In re M-I L.L.C.
505 S.W.3d 569
| Tex. | 2016Background
- M-I L.L.C. (M-I) and National Oilwell Varo (NOV) compete in oilfield solid-control screens; M-I alleges trade secrets and bidding/pricing/customer knowledge were known by its former employee Jeff Russo.
- Russo left M-I for NOV; M-I asserted Russo breached a non-compete and possessed confidential information and threatened litigation and injunctive relief. Russo sued to declare the non-compete unenforceable; M-I counterclaimed and also sued NOV for misappropriation and tortious interference.
- At a temporary-injunction hearing M-I sought to present trade-secret evidence via witness LaTosh'a Moore and asked the court to exclude NOV’s designated representative (Federico Mezzatesta) from portions of the hearing; the trial court refused without conducting the required balancing and only ordered Mezzatesta not to disclose any trade secrets he heard.
- M-I submitted an in camera affidavit of Moore to the court of appeals as an offer of proof; the trial court later ordered production of that affidavit without first reviewing it in camera because the affidavit had not been before the trial court.
- M-I petitioned the Texas Supreme Court for mandamus relief, arguing the trial court abused its discretion by (1) refusing to exclude NOV’s representative without balancing due-process and trade-secret interests, and (2) ordering disclosure of the Moore affidavit without in camera review. The Court conditionally granted mandamus.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion by refusing to exclude NOV’s designated representative from portions of a temporary-injunction hearing involving alleged trade secrets | M-I: The trial court should have excluded Mezzatesta (or held an in camera determination) because disclosure to a competitive decision-maker risks irreparable competitive harm; Trade Secrets Act authorizes protective measures including exclusion | NOV: Due process and open-courts principles (and the witness-rule exemption for company representatives) entitle its representative to attend; exclusion would be improper secrecy like Star Chamber | The court held the trial court abused its discretion by failing to balance competing due-process and trade-secret interests before refusing exclusion; remanded to perform the required balancing |
| Whether the trial court abused its discretion by ordering production of the Moore affidavit without conducting an in camera review | M-I: The Moore affidavit—submitted only to the court of appeals—might contain trade secrets; the trial court must review confidential materials in camera before ordering disclosure | NOV/Russo: The affidavit is a witness statement/discoverable and should be produced | The court held the trial court abused its discretion; when the document is the only evidence of privilege, the trial court must examine it in camera before ordering disclosure |
Key Cases Cited
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (mandamus standard: abuse of discretion and no adequate appellate remedy)
- Mathews v. Eldridge, 424 U.S. 319 (U.S. 1976) (due-process balancing test)
- Connecticut v. Doehr, 501 U.S. 1 (U.S. 1991) (consideration of private and opposing interests in due-process analysis)
- Garcia v. Peeples, 734 S.W.2d 343 (Tex. 1987) (need to balance harm to proprietary interests before restricting dissemination of trade secrets)
- Weisel Enters. v. Curry, 718 S.W.2d 56 (Tex. 1986) (trial court must review allegedly privileged documents in camera when they alone substantiate privilege)
- Helminski v. Ayerst Labs., 766 F.2d 208 (6th Cir. 1985) (civil litigant’s right to be present analyzed under due process; exclusion may be permitted in limited circumstances)
