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QTAT BPO Solutions, Inc. v. Lee & Murphy Law Firm

Court of Appeals of Texas, Fourteenth District

March 7, 2017


         On Appeal from the 281st District Court Harris County, Texas Trial Court Cause No. 2015-50482

          Panel consists of Chief Justice Frost and Justices Brown and Jewell.


          Kem Thompson Frost Chief Justice.

         In this appeal we consider the applicability of the Texas Citizens Participation Act to claims for breach of a contract between private parties. A litigation-services entity affiliated with various law firms hired a screening company to vet personal-injury claims related to pharmaceutical-products litigation. Before ending its business relationship with the law firms, the screening company downloaded confidential information from the law firms' computer system and gave that information to its own attorney for purposes of bringing a breach-of-contract suit against some of the law firms. After the screening company filed suit, the defendants counterclaimed for breach of a non-disclosure agreement. The screening company, seeking dismissal of the counterclaims under the Texas Citizens Participation Act, took the position that giving the data to its attorney amounted to protected activity.[1] The trial court denied the screening company's motion to dismiss as to two of the law firms, and the screening company now challenges that ruling in this interlocutory appeal. We conclude that the screening company has not shown that the Act applies to the counterclaims for breach of the non-disclosure agreement. Under binding precedent, this conclusion requires dismissal of the case for lack of appellate jurisdiction.

         I. Background

         Appellees/counter-plaintiffs Lee & Murphy Law Firm, G.P. and Clark, Love & Hutson, G.P. are law firms (collectively, the "Law Firms") that specialize in representing plaintiffs in high-volume pharmaceutical-product-liability cases. The Law Firms created an entity, Litigation & Records Services, LLC ("L&R Services"), to screen clients who have meritorious claims in these high-volume tort cases. L&R Services, in turn, hired appellant/counter-defendant QTAT BPO Solutions, Inc. to perform the screening.

         QTAT and James Lee, on behalf of "Clark Burnett Love & Lee, GP/Lee & Murphy, GP" entered into a confidentiality and non-disclosure agreement. The non-disclosure agreement prohibited QTAT from disclosing various categories of information.[2] QTAT signed a letter agreement, dated July 27, 2012, with L&R Services regarding (1) the "medical retrieval and nurse review projects" conducted by QTAT; (2) QTAT's submission of invoices; and (3) the split of any net profits earned by L&R Services, with QTAT receiving 25% of the net profits.

         To perform its work, QTAT accessed and reviewed the Law Firms' clients' medical records stored on the part of a data base that L&R Services maintained. QTAT was not permitted to access other parts of the database, which contained additional confidential client information and the Law Firms' proprietary information.

         L&R Services terminated the agreement with QTAT. QTAT claimed that it had spent over 60, 000 man-hours reviewing 40, 000 medical records for 30, 000 clients and that L&R Services had failed to pay QTAT in full for that work. QTAT also asserted that it did not receive a share of L&R Services's profits.

         Fourteen months later, QTAT's attorney, John Neese, wrote James Lee, requesting "information regarding a substantial body of work performed by QTAT at the request of [L&R Services ]/Lee Murphy Law Firm and a number of outside law firms." Neese attached to his letter a spreadsheet containing a list of 26, 768 transvaginal-mesh clients. Neese stated that he had redacted certain identifying information, such as social security numbers, and he asked Lee to provide him with the following information for the listed clients:

• The names of the law firms representing each of the clients on the attached spreadsheet;
• Copies of all contingent fee agreements for those cases;
• The status of each case, whether filed, settled, dropped, etc.;
• Copies of all contracts and agreements with the law firms whose clients are on the spreadsheet. (If there was no written documentation for one or more of the law firms, Neese asked Lee to summarize the particulars of each such deal, including the name, address, and telephone number of the attorney(s) with whom Lee had made the arrangement.);
• Copies of all invoices (or other similar type documents) that have been (or will be) submitted to the law firms representing the clients on the spreadsheet;
• An accounting of all payments, advances, or reimbursements made to Lee, Lee's firm, L&R Services, or any related or affiliated person or entity in connection with any work performed on any of the cases;
• An accounting of all costs and expenses L&R Services had incurred in connection with the clients on the spreadsheet; and
• A written confirmation of whether Lee intended to pay QTAT for the work it performed, Lee's understanding of exactly how much QTAT was to be paid or how QTAT's payment was to be calculated, and when Lee expected that QTAT would start receiving such payments.

         Several months later, QTAT filed a lawsuit against the Law Firms, L&R Services, James Lee, Jr., James Lee Law Firm, PC, Clayton A. Clark, and Clayton A. Clark, Esq., PC. QTAT claimed that it provided $15 million worth of work, but was paid less than $2 million, and received no share of L&R Services's profits. QTAT asserted claims for fraud, fraudulent inducement, breach of contract, ...

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