Court Opinion

ID: 9382915
Source: CourtListenerOpinion
Date Created: 2023-03-29 06:09:06.970492+00
Date Added: 2024-06-11T17:17:42.445701
License: Public Domain

REVERSE in part; AFFIRM in part; Remand and Opinion Filed March 23,
2023

                                           S   In The
                                 Court of Appeals
                          Fifth District of Texas at Dallas
                                      No. 05-21-00798-CV

       LACORE ENTERPRISES, LLC AND LINK BIOSCIENCES, LLC,
                           Appellants
                              V.
       CLAIRE ANGLES, MICHEAL KEARL, MICHAEL SMITH, THE
                VIRTUAL FORMULA, LLC, Appellees

                  On Appeal from the 380th Judicial District Court
                               Collin County, Texas
                      Trial Court Cause No. 380-01127-2021

                            MEMORANDUM OPINION
                    Before Justices Molberg, Pedersen, III, and Smith
                               Opinion by Justice Molberg
       Appellants LaCore Enterprises, LLC (LaCore) and Link BioSciences, LLC

(Link) appeal the denial by operation of law of their motion to dismiss appellees’

counterclaims pursuant to the Texas Citizens Participation Act.1 In one issue,

appellants argue the trial court erred by failing to dismiss appellees’ counterclaims.

   1
      Because the counterclaims at issue here were filed on May 11, 2021, the 2019 TCPA amendments,
which became effective September 1, 2019, apply in this case. See Act of May 17, 2019, 86th Leg., R.S.,
ch. 378, 2019 Tex. Sess. Law Serv. 684 (codified at TEX. CIV. PRAC. & REM. CODE §§ 27.001, .003, .005–
.007, .0075, .009–.010).
Because we conclude some of appellees’ counterclaims are based on or in response

to appellants’ exercise of the right to petition, we reverse in part the denial of

appellants’ motion to dismiss and remand to the trial court. We otherwise affirm.

                                I.     Background

      Appellants LaCore and Link filed their first amended petition and application

for a temporary restraining order and for temporary and permanent injunctive relief

on March 16, 2021. In their petition, appellants alleged appellee Michael Smith

became the CEO of appellant Link, an affiliate of appellant LaCore, and Smith

stayed for three years. Upon his departure from Link, Smith signed a separation

agreement that prohibited him from using or disclosing Link’s confidential

information, trade secrets, and other proprietary information without Link’s written

permission. Smith also was barred, for four months, from being employed by,

consulting with, or having any interest in, any ownership interest in, or any activity

involving customized nutrition or specialty blending of nutritional products. The

agreement also prohibited Smith from soliciting or entertaining inquiries from

Link’s vendors or suppliers for twenty-four months.

      Appellants alleged Smith began competing against Link shortly after his

departure. Two weeks after executing the Smith release agreement, he reinstated the

corporate status of appellee Virtual Formula, LLC (Virtual). Smith was the co-

founder and president of Virtual, and his wife served as CEO. Virtual held itself out

as a firm in “the field of individualized nutritional supplements and skin care.”

                                         –2–
Appellants alleged that, by February 2021, Virtual had in place over a dozen items

of intellectual property and an executive team, an agreement with a lab processor

and data analytics company, an agreement with a manufacturer, five DNA reports,

software development, a capacity to process DNA, initial individualized formulas,

pre-sales “across multiple channels,” and “strategic sales and supplier partnership

conversations.”

      Appellants alleged appellee Michael Kearl was the former chief technology

officer for appellant LaCore, where he learned the “science and technology behind

individualized supplements.”     On July 14, 2020, Kearl’s employment was

terminated, and he executed a separation agreement, which prohibited him from

directly or indirectly using or disclosing LaCore’s confidential information, trade

secrets, and other proprietary information without LaCore’s written permission.

LaCore never gave Kearl such permission.         Appellee Claire Angles was an

accounting clerk at LaCore, where she executed an agreement to not disclose to third

parties any of LaCore’s trade secrets or confidential information without LaCore’s

written consent. Angles was also Kearl’s “live-in girlfriend.” While Angles was

on administrative leave, Angles was informed on February 18, 2021 she was being

terminated, but would continue to receive salary and benefits for ninety days.

Appellants alleged LaCore made Angles’ termination effective on March 9 after

discovering an incident of intellectual property theft described below. Appellants

alleged LaCore served demand letters on Virtual, Smith, and Kearl on March 4,

                                        –3–
2021, “in connection with their (mis)use of LaCore, Link, and their affiliates’

confidential information for the purposes of competing with LaCore, Link, and their

affiliates.”

       The next day, LaCore discovered Angles, who was still receiving salary, had

reset her LastPass password and “had begun copying and/or transferring LaCore’s

trade secrets and/or confidential information from LaCore’s data servers and online

data storage to Angles’ personal Gmail account.” Angles used the LastPass account

to gain “the passwords necessary to freely access LaCore’s confidential and trade

secret information including but not limited to financials, bank accounts, customer

and vendor information, and personal bank account information and emails for the

vast network of independent distributors that are paid by LaCore owned or supported

MLM companies.” Angles did this, appellants alleged, to disclose the confidential

information to Kearl and Virtual, to give them “an economic advantage to compete

with LaCore and its affiliates,” and “to interfere with LaCore’s customers and/or

vendors in an attempt to solicit those customers and/or vendors away from

conducting business with LaCore and its affiliates.”

       Appellants alleged Angles then refused to meet with LaCore management to

discuss the transfer of intellectual property to Angles’ personal Gmail account.

LaCore sought and obtained a temporary restraining order enjoining Angles from

“further harming LaCore” and ordering her to return the stolen information.

                                        –4–
      LaCore sued Smith, Kearl, and Angles for breach of contract for violating

their separation agreements and for breach of fiduciary duty. It sued Virtual, Smith,

Kearl, and Angles for violations of the Texas Uniform Trade Secrets Act. LaCore

also applied for a temporary restraining order, and temporary and permanent

injunctive relief, to restrain appellees from disclosing or using LaCore’s confidential

information; accessing, transferring, downloading, or using LaCore’s confidential

information; deleting, removing, or modifying any data on LaCore’s computers,

databases, or servers; or taking any action that would impair the value of LaCore’s

assets, intellectual property, or confidential information.

      On May 11, 2021, appellees generally denied appellants’ claims, asserted

several affirmative defenses, and alleged counterclaims against appellants. In direct

contrast to appellants, they claimed Kearl and Smith never disclosed any confidential

or proprietary information of LaCore or Link. Appellees alleged that Viome—a

possible investor in Smith’s startup—reached out to Smith, and that Smith was

unaware Viome was also a LaCore customer. When Smith learned Viome had a

connection to LaCore, he told Viome he could not do business with an employee,

vendor, or supplier of Link. Viome indicated it was not an employee, vendor, or

supplier of Link, and Viome “continued communicating with Smith with the desire

that they form a partnership and eventually build a facility and process.” Smith told

Viome that Virtual was fundraising, and Viome requested a confidential information

memorandum (“IM”)—the formal fundraising document Virtual generated for

                                         –5–
potential investors—which Smith sent to the CEO of Viome. Smith attended a

business meeting at Viome “to discuss the company’s future,” where he ran into

LaCore’s owner, Terry LaCore.

