TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-18-00721-CV

Kevin Rose, Appellant

v.

Scientific Machine & Welding, Inc., Appellee

FROM THE 419TH DISTRICT COURT OF TRAVIS COUNTY

NO. D-1-GN-18-005034, THE HONORABLE JAMES LEE CARROLL, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

Scientific Machine & Welding, Inc. (Scientific) sued its former employee, 

Kevin Rose, for breach of contract and trade-secret misappropriation after he left its employ and

began working for one of its customers. Rose moved to dismiss the action under the Texas 

Citizens Participation Act (TCPA). See generally Tex. Civ. Prac. & Rem. Code §§ 27.001–.011. 

The trial court denied the motion. On appeal, Rose argues that the trial court erred in denying his 

motion because Scientific’s lawsuit relates to his exercise of the rights of free speech and 

association, and Scientific has proved neither exemption of its lawsuit from the TCPA under the 

Act’s “commercial speech” exemption nor a prima facie case for its claims. See id. §§ 27.005(b),

(c), .010(b). For the following reasons, we affirm the trial court’s denial of Rose’s TCPA motion.
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BACKGROUND1

Scientific is a manufacturing company that specializes in producing specialty 

parts and equipment. It regularly creates customized orders based on specialized drawings and 

blueprints that it prepares for its customers. Scientific formerly employed Rose as its Operations 

Manager, and Rose worked with its customers to develop manufacturing drawings and blueprints 

for it to create the necessary final products. Upon ceasing his employment with Scientific, Rose

began working for Scientific’s customer, FlashParking. Rose allegedly “improperly removed 

and divulged trade secrets and proprietary assets of Scientific” to FlashParking either while still 

working for Scientific or after starting to work for FlashParking. Scientific alleges that it “has 

information and belief that Rose has in his possession a number of the original manufacturer 

drawings from Scientific and continues to profit from the sale and design of such drawings with 

many of the former customers of Scientific.” Additionally, before termination of his employment

with Scientific, Rose “made copies of manufacturing drawings” and “used [Scientific]’s trade 

secrets for the purpose of manufacturing and selling, in competition with Scientific.”

Scientific supported its response to Rose’s TCPA motion with the affidavit of its 

president, Alan Basta. Basta averred that Scientific “considers the manufacturing diagrams and 

accompanying instructions and documentation to be a trade secret of [Scientific]” and that 

Rose’s responsibility at Scientific “was to manage relationships and commercial sales with the 

different commercial customers, the creation of manufacturing drawings, the coordination of 

 

1 The facts in this section are taken from Scientific’s pleadings, which courts must 

consider in determining the applicability of the TCPA and whether a plaintiff has met its burden 

to overcome a party’s motion to dismiss. See Tex. Civ. Prac. & Rem. Code § 27.006(a) (“In 

determining whether a legal action should be dismissed . . . , the court shall consider the 

pleadings.”); Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017) (noting, in context of deciding 

what legal action at issue was “based on,” that plaintiff’s petition alone can be sufficient to show 

TCPA’s applicability).
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purchase material and components, the overseeing of the manufacturing and assembly process, 

and to ensure quality control and product delivery.” Basta averred that Rose “spent the vast 

amount of his time at [Scientific] servicing FlashParking, a major client of [Scientific].”

Basta’s affidavit stated that Scientific began its work for FlashParking by 

designing and manufacturing a parking-ticket kiosk (the SmartStation) and then later designing

various other items. Basta further averred:

• For each of these manufactured items, [Scientific] created a drawing package

that details the assembled product and technical specifications for [its] 

manufacture;

• The drawings were considered [Scientific’s] proprietary information and trade 

secrets;

• No drawings [of the SmartStation] other than those created by Scientific 

existed outside of Scientific prior to Rose’s termination;

• During the time that [] Rose was an employee of [Scientific], I instructed 

[him] not to remove any schematics/blue prints and instructions for any 

components related to FlashParking or any other Client;

• Rose agreed that he would neither remove any of the schematics/blue prints 

and instructions nor disclose any such documents to FlashParking or those 

belonging to any other client. I further explained to [] Rose that all such 

documents were confidential;

• [Scientific] has evidence of the improper removal and disclosure of the 

drawings by Rose based in part in how quickly vendors of [Scientific] began 

directly working with FlashParking;

• [M]ere days after the resignation of Rose, 3P Industries, Inc. (the powder 

coater for a product [Scientific] sold to FlashParking) sent an email to [] 

