NFL lessons for the C-Suite on succession planning, Exhibit 1: Tony Romo

Dallas Cowboys owner Jerry Jones has himself in an ideal succession situation. He waited to draft the perfect candidate – Dak Prescott. He and can now let potential future star quarterback Prescott learn while aging star Tony Romo still has the ball.

cowboysBoards and C-Suite folks should think like Jones: Keep your stars in place, but keep an eye on the future of the company. A CEO can fall at any time, be it from a physical problem like the cancer that took Apple’s Steve Jobs, a sexual harassment scandal like the one that felled Fox News’ Roger Ailes or a government investigation like the New Jersey inquiry that caused United Airlines to drop Jeff Smisek.

Certainly the NFL may not always get it right or do it smoothly. Just look at the Indianapolis Colts; they couldn’t afford Peyton Manning and Andrew Luck, so they tossed their older star. Of course, corporate America doesn’t have to deal with NFL salary caps. Nor does corporate America have to bench one player for another to be useful. A CEO successor can be the COO or president or serve some other role in the corporation while being groomed to take the helm should there be a natural succession or a sudden need for a replacement.

A 2014 study by the National Association of Corporate Directors showed that two-thirds of U.S. public and private companies reported they still have no formal CEO succession plan in place. Even though it can be awkward to plan for a company leader’s exit, having no plan is bad for shareholders, bad for employees and bad for business. This can be especially devastating to a smaller business. Even family businesses can have this problem as The Economist notes in discussing a lack of succession planning in family oil businesses in the Arabian Gulf.

 MIT Sloan Management Review this summer cited the example of Surveymonkey whose CEO died unexpectedly last year. There was no succession plan. The company looked at 75 candidates before making a choice two months later, only to have that person be replaced six months after that. That uncertainty and tumult had to cost them.

Apple did it right when the company knew Steve Jobs would be leaving, as I wrote back in 2012. Warren Buffett has been careful about this too. He realizes that such a plan allows people to stay invested and believe that things are, and will be, under control. Boards and incumbent CEOS owe it to their constituencies inside and outside the company to deal with the sensitive subject of passing the baton. Just as a smart company buys insurance for unforeseen problems, a smart company has a succession plan even if it seems the CEO is in great health and the horizon appears to be without scandal. Accidents and quarterback sacks happen.

Posted in Corporate successsion, Executive contracts, Fiduciary Duty, Retention agreements, Severance Packages, Sports contracts | Tagged , , , , , , , | Comments Off on NFL lessons for the C-Suite on succession planning, Exhibit 1: Tony Romo

Your Employment Agreement is Nothing Like a Mortgage Document

employment-contractAnother report on employment contracts is discouraging but not surprising. A survey of 1,000 people in the U.K. showed that more than 90 percent didn’t read their employment contracts – despite the fact that the terms can haunt them for years if they are violated. I have written about this subject before, including earlier this fall in regards to a lengthy online nondisclosure agreement that Republican presidential candidate Donald Trump required of online campaign volunteers.

It can’t be said too often: Read these contracts. Understand them. Get a lawyer’s help if necessary. My high-level executives often are asked to sign complicated non-compete agreements, and I work with them to get more flexible terms. Non-competes used to apply primarily to well-compensated employees, but they are increasingly used for the rank-and-file.

Many people who are asked to sign these agreements consider them fairly innocuous documents, much like the piles of papers one signs when they purchase a home. Buyers sign page after page without thoroughly reading the contents, but they feel fairly confident they understand the terms.

For example, when agreeing to a 30-year mortgage, in no way does the buyer believe he/she MUST remain in that home for three decades, right?! They’re not checking into the “Hotel California,” as the Eagles’ song goes. One can leave as long as the loan is paid off. The lender just wants the loan repaid – they don’t take an early departure personally.

The mortgage lending process is regulated and fairly normalized, so people feel pretty comfortable with the process. That is not the case with employment agreements in Texas, where employers are allowed lots of leeway in setting terms in employment contracts.

Historically, Texas and U.S. laws have been very protective of those who take out mortgages. But in regards to non-compete, nondisclosure and confidentiality agreements, there generally are no similar protections for employees outside of a few states – Texas not being one of them.

These agreements vary substantively and substantially. The job may be appealing, but there can be real danger lurking in the employment agreement that comes with it.

Additionally, after years on the job, an employee may forget signing a binding non-compete agreement way back when. Or they may not have realized they were agreeing to employment terms when they signed onto the company’s savings plan.

