Ernst & Young LLP and S.K. Thakkar v. Ryan, LLC ( 2023 )

Opinion issued June 29, 2023
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-21-00603-CV
———————————
ERNST & YOUNG, LLP AND S.K. THAKKAR, Appellants
V.
RYAN, LLC, Appellee
On Appeal from the 281st District Court
Harris County, Texas
Trial Court Case No. 2020-35770
MEMORANDUM OPINION
Ernst & Young, LLP (EY) and S.K. Thakkar (collectively, appellants), moved
to dismiss Ryan, LLC’s claim against EY for tortious interference with prospective
business relations under the Texas Citizens Participation Act (TCPA).1 See TEX. CIV.
PRAC. & REM. CODE §§ 27.001–.011. Ryan alleges that EY obtained information on
Ryan’s proprietary methods for calculating certain oil-and-gas-related tax credits
when it audited some of Ryan’s existing clients and then used that information to
develop competing services and solicit Ryan’s prospective clients. Appellants assert
that EY’s public audits involve communications and conduct that are protected
exercises of free speech, association, and petitioning rights under the TCPA. They
further assert that Ryan’s tortious interference claim is based on or in response to
that activity and therefore is subject to dismissal. The trial court disagreed and denied
the motion to dismiss.
In three issues on appeal, appellants contend: (1) the trial court erred by
concluding that the TCPA does not apply to Ryan’s claim for tortious interference
with prospective business relations, (2) the trial court misconstrued the TCPA’s
commercial speech exemption, and (3) Ryan failed to establish by clear and specific
evidence a prima facie case for each essential element of tortious interference with
prospective business relations.
1
The Texas Legislature amended certain provisions of the TCPA in 2019. See Act of
May 17, 2019, 86th Leg., R.S., ch. 378, 2019 Tex. Gen. Laws 684. The amendments
became effective September 1, 2019. Id. §§ 11–12, 2019 Tex. Gen. Laws at 687.
Because Ryan filed its original petition after the effective date of the amendments,
this case is governed by the current statute.
2
Because we conclude that appellants did not satisfy their burden to show that
Ryan’s claim for tortious interference with prospective business relations falls within
the TCPA’s scope, we affirm.
Background
EY is an accounting, audit, and professional services firm. Ryan is a
competing accounting and tax consulting firm. Ryan provided consulting services to
certain energy-sector companies whose financial statements EY audited. Ryan sued
EY and its employee, Thakkar, alleging that EY obtained Ryan’s proprietary
information during EY’s audits, including Ryan’s “fee arrangements” and its
methodologies for “federal royalty” and “severance tax” consulting services, and
then used this information to interfere with and usurp potential contracts between
Ryan and third parties for consulting engagements.
Ryan alleges that it “strategically developed [an] oil and gas severance tax and
royalty practice group” that “serves most of the oil and gas companies in the Fortune
500” by “helping those companies realize savings and obtain refunds of state taxes
and federal royalties.” A principal in Ryan’s severance tax and royalty group
described, “[C]ompanies who extract oil and gas from federal land and waters pay
royalties to the federal government, namely, the Office of Natural Resources
Revenue (‘ONRR’), which is in the Department of Interior.” These companies may
deduct from their royalty burden certain expenses incurred in transporting and
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processing the oil and gas extracted. Ryan developed a proprietary methodology for
identifying, calculating, and supporting allowable deductions to federal royalty
payments that realizes savings for its clients. Ryan earns a portion of its clients’
savings, typically on a contingency basis, as payment for its service.
Ryan also earns fees for severance-tax consulting services. A severance tax is
a state charge imposed on the extraction, production, and sale of oil and gas. As
Ryan explained, companies that pay severance taxes can deduct certain expenses,
like transportation and operation costs. “Tax-services companies like Ryan and EY
help producers reduce their tax burden by, among other methods, maximizing these
deductions.”
Ryan alleges that “[u]nder the guise of ‘auditing’ clients,” EY
“misappropriated a substantial trove of Ryan[‘s] intellectual property,” which it
made available to its employees in a new, competing federal royalty and severance
tax group. Then, “in violation of fundamental accounting rules prohibiting auditors
such as EY from using their attest function to profit from consulting services, at least
two EY employees, including [] Thakkar . . . , used Ryan’s work papers to interfere
with Ryan’s relationships with its existing clients and compete for business with new
clients.”
