DALLAS – A three-judge panel heard oral arguments Tuesday in a contentious noncompete dispute that is currently deadlocked in an interlocutory Texas Citizens Participation Act battle.
It is the first time for a Texas appeals court to consider whether the state’s very broad anti-SLAPP statute preempts the narrower Texas Covenants Not to Compete Act.
But even if the Dallas Court of Appeals rules in favor of the plaintiffs in the case and determines that counterclaims against them should have been dismissed under TCPA grounds, it may not matter. On Monday, the Texas House passed a bill that would perform a mass sweep of the types of cases eligible for dismissal under the TCPA – noncompete disputes included – if the Senate also passes the bill by May 22.
The case pits Christopher, Bryan and Garry Edgar, a trio of engineers, against their former employer, an oilfield wireline services company. After leaving the company in 2017, the Edgars filed a lawsuit asking a Dallas trial court to grant a declaratory judgment that each of their employment agreement’s noncompete and nonsolicit covenants were unenforceable, arguing that the terms were unlawfully burdensome.
The defendant, Integrity Wireline and Oilfield Services (IWOS), countersued the Edgars, plus the company they started after leaving, Clear Fork Wireline LLC, and two of its members, alleging breach of fiduciary duty, conspiracy, tortious interference and misappropriation of trade secrets.
The Edgars had asked Dallas District Judge Maricela Moore to dismiss the counterclaims on TCPA grounds, but she declined to do so.
At Tuesday’s oral arguments, plaintiffs’ attorney Stephen Fink of Thompson & Knight argued that the counterclaims should have been dismissed because it is “impossible to separate activities of community and association” – two components of the TCPA – “from the classic sense of enforcing a noncompete.
Fink quickly called to attention a May 1 opinion from Waco’s 10thCourt of Appeals, Joshua Arey and Rogina Kimmons v. The Shipman Agency, which he said supported his clients’ argument.
“It took about three sentences for them to essentially find a claim to enforce a noncompete is covered by the TCPA,” Fink told the panel, which included Justices Ken Molberg, Lana Myers and Cory Carlyle. “Both are under the right of free speech and right of association.”
But Akin Gump partner Eric Gambrell, who represents Integrity, told the panel the May 1 opinion would “squarely conflict” with other caselaw established by the Dallas Fifth Court of Appeals.
“To put it bluntly: the four corners of the TCPA stating that you can’t lessen or abrogate other provisions of the CNCA requires that the motion to dismiss be denied,” he said.
He argued the CNCA preempts the TCPA because the “four corners have extremely deferential provisions in it.”
Even if that were the case, Fink argued, anything the other side said is irrelevant because the company that his clients entered the noncompete agreement with “no longer exists.”
“All operations, all employees, everything about the business they originally intended to do was under the name Integrity Wireline and Oilfield Services … it actually wasn’t being done under that name.”
He said the entity is now called CEEE Wireline.
“That company is not a party of this case,” he said. “It never has been.”
In a question posed during rebuttal, Justice Molberg appeared a bit skeptical of Fink’s arguments.
“My point is if you hadn’t beat them to the courthouse, they could file their breach of contract action and you’d be on different sides of the table,” Justice Molberg said. “Would they not have the right to invoke [the TCPA] simply because they filed first?”
Fink argued this situation is an exception because it is truly related to a matter of public concern: a new employer that could come to the town of Albany, Texas, where his clients live.
“We’re talking about the possibility of a new employer in a town that hasn’t had a new employer in a long time, that has competition and a choice between one employer and another,” he answered.
The Edgars’ full legal team includes Thompson & Knight lawyers Anthony Campiti, and Bryan Neal and Matthew Mitzner of Mitzner Kawalek.
Integrity’s full legal team includes Brian Patterson and Scott Friedman of Akin Gump.