Richard Goldberg v. EMR (USA Holdings) Inc. ( 2020 )

Affirmed; Opinion Filed January 23, 2020
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-18-00261-CV
RICHARD GOLDBERG, KENNETH GOLDBERG, GEOMET RECYCLING, LLC,
JOSH APPLEBAUM, ALICIA MCKINNEY, ELOISA MEDINA, LEE WAKSER,
SPENCER LIEMAN, MIKEL SHECHT, LAURA MYERS, HENRY JACKSON, AND
KELLY COUCH, Appellants
V.
EMR (USA HOLDINGS) INC., EMR GOLD RECYCLING, LLC, GOLD METAL
RECYCLERS MANAGEMENT, LLC, GOLD METAL RECYCLERS, LTD., GMY
ENTERPRISES, LLC, GMY, LTD., GOLD METAL RECYCLERS—GAINESVILLE,
DLLC, GOLD METAL RECYCLERS—FORT WORTH, LLC, GOLD METAL
RECYCLERS—OKLAHOMA, LLC, AND GOLDBERG INDUSTRIES, INC., Appellees
On Appeal from the 116th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-17-14064
OPINION ON REHEARING
Before Justices Myers and Whitehill1
Opinion by Justice Myers
This Court’s opinion of August 22, 2019, is withdrawn. The following is the opinion of
this Court.
This case concerns the applicability of the Texas Citizens Participation Act (TCPA) to
breach of contract and various commercial torts, including misappropriation of trade secrets and
1
Justice Ada Brown was a member of the panel when this case was submitted. Subsequently, Justice Brown was appointed to the United
States District Court for the Northern District of Texas. Accordingly, she did not participate in the issuance of this opinion.
breach of fiduciary duty. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011.2 Appellees
(Plaintiffs) sued appellants (Defendants). Defendants moved for dismissal of the claims, asserting
that Plaintiffs’ “legal action” is based on, relates to, or is in response to their communications that
were protected under the TCPA. The trial court denied Defendants’ motion to dismiss. Defendants
bring five issues in this interlocutory appeal contending the trial court erred by denying their
motion to dismiss because: (1) Plaintiffs’ claims are based on, relate to, or are in response to
Defendants’ exercise of their right of association or free speech; (2) Plaintiffs did not establish that
the commercial-speech exemption applied to their claims; (3) Plaintiffs did not offer prima facie
proof of the elements of each claim as to each Defendant; (4) the trial court abused its discretion
by failing to exclude certain evidence Plaintiffs offered to establish a prima facie case; and (5)
Plaintiffs failed to establish that the TCPA violates the constitutional rights to jury trial, open
courts, and due process.3 See id. § 51.014(a)(12) (authorizing interlocutory appeal from denial of
motion to dismiss under TCPA). We conclude the trial court did not err by denying Defendants’
motion to dismiss because Defendants failed to prove by a preponderance of the evidence that
Plaintiffs’ claims are based on, relate to, or are in response to Defendants’ exercise of their right
of association or free speech. We affirm the trial court’s order denying Defendants’ motion to
dismiss.
BACKGROUND
From 1976 to 2011, Kenneth Goldberg co-owned and operated a scrap-metal recycling
company called Gold Metal Recyclers. In 2011, Goldberg sold Gold Metal to EMR Holdings for
2
The Texas Legislature amended the TCPA effective September 1, 2019. Those amendments apply to “an action filed on or after” that date.
Act of May 17, 2019, 86th Leg., R.S., ch. 378, § 11, 2019 Tex. Sess. Law Serv. 684, 687. Because the underlying lawsuit was filed before September
1, 2019, the law in effect before September 1 applies. See Act of May 21, 2011, 82d Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 961–64,
amended by Act of May 24, 2013, 83d Leg., R.S., ch. 1042, §§ 1–3, 5, 2013 Tex. Gen. Laws 2499–2500. All citations to the TCPA are to the
version before the 2019 amendments took effect.
3
Appellees filed a conditional cross-point challenging two orders denying discovery. Because we affirm the trial court’s judgment, we do
not address the cross-point.
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over $100 million. After the sale, Goldberg stayed on as manager of Gold Metal, now part of
EMR, and he agreed not to compete with EMR and its affiliated entities (Plaintiffs) for three years
after leaving employment with the company. Goldberg signed confidentiality agreements
promising not to use Plaintiffs’ confidential information for the benefit of “any person” other than
Plaintiffs.
