In re Jeanie Nolle (Tex.App.- Houston [1st Dist.] Jun 12, 2008)(Keyes)
(
discovery mandamus granted in part)
GRANT PETITION FOR WRIT OF MANDAMUS: Opinion by
Justice Evelyn Keyes  
Before Justices Taft, Keyes and Alcala
01-07-01065-CV        In re Jeanie Nolle and Technical Solutions, Inc.
Appeal from 113th District Court of Harris County
Trial Court
Judge: Hon. Patricia Hancock

O P I N I O N

Relators, Jeanie Nolle and Technical Solutions, Inc. ("TSI"), filed a petition for writ of mandamus
seeking to challenge the trial court's November 14, 2007 discovery orders in favor of real parties in
interest Cheryl Kerry and Full Staff, Inc. ("Full Staff"). (1) TSI complains that (1) requests for
production of correspondence between TSI and three particular technicians and for production of any
documents referring to Kerry were overbroad and (2) requests for production of documents and
depositions relating to a lawsuit between Nolle and her former employer were not relevant or
reasonably calculated to lead to the discovery of admissible evidence.

We grant in part and deny in part.

Background

Nolle is the owner, president, and CEO of TSI. Kerry began working for TSI in August and signed a
contract that included confidentiality and non-competition provisions. TSI terminated Kerry's
employment in September 2005. In 2006, TSI discovered that Kerry was operating a competing
business, Full Staff.

TSI filed suit against Kerry and Full Staff in February 2007, alleging breach of the confidentiality and
non-competition clauses of the contract, misappropriation of trade secrets, including misappropriation
of a recruiting database, common law misappropriation, tortious interference with a contract,
conversion, civil conspiracy and violations of the Theft Liability Act. (2) Full Staff filed a general denial
and alleged the affirmative defenses of failure of consideration, waiver, unclean hands and estoppel.
Full Staff also filed counterclaims against TSI for defamation, business disparagement, tortious
interference with a prospective contract, and attorney's fees and for a declaratory judgment that the
non-competition agreement is not valid or enforceable or, alternatively, that it is overbroad. Full Staff
also made a claim for attorney's fees under section 15.51(c) the Texas Business and Commerce
Code. (3)

Some of Full Staff's affirmative defenses and counterclaims arise out of its knowledge of litigation
between Nolle and her previous employer, Medical Staffing Network ("MSN"). Nolle first began working
for MSN when that company bought Nolle's then employer, Staff Relief, Inc. Nolle's employment with
MSN was terminated in 1999, and she started TSI in January 2000. Once Nolle started TSI, MSN filed
a lawsuit against her in Florida claiming misappropriation of trade secrets ("Florida lawsuit"). In March
2000, Nolle filed a declaratory action against MSN, which sought to establish that her non-competition
agreement with MSN was unenforceable in Dallas. The Florida case was dismissed due to lack of
personal jurisdiction over Nolle in 2001. The parties entered into a confidential settlement agreement
in August 2002, which resulted in MSN and Nolle dissmissing all remaining claims against each other.

In July 2007, Full Staff made the following requests for production:

REQUEST FOR PRODUCTION NO. 8: Please produce a copy of the original and amended petitions
and answers filed in the Florida lawsuit brought by MSN against [Nolle] and/or TSI.


REQUEST FOR PRODUCTION NO. 9: Please produce the transcript of any deposition testimony
given by [Nolle] in the Florida lawsuit brought by MSN against [Nolle] and/or TSI.


REQUEST FOR PRODUCTION NO. 10: Please produce a copy of any affidavit signed by [Nolle] in the
Florida lawsuit brought by MSN against [Nolle] and/or TSI.


REQUEST FOR PRODUCTION NO. 11: Please produce a copy of the non-competition agreement
[Nolle] signed with MSN.


REQUEST FOR PRODUCTION NO. 12: Please produce copies of correspondence between TSI
and/or [Nolle] and Sonny Khan.


REQUEST FOR PRODUCTION NO. 13: Please produce copies of correspondence between TSI
and/or [Nolle] and Rickey Griffith.


REQUEST FOR PRODUCTION NO. 14: Please produce copies of correspondence between TSI
and/or [Nolle] and Kim Rose.


