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concluding that panel's opinion departed from the court's precedent and concluding en banc reconsideration was warranted
Summary of this case from Kownslar v. City of Hous.Opinion
No. 05-20-00205-CV
04-28-2021
IN RE Byron Curtis COOK, Trade Rare, L.L.C., and Joel Hochberg, Relators
C. John Scheef III, Byron Kevin Henry, J. Mitchell Little, Justin R. Simmons, Scheef & Stone, L.L.P., Frisco, Kelly Mitchell Crawford, Scheef & Stone, L.L.P., Dallas, for Real Party in Interest Warren Kenneth Paxton, Jr. Christopher Arisco, Mark Wilson Stout, Padfield & Stout, L.L.P., Fort Worth, Christopher S. Ayres, Ayres Law Office, P.C., Dallas, for Real Party in Interest Shiner Energy & Consulting Corp. William Todd Albin, Law Offices, Plano, John Joseph Mongogna, Albin Roach, PLLC, Frisco, for Real Parties in Interest Unity Resources, L.L.C., Mark Thomas Mersman, Mark Joseph Solomon, Jr. Alexander More, Brent Michael Rubin, Ken Carroll, Neal James Suit, Neil Ross Burger, Carrington, Coleman, Sloman & Blumenthal, LLP, Dallas, Rene O. Oliveira, Roerig Oliveira & Fisher, L.L.P., Brownsville, Terry L. Jacobson, Jacobson Law Firm, P.C., Corsicana, for Relators.
C. John Scheef III, Byron Kevin Henry, J. Mitchell Little, Justin R. Simmons, Scheef & Stone, L.L.P., Frisco, Kelly Mitchell Crawford, Scheef & Stone, L.L.P., Dallas, for Real Party in Interest Warren Kenneth Paxton, Jr.
Christopher Arisco, Mark Wilson Stout, Padfield & Stout, L.L.P., Fort Worth, Christopher S. Ayres, Ayres Law Office, P.C., Dallas, for Real Party in Interest Shiner Energy & Consulting Corp.
William Todd Albin, Law Offices, Plano, John Joseph Mongogna, Albin Roach, PLLC, Frisco, for Real Parties in Interest Unity Resources, L.L.C., Mark Thomas Mersman, Mark Joseph Solomon, Jr.
Alexander More, Brent Michael Rubin, Ken Carroll, Neal James Suit, Neil Ross Burger, Carrington, Coleman, Sloman & Blumenthal, LLP, Dallas, Rene O. Oliveira, Roerig Oliveira & Fisher, L.L.P., Brownsville, Terry L. Jacobson, Jacobson Law Firm, P.C., Corsicana, for Relators.
Myers, J., not participating.
EN BANC OPINION
Opinion by Justice Osborne
On relators' motion for rehearing en banc, we withdraw our opinion dated July 21, 2020, and vacate the order of that date. This is now the opinion of the Court.
Relators seek mandamus relief because the trial court denied their motion to designate a responsible third party. See TEX. CIV. PRAC. & REM. CODE § 33.004. Sitting en banc, we conclude that relators have met both the standard for mandamus relief and the standard for designating a responsible third party. Accordingly, we conditionally grant relators' petition for writ of mandamus.
THE SEALED RECORD
Two documents—relators' motion to designate a responsible third party and real party's operative petition—control our decision in this proceeding. See In re Greyhound Lines, Inc. , No. 05-13-01646-CV, 2014 WL 1022329, at *2 (Tex. App.—Dallas Feb. 21, 2014, orig. proceeding) (mem. op.) (standards of review for ruling on motion to designate responsible third party). But both of these documents, all briefing, and the entire mandamus record have been filed under seal. This "presents an unusual problem" because this Court must issue a public opinion advising the parties of our decision and the basic reasons for it. Kartsotis v. Bloch , 503 S.W.3d 506, 510 (Tex. App.—Dallas 2016, pet. denied) ; TEX. R. APP. P. 52.8(d), 47.1, 47.3 ; TEX. GOV'T CODE § 552.022(a)(12).
The trial court has not issued a rule 76a sealing order in this case. See Tex. R. Civ. P. 76a (standards and procedures for sealing court records). Instead, in this case and related proceedings involving the same parties, the parties and the courts have operated under a May 16, 2019 amended protective order addressing the use of non-party W. Kenneth Paxton, Jr.'s deposition testimony. At the parties' request, and in accordance with appellate procedure rule 9.2(c)(3), this Court and the Texas Supreme Court have permitted all filings to be made under seal. See Tex. R. App. P. 9.2(c)(3) ; In re Cook , No. 05-19-01283-CV, 2020 WL 2552881, at *1 n.2 (Tex. App.—Dallas May 20, 2020, orig. proceeding) (mandamus conditionally granted); In re Calco Land Dev., LLC , No. 20-0583 (Tex., orders of Aug. 17, 2020, Oct. 20, 2020, Nov. 20, 2020, and Feb. 11, 2021).
Our decision in this proceeding turns on whether relators "plead[ed] sufficient facts" to support their motion to designate, and we cannot fulfill our responsibilities as a court of record without mentioning certain "facts concerning the alleged responsibility" of the third party relators seek to designate. See TEX. CIV. PRAC. & REM. CODE §§ 33.004(g)(1), 33.011(6) ; Greyhound Lines, Inc. , 2014 WL 1022329, at *2 ; Kartsotis , 503 S.W.3d at 510 ("[W]e must hand down a public opinion explaining our decisions based on the record.... This we cannot do without mentioning the key documents and certain specific facts."). Accordingly, similar to our approach in a previous original proceeding in the same case, In re Cook , No. 05-19-01283-CV, 2020 WL 2552881, at *1 n.2 (Tex. App.—Dallas May 20, 2020, orig. proceeding) (mandamus conditionally granted) (" Cook I "), we have "strived to preserve the confidentiality of the materials we believe the parties intended to be confidential[,] ... avoid[ing] reference to those materials where possible and making some references deliberately vague."
The trial court plaintiff, who is the real party in both Cook I and in this proceeding, has sought mandamus relief in the supreme court regarding our ruling in Cook I . The supreme court has issued four orders granting motions to seal each filing in that proceeding, as cited in the previous footnote. Given the supreme court's rulings, we follow our Cook I approach to confidentiality here.
