AFFIRM in Part, REVERSE in Part, RENDER and REMAND; Opinion Filed December
18, 2015.




                                          Court of Appeals
                                                          S   In The


                                   Fifth District of Texas at Dallas
                                                        No. 05-15-00469-CV

                                             TERVITA, LLC, Appellant
                                                       V.
                                           CASEY SUTTERFIELD, Appellee

                                On Appeal from the 116th Judicial District Court
                                             Dallas County, Texas
                                     Trial Court Cause No. DC-14-13815

                                                           OPINION
                                   Before Justices Fillmore, Stoddart, and O’Neill 1
                                             Opinion by Justice O’Neill
            This accelerated interlocutory appeal arises from Casey Sutterfield’s action for

employment discrimination against his former employer Tervita LLC. Tervita moved to dismiss

the action pursuant to the Texas Citizens Participation Act (“TCPA”), which provides for

dismissal of actions involving the exercise of certain constitutional rights. See TEX. CIV. PRAC.

& REM. CODE ANN. § 27.001–27.011 (West 2015). The trial court denied Tervita’s motion. In

two issues, Tervita contends the denial was error because Sutterfield’s claims are based on

statements made by Tervita during a worker’s compensation agency hearing, or are based on

Tervita’s exercise of its right of association. We agree with Tervita that Sutterfield’s claims

based on Tervita’s participation in the agency hearing should be dismissed under the TCPA. But

   1
       The Hon. Michael J. O’Neill, Justice, Assigned
the trial court did not err by denying Tervita’s motion to dismiss Sutterfield’s remaining claims.

We affirm in part and reverse in part.

                                           BACKGROUND

         Sutterfield was injured while working for Tervita as a derrick hand in Williston, North

Dakota. Sutterfield contends that after his injury, Tervita made misrepresentations about the

availability of worker’s compensation benefits and created a hostile work environment.

Sutterfield either resigned (according to Tervita) or was constructively discharged (according to

Sutterfield). He returned to his home in Texas and filed a claim for worker’s compensation

benefits. Tervita’s insurance carrier American Zurich Insurance Company (Zurich) denied the

claim.    The claim proceeded to a contested case hearing before the Texas Department of

Insurance, Division of Worker’s Compensation (TDI-WC).                     Shane White, Tervita’s

representative, testified at the hearing. The hearing officer ruled in favor of Sutterfield.

         Sutterfield then filed this suit against Tervita, Zurich, and two individual adjusters for

violations of the Texas Labor Code, negligent misrepresentation, and conspiracy. Tervita filed a

motion to dismiss asserting that Sutterfield’s suit was based on Tervita’s constitutional rights to

associate with Zurich and to petition the TDI-WC. The trial court denied Tervita’s motion.

Tervita now appeals.

                          APPLICABLE LAW AND STANDARD OF REVIEW

         The legislature enacted the TCPA “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.” TCPA § 27.002; see also In re Lipsky, 460

S.W.3d 579, 586 (Tex. 2015) (TCPA protects citizens from retaliatory lawsuits that seek to

silence or intimidate them on matters of public concern). If a legal action is brought in response

                                                 –2–
to a party’s exercise of the right of free speech, right to petition, or right of association, then that

party may file a motion to dismiss the legal action. TCPA § 27.003.

       The movant bears the initial burden to show by a preponderance of the evidence that the

action “is based on, relates to, or is in response to the party’s exercise of” the right of free

speech, petition, or association. Id. §§ 27.003, 27.005(b); Lipsky, 460 S.W.3d at 586. If the

movant satisfies this “first prong,” the trial court must dismiss the action unless the party who

brought the action “establishes by clear and specific evidence a prima facie case for each

essential element of the claim in question.” TCPA § 27.005(b), (c); Lipsky, 460 S.W.3d at 587;

see also Pickens v. Cordia, 433 S.W.3d 179, 183 (Tex. App.—Dallas 2014, no pet.) (movant

bears initial burden on first prong of section 27.005). But the court shall dismiss a legal action

against the movant if the movant establishes by a preponderance of the evidence each essential

element of a valid defense to the nonmovant’s claim. TCPA § 27.005(d).

       Section 27.010 lists four exemptions from the application of the TCPA. See TCPA

§ 27.010(a)–(d). The nonmovant bears the burden of proving a statutory exemption. Better Bus.

Bureau of Metro. Dallas, Inc. v. BH DFW, Inc., 402 S.W.3d 299, 309 (Tex. App.—Dallas 2013,

pet. denied).

