Texas Supreme Court Agrees With Railroad - Trade Secrets Needn't Be Disclosed

The Southeast Texas Record is reporting that the Texas Supreme Court has sided with the Union Pacific Railroad in its appeal of a trial court's mandate that its rates for hauling hazardous materials needed to be turned over to the plaintiffs in a hazardous materials spill case.

The trial court did enter an order restricting those who could view the rate structures, but that alone does not ensure that an order will not violate the trade secret privilege," they wrote in an unsigned opinion. They wrote that they "would have difficulty concluding that evidence of damages, even punitive damages, could not be found anywhere but through trade secrets. "Plaintiff Kathleen Constanzo failed to show that rate structures were material and necessary to the case, they wrote.

Constanzo and her neighbors sued Union Pacific after a train derailed and toxic chlorine gas hissed from a broken tank car. The chlorine belonged to Occidental Chemical, or OxiChem. The neighbors alleged negligence and sought damages for injuries from inhaling. They claimed Union Pacific should have positioned the chlorine car farther back and shouldn't have placed hazardous cargo next to a steel car.

In a deposition, Union Pacific chemical transportation safety manager Timothy O'Brien said crews could put hazardous cargo anywhere but within five cars of an engine.

Plaintiffs then served notice on Union Pacific to produce rates for shipping hazardous material and the methods for calculating rates. Union Pacific moved to quash the notice, and Pozza denied the motion. Facing an appeal, plaintiffs amended the notice. They narrowed it to a comparison of OxiChem chlorine rates and rates for less hazardous materials.Union Pacific again moved to quash, and Pozza again denied the motion. She ordered disclosure only to attorneys and necessary employees.

Union Pacific sought a writ of mandamus at the Fourth District, and lost. It then sought a writ of mandamus at the Supreme Court, and won.

"If the information is a trade secret and the requesting parties do not need it, an order that requires disclosure is a clear abuse of discretion," the justices wrote. They wrote that all plaintiffs but Constanzo have settled their claims. The justices relied on Union Pacific safety executive Robert Worrell, who swore by affidavit that customers and competitors don't know the information. "The information is not even generally known throughout the company," he wrote.

The justices couldn't understand why Constanzo wanted to see the rates. They wrote, "Constanzo claims she has no alternative means of proving that Union Pacific recognized, yet disregarded, a higher duty with respect to hazardous materials.""It is unclear to us, and Constanzo has not explained, why she needs the specific rate structures to advance this negligence theory," they reasoned.