AUSTIN – The Texas Supreme Court recently affirmed an appellate court’s decision to overturn an order sealing eight exhibits that HouseCanary argues protect its trade secrets.
The complex litigation between HouseCanary and Amrock, formerly Title Source, has been occupying Texas appellate courts for several years.
Court records show Amrock had contracted HouseCanary, a real estate analytics firm, to develop an automated valuation model mobile app for appraisers to use on iPads in the field.
However, after HouseCanary failed to produce the app, Amrock sued for breach of contract and developed its own mobile AVM application.
In response, HouseCanary countersued, alleging Amrock misappropriated their purported trade secrets and committed fraud.
At trial, a jury sided with HouseCanary and awarded the company $706 million in damages (bumped up to nearly $740 million once attorney’s fees were tacked on).
The Fourth Court of Appeals overturned the $706 award, finding that the jury’s decision could not stand on possible invalid theories.
Aside from damages, there is another issue that has been bouncing between Texas courts.
On June 19, 2020, the Texas Supreme Court granted HouseCanary’s petition for review, which argues the trial court properly sealed the company’s trade secret exhibits – a ruling that was undone by the Fourth Court.
The Texas Uniform Trade Secrets Act (TUTSA) provides that a “court shall preserve the secrecy of an alleged trade secret by reasonable means.”
The Fourth Court held the trial court abused its discretion by sealing the exhibits under TUTSA and not adhering to Texas Rule of Civil Procedural 76a, which states a hearing will be held in open court a motion to seal records.
Conversely, Amrock argued HouseCanary indisputably failed to follow the procedures for sealing and that the exhibits in question were retroactively sealed six weeks after they had been publicly used in open court without any objection.
The Reporters Committee for Freedom of the Press, along with the Houston Forward Times, also filed a response asking the high court to deny HouseCanary’s petition for review.
On April 30, the Texas Supreme Court affirmed the Fourth Court’s finding, remanding the matter of sealing to the trial court for further proceedings.
“Because TUTSA does not displace Rule 76a entirely and offer a separate path to sealing, the trial court abused its discretion by granting the motion to reconsider,” the opinion states. “Accordingly, we affirm the portion of the court of appeals’ judgment that reverses the trial court’s order granting HouseCanary’s motion and sealing the fourteen exhibits.”
Chief Justice Nathan Hecht, joined by Justice Jane Bland, issued a concurring opinion, in which he writes that “HouseCanary’s battle is just beginning.”
“This Court now holds that to continue protecting the trade secrets that the jury found were wrongfully taken from it, HouseCanary must fight the whole world,” Hecht opines. “As the Court sees it, while Title Source may have no right to HouseCanary’s trade secrets, Title Source’s wrongdoing might have given the public a right to those secrets.
“This outcome is contrary to both the Texas Uniform Trade Secrets Act … and common sense.”
Chip Babcock of Jackson Walker LLP, lead attorney for Reporter’s Committee, says the win is an important one for the public and the news media.
"The Supreme Court reaffirmed Texas’ long commitment to open government through its rule guaranteeing access to judicial records recognizing, at the same time, that there can be business interests in legitimate, properly protected trade secrets," said Babcock. "The Jackson Walker team was pleased to have achieved this result on behalf of our client the Reporters Committee for Freedom of the Press.”
Babcock was aided by Jackson Walker lawyers Amanda Crouch and Joshua Romero.
HouseCanary is represented in part by David Gunn and Erin Huber, attorneys for the Houston law firm of Beck Redden.
Amrock is represented in part by San Antonio attorney Catherine Stone of Langley & Banack.
Texas Supreme Court case No. 19-0673