       We review de novo the trial court’s determinations that the parties met or failed to meet

their burdens of proof under section 27.005. Campbell v. Clark, 471 S.W.3d 615, 623 (Tex.

App.—Dallas 2015, no pet.). We also review de novo questions of statutory construction. Better

Bus. Bureau of Metro. Dallas, Inc., 402 S.W.3d at 304–05.




                                                 –3–
                                                                     ANALYSIS

             A.         Introduction

             Under the TCPA, a “legal action” includes not only a “lawsuit” but also a “cause of

action.” TCPA § 27.001(6). In reviewing the trial court’s ruling, we consider whether Tervita

has established that each cause of action pleaded by Sutterfield “is based on, relates to, or is in

response to” Tervita’s exercise of its right to petition or right of association. 2 TCPA § 27.003(a).

             In his original petition, 3 Sutterfield pleads causes of action against Tervita for

“discriminatory conduct in violation of Chapter 451 of the Texas Labor Code,” negligent

misrepresentation, and conspiracy.                                He makes four separate claims of employment

discrimination, alleging that Tervita discriminated against him in violation of section 451.001 of

the labor code by (1) creating a hostile work environment; (2) representing to him that he was

“not entitled to pursue benefits” under the Texas Worker’s Compensation Act; (3) presenting

false testimony during the claim process; and (4) discharging him. See TEX. LAB. CODE ANN.

§ 451.001 (West 2015) (person may not discharge or in any other manner discriminate against

employee who has filed worker’s compensation claim, hired a lawyer regarding the claim, or

instituted in good faith a proceeding under Subtitle A 4).

             In his negligent misrepresentation claim, Sutterfield alleges that Tervita’s “above

described representations” were “false and intended for the guidance of Plaintiff in his business,

namely his decision to secure benefits” under the Texas Worker’s Compensation Act. Sutterfield

contends that he has suffered pecuniary loss “due to his justifiable reliance on said

representations.”


     2
         Tervita does not contend that its right of free speech is implicated by Sutterfield’s claims.
     3
        Although the appellate record includes both an original petition and a first amended original petition, the original petition was the
operative pleading at the time of the trial court’s ruling on Tervita’s motion to dismiss.
     4
         Texas Worker’s Compensation Act, TEX. LAB. CODE ANN. §§ 401.001–419.007 (West 2015 and Supp. 2015).



                                                                          –4–
          For his conspiracy claim, Sutterfield pleads that Tervita and Zurich “combined to have a

meeting of the minds for the purpose of providing testimony and evidence against Plaintiff for

the unlawful purpose of denying benefits” under the worker’s compensation act.                                             Further,

Sutterfield pleads: “Specifically, Tervita provided testimony in the process of Plaintiff’s claim

and at the contested case hearing under oath that Defendants knew at the time was false.”

Sutterfield pleads that he has suffered injury and damages as a result of this conspiracy.

          B.        Claims based on Tervita’s participation in agency hearing

            Although Tervita moved to dismiss all claims, only Sutterfield’s conspiracy claim and

one of his claims for employment discrimination are based on Tervita’s participation in the

contested case hearing before the TDI-WC. We first review the trial court’s denial of Tervita’s

motion to dismiss these claims.

                    1.         Right to petition

          Tervita showed by a preponderance of the evidence that its participation in the hearing

before the TDI-WC, including White’s testimony, was an exercise of its right to petition. See

TCPA § 27.005(b)(2). “Exercise of the right to petition” is defined broadly under the TCPA.

See TCPA § 27.001(4). It includes a “communication” 5 pertaining to “an official proceeding,

other than a judicial proceeding, to administer the law,” as well as “an executive or other

proceeding” before a department of the state government or a subdivision of the state

government. TCPA § 27.001(4)(A)(ii), (iii). It also includes “a communication in connection

with an issue under consideration or review by a legislative, executive, judicial, or other

governmental body or in another governmental or official proceeding.” TCPA § 27.001(4)(B).

“Governmental proceeding” is defined as “a proceeding, other than a judicial proceeding, by an


     5
       “Communication” is also defined in the TCPA. TCPA § 27.001(1). “ʻCommunication’ includes the making or submitting of a statement
or document in any form or medium, including oral, visual, written, audiovisual, or electronic.” Id.



                                                                –5–
officer, official, or body of this state or a political subdivision of this state, including a board or

commission . . . .” TCPA § 27.001(5). Sutterfield’s contested case hearing before the TCI-WC

was such a proceeding. See TEX. LAB. CODE ANN. §§ 410.151–410.169 (West 2015) (“Contested

Case Hearing”).

