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In a decision that could have far-reaching effects on discovery in civil suits, the Texas Supreme Court held recently that a man’s mere access to documents sought by his ex-wife in a post-divorce enforcement action doesn’t mean that he can disclose the materials. On Dec. 19, the state Supreme Court held in In Re: Hal G. Kuntz that Houston’s 311th District Court erred when it ordered Kuntz, a geologist and general manager of the Houston office of the CLK Co., to produce to his former wife certain letters of recommendation (LORs) owned by a client that detailed where that client should drill for oil and gas in the Gulf of Mexico. In the mandamus proceeding, the court decided a question of first impression regarding how to interpret and apply the phrase “possession, custody or control” in Texas Rules of Civil Procedure 192.3(b) and 192.7(b), wrote Justice Steven Smith, author of the court’s opinion. Eight members of the court joined Smith in the opinion, but Justice Harriet O’Neill concurred only in the judgment. Justice Nathan Hecht wrote a concurring opinion in which he was joined by Justices Priscilla Owen, Michael Schneider and Dale Wainwright. Wainwright also filed a separate concurring opinion. Attorneys for Kuntz say the decision and concurring opinions will have an impact on issues of discovery and trade secrets. “You can’t just slap a subpoena on somebody [to obtain material] just because he has access to it,” says Gib Walton, a partner in Houston’s Vinson & Elkins. “Just because you have physical access to trade secrets doesn’t mean you have possession under the rules for production of documents,” says Marie Yeates, another V&E partner who argued on Kuntz’s behalf before the state Supreme Court in September. Yeates says it is not unusual for one party to hold trade secrets for another party. “I physically have trade secrets [owned by a client] in my file cabinets,” she says. “Our position was Mr. Kuntz had possession, custody or control of the information, and we were entitled to it,” says Billy Shepherd, a partner in Cruse, Scott, Henderson & Allen in Houston. Shepherd argued for the ex-wife, Vesta Frommer, at the state Supreme Court. “The decision overturns what I understood to be the law for many, many years,” says Thomas R. Conner, a shareholder in Houston’s Conner & Lindamood who was trial and appellate counsel for Frommer. Conner says discovery in Texas historically has been “wide-open and easily accessible.” As a result of this opinion, he says, discovery is going to be more difficult in the future. Shepherd and Conner say no decision has been made whether to file a motion for rehearing with the state Supreme Court. PRODUCING LETTERS OF RECOMMENDATION According to Smith’s opinion, Kuntz agreed when the couple divorced in 1999 that his former wife had the right to 25 percent of his royalty interests in oil and gas wells drilled by McMoran Oil & Gas (MOXY) based on recommendations made by CLK during the 15-year period when the couple was married. CLK evaluated oil and gas prospects for MOXY and detailed its findings and recommendations in the letters of recommendation, the opinion said. Smith noted in the opinion that the consulting agreement between MOXY and CLK provides that the data and information obtained or compiled by CLK for MOXY belongs to MOXY. Smith wrote in the opinion that Frommer filed a motion to compel discovery in May 2001, asking that Kuntz be required to produce all LORs written during the period of the couple’s marriage that contained positive findings for oil and gas. While the motion was pending, Kuntz requested permission from MOXY and CLK to release the documents and both companies denied his request, according to the opinion. In December 2001, Judge Douglas Warne, presiding judge of the 311th District Court, found that the LORs are trade secrets but ordered Kuntz to produce almost 2,000 of the letters in which CLK made positive recommendations regarding drilling. The 14th Court of Appeals in Houston denied Kuntz’s petition for a writ of mandamus in an unsigned opinion issued in April 2002. Justices Leslie Brock Yates, Charles Seymore and Eva Guzman sat on the 14th Court panel that considered the petition. Joan Jenkins, a partner in Houston’s Short & Jenkins and Kuntz’s trial counsel, says that turning over the LORs would cause Kuntz to breach the contract with MOXY. If he didn’t turn over the documents, he faced a contempt charge and jail, Jenkins says. “The choices were so onerous, it was really a terrible burden on him,” she says. Kuntz argued in his brief to the state Supreme Court that he should produce an LOR only when MOXY has assigned him an interest or drilled a well. In her brief to the state Supreme Court, Frommer argued that producing LORs only when wells are drilled would force her to litigate her rights to a share one well at a time and could take up to 10 years. Conner says Frommer won’t know which wells CLK recommended for drilling unless she sees the LORs. Frommer is reduced to taking Kuntz’s word regarding which wells she is owed a percentage of the royalties on, he says. Jenkins says MOXY offered to release the LORs as soon as a well is drilled and producing but that Frommer doesn’t trust that arrangement. “There’s never been any proof of wrongdoing by MOXY or my client,” Jenkins adds. John M. McCollam, MOXY’s attorney and a partner in Gordon Arata McCollum in New Orleans, declines comment. In his concurring opinion, Hecht said that Frommer has not shown she is entitled to production of the LORs because they are trade secrets. To obtain discovery of trade secrets, Frommer must show with specificity that the LORs are “necessary or essential to the fair adjudication of the case” and weigh her need for the information contained in the letters against the harm that may result to MOXY from disclosing a trade secret. Wainwright said in a separate concurring opinion that the implication of the court’s decision is that Frommer should obtain the documents, if she should obtain them at all, from MOXY.

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