      Afterwards, appellees alleged Terry texted Smith: “In light of the meeting

legal is wanted [sic] to gear up to start sending you letters and filing in the courts for

breach of your separation agreements. Would be nice if you and I could try to figure

this out before all that time, money, and headaches happen for both of us.” The two

spoke on the phone, and Terry told Smith he had invested over one million dollars

in Viome inventory and had almost $750,000 in inventory remaining, and that he

went to the meeting to possibly invest in Viome. Smith told Terry that he was

unaware of that and that he would have “refused to negotiate with Viome” had he

been aware. Smith told Terry he did not want to compete with LaCore and that he

had an IM if he wanted a copy for purposes of settlement or compromise negotiations

and to demonstrate that Smith’s vision did not compete with LaCore.                 Terry

requested Smith provide him with the IM to see if they could “resolve their dispute”

“prior to any litigation being filed.” The IM was sent to Terry on February 23, 2021.

      According to appellees, the IM stated, among other things, it was “prepared

on a confidential basis solely for the benefit of selected, qualified investors, and is

not to be copied, distributed, or disclosed to third-parties without the prior written

consent of [Virtual].” It stated that “[b]y accepting this information memorandum,

                                          –6–
the recipient acknowledges that this document is proprietary and confidential[.]”

Further, recipients agreed to the following:

      Hold and treat this Information Memorandum in the strictest
      confidence, and will not directly or indirectly disclose or permit anyone
      else to disclose this Information Memorandum to any other person, firm
      or entity, provided that recipient may disclose to its directors, executive
      officers, employees, counsel or accountants such information as is
      necessary for the proper evaluation of this Information Memorandum
      if such persons are informed by recipient of the confidential nature of
      this Information Memorandum and agree to be bound by the terms
      contained herein.

Smith and Terry discussed several other topics, including why Smith was fired by

Link, why Link refused to reimburse Smith for expenses Smith incurred during

employment, and Viome. The call was “cordial and non-threatening.” Smith and

Terry “continued to communicate on friendly terms” until March 2021. On March

10, 2021, a Viome representative e-mailed Smith, asking him to demonstrate that his

contract allowed them to do business together. Smith asked Viome to not contact

him or Virtual again. According to Smith, “Viome and [Virtual] never entered into

any contractual relationship, either written or verbal, and the parties have had no

discussion since.”

      Appellees alleged in their counterclaims that appellants violated the

confidentiality agreement “contained in the IM by disclosing the contents of the IM

to the general public by filing the petition,” which allegedly contained “the contents

of the IM.” They alleged five paragraphs of the amended petition “are near word-

for-word copies” or quotations of statements in the IM. Appellees alleged appellants

                                         –7–
did not receive prior written consent to copy, distribute, or disclose the IM’s

contents.

       Appellees further alleged Angles, in January 2021, began having problems

with her work laptop. The laptop’s display cracked, making it impossible to use.

The director of IT helped Angles upload particular items from the laptop to a cloud

drive so she could work from another computer. Angles “understood LaCore was

aware of this upload” and approved it.

       Appellees alleged that, on January 26, 2021, LaCore’s general counsel, Jenifer

Grace, informed Angles she needed to end her romantic relationship with appellee

Kearl, the former chief technology officer of LaCore. According to Angles, Grace

told her to move out of her shared home with Kearl “as it would, according to Grace,

more than likely ‘go into foreclosure’” because he could not afford the house on his

own.

       Angles was placed on temporary administrative leave from LaCore on the

same day. She believed the reason for the leave was her relationship with Kearl.

Angles was told on February 18, 2021, that she was being terminated and would

receive salary and benefits for ninety days. She was told she was terminated because

she was no longer a good fit for LaCore.

       Appellees further alleged in their counterclaims that, “[s]ince before February

26, 2021, Angles has not accessed, downloaded, or copied any LaCore-related

material to which Angles had access while she was employed by LaCore.” Angles

                                         –8–
believed her access to e-mail and work files was removed by February 2, 2021. On

March 5, 2021, Angles accessed her LastPass account, which was connected to her

LaCore e-mail address, to recover a password for her bank account to pay her

mortgage. Angles did not believe any of the passwords stored in her LastPass

“vault” were functional at that time. She did not “use any LaCore-related passwords

or credentials to access any documents or information belonging or related to

LaCore”; instead, she exported to her personal computer only the list of her personal

passwords. Angles was not employed by, did not work with, and had no business

dealings with Smith, Kearl, or Virtual, nor did she ever disclose any confidential or

proprietary information to any third parties, including Kearl, Smith, and Virtual.

Though Angles was in a romantic relationship with Kearl and owns a home with

him, she was not privy to any information regarding Kearl’s business dealings with

Smith or Virtual. Appellees alleged Angles could not meet on March 5 because she

had a sick child at home. When she informed LaCore about this circumstance, she

heard nothing further. At no point did anyone at LaCore “attempt to talk to Angles

about an[] alleged ‘data breach’ or any of the allegations made in the petition.”

      Appellees also alleged that appellants published defamatory statements in

their petition. They alleged the petition’s statement that Smith left Link to compete

was false. Smith, instead, was replaced as CEO and then fired from Link. After he

failed to secure any other opportunities, he decided to start his own company.

Appellees allege the petition’s statement that Smith reinstated Virtual to compete

                                         –9–
with appellants was false. Instead, he did so to collect commissions from Uforia

Science, an affiliate of LaCore, which he was owed “under the [Virtual] name.”

Grace, LaCore’s general counsel, was “aware of this and understood it was for

commissions and not to compete . . . .” Appellees alleged the petition’s statement

that Angles copied or transferred LaCore’s trade secrets or confidential information

from LaCore’s servers to Angles’ Gmail account was false. They also alleged the

petition’s statement that Angles gained the passwords necessary to freely access

LaCore’s confidential and trade secret information by improperly accessing the

LastPass account was false, and the petition’s statement that Angles accessed

LaCore’s accounts to disclose confidential information to third parties to give them

an advantage was false. Appellees alleged Virtual had not received any money in

revenue from selling DNA custom supplements except for the above-mentioned

commission received from Uforia. Appellees alleged the petition’s statement that

Angles copied or transferred LaCore’s confidential information to interfere with

LaCore’s customers or vendors to solicit them away from LaCore and its affiliates

was false; Angles never contacted any of LaCore’s or its affiliates’ customers or

vendors. Appellees alleged the petition’s statement that Angles refused to meet after

LaCore learned of the data breach was false because LaCore did not request a

meeting to discuss any alleged data breach.       Appellees alleged the petition’s

statement that Smith, Kearl, and Virtual used and disclosed appellants’ confidential

information for appellees’ personal and business enrichment was false; appellees

                                       –10–
had not received, disclosed, or used any such confidential information from Angles

or anyone else.