Goldberg left Gold Metal and, after waiting three years, he opened a scrap-metal recycling
business, Geomet Recycling. To staff Geomet, he hired some of Plaintiffs’ employees.
Five months after Geomet went into business, Plaintiffs sued Goldberg, Geomet, and
Plaintiffs’ former employees who had gone to work for Geomet for violations of the Texas
Uniform Trade Secrets Act (TUTSA), breach of contract, breach of fiduciary duty, tortious
interference with contract, and conspiracy. Plaintiffs sought monetary damages and injunctive
relief.
Defendants moved for dismissal of the suit under the TCPA, asserting Plaintiffs’ lawsuit
is based on, relates to, or is in response to Defendants’ exercise of the right of association or free
speech. Plaintiffs filed a response to the motion to dismiss.
The trial court denied Defendants’ motion to dismiss without stating a reason for the denial
of the motion and without making findings of fact and conclusions of law. The trial court also
entered a temporary restraining order prohibiting Defendants Goldberg, Josh Applebaum, Laura
Myers, “and all entities or individuals acting with them or at their direction . . . from directly or
indirectly using, disclosing, replicating, or otherwise misappropriating for their own individual or
collective use or benefit . . . any of Plaintiffs’ Trade Secrets or Confidential Information.”
TEXAS CITIZENS PARTICIPATION ACT
The TCPA permits a defendant to move for dismissal of a legal action that is “based on,
relates to, or is in response to a party’s exercise of the right of free speech, right to petition, or right
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of association.” CIV. PRAC. § 27.003(a). The statute’s purpose “is 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.” Id. § 27.002.
Determination of a motion to dismiss under the TCPA is a “three-step decisional process.”
Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, No. 18-0656, 2019 WL 6971659, at *3 (Tex.
Dec. 20, 2019); Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018); see also Duncan v. Acius
Group, LP, No. 05-18-01432-CV, 2019 WL 4392507, at *2 (Tex. App.—Dallas Sept. 13, 2019,
no pet.) (mem. op.) (determination of TCPA motion to dismiss “involves up to three steps”). In
step 1, the movant for dismissal has the burden of showing by a preponderance of the evidence
that the legal action is based on, relates to, or is in response to the movant’s exercise of one of
those rights. CIV. PRAC. § 27.005(b). If the movant does so, then the procedure moves to step 2,
and the burden of proof shifts to the nonmovant bringing the legal action to “establish[] by clear
and specific evidence a prima facie case for each essential element of the claim in question.” Id.
§ 27.005(c). If the nonmovant meets this burden, then the procedure moves to step 3, and the
burden of proof shifts back to the movant to “establish[] by a preponderance of the evidence each
essential element of a valid defense to the nonmovant’s claim.” Id. § 27.005(d).
The evidence considered by the trial court in determining a motion to dismiss includes “the
pleadings and supporting and opposing affidavits stating the facts on which the liability or defense
is based.” CIV. PRAC. § 27.006(a). However, the plaintiff’s pleadings are usually “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)).
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When a party appeals the denial of its motion to dismiss under the TCPA, the appeal stays
the commencement of the trial and “all other proceedings in the trial court pending resolution of
that appeal.” CIV. PRAC. § 51.014(b).
PLAINTIFFS’ CLAIMS
When Goldberg sold Gold Metal to EMR, the sale agreement contained a nondisclosure
provision stating each “Seller,” which included Goldberg, agreed “that all customer, prospect, and
marketing lists, sales data, intellectual property, employee information, proprietary information,
trade secrets and other confidential information” of Gold Metal before the sale would “be owned
exclusively by EMR” after the closing of the sale. The provision also stated that each “Seller,”
including Goldberg, promised to treat the information as confidential and promised “not to make
use of such information for its own purposes or for the benefit of any other Person.”
After the sale, Goldberg went to work for one of the Plaintiffs as its chief executive officer.
His employment agreement contained a nondisclosure provision stating he agreed that he would
not, even after termination of his employment, “disclose to or use for the benefit of any person,
corporation or other entity, or for himself, any and all files, trade secrets or other confidential
information concerning the internal affairs of [Plaintiffs], including, but not limited to, information
pertaining to its clients, services, products, earnings, finances, operations, methods or other
activities.” This nondisclosure provision did not apply to information that was “of public record
or is generally known, disclosed or available to the general public or the industry generally.” The
employment agreement also included noncompetition provisions in which Goldberg promised not
to own or work for a competing company for one year after his employment with Plaintiffs ceased.
