Late last week, the Texas Supreme Court denied a petition for mandamus in which the petitioner sought an order compelling a plaintiff to identify the specific trade secrets it contends were misappropriated, bucking what petitioner claimed is a “growing consensus” among the states.
In August 2015, B.J. Reynolds resigned from Sanchez Oil & Gas Corp. and began working as the vice president of operations for Terra Energy Partners LLC. In early March 2016, Terra hired two other Sanchez employees, Wes Hobbs and Mark Mewshaw. Later that month, Sanchez brought suit against Terra for misappropriation of trade secrets, alleging that after leaving the company, Hobbs and Mewshaw stole various electronic data involving processes to drill oil wells and to secure cost savings from vendors.
During the course of discovery, Sanchez produced approximately 170,000 pages of documents that allegedly contained the misappropriated trade secrets. According to Terra’s petition for writ of mandamus, however, Sanchez never specifically identified what trade secrets it accused Terra of stealing. As a result, Terra filed a motion to compel Sanchez to describe the “steps or elements of any trade secret processes that it claims were misappropriated,” arguing that Sanchez’s “data dump” ran afoul of its disclosure obligations under the Texas Rules of Civil Procedure and the Texas Uniform Trade Secrets Act. Terra also argued that it would cost its expert witnesses more than $1 million in fees to review the nearly 200,000 pages of documents Sanchez produced, and even that would not identify the specific trade secrets Sanchez claims had been misappropriated.
The trial court denied Terra’s motion to compel, and Terra filed a petition for writ of mandamus with the First Court of Appeals in Houston. Although the appellate court stayed the lower court’s proceedings, it also ultimately rejected Terra’s request.
In its petition for writ of mandamus filed with the Texas Supreme Court, Terra argued that there is a “growing consensus” among the 46 states which have adopted laws similar to the Texas Uniform Trade Secrets Act that a plaintiff must disclose the allegedly misappropriated trade secrets “with reasonable particularity at an early stage in the litigation.” Terra therefore urged the Texas Supreme Court to follow suit.
Sanchez, in response, argued that mandamus relief should be denied because Terra was improperly seeking to delay the underlying trial and to impose additional, unwarranted discovery obligations on Sanchez.
The Texas Supreme Court denied Terra’s petition without explanation.
In re Terra Energy Partners LLC et al., case number 18-0120, in the Supreme Court of Texas.