      Based on the above, appellees brought counterclaims for business

disparagement, defamation, retaliation, unlawful termination, abuse of process, anti-

trust violations, breach of contract, fraud, TUTSA violations, unfair competition,

tortious interference with contract, tortious interference with business relations, and

several declaratory judgments. Appellees also sought a temporary and permanent

injunction.

      In appellees’ business disparagement claim, they asserted “[appellants], by

their petition, have published false and disparaging information about Smith, Kearl,

and [Virtual].” Regarding defamation, they asserted appellants “have published

false statements of facts to third parties with the requisite level of fault.” Third, in

their retaliation claim, appellees asserted, “Angles engaged in a protected activity

while still employed at LaCore,” which took adverse action against Angles based on

that protected activity. In appellees’ unlawful termination claim, appellees asserted

LaCore unlawfully terminated Angles from her employment with LaCore based on

her sex and in retaliation for protected activities. Appellees alleged in their abuse of

process action that appellants “made an illegal, improper, or perverted use of the

process which was a use neither warranted nor authorized by the process.” For their

anti-trust violations claim, appellees asserted appellants violated section 15.05(a) of

the business and commerce code because they “engaged in a combination or

                                         –11–
conspiracy in restraint of trade or commerce which is unlawful.” Further, appellees

alleged appellants violated section “15.05(b) because they have monopolized,

attempted to monopolize, or conspired to monopolize any part of trade or

commerce.” In their breach of contract claim, appellees asserted Virtual and LaCore

“entered into a valid agreement both pertaining to and consisting of the Confidential

Information Memorandum,” and LaCore breached that agreement by “disclosing the

contents of the confidential agreement.” Appellees asserted in their fraud claim that

LaCore knowingly or recklessly made a material representation to Smith and Virtual

that was false to induce them to act upon the representation, Smith and Virtual relied

on the representation and were injured as a result. In their TUTSA violations claim,

appellees asserted the IM was a trade secret of Virtual that appellants obtained

through “improper means and improperly disclosed to third-parties.” In their unfair

competition claim, appellees asserted appellants “unfairly appropriated and used

Smith and [Virtual’s] confidential information memorandum,” which was “a unique

pecuniary interest created by [appellees] through the expenditure of labor, time, skill,

and money.” In their first tortious interference with contract claim, appellees

asserted Virtual had contracts with third parties that were willfully and intentionally

interfered with by appellants. In their tortious interference with business relations

claim, Virtual asserted it had “prospective contractual or business relations with third

parties,” and appellants engaged in conduct that was either “independently tortious

or unlawful which interfered with VF’s prospective contractual and business

                                         –12–
relations.” In Kearl’s declaratory judgment action against LaCore, Kearl sought a

declaration that (a) his separation agreement with LaCore does not prevent him from

working for a competitor of LaCore, (b) his separation agreement with LaCore does

not prevent him from working in the DNA-based custom nutrition supplement

industry, and (c) he is permitted to work for a DNA-based custom nutrition

supplement company as long as he is not disclosing or using LaCore confidential

information. In Smith’s declaratory judgment action against Link, Smith sought a

declaration that (a) his separation agreement with Link does not prevent him from

working for a competitor of Link after a date certain, (b) his separation agreement

with Link does not prevent him from working in the DNA-based custom nutrition

supplement industry, and (c) he is permitted to work for a DNA-based custom

nutrition supplement company as long as he is not disclosing or using Link’s

confidential information. Finally, Virtual sought a declaration that particular items

do not constitute trade secrets owned or licensed by Link or LaCore and therefore

such items cannot be the basis for a trade secret misappropriation claim against

Virtual.

      On June 14, 2021, appellants filed a TCPA motion to dismiss appellees’

counterclaims. They sought dismissal of appellees’ counterclaims, arguing they

were based on or in response to appellants’ “protected communications and actions”

in the lawsuit.    They sought the dismissal of appellees’ counterclaims for

defamation, business disparagement, breach of contract, abuse of process, TUTSA

                                       –13–
violations, unfair competition, anti-trust violations, and tortious interference with

existing and potential business, as well as their counterclaims for declaratory relief,

and appellee Angles’ counterclaims for retaliation and unlawful termination.

Appellants did not seek dismissal of the fraud counterclaim. Appellants’ motion

was denied by operation of law. See TEX. CIV. PRAC. & REM. CODE § 27.008(a).

                                   II.   Discussion

      “The [TCPA] protects citizens who petition or speak on matters of public

concern from retaliatory lawsuits that seek to intimidate or silence them.” In re

Lipsky, 460 S.W.3d 579, 584 (Tex. 2015) (citing TEX. CIV. PRAC. & REM. CODE §

27.001–.011) (footnote omitted). Its purpose “is to encourage and safeguard the

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

otherwise participate in government to the maximum extent permitted by law and,

at the same time, protect the rights of a person to file meritorious lawsuits for

demonstrable injury.” TEX. CIV. PRAC. & REM. CODE § 27.002.

      Under the TCPA, a party may file a motion to dismiss a legal action “based

on” or “in response to a party’s exercise of the right to free speech, right to petition,

or right of association[.]” Id. § 27.003(a). A three-step decisional process follows.

First, the trial court must dismiss the legal action “if the moving party demonstrates

that the legal action is based on or is in response to: (1) the party’s exercise of: (A)

the right of free speech; (B) the right to petition; or (C) the right of association; or

(2) the act of a party described by Section 27.010(b).” Id. § 27.005(c).

                                         –14–
      Second, the court “may not dismiss a legal action under this section if the

party bringing the legal action establishes by clear and specific evidence a prima

facie case for each essential element of the claim in question.” Id. § 27.005(c). This

prima facie standard requires the nonmovant to bring forth “only the minimum

quantum of evidence necessary to support a rational inference that the allegation of

fact is true.” In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004)

(internal quotation marks omitted). Prima facie evidence is evidence that will suffice

as proof of a fact in issue; “[i]n other words, a prima facie case is one that will entitle

a party to recover if no evidence to the contrary is offered by the opposite party.”

Serafine v. Blunt, 466 S.W.3d 352, 358 (Tex. App.—Austin 2015, no pet.).

      Finally, the court must dismiss the legal action if the movant “establishes an

affirmative defense or other grounds on which the moving party is entitled to

judgment as a matter of law.” TEX. CIV. PRAC. & REM. CODE § 27.005(d).