Based on these allegations, Ryan pleaded multiple causes of action against
either EY or Thakkar or both, including for misappropriation of trade secrets, breach
4
of contract, common law fraud, tortious interference with existing contracts, and
tortious interference with prospective business relations. Ryan also sought to enjoin
appellants from, among other things, seeking, retaining, or using Ryan’s confidential
or proprietary information to conduct audits or provide severance tax or federal
royalty services.
Appellants jointly moved to dismiss Ryan’s cause of action against EY for
tortious interference with prospective business relations under the TCPA. The TCPA
motion did not challenge Ryan’s other causes of action.
In Ryan’s original, first amended, and second amended petitions, the claims
for tortious interference with existing contracts and prospective business relations
were pleaded together. The petitions did not identify the specific factual allegations
underpinning the prospective relations claim beyond that the claim incorporated “the
preceding paragraphs” in the respective petitions, which included descriptions of the
public-audit communications and conduct. But after appellants filed their TCPA
motion, Ryan filed a third amended petition, which separated the two tortious
interference claims and alleged interference with its prospective business relations
“via a variety of unlawful means.”2 While still incorporating the petition’s previous
paragraph about public audits, Ryan’s third amended petition more specifically
2
Ryan’s third amended petition is the petition at issue here.
5
alleges that EY is liable to Ryan for tortiously interfering with Ryan’s prospective
business relations because:
• “Ryan had a reasonable probability of obtaining the prospective
contracts in federal royalty and severance tax services that were subject
to EY’s interference.”
• “The interference was intentional because EY’s employees and agents
specifically knew of Ryan’s prospective contract in which EY
interfered.”
• “[EY and Thakkar] were aware of facts and circumstances that would
lead a reasonable person to believe[] that Ryan’s prospective business
relationship existed, including specific knowledge that this was a small
market of competitors[,] with Ryan being EY’s only other competitor
in the federal royalty space, and the dominant force and only other
competitor with the requisite expertise in the severance tax space.”
• “EY interfered in Ryan’s prospective business relations for the
provision of federal royalty and severance tax services via a variety of
unlawful means, each of which would be independently actionable as a
recognized tort. This includes the misappropriation of Ryan’s trade
secrets, tortious interference in the contractual confidentiality
obligations of others to Ryan, tortious interference in the restrictive
covenants of former employees, and making fraudulent
misrepresentations to Ryan and prospective customers, as set forth
below.”
• “These unlawful acts committed by EY as part of its intentional
interference were the but-for and proximate cause of Ryan losing, and
EY gaining, prospective contracts to perform federal royalty and
severance tax services, including at least two specific such
instances . . . . These losses resulted in millions of dollars in lost
revenue and profits suffered by Ryan.”
Appellants argued that Ryan’s cause of action for tortious interference with
prospective business relations is based on or in response to EY’s audits, which
implicate protected speech and association under the TCPA. They explained that
6
public companies file auditor’s reports with the Securities and Exchange
Commission (SEC). The SEC and the Public Company Oversight Board
(PCAOB) have regulatory authority over public-company auditors to further the
public’s interest in “the preparation of informative, accurate, and independent audit
reports.” Consequently, independent auditors, like EY, “play an essential role in the
regulation and efficient function of the country’s capital markets, both public and
private,” making EY’s audits matters of public concern subject to the TCPA’s
protections.
Alternatively, appellants argued that Ryan’s tortious interference with
prospective relations claim is based on or in response to communications that “fit[]
within the broad definition of the right to petition” because “[t]he audit reports EY
authored in connection with its public company audits referenced in [Ryan’s]
[p]etition were subject to review by both the SEC and the PCAOB.”
Ryan responded that appellants’ arguments for the TCPA’s application
miscast its tortious interference claim. According to Ryan, the claim “targets [EY’s]
interference with Ryan’s federal royalty and severance tax business, not either
party’s auditing business.” Ryan added that it had identified two prospective clients
who were the subject of EY’s alleged tortious interference, and that EY does not
provide auditing services to either prospective client.
7
After a two-day hearing, the trial court denied appellants’ TCPA motion. The
trial court stated from the bench:
I disagree with [EY and Thakkar] that the TCPA applies on a couple of
levels in part because I see a separation between the allegations . . . that
touch on the auditing function . . . [and] the tortious interference of
prospective business relations because I think that is geared specifically
towards the severance tax and federal royalty tax services. And so
because, as has been made clear to me on the record, the auditing
services are separate and apart from the severance tax and federal
royalty tax services, to me that does not implicate like the SEC or
the . . . PCAOB.
