Court Opinion

ID: 9380785
Source: CourtListenerOpinion
Date Created: 2023-03-21 14:07:17.737128+00
Date Added: 2024-06-11T17:17:27.505522
License: Public Domain

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.”
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                                                     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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