BACKGROUND
As we explained in Cook I , the underlying lawsuit was filed against relators and four others in 2016. See id. at *1. Plaintiff, a limited liability company, alleged securities fraud and related claims in connection with a mineral acreage purchase transaction facilitated by defendant Unity Resources, L.L.C. ("Unity"). Id. Plaintiff contended the mineral acreage interests it purchased met the Texas Securities Act's definition of "securities" and thus it was owed heightened disclosure duties and other obligations not otherwise applicable. Id. According to plaintiff, Unity failed to make required disclosures and received undisclosed profits at the expense of plaintiff and other investors by engaging in self-dealing by and through its managers and related entities. Id.
The trial court granted plaintiff's motion for partial summary judgment on October 28, 2019, ruling that "the mineral interest sold in this case is a security."
Relators filed a motion for leave to designate Ken Paxton ("the non-party") as a responsible third party, alleging that the non-party knew about, reviewed, and approved the conduct complained of in plaintiff's petition. See id. Relators alleged that the non-party "served as counsel to and a manager and member" of Unity from 2008 through 2014 and "exercised control over the operations of Unity in general." They contended that the non-party "advised Unity on securities regulation compliance and corporate governance issues, specifically including the propriety of and disclosures regarding interested-party transactions between Unity and affiliate entities controlled by Unity's managers" but "demonstrated a lack of diligence and competence" in giving that advice. Relators alleged the non-party "structured" the complained-of scheme "[i]n his dual roles as counsel and manager for Unity." Relators also asserted that the non-party "specifically advised Unity about the adequacy of its disclosures" for the type of transactions at issue. Relators detailed other conduct of the non-party, alleging "negligence and other violations of applicable standards" including legal malpractice, breach of fiduciary duties, violations of the Texas Securities Act, and fraud by nondisclosure. Relators concluded that the non-party "therefore caused or contributed to causing the harm for which [plaintiff] seeks recovery."
In an order dated December 16, 2019, the trial court denied relators' motion for leave to designate the non-party as a responsible third party. The trial court ruled that the motion "is fully and finally DENIED" because "Defendants have already once been given leave to replead facts providing fair notice of the basis for [the non-party's] liability to Plaintiff" after a previous denial. Relators now seek mandamus relief, asking this Court to direct the trial court to grant the motion to designate.
APPLICABLE STANDARDS
To designate a responsible third party, "notice pleading under the Texas Rules of Civil Procedure" is required. Greyhound Lines, Inc. , 2014 WL 1022329, at *2. To obtain mandamus relief, relators must show the trial court clearly abused its discretion and that relators have no adequate appellate remedy. In re Molina , 575 S.W.3d 76, 79 (Tex. App.—Dallas 2019, orig. proceeding). En banc consideration of a case is not favored but may be ordered when necessary to maintain uniformity of the Court's decisions. TEX. R. APP. P. 41.2(c) ; Chakrabarty v. Ganguly , 573 S.W.3d 413, 415–16 (Tex. App.—Dallas 2019, no pet.) (en banc) ("We will rehear a case en banc where it is necessary to secure uniformity of the Court's decisions and in other extraordinary circumstances, as we deem necessary.").
DISCUSSION
1. Designation of responsible third party
First, we conclude that relators have met the pleading requirements for designating a responsible third party under Chapter 33. See generally TEX. CIV. PRAC. & REM. CODE § 33.004 (Designation of Responsible Third Party); id. § 33.011(6) (defining "responsible third party"). "The pleading requirements for designating a responsible third party at the outset of a case are not stringent." Greyhound Lines, Inc. , 2014 WL 1022329, at *2.
Despite the voluminous mandamus record the parties have submitted, the only relief relators request or may obtain at this stage—the pleading stage—is to designate the non-party as a responsible third party. Questions regarding the non-party's liability for damages, his inclusion in the jury charge, or the propriety of summary judgment are not before us. The operative petition and the motion to designate control the inquiry. See id.
Chapter 33 defines "responsible third party" as "any person who is alleged to have caused or contributed to causing in any way the harm for which recovery of damages is sought, whether by negligent act or omission, ... by other conduct or activity that violates an applicable legal standard, or by any combination of these." TEX. CIV. PRAC. & REM. CODE § 33.011(6) (emphasis added). In Greyhound Lines, Inc. , we explained that Chapter 33 "provides a framework for apportioning percentages of responsibility in the calculation of damages in any case in which more than one person, including the plaintiff, is alleged to have caused or contributed to cause the harm for which recovery of damages is sought." Greyhound Lines, Inc. , 2014 WL 1022329, at *1. "The statute's purpose is to hold each party responsible only for the party's own conduct causing injury." Id.
"At the pleading stage, the proportionate responsibility statute requires that the defendant seeking to designate a responsible third party ‘plead sufficient facts concerning the alleged responsibility of the person to satisfy the pleading requirement[s] of the Texas Rules of Civil Procedure.’ " Id. at *2 (quoting TEX. CIV. PRAC. & REM. CODE § 33.004(g)(2) ). The rules of civil procedure require "notice pleading." Id. "Under Texas' standards of notice pleading, the ‘fair notice’ standard for pleading is satisfied if the opposing party can ascertain from the pleading the nature and basic issues of the controversy, and what type of evidence might be relevant." Id.
Plaintiff has pleaded that it is the victim of securities fraud. It has asserted claims against seven defendants including the three relators for fraud, fraud by nondisclosure, fraud in a real estate transaction, breach of fiduciary duty, aiding and abetting breaches of fiduciary duty and fraud, fraudulent transfer, and two causes of action under the Texas Securities Act. Plaintiff also alleges conspiracy and seeks to pierce the corporate veil of the defendant entities. Plaintiff has also pleaded for actual and exemplary damages and rescission.
Relators, in turn, allege that the non-party, in his roles as manager, member, and counsel to defendant Unity, contributed to plaintiff's harm by:
• setting up and approving the business practices of Unity that plaintiff alleges were fraudulent,
• failing to "diligently and competently counsel Unity and Cook about compliance with securities regulation and corporate governance duties, specifically including the propriety of and disclosures regarding interested-party transactions and direct sales of mineral acreage" such as the purchase from which plaintiff's claims arise,
• failing to advise plaintiff's principal about interested party transactions between Unity, Cook, and Unity's other managers and members, including transactions involving "the land banking of mineral acreage for subsequent purchase by Unity's funds," and
• disclosing Unity's privileged and confidential information to plaintiff but not to Unity's own counsel, impairing relators' ability to develop their defenses.
In these ways and others, relators allege, the non-party "caused or contributed to causing" the harm for which plaintiff seeks damages. See TEX. CIV. PRAC. & REM. CODE § 33.011(6).
