Fourth Court of Appeals San Antonio, Texas MEMORANDUM OPINION
No. 04-21-00584-CV
TITLE SOURCE, INC., Reporters Committee for Freedom of the Press, and Houston Forward Times, Appellants
v.
HOUSECANARY, INC., f/k/a Canary Analytics, Inc., Appellee
From the 73rd Judicial District Court, Bexar County, Texas Trial Court No. 2016CI06300 Honorable David A. Canales, Judge Presiding
Opinion by: Beth Watkins, Justice
Sitting: Rebeca C. Martinez, Chief Justice Patricia O. Alvarez, Justice Beth Watkins, Justice
Delivered and Filed: March 15, 2023
REVERSED AND RENDERED
Appellants Title Source, Inc., the Reporters Committee for Freedom of the Press, and the
Houston Forward Times 1 challenge an order granting appellee HouseCanary, Inc. f/k/a Canary
Analytics, Inc.’s amended motion to seal fourteen trial exhibits. We reverse the trial court’s order
and render judgment denying HouseCanary’s amended motion to seal.
1 We refer to appellants the Reporters Committee for Freedom of the Press and the Houston Forward Times as “the Media Intervenors.” 04-21-00584-CV
BACKGROUND
This is the third appeal to this court arising out of a dispute between HouseCanary and Title
Source. See Title Source, Inc. v. HouseCanary, Inc., 612 S.W.3d 517 (Tex. App.—San Antonio
2020, pet. denied) (op. on reh’g) (Title Source II); Title Source, Inc. v. HouseCanary, Inc., 603
S.W.3d 829 (Tex. App.—San Antonio, 2019) (Title Source I), aff’d in part and rev’d in part, 622
S.W.3d 254 (Tex. 2021). The underlying dispute revolves around Title Source’s claim that
HouseCanary breached a contract 2 and HouseCanary’s counterclaim that Title Source
misappropriated HouseCanary’s trade secrets.
HouseCanary alleged that it owned trade secret technology that estimates the value of
residential real estate. It has identified five distinct trade secrets: a data dictionary, an automated
valuation model, a similarity score, a complexity score, and a data compilation. After a jury found
that HouseCanary owned the five trade secrets and Title Source had misappropriated those secrets,
the trial court signed a judgment for HouseCanary on its misappropriation claim. Title Source II,
612 S.W.3d at 526–27. In Title Source II, we concluded that legally and factually sufficient
evidence supported the jury’s finding that HouseCanary owned the trade secrets, but we ultimately
reversed the judgment on HouseCanary’s misappropriation claim and remanded that claim for a
new trial. Id. at 530, 532. The Texas Supreme Court denied both parties’ petitions for review of
our opinion in Title Source II, and we issued our mandate in that case on September 12, 2022.
While Title Source II considered the parties’ substantive claims, Title Source I and this
appeal involve procedural questions about the protection of HouseCanary’s alleged trade secrets
during this litigation. Before the jury trial, the trial court signed a Stipulated Protective Order that
established procedures for the parties to exchange and use potentially sensitive documents and
2 The resolution of Title Source’s breach of contract claim is not relevant to this appeal.
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testimony without compromising their trade secrets and other non-public confidential information.
On April 6, 2018, after the jury trial concluded, HouseCanary filed a motion under the Stipulated
Protective Order and Texas Rule of Civil Procedure 76a asking the trial court to seal thirty exhibits
the parties had presented at trial. Title Source opposed the motion as did the Media Intervenors,
who intervened in this case in response to HouseCanary’s public notice of its motion to seal. The
trial court denied HouseCanary’s April 6, 2018 motion.