Carefully consider all the details, understand the employment terms, protect your own interests. You know the people who may end up suing you if you decide to break your employment agreement.

 

 

 

Posted in CEOs, Confidential Information, Corporate culture, Covenants Not to Compete, Executive Compensation, Executive contracts, Non-Competes | Tagged , , , | Comments Off on Your Employment Agreement is Nothing Like a Mortgage Document

Dialer Beware: Trump Volunteers Must Sign Onerous Agreement to Work Online Phone Bank

sign contractWhere do I begin?

There are so many troubling aspects to the lengthy nondisclosure agreement that Republican presidential candidate Donald Trump is requiring online campaign volunteers to sign that I just had to speak up.

The contents of this 2,271-world nondisclosure agreement have come to light in recent days as the presidential campaigns ramp up their voter outreach efforts.

At this point, I will disclose I’m a Hillary Clinton supporter. But let’s set aside politics and just analyze this from a legal perspective. My complaints and concerns about this nondisclosure agreement come from my experience as a lawyer who represents executives in a variety of matters, including these types of legally binding agreements.

To sign up on the candidate’s website for the Trump Red Dialer, an online call system that connects campaign volunteers with potential voters, one first must first sign the nondisclosure agreement.

If you sign this far-reaching agreement, and you need to think long and hard about it before you do, you are prohibited from criticizing Trump as well as any member of his family for the rest of their lifetimes, not just during the campaign period. You also can’t comment critically on his brands or disclose any personal information about the candidate.

This non-disparagement requirement is just too ambiguous and broad. It states you cannot disparage Trump or any “family member,” which includes grandchildren and his nieces and nephews, or any of their companies. Try figuring out who all of these people and companies are – just try! Nor can you even disparage any of these companies’ products.

Yes, non-disparagement clauses are difficult to enforce and legal cases regarding them are rare. But that doesn’t mean they can’t be successful.  At least one Arizona court has enforced a non-disparagement clause, so you need to be careful about signing one.

The definition of “confidential information” is a little over the top as well. It includes anything Trump insists is confidential, including his “political affairs” and other things that are clearly public.

Additionally, the non-compete and non-solicit is strange and unnecessary. The “no competitive services” clause is particularly troublesome; it requires the person to agree “not to assist or counsel, directly or indirectly, for compensation or as a volunteer, any person that is a candidate or exploring candidacy for President of the United States other than Mr. Trump and to prevent your employees from doing so.”  So much for changing your mind.

I could go on and on, but you get the idea.

Again, we’re talking about online volunteers here! A legal question to ask is what is the consideration – what does the volunteer get – in return for signing this broad agreement?  One guess is that it could mean they may get access to some type of confidential information. But that is neither promised nor even implied in the agreement.

In the business world, this would not fly.  Maybe Trump has passionate supporters who will sign anything just for the privilege of doing work for free.  But most companies will have to promise something, and limit the restrictions to those reasonably necessary to protect the business, for it to be enforceable.

Unfortunately, I think many volunteers will sign the agreement without getting any legal advice whatsoever. They support the candidate and they want to be part of the political process. Those are sincere goals. But in doing so, they also are making a lifetime promise that could someday prove to be problematic.

 

 

 

 

 

 

Posted in CEOs, Confidential Information, Covenants Not to Compete, Executive contracts, Litigation, Non-Competes, Trade Secrets | Tagged , , | 1 Comment

Noteworthy Outcome in Early Test of Federal Trade Secrets Act

court ruling 2There’s a bigger story behind a Florida judge’s recent ruling in one of the first lawsuits brought under the new Defend Trade Secrets Act (DTSA).

U.S. District Judge Cecilia M. Altonaga dismissed, at least temporarily, a lawsuit filed by an engineering and telecom services provider working as a subcontractor on the renovation of the city of Miami Beach’s convention center.

M.C. Dean Inc. filed a claim under the DTSA in May, just days after it was enacted. The company sought injunctive relief to recover employee payroll data it claimed was wrongly obtained by an electricians union from the city.

Judge Altonaga ruled that while M.C. Dean raised plausible allegations that the data had value that was worth keeping confidential, it failed to show it took reasonable actions to protect its payroll information.

“M.C. Dean fails to allege it took reasonable steps to protect the secrecy of the information at issue, thus failing to satisfy the definition of trade secret as to both counts,” the judge said.