       Sutterfield specifically contends that Tervita discriminated against him by “presenting

false testimony during the claim process.” He alleges that Zurich and Tervita conspired “to have

a meeting of the minds for the purpose of providing testimony and evidence against Plaintiff for

the unlawful purpose of denying benefits under the TWCA.” He contends, “Tervita provided

testimony in the process of Plaintiff’s claim and at the contested case hearing under oath that

Defendants knew at the time was false.” Sutterfield’s own pleadings establish that his causes of

action for conspiracy and for discrimination by presenting false testimony against Tervita are

based on Tervita’s participation in the contested case hearing.

       Sutterfield disagrees.    He describes White’s testimony as only “the culmination of

[Tervita’s] negative attitude toward Sutterfield’s claim,” not the basis for the claim itself. As

such, Sutterfield argues, the testimony is evidence of an element of his employment

discrimination claim. Sutterfield argues that unlike a defamation claim, in which the defamatory

statement itself creates the cause of action, his employment discrimination claim is not based on

White’s testimony. He has not sued White personally for defamation based on statements made

during the contested case hearing.        Sutterfield also points out that the TDI-WC had no

jurisdiction to resolve his claim of employment discrimination under Chapter 451 of the Texas

Labor Code. Sutterfield thus argues that his suit does not implicate Tervita’s right to petition.

       But even though Sutterfield does not seek damages resulting from White’s testimony

standing alone, he does claim that Tervita discriminated against him by, among other acts,

presenting White’s testimony at the agency hearing. And although the TDI-WC could not

                                                 –6–
resolve Sutterfield’s claims of employment discrimination, it could resolve his claim for

worker’s compensation benefits, and did so. White’s testimony was a “communication,” “in or

pertaining to” a proceeding before the TDI-WC. See TCPA § 27.001(1), (4). Sutterfield’s

employment discrimination and conspiracy claims are in part “based on, relate[ ] to, or [are] in

response to” this communication. See id., § 27.003.

                 2.      Valid defense

          Tervita has established that Sutterfield’s claims of (1) a violation of Chapter 451 of the

labor code by “presenting false testimony during the claim process,” and (2) conspiracy to

knowingly provide false testimony at the TCI-WC hearing are based on Tervita’s exercise of a

protected right. See Serafine v. Blunt, 466 S.W.3d 352, 360 (Tex. App.—Austin 2015, no pet.)

(movant may carry burden based on pleadings alone). Tervita has thus carried its initial burden

under the TCPA. TCPA § 27.005(b) (moving party must show by preponderance of evidence

that legal action is based on, relates to, or is in response to that party’s exercise of constitutional

right).

          Because Tervita carried its burden as to these two causes of action, the trial court was

required to dismiss Sutterfield’s claims unless Sutterfield established “by clear and specific

evidence a prima facie case for each element of the claim in question.” TCPA § 27.005(c);

Lipsky, 460 S.W.3d at 587. And even if Sutterfield met this burden, the trial court was required

to dismiss his claims if Tervita “establishe[d] by a preponderance of the evidence each essential

element of a valid defense” to Sutterfield’s claim. TCPA § 27.005(d). White’s testimony, given

in a quasi-judicial proceeding before a governmental entity with the power to investigate and

decide the issue, was an absolutely privileged communication. See Senior Care Res., Inc. v.

OAC Senior Living, LLC, 442 S.W.3d 504, 512 (Tex. App.—Dallas 2014, no pet.). “Any

communication, even perjured testimony, made in the course of a judicial proceeding, cannot

                                                 –7–
serve as the basis for a suit in tort.” In re Hinterlong, 109 S.W.3d 611, 635–36 (Tex. App.—Fort

Worth 2003, orig. proceeding). Sutterfield’s claims arising from White’s testimony are barred as

a matter of law. See Senior Care Res., Inc., 442 S.W.3d at 518 (absolute privilege barred claims

for libel and business disparagement based on statements made during quasi-judicial

proceeding). Thus Tervita established a valid defense to Sutterfield’s causes of action based on

White’s testimony. See TCPA § 27.005(d).

               3.     Statutory exemption

       Sutterfield contends, however, that his claims against Tervita are exempt from the TCPA

because they arise out of the worker’s compensation insurance contract between Tervita and

Zurich. By its express terms, the TCPA “does not apply to a legal action brought under the

Insurance Code or arising out of an insurance contract.” TCPA § 27.010(d).

       Sutterfield contends Tervita discriminated against him because he filed a worker’s

compensation claim, conduct specifically prohibited by Chapter 451 of the Texas Labor Code.