Rose’s email address at [Scientific] to arrange pickup of parts in Elgin, Texas, 

Rose’s town of residence. A copy of this email is referred to as Exhibit C and 

incorporated by reference in this document. This email makes it obvious that 

[] Rose was already working for FlashParking prior to his termination with 

[Scientific];
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• Prior to the resignation of Rose, [Scientific] was the sole manufacturer and 

supplier to FlashParking for the parts supplied by [Scientific]. [] Rose was the 

primary and almost exclusive contact between [Scientific] and FlashParking 

and suppliers to [Scientific]. It appears that FlashParking hired [] Rose in 

order to obtain trade secrets and intellectual property owned by [Scientific].

The trial court denied Rose’s motion to dismiss after a non-evidentiary hearing.

DISCUSSION

The TCPA’s stated overarching purpose is “to encourage and safeguard the 

constitutional rights of persons to petition, speak freely, associate freely, and otherwise 

participate in government” against infringement by meritless lawsuits. See Tex. Civ. Prac. & 

Rem. Code § 27.002. The TCPA directs that it be “construed liberally to effectuate its purpose 

and intent fully.” Id. § 27.011(b); see also Adams v. Starside Custom Builders, LLC, 547 S.W.3d 

890, 894 (Tex. 2018) (“The TCPA casts a wide net.”). To achieve its professed purposes, the Act

defines “a suspect class of legal proceedings that are deemed to implicate free expression, 

making those proceedings subject to a threshold testing of potential merit, and compelling rapid 

dismissal—with mandatory cost-shifting and sanctions—for any found wanting.” Cavin v. Abbott,

545 S.W.3d 47, 55 (Tex. App.—Austin 2017, pet. denied). “[T]he unique language of the TCPA 

directs courts to decide its applicability based on a holistic review of the pleadings.” Adams, 

547 S.W.3d at 897. Section 27.010, however, exempts certain types of “legal actions” from the 

Act’s purview and, therefore, from the “suspect class” of legal actions subject to dismissal. See 

Tex. Civ. Prac. & Rem. Code § 27.010.

Rose contends on appeal that the trial court erred in denying his motion to dismiss 

because (1) the TCPA applies to claims, such as those here, concerning wrongful disclosure of 

trade-secret or proprietary information, (2) Scientific did not meet its burden to show that the 
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TCPA’s commercial-speech exemption applies, (3) Scientific did not meet its burden to present 

clear and specific evidence of the essential elements of its claims, and (4) he showed that the 

statute of frauds barred Scientific’s contract claim. We will address each contention in turn, to 

the extent necessary.

Does the TCPA apply to this lawsuit?

Under the TCPA, a party may file a motion to dismiss a “legal action” that “is 

based on, relates to, or is in response to a party’s exercise of the right of free speech, right to 

petition, or right of association.” Id. § 27.003(a); see id. § 27.001(6) (defining “legal action” 

to include “a lawsuit” or single “cause of action”). Rose contends that the TCPA applies to 

Scientific’s lawsuit because it “relates to” his exercise of the rights of association and of free 

speech.

The TCPA defines both the exercise of the right of association and the exercise of 

the right of free speech with reference to the making of a “communication,” see id. § 27.001(2), 

(3), which term “includes the making or submitting of a statement or document in any form or 

medium, including oral, visual, written, audiovisual, or electronic,” id. § 27.001(1). The TCPA 

defines the “exercise of the right of association” as “a communication between individuals who 

join together to collectively express, promote, pursue, or defend common interests” and the

“exercise of the right of free speech” as “a communication made in connection with a matter of 

public concern.” Id. § 27.001(2), (3). A “‘matter of public concern’ includes an issue related to

. . . a good, product, or service in the marketplace.” Id. § 27.001(7).

This Court has recently held that alleged trade-secret disclosures may fit within 

the TCPA-defined right of association. See Elite Auto Body LLC v. Autocraft Bodywerks, Inc., 
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520 S.W.3d 191, 204–06 (Tex. App.—Austin 2017, pet. dism’d). In Elite Auto Body, we 

considered the plaintiff’s allegations that its former employees had founded or joined a 

competing company and furnished the new company with its confidential trade secrets. See id.

at 194. We held that these allegations met the TCPA’s definition of a communication between 

individuals who join together to pursue common interests and that the lawsuit, therefore, related 

to the defendants’ exercise of the right of association. See id. at 205–06.

