in Re IntelliCentrics, Inc.

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-18-00280-CV
___________________________
IN RE INTELLICENTRICS, INC.
Original Proceeding
Trial Court No. 18-2879-362
Before Sudderth, C.J.; Meier and Kerr, JJ.
Memorandum Opinion by Chief Justice Sudderth
MEMORANDUM OPINION
I. Introduction
In two issues in its petition for writ of mandamus, Relator IntelliCentrics, Inc.
complains that the trial court abused its discretion when it ordered IntelliCentrics to
respond to discovery requests during a proceeding on a motion to dismiss under the
Texas Citizens Participation Act (TCPA), which it contends were not “specified and
limited” or “relevant to the motion [to dismiss],” as required by the statute, see Tex.
Civ. Prac. & Rem. Code Ann. § 27.006(b) (West 2015), and that its appellate remedy is
inadequate. IntelliCentrics asks us to vacate the trial court’s August 22, 2018
discovery order “as it relates to Request Nos. 3–7.” We deny the petition.
II. Background
In December 2016, when Real Party in Interest Dean McCaskill was 58 years
old, IntelliCentrics hired him away from his previous employer to be its Executive
Vice President for North America. He and his wife relocated from Georgia to Texas.
According to McCaskill, 17 days after he reported to work on January 3, 2017, his role
as the Executive Vice President for North America was given to a significantly
younger employee, and McCaskill was informed that he would instead have a
materially different position.
Four months later, McCaskill was terminated. He filed an age discrimination
complaint against IntelliCentrics with the Texas Workforce Commission (TWC), and
after receiving his right-to-sue notice from TWC, McCaskill sued the company,
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alleging breach of contract, promissory estoppel, fraudulent inducement, and age
discrimination.
IntelliCentrics filed a TCPA motion to dismiss all of McCaskill’s claims on
June 4, 2018. A little over two weeks later, McCaskill filed a motion for expedited
discovery regarding the TCPA motion, propounding eleven requests for production.
See id. IntelliCentrics opposed the motion.
As pertinent here, with regard to Requests 3–5, IntelliCentrics complained that
the requested items were neither “specified and limited” nor relevant to the TCPA
motion because McCaskill sought over three years of documents, including
proprietary and private compensation information of other IntelliCentrics employees.
See id. With regard to Requests 6–7, IntelliCentrics complained that the requested
items were not “limited” in that McCaskill demanded almost ten years of documents
about accounts and all information regarding potential sales to a customer. See id.
McCaskill disagrees with this characterization of his requests.
On August 22, 2018, the trial court granted McCaskill’s motion, ordered
IntelliCentrics to respond to and produce documents that McCaskill had requested in
his expedited discovery request, and ordered IntelliCentrics to do so on or before
September 7, 2018. 1
The trial court also reset the TCPA motion hearing from August 30, 2018, to
1
September 21, 2018.
3
On September 7, 2018, IntelliCentrics produced its responses to Requests 1–2
and 8–11 and filed its petition for writ of mandamus with regard to the remaining
requests. McCaskill then filed an emergency motion to stay the trial court
proceedings during the pendency of the original proceeding, and we granted the stay
on September 17, 2018. After IntelliCentrics filed a motion for clarification, we
clarified that our stay order covered all trial court proceedings, including the TCPA
deadlines, until further order of this court.
III. Discussion
IntelliCentrics argues that it does not have an adequate remedy by appeal
because complying with the trial court’s discovery order would require an overly
burdensome production of irrelevant documents and that the trial court abused its
discretion because it disregarded the statutory discovery limitations imposed by the
TCPA. McCaskill responds that IntelliCentrics has failed to show any evidence of
undue burden, that it has mischaracterized the time periods of the requests as
necessitating the production of voluminous and duplicative documents, and that the
trial court had good cause to order the documents supporting his prima facie case for
fraudulent inducement. IntelliCentrics counters that McCaskill’s response fails to
apply the correct standards of discovery under the TCPA and improperly attempts to
shift the burden from himself.