      “Legal action” under the TCPA “means a lawsuit, cause of action, petition,

complaint, cross-claim, or counterclaim or any other judicial pleading or filing that

requests legal, declaratory, or equitable relief.” Id. § 27.001(6). “Exercise of the

right to petition” means, among other things, a communication in or pertaining to a

judicial proceeding. Id. § 27.001(4). “‘Communication’ 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). Judicial proceeding means an

actual, pending judicial proceeding. Levatino v. Apple Tree Cafe Touring, Inc., 486

                                          –15–
S.W.3d 724, 728 (Tex. App.—Dallas 2016, pet. denied).              A communication

“pertaining to” a judicial proceeding does not include anticipated or potential future

judicial proceedings. Id. “To trigger the TCPA’s protection, the ‘legal action’ must

be factually predicated on the alleged conduct that falls within the scope of the

TCPA’s definition of the exercise of the right to petition.” Sorkin v. P.T. Atlas Mfg.,

L.L.C., No. 05-21-00657-CV, 2022 WL 780444, at *3 (Tex. App.—Dallas Mar. 15,

2022, pet. denied) (mem. op.). Exercise of the right of free speech means “a

communication made in connection with a matter of public concern.” TEX. CIV.

PRAC. & REM. CODE § 27.001(3). Matters of public concern include statements or

activities regarding “a matter of political, social, or other interest to the

community[,]” or “a subject of concern to the public.” Id. § 27.001(7). But “[a]

private communication made in connection with a business dispute is not a matter

of public concern under the TCPA.” Erdner v. Highland Park Emergency Ctr., LLC,

580 S.W.3d 269, 276 (Tex. App.—Dallas 2019, pet. denied).

      When the text of the TCPA dictates the outcome of a case, we review the trial

court’s ruling de novo. Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, 591

S.W.3d 127, 132 (Tex. 2019). In our review, we consider “the pleadings, evidence

a court could consider under Rule 166a, Texas Rules of Civil Procedure, and

supporting and opposing affidavits stating the facts on which the liability or defense

is based.” TEX. CIV. PRAC. & REM. CODE § 27.006(a); Dyer v. Medoc Health

Services, LLC, 573 S.W.3d 418, 424 (Tex. App.—Dallas 2019, pet. denied).

                                        –16–
      In construing the TCPA, we must determine and give effect to the

Legislature’s intent. See City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25

(Tex. 2003). The best guide to what lawmakers intended is the enacted language of

a statute, “which necessarily includes any enacted statements of policy or purpose.”

Youngkin v. Hines, 546 S.W.3d 675, 680 (Tex. 2018). Moreover, we determine

legislative intent from considering an act as a whole rather than its parts in isolation.

City of San Antonio, 111 S.W.3d at 25. We construe the statute’s words “according

to their plain and common meaning, unless a contrary intention is apparent from the

context, or unless such a construction leads to absurd results.” City of Rockwall v.

Hughes, 246 S.W.3d 621, 625–26 (Tex. 2008) (citations omitted). We “may not

judicially amend a statute by adding words that are not contained in the language of

the statute.” Lippincott v. Whisenhunt, 462 S.W.3d 507, 508 (Tex. 2015).

                                 Exemptions waived

      Appellees argue the “commercial speech” exemption under section

27.010(a)(2) applies to its counterclaims, and alternatively, they argue the

“employee-employer” exemption under section 27.010(a)(5) applies. Appellants

respond, in the first place, that appellees failed to raise these arguments in the trial

court and thus failed to preserve them for appeal. We agree with appellants.

      The non-movant bears the burden of proving a statutory exemption applies to

its legal action. Kirkstall Rd. Enterprises, Inc. v. Jones, 523 S.W.3d 251, 253 (Tex.

App.—Dallas 2017, no pet.). To preserve a complaint for appellate review, the

                                         –17–
record must show that a party made the complaint to the trial court by a timely

request, objection, or motion that stated the grounds for the ruling that the

complaining party sought from the trial court with sufficient specificity to make the

trial court aware of the complaint. TEX. R. APP. P. 33.1. Accordingly, the non-

movant waives a contention on appeal that one of the statutory exemptions under

section 27.010 applies if the non-movant failed to raise the contention in the trial

court. See Baumgart v. Archer, 581 S.W.3d 819, 826 n.4 (Tex. App.—Houston [1st

Dist.] 2019, pet. denied); Elite Auto Body LLC v. Autocraft Bodywerks, Inc., 520

S.W.3d 191, 206 n.75 (Tex. App.—Austin 2017, pet. dism’d).

      Appellees did not raise in the trial court their two arguments relating to the

commercial speech and employee-employer exemptions. Consequently, this issue

is not preserved for our review. See TEX. R. APP. P. 33.1.

                     Business disparagement and defamation

      Step one.      Appellants argue that, on their face, appellees’ business

disparagement and defamation counterclaims are based on or in response to

communications made by appellants in a judicial proceeding—specifically,

statements made in their petition.       As described above, appellee’s business

disparagement counterclaim alleged appellants, “by their petition, have published

false and disparaging information about Smith, Kearl, and [Virtual].” Under their

defamation counterclaim, appellees stated more generally that appellants “have

published false statements of fact to third parties with the requisite level of fault.”

                                        –18–
Elsewhere in in appellees’ counterclaims, however, appellants described the

allegedly defamatory statements, stating, “Several of the material statements

contained in the petition are false and defamatory and cannot be proven by any

competent and reliable evidence.” Appellees then discussed several statements in

the petition, explaining why they were false. We agree with appellants that, on their

face, these two counterclaims are based on appellants’ petition, which is a

communication made in a judicial proceeding.           We conclude appellants have

demonstrated these counterclaims are based on or in response to appellants’ exercise

of their right to petition. See TEX. CIV. PRAC. & REM. CODE § 27.005(b).

      Step two. We now consider whether appellees have established by clear and

specific evidence a prima facie case for each element of their business disparagement

and defamation claims. To prevail on a business disparagement claim, a plaintiff

must establish that (1) the defendant published false and disparaging information

about it, (2) with malice, (3) without privilege, (4) that led to special damages to the

plaintiff. Choctaw Constr. Servs. LLC v. Rail-Life R.R. Servs., LLC, 617 S.W.3d

143, 152 (Tex. App.—Houston [1st Dist.] 2020, no pet.). To prevail on a defamation

cause of action, the plaintiff must prove the defendant (1) published a false statement

about the plaintiff (2) that was defamatory (3) while acting with either actual malice,

if the plaintiff was a public official or public figure, or negligence, if the plaintiff

was a private individual, regarding the truth of the statement. Williams v. City of

Dallas, 53 S.W.3d 780, 789 (Tex. App.—Dallas 2001, no pet.). A plaintiff must

                                         –19–
further prove specific damages unless the offending publication is defamatory per

se. In re Lipsky, 460 S.W.3d 579, 596 (Tex. 2015). “Defamation per se refers to

statements that are so obviously harmful that general damages, such as mental

anguish and loss of reputation, are presumed.” Id. Remarks that adversely reflect

on a person’s fitness to conduct his or her business or trade are also deemed

defamatory per se. Id. Here, we do not think the statements Smith alleged can be

implied—that Smith’s separation agreement prevented him from working with

Viome—were defamatory per se.          Id.   The implied statements were neither

“obviously harmful” nor related to Smith’s “fitness to conduct his business.” Id.

