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In re Cooper Tire & Rubber Co.

Court of Appeals of Texas, Fourth District, San Antonio

March 28, 2018


          Original Mandamus Proceeding [1]

          Sitting: Sandee Bryan Marion, Chief Justice, Karen Angelini, Justice Patricia O. Alvarez, Justice.


          Patricia O. Alvarez, Justice.


         The trial court signed a "Protective Order of Confidentiality" submitted by the plaintiffs below/real parties in interest here (hereinafter, the plaintiffs). Cooper Tire & Rubber Company, the relator, filed a petition for writ of mandamus complaining about the trial court's entry of the plaintiffs' order, as opposed to a proposed protective order submitted by Cooper Tire. We conditionally grant Cooper Tire's petition.


         The plaintiffs were involved in an automobile accident, which they contend was caused by the defective design and manufacture by Cooper Tire of the tires on the plaintiffs' vehicle. Plaintiffs allege the tires are Sierradial A/S Plus, size 265/75R16 tires. Plaintiffs served Cooper Tire with requests for admissions, interrogatories, and production of documents. Cooper Tire objected to the discovery based on the trade secret privilege. Both sides submitted proposed protective orders. After the parties attempted, but failed, to reach an agreement on the terms of the protective order, the trial court signed the protective order submitted by the plaintiffs. Cooper Tire filed a petition for writ of mandamus, to which the plaintiffs responded and Cooper Tire replied.


         Cooper Tire asserts the protective order signed by the trial court fails to provide adequate protections to maintain the secrecy of its trade secrets and confidential information. More specifically, Cooper Tire contends the order allows plaintiffs to reveal Cooper Tire's confidential and trade secret information to any witness without a showing that the disclosure is relevant and necessary to a fair adjudication of plaintiffs' claims and even if that witness refuses to agree to maintain secrecy. Cooper Tire also asserts the order permits the wide-spread dissemination and use of its confidential information and trade secrets at the discretion of plaintiffs' counsel, without a showing of relevance and necessity. Finally, Cooper Tire complains about several "procedural traps" it contends make protecting its trade secrets more difficult.

         The plaintiffs respond to each of these arguments in turn, but, as a preliminary matter, they also assert Cooper Tire has an adequate remedy via an interlocutory appeal, and the petition for writ of mandamus is not ripe for review because the trial court has not yet compelled discovery. We address the plaintiffs' preliminary arguments first.


         To obtain mandamus relief, a relator generally must show both that the trial court clearly abused its discretion and that the relator has no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004) (orig. proceeding). A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law, or if the trial court clearly fails to analyze the law correctly or apply the law correctly to the facts. In re Cerberus Capital Mgmt. L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam). No adequate appellate remedy exists if a trial court orders a party to produce privileged trade secrets absent a showing of necessity. In re Bass, 113 S.W.3d 735, 745 (Tex. 2003) (orig. proceeding).

         Cooper Tire asserts the trial court abused its discretion because the protective order (1) permits dissemination of protected materials to witnesses without a showing of necessity and who refuse to agree to be bound by the protective order, and (2) allows plaintiffs' attorneys to disseminate Cooper Tire's trade secrets to third parties who have not established a viable exception to the trade secret privilege.

         The plaintiffs assert Cooper Tire has an adequate remedy through an interlocutory appeal via Texas Rule of Civil Procedure 76a, which sets the procedure for sealing court records. That section provides:

Any order (or portion of an order or judgment) relating to sealing or unsealing court records shall be deemed to be severed from the case and a final judgment which may be appealed by any party or intervenor who participated in the hearing preceding issuance of such order. The appellate court may abate the appeal and order the trial court to direct that further public notice be given, or to hold further hearings, or to make additional findings.

Tex. R. Civ. P. 76a(8).

         We do not agree with plaintiffs' argument that Cooper Tire may raise its complaints in an interlocutory appeal under Rule 76a(8) because this case involves the scope of a protective order and not a sealing order.