However, Judge Altonaga refused the city and union’s request to have the case dismissed with prejudice. She gave M.C. Dean some time to refile an amended complaint that shows it took reasonable actions to protect its confidential information. Stay tuned.

The bigger issue, I believe, is the fact that the case was dismissed so early. That probably would not have happened in state court.

The DTSA, overwhelmingly passed by Congress in April, allows trade theft claims to be filed in federal court. Previously, these actions could only be pursued in state courts.

As I wrote earlier, I’m not sold on the need for the DTSA – and the Florida ruling only confirms my skepticism.

I represent executives in a variety of matters, including trade secrets. I know from experience that in state courts, these types of lawsuits are rarely punted at the start.

But the federal judge in the Florida case was able to apply a higher standard – Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) – in deciding the motion to dismiss.

“Although this pleading standard does not require detailed factual allegations … it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation,” she wrote.

It’s important to remember that trade theft lawsuits often are filed quickly. A company suddenly realizes that confidential information may have been stolen. It rushes for a remedy – an injunction to secure the information as it builds its case. State courts understand this.

So if a federal court is going to hold your claim to a higher standard, is it the proper venue to use?

I don’t know the merits of the Florida lawsuit – but I do know that valuable time has been lost in pursuing the claim, not to mention the ego-deflating effect of losing right out of the starting gate.

You need to give careful consideration to filing a trade secret theft claim in federal court. Is it the best legal avenue to pursue? I’m not so sure.

Posted in Confidential Information, Defend Trade Secrets Act, Trade Secrets, Uniform Trade Secrets Act | Tagged , , | Comments Off on Noteworthy Outcome in Early Test of Federal Trade Secrets Act

Massage Envy No More

massageTexasBarToday_TopTen_Badge_VectorGraphicHouston Chronicle business columnist Chris Tomlinson recently interviewed me about how a woman’s search for a better job landed her in serious legal trouble.

The unfortunate story involves Maxie Foster, who worked for years as a receptionist to pay her way through beauty school to earn an esthetician license. She got a job at a Massage Envy franchise and worked there for 2½ years. Her legal problems began after she got another job at a similar business that paid her better money, which she needed to support her daughter.

FBE Ventures, which owns the Massage Envy franchises in Conroe and Tomball where Ms. Foster worked, filed a lawsuit against her and the new employer, which fired her just before Christmas to settle their part of the legal battle. Ms. Foster, now 27, is still fighting the $100,000 lawsuit and she’s prohibited from working in her field at any business located within 40 miles of her home, which is now a trailer on her parents’ property in Magnolia, a town north of Houston.

As Mr. Tomlinson wrote, Ms. Foster is one of millions of Americans who signed employment contracts that came with non-compete agreements they probably didn’t completely understand.

I represent high-level executives and non-compete agreements are a major focus of my work. I realize they can be an important tool for a company. They help protect a business’ trade secrets and can motivate an employer to invest in specialized training and provide stock options or equity in the company because it makes employees less likely to leave.

But non-competes used to apply primarily to well-compensated employees who had access to confidential information or received highly specialized training or equity in the employer. I’m talking about a company’s top executives and lead researchers. And although I understand their value, I often seek more flexible terms for my executive-clients.

I’m concerned about the expanded use of non-competes. What was once a tool essentially reserved for the executive suite has become a standard practice for the rank-and-file.

Ms. Foster says the company suing her didn’t pay for her training or her license. She says she didn’t have access to company trade secrets or equity and didn’t take any previous clients to her new employer.

“You’d think I’d murdered somebody. They came in with two corporate attorneys and tore me apart,” Ms. Foster told the Chronicle.

Ms. Foster’s lawyer, if she could afford one, likely could make a strong argument against the validity of the non-compete.

I’m not the only one concerned about the increasing use of non-competes. Earlier this year, I wrote about how the White House issued a 16-page report detailing how non-competes are becoming more commonplace among lower-wage employees.

I will say it again and again – please be aware of the real ramifications of signing a non-compete. Please consult an attorney if at all possible before signing any such agreement.

 

Posted in Confidential Information, Corporate culture, Covenants Not to Compete, Executive Compensation, Executive contracts, Litigation, Non-Competes, Trade Secrets | Tagged , , , , , , | Comments Off on Massage Envy No More

Who Says There’s No Crying in Baseball?

baseball-1091210_960_720TexasBarToday_TopTen_Badge_VectorGraphicTo those who shrug off cybertheft as a victimless crime that shouldn’t involve any real punishment, there’s a federal judge in Houston who just officially delivered a very different message on the subject.