Accordingly, appellees were required to prove damages not just for their business

disparagement claim but also their defamation claim.

      Appellees point to Smith’s affidavit submitted in response to appellants’

TCPA motion to dismiss as evidence for these two claims. Smith stated Virtual had

not received or solicited any money from selling DNA-custom supplements and he

did not begin fundraising for Virtual until his non-compete obligations under his

separation agreement had been fulfilled. Regardless, Smith stated Link did not sell

products to the public, and that Virtual and Link therefore could not be in the “same

marketing space.” Smith stated he was contacted by Viome on October 19, 2020,

and he notified it he was “still bound by non-compete provisions of the agreement

with Link”—communications ceased. Smith contacted Viome in January 2021,

looking for referrals. He learned Viome “wanted to expand and end the relationship

                                       –20–
between Viome and LaCore.” Before this time, Smith was unaware Viome had a

relationship with LaCore or Link. Smith told Viome he could not do business with

any entity that was an employee, vendor, or supplier of Link. Viome told Smith it

was not an employee, vendor, or supplier of Link, though it confirmed it did business

with LaCore. Viome wished to form a partnership with Virtual or Smith. Smith

declined employment and stock options with Viome, but he informed Viome that

Virtual was fundraising and provided it with Virtual’s information memorandum. A

few days later, Smith received a text message from Terry—LaCore’s owner—stating

that, after meeting with Viome, LaCore’s legal team wanted to go after Smith for

breaching his separation agreement but Terry wanted to “figure this out before all

that.” Terry and Smith then had a conversation about Viome, during which Smith

learned about Terry’s investments with Viome. Smith provided Terry with the

information memorandum to try to show him he did not want to compete with

LaCore directly. Smith explained to Terry the memorandum was confidential, and

Terry agreed not to share it with anyone else. Smith received an email on March 10,

2021, from Viome asking him to prove that his contract allowed Smith and Viome

to do business together. Smith alleged the email “implie[d] that he spoke to Terry

and that Terry told him [Smith] was prohibited from doing business with Viome,

which is false.” Smith requested Viome never to contact Virtual or Smith again.

Smith alleged that, as a result of Terry or LaCore “falsely stating to third parties,

including Viome, that [he] could not do business in the DNA-based nutrition

                                       –21–
supplement industry, Viome and [Virtual] never entered into any contractual

relationship . . . and the parties have had no discussion since.” Smith stated that

Terry’s communications with Viome ultimately resulted in Virtual losing a

$1,250,000 contract. Smith also alleged “disparagement from LaCore’s group of

contacts” included comments to employees, vendors, suppliers, and other LaCore

entities that Smith or Virtual used proprietary information to build Virtual, while

“poaching Uforia customers”—both of which Smith stated are false.

       We conclude appellees failed to establish by clear and specific evidence a

prima facie case for each element of their business disparagement and defamation

claims.     Specifically, they failed to provide clear and specific evidence that

appellants made false statements about Smith or Virtual and that appellees were

damaged as a result.          First, Smith’s affidavit was conclusory and speculative

regarding any defamatory statements made by Terry or LaCore. The best Smith

offers is his suggestion that Viome’s email, asking him to demonstrate he could work

with Viome under his separation agreement, “implie[d] that [Viome] spoke to Terry

and that Terry” told Viome that Smith could not work with them. This fails to meet

the “clear and specific evidence” standard required by the TCPA.2 Otherwise,

Smith’s affidavit assumed LaCore or Terry made false statements, but failed to

provide clear and specific evidence that they did so. Second, appellees failed to

   2
     “‘Clear’ means ‘free from doubt,’ ‘sure,’ or ‘unambiguous.’” Serafine v. Blunt, 466 S.W.3d 352, 358
(Tex. App.—Austin 2015, no pet.).
                                                –22–
provide clear and specific evidence they suffered damages as a result of any

defamatory statements. Smith’s conclusory statement that Terry’s “communication

with Viome ultimately resulted in [Virtual] losing a $1,250,000 contract” is

contradicted elsewhere in the affidavit. Smith stated that, after Viome asked him to

demonstrate he was free to work with them under his separation agreement, Smith

himself cut off further communications with Viome, telling Viome never to contact

him again. Thus, any loss of business seemingly resulted from Smith ending his

business relationship with Viome.

      We conclude appellees failed to establish by clear and specific evidence that

appellants published false statements about Smith or Virtual or that Smith or Virtual

suffered any damages as a result. Accordingly, we conclude the trial court erred by

failing to dismiss appellees’ business disparagement and defamation claims.

                      Breach of contract, TUTSA violation,
                            and unfair competition

      Step one. In its breach of contract counterclaim against LaCore, appellees

alleged Virtual and LaCore “entered into a valid agreement both pertaining to and

consisting of the confidential information memorandum.” They alleged LaCore

breached the agreement “by disclosing the contents of the confidential agreement.”

Appellees asserted in their TUTSA violations counterclaim that the information

memorandum constituted Virtual’s trade secret and appellants “improperly

disclosed [it] to third-parties.” In their unfair competition counterclaim, appellees

                                       –23–
alleged appellants “unfairly appropriated and used Smith and [Virtual’s] confidential

information memorandum.”

      Appellees primarily alleged disclosure of the information memorandum

through appellants’ petition, but they also point to evidence that appellants disclosed

the memorandum to its lawyer in this case, Carlisle Braun, and to its general counsel,

Jenifer Grace. Smith stated in his affidavit attached to appellees’ response to the

TCPA motion that Terry LaCore disclosed the contents of the memorandum to

Braun and Grace, who, he stated, “were not just attorneys for LaCore, but also other

third-party companies such as Uforia[.]” Smith stated that the “fact the Confidential

IM was disclosed to others, including Jenifer Grace, is evidenced by the affidavits

attached to Plaintiffs’ own pleadings . . . .” In Grace’s affidavit, attached to

appellants’ TCPA motion, she stated she received a copy of Virtual’s information

memorandum shortly after January 26, 2021.

      As noted above, communications made regarding anticipated or potential

future judicial proceedings are not communications pertaining to judicial

proceedings under the TCPA. See Levatino, 486 S.W.3d at 728. Thus, LaCore’s

disclosure of the information memorandum to his lawyers before the suit was filed

was not a communication made in or pertaining to a judicial proceeding. See QTAT

BPO Sols., Inc. v. Lee & Murphy Law Firm, G.P., 524 S.W.3d 770, 777–78 (Tex.

App.—Houston [14th Dist.] 2017, pet. denied) (following Levatino and concluding

the appellant’s disclosure of confidential information to its lawyers prior to initiation

                                         –24–
of litigation relating to the confidential information was not a communication made

in or pertaining to judicial proceeding). We conclude appellants have not established

the TCPA applies to these communications, and appellants’ motion to dismiss was

properly denied as to these communications.