         Plaintiffs next assert this court does not have jurisdiction to consider the scope of the protective order because no discovery has yet been compelled. We disagree. Several appellate courts have considered the scope of protective orders. See Garcia v. Peeples, 734 S.W.2d 343, 345-47 (Tex. 1987) (orig. proceeding) (considering whether trial court abused its discretion by issuing the protective order, by failing to modify the order, and by not prohibiting GMC from enforcing several protective orders issued by courts in other states); Am. Honda Motor Co., Inc. v. Dibrell, 736 S.W.2d 257, 258 (Tex. App.-Austin 1987, orig. proceeding) ("In this mandamus proceeding, Honda requests this Court to order Judge Dibrell to vacate or modify his order to deny plaintiffs the right to disseminate discovered material to anyone not connected with this action or in the alternative to require the limitations requested by Honda in lieu of paragraph nine."); In re State Farm Lloyds, 09-03-311 CV, 2003 WL 22149155, at *1 (Tex. App.-Beaumont Sept. 18, 2003, orig. proceeding) (per curiam) (mem. op.) (relator asked appellate court "to vacate a protective order and to issue a different protective order that restricts the use and disclosure of certain privileged documents to the specific case before the trial court"); see also In re Cont'l Gen. Tire, Inc., 979 S.W.2d 609, 613 (Tex. 1998) (orig. proceeding) ("The issue there was not whether trade secret documents should be produced, but rather the scope of the protective order accompanying the production.").

         Therefore, we conclude this court is not required to wait for the trial court to compel discovery before determining whether this protective order adequately protects the information sought. Accordingly, we next address Cooper Tire's arguments.


         Cooper Tire argues the trial court's protective order allows the plaintiffs to obtain trade secret information without satisfying their burden as set forth in Continental General Tire. Cooper Tire contends it "has been willing to agree that disclosure is relevant and necessary as to certain persons, but Plaintiffs wish to expand that group." Cooper Tire appears to argue that a party seeking disclosure of trade secrets must satisfy their burden on a witness-by-witness basis.

         Texas Rule of Evidence 507 provides a privilege entitling a party to refuse to disclose its trade secrets "if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice." Tex. R. Evid. 507(a); Cont'l Gen. Tire, 979 S.W.2d at 610. Under Rule 507, the party resisting discovery of trade secrets must first establish the information sought constitutes a trade secret. Cont'l Gen. Tire, 979 S.W.2d at 610, 613. Once the party resisting discovery establishes the information is a trade secret, the burden shifts to the requesting party to establish the information is "necessary for a fair adjudication of its claims." Id. If the requesting party meets that burden, the court should compel disclosure of the information subject to an appropriate protective order. Id. at 613. However, "[t]hat a trial court has ordered the parties to enter into a protective order with respect to trade secret information does not dispense with the requesting party's burden to establish the necessity for the discovery of the trade secret information to fairly adjudicate a claim or defense." In re Hewlett Packard, 212 S.W.3d 356, 364 (Tex. App.-Austin 2006, orig. proceeding).

         Cooper Tire contends the protective order in this case allows plaintiffs' attorney to bypass the above test for all witnesses plaintiffs choose to designate. According to Cooper Tire, the plaintiffs in this case must "demonstrate with specificity exactly how the lack of the information will 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."[2] See In re Bridgestone/Firestone, Inc., 106 S.W.3d 730, 733 (Tex. 2003) (orig. proceeding). We do not interpret the order as allowing the plaintiffs to automatically obtain documents designated as trade secrets. The protective order contains two provisions: (1) a "Designation" provision that states how a party may designate a document or a portion of a document as a "Protectible Document, " and (2) a "Challenge Designation" provision that sets forth how a party may challenge the other party's designation.

         The "Challenge Designation" section places the burden on the parties to resolve a dispute over how a document is designated or obtain a ruling from the trial court resolving the dispute. But, the burden to obtain a court ruling in the absence of an agreement is placed on the party seeking confidential treatment of its material. Pursuant to the protective order, that party bears the burden to show "good cause" exists "for confidential treatment pursuant to" Federal Rule of Civil Procedure 26(c). In other words, here, Cooper Tire bears the burden to obtain a hearing and show "good cause" under Federal Rule 26(c) if the plaintiffs challenge Cooper Tire's designation. However, the order does not place any burden on the plaintiffs as the party seeking disclosure, nor does the order expressly state the shifting burdens annunciated in Continental General Tire. Nevertheless, although the protective order neither expressly places a burden on the plaintiffs who seek disclosure nor requires application of the Continental General Tire test, it does not expressly allow plaintiffs to automatically obtain documents designated as trade secrets.

         We conclude that, although the protective order does not expressly state the Continental General Tire test, the order does not-as argued by Cooper Tire-allow plaintiffs to obtain protected documents without meeting their Continental General Tire burden. In other words, if relator objects to disclosing protected documents, all parties must satisfy their burden at a later hearing before the trial court. See Hewlett Packard, 212 S.W.3d at 364 (holding, "[t]hat a trial court has ordered the parties to enter into a protective order with respect to trade secret information does not dispense with the ...

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