My partner Britta Stanton recently published a good article – “Who’s Your Client? The Business or the Executive?”‘ about the importance of quality Upjohn warnings – worth a read if your practice involves the depositions of company executives.
The Discovery Channel may have has Shark Week, but the Fifth Court is having Mandamus Week. The most recent installment is In re: Commercial Metals, which involved a challenge to a protective order about a business’s trade secrets. The Court began by reminding, as to the basic requriements for a writ of mandamus, that “[a] trial court abuses its discretion if it orders discovery exceeding the scope permitted by the rules,” and that “[n]o adequate appellate remedy exists when the trial court compels production beyond the permissible bounds of discovery.” That said, the Court found no abuse of discretion in the particularized procedures used to limit use of the information by plaintiff’s “de facto in house counsel,” and denied the petition. The opinion provides useful guidance on a very practical and recurring issue in business disputes about the use of confidential information. No. 05-16-01214-CV (Aug. 29, 2017) (mem. op.)
Six tenants intervened in a code enforcement action, seeking to pursue class claims against the property owners. Defendants sought to take their depositions about issues regarding certification, the intervenors moved to quash, and the trial judge allowed the depositions to proceed, but for no more than thirty minutes each. The Fifth Court granted mandamus, finding that “the record includes no evidence or even argument regarding how a deposition of any length wqould cause intervenors to suffer harm or subject them to undue burden,” and also that the intervenors “lack an adequate remedy by appeal because the order severely compromises relators’ ability to present its case on the issue of class certification.” In re: Topletz, No. 05-17-00315-CV (Aug. 24, 2017).
In a forceful statement against merits discovery before the resolution of a special appearance, the Fifth Court granted a writ of mandamus to require that “relator’s deposition be limited to matters directly relevant to the issue of jurisdiction if the deposition is taken before the trial court rules on relator’s special appearance,” because “Rule 120a requires discovery be limited to matters relevant to jurisdiciton prior to a ruling on a special appearance.” In re: Stanton, No. 05-17-00834-CV (Aug. 24, 2017) (mem. op.) (citing, inter alia, In re: Doe, 444 S.W.3d 603, 608 (Tex. 2014)).
Last Friday, the Texas Supreme Court denied mandamus relief in a high-profile dispute about the proper format in which to produce electronic records, but provided extensive guidance about the framework and factors that should decide such disputes, and remanded for reconsideration in light of that guidance. In a nutshell: “Under our discovery rules, neither party may dictate the form of electronic discovery. The requesting party must specify the desired form of production, but all discovery is subject to the proportionality overlay embedded in our discovery rules and inherent in the reasonableness standard to which our electronic-discovery rule is tethered. The taproot of this discovery dispute is whether production in native format is reasonable given the circumstances of this case. Reasonableness and its bedfellow, proportionality, require a case-by-case balancing of jurisprudential considerations,which is informed by factors the discovery rules identify as limiting the scope of discovery and geared toward the ultimate objective of “obtain[ing] a just,fair, equitable and impartial adjudication” for the litigants “with as great expedition and dispatch at the least expense . . . as may be practicable.” In re State Farm Lloyds, No. 15-903 (Tex. May 26, 2017).
In a quick break from Texas state practice – for a recent CLE presentation, I prepared the attached one-page chart to summarize the Fifth Circuit’s recent holdings about discovery.
In Glassdoor Inc. v. Andra Group LP, the Fifth Court affirmed an order granting a Rule 202 petition about online reviews of a business as an employer, offering several pointers for the handling of such petitions:
- The trial judge limited the scope of the examination to two posts, and specific items within them;
- The movant established its potential business disparagement damages with three affidavits about the effect of the posts on its recruiting;
- The statements at issue went beyond “hyperbole or mere personal opinion” to make specific “accusations of illegal conduct that are capable of being proved true or false”; and
- The First Amendment rights of the anonymous reviewers to speak anonymously “must be balanced against the right of others to hold accountable those who engage in speech not protected by the First Amendment.”
A “mirror image” anti-SLAPP motion was properly rejected for the same reasons that the Rule 202 petition was granted. No. 05-16-00189-CV (March 24, 2017) (mem. op.)
In In re Michelin North America, Inc., the Dallas Court of Appeals conditionally granted a writ of mandamus to protect Michelin from being forced to produce certain discovery. The district court ordered Michelin to produce specifications for tires similar to the allegedly defective tire at issue in that case in addition to financial information for the decade prior to the litigation.
The court of appeals held that Michelin satisfied its burden under Texas Rule of Evidence 507 to resist the discovery of trade secrets through the affidavit of an engineer who worked in Michelin’s legal department but that Michelin failed to satisfy its burden of proving its financial data was a trade secret because it failed to offer an affidavit until after the hearing on the motion to compel (helpful hint: it should be filed 7 days before the hearing under TRCP 193.4(a) if it is in affidavit form). The court also held that the plaintiffs failed to meet their burden under Rule 507 to show “with specificity” exactly how the lack of information would impair the presentation of the case on the merits “to the point that an unjust result is a real, rather than a merely possible, threat.” On the issue of financial information, though Michelin failed to timely prove its trade secrets privilege, Michelin was saved by a secondary argument that the district court’s order was too broad because the discovery included financial information from several years earlier and only current financial information is relevant for calculation of punitive damages.
DFW Advisors sued its former bookkeeper, Ervin, alleging misappropriation. She responded to a request for disclosure by saying that she did acted with consent. At trial, she sought to introduce evidence of consent, in the form of testimony of an affair with DFW’s principal. The trial court allowed the testimony, over DFW’s objection, and the Fifth Court affirmed “[T]his response sufficiently disclosed Ervin’s basic defense, which was that she had consent to take the money. [Tex. R. Civ. P.] 194.2 only requires disclosure of a party’s basic assertions and did not require Ervin to disclose the details of how consent was given.” DFW Advisors Ltd. v. Ervin, No. 05-14-00883-CV (Feb. 11, 2016) (mem. op.)
A personal injury case led to an award of $4500 in attorney fees against the defendants’ attorneys after they lost a motion to compel. Among other things, the defendants sought to designate certain documents as “ATTORNEYS EYES ONLY” and objected to 14 of 21 document requests on the basis of trade secret privilege — in a car wreck case. The county court at law overruled the vast majority of the defendants’ objections, and awarded the $4500 to the plaintiff. On appeal, the defendants’ attorneys argued that the award was a sanction that could not be justified by any offensive conduct. The Dallas Court of Appeals disagreed, pointing to the trial court’s order stating that the award of fees and costs was granted for securing orders overruling the defendants’ objections to the plaintiff’s discovery requests. That made it an award of expenses on a motion to compel, which is required (but rarely observed) by TRCP 215.1(d). Reviewing the course of the proceedings in the trial court, the Court of Appeals could not conclude that the trial court had abused its discretion in determining that the defendants’ resistance to the discovery had not been “substantially justified.”
MacDonald Devin, PC v. Rice, No. 05-14-00938-CV