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A. Standard of Review
Generally, the scope of discovery is within the trial court’s discretion, Dillard
Dep’t Stores, Inc. v. Hall, 909 S.W.2d 491, 492 (Tex. 1995) (orig. proceeding), and
mandamus relief is appropriate only if a trial court abuses its discretion, and “there is
no adequate remedy on appeal.” In re Olshan Found. Repair Co., 328 S.W.3d 883, 887
(Tex. 2010) (orig. proceeding). The supreme court has instructed us that the burden
of establishing an abuse of discretion and no adequate remedy on appeal “is on the
party resisting discovery, and this burden is a heavy one.” In re CSX Corp., 124 S.W.3d
149, 151 (Tex. 2003) (orig. proceeding). A clear abuse of discretion occurs when a
trial court’s action is “so arbitrary and unreasonable as to amount to a clear and
prejudicial error of law.” Id. (citing CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996)
(orig. proceeding)).
When determining whether the trial court abused its discretion, we are mindful
that the purpose of discovery is to seek the truth so that disputes may be decided by
what the facts reveal, not by what facts are concealed. In re Colonial Pipeline Co., 968
S.W.2d 938, 941 (Tex. 1998) (orig. proceeding). Generally speaking, the rules
governing discovery do not require as a prerequisite to discovery that the information
sought be admissible; it is enough that the information appears reasonably calculated
to lead to the discovery of admissible evidence. See Tex. R. Civ. P. 192.3(a). But this
broad grant is limited by the legitimate interests of the opposing party to avoid overly
broad requests, harassment, or disclosure of privileged information. In re Am. Optical
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Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding); see also Tex. R. Civ. P. 192.4
(“Limitations on Scope of Discovery”). It may also be limited by statute, such as the
TCPA, which permits only “specified and limited discovery relevant to the motion [to
dismiss].” Tex. Civ. Prac. & Rem. Code Ann. § 27.006(b). And a clear abuse of
discretion occurs when the trial court orders discovery exceeding that which is
permitted by the rules. See CSX Corp., 124 S.W.3d at 152 (explaining that an abuse of
discretion occurs when the discovery ordered “exceeds that permitted by the rules of
procedure”).
Because appellate courts should not intervene to control incidental trial court
rulings when an adequate remedy by appeal exists, In re Prudential Ins. Co. of Am., 148
S.W.3d 124, 136 (Tex. 2004) (orig. proceeding), we must consider whether the
benefits of mandamus review outweigh the detriments when determining whether
appeal is an adequate remedy. In re BP Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex.
2008) (orig. proceeding). An appeal is inadequate when a party is in danger of losing
substantial rights, such as (1) when the appellate court would not be able to cure the
trial court’s discovery error; (2) when the party’s ability to present a viable claim or
defense at trial is vitiated or severely compromised by the trial court’s discovery error;
or (3) when the trial court disallows discovery and the missing discovery cannot be
made a part of the appellate record or the trial court, after proper request, refuses to
make it part of the record. In re Van Waters & Rogers, Inc., 145 S.W.3d 203, 210–11
(Tex. 2004) (orig. proceeding). An appeal is also inadequate in those “exceptional
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cases” when an ordinary appeal would deprive a party of the ability to “preserve
important substantive and procedural rights from impairment or loss.” Prudential Ins.
Co. of Am., 148 S.W.3d at 136, 138 (holding that the right to waive a jury trial would
“be lost forever” by requiring a party to submit to a jury trial and wait to complain of
the resulting judgment through ordinary appeal).
B. TCPA Discovery
The TCPA serves a dual purpose. On the one hand, the statute is designed 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. Tex. Civ. Prac. & Rem. Code Ann. § 27.002 (West 2015). Balanced
against those rights, the statute also seeks to protect the rights of persons to file
meritorious lawsuits for demonstrable injury. Id.; see D Magazine Partners, L.P. v.