REQUEST FOR PRODUCTION NO. 15: Please produce copies of any document referring to [Kerry].


TSI objected to requests for production 12-15, claiming that the requests were overbroad because
they were not limited in time and scope or to subject. TSI objected to requests for production 8-11,
claiming that documents from the Florida case were not relevant to the current case and that the
requests were not calculated to lead to admissible evidence, and they were designed to harass and
needlessly increase the cost of litigation.

In October 2007, Full Staff filed requests for letters rogatory compelling the deposition of Patricia
Donohoe, an employee of MSN who was involved in the Florida lawsuit, and for deposition on written
questions to MSN. In the subpoena requiring MSN's custodian of records to appear at the deposition,
Full Staff requested that MSN produce all correspondence sent to or received from Nolle, any
contracts or agreements entered into by MSN and Nolle, all court pleadings or documents filed by or
served on MSN in the Florida lawsuit, and all correspondence between MSN's and Nolle's counsel of
record in the Florida case.

TSI objected to these requests for depositions, claiming details of the Florida suit are not relevant to
the present case and the Florida documents and depositions are not reasonably calculated to lead to
the discovery of admissible evidence. TSI requested a hearing on its objection to the depositions. The
trial court set a submission date of November 23, 2007 for a hearing on TSI's objection.

On November 14, 2007, the trial court issued an order compelling the production of the documents
Full Staff requested in requests for production 8-15 and two orders approving the requested
depositions. An oral hearing was held on November 26, 2007, during which the trial court confirmed
its orders of November 14, 2007.

Nolle filed this petition for writ of mandamus, requesting that we order the trial court to vacate all of the
November 14, 2007 orders and sign an order denying the requested discovery, or that we grant any
other relief to which TSI is entitled.

Requests for Production 12-15

Standard of Review

Mandamus relief is appropriate only if a trial court abuses its discretion and no adequate appellate
remedy exists. In re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003). The heavy burden of establishing
an abuse of discretion and an inadequate appellate remedy is on the party resisting discovery. Id. A
trial court commits a clear abuse of discretion when its action is "so arbitrary and unreasonable as to
amount to a clear and prejudicial error of law." Id. (quoting CSR Ltd. v. Link, 925 S.W.2d 591, 596
(Tex. 1996)).

The scope of discovery is largely within the trial court's discretion. In re Colonial Pipeline Co., 968
S.W.2d 938, 941 (Tex. 1998) (citing Dillard Dept. Stores, Inc. v. Hall, 909 S.W.2d 491, 492 (Tex.
1995)). Texas Rule of Civil Procedure 192.3 allows a party to "obtain discovery regarding any matter
that is not privileged and is relevant to the subject matter of the pending action, whether it relates to
the claim or defense of the party seeking discovery or the claim or defense of any other party." Tex.
R. Civ. P. 192.3(a). The comments to Rule 192 further state, however, "While the scope of discovery
is quite broad, it is nevertheless confined by the subject matter of the case and reasonable
expectations of obtaining information that will aid resolution of the dispute." Tex. R. Civ. P. 192 cmt. 1;
see also CSX, 124 S.W.3d at 152 ("Although the scope of discovery is broad, requests must show a
reasonable expectation of obtaining information that will aid the dispute's resolution."); Dillard, 909
S.W.2d at 492 ("[A] discovery order that compels overly broad discovery 'well outside the bounds of
proper discovery' is an abuse of discretion for which mandamus is the proper remedy.") (quoting
Texaco, Inc. v. Sanderson, 898 S.W.2d 813, 815 (Tex. 1995)).

In determining whether the trial court abused its discretion, we are mindful that the ultimate purpose of
discovery is to seek the truth, so that disputes may be decided by what the facts reveal, not by what
facts are concealed. Brewer & Pritchard, P.C. v. Johnson, 167 S.W.3d 460, 467 (Tex. App.--Houston
[14th Dist.] 2005, pet. denied) (citing Colonial Pipeline, 968 S.W.2d at 941). Therefore, discovery is
not limited only to information that will be admissible at trial. Tex. R. Civ. P. 192.3(a); Eli Lilly & Co. v.
Marshall, 850 S.W.2d 155, 160 (Tex. 1993). However, a trial court must determine whether the
requested discovery "appears reasonably calculated to lead to the discovery of admissible evidence."
Tex. R. Civ. P. 192.3(a); Eli Lilly, 850 S.W.2d at 160. The scope of discovery is also limited by the
legitimate interests of the opposing party to avoid overly broad requests, harassment, or disclosure of
privileged information. Tex. R. Civ. P. 192.4; In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex.
1998).

