Date: 06-10-2014

Case Style: Cheniere Energy, Inc. v. Azin Lotfi

Case Number: 01-13-00515-CV

Judge: Harvey Brown

Court: Texas Court of Appeals, First District on appeal from the 151st District Court Harris County

Plaintiff's Attorney: Matthew L. Hoeg for Cheniere Energy, Inc., Charif Souki, individually, and Greg Rayford, individually

Defendant's Attorney: Martin A. Shellist and Michael Todd Slobin for Azin Lotfi

Description: This is an interlocutory appeal. Azin Lotfi sued her employer, Cheniere Energy, Inc., claiming her employment was wrongly terminated; she also sued two officers of the company, Charif Souki and Greg Rayford, for tortious interference with her employment at Cheniere. Souki and Rayford filed a motion to dismiss

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Lotfi’s claims against them under chapter 27 of the Texas Civil Practices and Remedies Code. See generally TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011 (West Supp. 2013) (entitled “Actions Involving the Exercise of Certain Constitutional Rights” and also known as the Texas Citizens Participation Act (TCPA)).

The trial court denied the motion to dismiss. Souki and Rayford appeal that ruling.1 They contend that (1) they established by a preponderance of the evidence that Lotfi’s claims against them are in response to their exercise of the right of association and (2) Lotfi failed to present clear and specific evidence to support each element of her prima facie case of tortious interference. We affirm.

Background

A. Factual and procedural background

Lotfi, Cheniere’s former assistant general counsel, sued the company for “breach of contract, fraud, fraud in the inducement, unjust enrichment, and pending disability discrimination and retaliation claims under chapter 21 of the Texas Labor Code.” She also sued Cheniere’s chairman of the board and chief executive officer,

1 The TCPA authorizes this interlocutory appeal. See Kinney v. BCG Attorney Search, Inc., No. 03-12-00579-CV, 2013 WL 4516106 (Tex. App.—Austin Aug. 21, 2013, no. pet. h.) (mem. op.) (finding jurisdiction over order denying motion); KTRK Television, Inc. v. Robinson, 409 S.W.3d 682 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (same); San Jacinto Title Servs. of Corpus Christi, LLC. v. Kingsley Props., LP., No. 13–12–00352–CV, 2013 WL 1786632 (Tex. App.—Corpus Christi Apr. 25, 2013, pet. denied) (same); cf. Direct Commercial Funding, Inc. v. Beacon Hill Estates, LLC, No. 14–12–00896–CV, 2013 WL 407029 (Tex. App.—Houston [14th Dist.] Jan. 24, 2013, order) (finding jurisdiction over order granting motion that remained interlocutory due to pending counterclaims).

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Souki, and its senior vice president and general counsel, Rayford, claiming tortious interference with her employment relationship with Cheniere. Lotfi claimed she was fired from Cheniere in retaliation for reporting improper activities within the company, including unauthorized disclosures of confidential company information to Souki’s son.

Souki and Rayford moved to dismiss the tortious interference claim, arguing that it was “based on, relates to, or is in response to Souki and Rayford’s exercise of the right of association,” within the meaning of the TCPA. Lotfi filed a response to Souki and Rayford’s motion to dismiss arguing that the statute did not apply to her breach-of-contract or tort claims against her former co-workers.

While Lotfi’s first amended petition was verified, neither side filed affidavits with or in response to the motion to dismiss. The trial court denied the motion. Souki and Rayford appeal that interlocutory order.