Plaintiff responds that "[t]he Mandamus Record makes clear that [the non-party] had no involvement in the scheme for which [plaintiff] seeks redress." Citing deposition testimony, plaintiff argues that the non-party lacked knowledge of the alleged fraudulent scheme. Plaintiff argues it was harmed by that scheme, not by any conduct of the non-party. Plaintiff also argues that the non-party "could not be liable for any act of legal malpractice" because he made decisions " ‘which a reasonably prudent attorney could make in the same or similar circumstance,’ " quoting Cosgrove v. Grimes , 774 S.W.2d 662, 665 (Tex. 1989). And plaintiff argues that proportionate responsibility does not apply to claims under the Texas Securities Act.
But at this stage, "the trial court is restricted to evaluating the sufficiency of the facts pleaded by relators and is not permitted to engage in an analysis of the truth of the allegations or consider evidence on the third party's ultimate liability." Greyhound Lines, Inc. , 2014 WL 1022329, at *2. And as the supreme court has explained, although Chapter 33 "initially equated responsibility with liability to the plaintiff or claimant, this is no longer the case." Galbraith Eng'g Consultants, Inc. v. Pochucha , 290 S.W.3d 863, 868 (Tex. 2009). "Thus, a defendant may designate a responsible third party even though that party possesses a defense to liability, or cannot be formally joined as a defendant, or both." Id. at 868–69 ; see also In re Mobile Mini, Inc. , 596 S.W.3d 781, 787 (Tex. 2020) (per curiam) (orig. proceeding) (quoting this language from Galbraith and concluding that "under the proportionate-responsibility statute, ‘responsibility’ is not equated with ‘liability’ "). "Chapter 33 then is apparently unconcerned with the substantive defenses of responsible third parties, who are defined to include ‘any person who is alleged to have caused or contributed to causing in any way the harm for which recovery of damages is sought....’ " Galbraith , 290 S.W.3d at 869 (quoting TEX. CIV. PRAC. & REM. CODE § 33.011(6) ).
Further, even if plaintiff is correct that Chapter 33's apportionment scheme does not apply to some of its claims, see, e.g., Pierre v. Swearingen , 331 S.W.3d 150, 154–55 (Tex. App.—Dallas 2011, no pet.) (trial court was not required to determine percentage liability of defendant whose liability was "purely derivative"), it does apply to others. See Challenger Gaming Sols., Inc. v. Earp , 402 S.W.3d 290, 292, 299 (Tex. App.—Dallas 2013, no pet.) (noting that Chapter 33 applies to "any cause of action based on tort," including claims for negligence, fraud, and "any other conduct that violates an applicable legal standard," although concluding it did not apply to claim under uniform fraudulent transfer act). Chapter 33 expressly applies to "any cause of action based in tort in which a defendant, settling person, or responsible third party is found responsible for a percentage of the harm for which relief is sought." TEX. CIV. PRAC. & REM. CODE § 33.002(a)(1). Plaintiff's pleading includes causes of action based in tort.
Whether there is sufficient evidence to establish—or even to raise a genuine issue of material fact about—the non-party's liability is not the standard. That inquiry may be made by motion for summary judgment, motion to strike the designation, or objection to the non-party's inclusion in the jury charge, among other challenges permitted by the rules. See Greyhound Lines, Inc. , 2014 WL 1022329, at *2. Accordingly, we express no opinion on whether there is sufficient evidence to establish—or to raise a fact issue on—the non-party's liability.
Instead, at this point in the proceedings, the sole question is the sufficiency of the movant's pleading. And the standard by which that question is resolved is "fair notice." See id. ; see also TEX. R. CIV. P. 47(a) (claim for relief "shall contain ... a short statement of the cause of action sufficient to give fair notice of the claim involved"). We conclude that relators have given fair notice of their allegations that the non-party "caused or contributed to causing ... the harm for which recovery of damages is sought." See TEX. CIV. PRAC. & REM. CODE § 33.011(6). Because they have done so, we conclude the trial court abused its discretion by denying their motion for leave to designate the non-party as a responsible third party under civil practice and remedies code section 33.004. See id. § 33.004(g) (trial court "shall grant leave to designate" unless objecting party establishes that defendant failed to satisfy civil procedure rules' pleading requirements). 2. Mandamus relief
Next, we conclude that mandamus relief is warranted. As this Court explained in Molina , "[b]ecause the erroneous denial of a motion for leave to designate a responsible third party skews the proceedings, potentially affects the litigation's outcome, and compromises the defense in ways unlikely to be apparent in the appellate record, such an error ordinarily renders the appellate remedy inadequate." Molina , 575 S.W.3d at 79 (citing In re Coppola , 535 S.W.3d 506, 509–10 (Tex. 2017) (orig. proceeding) (per curiam) ).
Plaintiff argues that "the granting of a mandamus petition should be made on a case by case basis considering the circumstances presented," citing In re Prudential Insurance Co. , 148 S.W.3d 124, 137 (Tex. 2004) (orig. proceeding). Plaintiff contends relators "simply provided no circumstances establishing the inadequacy of an appellate remedy." But in Coppola , the supreme court considered and expressly cited Prudential in reaching its conclusion that "ordinarily, a relator need only establish a trial court's abuse of discretion to demonstrate entitlement to mandamus relief with regard to a trial court's denial of a timely-filed section 33.004(a) motion":
In Prudential , we explained that "adequate" is merely "a proxy for the careful balance of jurisprudential considerations that determine when appellate courts will use original mandamus proceedings to review the actions of lower courts" and an "adequate" appellate remedy exists when "any benefits to mandamus review are outweighed by the detriments." 148 S.W.3d at 136. In weighing the benefits of mandamus review, we conclude, consistent with the weight of appellate authority, that the benefits generally outweigh the detriments.... The denial of mandamus review impairs—and potentially denies—a litigant's significant and substantive right to allow the fact finder to determine the proportionate responsibility of all responsible parties.
Coppola , 535 S.W.3d at 509–10. Here, the trial court's ruling potentially denies relators this "significant and substantive right" to have a fact finder determine proportionate responsibility. See id. As we have discussed, relators' pleading is sufficient to designate the non-party as a responsible third party. Consequently, we conclude they have met their burden at this stage of the proceedings to establish the lack of an adequate remedy by appeal. See Molina , 575 S.W.3d at 79.
3. En banc review
Last, we conclude that en banc review is necessary to maintain uniformity of the Court's decisions regarding the standards for obtaining leave to designate responsible third parties and the availability of mandamus relief when a trial court has denied leave. See TEX. R. APP. P. 41.2(c) (standards for en banc consideration); TEX. CIV. PRAC. & REM. CODE § 33.004(f), (g) (standards for granting leave to designate responsible third parties); Greyhound Lines, Inc. , 2014 WL 1022329, at *3 (standard for mandamus relief). As we explained in Chakrabarty , "[t]he standard set forth in Rule 41 is sufficiently broad to afford the Court the discretion to consider a case en banc if the circumstances require and the court votes to do so." Chakrabarty , 573 S.W.3d at 416 n.4 (internal quotation omitted).