The trial court later issued a written order denying the TCPA motion.
Standard of Review
We review de novo the denial of a TCPA motion to dismiss. Dall. Morning
News, Inc. v. Hall, 579 S.W.3d 370, 377 (Tex. 2019); Better Bus. Bureau of Metro.
Hous., Inc. v. John Moore Servs., Inc., 441 S.W.3d 345, 353 (Tex. App.—Houston
[1st Dist.] 2013, pet. denied). In deciding whether a legal action should be dismissed
under the TCPA, we consider “the pleadings, evidence a court could consider under
[Texas] Rule [of Civil Procedure] 166a, . . . and supporting and opposing affidavits
stating the facts on which the liability or defense is based.” TEX. CIV. PRAC. & REM.
CODE § 27.006(a). The plaintiff’s allegations, and not the defendant’s admissions or
denials, constitute the basis of a legal action. Hersh v. Tatum, 526 S.W.3d 462, 467
(Tex. 2017). We review the pleadings and evidence in the light most favorable to the
nonmovant. Gaskamp v. WSP USA, Inc., 596 S.W.3d 457, 470 (Tex. App.—Houston
8
[1st Dist.] 2020, pet. dism’d) (en banc); Schimmel v. McGregor, 438 S.W.3d 847,
855–56 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). Whether the TCPA
applies is an issue of statutory interpretation that we also review de novo. S & S
Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 847 (Tex. 2018).
TCPA Motion to Dismiss
Appellants contend they satisfied their initial burden to show that the TCPA
applies. See TEX. CIV. PRAC. & REM. CODE § 27.005(b). Ryan’s cause of action for
tortious interference with prospective business relations is a “legal action” as defined
in the TCPA. See id. § 27.001(6) (defining “legal action” to include cause of action).
The question is whether Ryan’s tortious interference claim “is based on or is in
response to” EY’s exercise of the right of free speech, the right of association, or the
right to petition. See TEX. CIV. PRAC. & REM. CODE § 27.005(b). Appellants contend
all three protected rights are implicated here. We address each in turn.
A. Statutory Framework
Codified in Chapter 27 of the Texas Civil Practice and Remedies Code, the
TCPA protects citizens from retaliatory lawsuits that seek to silence or intimidate
them on matters of public concern. In re Lipsky, 460 S.W.3d 579, 586 (Tex.
2015) (orig. proceeding); see generally TEX. CIV. PRAC. & REM. CODE § 27.002. The
TCPA’s purpose is to identify and summarily dispose of lawsuits designed only to
9
chill First Amendment rights, not to dismiss meritorious lawsuits. In re Lipsky, 460
S.W.3d at 589; see also TEX. CIV. PRAC. & REM. CODE § 27.002.
To carry out its purpose, the TCPA provides a multi-step process for
determining whether a lawsuit or claim should be dismissed under the statute. See
Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, 591 S.W.3d 127, 132 (Tex.
2019). First, the trial court must dismiss a legal action if the movant shows that the
action is “based on” or “in response to” its exercise of (1) the right of free speech,
(2) the right to petition, or (3) the right of association. TEX. CIV. PRAC. & REM. CODE
§ 27.005(b); Creative Oil, 591 S.W.3d at 132; In re Lipsky, 460 S.W.3d at 586–87.
Under the next step, the nonmovant may avoid dismissal by establishing “by clear
and specific evidence a prima facie case for each essential element of the claim in
question.” TEX. CIV. PRAC. & REM. CODE § 27.005(c). Finally, the movant can still
win dismissal if it establishes an affirmative defense or other grounds on which it is
“entitled to judgment as a matter of law.” Id. § 27.005(d).
Intertwined with and overlaying this multi-step dismissal process is the TCPA
provision exempting certain actions from its application. See id. § 27.010; Morrison
v. Profanchik, 578 S.W.3d 676, 680 (Tex. App.—Austin 2019, no pet.). When
invoked, the 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
10
dismissal process. See Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex.
2018); Morrison, 578 S.W.3d at 680.