      However, appellants were undoubtedly exercising their right to petition by

making statements and allegations in their petition. Appellees’ counterclaims for

breach of contract, TUTSA violation, and unfair competition were, in part, based on

appellants’ petition insofar as appellees allege disclosure of the information

memorandum in the petition.           Accordingly, we conclude appellants have

demonstrated these counterclaims—to the extent appellees seek to recover for

appellants’ statements in the petition—are based on appellants’ exercise of their

right to petition. See TEX. CIV. PRAC. & REM. CODE § 27.005(b); Rose v. Wash, No.

05-22-00289-CV, 2022 WL 17750750, at *3 (Tex. App.—Dallas Dec. 19, 2022, no

pet. h.) (mem. op.) (concluding a legal action was only partly based on or in response

to the movant’s exercise of the right to petition).

      Step two. To prevail on a breach of contract claim, a plaintiff must establish

the following elements: (1) a valid contract existed between plaintiff and defendant;

(2) plaintiff tendered performance or was excused from doing so; (3) defendant

breached the terms of the contract; and (4) plaintiff sustained damages as a result.

Atrium Med. Ctr., LP v. Houston Red C LLC, 546 S.W.3d 305, 311 (Tex. App.—

Houston [14th Dist.] 2017), aff’d, 595 S.W.3d 188 (Tex. 2020).

                                         –25–
      The elements of the tort of unfair competition by misappropriation are (1) the

creation of plaintiff’s product—the trade secret information—through extensive

time, labor, skill, and money; (2) defendant’s use of that product in competition with

plaintiff, thereby gaining a special advantage in that competition because defendant

is burdened with little or none of the expense incurred by plaintiff; and

(3) commercial damage to plaintiff. Baylor Scott & White v. Project Rose MSO,

LLC, 633 S.W.3d 263, 287 (Tex. App.—Tyler 2021, pet. denied).

      “The elements of a claim for violation of TUTSA are (1) ownership of a trade

secret; (2) misappropriation of the trade secret; and (3) an injury to the plaintiff or

unjust enrichment to the defendant.” Morrison v. Profanchik, No. 05-17-01281-CV,

2019 WL 3798182, at *5 (Tex. App.—Dallas Aug. 13, 2019, no pet.) (mem. op.).

      Each of these claims requires proof of damages suffered by the plaintiff, or in

the case of the TUTSA violation claim, “an injury to the plaintiff.” Appellees argue

Smith’s statement that the disclosure of Virtual’s confidential information “reduced

the value [of] such information” and that appellees have further suffered “because

of the attorney’s fees that have been incurred” is evidence of damages. We disagree.

Smith’s statement that any disclosure of the memorandum reduced the value of the

information is conclusory and does not meet the clear and specific standard required

by the TCPA. Furthermore, generally attorney’s fees incurred in a lawsuit are not

“actual damages.” See Worldwide Asset Purchasing, L.L.C. v. Rent-A-Ctr. E., Inc.,

290 S.W.3d 554, 572 (Tex. App.—Dallas 2009, no pet.). We conclude the trial court

                                        –26–
erred by failing to dismiss appellees’ breach of contract, TUTSA violation, and

unfair competition claims insofar as they were based on the petition.

                       Retaliation and unlawful termination

      Step one. Appellants argue Angles’ retaliation and unlawful termination

claims against LaCore are “based on or brought in response to LaCore’s

communications in connection with a matter of public concern” in light of the

“circumstances surrounding Angles’ placement on administrative leave and

Defendants’ contention that her termination was part of such leave[.]” Appellants

argue these communications “related to potential sex crimes . . . .”

      In its retaliation claim, appellees alleged that “Angles engaged in a protected

activity while still employed at LaCore,” LaCore took adverse employment action

based on that protected activity, and a causal connection existed between the

protected activity and the adverse employment action “because LaCore used the

protected activity as the basis for” terminating Angles. Appellees alleged in their

unlawful termination claim that Angles was unlawfully terminated from LaCore

based on her sex and in retaliation for protected activities. Reviewing the rest of

appellees’ counterclaims, the factual basis for these counterclaims appears to be

Angles’ belief that she was fired for her relationship with Kearl and for not ending

the relationship.

      We reject appellants’ contention that these two counterclaims are based on or

in response to appellants’ exercise of its right to free speech on a matter of public

                                        –27–
concern. We fail to see how Angles’ allegation that she was fired for her relationship

with Kearl is based on or in response to appellants’ speech simply because appellants

made communications regarding Kearl’s conduct or character. Of course, appellants

contend Angles was placed on leave and terminated for reasons other than those

alleged by Angles, but we do not determine the nature of appellees’ counterclaims

by looking to appellants’ contentions. Therefore, we conclude appellants have failed

to demonstrate appellees’ retaliation and unlawful termination claims are subject to

the TCPA. See TEX. CIV. PRAC. & REM. CODE § 27.005(b).

                                  Abuse of process

      Step one. Appellants argue appellees’ abuse of process counterclaims are “by

their nature based on or brought in response to communications made in a judicial

proceeding.” Appellees alleged in their counterclaims that appellants “made an

illegal, improper, or perverted use of the process[,] which was [ ] neither warranted

nor authorized by the process.” The elements of an abuse of process claim include

      (1) an illegal, improper, or perverted use of the process, neither
      warranted nor authorized by the process, (2) an ulterior motive or
      purpose in exercising such use, and (3) damages as a result of the illegal
      act. To constitute an abuse of process, the process must have been used
      to accomplish an end which is beyond the purview of the process and
      which compels a party to do a collateral thing which he could not be
      compelled to do. The critical aspect of this tort is the improper use of
      the process after it has been issued. Stated another way, the original
      issuance of process is justified, but the process itself is later used for a
      purpose for which it was not intended. When the process is used for
      the purpose for which it was intended, even though accomplished by an
      ulterior motive, no abuse of process has occurred.

                                         –28–
Preston Gate, LP v. Bukaty, 248 S.W.3d 892, 897 (Tex. App.—Dallas 2008, no pet.).

“Process” in this context refers to the range of procedures incident to litigation. See

Warner Bros. Entm’t, Inc. v. Jones, 538 S.W.3d 781, 816 (Tex. App.—Austin 2017)

(finding no cases “where a valid abuse-of-process claim involved something other

than the commencement of the judicial process against the defendant”), aff’d, 611

S.W.3d 1 (Tex. 2020). Given the nature of abuse of process claims, in light of the

allegations in appellees’ counterclaims, we conclude appellants have demonstrated

appellees’ abuse of process counterclaim is based on or in response to appellants’

exercise of their right to petition. See TEX. CIV. PRAC. & REM. CODE § 27.005(b).

      Step two. As stated above, the elements of abuse of process are (1) an illegal,

improper, or perverted use of the process, neither warranted nor authorized by the

process, (2) an ulterior motive or purpose in exercising such use, and (3) damages

as a result of the illegal act. Bukaty, 248 S.W.3d at 897. Appellees point to Smith’s

statement in his affidavit that the CEO of Uforia, Kevin Raulston, “stated that

LaCore’s and Uforia’s goal was to make it so that neither [Virtual] nor [Smith]

directly could poach Uforia’s customers for at least the next year.” While this

evidence arguably goes to the second element—“ulterior motive”—appellees have

not put forth any evidence of the first: that appellants made an “illegal, improper, or

perverted use of the process.” Accordingly, we conclude appellees failed to prove

by clear and specific evidence a prima facie case of its abuse of process

counterclaim, and the trial court erred in failing to dismiss the claim.