In Greyhound Lines, Inc. , we explained that "[t]he standard for designating a potentially responsible third party is notice pleading under the Texas Rules of Civil Procedure," and is satisfied "if the opposing party can ascertain from the pleading the nature and basic issues of the controversy, and what type of evidence might be relevant." Greyhound Lines, Inc. , 2014 WL 1022329, at *2. And in Greyhound Lines, Inc. and Molina , we concluded that mandamus relief was warranted because the erroneous denial of a motion for leave to designate "ordinarily renders the appellate remedy inadequate." Molina , 575 S.W.3d at 79 ; see also Greyhound Lines, Inc. , 2014 WL 1022329, at *4.
We conclude that the panel opinion's departure from these standards in this case necessitates en banc consideration. See TEX. R. APP. P. 41.2(c). "While en banc reconsideration is disfavored under the rule, we deem it appropriate here." Chakrabarty , 573 S.W.3d at 416 n.4.
CONCLUSION
We conclude the trial court abused its discretion in denying relators' motion to designate a responsible third party and there is no adequate remedy at law. Accordingly, we conditionally grant relators' petition for a writ of mandamus and direct the trial court to enter an order granting relators' motion to designate Ken Paxton as a responsible third party. We are confident the trial court will comply with this order; a writ will issue only if it does not.
Schenck, J. dissenting; Smith, J. concurring.
DISSENTING OPINION
Opinion by Justice Schenck
I believe the Court improvidently granted reconsideration en banc in this case and has now erred in vacating the panel opinion and order denying relators mandamus relief from the trial court's order. I disagree that the trial court's order does (or could) constitute error, much less an abuse of discretion, or that the asserted error would be subject to mandamus relief under this Court's evolving understanding of the adequacy of appellate remedies, in any case. It is unclear to me why the Court would choose this case to convene en banc, to make new law concerning third-party-designation practice in the face of explicit, contrary statutory directives, or to empower windmill-tilting defendants to delay and obstruct the course of proceedings in the trial court with mandamus actions that have no potential to reduce that defendant's ultimate responsibility to the plaintiff.
Because the legislature in enacting Chapter 33 explicitly empowered trial courts to evaluate and strike third-party designations both before and during trial, declared the Chapter inapplicable where, as here, the absent party's liability would be subject to a separate statutory apportionment regime, and the defendant could not show how its ultimate responsibility for any judgment would be reduced, why its interest would not be protected by seeking contribution, or how any apportionment would be binding on the absent defendant in any later action, I can see no basis for error or abuse of discretion. Likewise, I do not believe that the relators have shown the need for mandamus intervention. Accordingly, I dissent.
AVAILABILITY OF MANDAMUS RELIEF
Mandamus is an extraordinary remedy granted only when the relator establishes an abuse of discretion by the trial court and an inadequate appellate remedy. In re N. Cypress Med. Ctr. Operating Co. , 559 S.W.3d 128, 130 (Tex. 2018) (orig. proceeding). A trial court abuses its discretion when it acts in an unreasonable or arbitrary manner or, stated differently, when it acts without reference to guiding rules and principles. In re Colonial Pipeline Co. , 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding). No specific definition captures the essence of what constitutes an adequate appellate remedy. See In re Garza , 544 S.W.3d 836, 840 (Tex. 2018) (per curiam) (orig. proceeding). The supreme court has consistently held, however, that mandamus relief is not appropriate to supervise or correct incidental rulings of a trial court when there is an adequate remedy by appeal. See In re Entergy Corp. , 142 S.W.3d 316, 320–21 (Tex. 2004) (orig. proceeding).
DISCUSSION
I. ABUSE OF DISCRETION AND APPLICATION OF CHAPTER 33, THE PROPORTIONATE RESPONSIBILITY STATUTE
While the plaintiff may decide who it will sue, Chapter 33 allows a defendant, under certain limited circumstances, to seek to designate an absent person or entity as a responsible third party to potentially reduce its own "responsibility" for any damages awarded. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.002 – 33.004. The defendant may also elect to join any absent third party who might be contingently liable to him. TEX. R. CIV. P. 38 – 40.
I presume that the trial court was also aware that our Constitution would prohibit application of any apportionment made at trial in this case to any party who was not joined to the action. Blonder–Tongue Labs., Inc. v. Univ. of Ill. , 402 U.S. 313, 328–29, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). Thus, relators' only conceivable interest in the designation would be, in keeping with the name of the act, to reduce their own initial "responsibility" to the plaintiff. The trial court was therefore required to determine whether Chapter 33 applied and, if so, whether relators' designation could affect their ultimate responsibility.
In this case, neither the plaintiff nor the defendants brought any claim against Ken Paxton. Instead, relators sought to designate him as a potentially responsible third party under Chapter 33. In doing so, relators asserted he served as counsel to and as a manager and member of Unity Resources, L.L.C. ("Unity") and that he advised Unity on securities-regulation compliance and the adequacy of disclosures for the transaction at issue, and, thus, caused or contributed to the harm for which the real party in interest seeks to recover.
As the majority notes, the real party in interest has pleaded that it is the victim of securities fraud in connection with its purchase of a mineral interest from Unity. The real party in interest seeks to hold relators liable for "aiding and abetting" Unity in the alleged fraudulent scheme. The trial court has determined that the mineral interest at issue in this case is a security. Thus, the real party in interest's claims fall within the purview of the Texas Securities Act. The trial court was presumably aware of this when, pursuant to section 33.004(g), it sustained the real party in interest's objection to relators' designation of Paxton under Chapter 33.
-The Texas Supreme Court has refused to recognize "aiding and abetting" as its own cause of action in tort. Juhl v. Airington , 936 S.W.2d 640, 644 (Tex. 1996). And, more recently the court has confirmed that a "civil conspiracy" is "not an independent tort." Agar Corp. v. Electro Circuits , 580 S.W.3d 136, 141–42 (Tex. 2019). Rather, it is a theory for imputing joint and several liability for the underlying claim. Id. Thus, this claim, to the extent it exists, is a procedural derivative of the alleged violation of the Texas Securities Act. Cohen v. NewBiss Prop., L.P. , No. 01-19-00397-CV, 2020 WL 6878414 *4 (Tex. App.—Houston [1st Dist.] Nov. 24, 2020, no pet.) (mem. op.). I accordingly agree with the majority that the claims here arise under the Texas Securities Act.
