On April 30, 2021, the Supreme Court of Texas upheld a ruling by the San Antonio Court of Appeals to reverse a sealing order and remanded the matter of sealing to the trial court.
After a business dispute involving two companies—Title Source, now known as Amrock, and HouseCanary—that prize algorithms, software, and data as proprietary trade secrets concluded in 2018, the trial court ordered several exhibits that had been admitted at trial by both parties to be sealed or redacted. In response to HouseCanary’s public notice of its request to seal evidence presented in open court, Jackson Walker’s client, the Reporters Committee for Freedom of the Press, in cooperation with the Houston Forward Times, intervened in the trial court and filed an interlocutory appeal in the San Antonio Court of Appeals.
Court of Appeals Reverses Sealing Order
On July 10, 2019, the San Antonio Court of Appeals delivered an opinion in favor of the Reporters Committee. Justice Rebeca C. Martinez authored the opinion, with a concurring opinion by Chief Justice Sandee Bryan Marion, which held that the appeals court had jurisdiction over the appeal, that Texas Rule of Civil Procedure Rule 76a and the Texas Uniform Trade Secrets Act (TUTSA) do not conflict, and that HouseCanary failed to follow the protective order agreed to by Title Source (Amrock) and HouseCanary before trial, which stipulated the procedures for sealing alleged trade secrets.
As a result, the appeals court held that the trial court abused its discretion when it sealed records without applying the agreed-upon procedures, and set aside the trial court’s order sealing the exhibits – making the exhibits open records that can be covered by the media because of protections provided by the First Amendment.
Texas Supreme Court Affirms Reversal
In a 22-page opinion authored by Justice Brett Busby on April 30, 2021, the Supreme Court held that the trial court abused its discretion in ordering the exhibits sealed. After reviewing the relevant provisions of Rule 76a and TUTSA and analyzing the extent to which the provisions conflict, the Court wrote:
“Many of Rule 76a’s provisions are not in conflict with TUTSA, which does not address sealing procedures at all. Thus, TUTSA does not provide a separate, self-contained pathway—independent of Rule 76a—for seeking and ordering the sealing of court records. If it did, we would be without jurisdiction to consider HouseCanary’s petition for review, which stems from an appeal of the trial court’s sealing order as authorized by Rule 76a(8).
Because the trial court concluded otherwise and did not apply the non-displaced provisions of Rule 76a in ruling on HouseCanary’s motion to reconsider, we hold the court abused its discretion in ordering the exhibits sealed.”
The Court also noted:
“More importantly, [Rule 76a’s] procedures serve our fundamental commitment to open courts, which is rooted in the common law and the First Amendment. The public’s right of access to judicial proceedings ‘is a fundamental element of the rule of law’ because ‘monitoring the exercise of judicial authority’ helps ‘maintain the integrity and legitimacy of an independent Judicial Branch.’
Nothing about TUTSA’s presumption in favor of protective orders signals that the Legislature wanted courts to abandon this commitment and their procedures any time a trade secret is alleged. Recognizing a duty to seal with no accompanying procedures would rewrite the Legislature’s presumption, turning it into a conclusive command. Procedures allowing public scrutiny and adversary testing of requests to seal court records do not conflict with a rebuttable presumption that some form of protection is proper; to the contrary, they are essential for its proper application.”
In returning the matter of retroactively sealing the exhibits, the Court stated “it would be premature to consider these constitutional and common-law objections” before the trial court has applied the non-displaced provisions of Rule 76a.
Following the Supreme Court’s decision, Jackson Walker partner Chip Babcock, who argued the case for the Reporters Committee, said, “This is an important win for the public and the news media. The Supreme Court reaffirmed Texas’ long commitment to open government through its rule guaranteeing access to judicial records recognizing, at the same time, that there can be business interests in legitimate, properly protected trade secrets. The Jackson Walker team was pleased to have achieved this result on behalf of our client the Reporters Committee for Freedom of the Press.”
“The Supreme Court reaffirmed Texas’ long commitment to open government through its rule guaranteeing access to judicial records recognizing, at the same time, that there can be business interests in legitimate, properly protected trade secrets.”
The case is HouseCanary fka Canary Analytics v. Title Source, Reporters Committee for Freedom of the Press and Houston Forward Times. For more information about the suit, visit the following articles:
- Law360: “Texas Justices Kick Back Dispute Over Trade Secret Sealing” (subscription required)
- The Texas Lawbook: “SCOTX Preserves 30-Year-Old Trade Secrets Rule” (subscription required)
- Southeast Texas Record: “Texas Supreme Court affirms ruling reversing sealing order in appeal over HouseCanary trade secrets“
Meet Our Team
Charles L. Babcock is a nationally recognized trial and appellate attorney. Chip’s practice experience includes bet-the-company litigation, First Amendment litigation, commercial litigation, intellectual property litigation, government investigations, media litigation, and appellate litigation. In addition to receiving the Ronald D. Secrest Outstanding Trial Lawyer Award from the Texas Bar Foundation, Chip has been named a “25 Greatest Texas Lawyer of the Past Quarter Century” by Texas Lawyer and a Fellow of the American College of Trial Lawyers.
Amanda N. Crouch argued the case in the San Antonio Court of appeals for the Reporter’s Committee. She is a commercial litigator who regularly practices in state and federal court. Amanda has had the opportunity to demonstrate high-level responsibility in her practice that includes working directly with clients. She has gained direct experience handling injunctive relief, summary judgement proceedings, taking and defending fact and expert witness depositions, and leading mediations.
Joshua A. Romero was on brief in both the San Antonio Court of Appeals and the Texas Supreme Court. He is a trial and appellate lawyer who has represented both plaintiffs and defendants in state and federal courts across the country in complex commercial litigation and First Amendment litigation. Josh has successfully tried cases ranging from multimillion-dollar corporate disputes and consumer fraud cases to construction cases. In 2015, he assisted his clients in obtaining the largest settlement in Texas and the fourth largest settlement in the United States, as featured in the National Law Journal.
For more information about Jackson Walker’s experience handling trial and appellate litigation related to First Amendment and media law, intellectual property, and trade secrets, visit our Trial & Appellate Litigation practice page.