HouseCanary filed a motion to reconsider that relied solely on the Texas Uniform Trade
Secrets Act (TUTSA), expressly disclaimed reliance on Rule 76a, and limited its sealing request
to eight exhibits. After the trial court indicated its intention to seal those eight exhibits,
HouseCanary submitted a proposed order that would have sealed, either in whole or in part, the
eight exhibits listed in its motion to reconsider plus an additional six exhibits that were not listed
in the motion. Title Source objected to the proposed order, arguing it would grant more relief than
HouseCanary had requested. On July 3, 2018, the trial court signed an order that sealed eight
exhibits—PX 49, PX 64, DX 95, DX 342, DX 561, DX 759, DX 800, and DX 835—in their
entirety. It also ordered six additional exhibits—PX 108, PX 345, DX 101, DX 136, DX 421, and
DX 828—redacted “so that the trade secrets contained therein are removed and sealed[.]”
Title Source and the Media Intervenors appealed. We reversed the trial court’s July 3, 2018
order and rendered judgment denying HouseCanary’s motion to reconsider. Title Source I, 603
S.W.3d at 841. This court’s majority opinion in Title Source I concluded that the trial court erred
by “seal[ing] records without applying the Rule 76a standards and procedures, as agreed and
ordered in the [Stipulated Protective Order].” Id.
The Texas Supreme Court affirmed our judgment in part and reversed it in part. See
HouseCanary, Inc. v. Title Source, Inc., 622 S.W.3d 254, 266 (Tex. 2021). The supreme court held
that when a party moves to seal court records that contain alleged trade secrets, TUTSA displaces
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Rule 76a’s “substantive sealing standards”—specifically, the rule’s provision “that court records
are presumed to be open to the public”—but not its procedural requirements. Id. at 259–63.
Because the trial court did not apply the non-displaced portions of Rule 76a to HouseCanary’s
motion to reconsider, the supreme court affirmed our conclusion that the trial court erred by
granting the motion. Id. at 265–66. However, because the trial court had “not had an opportunity
to exercise its discretion under” a legal standard that “combines TUTSA’s presumption with Rule
76a’s non-displaced provisions,” the supreme court reversed our rendition of judgment denying
HouseCanary’s motion and remanded the matter to the trial court to allow HouseCanary “to file a
new motion under the correct standard.” Id. at 266.
HouseCanary filed a new motion to seal, and it later amended that motion. HouseCanary
asked the trial court “to seal the same 14 exhibits containing trade secret information that the Court
sealed on July 3, 2018[.]” Title Source and the Media Intervenors filed written responses, and
HouseCanary filed individual replies to each response. On December 10, 2021, the trial court
signed an order that granted HouseCanary’s amended motion and sealed all fourteen exhibits in
their entirety. Title Source and the Media Intervenors timely filed this appeal.
ANALYSIS
In four issues, Title Source argues the trial court abused its discretion by: (1) modifying
the Stipulated Protective Order and disregarding HouseCanary’s failure to comply with the
original terms of the Stipulated Protective Order; (2) sealing the fourteen exhibits without a
showing that “no less restrictive means” would protect HouseCanary’s interest in the alleged trade
secrets; (3) granting HouseCanary’s amended motion to seal without a showing of changed
circumstances; and (4) “sealing documents already in the public domain . . . in violation of the
First Amendment.” In two issues, the Media Intervenors argue that sealing the exhibits violated
the First Amendment—in part, because the sealing order is not “narrowly tailored”—and that the
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trial court erred by amending the Stipulated Protective Order. We will begin by considering Title
Source’s second issue.
Standard of Review
We review a trial court’s order sealing records under Rule 76a for abuse of discretion.
HouseCanary, 622 S.W.3d at 259. A trial court abuses its discretion if its ruling is arbitrary,
unreasonable, or issued “without supporting evidence.” Bocquet v. Herring, 972 S.W.2d 19, 21
(Tex. 1998); see also Gen. Tire, Inc. v. Kepple, 970 S.W.2d 520, 525 (Tex. 1998). Additionally,
“[a] trial court has no ‘discretion’ in determining what the law is or applying the law to the facts.”
Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). “With respect to factual matters, a trial court
abuses its discretion if, under the record, it reasonably could have reached only one decision and
it failed to do so.” Clear Channel Commc’ns, Inc. v. United Servs. Auto. Ass’n, 195 S.W.3d 129,
134 (Tex. App.—San Antonio 2006, no pet.).
Applicable Law
Texas Rule of Civil Procedure 76a provides that court records “are presumed to be open to
the general public” and may be sealed only upon a showing of, inter alia, “a specific, serious and
substantial interest which clearly outweighs . . . this presumption of openness[.]” TEX. R. CIV. P.
76a(1)(a). TUTSA, however, requires a trial court to “preserve the secrecy of an alleged trade
secret by reasonable means.” TEX. CIV. PRAC. & REM. CODE ANN. § 134A.006(a). “There is a
presumption in favor of granting protective orders to preserve the secrecy of trade secrets.” Id. For
purposes of complying with TUTSA’s presumption, “[p]rotective orders may include provisions
limiting access to confidential information to only the attorneys and their experts, holding in
camera hearings, sealing the records of the action, and ordering any person involved in the
litigation not to disclose an alleged trade secret without prior court approval.” Id. The Texas
Supreme Court has held that TUTSA’s presumption in favor of protective orders conflicts with,
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and thus displaces, Rule 76a’s presumption that court records are generally open to the public.
HouseCanary, 622 S.W.3d at 261.
But TUTSA “does not provide an independent, self-contained pathway for sealing court
records” and “prescribes no procedures for parties or courts to follow in using these means.” Id. at
256, 260. As a result, the Texas Supreme Court concluded that TUTSA “leaves much of Rule 76a
in place” and does not displace Rule 76a’s procedural requirements. Id. at 262–63. Those
procedural requirements include, inter alia, a showing that “no less restrictive means than sealing
records will adequately and effectively protect the specific interest asserted.” TEX. R. CIV. P.
76a(1)(b); HouseCanary, 622 S.W.3d at 262–63.
“‘The party seeking to seal the court records must prove the [non-displaced] elements of
rule 76a by a preponderance of the evidence.’” Musculoskeletal Imaging Consultants, LLC v. Jar
Enters., Inc., 631 S.W.3d 739, 742 (Tex. App.—San Antonio 2021, no pet.) (quoting Upjohn Co.
v. Freeman, 906 S.W.2d 92, 96 (Tex. App.—Dallas 1995, no writ)); see also TEX. R. CIV. P.
76a(7). This court has held, in an opinion citing HouseCanary, that “generalized allegations”
regarding Rule 76a’s requirements will not support a conclusion that no less restrictive means than
sealing would adequately protect a trade secret. See Musculoskeletal Imaging, 631 S.W.3d at 742–
43; see also Volvo Car Corp. v. Marroquin, No. 13-06-00070-CV, 2009 WL 3647348, at *4–5
(Tex. App.—Corpus Christi–Edinburg Nov. 5, 2009, pet. denied) (mem. op., per curiam) (holding,
in a case involving allegations of trade secrets, that “blanket assertions that a total seal is
necessary” did not satisfy Rule 76a’s “no less restrictive means” requirement).
Application
In its December 10, 2021 sealing order, the trial court concluded, “HouseCanary
established that there are no less restrictive means than sealing the trade secret documents that will
adequately and effectively protect HouseCanary’s information.” The order did not state the reasons
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underlying this conclusion. See TEX. R. CIV. P. 76a(6) (motion seeking to seal court records “shall
be decided by written order, open to the public, which shall state . . . the specific reasons for
finding and concluding whether the showing required by [Texas Rule of Civil Procedure 76a(1)]
has been made”). 3
In its amended motion to seal, HouseCanary argued that the trial court had previously
concluded that HouseCanary’s alleged “trade secrets are reflected in the 14 trial exhibits at issue.”