A prior mandamus action, which we refer to as Calco, was filed in this Court in October 2019.
A. The Trial Court Was Not Obliged to Deny the Objection as a Matter of Law
In reaching its conclusion the trial court abused its discretion in denying relators leave to designate Paxton as a potentially responsible third party, the majority focuses on the pleading requirements and buries consideration of the applicability of the proportionate responsibility statute in the first instance. Chapter 33 does not apply to all claims based in tort, however. In fact, Chapter 33 clearly does not to apply to statutory tort claims where the governing statute contains its own separate and conflicting legislative fault-allocation scheme. See Sw. Bank v. Info. Support Concepts, Inc. , 149 S.W.3d 104, 111 (Tex. 2004) (concluding proportionate responsibility statute does not apply to conversion claims under article 3 of the Uniform Commercial Code because article 3 has its own loss-allocation scheme); Challenger Gaming Sols., Inc. v. Earp. , 402 S.W.3d 290, 296–97 (Tex. App.—Dallas 2013, no pet.) (concluding proportionate responsibility statute does not apply in fraudulent transfer cases because the Uniform Fraudulent Transfer Act contains comprehensive statutory scheme for recourse).
Like article 3 of the Uniform Commercial Code and the Uniform Fraudulent Transfer Act, the Texas Securities Act contains its own comprehensive loss-allocation scheme. See TEX. REV. CIV. STAT. ANN. art. 581-33(F). That scheme provides for joint and several liability for aiders and abettors, which appears to be at least potentially, if not directly, in conflict with Chapter 33's apportionment scheme. Certainly, until this mandamus decision, no authority of this Court or the Texas Supreme Court had even suggested that the legislature's decision to attribute full financial accountability on "aiders and abettors" in the Texas Securities Act left open the contrary prospect of lesser responsibility under Chapter 33.
Relators claim the Houston First District Court of Appeals held Chapter 33 applies to Texas Securities Act claims in Villarreal v. Wells Fargo Brokerage Services, LLC , 315 S.W.3d 109, 125 (Tex. App.—Houston [1st Dist.] 2010, no pet.). Relators' reliance on Villarreal for this proposition is misplaced as the court reached that conclusion only based upon the defendants' failure to argue in their summary judgment motion that the subject statutes contained a separate and conflicting legislative fault allocation scheme. Id.
I note without comment that there may be other statutes or regulations affording protections such as the Texas Uniform Trade Secrets Act, the Texas Family Code, section 134A.006 of the Texas Civil Practice and Remedies Code, or HIPAA.
Consequently, as a matter of law, the trial court did not, indeed could not, abuse its discretion in granting the real party in interest's objection to relators' designation of Paxton as a potentially responsible third party.
B. The Trial Court's Decision Could Not Result in an Improper Judgment or Amount to an Abuse of Discretion in Any Event
The Texas Securities Act imposes liability on sellers or issuers of securities and, separately, provides for joint and several liability for any person who "directly or indirectly" "controls" a seller or issuer of a security that violated the Texas Securities Act. TEX. REV. CIV. STAT. ANN. art. 581-33(F)(1). Further, as noted, "aiders and abettors" are also jointly and severally liable where they aided another person in violating the Texas Securities Act with intent to deceive or defraud or with reckless disregard for the truth or the law. Id. art. 581-33(F)(2).
Thus, in this case, if relators are found to be liable, whether as "control persons," "issuers," "sellers," or for "aiding and abetting," the legislature consciously and separately decreed that they would be responsible for all damages the jury awards. Within the comprehensive terms of the Texas Securities Act, the legislature could thus readily be understood to have intended that all involved with a fraudulent securities scheme should be fully responsible to the plaintiff victim with any claim for contribution or indemnity preserved. In all events, any defendant found liable under the Texas Securities Act would be fully liable to the plaintiff in the original action. Relators cite no authority approving, much less requiring, a trial court to allow a third-party designation that could not possibly reduce the designating party's ultimate liability to the plaintiff. See Bounds v. Scurlock Oil , 730 S.W.2d 68, 72 (Tex. App.—Corpus Christi–Edinburg 1987, writ ref'd n.r.e.) (failure to submit apportionment question cannot possibly result in rendition of improper judgment unless it could affect the judgment).
Moreover, and regardless of whether the law here so clearly called for the application of Chapter 33 as to warrant mandamus intervention, even that proportionate responsibility statute allows the trial court discretion to strike the designation at the objection stage of the designation process. TEX. CIV. PRAC. & Rem. Code Ann. § 33.004(g). The majority holds it was an abuse of discretion for the trial court to strike relators' designation at the objection stage, but it does not say why. Instead, the majority focuses on the notice pleading standard and punts the ultimate determination of the efficacy of the designation down the road by noting there are additional channels for contesting the designation, including an objection to the non-party's inclusion in the jury charge.
I recognize that a trial court might later decline to submit a question concerning a third party's responsibility, but this begs the question of why the legislature would specifically authorize the trial court to exercise that same discretion earlier by striking the designation upon objection of a party. If sustaining the objection at that stage is too early, as the majority seems to believe, and thus constitutes an abuse of discretion subject to interlocutory mandamus correction, what discretion would the trial court be left with in considering an objection pursuant to the proportionate responsibility statute?
I believe the trial court should be able to exercise its discretion to strike the designation at the objection stage when the moving party fails to show either the clear applicability of Chapter 33 or that the designation could lead to any conceivable reduction in the movant's ultimate responsibility to the plaintiff. Because relators failed to make either showing, our intervention and finding of abuse of discretion at this stage appear improper to me.
II. ADEQUATE REMEDY BY APPEAL
Had the trial court abused its discretion in denying relators leave to designate Paxton as a responsible third party, relators would be required to demonstrate that they lack an adequate remedy by appeal. As discussed below, the Texas Supreme Court has recognized mandamus as appropriate in other cases involving third-party designations, but its decision is hardly on all fours with our posture and cannot be read to unvaryingly disallow a trial court to strike an improper designation on account of the ability to do so later. Moreover, the result in this case seems at odds with our own more recent jurisprudence with respect to the harm a defendant must show relative to its damages case at trial in order to warrant the conclusion that a subsequent appeal will be inadequate. See In re Parks , No 05-19-00375-CV, 2020 WL 774107, at *2 (Tex. App.—Dallas Feb. 18, 2020, orig. proceeding [mand. pending]) (mem. op.).