Similarly here, Scientific’s petition alleges that Rose “disclosed” its trade secrets

by providing the misappropriated blueprints and drawings or copies thereof to FlashParking and 

others, which fits within the broad definition of a TCPA “communication.” See Tex. Civ. Prac. &

Rem. Code § 27.001(1). Furthermore, Scientific’s allegation that Rose communicated its trade 

secrets to FlashParking and others for the benefit of himself and the parties to whom he 

communicated them fits within the TCPA’s definition of the exercise of the right of association

because the alleged communication allowed for Rose and those parties to pursue common 

business interests. See Elite Auto Body, 520 S.W.3d at 205–06. The alleged wrongful disclosure

(the TCPA “communication”) of Scientific’s trade secrets underlies both of Scientific’s causes of 

action (breach of contract and trade-secret misappropriation). Accordingly, we hold that the 

TCPA applies to Scientific’s lawsuit absent the application of an exemption, which issue we 

discuss below. Because of our determination that the TCPA applies to this lawsuit due to its 

relating to Rose’s exercise of the right of association, we need not consider whether the lawsuit 

alternatively relates to Rose’s exercise of the right of free speech. Id. at 205; see Tex. R. App. 

P. 47.1.
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Does the commercial-speech exemption apply?

Having determined that the TCPA applies to this lawsuit, we consider whether

Scientific’s claims are exempt from the Act under its commercial-speech exemption:

This chapter does not apply to a legal action brought against a person primarily 

engaged in the business of selling or leasing goods or services, if the statement or 

conduct arises out of the sale or lease of goods, services, or an insurance product, 

insurance services, or a commercial transaction in which the intended audience is 

an actual or potential buyer or customer.

Tex. Civ. Prac. & Rem. Code § 27.010(b). The burden to establish the exemption is on the party 

relying on it. Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 887 (Tex. App.—Austin 2018, 

pet. filed). The Texas Supreme Court has recently construed the commercial-speech exemption 

as applying when:

(1) the defendant was primarily engaged in the business of selling or leasing 

goods [or services],

(2) the defendant made the statement or engaged in the conduct on which the 

claim is based in the defendant’s capacity as a seller or lessor of those goods or 

services,

(3) the statement or conduct at issue arose out of a commercial transaction

involving the kind of goods or services the defendant provides, and

(4) the intended audience of the statement or conduct were actual or potential 

customers of the defendant for the kind of goods or services the defendant 

provides.

Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018) (per curiam). To determine 

whether a party has met its burden on the exemption’s elements, we consider the pleadings and 

record evidence. See Giri v. Estep, No. 03-17-00759-CV, 2018 WL 2074652, at *4 (Tex. 
8

App.—Austin May 4, 2018, pet. denied) (mem. op.). Factual allegations in a plaintiff’s petition

alone may be sufficient to meet the exemption’s elements. See id.

We conclude that the pleadings and evidence establish the first element—that 

Rose was, at the relevant time, “primarily engaged in the business of selling goods or services.” 

Scientific’s petition and Basta’s affidavit state that Rose was Scientific’s operations manager

immediately before or when he allegedly disclosed or sold its trade secrets to FlashParking and 

other parties. Scientific designs, manufactures, and sells custom metal parts and equipment to 

clients such as FlashParking. The goods and services it sells include the design of products, the 

creation of drawings and blueprints, and the manufacture of products as well as, on occasion, the 

sale of drawings and blueprints themselves.2 Basta’s affidavit outlined Rose’s responsibility in 

his role as Operations Manager to include “the manage[ment of] relationships and commercial 

sales with the different commercial customers,” “the creation of manufacturing drawings,” and 

“the overseeing of the manufacturing and assembly process.” The “vast amount” of Rose’s time 

at Scientific was spent “servicing” the FlashParking account. Based on these allegations, it is 

indisputable that Scientific itself is “primarily engaged in the business of selling the goods and

services” outlined above.

Furthermore, while we have found no authority regarding whether an employee of 

a company primarily engaged in the business of selling goods and services should also be 

considered to be primarily engaged in that business, the only logical conclusion from the 

circumstances here is that Rose, as Scientific’s operations manager tasked with managing 

 

2 Basta attached to his affidavit Scientific’s contract with FlashParking, signed by Rose 

on behalf of Scientific. The contract provided that FlashParking would be entitled to the 

blueprints for the SmartStations designed by Scientific upon payment of the required funds under 

the contract and the delivery of the 500th SmartStation as detailed in the contract. Basta averred 

that FlashParking had not complied with the requirement when Rose left its employ.
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commercial sales, servicing accounts (including FlashParking’s), and creating manufacturing 

drawings, was similarly and necessarily “primarily engaged” in the same “business” as Scientific.