Rosenthal, 529 S.W.3d 429, 433–34 (Tex. 2017) (holding that the TCPA seeks to
balance the tension between protecting First Amendment freedoms and preserving
the rights of individuals to file meritorious lawsuits).
The primary apparatus in achieving this balance is found in civil practice and
remedies code section 27.003, which provides that a party may file a motion to
dismiss the legal action if such action “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 of association.”
Tex. Civ. Prac. & Rem. Code Ann. § 27.003(a) (West 2015). Ordinarily, once such a
motion has been filed, all discovery is stayed. Id. § 27.003(c). However, the
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respondent may, upon a showing of good cause, be entitled to a court order allowing
it to conduct “specified and limited discovery relevant to the motion.” Id. § 27.006(b).
After such specified and limited discovery has been conducted—and no later than 120
days after service of the motion to dismiss—the dismissal hearing must occur. Id.
§ 27.004(c) (West 2015). At that hearing, the movant must first show that it is entitled
to bring the motion to dismiss, and then if successful, the burden shifts from the
movant to the respondent to establish “by clear and specific evidence a prima facie
case for each essential element of the claim in question,” or face dismissal of the claim
or claims in question. Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018); see also Tex.
Civ. Prac. & Rem. Code Ann. § 27.005(b), (c) (West 2015).
This statutorily mandated procedure becomes problematic in circumstances
where a movant’s entitlement to bring a motion to dismiss under section 27.002 is
dubious, i.e., when the plaintiff’s legal action is arguably not based on, related to, or in
response to movant’s right of free speech, right to petition, or right of association.
When a movant is not entitled to file a TCPA motion to dismiss but nevertheless files
one, the respondent has no statutory mechanism to challenge the filing at the outset.
Instead, under the statutory scheme, the respondent must wait until specified and
limited discovery, if any, is completed and challenge the motion at the time the
hearing on the motion occurs.2
We find no authority either permitting or prohibiting a challenge to a TCPA
2
motion to dismiss by filing an exception in response to the motion. Cf. McConnell v.
8
The problem this creates is exacerbated in complex cases involving numerous
legal actions where the movant uses a shotgun approach, taking aim at all of the legal
actions, not just the actions that are actually based on free speech, petition, or
association rights. In such cases, prior to receiving a threshold determination of
whether the movant was entitled to bring the motion to dismiss as to certain claims in
the first place, the plaintiff must nevertheless be armed with “clear and specific”
evidence of each essential element of every single claim challenged. Tex. Civ. Prac. &
Rem. Code Ann. § 27.005(c). Thus, under these circumstances, discovery must be
sufficiently broad to cover all essential elements of all of the challenged claims, even if
it could be later determined that some of the claims did not fall within the TCPA.
Here, IntelliCentrics challenged all four of McCaskill’s causes of action—
breach of contract, promissory estoppel, fraudulent inducement, and age
discrimination. With regard to the breach of contract and promissory estoppel claims,
IntelliCentrics argues that its alleged agreement and verbal promise to pay McCaskill a
salary, benefits, bonuses, and stock options constituted “protected communications
within the meaning of the TCPA” because these statements involved the “economic
well-being” of IntelliCentrics, were related to “products or services in the
marketplace,” and occurred among individuals who “joined together to collectively
express, promote, pursue, or defend common interests.” See id. § 27.001(2) (West
Southside ISD, 858 S.W.2d 337, 342 (Tex. 1993) (holding, in summary judgment
context, that an exception should be filed when a nonmovant wishes “to complain on
appeal that the grounds relied on by the movant were unclear or ambiguous”).
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2015) (defining “exercise of the right of association” as “a communication between
individuals who join together to collectively express, promote, pursue, or defend
common interests”), § 27.001(3), (7)(B) (defining the “exercise of the right of free
speech” to include a communication made in connection with an issue of “economic[]
or community well-being”), § 27.001(3), (7)(E) (defining the “exercise of the right of
free speech” to include a communication made in connection with an issue related to
“a good, product, or service in the marketplace”).