Based on its assertion that two of our sister courts had “concluded that sealing entire documents is
the least restrictive method of protecting a party’s trade secret information,” 4 HouseCanary’s
amended motion and its reply to the Media Intervenors’ response stated that “sealing the 14 trial
exhibits is the least restrictive means of protecting HouseCanary’s trade secret information.” In its
reply to Title Source’s response, HouseCanary argued, “The entirety of each of the fourteen
exhibits meets the TUTSA sealing standard and must be sealed in their entirety to protect those
trade secrets.” HouseCanary did not, however, present or cite any “testimony or evidence
regarding whether the [exhibits containing the alleged trade secrets] could be redacted while still
protecting its interest.” Marroquin, 2009 WL 3647348, at *4–5; see also Musculoskeletal Imaging,
631 S.W.3d at 743 (“Generally, motions, arguments of counsel, and bare assertions are not
evidence.”) (internal quotation marks and brackets omitted). Instead, HouseCanary’s motion and
replies presented the kind of “generalized allegations” that we have previously held cannot satisfy
3 HouseCanary argues that because the trial court’s order finds that less restrictive means than sealing would not protect HouseCanary’s asserted interest, “no further discussion was required” in the order. This argument is directly contrary to Rule 76a(6)’s plain language. See TEX. R. CIV. P. 76a(6). 4 Both of the opinions HouseCanary cited for this proposition below indicate that the movants in those cases presented affidavits or other testimonial evidence in support of their motions to seal. See Witt v. Michelin N. Am., Inc., No. 02- 18-00390-CV, 2020 WL 5415228, at *9–11 (Tex. App.—Fort Worth Sept. 10, 2020, no pet.) (mem. op.); Hillwood Inv. Props. III, Ltd. v. Radical Mavericks Mgmt., LLC, No. 05-11-01470, 2014 WL 4294968, at *4 (Tex. App.— Dallas Aug. 21, 2014, no pet.) (mem. op.). Neither Witt nor Hillwood suggests courts should presume that permanently sealing documents in their entirety is the least restrictive means to protect alleged trade secrets. To the contrary, the Witt court held that a trial court abused its discretion by sealing a set of documents that the movant’s own redactions showed “could be protected by less restrictive means.” Witt, 2020 WL 5415228, at *11.
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Rule 76a’s “no less restrictive means” requirement. See Musculoskeletal Imaging, 631 S.W.3d at
743.
Furthermore, both the appellate record and HouseCanary’s own arguments in this appeal
show that sealing all fourteen exhibits was not the least restrictive means to protect HouseCanary’s
asserted interest. For example, the record shows that in the July 3, 2018 order at issue in Title
Source I, the trial court determined that six of the fourteen exhibits—PX 108, PX 345, DX 101,
DX 136, DX 421, and DX 828—could be redacted in a way that sufficiently protected
HouseCanary’s interest. The December 10, 2021 order at issue in this appeal does not explain why
the trial court decided to reconsider its earlier conclusion as to those six exhibits, and neither the
supreme court’s opinion in HouseCanary nor this court’s opinion in Title Source I suggested that
the trial court’s earlier conclusion on this point was erroneous. See generally HouseCanary, 622
S.W.3d at 256–67; Title Source I, 603 S.W.3d at 832–41.
Additionally, HouseCanary has represented to this court that it “no longer seeks protection
for” two exhibits, DX 342 and DX 759, which it contends were inadvertently disclosed in a
separate lawsuit. The record shows that before the trial court signed the December 10, 2021 order
at issue in this appeal, Title Source informed the court that HouseCanary had made the same
concession regarding DX 342 and DX 759 during the proceedings in the Texas Supreme Court.