This noncompetition provision also prohibited Goldberg from hiring any of Plaintiffs’ employees
for one year after he left Plaintiffs. Goldberg was also on EMR’s board of directors and promised
not to compete with EMR for three years after he left the board of directors.
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Plaintiffs’ employees, including the other individual Defendants, received Plaintiffs’
employee handbook. The handbook contained a nondisclosure provision about confidential
information:
During employment at the Company, employees may acquire confidential
information belonging to the Company such as, but not limited to, customer
information, accounts, prospects, trade secrets, procedures, sales data, supply
sources, . . . electronic files, and other specific information concerning the
Company, its suppliers, its customers, and its employees. . . . Employees agree that
all such information is the exclusive property of the Company and that they will
not at any time divulge or disclose to anyone, except in the responsible exercise of
an employee’s job, any such information, whether or not the information has been
designated specifically as confidential. The unauthorized release or removal of
such information will be viewed as grounds for discipline, up to and including
termination of employment and possible legal action against employee.
The handbook also stated that “[p]rograms and information on computers are to be treated as
proprietary and confidential” and that “[e]mployees may not use computers to disclose confidential
and proprietary information.”
Plaintiffs had a computer system called Trade 2. According to Andrew Sheppard, the chief
operating officer of Southern Recycling, LLC, Trade 2 “contain[ed] a compilation of information
of virtually all of EMR Group’s commercial data, including the operational transactions that take
place within EMR Group (and its related companies), as well as inventory control and virtually all
aspects of the relationships with customers [suppliers] and consumers [purchasers].” Many of
Plaintiffs’ purported trade secrets were contained within Trade 2. When they worked for Plaintiffs,
all the individual Defendants had at least some access to parts of Trade 2.
Goldberg resigned from EMR’s board of directors in September 2013, and he resigned
from his CEO position in September 2014. The noncompete agreements expired by September
17, 2016.
In May 2017, Goldberg formed a new company, Geomet, which would be competing
directly with Plaintiffs.
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From November 2016 and continuing through 2017, many of Plaintiffs’ employees
resigned and ultimately went to work for Geomet. Many of these employees, when they worked
for Plaintiffs, communicated with scrap-metal suppliers and purchasers to buy and sell the scrap
metal that constituted Plaintiffs’ business. When these employees went to work for Geomet, they
contacted some of those same suppliers and purchasers.
A few of the employees, before they resigned from Plaintiffs, e-mailed to their personal
e-mail accounts information from Plaintiffs’ computer database, including seller and purchaser
lists, inventory of some of Plaintiffs’ facilities, environmental reports, and information about
Plaintiffs’ employees. Plaintiffs considered all this information to be trade secrets. Some of the
employees took cell phones, laptop computers, and computer tablets belonging to Plaintiffs with
them when they resigned. Some of these items were later returned to Plaintiffs but with records
of their use erased. Plaintiffs hired a company to examine these computers, phones, and tablets.
The company determined that USB storage devices such as external hard drives had been attached
to some of the computers and others had accessed data-storage websites.
Plaintiffs complain that Goldberg violated his employment agreement by contacting
Plaintiffs’ employees and persuading them to resign and work for Geomet. Plaintiffs also
complain that the individual Defendants breached the nondisclosure provisions of Plaintiffs’
employee handbook by downloading information and sending it to their personal e-mail accounts
or by using external hard drives and data-storage devices and websites. Plaintiffs also complain
that the individual Defendants, after they went to work for Geomet, violated Plaintiffs’ employee
handbook by contacting scrap-metal suppliers and purchasers who were also suppliers and
purchasers from Plaintiffs. Plaintiffs complain that the individual Defendants contacted the same
people at the purchasers and suppliers with whom they did business while employed by Plaintiffs.
Some of these contacts resulted in purchases and sales of scrap metal by Geomet. Plaintiffs assert
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that if the purchasers and suppliers had come to them instead of Geomet, Plaintiffs would have
made a profit from those purchases and sales.
Plaintiffs also complain about the Pecan House incident. Pecan House agreed to send a
load of scrap metal to one of the Plaintiffs, Gold Metal Recyclers, and Gold Metal Recyclers made
an advance payment to Pecan House. According to Plaintiffs, before Pecan House delivered the
scrap metal, Defendant Mikel Shecht falsely represented to Pecan House that Gold Metal
Recyclers had shut down and moved its operations to Geomet. After talking to Shecht, Pecan
House delivered the load of scrap metal to Geomet instead of to Gold Metal Recyclers. Defendant
Henry Jackson signed for the load when it arrived at Geomet.