Requests for production must be "reasonably tailored to include only matters relevant to the case."
Am. Optical, 988 S.W.2d at 713; see also CSX, 124 S.W.3d at 152-53 ("A central consideration in
determining overbreadth is whether the request could have been more narrowly tailored to avoid
including tenuous information and still obtain the necessary, pertinent information."). However, "[a]
reasonably tailored discovery request is not overbroad merely because it may include some
information of doubtful relevance." Am. Optical, 988 S.W.2d at 713. The Texas Supreme Court has
specifically recognized that parties must be allowed some latitude in creating discovery requests. Id.
(quoting Texaco, 898 S.W.2d at 815).

Analysis

TSI complains that the requests for production of correspondence between TSI and histologists Khan,
Griffith, and Rose and the request for production of documents referring to Kerry are overbroad. We
disagree. TSI specifically named two of the three histologists as people Kerry contacted in violation of
her agreement with TSI. Kerry is a party accused of breach of contract, misappropriation of trade
secrets, common law misappropriation, tortious interference with contract, conversion, civil conspiracy
and liability under the Theft Liability Act, acting either alone or through Full Staff.

Full Staff anticipates that the requested communications will reveal the nature of TSI's relationship
with the three named histologists, the terms of their employment through TSI, and the nature of the
communication between TSI and these individuals after TSI terminated Kerry's employment and will,
therefore, "shed light on whether TSI may claim these individuals' identities and contact information as
proprietary information. Information about whether or not these individuals are or were actually
employed by TSI, how they came to be involved with TSI, and the nature of their interactions with TSI
both before and after Kerry's alleged misdeeds is necessary for Full Staff to address TSI's claims that
Kerry breached her confidentiality and non-competition agreement, that Full Staff interfered with a
contract, and that Kerry misappropriated trade secrets in the form of a client database. Information
regarding Nolle's and TSI's representations about Kerry and Full Staff is also relevant to Full Staff's
counter-claims of defamation and interference with a potential contract. This same reasoning applies
to the terms of Kerry's employment, termination and subsequent relationship with TSI and Nolle. None
of these discovery requests could have been more narrowly tailored and still have obtained the
necessary information. See CSX, 124 S.W.3d at 153.

As TSI correctly points out, orders compelling production of documents from "an unreasonably long
time period or from distant and unrelated locales are impermissibly overbroad." CSX, 124 S.W.3d at
152. However, the cases in which the Texas Supreme Court has granted mandamus relief for overly
broad requests for production in the past are clearly distinguishable from the present case. The CSX
court points out several examples:

[I]n American Optical, an asbestos-litigation case, the trial court ordered the defendant to turn over
every document ever produced relating to asbestos. We held the order was overbroad, because
"ordering a defendant to produce virtually all documents regarding its products for a fifty-year period
is an abuse of . . . discretion." In Dillard, we held the trial court's order was overly broad, because it
required Dillard to produce every incident report filed between 1985 and 1990 in all 227 Dillard stores
nationwide. The Court explained that "requests for document production may not be used simply to
explore." Finally, in Texaco, the plaintiffs claimed injurious workplace exposure to benzene and
requested all safety and toxicology documents written by the corporate safety director, including those
documents regarding other employees' exposure and plants where the plaintiffs never worked. The
request also extended into a time period during which the plaintiffs did not work with the company.


CSX, 124 S.W.3d at 152 (citing Am. Optical, 988 S.W.2d at 713; Dillard, 909 S.W.2d at 492; Texaco,
898 S.W.2d at 814) (internal citations omitted). In CSX, the Court held that "[a] request to identify all
safety employees who worked for Relators over a 30-year period, even though [real party in interest]
never worked for Relators or for their parent company for that length of time, qualifies as the kind of
'fishing expedition' this Court has repeatedly struck down." Id. at 153.