                                         –29–
                                Anti-trust violations

      Step one.     Appellees alleged in their counterclaims in their anti-trust

violations claim that appellants “engaged in a combination or conspiracy in restraint

of trade or commerce which is unlawful” and “monopolized, attempted to

monopolize, or conspired to monopolize any part of trade or commerce.” Appellees

provide no other details in their counterclaims explaining the basis for this claim.

However, the only factual allegations that could plausibly underly these claims are

the allegations that LaCore used its lawsuit, including its application for injunctive

relief, to stop appellees from competing. Appellees argue this counterclaim is not

based on or in response to this lawsuit, “but upon the systematic effort by appellants

to prevent Smith, Kearl, and [Virtual] from engaging in” business or competing.

However, they point to nothing specific beyond the lawsuit as constituting this

systematic effort. Thus, considering the factual allegations made in appellees’

counterclaims, we conclude this claim, too, is based on appellants’ exercise of their

right to petition. See TEX. CIV. PRAC. & REM. CODE § 27.005(b).

      Step two. To establish that a defendant contracted, combined, or conspired

in restraint of trade in violation of section 15.05(a), a plaintiff must show that the

alleged contract, combination, or conspiracy is unreasonable and has an adverse

effect on competition in the relevant market. Marlin v. Robertson, 307 S.W.3d 418,

427 (Tex. App.—San Antonio 2009, no pet.); TEX. BUS. & COM. CODE § 15.05(a).

Appellees were thus required to prove (1) a contract, combination, or conspiracy, (2)

                                        –30–
which is unreasonable, and (3) has an adverse effect on competition in the relevant

market. W. Mktg., Inc. v. AEG Petroleum, LLC, 616 S.W.3d 903, 915 (Tex. App.—

Amarillo 2021, pet. denied). For anticompetitive conduct to give rise to liability

under section 15.05(a) of the Texas Antitrust Act, the conduct must arise out of an

agreement, rather than from independent action. AMC Entm’t Holdings, Inc. v. iPic-

Gold Class Entm’t, LLC, 638 S.W.3d 198, 208–09 (Tex. 2022). Because antitrust

law “does not prohibit unreasonable restraints of trade as such—but only restraints

effected by a contract, combination, or conspiracy—it leaves untouched a single

firm’s anticompetitive conduct,” short of threatened monopolization. Id. at 209. To

prove an adverse effect on competition, the plaintiff must bring forth evidence of

“‘demonstrable economic effect,’ not just an inference of possible effect.” Coca-

Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671, 689 (Tex. 2006). “[O]nly those

restraints that actually have an adverse effect on competition in a market, as opposed

to merely hurting a competitor,” are condemned by anti-trust law. Regal Entm’t

Group v. iPic-Gold Class Entm’t, LLC, 507 S.W.3d 337, 348 (Tex. App.—Houston

[1st Dist.] 2016, no pet.).

      Appellees argue Smith’s statements that the CEO of Uforia, a LaCore entity,

stated that LaCore wished to “tie up” appellees so they could not lure appellants’

customers away over the course of the next year support their claim for unlawful

restraint of trade. They also point to LaCore and Uforia’s litigation against Smith

and Virtual and Uforia’s trademark lawsuit against Smith and Virtual.           Even

                                        –31–
assuming this is evidence of an unreasonable combination, appellees failed to

produce evidence of an adverse effect in the market—an inference of possible effect

is not enough. See Harmar Bottling Co., 218 S.W.3d at 689. Accordingly, we

conclude appellees failed to provide clear and specific evidence establishing their

anti-trust claim, and the trial court therefore erred by failing to dismiss the claim.

                                Tortious interference

      Step one. Under Virtual’s tortious interference counterclaims, appellees

alleged Virtual “had contracts with third parties” and “had prospective contractual

or business relations with third parties” that appellants interfered with. Here, again,

appellees fail to describe in their counterclaims the factual bases for these causes of

action. Appellants argue these counterclaims are based on their lawsuit and issuance

of injunctive relief against appellees, “as [appellees] contend these protected actions

have wrongfully interfered with [Virtual’s] business.” Considering the entirety of

appellees’ factual allegations, we agree. Appellees alleged appellants improperly

disclosed Virtual’s information memorandum through filing their petition, and that

the petition made two defamatory statements regarding Virtual: that it was

reconstituted to compete with LaCore and that Virtual used appellants’ confidential

information. We conclude appellees’ tortious interference counterclaims are in

response to appellants’ exercise of their right to petition. See TEX. CIV. PRAC. &

REM. CODE § 27.005(b).

                                         –32–
      Step two. Appellees allege both that appellants tortiously interfered with an

existing contract and tortiously interfered with a prospective contract. The elements

of tortious interference with an existing contract are: (1) an existing contract subject

to interference; (2) a willful and intentional act of interference with the contract; (3)

that proximately caused the plaintiff's injury; and (4) caused actual damages or loss.

Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300

S.W.3d 348, 367 (Tex. App.—Dallas 2009, pet. denied). To prove a cause of action

for tortious interference with a prospective contract, a plaintiff must establish the

following elements: (1) a reasonable probability that the parties would have entered

into a business relationship; (2) an intentional, malicious intervention or an

independently tortious or unlawful act performed by the defendant with a conscious

desire to prevent the relationship from occurring or with knowledge that the

interference was certain or substantially likely to occur as a result of its conduct;

(3) a lack of privilege or justification for the defendant’s actions; and (4) actual harm

or damages suffered by the plaintiff as a result of the defendant’s interference, i.e.,

the defendant’s actions prevented the relationship from occurring. Id.

      Appellees argue Smith’s affidavit proves a prima facie case for these two

causes of action. However, Smith stated that Virtual and Viome “never entered into

any contractual relationship, either written or verbal . . . .” Thus, appellees cannot

make a case for tortious interference with an existing contract. Further, appellees’

tortious interference with a prospective contract claim suffers the same weakness as

                                         –33–
their business disparagement and defamation claims—whether appellees suffered

damages as a result of any tortious interference. Smith stated in his affidavit that he

himself cut off further communications with Viome after Viome asked him to

demonstrate he was free to work with them under his separation agreement. Given

this, we cannot conclude appellees have provided clear and specific evidence that

appellants’ actions prevented a business relationship between Viome and Virtual

from developing. The trial court erred by failing to dismiss these two claims.