Plaintiffs’ assertions of their damages include the lost value of the goodwill in the purchase
from Goldberg, the lost sales due to Defendants’ contacting the purchasers who did business with
Plaintiffs, and the loss to Plaintiffs’ inventory of scrap metal they would have purchased from the
scrap-metal providers had Defendants not contacted Plaintiffs’ suppliers and purchased it.
Plaintiffs assert they would have made a profit on the scrap-metal Defendants purchased. Plaintiffs
also seek disgorgement of Defendants’ profits from doing business with the suppliers and
purchasers. Plaintiffs also claim as damages the costs of recruiting and training new employees
for the positions previously held by Plaintiffs’ employees who went to work for Geomet. Plaintiffs
also seek injunctive relief to bar Defendants from using or otherwise misappropriating Plaintiffs’
trade secrets or other confidential information.
APPLICATION OF THE TCPA
In their first issue, Defendants contend the trial court erred to the extent the court
determined Defendants failed to prove by a preponderance of the evidence that Plaintiffs’ claims
were based on Defendants’ exercise of their right of association or free speech.
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The trial court’s application of the TCPA is a matter of statutory interpretation that we
review de novo. Youngkin, 546 S.W.3d at 680. In conducting our analysis, “we ascertain and give
effect to the Legislature’s intent as expressed in the language of the statute.” State ex rel. Best v.
Harper, 562 S.W.3d 1, 11 (Tex. 2018) (quoting City of Rockwall v. Hughes, 246 S.W.3d 621, 625
(Tex. 2008)); see also Travis Cent. Appraisal Dist. v. Norman, 342 S.W.3d 54, 58 (Tex. 2011)
(“Legislative intent . . . remains the polestar of statutory construction.” (internal citations omitted)).
We construe the statute’s words according to their plain and common meaning, “unless a contrary
intention is apparent from the context, or unless such a construction leads to absurd results.”
Youngkin, 546 S.W.3d at 680; see also Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011)
(“The plain meaning of the text is the best expression of legislative intent unless a different
meaning is apparent from the context or the plain meaning leads to absurd or nonsensical results.”).
We consider both the specific statutory language at issue and the statute as a whole. In re
Office of Att’y Gen., 422 S.W.3d 623, 629 (Tex. 2013) (orig. proceeding); see also Youngkin, 546
S.W.3d at 680 (“[L]egislative intent derives from an act as a whole rather than from isolated
portions of it.”). We endeavor to read the statute contextually, giving effect to every word, clause,
and sentence. In re Office of Att’y Gen., 422 S.W.3d at 629. We adhere to the definitions supplied
by the legislature in the TCPA. Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894
(Tex. 2018); Youngkin, 546 S.W.3d at 680. In applying those definitions, we must construe those
individual words and provisions in the context of the statute as a whole. Youngkin, 546 S.W.3d at
680–81.
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Step 1: Whether Plaintiffs’ Claims Are Based on, Relate to, or Are in Response to
Defendants’ Exercise of Protected Rights
For Defendants to be entitled to dismissal under the TCPA, they had to prove by a
preponderance of the evidence that Plaintiffs’ claims are based on, relate to, or are in response to
Defendants’ exercise of the right of association or free speech.4 CIV. PRAC. § 27.005(b).
“‘Exercise of the right of association’ means a communication between individuals who
join together to collectively express, promote, pursue, or defend common interests.” CIV. PRAC.
§ 27.001(2). Exercise of the right of association requires that the “nature of the communication
between individuals who join together must involve public or citizen’s participation.” Dyer v.
Medoc Health Servs., LLC, 573 S.W.3d 418, 426 (Tex. App.—Dallas 2019, pet. denied) (internal
quotation marks omitted).