B. Rights of free speech and association
We begin by considering appellants’ contention that Ryan’s claim for tortious
interference with prospective business relations “is based on or is in response to”
EY’s exercise of the rights of free speech and association. Both the right of free
speech and the right of association, as defined in the TCPA, involve matters of public
concern. See TEX. CIV. PRAC. & REM. CODE § 27.001(2), (3). The exercise of the
right of free speech “means a communication made in connection with a matter of
public concern.” Id. § 27.001(3). A “‘communication’ includes the making or
submitting of a statement or document in any form or medium . . . .” Id. § 27.001(1).
The exercise of the right of association “means to join together to collectively
express, promote, pursue, or defend common interests relating to a governmental
proceeding or a matter of public concern.” Id. § 27.001(2).
Appellants argue these rights are implicated here because Ryan’s tortious
interference claim is based on or related to EY’s conduct and communications in its
capacity as an independent public-company auditor, which involve matters of public
concern. The TCPA broadly defines a “matter of public concern” to include a
statement or activity about (1) “a matter of political, social, or other interest to the
community,” or (2) “a subject of concern to the public.” Id. § 27.001(7). But the
11
definition is not without limit. “To be a matter of public concern, a claim must have
public relevance beyond the interest of the parties.” Morris v. Daniel, 615 S.W.3d
571, 576 (Tex. App.—Houston [1st Dist.] 2020, no pet.) (citing Creative Oil, 591
S.W.3d at 136). Private disputes, whether based in contract or tort, affecting only the
litigants’ fortunes are not matters of public concern. Id. at 576–77; see also
Gaskamp, 596 S.W.3d at 475–77 (noting that tort claims with no potential impact
on the wider community or a public audience are not TCPA matters of public
concern).
According to appellants, an independent public-company auditor, like EY,
serves as a “public watchdog” and is “central to the effectiveness of the public
financial markets.” They say, “An auditor’s communications with its client and its
own internal documentation are the kind of communications essential for the
issuance of publicly available audit reports that are required by the SEC and that can
be relied on by the investing public.” EY also claims a common interest with federal
regulatory entities, like the SEC and the PCAOB, in ensuring the availability of
reliable audit reports for the investing public.
We agree, and Ryan does not contest, that EY’s audit-related communications
and conduct are connected with or relate to a matter of public concern for the reasons
appellants state. See, e.g., United States v. Arthur Young & Co., 465 U.S. 805, 817–
18 (1984) (recognizing that “[b]y certifying the public reports that collectively
12
depict a corporation’s financial status, the independent public auditor assumes a
public responsibility” and that an independent public auditor’s “ultimate allegiance”
is to a corporation’s creditors, its stockholders, and the investing public). But that
does not resolve our inquiry. It matters naught that EY’s audit-related
communications and conduct are matters of public concern if Ryan’s claim for
tortious interference with prospective business relations is not “based on” or “in
response to” such communications or conduct. And according to Ryan, it is not.
Ryan characterizes its tortious interference claim against EY as “based on”
and “in response to” the solicitation of royalty and severance tax business from
Ryan’s prospective clients, not EY’s audit-related communications and conduct.
Ryan argues that the solicitation-related communications and conduct are not
protected under the TCPA because such actions have no relevance to a public
audience of buyers or sellers and concern only “the pecuniary interests of the private
parties involved.” Creative Oil, 591 S.W.3d at 136.
Appellants do not dispute that the solicitation-related communications and
conduct are unprotected by the TCPA. Essentially then, the parties agree about
which communications and conduct the TCPA protects. That is, they do not contest
that EY’s audit-related communications and conduct are protected under the TCPA,
whereas the solicitation-related communications and conduct are not. But they
disagree about the extent to which Ryan’s tortious interference claim is based on one
13
or the other type of communications and conduct or both. Consequently, our central
inquiry is: what are the factual bases for Ryan’s tortious interference claim?
To determine what communications or conduct Ryan’s tortious interference
claim is “based on” or “in response to,” we review the allegations in Ryan’s petition.
Hersh, 526 S.W.3d at 467 (observing that Texas courts have often said that the
plaintiff’s petition is “the best and all-sufficient evidence of the nature of the action”
to show that the TCPA applies to the plaintiff’s claims); Gaskamp, 596 S.W.3d at
480 (“The nature of a legal action is revealed by the factual allegations in the
petition.”). Implicit in this analysis is that we do not blindly accept attempts by
appellants to characterize Ryan’s claims as implicating protected expression and
conduct. See Sloat v. Rathbun, 513 S.W.3d 500, 504 (Tex. App.—Austin 2015, pet.
dism’d). To the contrary, we view the pleadings in the light most favorable to
Ryan—that is, “favoring the conclusion that its claims are not predicated on
protected expression.” Id. EY’s expression or conduct that is not a factual predicate
for Ryan’s tortious interference claim is not pertinent to the inquiry. See id.; see also
TEX. CIV. PRAC. & REM. CODE § 27.003(a) (detailing that a party may file a motion
to dismiss if legal action is “based on or is in response to” protected conduct).
