Texas Supreme Court Rules Trial Court Cannot Lift Mandated Stay of Proceedings

It is not uncommon for business owners to ask their employees to enter into non-compete or non-disclosure agreements. If a former employee subsequently starts a competing business in violation of an agreement, the business owner can take legal action against the employee to recover damages. In many cases, however, the employee may be protected from enforcement of the agreement under the Texas Citizen’s Participation Act (TCPA) which is an anti-SLAPP law.

In a recent case in which an automatic stay had been issued pursuant to an interlocutory appeal following a denial of a motion to dismiss pursuant to TCPA, the Supreme Court of Texas ruled that  a trial court lift the automatic stay to conduct proceedings.  If you are a business owner or an employee subject to a non-compete or non-disclosure agreement you should meet with a skilled Texas civil litigation attorney to discuss your options for seeking recourse for any alleged violation of the agreement.

Factual and Procedural Background

It is alleged that the plaintiff, a scrap metal recycling company, filed a lawsuit against defendant, another scrap metal recycling company started by some of plaintiff’s former employees, alleging breach of fiduciary duty, misappropriation of trade secrets, and other related claims. The defendants filed a motion to dismiss under the TCPA. The trial court denied the defendant’s motion, after which the defendant filed an interlocutory appeal. Pursuant to Texas statutory law, the appeal triggered a stay of all proceedings in the case.

Reportedly, the plaintiff subsequently filed a motion in the court of appeals, asking the court to lift the stay to permit the plaintiff to file a motion for contempt and a petition for a temporary injunction. The court of appeals lifted the stay, after which the defendant filed a petition for writ of mandamus.

Lack of Authorization to Lift Stay of Proceedings

Upon review, the Supreme Court of Texas granted the defendant’s writ of mandamus. The court noted that while mandamus relief is only appropriate where it is demonstrated the court committed a clear abuse of discretion and there is not adequate remedy by appeal, it was warranted in the subject case. The court explained that a trial court does not have discretion in determining the law or applying the law to the facts. Therefore, the court of appeals committed a clear abuse of discretion in directing the trial court to conduct proceeding despite the mandated stay of any other proceedings.

Further, the court noted there were no exceptions to the mandated stay under the TCPA that would allow the court to conduct proceedings prior to the resolution of the pending appeal and that by permitting an exception, the court had attempted to modify the statute. Thus, the court granted the defendant’s writ of mandamus.

Speak with a Trusted Texas Civil Litigation Attorney Regarding Your Case

If you are involved in a dispute over trade secrets and restrictive covenants you should meet with a trusted Texas civil litigation attorney regarding the facts of your case and your options for protecting your rights. Rick Davis is a seasoned civil litigation attorney who will work vigorously to protect your rights. Mr. Davis can be contacted via the online form or at (979) 779-4357 to schedule a free and confidential consultation.

 

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