“‘Exercise of the right of free speech’ means a communication made in connection with a
matter of public concern.” CIV. PRAC. § 27.001(3). “‘Matter of public concern’ includes an issue
related to: (A) health or safety; (B) environmental, economic, or community well-being; . . . or
(E) a good, product, or service in the marketplace.” Id. § 27.001(7). “The phrase ‘matter of public
concern’ commonly refers to matters ‘of political, social, or other concern to the community,’ as
opposed to purely private matters.” Creative Oil & Gas, 2019 WL 6971659, at *6 (quoting Brady
v. Klentzman, 515 S.W.3d 878, 884 (Tex. 2017)); see also Lei v. Natural Polymer Int’l Corp., 578
S.W.3d 706, 715 (Tex. App.—Dallas 2019, no pet.) (private communications in connection with
a business dispute do not involve matters of public concern when the communications address
only private economic interests and make no mention of health or safety). Not all communications
made in connection with a matter related to health or safety, environmental, economic, or
community well-being, or a good, product, or service in the marketplace will constitute the
4
The TCPA also applies to a legal action that is based on, relates to, or is in response to a party’s exercise of the right to petition. CIV. PRAC.
§ 27.003. Defendants do not assert the exercise of the right to petition is an issue in this case.
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exercise of the right of free speech under the TCPA. The communications themselves must relate
to a matter of public concern. See Creative Oil & Gas, 2019 WL 6971659, at *5–6. A
communication related to a good, product, or service in the marketplace must have some relevance
to a public audience of potential buyers or sellers and not be simply a communication between
private parties of matters of purely private concern. Id. at *5.
Central to the definitions of both rights is “a communication,” which the TCPA states
“includes the making or submitting of a statement or document in any form or medium, including
oral, visual, written, audiovisual, or electronic.” CIV. PRAC. § 27.001(1).
We will apply these definitions to the evidence to determine whether Defendants proved
by a preponderance of the evidence that Plaintiffs’ claims are based on, relate to, or are in response
to Defendants’ communications that constitute the exercise of the right of association or free
speech.
Transfer of Electronic Information
Plaintiffs alleged Myers, Medina, and Shecht e-mailed Plaintiffs’ confidential information
to themselves. Plaintiffs alleged Applebaum, Medina, Jackson, Shecht, Richard Goldberg, and
Wakser connected data-storage devices to Plaintiffs’ computers or accessed data-storage websites
from those computers. Plaintiffs also alleged Myers took her company-issued phone with her
when she left EMR. They also alleged, “Mr. Applebaum’s cell phone was reset to factory settings,
such that the data thereon was destroyed, in violation of the Handbook.” Plaintiffs asserted these
actions violated TUTSA and constituted breaches of fiduciary duties.
To determine whether Defendants met their burden under step 1, we must determine
whether the alleged electronic transfers of information were “communication[s]” as defined in the
TCPA. “‘Communication’ includes the making or submitting of a statement or document in any
form or medium, including . . . electronic.” CIV. PRAC. § 27.001(1). In these legal actions,
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Plaintiffs alleged Defendants transferred electronic documents to which Defendants had access on
Plaintiffs’ computers by e-mailing the documents to themselves or by saving the documents to
other drives or data-storage websites. The act of e-mailing a document to oneself or electronically
saving a document to a drive or data-storage website which no one else views or has access is not
a “communication” as defined by section 27.001(1) because it does not “make” or “submit” the
document. See Lei, 578 S.W.3d at 713 (“the theft and electronic transfer of trade secrets, without
more, is not a ‘communication’ under the TCPA”).
Electronically copying an existing document onto another drive, data-storage website, or
the e-mailer’s other inbox does not “make” a document because the document was already made.
See Make, WEBSTER’S 3RD NEW INT’L DICTIONARY (1981) (“to cause to exist, occur or appear”;
“to cause to be or become”). “Submitting” a document necessarily requires disclosing or making
the document available to another person. Webster’s defines “submit” as meaning “to send or
commit for consideration, study, or decision”; “refer”; “to present or make available for use or
study”; “offer”; and “supply.” Submit, id. Webster’s online dictionary defines “submit” as
meaning “to present or propose to another for review, consideration, or decision”; “to deliver
formally”; and “to put forward as an opinion or contention.” Submit, MERRIAM-WEBSTER,
https://www.merriam-webster.com/dictionary/submit (last visited Jan. 23, 2020). The act of
e-mailing a document to oneself or saving a document onto a separate drive or data-storage website
under the same person’s control, without more, does not “submit” a document.
Plaintiffs also alleged certain Defendants took a computer, a computer tablet, and cell
phones with them when they left Plaintiffs’ employment. Defendants’ acts of taking the computer,
tablet, and cell phones with the information saved on those devices were not communications
because those actions did not make or submit a document. Plaintiffs have not alleged, and
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Defendants have not presented evidence showing, that these claims are based on, relate to, or are
in response to a communication by Defendants.