                           Declaratory judgment claims

      Step one. As described above, Kearl sought a declaration of his rights under

his separation agreement with LaCore, that his agreement did not prevent him from

working in the “DNA-based custom nutrition supplement industry,” and that he was

permitted to work for a company in that industry provided he was not disclosing or

using LaCore’s confidential information. Smith sought similar declaratory relief

against Link. He requested a declaration that his separation agreement did not

prevent him from working for one of Link’s competitors after a certain date, that it

did not prevent him from working in the industry, and that he could work for a

company in the industry provided he did not disclose or use Link’s confidential

information. Finally, Virtual sought a declaration against Link and LaCore that

certain items, including particular ideas, machines, and software, did not constitute

trade secrets owned by Link or LaCore and “therefore, [such items] may not be the

basis for a trade secret misappropriation claim against [Virtual].”

                                        –34–
        We conclude Kearl’s and Smith’s declaratory judgment actions are not based

on or in response to appellants’ lawsuit or communications in the judicial

proceeding. Their sought-after declarations are not factually predicated on any such

communications. Nor are these actions based on or in response to appellants’ right

of free speech on matters of public concern, as appellants also argue. See Creative

Oil & Gas, LLC, 591 S.W.3d at 137 (“[N]ot every communication related somehow

to one of the broad categories set out in section 27.001(7) always regards a matter

of public concern. A private contract dispute affecting only the fortunes of the

private parties involved is simply not a ‘matter of public concern’ under any tenable

understanding of those words.”); see also Erdner, 580 S.W.3d at 276. Instead, their

requested declarations involve their legal rights under their respective separation

agreements and their right to work in their industry. We conclude the TCPA does

not apply to these actions. See Choudhri v. Lee, No. 01-20-00098-CV, 2020 WL

4689204, at *3 (Tex. App.—Houston [1st Dist.] Aug. 13, 2020, pet. denied) (mem.

op.).

        We similarly conclude appellants have failed to demonstrate that Virtual’s

declaratory judgment action against LaCore and Link is based on or in response to

appellants’ exercise of the right of free speech or the right to petition. As to the right

of free speech, appellants fail to point to what communications of theirs the

declaratory judgment claim was based on or in response to. Further, we do not think

whether something is a trade secret owned by LaCore is a “matter of public concern”

                                          –35–
within the meaning of the TCPA. See Creative Oil & Gas, LLC, 591 S.W.3d at 137.

As to the right to petition, it is true that appellants brought a claim against all

appellees, including Virtual, for violations of the Texas Uniform Trade Secrets Act.

However, we cannot agree that Virtual’s declaratory judgment action was factually

predicated upon this claim simply because it sought a declaration regarding the same

or similar issues raised by appellants in their TUTSA claim. Cf. Riggs & Ray, P.C.

v. State Fair of Tex., No. 05-17-00973-CV, 2019 WL 4200009, at *5 (Tex. App.—

Dallas Sept. 5, 2019, pet. denied) (mem. op.) (concluding Riggs & Ray’s lawsuit

was not based on or in response to the State Fair’s exercise of its right to petition

even though Riggs & Ray filed a declaratory judgment action after the State Fair had

non-suited a declaratory action involving the same information).            Virtual’s

declaratory relief claim is based upon the business dispute between the parties about

whether certain items are appellants’ trade secrets.       Accordingly, we reject

appellants’ contentions regarding the three declaratory judgment actions.

                                  Attorney’s fees

      Finally, appellants argue they are entitled to attorney’s fees and sanctions

because appellees’ counterclaims are frivolous or solely intended for delay. Under

section 27.009(a), except as provided by section 27.009(c), if the court dismisses a

legal action under the TCPA, the court “(1) shall award to the moving party court

costs and reasonable attorney’s fees incurred in defending against the legal action”

and “(2) may award to the moving party sanctions against the party who brought the

                                       –36–
legal action as the court determines sufficient to deter the party who brought the

legal action from bringing similar actions described in this chapter.” TEX. CIV.

PRAC. & REM. CODE § 27.009(a). Under section 27.009(c), if the court “orders

dismissal of a compulsory counterclaim under this chapter, the court may award to

the moving party reasonable attorney’s fees incurred in defending against the

counterclaim if the court finds that the counterclaim is frivolous or solely intended

for delay.” Id. § 27.009(c).

        Because appellants’ motion to dismiss was denied by operation of law, the

trial court did not reach the question of costs, fees, or sanctions. We remand for the

trial court to, if it so decides in its discretion, award appellants reasonable attorney’s

fees if the trial court finds that appellees’ compulsory counterclaims subject to

dismissal were frivolous or solely intended for delay. See id. § 27.009(c).3 Further,

we remand for the trial court to award appellants court costs, and if the trial court

determines them warranted in these circumstances, sanctions against appellees as

the court determines sufficient to deter appellees from bringing similar actions

described in chapter 27. See id. § 27.009(a).

                                        III.     Conclusion

        We sustain appellants’ issue on appeal as to appellees’ business

disparagement, defamation, abuse of process, anti-trust violations, and tortious

    3
      Appellants contended in their TCPA motion to dismiss that attorney’s fees are mandatory. We reject
this contention and agree with appellees that, under section 27.009(c), the trial court has discretion in
awarding fees following dismissal of compulsory counterclaims. See id.
                                                 –37–
interference claims, and appellees’ breach of contract, TUTSA, and unfair

competition claims to the extent they were based upon communications made in

appellants’ petition. We reverse the denial of appellants’ motion to dismiss as to

these claims. We remand to the trial court to dismiss these claims, and to address

court costs, attorney’s fees, and sanctions in accordance with this opinion. We

otherwise affirm the trial court’s denial as a matter of law of appellants’ TCPA

motion to dismiss.

                                         /Ken Molberg/
                                         KEN MOLBERG
                                         JUSTICE

210798F.P05

                                      –38–
                                    S
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                  JUDGMENT

LACORE ENTERPRISES, LLC                        On Appeal from the 380th Judicial
AND LINK BIOSCIENCES, LLC,                     District Court, Collin County, Texas
Appellants                                     Trial Court Cause No. 380-01127-
                                               2021.
No. 05-21-00798-CV           V.                Opinion delivered by Justice
                                               Molberg. Justices Pedersen, III and
CLAIRE ANGLES, MICHEAL                         Smith participating.
KEARL, MICHAEL SMITH, THE
VIRTUAL FORMULA, LLC,
Appellees

       In accordance with this Court’s opinion of this date, the denial by operation
of law of appellants’ motion to dismiss is AFFIRMED in part and REVERSED in
part. We REVERSE that portion of the denial that denied appellants’ motion to
dismiss as to appellees’ business disparagement, defamation, abuse of process, anti-
trust violations, and tortious interference claims, and appellees’ breach of contract,
TUTSA, and unfair competition claims to the extent they were based upon
communications made in appellants’ petition. We REMAND this cause to the trial
court to dismiss these claims and for consideration of court costs, attorney’s fees,
and sanctions in accordance with this opinion. We otherwise AFFIRM the denial
by operation of law of appellants’ motion to dismiss.

      It is ORDERED that each party bear its own costs of this appeal.

Judgment entered March 23, 2023.

                                        –39–