The Texas Supreme Court issued one opinion with today’s order list, granted two new petitions to be argued in December, and invited the Solicitor General to give the views of the State about whether the privilege that attaches to civil investigative demands extends to private litigation.

As always, briefs and opinions are available through the “DB” link.

What’s needed to overcome trade secret protection when trying to prove negligence?

In re Union Pacific Railroad Co., No. 08-0740 (DB)

This is a negligence case brought against a railroad for damages caused by its handling of hazardous cargo.

As part of proving negligence, the plaintiffs argued that the railroad should have moved the cars containing these chemicals farther back in the train and also should not have positioned those cars near steel cars that might puncture their tanks.

The railroad admitted that it had flexibility about how to arrange the cars and that it charged more for handling hazardous materials.

The plaintiffs then requested the railroad’s exact rates for that period for handling that class of materials. The railroad filed for a protective order, which the trial court denied. The court of appeals denied mandamus review. In a per curiam opinion, the Texas Supreme Court grants mandamus relief against disclosure.

The Texas Supreme Court concluded that these rates were a trade secret, in part because of the unique regulatory environment in which railroads operate. The Court then concluded that the plaintiffs had not carried their burden of proof to show why they needed the exact rates to make their negligence arguments.

As the Court noted, the railroad had conceded the points in the abstract — that they charged more and that they had flexibility about where to place the cars. With that in mind, “It is unclear to us, and Constanzo has not explained, why she needs the specific rate structures to advance this negligence theory.” Thus, the Court concluded, the plaintiff had failed to establish that this information was “material and necessary” to the case.

Petition about assignment of lottery winnings

Texas Lottery Commission v. First State Bank of DeQueen; Stone Street Capital, Inc.; and Cletius L. Irvan, No. 08-0523 (DB) [to be argued Dec. 16, 2009]

This petition asks if it is legal for a lottery winner to assign a future stream of winnings to a structured-settlement company in exchange for a lump-sum payment.

The Legislature passed a bill amending the Lottery Act to limit those assignments. During the very same session, the Legislature also passed amendments to the UCC that generally strike down anti-assignment laws.

A divided Third Court held that the Texas UCC controlled this question and rendered the relevant parts of the Lottery Act ineffective.

(Disclosure: I was counsel for the Lottery Commission in the court of appeals, before I moved to private practice.)

Must a product manufacturer indemnify downstream sellers of the item for the amount of their settlements?

Fresh Coat, Inc. v. K-2, Inc., No. 08-0592 (DB) [to be argued Dec. 17, 2009]

This products-liability indemnity lawsuit is between a manufacturer of stucco products and the firm that installed the stucco on houses. The installation firm had already settled with the homeowner.

The dispute is about how the statutory indemnity provided by Section 82.002(a) of the Texas Civil Practice & Remedies Code applies to this situation. That provision states:

(a) A manufacturer shall indemnify and hold harmless a seller against
loss arising out of a products liability action, except for any loss
caused by the seller’s negligence, intentional misconduct, or other
act or omission, such as negligently modifying or altering the
product, for which the seller is independently liable.

Both parties ended up filing petitions for review. The issues include whether this installer was a “seller” of the goods; whether the statutory provision applies to losses incurred pursuant to contractual indemnity clauses the installer had entered; and what must be established to show that the manufacturer is independently liable for this claim.

CVSG: Are materials produced for a civil investigative demand privileged from disclosure in private antitrust litigation?

In re Memorial Hermann Healthcare System and Memorial Hermann Hospital System, No. 08-1046 (DB)

The Texas statute governing state civil investigative demands (CIDs) creates a privilege against disclosure of those materials by the Attorney General. The relator argues that the statute also gives the target of the CID a privilege against disclosing those materials in discovery in private litigation.

The Fourteenth Court rejected that legal argument. It further concluded that this particular request was not overbroad:

Both the attorney general and Stealth may prosecute antitrust actions against Memorial Hermann for the same statutory violations. Memorial Hermann has not demonstrated that all or part of the CID materials do not relate to Stealth’s claims in this lawsuit.

The Solicitor General has been invited to file a brief in this case expressing the views of the State.