B. The purpose and intent of the TCPA, an anti-SLAPP statute

The TCPA was enacted to permit summary dismissal of “Strategic Lawsuits Against Public Participation” (SLAPPs) and is, therefore, known as an “anti-SLAPP” statute. See Rehak Creative Servs., Inc. v. Witt, 404 S.W.3d 716, 719 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). The Texas Legislature expressly and specifically stated the purpose as follows:

The purpose of this chapter is to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate

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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 ANN. § 27.002 (West Supp. 2013). Such anti-SLAPP statutes seek to address a concern over suits being filed against politically and socially active individuals—not with the goal of prevailing on the merits but, instead, of chilling those individuals’ First Amendment activities. See George W. Pring & Penelope Canan, Strategic Lawsuits Against Public Participation (“SLAPPS”): An Introduction for Bench, Bar and Bystanders, 12 Bridgeport L. Rev. 937, 938 (1992); see also Barron v. Vanier, 190 S.W.3d 841, 843 (Tex. App.—Fort Worth 2006, no pet.) (case pre-dating enactment of Texas anti-SLAPP statute stating that California’s version was enacted to “prevent and deter lawsuits (SLAPPs) ‘brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.’” (quoting CAL. CIV. P. CODE § 425.16 (West 2004 & Supp. 2005))).

The constitutional rights protected by the TCPA include rights of free speech, petition, and association. TEX. CIV. PRAC. & REM. CODE ANN. § 27.003. All three of these derive from the First Amendment. See Roberts v. U.S. Jaycees, 468 U.S. 609, 618, 622, 104 S. Ct. 3244, 3249–50, 3252 (1984) (stating that First Amendment rights of free speech, religious liberty, assembly, and petition of government implicate a “correlative freedom to engage in group effort toward

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those ends.”); NAACP v. State of Ala. ex rel. Patterson, 357 U.S. 449, 460, 78 S. Ct. 1163, 1171 (1958) (“Effective advocacy of both public and private points of view, particularly controversial ones, is undeniably enhanced by group association, as this Court has more than once recognized by remarking upon the close nexus between the freedoms of speech and assembly”); see also TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.002, 27.011(b).

The freedom of association protects the “collective effort on behalf of shared goals”—which can be “political, social, economic, educational, religious, and cultural”—thereby “preserving political and cultural diversity and . . . shielding dissident expression from suppression by the majority.”2 Roberts, 468 U.S. at 622, 104 S. Ct. at 3252. Standard of Review

A. Statutory construction in general

Statutory construction is a question of law we review de novo. State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006). When construing a statute, our objective is to determine and give effect to legislative intent. See Nat’l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). In determining the legislature’s intent, we look to the plain meaning of the statute’s words. Tex. A &

2 As an example, there is a constitutionally recognized right of Boy Scouts to associate in furtherance of their stated cultural objective to “instill values in young people.” Boy Scouts of Am. v. Dale, 530 U.S. 640, 649, 120 S. Ct. 2446, 2452 (2000).

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M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840–41 (Tex. 2007). “The plain meaning of the text is the best expression of the legislative intent unless a different meaning is apparent from the context or the plain meaning leads to absurd or nonsensical results.” Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011). We cannot give one provision meaning out of harmony or inconsistent with other provisions, even if it might be susceptible to such a construction standing alone. Direct Commercial Funding, Inc. v. Beacon Hill Estates, LLC., No. 14-12-00896-CV, 2013 WL 407029, at *2 (Tex. App.—Houston [14th Dist.] Jan. 24, 2013, order). Additionally, we “must not interpret the statute in a manner that renders any part of the statute meaningless or superfluous.” Columbia Med. Ctr. of Los Colinas, Inc. v. Hogue, 271 S.W.3d 238, 256 (Tex. 2008).

B. Review of ruling on TCPA motion to dismiss

The legislature dictated that the TCPA “be construed liberally to effectuate its purpose and intent fully” which it stated was “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 ANN. §§ 27.002, 27.011(b). In deciding whether to grant a motion to dismiss under the TCPA, the statute directs the trial court to “consider the pleadings and supporting and opposing

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affidavits stating the facts on which the liability or defense is based.” Id. at § 27.006(a).