When a party concedes that a less restrictive alternative than sealing is available, that party cannot
meet its burden under Rule 76a(1)(b). See BP Prods. N. Am., Inc. v. Hous. Chronicle Publ’g Co.,
263 S.W.3d 31, 35 (Tex. App.—Houston [1st Dist.] 2006, no pet.).
HouseCanary also represents to this court that it “no longer seeks protection for
approximately 44 pages in the twelve [remaining] exhibits at issue” because “[t]hese pages do not
contain trade-secret material, and do not disclose any element of HouseCanary trade secrets.” See
id. HouseCanary identifies these forty-four pages as “eight transmittal emails, three mostly blank
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pages, two blank pages, a master software license agreement, and an amendment to a master
software license agreement.” In contrast to DX 342 and DX 759, the record does not show that
HouseCanary made any explicit concessions regarding these forty-four pages before it filed its
brief in this appeal. Nevertheless, after reviewing the pages in question, we conclude the trial court
could not have reasonably concluded that sealing those pages was the least restrictive means to
protect HouseCanary’s alleged trade secrets. See TEX. R. CIV. P. 76a(1)(b); Clear Channel, 195
S.W.3d at 134. For example, while six of the eight “transmittal emails” refer to documents attached
to the emails, the emails themselves either do not describe those documents or describe them in
general terms that are similar to or less detailed than the descriptions in HouseCanary’s public
notice of its amended motion to seal. One of the transmittal emails mentions, but does not describe,
a “data dictionary”; three of the emails mention the words “complexity” or “complexity score” but
do not elaborate on or explain those terms; and four of the emails do not specifically mention any
of HouseCanary’s five alleged trade secrets. Two of the emails contain no message and show only
the sender and recipients.
HouseCanary argues that its current recognition that portions of the sealed exhibits are not
entitled to protection does not support reversal of the trial court’s order because the sealing of the
non-protected information “was not harmful and of only de minimus significance.” But both the
supreme court and this court have held that a sealing order must be reversed where, as here, the
record shows the movant has not satisfied Rule 76a’s non-displaced provisions. See HouseCanary,
622 S.W.3d at 264–66; Musculoskeletal Imaging, 631 S.W.3d at 743. Nothing in the text of Rule
76a or the supreme court’s opinion remanding this matter to the trial court suggests that we may
overlook “de minimus” violations of Rule 76a’s requirements. See TEX. R. CIV. P. 76a(1)(b);
HouseCanary, 622 S.W.3d at 264–66; see also Burrhus v. M&S Supply, Inc., 933 S.W.2d 635, 640
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(Tex. App.—San Antonio 1996, writ denied) (we apply rules of civil procedure as they are
written).
HouseCanary contends on appeal that redaction “is neither practical nor possible” to
sufficiently protect the information that it argues was properly sealed. It further contends that under
some circumstances, “redaction may be so extensive that is effectively a full sealing.” But
HouseCanary did not raise these arguments below. See TEX. R. APP. P. 33.1(a). We therefore
decline to consider them on appeal. See Watts v. Watts, 396 S.W.3d 19, 23 (Tex. App.—San
Antonio 2012, no pet.) (“In order to preserve error for appellate review, a party’s argument on
appeal must comport with its argument in the trial court.”).
HouseCanary also argues that “[Title Source] and the Media Intervenors do not explain
how redactions could be accomplished while still protecting the alleged secrets.” But Rule 76a
specifically provides that “the burden of making the showing required by paragraph 1 [which
includes the “no less restrictive means” provision], shall always be on the party seeking to seal
records.” TEX. R. CIV. P. 76a(7); see also Musculoskeletal Imaging, 631 S.W.3d at 743 (holding
movant bore burden to show sealing was warranted). HouseCanary cites no authority for the
proposition that Title Source or the Media Intervenors bore a burden to suggest specific redactions
or other protective measures. See TEX. R. APP. P. 38.1(i).