See TEX. LAB. CODE ANN. § 451.001 (prohibiting discrimination against employees who file a

worker’s compensation claim in good faith). Sutterfield emphasizes that he could not assert this

claim if Tervita had not elected to obtain worker’s compensation coverage. See Addison v.

Diversified Healthcare/Dallas, L.L.C., 378 S.W.3d 625, 627 (Tex. App.—Dallas 2012, no pet.)

(citing TEX. LAB. CODE ANN. § 406.002). In Addison, we explained that “only subscribing

employers” are subject to section 451.001 of the labor code, prohibiting an employer from firing

an employee who files a worker’s compensation claim in good faith, has hired an attorney to

represent him in a claim, or who participates in administrative review proceedings regarding

pending claims. Id. Sutterfield also contends his claim for negligent misrepresentation arises out

of a worker’s compensation insurance policy because his claim is based on the false

representation that benefits were not available to him under the policy.

                                               –8–
       We conclude the section 27.010(d) exemption does not apply. Sutterfield’s suit is not a

“legal action brought under the Insurance Code or arising out of an insurance contract.” TCPA

§ 27.010(d). “Legal action” is defined in the TCPA as “a lawsuit, cause of action, petition,

complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal

or equitable relief.” TCPA § 27.001(6). Sutterfield’s “legal action” against Tervita is brought

under the Texas Labor Code and the common law, not the Texas Insurance Code. His petition

specifically alleges that Tervita “engaged in discriminatory conduct in violation of Chapter 451

of the Texas Labor Code which prohibits the discharge of or discrimination against a worker

who files a workers’ compensation claim or institutes a proceeding under the Texas Worker’s

Compensation Act . . . in good faith.” And Sutterfield does not seek worker’s compensation

benefits under the insurance contract between Tervita and Zurich in this suit. Instead, he seeks

damages under Chapter 451 of the Texas Labor Code:

          23. The elements of Plaintiff’s damages include, but are not limited to,
          attorney’s fees incurred during the prosecution of his worker’s
          compensation claim, mental anguish caused by the conduct of Defendants
          in denying and/or delaying benefits, lost earnings and lost earning capacity
          caused by the delay in receiving timely medical care, out-of-pocket
          expenses, and costs associated with the handling of the [TDI-WC] process.
          Plaintiff would further show he is entitled to back pay and reinstatement
          pursuant to Chapter 451 of the Texas Labor Code.

       Sutterfield’s suit is not “a legal action brought under the Insurance Code or arising out of

an insurance contract.” TCPA § 27.010(d). His claims based on Tervita’s participation in the

TDI-WC hearing are not exempt from the TCPA.

               4.      Attorney’s fees and costs

       If the trial court dismisses a “legal action” under the TCPA, section 27.009 requires an

award of “court costs, reasonable attorney’s fees, and other expenses incurred in defending

against the legal action as justice and equity may require.” TCPA § 27.009(a)(1); Avila v.

Larrea, No. 05-14-00631-CV, 2015 WL 3866778, at *4 (Tex. App.—Dallas June 23, 2015, pet.
                                                –9–
filed). In its motion to dismiss, Tervita requested that it be permitted to prove up its costs,

reasonable attorney’s fees, and expenses “[u]pon entry of an order granting this motion to

dismiss,” but did not request or offer proof of a specific amount. And in any event, as discussed

below, the trial court did not err by denying Tervita’s motion to dismiss Sutterfield’s remaining

claims under the Texas Labor Code and for negligent misrepresentation. Tervita’s motion to

dismiss should have been granted only in part. The trial court has discretion on remand to

determine the amount of attorney’s fees and costs “as justice and equity may require.” See Avila,

2015 WL 3866778, at *5 (discussing trial court’s discretion under TCPA § 27.009(a)(1)).

Accordingly, we remand to the trial court for consideration of attorney’s fees and costs pursuant

to TCPA § 27.009(a). See Serafine, 466 S.W.3d at 364 (TCPA motion to dismiss should have

been granted in part; cause remanded for further proceedings including consideration of award

under § 27.009).

       C.      All other claims

       Tervita did not establish by a preponderance of the evidence that Sutterfield’s remaining

claims are based on its exercise of its right to petition or its right of association. Sutterfield’s

causes of action for employment discrimination based on (1) creating a hostile work

environment, (2) representing that he was “not entitled to pursue benefits” under the Texas

Worker’s Compensation Act, and (3) wrongful discharge, as well as his cause of action for

negligent misrepresentation about his entitlement to benefits, are based on Tervita’s actions and

statements outside of the TDI-WC proceeding. Tervita did not show, by a preponderance of the

evidence, that these claims are based on, relate to, or are in response to its exercise of its right to

petition. See TCPA § 27.005(b); see also Serafine, 466 S.W.3d at 360 (to extent counterclaims

were based on threats made outside of context of lawsuit, TCPA movant did not satisfy initial

burden to show that these portions of counterclaims were subject to TCPA).