Plaintiffs’ allegation that Applebaum destroyed data on his cell phone does not involve the
making or submitting of a document. Therefore, his destruction of data was not a communication.
Defendants did not meet step 1 as to the claims involving these actions, and the trial court
did not err by denying Defendants’ motion to dismiss as to these claims.
Communications Between Defendants and the Purchasers and Suppliers
Plaintiffs alleged Defendants violated TUTSA, breached fiduciary duties, and tortiously
interfered with contracts by using Plaintiffs’ trade secrets and confidential and proprietary
information to contact purchasers and suppliers. Plaintiffs alleged these contacts resulted in
Geomet’s purchasing scrap metal from the suppliers or selling scrap metal to the purchasers.
The contacts with purchasers and suppliers generally involved Defendants’ sending e-mails
to individual purchasers and suppliers offering to buy or sell scrap metal. Other e-mails from
Defendants contained information and discussion concerning transactions for the purchase or sale
of scrap metal. In the Pecan House incident, Defendants falsely told a scrap-metal supplier that
one of the Plaintiffs had ceased operations and that the supplier should deliver its load of scrap to
Geomet. The e-mails were communications because they were made by Defendants and submitted
to the purchasers and suppliers. The communications were “made in connection with” “an issue
related to . . . a good, product, or service in the marketplace,” scrap metal. However, all these
communications were private communications between private parties about purely private
economic matters. Therefore, these communications were not “made in connection with a matter
of public concern” under the TCPA. See Creative Oil & Gas¸ 2019 WL 6971659, at *5–6.
Defendants also argue their communications involved a matter of public concern because
they were related to health or safety, or environmental, economic, or community well-being
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because they involved recycling scrap metal. See CIV. PRAC. § 27.001(7)(A), (B). Kenneth
Goldberg testified in his affidavit:
Geomet’s business is as a dealer in the chain of scrap metal recycling, taking
nonferrous scrap such as copper wire or aluminum cans, baling or boxing them by
the hundreds or thousands of pounds, and moving them to other recycling dealers,
or to manufacturers who separate, melt, and reuse the materials. The scrap metal
recycling business diverts tons of materials away from landfills. Scrap metal
recycling also saves energy in the manufacturing process, compared to producing
metals from raw earth materials, conserving raw materials and natural resources.
As such, scrap metal recycling results in more environmentally friendly products,
and is integral to the environment, the economy, and the well-being of the
community.
Even though Defendants’ business of purchasing and selling scrap metal may have many beneficial
effects and involve matters of health or safety, and environmental, economic, or community
well-being, the communications in this case did not involve those matters. Instead, they concerned
Defendants’ offers to buy or sell scrap metal. The communications did not discuss the benefits of
recycling, nor did the communications seek to promote health or safety, or environmental,
economic, or community well-being. Instead, they were private communications regarding private
commercial transactions for the purchase and sale of a commodity, scrap metal. Plaintiffs’ claims
are related to Defendants’ use of Plaintiffs’ confidential information to make purchases and sales.
Plaintiffs’ claims are not related to any communications by Defendants concerning the beneficial
effects of recycling provided by the scrap-metal industry.
We conclude Defendants failed to meet their burden in step 1 of proving by a
preponderance of the evidence that these claims are based on, relate to, or are in response to
Defendants’ exercise of the right of free speech. The trial court did not err by denying Defendants’
motion to dismiss as to these claims.
Defendants’ Hiring Plaintiffs’ Employees
Plaintiffs alleged Defendants violated TUTSA, breached fiduciary duties, and tortiously
interfered with contracts by hiring Plaintiffs’ employees to work for Geomet. Plaintiffs also
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alleged Goldberg breached his contract with Plaintiffs by hiring Plaintiffs’ employees. Defendants
argue that these claims are based on, relate to, or are in response to Defendants’ communications
with Plaintiffs’ employees. Defendants assert these communications constitute the exercise of
their right of association and free speech.
For Defendants’ communications with Plaintiffs’ employees to constitute the exercise of
the right of association, the communications must have involved public or citizen’s participation.
See Dyer, 573 S.W.3d at 426. Generally, private communications between an employer and a
potential employee do not involve public or citizen’s participation. See Staff Care, Inc. v. Eskridge
Enters., LLC, No. 05-18-00732-CV, 2019 WL 2121116, at *6 (Tex. App.—Dallas May 15, 2019,
no pet.) (mem. op.). Nothing in the record shows Defendants’ communications with Plaintiffs’
employees to hire them to work at Geomet involved any manner of public or citizen’s participation.