Although, on the surface, IntelliCentrics’s argument appears persuasive, and the
supreme court has recognized the “wide net” that the TCPA casts, see Adams v. Starside
Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex. 2018) (citing Tex. Civ. Prac. & Rem.
Code Ann. § 27.001(1)), the reach of the statute must have its limits. After all, what
breach of contract action would not find its genesis in communication between the
parties? And to be actionable, how would such communication not also touch upon
the economic well-being of the parties?
We see a distinction between communications used as evidence to support a
claim for breach of contract and a claim that is “based upon, relate[d] to, or []in
response to” that communication under the TCPA. See Beving v. Beadles, No. 02-17-
00223-CV, 2018 WL 5074765, *7 (Tex. App.—Fort Worth Oct. 18, 2018, no pet. h.).
Given that distinction, at first blush, IntelliCentrics’s arguments may seem a stretch.
But if it is a stretch, then under the procedural structure of this statute, it is one that
creates a double-edged sword. Assuming McCaskill met his burden of showing good
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cause, discovery ordered by the trial court under section 27.006(b), albeit restricted to
a specified and limited amount, should also be sufficiently broad to uncover evidence
of all essential elements of the challenged breach of contract and promissory estoppel
claims.
Similarly, with regard to the fraudulent inducement claim, IntelliCentrics argues
that its alleged misrepresentations about job title, work responsibilities, expected sales
targets, commission-based performance incentives, bonus payments, reimbursement
for moving expenses, and business prospects, as well as subsequent alleged statements
regarding product unavailability, constituted “protected communications within the
meaning of the TCPA,” again because such alleged misrepresentations involved the
“economic well-being” of IntelliCentrics, were related to “products or services in the
marketplace,” and occurred among individuals who “joined together to collectively
express, promote, pursue, or defend common interests.” See Tex. Civ. Prac. & Rem.
Code Ann. § 27.001(2) (defining “exercise of the right of association” as “a
communication between individuals who join together to collectively express,
promote, pursue, or defend common interests”), § 27.001(3), (7)(B) (defining the
“exercise of the right of free speech” to include a communication made in connection
with an issue of “economic[] or community well-being”), § 27.001(3), (7)(E) (defining
the “exercise of the right of free speech” to include a communication made in
connection with an issue related to “a good, product, or service in the marketplace”).
And as we stated regarding the breach of contract and promissory estoppel claims,
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assuming McCaskill met his burden of showing good cause, discovery ordered by the
trial court, albeit restricted to a specified and limited amount, should have been
sufficiently broad to uncover evidence of all essential elements of the fraudulent
inducement claim.
IntelliCentrics also argues that because McCaskill attributed “‘various
comments’ about McCaskill’s age and whether he would be able to work for the next
ten years” to IntelliCentrics and recited these comments as evidence of age
discrimination in his original petition, these alleged statements transform an age
discrimination claim into a claim “‘based on, relate[d] to[,] or . . . in response to’
protected communications within the meaning of the TCPA.” Despite the failure to
specifically articulate a theory that would place such comments within the TCPA’s
ambit, IntelliCentrics nevertheless claims that McCaskill’s age discrimination action is
subject to dismissal under the TCPA as well. Once more, having challenged this
cause of action under the TCPA, if good cause was shown to obtain discovery,
IntelliCentrics cannot now complain of any specified and limited age-discrimination
discovery ordered under section 27.006(b).
According to IntelliCentrics, after McCaskill moved for discovery under section
27.006(b), a visiting judge held a hearing and ruled on the motion. But although
IntelliCentrics attached a copy of the resulting discovery order to its petition for writ
of mandamus, it did not include a reporter’s record from the hearing. Accordingly,
we presume that McCaskill satisfied the statutory showing of good cause. See id.
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§ 27.006(b) (stating that on motion by a party and “on a showing of good cause,” the
court may allow specified and limited discovery relevant to the motion”); Tex. R. App.