Finally, we note that HouseCanary argued below that it sought to seal only fourteen of
1,474 exhibits the parties presented at trial. No matter how many exhibits a party seeks to seal, that
party must still meet the requirements of Rule 76a with regard to each exhibit. Toyota Motor Sales,
U.S.A., Inc. v. Reavis, No. 05-19-00284-CV, 2021 WL 389094, at *8 (Tex. App.—Dallas Feb. 4,
2021, pet. granted, judgm’t vacated w.r.m.) (mem. op.). HouseCanary bore the burden to show
that sealing the entirety of the fourteen exhibits in question was the least restrictive means to
protect its asserted interest. See id.; see also TEX. R. CIV. P. 76a(1)(b), (7). HouseCanary simply
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did not show that “no less restrictive means than sealing [all fourteen exhibits] will adequately and
effectively protect” its interest in the alleged trade secrets. TEX. R. CIV. P. 76a(1)(b);
Musculoskeletal Imaging, 631 S.W.3d at 743. Because HouseCanary did not carry its burden under
Texas Rule of Civil Procedure 76a(1)(b), the trial court abused its discretion by granting
HouseCanary’s amended motion to seal. See Musculoskeletal Imaging, 631 S.W.3d at 743.
Having concluded that we must reverse the trial court’s order, we must now determine
whether to remand this matter for further proceedings or to render judgment denying
HouseCanary’s amended motion to seal. See TEX. R. APP. P. 43.2, 43.3. As HouseCanary notes,
Rule 76a provides that in an appeal from a sealing order, an “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). Similarly, the Texas Rules of Appellate
Procedure permit us to “modify the trial court’s judgment and affirm it as modified.” TEX. R. APP.
P. 43.2(b). We have previously held, however, that when a “trial court seal[s] court records without
a sufficient basis to conclude the requirements of Rule 76a were met,” rendition of judgment
denying a motion to seal is an appropriate disposition. See Musculoskeletal Imaging, 631 S.W.3d
at 741, 744. Additionally, we rendered judgment denying HouseCanary’s sealing motion in the
first iteration of this dispute, and the supreme court noted that our reasoning—that the trial court
erred by sealing records without applying Rule 76a’s requirements—“supported that disposition.”
Compare Title Source I, 603 S.W.3d at 841, with HouseCanary, 622 S.W.3d at 266. Because we
have again held that Rule 76a’s requirements were not satisfied, and because we see no changed
circumstances that would permit the trial court to consider a third sealing motion, we conclude
rendition of judgment is warranted here. See TEX. R. CIV. P. 76a(7); cf. HouseCanary, 622 S.W.3d
at 266 (remanding to allow HouseCanary to file, and the trial court to consider, a new sealing
motion in light of the supreme court’s “clarification of the applicable legal standard”); see also
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TEX. R. APP. P. 43.3; TEX. CIV. PRAC. & REM. CODE § 134A.006(a) (“In an action under [TUTSA],
a court shall preserve the secrecy of an alleged trade secret by reasonable means.”) (emphasis
added).
HouseCanary suggests that a judgment denying its motion to seal means that “a failure to
redact in the manner an appellate court later determines should have happened forfeits the
information’s security.” We disagree. This is not a case where HouseCanary attempted to redact
exhibits but ultimately came up short. Instead, HouseCanary asserted below that the only way to
protect its alleged trade secrets was to permanently seal all fourteen exhibits in their entirety.
HouseCanary did not present any evidence to support that assertion and, as HouseCanary now
recognizes, the exhibits themselves do not support that assertion. Where, as here, the party seeking
to seal documents does not satisfy its burden on one of Rule 76a’s plain requirements, Rule 76a
requires the denial of the motion to seal. TEX. R. CIV. P. 76a(1)(b), (7); see also TEX. R. APP. P.
43.3. As the supreme court noted, “[T]he people of Texas have an interest in what goes on in their
courts, and TUTSA does not eliminate that interest or adopt different sealing procedures for
alleged trade secrets.” HouseCanary, 622 S.W.3d at 264, n.7.
For these reasons, we sustain Title Source’s second issue. Because our resolution of this
issue is dispositive, we need not address Title Source’s and the Media Intervenors’ remaining
arguments. TEX. R. APP. P. 47.1.
CONCLUSION
We reverse the trial court’s sealing order and render judgment denying HouseCanary’s
amended motion to seal.
Beth Watkins, Justice
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