

secret. See Elite Auto Body LLC v. Autocraft Bodywerks, Inc., 520 S.W.3d 191, 198

(Tex. App.—Austin 2017, pet dism’d).

      Appellees’ attempt to cast Callison’s conduct as “use” also fails to avoid the

applicability of the TCPA. They allege that Callison used the information to her

benefit, to “unlawfully compete and convert business[.]” Utilization and disclosure

of purported trade secret information for those purposes necessarily required

communicating that information to the customers. See Gaskamp, 2018 WL 6695810,

at *12 (explaining that the movants’ “transfer and disclosure” of the non-movant’s

                                         12
trade secret information required communication); Morgan v. Clements Fluids S.

Tex., Ltd., No. 12-18-00055-CV, 2018 WL 5796994, at *3 (Tex. App.—Tyler Nov.

5, 2018, no pet.) (indicating defendants’ sharing and use of their former employers’

trade secrets were TCPA communications). We determine Callison’s use or

disclosure of confidential and proprietary information qualifies as a communication

under the “wide net” the TCPA casts. See Tex. Civ. Prac. & Rem. Code Ann. §

27.001(1); see also Adams, 547 S.W.3d at 894; Gaskamp, 2018 WL 6695810, at

*12; Morgan, 2018 WL 5796994, at *3; Elite Auto Body, 520 S.W.3d at 198.

             b. Matters of Public Concern

      To implicate Callison’s right to free speech, the communications must have

been in connection with a matter of public concern. See Tex. Civ. Prac. & Rem.

Code Ann. § 27.001(3); Adams, 547 S.W.3d at 894. Matters of public concern

include goods, products or services in the marketplace. Tex. Civ. Prac. & Rem. Code

Ann. § 27.001(7)(E). The communications at issue here centered around selling and

providing staffing services to various companies. Neither party disputes that C&C

sold staffing services in the marketplace or that Callison sold those services on behalf

of C&C and later her new employer. The Appellees alleged that the confidential and

proprietary information included customer account lists, information, and pricing

that Callison utilized to engage in unfair competition. Said another way, Appellees

                                          13
complain that Callison took their proprietary and confidential information and used

it to acquire their customers in the staffing services sector for the benefit of herself

or her new employer. Because the complained of communication involved selling

staffing services to customers, it “related to a good, product or service in the

marketplace.” See id. § 27.001(3), (7)(E).

      We conclude that Callison has met her initial burden establishing by a

preponderance of the evidence that the communications were in connection with a

matter of public concern. Since Callison established Appellees’ claims implicated

her right of free speech thereby triggering the TCPA’s applicability, we need not

address the assertion that her right to freely associate likewise triggered the TCPA’s

applicability.

C. Commercial Speech Exemption

      Although we have determined the TCPA applies to this case, Appellees argue

the communications at issue fall under the commercial speech exemption. A party

can avoid the TCPA’s burden-shifting requirements by establishing that one of the

statutory exemptions applies. Staff Care, Inc. v. Eskridge Enters., LLC, No. 05-18-

00732-CV, 2019 WL 2121116, at *7 (Tex. App.—Dallas May 15, 2019, no pet. h.)

(mem. op.) (citing Santellana v. CentiMark Corp., No. 01-18-00632-CV, 2019 WL

1442228, at *3 (Tex. App.—Houston [1st Dist.] Apr. 2, 2019, no pet.) (mem. op.)).

                                          14
When an exemption is invoked, the trial court must consider its applicability after

the movant meets its initial burden under the first step of the dismissal process.

Morrison, 2019 WL 2202210, at *2 (citing Castleman, 546 S.W.3d at 688). If an

action is exempt, the TCPA does not apply and cannot be used to dismiss the action.

Id.; see also Tex. Civ. Prac. & Rem. Code Ann. § 27.010; Best v. Harper, 562

S.W.3d 1, 11 (Tex. 2018).

      The TCPA provides an exemption for legal actions against an individual

“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 a

commercial transaction in which the intended audience is an actual or potential buyer

or customer.” Tex. Civ. Prac. & Rem. Code Ann. § 27.010(b). Commonly known as

the “commercial speech” exemption, this exemption applies when

      (1) the defendant was primarily engaged in the business of selling or
      leasing goods, (2) the defendant made the statement or engaged in the
      conduct on which the claim is based in the defendant’s capacity as a
      seller or lessor of those goods or services, (3) the statement or conduct
      at issue arose out of a commercial transaction involving the kind of
      goods or services the defendant provides, and (4) the intended audience
      of the statement or conduct were actual or potential customers of the
      defendant for the kind of goods or services the defendant provides.

Castleman, 546 S.W.3d at 688.