The court’s inquiry is a two-step process. Newspaper Holdings, Inc. v. Crazy Hotel Assisted Living, Ltd., 416 S.W.3d 71, 80 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). First, to determine whether the TCPA applies, the court inquires whether the movant has shown “by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the party’s exercise of the right of free speech, the right to petition, or the right of association.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b); Newspaper Holdings, 416 S.W.3d at 80. If the movant meets this evidentiary burden to allow dismissal, the court then asks whether the non-movant has shown “by clear and specific evidence a prima facie case for each essential element of the claim in question” in order to avoid dismissal. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c); Newspaper Holdings, 416 S.W.3d at 80.

The first step of this inquiry is a legal question we review de novo. Newspaper Holdings, 416 S.W.3d at 80. Thus, we must determine whether Souki and Rayford have proven by a preponderance of the evidence that Lotfi’s claim against them for tortious interference with her employment at Cheniere—at which all three were employed—“is based on, relates to, or in response to” Souki and Rayford’s “exercise of the right of association.”

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If we conclude Souki and Rayford met their burden, we then analyze whether Lotfi has met her burden to establish by “clear and specific evidence” the elements of her prima facie case against them. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c).

Dismissal under the TCPA

Souki and Rayford seek to invoke the TCPA by asserting that Lotfi’s claims against them are in response to their exercise of the right of association.

A. The “right of association” is statutorily defined in Texas anti-SLAPP statute

The Texas legislature, unlike those in some of the other states that have enacted anti-SLAPP statutes, included the right of association in its anti-SLAPP protection. Compare TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(a) (West Supp. 2012) with CAL. CIV. P. CODE § 425.16 (West 2013) (protecting the “constitutional rights of freedom of speech and petition,” but not the right of association). Texas—again, unlike some other states—chose to define each of the constitutionally derived rights listed in the TCPA instead of deferring to evolving constitutional law. Compare TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(2) (defining the right of association) with CAL. CIV. P. CODE § 425.16 (containing no definitions of protected constitutional rights). Thus, the proper inquiry is whether Lotfi’s claims relate to or are in response to Souki and Rayford’s exercise of their legislatively

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defined, statutory right of association, not whether Souki and Rayford were exercising a right of association in the broad, constitutional sense.

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.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(2). A “communication” includes the “making or submitting of a statement or document in any form . . . .” TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(1).

B. Souki and Rayford’s evidentiary burden

We consider the parties’ pleadings and affidavits when reviewing a ruling on a TCPA motion to dismiss. TEX. CIV. PRAC. & REM. CODE ANN. § 27.006(a). The only relevant pleadings included in the appellate record are Lotfi’s amended verified petition, Souki and Rayford’s motion to dismiss, and Lotfi’s response. Neither party submitted an affidavit in support of or against the motion to dismiss.

Instead of relying on affidavits, Souki and Rayford relied on their assertion that Lotfi’s “Petition makes clear that the claims and allegations made against Souki and Rayford in this lawsuit are ‘based upon, relate to or are in response to’ their constitutionally protected exercise of the right of association.” Rayford and Souki point to paragraphs 9, 10, 11, 15, and 21 of Lotfi’s verified petition to meet

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their evidentiary burden. The facts alleged by Lotfi in these paragraphs are summarized below:

• Lotfi started at Cheniere in September 2011 after being personally recruited by Rayford, Cheniere’s general counsel;

• Lotfi raised violations of Cheniere’s Code of Business Conduct and Ethics, documentation and accounting irregularities, and other compliance issues, which lead to her termination in retaliation;

• the company initially stated it would pay Lotfi the full amount of company stock owed which, according to Lotfi, was only possible under the Restricted Stock Grant Agreement if she were being terminated “without Cause,” then, quickly thereafter, the termination was revoked;

• Lotfi received “one of the highest” year-end bonuses given to a non-senior executive in December 2012 and did nothing to warrant a “for Cause” termination; and

• Souki and Rayford made the decision to terminate Lotfi to exact revenge; the claim that she was fired for “cause” is false.