Appellants urge that Ryan’s pleading alone compels a conclusion that the
tortious interference claim is based on or in response to EY’s audit-related
communications and conduct. See TEX. CIV. PRAC. & REM. CODE § 27.006(a) (courts
14
may consider pleadings in determining whether legal action is subject to the TCPA).
In support, they look primarily to allegations in the third amended petition’s
introduction and background sections claiming that, during EY’s auditing work, the
firm sought and obtained Ryan’s confidential and proprietary information from EY’s
audit clients and then used that information to solicit Ryan’s prospective consulting
clients, thereby “usurp[ing] at least one prospective contract.” Appellants emphasize
the petition’s introductory statement that EY’s audit group “ha[d] repeatedly
demanded Ryan’s confidential work papers from [mutual] clients” and, under the
“guise” of auditing those clients, “misappropriated a substantial trove of Ryan
intellectual property,” which EY’s audit group then made available to “no less than
nine separate employees in a new competing federal royalty and severance tax
group.” And appellants identify several paragraphs in the background section which
they contend connect EY’s audit-related communications to its alleged unlawful
interference with Ryan’s prospective contracts. Specifically, they point to the
paragraphs alleging:
• “In November 2019, Ryan learned that Thakkar had begun pitching EY’s
federal royalty services to Ryan’s clients. During these solicitations,
Thakkar indicated that he had firsthand knowledge of Ryan’s confidential
federal royalty work papers and that the client would be disappointed by
Ryan’s deliverables. Because Thakkar had never been employed by Ryan
in its federal royalty practice, his firsthand knowledge could not have come
from Ryan. Rather, Ryan subsequently discovered that EY’s audit group
had demanded Ryan’s work papers from its severance tax and federal
royalty customers (in breach of Ryan’s confidentiality agreements) under
15
the guise of ‘auditing,’ only to then provide Ryan’s confidential
intellectual property to Thakkar.”
• “To obtain the work product, EY’s [audit] team requested Ryan’s
confidential work product from a mutual client under the guise of the
documents being necessary for the team to complete the audited financials
for the client.”
• “[A] Ryan client that acceded to EY’s demand and provided EY with
Ryan’s confidential, proprietary, and trade-secret work product has
continually been harassed by similar demands from EY’s audit team and
rudimentary questions relating to the client’s federal royalty schedules.”
• “Further underscoring the illegitimate and illegal nature of the audit team’s
requests, another mutual client approached by EY refused to provide the
requested Ryan information, citing the confidentiality obligations and the
lack of any legitimate and lawful purpose in EY’s requests.”
• “[T]he actions . . . by EY have violated the [federal auditing standards that
apply to independent public accountants.]”
Additionally, appellants point out that the petition expressly “incorporates the
preceding paragraphs [under the count against EY for tortious interference with
prospective business relations] as if fully stated therein.”
We disagree that the allegations in these paragraphs can be fairly read, in the
light most favorable to Ryan, to support appellants’ characterization of the
audit-related communications and conduct as the factual basis or impetus for Ryan’s
claim for tortious interference with prospective business relations. Ryan pleaded
multiple causes of action against both EY and Thakkar, not just tortious interference
with prospective business relations against EY. Consequently, the allegations in the
introductory and background sections of Ryan’s petition may be the basis or impetus
16
for the tortious interference claim or they may regard another claim, such as
misappropriation of trade secrets. The mere inclusion of allegations in the petition,
some of which include expression or conduct protected by the TCPA and some of
which do not, does not transform the tortious interference claim into one based on
or responding to any protected activity. See Gaskamp, 596 S.W.3d at 479 (rejecting
the argument that speech for one claim can be used to render all claims subject to
TCPA protection).
