in Re Eurecat US, Inc. ( 2014 )

Petition for Writ of Mandamus Denied and Majority, Dissenting, and
Concurring Opinions filed June 5, 2014.
In The
Fourteenth Court of Appeals
NO. 14-14-00365-CV
IN RE EURECAT US, INC., Relator
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
133rd District Court
Harris County, Texas
Trial Court Cause No. 2012-25700
DISSENTING OPINION
Eurecat returns to us with this second petition for writ of mandamus arising
from the trial court’s Rule 192.4 protective order. Previously, as the dissenting
justice, I urged that the trial court’s order1 is an impermissible discovery
injunction. In re Eurecat US, Inc., 425 S.W.3d 577, 584 (Tex. App.—Houston
[14th Dist.] 2014, orig. proceeding) (McCally, J., dissenting). The panel majority,
on the other hand, found that it was not clear that the trial court’s order prohibited
the subject customer discovery. See id. at 583 & n.2 (majority opinion).
Therefore, the parties returned to the trial court where Eurecat sought
reconsideration of the order. The trial court reaffirmed its order prohibiting the
customer discovery. Eurecat seeks mandamus relief arguing, once again, that Real
Parties have supplied no evidence to support their request for an order forbidding
customer discovery—discovery that goes to the heart of Eurecat’s claims and
defenses.2 By the petition and response, the parties agree that the trial court has
forbidden Eurecat from taking discovery from Eurecat customers.3 Today, the
majority nonetheless denies Eurecat’s second petition for writ of mandamus,
1
The order provides that “Eurecat U.S., Inc. may not serve discovery on any customers or
potential customers of catalyst activation services identified in the letter from Mr. Touchstone to Mr.
Escobar dated September 18, 2013.”
2
Real Parties attempt to undercut the nature of the harm from an order prohibiting Eurecat’s
discovery on customers by stipulating that they will not seek antitrust damages from Eurecat pertaining to
those customers. Real Parties do not state that they have dismissed their antitrust claims, nor does the
record reflect such. As with Real Parties’ assurances that they did not solicit Eurecat customers—“we
promise”—Real Parties promise that Eurecat doesn’t need this discovery because when it comes time to
offer evidence or ask the jury to fill in the damage blanks, they promise they will not include anything
about other customers. Denial of discovery that goes to the heart of a case—as pled—renders an appeal
inadequate. See Walker v. Packer, 827 S.W.2d 833, 843–44 (Tex. 1992). Thus, the “we promise”
handling of discovery defies established authority permitting discovery based upon pleadings, not
promises.
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My concurring colleague attempts to buttress the discovery injunction with reference to Real
Parties’ argument on trade secrets. However, to the extent that such argument previously had merit, it no
longer does as the subject of the forbidden discovery is a list of customers of both Eurecat and Real
Parties that is known to both parties and, thus, not a secret. To the extent that Real Parties are concerned
that Eurecat’s undrafted, unsent discovery might ultimately implicate Real Parties’ other trade secrets, a
prospective injunction on discovery is not an appropriate prophylactic measure.
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finding that Eurecat has not established itself entitled to relief. Again, I
respectfully disagree.
In addition to the reasons I previously stated for my belief that Eurecat’s
petition for writ of mandamus should be granted, see id. at 587–88 (McCally, J.,
dissenting), I add the following:
Real Parties have still provided no evidence
to support a Rule 192.4 Protective Order.
Real Parties urge that the trial court’s Rule 192.4 protective order is
supported by evidence. And, Real Parties urge that the trial court conducted an
appropriate balance to support the order as reflected in the following excerpt from
the hearing after our decision on the prior petition:
MR. HOEG [counsel for Eurecat]: [A]s Justice McCauley [sic]
said, [we do] not have to take their word for it, especially once
we have already seen that they haven’t been entirely
forthcoming.
THE COURT: Well, but Mr. Hoeg, in all fairness, Justice
McCauley [sic] didn’t have maybe all the background of the
letters and discussions that you actually had with Haldor
Topsoe, which I think I maybe gently said to you may have
been a little over the top.
MR. HOEG: Absolutely. You’re correct. Although, she did
have some of that, but my point is that’s only—
....
THE COURT: [W]hen you’ve got a whole big list and you’re
talking about possible damage to either or both of you when
you’re both countersuing each other basically, saying you’re
going to damage my business. If you intimidate of threaten or at
least insinuate that they’re [Real Parties’ customers] going to be
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brought in or we’re going to have a lawsuit against them, and
that’s when you have to do a covenant not to sue, then, you
know that’s a whole other balancing act that the Court has to
do, the harm versus the good, you know, which is no enviable
job for a judge; and I understand the Court of Appeals looks at
the record and doesn’t get to see the inflection, the body
language, the believability, the everything of all the witnesses
and the attorneys arguing those points that the trial court has.
Anyway, your motion is denied.
This excerpt, say Real Parties, shows the balancing that the trial court
performed—this is the evidence considered. Real Parties point to no other
evidence and there is none in this record.
Thus, we know that the trial court balanced Eurecat’s alleged “threats and
intimidation” of a common customer against Eurecat’s right to request discovery
from other common customers. But, Rule 192.4(b) compels a trial court to balance
“the burden or expense of the proposed discovery” against “its likely benefit,
taking into account the needs of the case, the amount in controversy, the parties’
resources, the importance of the issues at stake in the litigation, and the importance
of the proposed discovery in resolving the issues.” Tex. R. Civ. P. 192.4(b).
Therefore, the trial court did not perform a balancing under Rule 192.4(b).
If Real Parties wanted the trial court to enter an order forbidding Eurecat’s
discovery on common customers on the belief that Eurecat had threatened or
intimidated a potential witness, Real Parties should have sought relief for
discovery abuse. Texas Rule of Civil Procedure 215.3 addresses abuses of the
discovery process: “If the court finds a party is abusing the discovery process in
seeking, making or resisting discovery . . . , then the court in which the action is
pending may, after notice and hearing, impose any appropriate sanction authorized
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by paragraphs (1), (2), (3), (4), (5) and (8) of Rule 215.2(b).” Tex. R. Civ. P.
215.3. And, the very first sanction authorized is “(1) an order disallowing any
further discovery of any kind or of a particular kind by the disobedient party.”
Tex. R. Civ. P. 215.2(b)(1). However, before the trial court may issue such a
discovery sanction, it must consider a sanction less than a total prohibition of
discovery. See, e.g., Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). Real
Parties did not invoke Rule 215.3 and do not attempt to uphold the trial court order
on that basis.
Therefore, I respectfully dissent to this court’s denial of Eurecat’s request
for mandamus relief.
_____________________________
Sharon McCally
Justice
Panel consists of Justices Jamison, McCally, and Busby. (Busby, J., concurring)
(McCally, J., dissenting).
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