As noted, a jury's findings as to the relators' liability would (or at least may) not be impacted by any apportionment of responsibility to Paxton due to the Texas Securities Act's explicit and comprehensive selection of a joint and several liability scheme—and certainly not so clearly as to warrant a finding of abuse of discretion at this stage. Having elected not to join him as a party here, relators would also have no right to employ any of the jury's finding as to Paxton's accountability. On appeal from a final judgment, relators would thus be in same position they are today and would have suffered no cognizable harm. The only difference would be they would be able to present a complete record and the potential for the appeal to be mooted if relators prevail at trial.
The notion that every potential error in striking a designation of a responsible third party is subject to mandamus correction ignores the fact that trial courts, no less than appellate courts, are obliged to analyze cases on an individual basis and if no potential harm has occurred, as is the case here, the matter should be at an end, because no relief will be warranted below or here—whether by mandamus or appeal. See In re Prudential Ins. Co. of Am. , 148 S.W.3d 124, 137 (Tex. 2004).
The majority relies on an earlier panel opinion, In re Molina , which, in turn, applies the holding of In re Coppola , 535 S.W.3d 506, 509–10 (Tex. 2017) (orig. proceeding), that an erroneous denial of a motion for leave to designate a responsible third party potentially affects the litigation's outcome and ordinarily renders the appellate remedy inadequate. 575 S.W.3d 76, 79 (Tex. App.—Dallas 2019, orig. proceeding). Of course, Coppola also provided that mandamus relief is not available unless there is a clear abuse of discretion, which does not exist here. Coppola , 535 S.W.3d at 508. Molina was a personal injury case arising from a multi-vehicle collision. Coppola involved a claim of fraud in connection with the sale of real estate. Chapter 33 thus clearly applied in both cases, and the third-party designations presented the relators with at least some possibility of reducing the named defendants' ultimate liability to the plaintiffs. Such is not the case here, and certainly in my view, not so clearly as to warrant our intervening on a request for mandamus relief.
In all events, the majority's conclusion concerning the inadequacy of a remedy on appeal in this case—where the defendants remain fully able to resist any damages sought and to pursue contribution from others—is difficult to square with this Court's contrary determination in In re Parks —that a defendant who is completely disabled from offering any evidence on the amount of damages he will be required to pay—could be adequately addressed on appeal. In re Parks , 2020 WL 774107, at *2.
I note I did not agree with that conclusion and issued a dissenting opinion from the denial of en banc reconsideration in that case. See In re Parks , 603 S.W.3d 454 (Tex. App.—Dallas 2020, orig. proceeding) (Schenck, J., dissenting).
The situation in this case is akin to an example set forth by Professor Benham in his article on "tangled incentives":
For example, imagine that Paul sues BigCorp for an injury Paul sustained from an allegedly defective product produced by BigCorp. At the end of the day, BigCorp has incentives not to invoke sunshine laws and to keep litigation information secret, such as deterring future claims, restricting access to proof in future claims that do arise, and avoiding embarrassment. Paul is incentivized to obtain the maximum settlement and knows (or at least his attorney knows) that he may be able to trade a promise of secrecy for more money.
The attorneys are likewise incentivized to keep the information quiet. BigCorp's attorneys have both ethical and practical reasons--such as upholding an attorney's duty of diligence and retaining BigCorp's business--for abiding by their client's wishes to keep the information from the public.
Paul's attorneys have conflicting incentives. On the one hand, their other similar clients (present and future) might benefit from easy access to the evidence arising from this case. On the other hand, Paul's attorneys, who are presumably working under a contingency fee arrangement, also have incentives to expedite the case without engaging in work--fighting confidentiality--that could actually reduce the fee in the case. Paul's attorneys have reason to engage with BigCorp's desire for confidentiality to maximize settlement in the case and the resulting fee. In short, everyone with a good grasp on the information has reason to keep it quiet.
That leaves the judge. To understand why sunshine limitations on court discretion are ineffective, one only has to think of how discovery issues come before most trial judges in this country. Many judges, particularly in state courts, have hundreds of cases on their docket. Discovery is self-help by design, meaning that parties conduct it on their own, absent at least one of them seeking judicial intervention. When parties are concerned about the confidentiality of information, they typically conference with one another in the context of some set of discovery requests. The party with the information alleges that it is confidential and that party refuses to produce it without some form of protective order.
Here is where the court often gets involved. The parties, driven by the incentives described above, simply agree to a protective order and present it to the court for signature, notwithstanding the possible applicability of any sunshine statute. But wait, sunshine statutes often mandate that the judge cannot sign that order if it would conceal information pertinent to public health and safety! The reality is that if no one raises the sunshine statute in opposition to the protective order request, the court is free, as a practical matter, to ignore it. Indeed, even if the court does so in error, parties who have agreed to such an order are unlikely to seek appellate review of the order (and because of waiver, would likely be unsuccessful even if they did), and thus the court's decision goes undisturbed. In other words, the law is not self-executing. Appellate courts do not automatically review interlocutory discovery orders, nor could they based on the volume of such orders.
Dustin B. Benham, Tangled Incentives: Proportionality and the Market for Reputation Harm , 90 Temp. L. Rev . 427, 455–56 (2018) (footnotes omitted).
III. Access to Court Proceedings and Records
I appreciate and generally share the concerns Justice Smith raises in his concurrence. I agree that we should be ever-mindful of the public's right of access to judicial proceedings, not just those of the trial courts. I would note, however, that this right is grounded in the public's interest in understanding the basis for judicial decisions and assuring their fidelity to the rule of law. Nixon v. Warner Commc'ns, Inc. , 435 U.S. 589, 598, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978). That interest, as the Supreme Court has stressed, is paramount in any subsequent question of the scope of the right of access, see Gentile v. State Bar of Nevada , 501 U.S. 1030, 1052, 111 S.Ct. 2720, 115 L.Ed.2d 888 (1991) (citing Seattle Times Co. v. Rhinehart , 467 U.S. 20, 104 S.Ct. 2199, 81 L.Ed.2d 17 (1984) ), and would thus apply to materials filed with the court insofar as they might have played a role in a judicial decision. In re Policy Mgmt. Sys. Corp. , Nos. 94-2254 and 94-2341, 1995 WL 541623, at *4 (4th Cir. Sept. 13, 1995) ; Wilk v. Am. Med. Ass'n , 635 F.2d 1295, 1299 n.7 (7th Cir. 1980).
Thus, the public right of access generally does not apply to "raw fruits" of discovery that have neither been filed with the court, Seattle Times , 467 U.S. at 33 n.19, 104 S.Ct. 2199, nor simply deposited with the clerk, but that could not have been considered by the court in arriving at a decision. Policy Mgmt. Sys. Corp. , 1995 WL 541623, at *4. In all events, I believe the issue is best left at this stage to the trial court or the supreme court.