P. 52.3(k)(2) (stating that the relator’s mandamus appendix may contain any other
item pertinent to the issues or points presented for review), 52.7(a)(2) (requiring
relator to file with the petition a properly authenticated transcript of any relevant
testimony from any underlying proceeding, including any exhibits offered in evidence,
“or a statement that no testimony was adduced in connection with the matter
complained”);3 Walker v. Packer, 827 S.W.2d 833, 837 (Tex. 1992) (orig. proceeding)
(stating that relator, as the party seeking relief, has the burden of providing the court
with a sufficient record to establish its right to mandamus relief); see also In re Allied
Chem. Corp., 227 S.W.3d 652, 654, 658 (Tex. 2007) (orig. proceeding) (observing that
trial courts have broad, although not unlimited, discretion in scheduling discovery and
that mandamus has been granted when the denial of discovery “goes to the heart of a
party’s case”). Thus, we are limited in our review to the question of whether the
discovery ordered was sufficiently “specified and limited” to pass statutory muster.
In its order, the trial court directed IntelliCentrics to “respond to and produce
the documents requested by [McCaskill’s] Request for Production of Documents Relevant to
3
In the unsworn declaration attached to IntelliCentrics’s petition for writ of
mandamus, IntelliCentrics’s counsel stated that he had reviewed the petition and
“concluded that every factual statement therein is supported by competent evidence
included in the Appendix or record.” [Emphasis added.] However, no mandamus
record was filed in this court. IntelliCentrics’s counsel did not include a statement
that no testimony was adduced in connection with this matter.
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Motion to Dismiss and Prima Facie Case.” Of the eleven requests for production that
McCaskill propounded, IntelliCentrics takes issue with five, specifically, Requests for
Production 3–7. In presenting its argument, IntelliCentrics divides these Requests
into two groups—Requests 3–5 and Requests 6–7. For purposes of our discussion
and analysis, we will organize them in similar fashion.
1. Requests 3–5:
REQUEST NO. 3: Documents reflecting the material terms of any
commission-based or other performance incentives that applied to
Defendant’s executive staff (including, but not limited to, vice presidents
and above) at any time from January 1, 2014, through April 7, 2017.
REQUEST NO. 4: Documents reflecting the amounts of commission-
based or other performance incentives paid to Defendant’s executive
staff (including, but not limited to, vice presidents and above) earned in
or attributable to any period of time from January 1, 2014, through
April 7, 2017.
REQUEST NO. 5: Communications to or from Michael Sheehan
reflecting the amounts of commission-based or other performance
incentives paid to Defendant’s executive staff (including, but not limited
to, vice presidents and above) earned in or attributable to any period of
time from January 1, 2014, through April 7, 2017.
Relying on our sister court’s opinion in In re SPEX Group US LLC,
IntelliCentrics argues that because Requests 3–5 seek more than three years of
documents and include the terms of and communications about any type of
commission-based performance incentives for IntelliCentrics’s executives, the scope
exceeds what is necessary to meet the “minimum quantum of evidence necessary to
support a rational inference that the allegation of fact is true.” No. 05-18-00208-CV,
14
2018 WL 1312407, at *4 (Tex. App.—Dallas Mar. 14, 2018, orig. proceeding [mand.
dism’d]) (mem. op.) (citing In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 223
(Tex. 2004) (orig. proceeding)).4
McCaskill argues that Requests 3–5 are specified and limited to obtaining
evidence to support his prima facie case for fraudulent inducement and that they do
not seek “all” or “each and every” document but rather could be satisfied “with a
minimal number of documents” containing the information sought. See Tex. R. Civ.
P. 193 cmt. 2 (“A party who objects to production of documents from a remote time
period should produce documents from a more recent period unless that production
would be burdensome and duplicative should the objection be overruled.”). As to the
relevant time periods, McCaskill points out that as proof of his fraud claim, he
believes the evidence would show that IntelliCentrics knew that its promised
performance incentives were not reasonably obtainable and were inaccurate because
4
The facts in SPEX are distinguishable from the facts here. As McCaskill
points out, the discovery in SPEX sought “virtually every document in SPEX’s
possession related to its business,” seeking:
[A]ll correspondence between the SPEX parties or any third parties
“referencing or mentioning the License Agreement or SPEX Ltd.’s
obligations under the License Agreement,” and documents evidencing
SPEX’s engineering, development, or creation of SPEX products,
SPEX’s marketing of SPEX products, and SPEX’s use of SPEX
products.
