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Supreme Court of Texas Decides New TCPA (anti-SLAPP) Cases

If you litigate cases in Texas, you need to be educated on the Texas Citizens Participation Act (TCPA), often referred to as the Texas anti-SLAPP statute. The TCPA originally was billed as a relatively narrow statute designed to prevent lawsuits aimed at stifling the exercise of constitutional rights related to freedom of speech and petition.

The TCPA provides for the possible early dismissal of certain claims—and the potential award of attorney’s fees. At first blush, the statute appears to apply to a fairly narrow group of legal claims. But, as Texas lawyers are discovering, the statute is being applied to a much wider range of claims than originally anticipated.

On April 27, 2018, the Supreme Court of Texas decided two new cases under the Texas Citizens Participation Act (TCPA), often referred to as the Texas anti-SLAPP statute.

The first case, Castleman v. Internet Money Limited, concerned what is known as the commercial-speech exemption under the statute. The exemption states that the TCPA “does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing good or services, if the statement or conduct arises out of the sale or lease of good, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or intended buyer or customer.”

Several cases raised an interesting question under this exemption: Must the statements be directed to the defendant’s actual or potential buyer or customer, as opposed the plaintiff’s buyers or customers or even the public at large? The intermediate courts were divided over the answer, though a majority held that the exemption applies only if the statements were directed at the defendant’s buyers or customers.

In Castleman, the Supreme Court agreed with this conclusion. According to the Court, the commercial-speech exemption applies where: “(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.”

The Court’s second decision, Youngkin v. Hines, concerned the applicability of the TCPA to claims against an attorney and also implicated the attorney immunity doctrine. To oversimplify a bit, the parties to a lawsuit entered into a settlement agreement concerning a parcel of real property. The plaintiffs’ attorney read the agreement into the record under Rule 11 of the Texas Rules of Civil Procedure.

The defendant later filed a new lawsuit against the plaintiffs alleging fraud in connection with the settlement agreement. The defendant later added a claim against the plaintiffs’ attorney for his role in the settlement. The attorney sought dismissal under the TCPA, alleging that his recitation of the agreement into the court’s record constituted the “exercise of the right to petition” as that term is defined by TCPA. The Supreme Court agreed, noting the expansive statutory definition of the petition right. The Court declined to decide whether the attorney’s statements fell within the constitutional right of petition, deeming that issue irrelevant in light of the unambiguous statutory definition.

The Court then examined whether the attorney had established the elements of his affirmative defense of attorney immunity. Pointing to its recent decision in Cantey Hanger, LLP v. Byrd, the Court held that the only relevant inquiry was whether the services performed by the lawyer were within the scope of client representation. The Court had little difficulty concluding that negotiating and entering the Rule 11 agreement (and preparing a transfer deed and filing a lawsuit—also actions challenged in the lawsuit) fell within the scope of the lawyer’s representation of his client. As a result, the attorney-immunity doctrine barred the claims.

Lest its decision be interpreted as granting lawyers a license to commit misconduct, the Court took pains to note that lawyers who violate ethical rules in the course of representing their clients remain subject to professional discipline­. And the Court reiterated that actions outside the scope of client representation—theft of goods or services on the client’s behalf, or participating with the client in a fraudulent business enterprise, for example—remain unprotected by the attorney-immunity doctrine.

Together, these two decisions further clarify the scope and operation of the TCPA. Castleman brings needed clarity to the interpretation of the commercial-speech exemption—a provision that had, perhaps surprisingly, generated substantial litigation and differing judicial decisions. Youngkin reinforces the attorney-immunity doctrine and establishes unequivocally that the TCPA’s protections may extend even further than those provided by the United States and Texas Constitutions for the rights of speech and petition.