While Souki and Rayford argue that these facts, as plead by Lotfi, meet their burden, Lotfi disagrees: “Souki and Rayford were not exercising their First Amendment Rights when terminating Plaintiff, and they are not afforded the protection of the TCPA . . . they uttered no communications that even come close to any protection afforded by the TCPA . . . . Defendants have not provided any evidence to establish that the instant lawsuit was filed in response to the exercise of Souki and Rayford’s First Amendment rights, and clearly they have not met the

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preponderance of evidence standard.” Lotfi is correct about the absence of evidence.

Nowhere in these pleaded facts—particularly when viewed in a light favorable to Lotfi, as the non-movant—do we find evidence of a “communication” between individuals “who join together to collectively express, promote, pursue, or defend common interests.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(1–2). The factual allegations plead by Lotfi do not meet Souki and Rayford’s burden to show by a preponderance of the evidence that a communication occurred between them in the exercise of their right of association.

Souki and Rayford contend that such evidence is unnecessary because Rayford’s status as an attorney at Cheniere is sufficient to establish that a constitutional right-of-association communication occurred. They argue that “every court to have considered the issue has recognized that the constitutionally-protected right of association applies directly to both a client’s choice of legal counsel to represent and advise it, and a client’s interactions with its chosen legal counsel.” See Denius v. Dunlap, 209 F.3d 944, 954 (7th Cir. 2000) (First Amendment’s guarantee of freedom of speech, association and petition “protects the right of an individual or group to consult with an attorney on any legal matter.”); DeLoach v. Bevers, 922 F.2d 618, 620 (10th Cir. 1990) (“The right to retain and consult with an attorney . . . implicates . . . clearly established First

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Amendment rights of association and free speech.”). Souki and Rayford explain their contention as follows: Since Lotfi’s own pleading establishes that protected conduct took place, it was not necessary for Appellants to offer evidence of the specific communications between Souki and Rayford. Nor, for that matter, should a party ever have to disclose the details of what are indisputably privileged communications between corporate officers and the corporate general counsel to establish that their communications constitute the exercise of the right of association under the TCPA.

We disagree that the base assertion of counsel involvement meets Souki and Rayford’s burden.

Even accepting that Rayford had “communications” with CEO Souki about Lotfi, Rayford and Souki have not demonstrated that Rayford’s communications were for the purpose of providing legal—versus business—advice. See Derek Lisk, When Does the Texas Attorney-Client Privilege Protect Communications with In-House Counsel?, 68 Tex. B.J. 386, 387 (2005) (“In-house counsel frequently wear more than one hat, performing other duties in addition to providing legal services.”). If Rayford provided business advice, the communications were not “legal” and do not invoke any attorney-client protections. See Stoffels v. SBC Commc’ns, Inc., 263 F.R.D. 406, 411 (W.D. Tex. 2009) (“[B]ecause in-house counsel has an increased level of participation in the day-to-day operations of the corporation, . . . the attorney-client privilege attaches only to communications made for the purpose of giving or obtaining legal advice or services, not business

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or technical advice or management decisions.”); see also United States v. Davis, 636 F.2d 1028, 1044 (5th Cir. 1981) (attorney who acts as his client’s business advisor is not acting in legal capacity). The pleadings alone do not demonstrate that Rayford was providing only legal advice. In fact, his title as Senior Vice President as well as General Counsel would suggest otherwise. See In re Tom’s Foods Inc., 345 B.R. 795, 798–99 (Bankr. M.D. Ga. 2006) (holding that communications with attorney serving on corporation’s board of directors were seeking business advice, not legal advice).

