in Re EOG Resources, Inc. ( 2014 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00440-CV
IN RE EOG RESOURCES, INC. RELATOR
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ORIGINAL PROCEEDING
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MEMORANDUM OPINION1
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Relator EOG Resources, Inc. filed this petition for writ of mandamus
seeking to vacate the trial court’s order requiring it to produce privileged trade
secret information during pretrial discovery.
David and Shelly Richey sued EOG alleging that after they had entered
into an oil and gas lease with EOG, it improperly failed to include their land in a
pooled unit with similarly-located leases and that EOG improperly drained oil and
gas from underneath their property. In discovery, the Richeys sought EOG’s
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See Tex. R. App. P. 47.4, 52.8(d).
geologic and seismic data for their property and any property located within one
mile of their property. EOG objected to the Richeys’ request for production
claiming, among other things, that the information sought is “confidential,
business, and/or proprietary information.” The Richeys moved to compel
production of the information, and the trial court held an evidentiary hearing.
At the hearing, the parties stipulated that the information sought is
privileged trade secret information. Following the hearing, the trial court signed
an order compelling production of the information to the Richeys. In its order, the
trial court found that the Richeys had met their burden to show that the trade
secret information sought in their request for production is necessary for a fair
adjudication of their claims. EOG then filed a petition for writ of mandamus in
this court challenging the trial court’s order.
Texas Rule of Evidence 507 provides,
A person has a privilege, which may be claimed by the person
or the person’s agent or employee, to refuse to disclose and to
prevent other persons from disclosing a trade secret owned by the
person, if the allowance of the privilege will not tend to conceal fraud
or otherwise work injustice. When disclosure is directed, the judge
shall take such protective measure as the interests of the holder of
the privilege and of the parties and the furtherance of justice may
require.
Tex. R. Evid. 507. After a party resisting discovery establishes that the
information is a trade secret, the burden shifts to the requesting party to establish
that the information is necessary for a fair adjudication of its claims. E.g., In re
Cont’l Gen. Tire, Inc., 979 S.W.2d 609, 613 (Tex. 1998) (orig. proceeding). “[A]
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party seeking such information cannot merely assert unfairness but 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.” In re Bridgestone/Firestone, Inc., 106
S.W.3d 730, 733 (Tex. 2003) (orig. proceeding).
The Richeys’ expert testified generally that the trade secret information
sought was “pertinent,” “helpful,” and “essential” to the Richeys’ claims and that
the request was “reasonable” and “necessary.” But he never articulated any
reason why discovery of the information was necessary other than that the only
evidence the Richeys had to support their claims is the proximity of the wellbores
on neighboring properties to their property. The Richeys’ expert admitted that
the Richeys could have obtained the information on their own but for “cost and
[lack of] expertise,” but he also testified that it “probably” would not do them any
good to spend their own money on obtaining such information.
We conclude and hold that the Richeys did not meet their burden to show
with specificity how their failure to obtain the trade secret information sought
would so impair the presentation of the case that the result would be unjust; thus,
the trial court abused its discretion by ordering production of the trade secrets.
See, e.g., id.; see also HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex.
1998) (noting that royalty owners should determine whether a common reservoir
underlies their leases because of the potential for drainage by surrounding wells
and also noting that records about operations in a common reservoir are
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generally available from the former Railroad Commission). There is no adequate
remedy by appeal when a trial court orders a party to produce privileged trade
secrets absent a showing of necessity. See, e.g., In re Union Pac. R.R., 294
S.W.3d 589, 593 (Tex. 2009) (orig. proceeding); In re Bass, 113 S.W.3d 735, 745
(Tex. 2003) (orig. proceeding).
Accordingly, we conditionally grant mandamus relief. We order the trial
court to withdraw its order compelling EOG to respond to the Richeys’ request for
production number 10 seeking geologic and seismic data for the property and
surrounding areas. We are confident that the trial court will promptly comply, and
a writ will issue only if it does not.
/s/ Terrie Livingston
TERRIE LIVINGSTON
CHIEF JUSTICE
PANEL: LIVINGSTON, C.J.; DAUPHINOT and WALKER, JJ.
DELIVERED: February 12, 2014
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