2018 WL 1312407, at *5. We do not take issue with the principle of law as set forth
by our sister court, but the scope of discovery sought here does not compare to that
sought in SPEX. See id.
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they “grossly exceeded what the company had proved capable of obtaining over the
prior ten years.” And because fraud “is not susceptible to direct proof,” McCaskill
argues that this cause of action must be proven through circumstantial evidence,
which these discovery requests were designed to obtain. See Spoljaric v. Percival Tours,
Inc., 708 S.W.2d 432, 435 (Tex. 1986); Hand v. Hughey, No. 02-15-00239-CV, 2016 WL
1470188, at *4 (Tex. App.—Fort Worth Apr. 14, 2016, no pet.) (mem. op.)
(referencing Andrews Cty. v. Sierra Club, 463 S.W.3d 867, 867 (Tex. 2015), to explain
that the clear and specific standard does not prohibit the use of circumstantial
evidence to meet plaintiff’s burden under the TCPA).
In sum, McCaskill argues that Requests 3–5 were not overbroad and were
specifically tailored to meet his burden under the TCPA “because evidence of
whether other executives had achieved their on-target performance incentives [in the
past] is indicative of whether achieving the target set for McCaskill was a reasonable
possibility” in the future. We agree and hold that the trial court’s order as to these
requests was not so arbitrary and unreasonable as to amount to a clear and prejudicial
error of law. Thus, the trial court did not clearly abuse its discretion by ordering the
specified and limited discovery sought in Requests 3–5. We overrule this portion of
IntelliCentrics’s second issue.
2. Requests 6–7:
REQUEST NO. 6: Documents reflecting the number of new accounts
obtained by Defendant from January 1, 2007, through December 31,
2016.
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REQUEST NO. 7: Communications to or from Michael Sheehan
reflecting the number of new accounts obtained by Defendant from
January 1, 2007, through December 31, 2016.
IntelliCentrics raises the same objections to the remaining two requests, plus
the additional objection that the discovery sought was irrelevant to the TCPA motion
because McCaskill failed to allege that IntelliCentrics made any misrepresentations to
him about whether bonuses were paid to other employees in previous years or as to
new accounts. In sum, IntelliCentrics argues that none of the requested documents
would assist McCaskill in proving that IntelliCentrics “made some misrepresentation
or that it never intended to pay a commission even if he achieved the metrics.”
McCaskill responds that Requests 6 and 7 are also relevant to his fraudulent
inducement claim. According to McCaskill, “Sheehan told McCaskill that he and his
team were expected to achieve over 5,000 new accounts in 2017.” Thus, obtaining
discovery as to whether that number had ever historically been achieved would be
“relevant to whether [Sheehan’s] representations to McCaskill about his target
incentive were either false when made, made with an intent to deceive, or made
without knowledge of their truth,” and thus relevant to the elements that McCaskill
must prove to present clear and specific evidence of a prima facie case for fraudulent
inducement. Again, we agree and hold that the trial court’s order was not so arbitrary
and unreasonable as to amount to a clear and prejudicial error of law. Thus, the trial
court did not clearly abuse its discretion by ordering the specified and limited
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discovery sought in Requests 6–7. We overrule the remainder of IntelliCentrics’s
second issue.
IV. Conclusion
Having overruled IntelliCentrics’s second issue, we deny the requested relief
without reaching its first issue on the adequacy of any appellate remedy, see Tex. R.
App. P. 47.1, and lift our September 17, 2018 stay.
/s/ Bonnie Sudderth
Bonnie Sudderth
Chief Justice
Delivered: October 25, 2018
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