CONCLUSION
I do not believe this case warranted en banc reconsideration as the panel opinion did not depart from the mandamus standards. Moreover, in my view, the majority has reached incorrect conclusions with respect to the controlling questions of whether the trial court abused its discretion and of the adequacy of the remedy by subsequent appeal. Accordingly, I dissent from the decision to grant en banc reconsideration of this case and from the majority's decision.
CONCURRING OPINION
Concurring Opinion by Justice Smith
I concur in the majority's determination that W. Kenneth Paxton can be properly designated as a responsible third party, and I agree there are problems surrounding the sealing of the record containing Paxton's deposition testimony. However, because the proper procedure for sealing orders under rule 76a merits further discussion, I write separately to highlight concerns for litigants, judges, and the public.
This mandamus proceeding was filed in February 2020. In this case and related proceedings2 involving the same parties, the parties and the courts have operated under a May 16, 2019 amended protective order addressing the use of non-party Paxton's deposition testimony. At the parties' request, and in accordance with rule of appellate procedure 9.2(c)(3), this Court has permitted all filings to be made under temporary seal pending the trial court's ruling on real parties in interest's motion to seal the deposition transcripts under rule 76a ; the Texas Supreme Court has not disturbed this state of affairs. See TEX. R. APP. P. 9.2(c)(3) ; In re Cook , No. 05-19-01283-CV, 2020 WL 2552881, at *1 n.2 (Tex. App.—Dallas May 20, 2020, orig. proceeding) (mandamus conditionally granted); In re Calco Land Dev., LLC , No. 20-0583 (Tex., orders of Aug. 17, 2020, Oct. 20, 2020, Nov. 20, 2020, and Feb. 11, 2021). The trial court has not issued a rule 76a sealing order in this case. See TEX. R. CIV. P. 76a. Yet these court records remain sealed in the trial court, the court of appeals, and the supreme court. This should not happen, and it is the duty of all attorneys and judges to make sure that it does not happen.
BACKGROUND SPECIFIC TO RULE 76a CONCERNS 3
Since the beginning of these related mandamus proceedings in October 2019, the briefing and record in these original proceedings have been physically filed in paper form rather than electronically with a motion to file under seal on a temporary basis. In that motion, relators explained that the sealing request was due to a protective order that was in place in the trial court. At that time, we granted an order temporarily sealing the record and instructed the parties to proceed with the rule 76a motion.
In November 2018, relators filed their first amended motion to designate Paxton as a responsible third party in the case below and served him with a deposition subpoena. Paxton moved to quash and for a protective order. The trial court allowed Paxton's deposition to proceed subject to a May 16, 2019 amended protective order. The amended protective order allowed the deposition to be taken under an "Attorney's Eyes Only" restriction and allowed access to the deposition testimony only to counsel of record and their regular employees, Paxton, the court, and any other person designated as a qualified person by the trial court. The order required any document filed with the court that included any portion of the deposition to be designated as "sensitive data" and filed electronically. Any party that sought to file the documents had to provide fourteen days' written notice to Paxton's counsel so that Paxton could consent to use of the designated portions of the deposition or move to seal the deposition under rule 76a of the Texas Rules of Civil Procedure. The order provided that if Paxton did not move to seal such filings within 14 days of receiving notice, the filing party "may use or file the noticed portions of Paxton's deposition testimony of public record without further notice."
Real parties informed Paxton's counsel of their intent to use the entirety of Paxton's deposition, which was taken on August 19, 2019, in support of the motion to designate Paxton as a responsible third party that is at issue in this original proceeding. In response, real party and Paxton filed a motion to seal the deposition pursuant to rule 76a. The trial court conducted a hearing on the motion on September 27, 2019. At the conclusion of the hearing, the trial court stated "All right. For now the Court rules that the attorneys' eyes only is the least restrictive alternative. I believe we can revisit this issue on the Daubert and other expert docket." According to relators and real party, the trial court has not ruled on the motion to seal, and it remains pending in the trial court.
When this petition for writ of mandamus was filed, as well as the petition in Calco , now pending before the supreme court, relators filed it in paper form along with a motion to file the petition and record entirely in paper and under seal on a temporary basis. In the motion, relators explained that, although they did not agree with the trial court's order prohibiting the Paxton deposition from being made public, in order to comply with the protective order it was necessary to file the petition and record in paper form and under seal because of the pending motion to seal under rule 76a. See TEX. R. APP. P. 9.2(c)(3) (Documents filed under seal, subject to a pending motion to seal, or to which access is otherwise restricted by law or court order must not be electronically filed. For good cause, an appellate court may permit a party to file other documents in paper form in a particular case). On February 21, 2020, we granted the motion to the extent that we sealed "relator's February 18, 2020 petition for writ of mandamus, accompanying mandamus record, and any responses ... pending the resolution of" Paxton's rule 76a motion. We directed the parties to notify us within ten days of any ruling by the trial court on the motion. By order dated April 30, 2020, we granted relators' motion for temporary relief and ordered all trial court proceedings stayed pending resolution of this writ of mandamus. That stay order remains in place.
At the conclusion of the en banc oral argument, we requested letter briefing regarding the sealing order. Real party responded only that the parties have striven to comply with the trial court's protective order. They did not comment on the pending motion to seal or its status. Relators explained that, other than the trial court's oral ruling following the rule 76a hearing, the trial court has not further ruled on the pending motion to seal and that, by doing so, the trial court has effectively sealed all filings containing Paxton's deposition under the guise of a "least restrictive alternative [that amounts to] sealing under a different label [and] has transformed this Court's temporary sealing order, issued a year ago, into an order that effectively seals the briefing and record in this matter indefinitely." Neither party addressed the stay order or the supreme court's sealing order in the Calco writ.
DISCUSSION
A. Applicable Law
Both state and federal courts recognize a general right of the public to access court proceedings and court records. The right is grounded in the common law, see Nixon v. Warner Commc'ns, Inc. , 435 U.S. 589, 597, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978) (recognizing a general common-law right to copy and inspect public records and documents, including judicial records and documents), the First Amendment, see e.g., Hartford Courant Co. v. Pellegrino , 380 F.3d 83, 91–92 (2d Cir. 2004), and the "open courts" or "free speech" provisions of the Texas Constitution, see Garcia v. Peeples , 734 S.W.2d 343, 349 (Tex. 1987) (orig. proceeding). As we recognize, the right is not absolute regardless of the source. Rather, it establishes a presumption of public access to court records that can be overcome in a particular case. Nixon , 435 U.S. at 597, 98 S.Ct. 1306 ; In re M-I L.L.C. , 505 S.W.3d 569, 577–78 (Tex. 2016) (orig. proceeding).