Here, the document requests are narrowly tailored enough to avoid including tenuous information
while still obtaining the necessary, relevant information. See id. Full Staff has narrowed its requests
for documents to the four people whose relationships with TSI it deemed to be central to several of
the claims and defenses at issue. Two of those histologists were named by TSI in its answers to
interrogatories and were the subject of very similar interrogatory requests by TSI. Full Staff's
discovery requests are in sharp contrast to the requests that were struck down in American Optical, in
which plaintiffs requested virtually every document American Optical had created on its products over
a 50-year period. Id. at 152.

Furthermore, Full Staff's requests for correspondence between TSI or Nolle and the three histologists
and for documents referring to Kerry are also inherently limited as to the relevant time period. The
circumstances under which Kerry first made contact with Nolle and TSI, her hiring in 2004, her
performance as an employee, the terms of her dismissal in 2005, her formation of Full Staff in 2006,
and her actions leading up to the filing of the lawsuit in 2007 are all closely related to the claims in the
suit. At most, Full Staff seeks four years' worth of documents, unlike American Optical, in which the
requested documents spanned a 50-year period, or CSX, in which the requested documents spanned
a 30-year period. Id. at 152-53.

The fact that the document requests spanning the entire length of TSI's relationship with Khan,
Griffith, Rose, and Kerry might also include some information of doubtful relevance does not mean the
requests for production were overly broad. See Am. Optical, 988 S.W.2d at 713. Therefore, the trial
court did not abuse its discretion in compelling TSI to produce the documents asked for in Full Staff's
requests for production 12-15. See CSX, 124 S.W.3d at 151.

We refuse to grant relief on the basis of TSI's objections to requests for production 12-15.

Requests for Production 8-11 & Depositions of Donohoe and MSN

Full Staff anticipates that the documents and depositions relating to the Florida lawsuit will lead to
evidence that is admissible to prove their defenses of unclean hands and estoppel, and their claims
for attorney's fees and to establish that Nolle's customer lists and other information allegedly
misappropriated by Kerry do not qualify for protection as trade secrets. TSI argues that the discovery
into the Florida litigation sought by Full Staff is beyond the scope of discovery because it is not
relevant to the present case or reasonably calculated to lead to the discovery of admissible evidence.

Full Staff argues that it is seeking documents and depositions relating to the Florida lawsuit to support
its affirmative defenses of unclean hands and estoppel. "Unclean hands" is an affirmative defense
available when the plaintiff is seeking an equitable remedy. In re EGL Eagle Global Logistics, L.P., 89
S.W.3d 761, 766 (Tex. App.--Houston [1st Dist.] 2002, orig. proceeding). The alleged wrongful acts
must have injured the person raising the defense. Right to Life Advocates, Inc. v. Aaron Women's
Clinic, 737 S.W.2d 564, 571 (Tex. App.--Houston [14th Dist.] 1987, writ denied) (citing Omohundro v.
Matthews, 341 S.W.2d 401, 410 (Tex. 1960)). However, the information about the Florida lawsuit is
not relevant to Full Staff's unclean hands defense because any alleged wrongful act harmed a third
party, not Kerry. Full Staff argues that Kerry was harmed because she is now subject to litigation over
the same information Nolle took from MSN, but this argument is tenuous at best. Strictly speaking, the
present case is based on a completely separate employment relationship, governed by a separate
contract containing confidentiality and non-competition clauses between Kerry and TSI. MSN settled
all of its claims against Nolle and TSI in 2002 and has no interest in the current litigation.

Furthermore, information from the Florida lawsuit is not discoverable for purposes of Full Staff's
equitable estoppel claim because it is not likely to lead to admissible evidence that Nolle knowingly
made false representations to Kerry or that Kerry relied on those representations to her detriment.
See Schroeder v. Tex. Iron Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991) (holding that equitable
estoppel requires party to prove false representation or concealment of material facts made with
actual or constructive knowledge of those facts with intent that representation will be acted on and
that party to whom representation was made was without knowledge or means of knowledge and
detrimentally relied on misrepresentation). Kerry first began working for Nolle in 2004--at least four
years after the events that were the subject of the Florida lawsuit. Furthermore, the Florida case was
dismissed for want of jurisdiction over Nolle, so nothing in that suit could have given Nolle knowledge
of any of the substantive legal claims involved, even if they had been identical to those in the present
case.