U.S. District Judge Lynn Hughes sentenced former St. Louis Cardinals executive Christopher Correa to 46 months in prison for illegal intrusions into the Houston Astros computer database. Correa also was fined $279,000.

Correa, who was the Cardinals’ director of baseball development, admitted in January that he had accessed the Astros’ database in 2013 and 2014. He said then he suspected the Astros of having information proprietary to the Cardinals because former Cardinals employees had gone to work for the Houston team. The Astros have denied the claim and Correa made no mention of it at his sentencing.

It turns out, Correa hacked into the database in part by guessing at logon information, which was similar to what was used by one of the former Cardinals executives. Correa gained access to a database that contained scouting reports, amateur player evaluations, notes on trade discussions and proposed bonuses for draft picks. The U.S. Attorney’s office put the estimated value of the cybertheft at $1.7 million.

Judge Hughes’ indignation at Correa’s actions was evident at his sentencing. As Correa read a letter of apology to the court, the judge interjected some of his words to characterize Correa’s actions: “intentionally, over a long period time, stupidly.”

The key takeaway from this case is that digital theft of trade secrets is a serious matter that can have serious ramifications, including jail time. There seems to be a prevailing attitude, particularly among some younger people, that digital theft of trade secrets really isn’t that big a deal, certainly not something that merits incarceration.

While I do believe the punishment in this high-profile case was pretty stiff, I don’t see this as the only time this could happen. The threat is real. It’s important to understand that there are laws against digital theft of information and procedures in place that can result in severe, life-changing punishments. In fact, the potential for getting into legal trouble has expanded with the recent passage of the Defend Trade Secrets Act (DTSA), which I wrote about earlier this year.

The fallout from this cyber-crime may not be over. Next up to bat? Major League Baseball Commissioner Rob Manfred will decide if the Cardinals face sanctions because of Correa’s actions.

Posted in Confidential Information, Corporate culture, Criminal Prosecutions, Defend Trade Secrets Act, Trade Secrets | Tagged , , , | 1 Comment

Considering a New Job? Please Talk to Your Lawyer

dream jobZillow recently reached a whopping $130 million settlement with Realtor.com operator Move Inc. shortly before the two online real estate giants went to trial over alleged misappropriation of trade secrets. While the settlement amount is a far cry from the estimated $1 billion in potential damages that was at stake in the contentious legal battle, it still is an extraordinary amount of money.

And to think it all started with a job change. Ok, so it wasn’t your run-of-the-mill job switch – it involved two high-level Move executives who took important roles at Zillow.

The legal battle began in March 2014 shortly after Erroll Samuelson resigned from his job as Move’s chief strategy officer and joined Zillow as its second-highest paid executive – on the same day. The second executive was sued later in the year.

In today’s world, leaving a high-level executive position one day and taking a similar job in the same industry the next is a high-risk move. At the very least, this kind of action is going to prompt a meeting between your former employer and its lawyers. Even worse, a lawsuit may be in your future, whether a non-compete clause was involved or not.

Move claimed Zillow engaged in a “very regrettable act of executive poaching.”

These days, there are just too many ways for an executive to get tripped up legally when he/she decides to leave a company. I advise my executive clients to consult an attorney BEFORE they take a new job, even if they aren’t bound by a non-compete agreement.

The key legal points to remember in these cases are: geography, scope of industry and length of time. Is your potential new employer located in the same area? Is in the same field of work? Are you going to join the company immediately, or will you sit out for six months or so?

If you are an executive thinking about leaving your current job, you should first discuss these issues with your attorney before you make any kind of decision that could be harmful to you and your potential new employer. Your attorney can advise you on the risks of accepting a new job as well as explain how to properly exit a position in terms of what information you can take with you and other legal matters.

An executive has the right to seek new employment opportunities. Just do so wisely, with no regrets and with the benefit of legal counsel.

 

 

Posted in Business Continuity, CEOs, Complaints Against Executives, Confidential Information, Corporate culture, Covenants Not to Compete, Executive Compensation, Executive contracts, Executive Management Style, Fiduciary Duty, Legal, Litigation, Non-Competes, Trade Secrets, Uncategorized | Comments Off on Considering a New Job? Please Talk to Your Lawyer

White House Report Says Non-Competes May Hurt Competition

The White House is weighing in on the growing use of non-compete agreements and how they can negatively affect competition, individual workers and the overall economy. Once a tool reserved for top executives, the 16-page report released earlier this week details how non-compete agreements are becoming more commonplace for low-wage, less-skilled workers.