We conclude Defendants failed to prove by a preponderance of the evidence that their
communications with Plaintiffs’ employees were the exercise of the right of association.
For Defendants’ communications in hiring Plaintiffs’ employees to have involved the
exercise of the right of free speech, those communications must have been in connection with a
matter of public concern. See CIV. PRAC. § 27.001(3). The only evidence of the substance of these
communications is that Geomet offered seven of Plaintiffs’ employees three dollars more per hour
than Plaintiffs paid them and that Geomet offered positions to some of Plaintiffs’ employees.
Defendants have not presented evidence that any of their communications in hiring Plaintiffs’
employees were “made in connection with a matter of public concern.” Id. Accordingly, we
conclude Defendants failed to prove by a preponderance of the evidence that Plaintiffs’ claims
concerning Defendants’ communications for hiring Plaintiffs’ employees are based on, relate to,
or are in response to Defendants’ exercise of the right of free speech.
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The trial court did not err by denying Defendants’ motion to dismiss the claims for breach
of contract, breach of fiduciary duty, and tortious interference with contract concerning
Defendants’ communications to hire Plaintiffs’ employees to work for Geomet.
Goldberg’s Tortious Interference with Contract
Plaintiffs alleged Goldberg tortiously interfered with Plaintiffs’ contracts with the
individual Defendants by “misusing [Plaintiffs’] confidential information and inducing such
individual Defendants to misuse [Plaintiffs’] confidential information.” From the rest of the
pleading of this cause of action, it appears Goldberg’s alleged misuse of confidential information
to tortiously interfere with Plaintiffs’ contracts with the individual Defendants concerned his hiring
the individual Defendants. As discussed above, Defendants, including Goldberg, failed to prove
by a preponderance of the evidence that their communications regarding hiring Plaintiffs’
employees involved public or citizen’s participation or were in connection with a matter of public
concern. Therefore, the communications were not an exercise of the right of association or free
speech.
Concerning Plaintiffs’ allegation that Goldberg induced the other individual Defendants to
misuse Plaintiffs’ confidential information, Goldberg has not shown that the allegation was based
on any communication by him or that any communications that induced the other Defendants to
misuse Plaintiffs’ confidential information constituted the exercise of the right of association or
free speech.
Goldberg failed to show by a preponderance of the evidence that he met his burden under
step 1 as to Plaintiffs’ claim that he tortiously interfered with Plaintiffs’ contracts with the other
individual Defendants. The trial court did not err by denying the motion to dismiss as to this claim.
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Conspiracy
Plaintiffs alleged Defendants engaged in a conspiracy with the unlawful purpose of:
“diverting business opportunities from the Plaintiffs to the Defendants by misappropriation of the
Plaintiffs’ trade secrets, misuse of the Plaintiffs’ confidential and proprietary information, and
interfering with the contracts with employees of [Plaintiffs].” For Defendants’ communications
to constitute the exercise of the right of association, they must have involved public or citizen’s
participation. Defendants failed to prove by a preponderance of the evidence that their
communications involved any matters of public or citizen’s participation. Therefore, their
communications were not exercises of the right of association. See Dyer, 573 S.W.3d at 426.
The factual bases for Plaintiffs’ conspiracy claims are the same as for their
breach-of-contract and tort claims, discussed above. Defendants argue they met step 1 as to the
conspiracy claims for the same reasons as they did for the underlying causes of action. However,
as discussed above, Defendants failed to meet step 1 as to any of Plaintiffs’ causes of action.
Therefore, Defendants have failed to meet step 1 as to the conspiracy cause of action. The trial
court did not err by denying the motion to dismiss this claim.
Injunctive Relief
Plaintiffs also sought injunctive relief against Defendants. The trial court entered a
temporary restraining order prohibiting Goldberg, Applebaum, Myers, “and all entities or
individuals acting with them or at their direction . . . from directly or indirectly using, disclosing,
replicating, or otherwise misappropriating for their own individual or collective use or
benefit . . . any of Plaintiffs’ Trade Secrets or Confidential Information.” To be entitled to an
injunction, a plaintiff must plead and prove (1) a wrongful act; (2) imminent harm; (3) irreparable
injury; and (4) no adequate remedy at law. Leibovitz v. Sequoia Real Estate Holdings, L.P., 465
S.W.3d 331, 350 (Tex. App.—Dallas 2015, no pet.).