Cf. Backes v. Misko, 486 S.W.3d 7, 22 (Tex. App.—Dallas 2015, pet. denied) (concluding that

evidence did not show that defendant was primarily engaged in business of selling quarter-horsebreeding services where evidence showed that she had full-time job raising money for charity 

and that breeding came “second” for her). Notably, the exemption’s plain text requires the 

defendant to be primarily engaged in the business of selling goods or services, not primarily 

engaged in the act of selling. See Tex. Civ. Prac. & Rem. Code § 27.010(b).

It is reasonable to conclude that a high-level executive of a company that 

primarily designs and sells manufactured items to customers is also “primarily engaged” in that 

type of business. Furthermore, we conclude that under the facts alleged here—that when he

resigned, Rose allegedly performed or sought to perform similar services for his former 

employer’s customers—he continued to be primarily engaged in that type of business for the 

purposes of the TCPA’s commercial-speech exemption. We find particularly relevant to this 

conclusion the context of the allegedly actionable statements and the capacity in which Rose 

made them—which we discuss in more detail below with respect to the second and third 

elements—and is consistent with the policy behind the commercial-speech exemption. See

Castleman, 546 S.W.3d at 688–91 (analyzing applicability of commercial-speech exemption 

largely by considering capacity in which defendant makes challenged statement and whether 

defendant or its business “stood to profit” from statements at issue); Staff Care, Inc. v. Eskridge 

Enters., LLC, No. 05-18-00732-CV, 2019 WL 2121116, at *8 (Tex. App.—Dallas May 15, 2019,

no pet. h.) (mem. op.) (noting that in Castleman, supreme court “implied the exemption applies 
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when communications involve business pursuits for oneself or a business stands to profit from 

the statements at issue”).

In considering the second element—whether Rose made the statements at issue 

(i.e., disclosed the blueprints and drawings) “in his capacity as a seller of the goods and services”

previously described—we look to the context in which the statement was allegedly made. See 

Castleman, 546 S.W.3d at 690–91 (“[T]he commercial-speech exemption applies only to certain

communications related to a good, product, or service in the marketplace—communications 

made not as a protected exercise of free speech by an individual, but as “commercial speech 

which does ‘no more than propose a commercial transaction.’” (citations omitted)); Giri, 

2018 WL 2074652, at *4 (concluding that second element was met where evidence showed

defendant veterinarian sent email to his past customers acknowledging their prior use of his 

pathology services); Abatecola v. 2 Savages Concrete Pumping LLC, No. 14-17-00678-CV, 

2018 WL 3118601, at *9–10 (Tex. App.—Houston [14th Dist.] June 26, 2018, pet. denied)

(mem. op.) (determining that exemption applied to defendant competitor’s allegedly tortiously 

interfering statements it made to plaintiff’s customers but not to its statements made in context of 

hiring away plaintiff’s employee because those statements did not arise out of commercial 

transaction involving goods and services that competitor sold); Epperson v. Mueller, No. 01-15-

00231-CV, 2016 WL 4253978, at *10–11 (Tex. App.—Houston [1st Dist.] Aug. 11, 2016, no 

pet.) (mem. op.) (determining that online comments made by defendant-seller of collectible 

memorabilia about authenticity of competitor’s goods were made in course of promoting 

defendant’s authenticity services even though he did not overtly solicit sales of goods or 

services).
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The gravamen of Scientific’s allegations is that Rose disclosed and sold, or 

attempted to sell, its trade secrets (the blueprints and drawings) to FlashParking and others to 

profit personally. In other words, Scientific contends that Rose unlawfully disclosed the trade 

secrets in his personal capacity as a designer and creator of blueprints and drawings for the 

manufacture of specialty machines; he did not lawfully disclose that information as a 

representative of Scientific. According to Scientific’s petition, Rose “continues to [personally] 

profit from the sale and design of such drawings with many of the former customers of 

Scientific.” Essentially, Scientific alleged that Rose acted independently in promoting himself 

and his services and the misappropriated goods and that Rose, through the very act of selling or 

proposing to sell Scientific’s trade secrets for his own personal gain, functioned as the “seller” 

(or would-be seller) of those goods and services. Because Scientific’s allegations complain 

about Rose’s sale or attempted sale of the blueprints and drawings for his personal gain as the 

actionable conduct, we conclude that the allegations meet the second Castleman requirement. 