                                                –10–
       Nor did Tervita show that these claims are based on its exercise of the right of

association. This right is defined in section 27.001(2) of the TCPA: “‘Exercise of the right of

association’ means a communication between individuals who join together to collectively

express, promote, pursue, or defend common interests.”          TCPA § 27.001(2).       Sutterfield

contends that Tervita created a hostile work environment, misrepresented his eligibility for

worker’s compensation benefits, and wrongfully discharged him. None of these allegations

involve association between Zurich and Tervita. Sutterfield pleaded communications between

Zurich and Tervita only in connection with his conspiracy claim. He alleged that Zurich and

Tervita “combined to have a meeting of the minds for the purpose of providing testimony and

evidence against Plaintiff for the unlawful purpose of denying benefits under the TWCA.” But

we have already concluded that the conspiracy claim should have been dismissed because it is

based on Tervita’s right to petition.     And any further “internal, private communications”

regarding Sutterfield’s employment, rather than the proceedings before the TDI-WC, do not

constitute an exercise of the right of association. See ExxonMobil Pipeline Co. v. Coleman, 464

S.W.3d 841, 846–850 (Tex. App.—Dallas 2015, pet. filed) (“internal, private communications”

among Coleman’s former employer and supervisors about Coleman’s job performance did not

have “any element of citizen participation” and were thus not made in exercise of the right of

association).

       By seeking dismissal under the TCPA, Tervita bore the initial burden to show its

provisions apply. See Pickens, 433 S.W.3d at 187. That burden required Tervita to show, by a

preponderance of the evidence, that Sutterfield’s allegations were based on Tervita’s exercise of

its right of petition or its right of association. See id. Because Tervita did not meet this burden

of proof, we need not address the “second prong” of the TCPA, whether Sutterfield established

by clear and specific evidence each essential element of his claims. See id. (where movant did

                                              –11–
not meet burden to show that nonmovant’s action was based on, related to, or in response to

movant’s exercise of right of free speech, court of appeals need not address second prong of

TCPA). And we need not address Tervita’s defenses to these claims, such as its arguments that

Sutterfield’s claims are barred by the holdings of Texas Mutual Insurance Company v. Ruttiger,

381 S.W.3d 430 (Tex. 2012), and In re Crawford & Co., 458 S.W.3d 920, 925–26 (Tex. 2014)

(per curiam).

                                          CONCLUSION

       Because Tervita showed by a preponderance of the evidence that Sutterfield’s conspiracy

claim and his claim for employment discrimination by “presenting false testimony during the

claim process” are based on Tervita’s exercise of the right to petition, the trial court should have

granted Tervita’s motion to dismiss those claims. We sustain Tervita’s two issues in part. We

render judgment dismissing Sutterfield’s claim for conspiracy and the portion of his employment

discrimination claim based on Tervita’s presentation of testimony and evidence at the hearing

before the Texas Department of Insurance, Division of Worker’s Compensation. We remand

Sutterfield’s remaining causes of action for further proceedings, including the trial court’s

consideration of an award under TCPA § 27.009.




                                                    /Michael J. O'Neill/
                                                    MICHAEL J. O’NEILL
                                                    JUSTICE, ASSIGNED

150469F.P05




                                               –12–
                                        S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      JUDGMENT

TERVITA, LLC, Appellant                             On Appeal from the 116th Judicial District
                                                    Court, Dallas County, Texas
No. 05-15-00469-CV         V.                       Trial Court Cause No. DC-14-13815.
                                                    Opinion delivered by Justice O’Neill;
CASEY SUTTERFIELD, Appellee                         Justices Fillmore and Stoddart participating.

        In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED in part and REVERSED in part. We REVERSE that portion of the trial court’s
judgment denying the appellant Tervita, LLC’s motion to dismiss appellee Casey Sutterfield’s
claim for conspiracy and the portion of his claim for employment discrimination based on the
presentation of testimony and evidence at the hearing before the Texas Department of Insurance,
Division of Worker’s Compensation, and RENDER judgment dismissing those claims. In all
other respects, the trial court’s judgment is AFFIRMED. We REMAND this cause to the trial
court for further proceedings consistent with this opinion.

       It is ORDERED that each party bear its own costs of this appeal.


Judgment entered this 18th day of December, 2015.




                                             –13–