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Plaintiffs’ claim for injunctive relief was based on the same facts as their causes of action
for damages. Defendants do not make any different arguments to support their assertions that the
claim for injunctive relief is based on, relates to, or is in response to Defendants’ exercise of the
right of free speech and association. For a communication to constitute the right of association
under the TCPA, the communication “must involve public or citizen’s participation.” Dyer, 573
S.W.3d at 426. For a communication to constitute the exercise of the right of free speech because
it involves a matter of public concern related to a good, product, or service in the marketplace, “the
communication must have some relevance to a public audience of potential buyers or sellers” and
not simply be a communication between private parties of matters of purely private concern.
Creative Oil & Gas, 2019 WL 6971659, at *5–6. None of the communications on which Plaintiffs’
pleaded their case or in the other evidence presented to the trial court show any matter of “public
or citizen’s participation” or “relevance to a public audience of potential buyers and sellers.” Nor
does the record show Plaintiffs’ claims are based on, relate to, or are in response to
communications by Defendants related to issues of health or safety or environmental, economic,
or community well-being. Instead, the pleadings and other evidence show Plaintiffs’ claims were
in response to Defendants’ alleged transfer of trade secrets and their private communications with
other private parties for the purchase and sale of scrap metal or for the potential hiring of
employees. The trial court did not err by denying Defendants’ motion to dismiss Plaintiffs’ claim
for injunctive relief.
CONCLUSION
We conclude Defendants have failed to prove by a preponderance of the evidence that
Plaintiffs’ claims are based on, relate to, or are in response to Defendants’ exercise of the right of
association or free speech as those rights are defined in the TCPA and interpreted by the supreme
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court and this Court. We overrule Defendants’ first issue. Defendants’ remaining issues are
dependent on our sustaining the first issue. Accordingly, we need not address the other issues.
We affirm the trial court’s order denying Defendants’ motion to dismiss.
/Lana Myers/
LANA MYERS
JUSTICE
180261HF.P05
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
RICHARD GOLDBERG, KENNETH On Appeal from the 116th Judicial District
GOLDBERG, GEOMET RECYCLING, Court, Dallas County, Texas
LLC, JOSH APPLEBAUM, ALICIA Trial Court Cause No. DC-17-14064.
MCKINNEY, ELOISA MEDINA, LEE Opinion delivered by Justice Myers. Justice
WAKSER, SPENCER LIEMAN, MIKEL Whitehill participating.
SHECHT, LAURA MYERS, HENRY
JACKSON, AND KELLY COUCH,
Appellants
No. 05-18-00261-CV V.
EMR (USA HOLDINGS) INC., EMR
GOLD RECYCLING, LLC, GOLD
METAL RECYCLERS MANAGEMENT,
LLC, GOLD METAL RECYCLERS,
LTD., GMY ENTERPRISES, LLC, GMY,
LTD., GOLD METAL RECYCLERS—
GAINESVILLE, DLLC, GOLD METAL
RECYCLERS—FORT WORTH, LLC,
GOLD METAL RECYCLERS—
OKLAHOMA, LLC, AND GOLDBERG
INDUSTRIES, INC., Appellees
Appellees’ motion for rehearing is GRANTED, and appellants’ motion for rehearing is DENIED.
This Court’s judgment of August 22, 2019 is VACATED; the following is now the judgment of
this Court.
In accordance with this Court’s opinion of this date, the order of the trial court denying appellants’
motion to dismiss is AFFIRMED.
It is ORDERED that appellees EMR (USA HOLDINGS) INC., EMR GOLD
RECYCLING, LLC, GOLD METAL RECYCLERS MANAGEMENT, LLC, GOLD METAL
RECYCLERS, LTD., GMY ENTERPRISES, LLC, GMY, LTD., GOLD METAL
RECYCLERS—GAINESVILLE, DLLC, GOLD METAL RECYCLERS—FORT WORTH,
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LLC, GOLD METAL RECYCLERS—OKLAHOMA, LLC, AND GOLDBERG INDUSTRIES,
INC. recover their costs of this appeal from appellants RICHARD GOLDBERG, KENNETH
GOLDBERG, GEOMET RECYCLING, LLC, JOSH APPLEBAUM, ALICIA MCKINNEY,
ELOISA MEDINA, LEE WAKSER, SPENCER LIEMAN, MIKEL SHECHT, LAURA
MYERS, HENRY JACKSON, AND KELLY COUCH.
Judgment entered this 23rd day of January, 2020.
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