In Re Bass

113 S.W.3d 735, 164 Oil & Gas Rep. 834, 46 Tex. Sup. Ct. J. 988, 2003 Tex. LEXIS 114, 2002 WL 32126139
CourtTexas Supreme Court
DecidedJuly 3, 2003
Docket02-0071
StatusPublished
Cited by292 cases

This text of 113 S.W.3d 735 (In Re Bass) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Bass, 113 S.W.3d 735, 164 Oil & Gas Rep. 834, 46 Tex. Sup. Ct. J. 988, 2003 Tex. LEXIS 114, 2002 WL 32126139 (Tex. 2003).

Opinion

Justice SCHNEIDER

delivered the opinion of the Court.

The Texas Rules of Evidence protect trade secrets from discovery “if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.” Tex.R. Evid. 507. We held in In re Continental General Tire, Inc., 979 S.W.2d 609 (Tex.1998), that a party asserting the trade secret privilege has the burden of proving that the discovery information sought qualifies as a trade secret. If met, the burden shifts to the party seeking trade secret discovery to establish that the information is necessary for a fair adjudication of its claim.

Here, non-participating royalty interest owners are attempting discovery of the mineral estate owner’s geological seismic data to prove that the mineral estate owner breached an implied duty to develop its land. The mineral estate owner claims that the data are trade secrets. The trial court found that the royalty owners met their burden of establishing necessity and ordered the mineral estate owner to produce the data under a protective order. The court of appeals denied the mineral estate owner’s requested mandamus relief. The mineral estate owner now seeks mandamus relief from this Court to prevent discovery of the claimed trade secrets.

The issues before us today are: l)whether the mineral estate owner proved that the seismic data at issue are trade secrets; and 2) if the mineral estate owner proved the data are trade secrets, whether the non-participating royalty interest owners established that the discovery of the trade secret information was necessary to a fair adjudication of their breach of an implied duty claim. We hold that geological seismic data are trade secrets and that the non-participating royalty interest owners failed to establish the existence of a claim against the mineral estate owner justifying discovery of the trade secret data. We therefore conditionally grant mandamus relief and order the trial court to vacate its order compelling the seismic data’s production.

I. BACKGROUND

Real parties in interest, the non-participating royalty interest owners (the McGills), sued Relator, the mineral estate owner (Bass), for multiple claims in the trial court. The relevant claim for the purpose of this mandamus is the McGills’ assertion that Bass breached an implied duty to the McGills to develop his land.

Bass owns the surface and mineral estate of La Paloma Ranch — a large tract of land in Kenedy and Kleberg counties. The Ranch is made up of multiple tracts of land, which Bass purchased from the *738 McGills and their predecessors in interest. The disputed land tract here is the former Erck property — approximately 22,000 acres within the La Paloma Ranch. The Erck property was originally part of the McGill family ranch. The McGill family ranch was partitioned between three brothers, J.C. McGill, H.F. McGill, and Scott McGill in 1954. Although both surface and minerals were partitioned, each of the brothers retained a l/3rd of l/8th nonparticipating royalty interest in the other two brothers’ partitioned land.

As sole daughter and heir of J.C. McGill, Anne McGill Erck inherited her father’s land. Bass purchased the Erck property from Ann McGill Erck’s bankruptcy sale in 1990. The Erck property general warranty deed to. Bass clearly recognizes the encumbrance of the royalty interests that the other McGill brothers own. Here, Re-lators are the heirs of Scott McGill, and their non-participating royalty interest in the Erck property is less than 2%.

In the mid-nineties, Bass contracted with Exxon to run a geological survey of seismic activity on the entire La Paloma Ranch. Bass has never opted to lease the land for development. The McGills claim that by refusing to lease and thus develop the land, Bass has breached an implied duty to the royalty interest holders. To prove that Bass breached this duty, the McGills claim access to Bass’ seismic data is necessary because the data will reveal whether development would be profitable. The trial court ordered production of the data subject to a protective order.

The trial court order did not expressly find that the seismic activity data are trade secrets. Bass contends the data are trade secrets, and thus, Bass sought mandamus relief from the court of appeals, which denied relief in a per curiam order. Bass now seeks relief from this Court, arguing that the data are trade secrets and that the McGills have not shown entitlement to the seismic information.

II. STANDARD OF REVIEW

“Mandamus issues only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy by law.” Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992); Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985). Thus, evaluating whether mandamus relief should be granted requires that we determine whether there has been a clear abuse of discretion by the trial court and whether an adequate appellate remedy exists. Walker, 827 S.W.2d at 839.

III. ANALYSIS

A. Abuse of Discretion

Abuse of discretion occurs when the trial court “reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.” Walker, 827 S.W.2d at 839.

In In re Continental, we held that “[w]hen trade secret privilege is asserted as the basis for resisting production, the trial court must determine whether the requested production constitutes a trade secret; if so, the court must require the party seeking production to show reasonable necessity for the requested materials.” 979 S.W.2d at 611(quoting Rare Coin-It, Inc. v. I.J.E., Inc., 625 So.2d 1277 at 1278(Fla.Dist.Ct.App.1993). If a trial court orders production once trade secret status is proven, but the party seeking production has not shown a necessity for the requested materials, the trial court’s action is an abuse of discretion. Id.

(1) Whether geological seismic data constitute trade secrets

*739 Under the first prong of In re Continental, we must determine whether the geological seismic data constitute trade secrets.

We have held that a trade secret is “any formula, pattern, device or compilation of information which is used in one’s business and presents an opportunity to obtain an advantage over competitors who do not know or use it.” Computer Assocs. Intern, v. Altai 918 S.W.2d 453, 455 (Tex.1994). However, we have never stated whether geological seismic data qualify as trade secrets.

To determine whether a trade secret exists, this Court applies the Restatement of Torts’ six-factor test:

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Cite This Page — Counsel Stack

Bluebook (online)
113 S.W.3d 735, 164 Oil & Gas Rep. 834, 46 Tex. Sup. Ct. J. 988, 2003 Tex. LEXIS 114, 2002 WL 32126139, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bass-tex-2003.