COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00179-CV
IN RE SOUTHWEST AIRLINES CO. RELATORS
AND AIRTRAN AIRWAYS, INC.
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ORIGINAL PROCEEDING
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MEMORANDUM OPINION1
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I. Introduction
In two issues, Relators Southwest Airlines Co. and AirTran Airways, Inc.
ask this court for relief from Respondent the Honorable Donald J. Cosby’s order
requiring them to produce documents in response to Real Party in Interest
American Airlines Inc.’s third-party discovery requests. We conditionally grant
relief, modifying Respondent’s order to allow Southwest and AirTran to first file a
1
See Tex. R. App. P. 47.4.
privilege log for the documents that they claim are privileged and to allow
Respondent the opportunity to then review the documents in camera to
determine which, if any, are non-privileged.
II. Background
American and Sabre, a global travel technology company, have been
engaged in litigation with regard to American’s efforts to connect directly to
consumers and Sabre’s desire to maintain a legacy airline reservation system.
American sued Sabre, alleging the following causes of action: breach of
contract; five violations of the Texas Free Enterprise & Antitrust Act of 1983
(group boycott, conspiracy to monopolize, monopoly, agreement in restraint of
trade, and agreement not to compete); tortious interference with contract; and
tortious interference with prospective contractual relations.
Southwest Airlines and AirTran, which Southwest recently acquired, are
American’s competitors; they are not parties to the suit between American and
Sabre. American sought third-party discovery from Southwest and AirTran, who
refused to produce anything, leading American to file a motion to compel seeking
documents that Southwest and AirTran claim are confidential or trade secrets.2
Neither Southwest nor AirTran provided a privilege log.
At the conclusion of the hearing on American’s motion to compel,
Respondent asked the parties to work out a new protective order, ordered
2
Southwest and AirTran also claimed that the requests for production were
irrelevant, overly broad, and unduly burdensome.
2
Southwest and AirTran to produce documents subject to an adequate modified
protective order, and said that he would sign the order granting the motion to
compel after he reviewed the new protective order. He concluded the hearing by
stating,
. . . I think that I should grant the motion to compel, but I don’t think I
should grant the motion to compel with the existing protective
order. . . .
. . . I think there’s some information that will be useful to this case.
But my concern that I have as I looked at the existing protective
order . . . is that Southwest is not protected.[3]
And I am—I was very concerned, because I know Southwest is—it’s
not—it’s not a secret that—that a lot of the air carriers want to be like
Southwest, and so they want to find out how they do it. It’s more
than just, you know, quick boarding passes . . .
....
. . . I think the protective order will take care of what you want. I
really believe that. And I think—I think American has met their
burden to show that they need it.
Respondent signed the order compelling production and the new protective
order.
In the order compelling production, Respondent ordered Southwest and
AirTran to produce “non-privileged” documents responsive to American’s
subpoena within fourteen days from the date of the order and overruled
Southwest and AirTran’s objections. Concurrent with the order compelling
production, Respondent also entered a second amended protective order to
3
Southwest and AirTran were not involved in the drafting of the original
protective order between American and Sabre.
3
provide protection for confidential documents produced by Southwest and
AirTran. In the second amended protective order, “confidential information” was
defined as
trade secrets, sensitive business or financial information; confidential
research, development or commercial information; and confidential
or private personal information the disclosure of which would greatly
negatively impact specific, serious and substantial interests of the
Party or Person to whom the Confidential Information belongs and
would not have any effect on the health or safety of the public.
This court issued a stay of Respondent’s order compelling production to consider
Southwest and AirTran’s mandamus petition.
III. Privilege
Southwest and AirTran claim that Respondent’s order will force them to
reveal their trade secrets and to produce documents not relevant or reasonably
calculated to lead to the discovery of admissible evidence.
American responds that Southwest and AirTran never properly asserted
the trade-secret privilege; that Southwest made implausible assertions that every
single document that fell within the scope of the document requests was a
privileged trade secret; that the narrowed set of requests on which Respondent
granted the motion to compel seeks the production of documents that are
necessary for a fair adjudication of key issues in the underlying case; and that
the new protective order in the case is indisputably sufficient, after Respondent
amended the existing protective order to provide additional protections—at
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Southwest’s and AirTran’s request—regarding the confidentiality of the
information that may be contained in the requested documents.
A. Standard of Review and Applicable Law
Mandamus will issue to correct a discovery order if the order constitutes a
clear abuse of discretion and there is no adequate remedy by appeal. In re
Colonial Pipeline Co., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding); In re
Kings Ridge Homeowners Ass’n, Inc., 303 S.W.3d 773, 778 (Tex. App.—Fort
Worth 2009, orig. proceeding). A clear abuse of discretion warranting correction
by mandamus occurs when a court’s decision is without basis or guiding
principles of law. Kings Ridge, 303 S.W.3d at 778. With respect to resolution of
factual issues or matters committed to the trial court’s discretion, the reviewing
court may not substitute its judgment for that of the trial court. Id. And even if
the reviewing court would have decided the issue differently, it cannot disturb the
trial court’s decision unless that decision is shown to be arbitrary and
unreasonable. Id. A trial court abuses its discretion by ordering discovery that
exceeds that permitted by the rules of procedure. In re CSX Corp., 124 S.W.3d
149, 152 (Tex. 2003) (orig. proceeding).