In Texas, the presumption of public access is found in rule 76a, which governs efforts to seal or unseal court records in most cases. Rule 76a establishes the presumption that most court records should remain open to public view with limited exceptions. The rule allows courts to grant sealing orders only after confirming that any private interest at stake outweighs the extensive public interest in access to information. See C. Smith, G. Schmidt, A. Smith, Finding a Balance Between Securing Confidentiality and Preserving Court Transparency: A Re-Visit of Rule 76a and Its Application to Unfiled Discovery , 69 SMU L. REV . 309, 312 (2016).
In particular, rule 76a provides that "court records," as defined by the rule, are "presumed to be open to the general public" and may only be sealed by showing:
(a) a specific, serious and substantial interest which clearly outweighs:
(1) this presumption of openness;
(2) any probable adverse effect that sealing will have upon the general public health or safety;
(b) no less restrictive means than sealing records will adequately and effectively protect the specific interest asserted.
Rule 76a contains a broad definition of "court records." The "court records" subject to the rule include documents filed in court in civil cases, with some exceptions, and unfiled discovery or settlement agreements seeking to restrict disclosure of information concerning matters that "have a probable adverse effect" upon public health, the administration of public office, or the operation of government. See id.
Rule 76a establishes notice and hearing procedures for obtaining a sealing order and allows for temporary sealing orders based on the showing of "compelling need from specific facts shown by affidavit or verified petition" that the applicant will suffer immediate and irreparable injury. See id. Rule 76a further specifies the contents of an order sealing records and deems orders relating to the sealing or unsealing of court records to be final, appealable judgments. But the "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." Id.
There is little precedent regarding sealing records in the appellate courts. See Navasota Res. v. First Source Tex., Inc. , 206 S.W.3d 791, 793 (Tex. App—Waco 2006, no pet.) (dissenting opinion to sealing order). Courts of appeals are authorized to seal court records to protect their jurisdiction. See Dallas Morning News v. Fifth Court of Appeals , 842 S.W.2d 655, 657–58 (Tex. 1992) (orig. proceeding) (court had authority to seal record to protect its jurisdiction in appeal from order denying rule 76a sealing request).
When the trial court has already entered a rule 76a sealing order covering the relevant portion of the record, if the order is unchallenged, courts may grant motions to extend that protection to the relevant portions of the record filed on appeal. See e.g., Tindall v. Nationsbank of Tex., N.A. , 05-97-01843-CV, 1998 WL 324731, at *1 (Tex. App—Dallas June 22, 1998, no pet.) (per curiam) (not designated for publication).
When there is no sealing order in place, courts have determined rule 76a governs the sealing of records or documents filed in the court of appeals, so the appellate record should not be sealed until the trial court has entered a sealing order after following the procedures of rule 76a. See, e.g., Navasota , 206 S.W.3d at 793–94. The parties may not enter a Rule 11 agreement to skirt the requirements of rule 76a. Similarly, it is doubtful that an agreed sealing order submitted to a trial court for signature without following the strict requirements of rule 76a will protect the records sought to be sealed from public disclosure if challenged. This Court has previously granted access to documents filed under seal where the record did not show compliance with rule 76a. If the trial court has not entered a sealing order, appellate courts abate the appeal or temporarily seal the filed documents to allow the trial court to conduct a hearing to determine whether the requirements of rule 76a have been satisfied and to make findings on whether the contents of the record should be sealed. See e.g., Griffin v. Birkman , No. 03-06-00412-CV, 2006 WL 6041819, at *1 (Tex. App—Austin Nov. 16, 2006, no pet.) (mem. op.).
Additionally, leaving records unsealed in the trial court for several months may result in waiver of the right to have the appellate record sealed. See Envtl. Procedures, Inc. v. Guidry , 282 S.W.3d 602, 636 (Tex. App—Houston [14th Dist.] 2009, pet. denied) (concluding that, even assuming court of appeals had authority to seal record under rule 76a, appellee had waived right to seal appellate record by waiting seven months after record was filed before moving to seal, and record remained unsealed in the trial court).
B. Analysis
Here, the trial court issued a protective order requiring any portion of Paxton's deposition to be for "Attorneys' Eyes Only" and providing for written notice if any portion of the deposition was to be filed with the trial court so that Paxton could either consent to use of the deposition or file a motion to seal. Relators noticed real party, and Paxton filed a motion to seal pursuant to rule 76a. Thereafter, both relators, Paxton, and real parties filed the deposition or portions of the deposition as exhibits to various motions and responses subject to the protective order. Thus, the Paxton deposition is unquestionably a "court record" and presumed to be open to the public. See TEX. R. CIV. P. 76a(1),(2)(a).
When filed in this Court, the Paxton deposition was subject to the trial court's amended protective order and there was a pending motion to seal the deposition under rule 76a. Thus, we issued a temporary sealing order pending resolution of the 76a motion. See TEX. R. APP. P. 9.2(c)(3). More than a year later, that 76a motion remains pending. It is well recognized that the interests of litigants in certain lawsuits can sometimes be in conflict with maintaining open courts and ensuring public access to the court records we are charged with protecting.4
In a situation like this, the appellate court finds itself faced with multiple unsatisfactory alternatives. First, the court might request a status report on the pending motion to seal and then inform the parties that the Court is inclined to unseal the record on its own motion.
Second, the court might reason that a party such as Paxton had waived his right to seal the record by not pursuing a ruling on the 76a motion. However, on this record, the supreme court's stay order in Calco likely prevents such a conclusion in this case.
Finally, the court might issue an order lifting the stay, give the parties a limited amount of time to obtain a ruling on the pending motion to seal, and inform the parties that the Court will vacate its temporary sealing order subject to any order issued by the trial court. If the trial court ruled on the motion to seal, that order would be subject to appeal. Should the trial court fail to rule, a party, or potential intervenor, could file a petition for writ of mandamus on that basis. Going forward, I would recommend such an approach from the beginning. In light of the supreme court's sealing order in the Calco writ, we are constrained and bound by the temporary sealing orders applicable in this cause.
See Tex. R. Civ. P. 76a(8) (any order (or portion of order or judgment) relating to sealing or unsealing court records shall be deemed severed from case and a final judgment which may be appealed by any party or intervenor who participated in hearing preceding issuance of such order).
I fully embrace the importance of protecting certain confidential information. However, failure to follow rule 76a jeopardizes the concepts of open courts and public access, wastes valuable judicial resources, and lets parties hide information that should not be protected.
Goldstein, J., joining.