      On appeal, neither Callison nor Appellees dispute, and the pleadings and

evidence establish, that she is primarily engaged in the business of selling services.
                                          15
See id.; Morrison, 2019 WL 2202210, at *4. In the present case, Callison’s affidavit

focuses on the fact that she was involved in sales for the provision of staffing

services. Specifically, Callison outlined in her affidavit that she worked selling

staffing services, first as the Director of Sales for C&C, then in a sales position for

her new employer.

      Likewise, with respect to the second element of the Castleman analysis,

Callison acknowledged in her TCPA motion to dismiss that the “entire basis” for

Plaintiffs’ “Trade Secret Claims center upon Callison’s communication with

prospective client companies, coworkers at [her new employer], and her receipt of

unwanted communications[.]” See Castleman, 546 S.W.3d at 688. Callison also

demands to know “[h]ow else does a salesperson engage in tradecraft other than by

communication[.]” Similar to the defendant in Morrison, who denied making the

online statements, Callison denies that she stole emails containing confidential

information or solicited specific customers. See Morrison, 2019 WL 2202210, at *4.

There, the Austin Court of Appeals reasoned that regardless of whether the

defendant made the statement (i.e., the communication), “we must assume that [the

defendant] did make the statement for purposes of determining whether the

statement is exempted from the TCPA’s application.” Id. (citing Castleman, 546

S.W.3d at 688); see also Hersh, 526 S.W.3d at 467 (holding that the movant’s denial

                                          16
of making the communication does not prohibit TCPA motion to dismiss). The

pleadings and evidence, including Callison’s affidavit testimony, reveal she made

the communications in her capacity as a seller of staffing services. See Tex. Civ.

Prac. & Rem. Code Ann. § 27.010(b); see also Castleman, 546 S.W.3d at 689;

Morrison, 2019 WL 2202210, at *4.

      The third element of the commercial speech exemption requires that the

“statement or conduct” arise out of a commercial transaction involving the kind of

goods or services the defendant provides. Castleman, 546 S.W.3d at 688. The record

reflects that although Callison denied procuring the accounts, several prior

customers of C&C signed contracts for staffing services with her new employer.

Taking the allegations contained in Appellees’ petition as true, certainly Callison’s

new employer and Callison derivatively, stood to profit from the statements or

conduct at issue by acquiring these accounts. See Staff Care, Inc., 2019 WL

2121116, at *8 (citing Castleman, 546 S.W.3d at 691) (noting the Castleman Court

“implied the exemption applies when communications involve business pursuits for

oneself or a business stands to profit from the statements at issue”). 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.



                                         17
      Finally, the last element requires that “the intended audience of the statement

or conduct were actual or potential customers of the defendant for the kind of goods

or services the defendant provides.” Castleman, 546 S.W.3d at 688. The pleadings

and evidence show that Callison was a salesperson in the staffing services industry

for many years, which included her time at C&C and her new employer. The conduct

she allegedly engaged in and the communications at issue were directed at prior

actual and potential customers. These companies were previous customers of C&C,

and several ultimately signed contracts with Callison’s new employer. Therefore,

the statements or conduct were intended for actual or potential customers seeking

the services Callison spent years selling. See Castleman, 546 S.W.3d at 688;

Morrison, 2019 WL 2202210, at *4.

      Having determined the Castleman elements are satisfied, the commercial

speech exemption applies in this case. See Castleman, 546 S.W.3d at 688; Morrison,

2019 WL 2202210, at *4; see also Tex. Civ. Prac. & Rem. Code Ann. § 27.010(b).

Because we conclude the commercial speech exemption applies and precludes

dismissal based on the TCPA, we need not address whether Appellees have

established by clear and specific evidence a prima facie case for every element of

their trade secret causes of action. See Morrison, 2019 WL 2202210, at *5 (noting

that because the commercial speech exemption applied, they need not address the

                                        18
assertion that the plaintiff failed to meet his burden of establishing by clear and

specific evidence a prima facie case).

                                  IV. Conclusion

      While the TCPA applies, the communications at issue fall within the TCPA’s

commercial speech exemption, and the trial court properly denied Callison’s motion

to dismiss Appellees’ trade secret claims. 3 Accordingly, we affirm the trial court’s

denial of Callison’s TCPA motion to dismiss.

      AFFIRMED.



                                                    _________________________
                                                         CHARLES KREGER
                                                              Justice

Submitted on May 30, 2019
Opinion Delivered July 11, 2019

Before McKeithen, C.J., Kreger and Johnson, JJ.




      3
        In our disposition of this appeal, we do not reach or address the issue
surrounding the propriety of the expedited discovery order or purported deemed
admissions.
                                       19