Non-compete agreements are a focus of my work and one of my favorite topics for discussion. These agreements can be valuable tools in the marketplace. They help protect company trade secrets, which promotes innovation. They also may encourage a company to invest more in specialized training for employees by reducing the possibility that the employee will leave the company.

But as the White House notes, with nearly a fifth of U.S. workers, including many low-wage employees, currently covered by non-competes, these agreements are likely being used in situations where they aren’t necessary. download

Here are a couple of interesting excerpts:

In addition to reducing job mobility and worker bargaining power, non-competes can negatively impact other companies by constricting the labor pool from which to hire. Non-competes may also prevent workers from launching new companies. Some critics also argue that non-competes can actually stifle innovation by reducing the diffusion of skills and ideas between companies within a region, which can in turn impact economic growth. Non-compete agreements may also have a detrimental effect on consumer well-being by restricting consumer choice.

Based on the impacts of unnecessary non-competes for workers, consumers, and the broader economy, several states have passed, and many others are currently weighing reforms to the ways non-compete agreements are regulated. Federal legislation has also been proposed to limit the use of non-compete agreements in low-wage fields where they are less likely to have valid uses.

As I wrote earlier this year when the U.S. Treasury Department released its report on non-competes, I work with many executives who are required to sign such agreements.

These individuals generally have access to important confidential information, receive specialized training and are well-compensated, often with stock options and equity interests. However, I still have argued in some cases for more flexible agreements to allow my client greater mobility and career growth.

I can understand a company wanting to protect its confidential information and investment in top workers, but what if the company’s chief goal is to keep customers? Is the use of a non-compete a fair tool in these cases?

For example, let’s say a popular hair stylist gets a lucrative offer to move to a new salon. Devoted customers often follow the stylist to the new shop. But what happens if a stylist is covered by a non-compete? Is the existing salon trying to protect confidential information and/or training, or is it using a non-compete merely to keep customers?

I have deep concerns about a non-compete agreement being used in cases to preserve a company’s relationship with the customer through a well-regarded employee. You just can’t own someone else’s personality. And using a non-compete in this way is really just a thinly veiled attempt at stifling competition, hardly a laudable or even legitimate purpose.

While I support a company’s effort to protect confidential information and the investment in specialized training, I think we are straying too far from the original – and reasonable – uses for these agreements.

Employee mobility is a good thing in the U.S. for the individual, consumers and competition. The White House, the Treasuring Department and Labor Department are expected to convene a group of experts in the coming months to further discuss non-compete agreements and their consequences. Stay tuned.

Posted in Business Continuity, CEOs, Confidential Information, Covenants Not to Compete, Executive contracts, Non-Competes, Uncategorized | Tagged , , , , , | Comments Off on White House Report Says Non-Competes May Hurt Competition

UPDATED: Trade Secret Proposal Has Won Over Congress & The President, But Not Me

Who says Congress can’t agree on anything these days? By an overwhelming vote of 410-2, the House recently approved the Defend Trade Secret Act (DTSA). The Senate already has passed the proposal and President Obama is expected to sign it into law. (UPDATE: The president did sign it into law May 11, 2016)

Washington may be all simpatico about the DTSA, but I still have reservations about the overall need for this expansive new law, as well as the ex parte authority it allows for the seizure of allegedly stolen trade secrets.

The DTSA appears to be another example of the federalization of the justice system – and that’s not always a good thing.

Currently, trade secret theft claims are generally resolved in state courts. Proponents say the DTSA will provide a federal civil cause of action for the theft of trade secrets and establish a nationwide uniform standard for protection and enforcement. With that comes the greatly enhanced potential for forum shopping in these cases.

I don’t see anything wrong with the current system. State courts in Texas have effectively dealt with these cases for years, and I see no reason why they can’t continue to do so. The suggestion that state courts are not as capable as the federal courts in handling complicated intellectual property issues is without merit in my opinion – and in my experience.

Even still, with diversity jurisdiction, a plaintiff can choose to file these cases in federal court. So the notion that we need a federal law to allow federal jurisdiction to deal with theft by agents of foreign nationals is just not a reality for the most part.