See Staff Care, 2019 WL 2121116, at *8 (concluding that exemption requirements were met 

where pleadings showed that physician staffing agency stood to profit from statements at issue 

made to physicians informing them that they could not work for competing company); cf. Toth v. 

Sears Home Improvement Prods., Inc., 557 S.W.3d 142, 155 (Tex. App.—Houston [14th Dist.] 

2018, no pet.) (determining that where evidence did not show that independent contractor of 

home improvement company made statements at issue in attempt to promote his own business 

rather than that of his principal, second element was not met).

We similarly conclude that Scientific’s pleadings and evidence establish the 

closely related third element. Applied here, the third element requires that Rose’s alleged 

disclosure and sale or attempted sale of the blueprints and drawings “arose out of a commercial 
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transaction involving the goods or services that he provides” (i.e., the design and manufacture 

of products and the creation of drawings and blueprints). A “commercial transaction” need not 

be consummated and can include conduct or statements that merely “propose[] a commercial 

transaction.” See Castleman, 546 S.W.3d at 690; Toth, 557 S.W.3d at 154 (“Castleman aligns 

with the approach taken by other Texas courts that have held the challenged statement or conduct 

must be made ‘for the purpose of securing sales in the goods or services of the person making the 

statement.’” (quoting Backes v. Misko, 486 S.W.3d 7, 21 (Tex. App.—Dallas 2015, pet. denied)); 

see also Morrison v. Profanchik, __ S.W.3d __, No. 03-17-00593-CV, 2019 WL 2202210, at *5 

(Tex. App.—Austin May 22, 2019, no pet. h.) (noting that “nothing in the text of the ‘commercial

speech’ exemption, or in the supreme court’s analysis of this exemption in Castleman, dictates 

the content of the speech at issue” and that defendant’s online review of competitor’s sale and 

installation of same product sold and installed by defendant met third and fourth requirements);

Giri, 2018 WL 2074652, at *4 (noting that requirement that statement or conduct at issue “arose 

out of” commercial transaction means merely that it “results, issues, or proceeds” from sale or 

commercial transaction). Scientific’s pleadings allege that Rose “continues to profit from the 

sale and design of [the] drawings” that he misappropriated and has used them “for the purpose of 

manufacturing and selling, in competition with Scientific.” Basta avers that “[i]t appears that 

FlashParking hired Kevin Rose in order to obtain the trade secrets and intellectual property 

owned by [Scientific].” These allegations are sufficient to meet the requirement that Rose’s 

challenged statements and conduct “arose out of” a commercial transaction involving the kinds 

of goods and services that he provides.

Similarly, the intended audience of the alleged disclosure and attempted sale—

FlashParking and other customers of Scientific—were actual or potential customers of Rose for 
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the products and services that he allegedly was attempting to or did provide through his 

misappropriation of Scientific’s trade secrets. In other words, as Scientific alleges, Rose sought 

to profit personally through his provision of the trade secrets to FlashParking and other of its 

customers and in fact profited by being hired by FlashParking or receiving other remuneration. 

In sum, Rose’s alleged disclosures of Scientific’s trade secrets constitute communications 

“related to a good, product, or service in the marketplace” that proposed a commercial transaction

involving those very goods and services in pursuit of profit for himself. See Castleman, 

546 S.W.3d at 690–91.

We conclude that the evidence and pleadings meet all four elements of the 

commercial-speech exemption and that, accordingly, the trial court properly denied Rose’s 

motion to dismiss because Scientific’s lawsuit is exempt from the TCPA’s provisions. See Tex. 

Civ. Prac. & Rem. Code § 27.010(b). Because of this holding, we need not address Rose’s third 

and fourth issues. See Tex. R. App. P. 47.1.

CONCLUSION

Because we have concluded that the TCPA’s commercial-speech exemption 

applies to Scientific’s lawsuit, the trial court properly denied Rose’s motion to dismiss, and we 

affirm the trial court’s order denying the motion.

__________________________________________

Thomas J. Baker, Justice

Before Justices Goodwin, Baker, and Triana

Affirmed

Filed: June 25, 2019