Court Opinion

ID: 4666323
Source: CourtListenerOpinion
Date Created: 2021-03-10 07:14:35.119327+00
Date Added: 2024-06-11T08:02:48.409886
License: Public Domain

DENIED and Opinion Filed March 5, 2021

                                       In The
                            Court of Appeals
                     Fifth District of Texas at Dallas
                               No. 05-21-00085-CV

                 IN RE DANIEL J. EDELMAN, INC., Relator

           Original Proceeding from the County Court at Law No. 3
                            Dallas County, Texas
                    Trial Court Cause No. CC-17-06253-C

                        MEMORANDUM OPINION
                   Before Justices Schenck, Nowell, and Garcia
                               Per Curiam Opinion
      This original proceeding stems from the trial court’s ruling on real parties in

interest’s challenges to relator Daniel J. Edelman, Inc.’s (“Edelman”) confidentiality

designations of certain documents produced in response to a third-party subpoena.

Real parties in interest, United Development Funding, L.P. and related entities

(collectively, “UDF”), are the plaintiffs below.       They challenged Edelman’s

confidentiality designations of documents identified as Exhibit B through S,

documents UDF relied upon to support their separate motion to compel discovery

from defendants Hayman Capital Management, L.P. and several related individuals

and entities (collectively, “HCM”).      The trial court held hearings on UDF’s
objections to Edelman’s designations and their motion to compel on consecutive

days. The trial court determined the questioned documents are not confidential and

on February 5, 2021 ordered the documents be de-designated as confidential.

      Edelman filed a petition for writ of mandamus challenging that order. After

reviewing the parties’ briefs and the mandamus record, we conclude that relator has

not shown itself to be entitled to relief. Accordingly, we deny the writ.

                                    BACKGROUND

      In the underlying proceeding, UDF alleges HCM disseminated false

information about UDF to drive down its stock price and hired Edelman, a public

relations firm, to carry out the smear campaign.

      To facilitate the discovery process, the trial court entered an agreed protective

order signed by the parties, which set forth the conditions for treating, obtaining, and

using potentially confidential, propriety, or trade secret information. The order

allows a producing party to designate as “Confidential–Subject to Protective Order”

discovery material “which it considers to contain or reflect non-public, confidential,

proprietary, and/or commercially sensitive information.” The order restricts who

may access the designated confidential materials.

      Notwithstanding the producing party’s broad ability to initially designate

documents produced as “confidential,” the protective order also expressly provides,

“nothing in this Order creates a presumption or implies that information designated

as Protected Material actually constitutes a trade secret, is proprietary, or is

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otherwise protectable information,” and sets forth a process by which any party

might challenge designations of protected material. In the event of a dispute over a

designation that the parties cannot resolve, the parties are directed to present the

dispute to the trial court. The order expressly provides that “[t]he burden of proving

the confidentiality of information designated as ‘Confidential–Subject to Protective

Order’ remains with the designating party.”

       Edelman produced approximately 2,000 documents in response to UDF’s

third-party subpoena for production of documents. Edelman designated most of

those documents “confidential.” UDF objected to eighteen of those designations in

advance of filing a pleading to which the exhibits would be germane, specifically

documents identified as Exhibits B through S,1 and filed an “Emergency Request for

Ruling on Confidentiality Designation.” The trial court held a hearing on this

emergency request on February 4, 2021. On February 5, 2021, the trial court entered

an order sustaining UDF’s objections and striking Edelman’s confidentiality

designations for Exhibits B through S.              Edelman then initiated this original

proceeding urging the trial court applied an incorrect legal standard to address

objections to confidentiality designations by ignoring the terms of the Agreed

Protective Order and abused its discretion in sustaining UDF’s objections because it

proved the documents are confidential.

   1
     Exhibits B through S are dated prior to 2017 and are primarily email exchanges among Edelman
employees regarding the Hayman project, some emails between Edelman and Hayman, and draft strategy
proposals.
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                      AVAILABILITY OF MANDAMUS REVIEW

      Mandamus is an extraordinary remedy that is available only in limited

circumstances.    Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig.

proceeding). Entitlement to mandamus relief requires the relator to demonstrate that

the trial court has clearly abused its discretion and that he has no adequate appellate

remedy. In re Prudential Ins. Co., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig.

proceeding).

      Insofar as any question involving a factual dispute is concerned, a trial court

abuses its discretion if the trial court could reasonably have reached only one

decision, or reaches a decision so arbitrary and unreasonable as to amount to a clear

and prejudicial error of law, or clearly fails to correctly analyze or apply the law.

Walker, 827 S.W.2d at 839–40. A trial court has no discretion in determining what

the law is or applying the law to the facts. Id. at 840. Appeal is inadequate when a

trial court erroneously orders the production of confidential information or

privileged documents. In re Ford Motor Co., 211 S.W.3d 295, 298 (Tex. 2006)

(orig. proceeding).

                                     DISCUSSION

      While the protective order allows the producing party to designate

information produced as confidential, that designation is subject to the trial court’s

review when challenged. Edelman asserts because the agreed protective order

permits a producing party to designate as “Confidential—Subject to Protective

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Order” discovery material which the producing party considers to contain or reflect

non-public, confidential, proprietary, and/or commercially sensitive information, the

producing party can overcome a challenge to such designation by simply

establishing its subjective intent to treat the information as confidential. While a

producing party’s subjective intent may be sufficient to initially designate a

document to be confidential, that designation is subject to challenge. And, when

challenged, the trial court’s determination will be upheld if it is reasonable and in

accordance with applicable law. See id. at 839–40.

      In support of its contention the information UDF sought to de-designate is

confidential, Edelman relied, in part, on a non-disclosure agreement that by its very

terms expired years before the documents were subpoenaed and produced. Thus,

the trial court did not abuse its discretion in disregarding such an agreement as a

basis to deny UDF’s requested de-designation. Edelman also relied on the affidavit

of the President of one of Daniel J. Edelman Holdings, Inc.’s portfolio companies,

which contains conclusory allegations concerning the confidential nature of

Edelman’s business and strategies, and of potential harm. Those assertions, in and

of themselves, are not dispositive of the objection to confidentiality. In re Toyota

Motor Sales, U.S.A., Inc., No. 05-19-00030-CV, 2019 WL 3244490, at *1 (Tex.

App.—Dallas July 19, 2019, orig. proceeding) (applying abuse of discretion

standard). Thus, we conclude Edelman has not shown a clear abuse of discretion.

                                        –5–
                                  CONCLUSION

      We deny Edelman mandamus relief.

                                                PER CURIAM

Schenck, J., concurring and dissenting.

210085F.P05

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