Read in the light most favorable to Ryan, the tortious interference with
prospective contracts claim, as set out in Ryan’s third amended petition, does not
allege that EY usurped Ryan’s prospective royalty and severance tax contracts by
conducting public audits. As stated by Ryan, “[T]he acts of EY’s auditors are
insufficient by themselves to give rise to a tortious interference with prospective
business relations claim. Rather, those acts give rise to Ryan’s trade secret
misappropriation claim.” It is the “additional, subsequent conduct” that “trigger[ed]
Ryan’s tortious interference claim—namely, EY’s use of Ryan’s trade secrets to
form a competing federal royalty business and to solicit Ryan’s federal royalty
customers.” That is, while EY allegedly obtained trade secrets in audits and the
audits have some link to the claim, the audits are several steps removed from the
17
solicitations.3 The core of the tortious interference claim is the subsequent conduct
in misusing the information through “reverse engineer[ing]” to develop a competing
federal royalty business, which EY and Thakkar then marketed to prospective clients
to usurp Ryan’s business opportunities.
While the tortious interference claim may be tangentially related to EY’s
auditing communications and conduct, tangentially related communications and
conduct no longer fall within the ambit of the TCPA. See Union Pac. R.R. Co. v.
Chenier, 649 S.W.3d 440, 447–48 (Tex. App.—Houston [1st Dist.] 2022, pet.
denied) (concluding that by dropping the “relates to” standard, the revised TCPA
“narrowed” the categories of connections such that a claim must be more than
“tangential[ly]” related to the exercise of protected rights).
When the Legislature amended the TCPA in 2019, one of the more significant
changes to the statute was a narrowing of the categories of connections a claim could
3
Appellants cite TheraSource, LLC v. Houston Occupational Therapy, PLLC, No.
01-19-00877-CV, 2021 WL 3868771, at *8 (Tex. App.—Houston [1st Dist.] Aug.
31, 2021, no pet.) (mem. op.), to support their contention that the audit-related
communications and conduct are sufficiently connected to the tortious interference
claim. In TheraSource, the plaintiffs alleged that the defendants interfered with their
prospective business by making false statements to a referral agent about the quality
of their healthcare services. The cited discussion in TheraSource concerned whether
the communications at issue were made in connection with a matter of public
concern, considering recent case law on the scope of that inquiry. See id. at *7
(discussing Creative Oil, 591 S.W.3d at 137, and Gaskamp, 596 S.W.3d at 479).
The issue was not the meaning or scope of the connectivity language in the
pre-amendment TCPA—“based on, relates to, or is in response to”—that has since
been narrowed. See id. at *7–8.
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have to the exercise of a protected right. See ML Dev, LP v. Ross Dress for Less,
Inc., 649 S.W.3d 623, 626 (Tex. App.—Houston [1st Dist.] 2022, pet. denied).
Originally, the movant had to establish that a legal action was “based on,” “relate[d]
to,” or “in response to” the movant’s exercise of a protected right. TEX. CIV. PRAC.
& REM. CODE § 27.005(c) (pre-amendment version). “Relate[d] to” was the most
expansive of the three categories of connections and brought tangential
communications within the TCPA’s reach. See Chenier, 649 S.W.3d at 448; Robert
B. James, DDS, Inc. v. Elkins, 553 S.W.3d 596, 604 (Tex. App.—San Antonio 2018,
pet. denied) (interpreting “relates to” as a broad qualifier); Calvin v. Abbott, 545
S.W.3d 47, 69 n.85 (Tex. App.—Austin 2017, no pet) (interpreting “relates to” as
merely denoting “some sort of connection, reference, or relationship”); see also
WEBSTER’S THIRD NEW INT’L DICTIONARY 1916 (2002) (defining “relate” as “to be
in relationship: to have reference”); THE AMERICAN HERITAGE DICTIONARY OF THE
ENGLISH LANGUAGE 1482 (2011) (defining “relate” as “to have connection, relation,
or reference”). However, the 2019 amendments deleted “relates to” from the list,
thereby requiring future movants, like appellants, to establish that the legal actions
they seek to dismiss are “based on” or “in response to” their exercise of a protected
right. TEX. CIV. PRAC. & REM. CODE §§ 27.003(a), .005(b) (new version); see Laura
Prather & Robert T. Sherwin, The Changing Landscape of the Texas Citizens
19
Participation Act, 52 TEX. TECH. L. REV. 163, 169 (2020) (noting that the deletion
of “relates to” increased the burden on movants seeking dismissal).
