Labor & Employment Law Daily Wrap Up, STATE-LAW CLAIMS—Tex. App.: Texas Citizens Participation Act (TCPA) applied in action to enforce noncompetition agreement, (Sep 2, 2026)

By Sara Cracau, J.D.

District court erred in denying pharmacy’s motion to dismiss former employee’s counterclaims under Texas Citizens Participation Act.

A Texas state court erred in declining to dismiss antitrust counterclaims filed by a former pharmacy employee in an action to enforce a noncompetition agreement because it should have been dismissed under the Texas Citizens Participation Act (TCPA), according to a Texas state appellate court. Within days of the employee’s departure from Empower Clinic Services, L.L.C. d/b/a Empower Pharmacy, he allegedly went to work for a competing company in violation of noncompetition agreements and Empower filed suit. The former employee countersued, alleging that Empower retaliated against him after he raised concerns about “illicit purchases of active pharmaceutical ingredients. Because the pharmacy’s exercise of its right to petition resulted in the former employee’s legal action seeking to enjoin it, the former employee’s antitrust claim was based on or in response to the pharmacy’s suit, and, therefore, the TCPA applied. Furthermore, the former employe’s antitrust counterclaim sought to avoid the pharmacy’s attempt to enforce the agreement, and, therefore, the employee-employer exemption did not apply (Empower Clinic Services, L.L.C. v. Pray, No. 01-25-00410-CV (Tex. App. Aug. 25, 2026)).

Background. A pharmacy sued a former employee to enforce a noncompetition agreement and other claims. The former employee countersued alleging retaliation under the federal False Claims Act and antitrust violations under the Texas Free Enterprise and Antitrust Act of 1983 (TFEAA). The pharmacy moved to dismiss the counterclaims on the grounds that they were based on or in response to the pharmacy’s exercise of the right to petition but the former employee argued that the TCPA did not apply, or that his claims were statutorily exempt if it did apply and, that, regardless, he proffered clear and specific evidence sufficient to make a prima facie case with respect to each claim. The trial court denied the pharmacy’s motion and it appealed challenging the trial court’s denial and failure to award monetary relief under the statute.

The non-competition agreements. The pharmacy, a Houston-based compounding pharmacy that filled prescriptions for tens of thousands of clinics nationwide and employed more than 1200 employees, had hired the former employee as director of its supply chain and required him to sign a confidentiality and non-compete agreement which prohibited him from “engag[ing in the manufacture, sale, and/or distribution of the same or substantially similar pharmaceutical product lines, on behalf of any compounding pharmacy” for three years “in Houston, Texas and its surrounding counties.” A couple of months later, the employee signed a second confidentiality and non-compete agreement when he contemporaneously accepted an award of phantom stock. The restrictions of the second agreement also ran for three years from the date of separation and prohibited future employment with 21 listed companies, including Revive Rx, LLC. Anywhere in the U.S. The employee resigned after two years of working with the pharmacy. Several former employees of the pharmacy had left the company to start a competing business which the pharmacy alleged was done utilizing the pharmacy’s “resources, opportunities, confidential information, and trade secrets” allegedly in conspiracy with the former employee. The former employee maintained that he discovered some irregularities, including what he assessed to be flagrant violations of FDA requirements, to maximize profits and alleged that he forfeited a promotion as a result of reporting the alleged violations to upper management. Shortly after leaving the company, the former employee went to work for Revive, Rx, LLC. The pharmacy sued him and other former employees for breach of fiduciary duty, conversion, fraud, violations of the Texas Uniform Trade Secret Act, breach of contract, and civil conspiracy.

TCPA. The statutorily expressed purpose of the TCPA is “to encourage and safeguard the constitutional rights of person 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.” In reviewing TCPA motions to dismiss, trial courts engage in a multi-step process which includes determining whether the TCPA applies to the legal action, determining whether a statutory exemption applies, and determining whether the movant has an affirmative defense or other grounds to entitle it to judgment as a matter of law.

The antitrust claim. Because the pharmacy’s exercise of its right to petition resulted in the former employee’s legal action seeking to enjoin it, the former employee’s antitrust claim was based on or in response to the pharmacy’s suit, and, therefore, the TCPA applies. The former employee’s antitrust claim complained of the enforcement of the noncompetition agreement, including the pharmacy’s lawsuit against him, an example of a type of enforcement effort. The pharmacy’s suit against the former employee was an exercise of the right to petition as it is a communication in a judicial proceeding. Furthermore, the former employe’s antitrust counterclaim sought to avoid the pharmacy’s attempt to enforce the agreement, and, therefore, the employee-employer exemption did not apply. The former employee failed to make a prima facie case for an antitrust claim. He did not produce evidence to show that he had standing to sue under the statute. He also had to show an adverse effect on competition “by proving the existence of actual anticompetitive effects, such as reduction of output, increase in price, or deterioration in quality of goods and services” which he failed to do. He merely argued that the agreement were unreasonable. Because the court determined that the trial court erred in denying the pharmacy’s motion to dismiss, it remanded the case for additional proceedings.

Retaliation claim. The court concluded that the TCPA applied to the former employee’s retaliation claim as the former employee’s factual allegations showed that a main ingredient or fundamental part of his retaliation claim involved the pharmacy’s exercise of its right to petition. Furthermore, the court found that the TCPA’s fraud exemption did not apply to the former employee’s whistleblower retaliation claim. The court also found that the former employee failed to make a prima facie case for retaliation.

The Case is No. 01-25-00410-CV.

Judge: Dokupil, S.

Attorneys: Kyle Poelker (AZA Law) for Empower Clinic Services, L.L.C. d/b/a Empower Pharmacy. John Keville (Sheppard, Mullin, Richter & Hampton) for Samuel Pray.

Companies: Empower Clinic Services, L.L.C.; Empower Pharmacy

Cases: StateLawClaims Retaliation TortClaims Whistleblowers ContractClaims TexasNews