And it’s not just creating federal jurisdiction in every trade secrets case. It provides for a longer statute of limitations – five years from discovery of the theft, and for treble damages in the case of willful and malicious theft instead of the usual double damages.  But those are relatively insignificant; the real concern is the ex parte seizure power authorized by the Act. As I discussed earlier this year, this provision raises the issue of hearing only one side of the story and the potential for abuse.

The provision allows for one party to argue before a judge for the seizure of allegedly stolen trade secrets without the opposing party knowing about the complaint or the hearing.

I don’t know about you, but when I argue against nobody, I usually win.

The stakes are high in these types of cases and the potential for abuse of this seizure power is real. Unscrupulous parties will try to find a way to use this power inappropriately.

Generally speaking, ex parte anything in the civil arena is a bad idea. When the other side gets to argue their side, it maintains a higher level or accountability and honesty.

Yes, there are safeguards provided in the provision. Lawmakers added the term “extraordinary circumstances,” in granting such seizures and a fee is imposed in cases of wrongful seizures. But I find the power granted by this provision troubling.

Why aren’t criminal courts – and the protections provided to a defendant in these courts – a more just alternative? Others have succeeded in taking this route for their clients, and the opposing side still is afforded their rightful legal protections.

Posted in Confidential Information, Defend Trade Secrets Act, Litigation, Trade Secrets, Uniform Trade Secrets Act | Tagged , , , , , , , | Comments Off on UPDATED: Trade Secret Proposal Has Won Over Congress & The President, But Not Me

When You Get SLAPPed, You Can Get SLAPPed Hard

Lawyers who are keeping an eye on SLAPP litigation will want to review the Texas Supreme Court’s April 15 ruling in Sullivan v. Abraham.  In its brief decision, the court provided a little more clarity in this emerging area of litigation that can affect many areas of law, including trade secrets.

In Sullivan, the court held that Texas’ new-ish law against strategic lawsuits against public Sullivan v. Abraham, anti-SLAPPparticipation (SLAPP) does not allow a court to reduce the amount of “reasonable” attorneys’ fees to account for “justice and equity.” The plaintiff, who won the underlying action, had sought $71,700 in fees and expenses, but the trial court awarded only $8,000. That decision was upheld on appeal, with the court finding that the trial court had “discretion to award a lesser amount if ‘justice and equity’ so required.”

TexasBarToday_TopTen_Badge_SmallThe Supreme Court, however, disagreed, ruling that the “equitable and just” standard wasn’t part of the Texas Citizens Participation Act, the 2011 anti-SLAPP law the underlying suit invoked. The TCPA simply allows for “reasonable” fees, the high court ruled, and sent it back to the trial court to determine what “reasonable” is in this case.

The lesson here is an important one: the TCPA is a robust tool to protect Texas citizens when they are participating in protected activities, whether that’s exercising free speech, seeking a remedy in court or partaking in the right of association.

In the case of trade secret theft cases, companies will often counter sue, or even file suit against the plaintiff in a separate case, on little more than a hunch that, because a former employee is suing the company, they’re using confidential information, trusting that discovery will – or won’t – bear that suspicion out.

Parties with that thought in mind need to make sure that what they’re suing for isn’t protected activity (i.e. filing a lawsuit) and, if it is, they need to be prepared to explain at the outset of their case that they have “clear and specific” evidence to support their case – even before discovery begins. Otherwise, they risk not only dismissal, but getting SLAPPed with a hefty attorneys’ fees bill.

The high court actually watered down the TCPA in 2015’s In re: Lipsky. In that case, a Texas couple who claimed that fracking contaminated their water well with methane was sued for defamation by Range Resources Corp. The court ruled that Range could not pursue the defamation case because it didn’t show “clear and specific” evidence to establish a prima facie case against the couple.

In its decision, however, the court clarified that circumstantial evidence could be considered “clear and specific” evidence, under the TCPA.

“Circumstantial evidence may be used to prove one’s case-in-chief or to defeat a motion for directed verdict, and so it would be odd to deny its use here to defeat a preliminary motion to dismiss under the TCPA,” the opinion said. “That the statute should create a greater obstacle for the plaintiff to get into the courthouse than to win its case seems nonsensical.”

At just 5 years old, the TCPA is still fairly new, so it’s worth keeping an eye the courts for continued clarity.

Posted in Complaints Against Executives, Litigation, SLAPP, Trade Secrets | 1 Comment