The ordinary meaning of the “is based on” component denotes a legal action
that has the relevant TCPA-protected activity “as a main ingredient” or
“fundamental part” of the challenged legal action. See Serafine v. Blunt, 466 S.W.3d
352, 391 (Tex. App.—Austin 2015, no pet.) (Pemberton, J., concurring) (citing
WEBSTER’S at 180 (defining “base” (n.) as “main ingredient” and “fundamental part
of something”); AMERICAN HERITAGE at 148 (defining “base” (n.) as “fundamental
principle,” “underlying concept,” “fundamental ingredient,” and “chief
constituent”); BLACK’S LAW DICTIONARY at 180 (defining “base” (v.) as “to use
(something) as the thing from which something else is developed”)). The second
component—“in response to”—denotes some sort of answer or other act in return.
Id. (citing WEBSTER’S at 1935 (defining “response” as “act or action of saying
something in return, making an answer”); AMERICAN HERITAGE at 1496 (defining
“response” as “an answer”)).
The deleted phrase “relates to” might encompass EY’s audit-related
communications and conduct, but “based on” and “in response to” are not so
sweeping. Under a de novo review, we cannot agree that EY’s audit-related
communications are the “main ingredient” or “fundamental part” of the tortious
interference claim. Nor is the tortious interference claim in “answer” to EY’s
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audit-related communications and conduct. As construed in the light most favorable
to Ryan, the tortious interference claim has as its “main ingredient” the unprotected
solicitation-related communications and conduct. The tortious interference claim is
asserted in answer thereto. Even if there is some connection between the
audit-related communications and the tortious interference claim, the tightening of
the statutory language forecloses appellants’ invocation of the TCPA. See
TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011) (noting
statutory presumption that “the Legislature chooses a statute’s language with care,
including each word chosen for a purpose, while purposefully omitting words not
chosen”).
Expanding the definition of “based on” to include the audit communications
that EY allegedly inappropriately received second-hand then used to solicit business,
as the concurrence suggests, threatens to resurrect the departed “related to” language
from the since-amended TCPA. The primary communication the cause of action
rests on is the solicitation itself, not the information allegedly misappropriated then
used to make the solicitation. We decline to read “related to” back into the statute.
Consequently, we conclude that appellants have not shown that Ryan’s tortious
interference claim against EY is “based on” or “in response to” the exercise of EY’s
rights of free speech and association. See TEX. CIV. PRAC. & REM. CODE § 27.005(b).
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C. Right to Petition
Appellants also contend that Ryan’s claim for tortious interference with
prospective business relations is “based on”’ or “in response to” the exercise of EY’s
right to petition because EY’s audit reports are filed with, and reviewed by, federal
regulators. The Texas Supreme Court has noted the TCPA’s definition of the
exercise of the right to petition is “expansive.” Youngkin v. Hines, 546 S.W.3d 675,
680 (Tex. 2018). It includes “a communication in or pertaining to . . . an executive
or other proceeding before a department of the state or federal government or a
subdivision of the state or federal government” and “a communication in connection
with an issue under consideration or review by a[n] . . . executive, . . . or other
governmental body or in another governmental or official proceeding.” TEX. CIV.
PRAC. & REM. CODE § 27.001(4)(A)(iii), (B). An “official proceeding” is defined as
“any type of administrative, executive, legislative, or judicial proceeding that may
be conducted before a public servant.” Id. §27.001(8).
For the reasons we articulated with respect to the rights of free speech and
association, we conclude that EY and Thakkar have not shown that Ryan’s tortious
interference claim is “based on” or “in response to” the exercise of the right to
petition. EY’s audit reports filed with, and reviewed by, federal regulators are not
the “main ingredient” or a “fundamental part” of Ryan’s tortious interference claim.
Nor is the tortious interference claim asserted in answer to the audit reports.
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Conclusion
In sum, we conclude that appellants did not meet their burden to show that the
TCPA applies to Ryan’s claim against EY for tortious interference with prospective
business relations.4 Accordingly, we hold the trial court did not err in denying
appellants’ TCPA motion to dismiss that claim. We affirm the trial court’s order.
Sarah Beth Landau
Justice
Panel consists of Justices Kelly, Landau, and Farris.
Justice Farris, concurring.
4
Having concluded that appellants did not establish that the TCPA applies, we need
not address their arguments on the commercial speech exemption or the proof of the
tortious interference claim. See TEX. R. APP. P. 47.1.
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