Under rules of civil procedure 205.1 and 205.3, Southwest and AirTran can
be compelled to produce documents as non-parties. Tex. R. Civ. P. 205.1,
205.3. And per rule 205.3(d), “[t]he nonparty must respond to the notice and
subpoena in accordance with rule 176.6.” Tex. R. Civ. P. 205.3(d). Rule
176.6(c) states that “[a] person may withhold material or information claimed to
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be privileged but must comply with Rule 193.3.” Tex. R. Civ. P. 176.6(c)
(emphasis added); see also In re Certain Underwriters at Lloyd’s London, 294
S.W.3d 891, 903 (Tex. App.—Beaumont 2009, orig. proceeding [mand. denied])
(“By employing the term ‘party who produces,’ we do not perceive any intent by
the drafters of Rule 193.3(d) to constrict the Rule’s application solely to those
that are named as parties in a suit.”).
Rule 193.3 requires that a party who claims that material or information
responsive to written discovery is privileged state in the response to discovery or
in a separate document: (1) that information or material responsive to the
request has been withheld; (2) the request to which the information or material
relates; and (3) the privilege or privileges asserted. Tex. R. Civ. P. 193.3(a).
The party seeking discovery may then serve a written request that the
withholding party identify the information and material withheld, and within fifteen
days of service of that request, the withholding party must serve a response that:
(1) describes the information or materials withheld that, without revealing the
privileged information itself or otherwise waiving the privilege, enables other
parties to assess the privilege’s applicability, and (2) asserts a specific privilege
for each item or group of items withheld. Tex. R. Civ. P. 193.3(b). Further, when
the 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 trial court must then require the party seeking production to
show reasonable necessity for the requested materials. In re Bass, 113 S.W.3d
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735, 738 (Tex. 2003) (orig. proceeding) (quoting In re Cont’l Gen. Tire, Inc., 979
S.W.2d 609, 611 (Tex. 1998) (orig. proceeding)). Rule 193.4 provides for a
hearing with regard to assertions of privilege and for in camera review if
determined necessary by the trial court. Tex. R. Civ. P. 193.4.
B. Analysis
Respondent ordered Southwest and AirTran to produce “non-privileged
documents” responsive to the categories in American’s subpoena. However,
Southwest and AirTran never produced a privilege log in response to American’s
request for one,4 and as no documents were produced, Respondent could not
review any of the documents in camera to determine whether the privilege
applied. Therefore, Respondent could make no ruling on which documents
would constitute the “non-privileged documents” recited in his order. Cf. In re
Samson Lone Star, LLC, No. 06-10-00050-CV, 2010 WL 3008670, at *1, 4 (Tex.
App.—Texarkana Aug. 3, 2010, orig. proceeding) (conditionally granting
mandamus relief when trial court’s order was overbroad and indefinite,
constituting an abuse of discretion; the order for “all documents responsive to”
request number 11 failed to specify which documents were responsive and the
order’s general nature did not allow the appellate court to consider whether the
4
American responded to Southwest’s privilege claims in a letter to
Southwest, stating that it “should create a privilege log under the Texas Rules for
any documents it withholds on that basis, and American will challenge privilege
assertions as may be appropriate.” On the first page of its reply to Southwest’s
response to American’s motion to compel, American again asked Southwest and
AirTran to comply with rule 193.3 and provide a log of specific documents with
sufficient information to challenge trade secret claims as to those items.
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trade secret issue was properly preserved, proven, or rebutted as to the
“responsive” documents even despite production of a privilege log). In essence,
the order leaves the parties in the same position that they were in before the
order—with Southwest and AirTran contending that everything is privileged and
that they should not have to produce anything, and American contending that
less than everything is privileged and that Southwest and AirTran should have to
produce something.
Although neither Southwest nor AirTran complied with rule 193.3, because
Respondent has not had the opportunity to evaluate the actual materials sought,
we conditionally grant relief to allow the parties and Respondent the opportunity
to follow the procedure set out in rules 193.3 and 193.4. Cf. In re Rio Grande
Reg’l Hosp., No. 13-11-00058-CV, 2011 WL 1844453, at *1, 5 (Tex. App.—
Corpus Christi Mar. 14, 2011, orig. proceeding) (mem. op.) (noting that in support
of its privilege argument, nonparty hospital produced 1,000 pages of documents
for in camera inspection by the trial court along with a privilege log purporting to
detail the nature of the documents and stating which privilege was being claimed
with respect to each in response to subpoena); see also In re Monsanto Co., 998
S.W.2d 917, 924–25 (Tex. App.—Waco 1999, orig. proceeding) (stating that
within fifteen days after receiving the request, the withholding party must produce
a “privilege log” and noting that the withholding party had complied when it
served privilege logs that identified each document by Bates number, number of
pages, date, document title, document type, document traits, author/source (if
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known), and recipients (if applicable) and identified the persons receiving a copy
of the document and the privileges asserted as to each document). We sustain
Southwest and AirTran’s first issue in part, and we modify Respondent’s order to
allow Southwest and AirTran a reasonable time to prepare a privilege log and for
the parties to follow the procedure set out in rules 193.3 and 193.4.
IV. Conclusion
Having sustained Southwest and AirTran’s first issue in part, we
conditionally grant relief.5 The stay on Respondent’s order will be lifted after
Southwest and AirTran have produced a privilege log and Respondent has had
an opportunity to determine which documents are “non-privileged.”
PER CURIAM
PANEL: MCCOY, WALKER, and MEIER, JJ.
DELIVERED: July 12, 2012
5
Based on our resolution here, we need not reach the remainder of
Southwest and AirTran’s first issue or their second issue.
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