Souki and Rayford could have offered evidence beyond Rayford’s status as an in-house attorney to establish an attorney-client communication. They could have filed affidavits stating that an attorney-client communication occurred that involved legal advice instead of only business advice—and could have done so without disclosing any privileged content. Cf. In re ExxonMobil Corp., 97 S.W.3d 353, 357 (Tex. App.—Houston [14th Dist.] 2003, no pet.); TEX. R. EVID. 503 (lawyer-client privilege); 4A West’s Tex. Forms, Business Litigation § 24.2.11.60 (2d ed. June 2013) (“Counsel is well-advised to file one or more Affidavit(s) based on this form to accompany [an] Anti-SLAPP Motion to Dismiss.”).3 Without any

3 See also Borden, Inc. v. Valdez, 773 S.W.2d 718, 720–21 (Tex. App.—Corpus Christi 1989, no writ) (“Not all statements and communications made by a client to an attorney are privileged, and the burden is on the party resisting discovery to show that the communication was, in fact, protected by the privilege.”); Pownell v. Credo Petroleum Corp., No. 09-CV-01540-WYD-KLM, 2011 WL 1045418, at *2

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evidence to support their characterization of their communications as “legal,” their argument that Rayford’s status, alone, is sufficient to invoke the right of association fails. Cf. KTRK Television, Inc. v. Robinson, 409 S.W.3d 682, 686 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (noting that parties filed affidavits related to TCPA motion to dismiss); Rehak Creative Servs., 404 S.W.3d at 723 (same).

Were we to presume that Rayford’s communications were legal in nature, we would create a presumption that every communication with an in-house attorney meets the TCPA’s definition of the “exercise of the right of association.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(2). Accepting that the TCPA has such a broad reach would (1) require us to ignore the TCPA provision specifically requiring evidence in support of a motion to dismiss, and (2) be contrary to the (D. Colo. Mar. 17, 2011) (“the attorney-client privilege does not protect communications related to business advice”); Baptist Health v. BancorpSouth Ins. Servs., Inc., 270 F.R.D. 268, 276 (N.D. Miss. 2010) (stating that, for questions of privilege in a corporate setting, “the critical inquiry is whether any particular communication facilitated the rendition of predominantly legal advice or services to the client”); Owens-Corning Corp. v. Caldwell, No. 01-92-00381-CV, 1992 WL 190792, at *7 (Tex. App.—Houston [1st Dist.] Aug. 7, 1992, orig. proceeding) (holding that corporation failed to establish that memorandum between company doctor and in-house counsel was protected by the attorney-client privilege); In re Tom’s Foods Inc., 345 B.R. 795, 798 (Bankr. M.D. Ga. 2006) (holding that communications with attorney serving on corporation’s board of directors were seeking business advice, not legal advice, and thus, were not protected by attorney-client privilege); see also Restatement (Third) of Law Governing Lawyers § 68 (2000) (requiring a communication to be “for the purpose of obtaining or providing legal assistance” to invoke the attorney-client privilege).

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explicitly stated purpose of the statute, namely to balance the protection of First Amendment constitutional rights against the recognized right all individuals have to file lawsuits to redress their injuries.

4 See Direct Commercial Funding, 2013 WL 407029, at *2 (rejecting statutory construction that causes provision to be out of harmony or inconsistent with other provisions); Columbia Med. Ctr. of Los Colinas, 271 S.W.3d at 256. Indeed, Lotfi’s lawsuit against Cheniere, Souki, and Rayford does not in any way implicate “the constitutional rights of persons to petition, speak freely, associate freely, [or] otherwise participate in government” as contemplated by Chapter 27. TEX. CIV. PRAC.& REM. CODE ANN. § 27.002.

Because Souki and Rayford failed to meet their burden of establishing, by a preponderance of the evidence, that their communications fell within the statutory definition of exercise of the right of association, the trial court did not err in denying their motion to dismiss.

C. Prima Facie Case

Given the conclusion that Souki and Rayford failed to meet their evidentiary burden to establish that Lotfi’s claims were based on their exercise of the right of

4 See TEX. CIV. PRAC. & REM. CODE ANN. § 27.002 (“The purpose of this chapter 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.”).

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association, it is unnecessary to review the second step of the inquiry on a Chapter 27 motion to dismiss: whether the plaintiff has established a prima facie case.

Outcome: Because Souki and Rayford failed to meet their evidentiary burden, the trial court did not err in denying their motion to dismiss under the TCPA. We affirm.

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