This same logic applies to Full Staff's claims that it also expects discovery to lead to evidence
supporting its claims for attorney's fees under section 15.51(c) of the Texas Business & Commerce
Code. Section 15.51(c) provides:

If the primary purpose of the agreement to which the covenant is ancillary is to obligate the promisor
to render personal services, the promisor establishes that the promisee knew at the time of the
execution of the agreement that the covenant did not contain limitations as to time, geographical area,
and scope of activity to be restrained that were reasonable and the limitations imposed a greater
restraint than necessary to protect the goodwill or other business interest of the promisee, and the
promisee sought to enforce the covenant to a greater extent than was necessary to protect the
goodwill or other business interest of the promisee, the court may award the promisor the costs,
including reasonable attorney's fees, actually and reasonably incurred by the promisor in defending
the action to enforce the covenant.

Tex. Bus.& Com. Code Ann. § 15.51(c) (Vernon 2002).

Full Staff argued in its reply to TSI's objections that Nolle is seeking to enforce an agreement that she
knew to be unenforceable because of her previous litigation with MSN. No court or fact-finder ever
determined the enforceability of MSN's non-competition agreement with Nolle, so even if the clauses
involved and the circumstances surrounding the creation and breach were substantially similar, the
Florida litigation could not have put Nolle on notice that she was seeking to enforce an unenforceable
agreement. See id.

Full Staff also argues that the requested discovery will allow it to determine whether TSI's client list
and the other "trade secrets" Kerry allegedly misappropriated actually qualify as trade secrets. See In
re Bass, 113 S.W.3d 735, 739 (Tex. 2003) (holding that courts should examine six factors to
determine if trade secret exists, including extent to which it is known by employees and other in
business, amount of effort or money expended developing information, and ease or difficulty with
which information could be properly acquired or duplicated by others). Full Staff argues that evidence
that Nolle acquired the client list and other materials from her previous employer is relevant in
determining the amount of effort Nolle expended in developing the information and the ease or
difficulty with which the information could be acquired or duplicated by others. See id.

We cannot conclude that Full Staff's discovery requests regarding the Florida lawsuit are reasonably
calculated to lead to the discovery of admissible evidence. See Tex. R. Civ. P. 192.3(a). No fact finder
ever determined whether or not Nolle misappropriated trade secrets. Therefore, Full Staff is seeking
discovery of claims that were dismissed under the terms of a confidential settlement agreement
between Nolle and MSN. At most, Full Staff will only uncover MSN's allegations of wrong-doing against
Nolle, which are not admissible to prove or disprove any of Nolle's allegations of wrong-doing against
Kerry and Full Staff. See Tex. R. Evid. 404(b) ("Evidence of other crimes, wrongs or acts is not
admissible to prove the character of a person in order to show action in conformity therewith.").

Indeed, the information sought from the Florida lawsuit could only be used in an attempt to relitigate
the issues between MSN and Nolle in the present case. Allowing Full Staff to discover a settlement
agreement to introduce settled claims would generally undermine the enforceability of settlement
agreements. Courts must enforce settlement agreements if they are to remain an effective means of
resolving disputes and promoting judicial economy. Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1370
(Fed. Cir. 2001). An attempt by an outside, interested party to relitigate settled issues undermines the
finality and judicial economy of settlement agreements. See Hallco Mfg. Co., Inc. v. Foster, 256 F.3d
1290, 1294-95 (Fed. Cir. 2001); Public Citizen v. Ins. Servs. Office, Inc., 824 S.W.2d 811, 813 (Tex.
App.--Austin 1992, no writ).

Full Staff cites several authorities that it argues support its ability to conduct discovery into the
litigation between Nolle and MSN. See Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 850 (Tex. 1992);
Allen v. Humphreys, 559 S.W.2d 798, 803 (Tex. 1977), overruled on other grounds, Walker v. Packer,
827 S.W.2d 833 (Tex. 1992); In re Rogers, 200 S.W.3d 318, 324 (Tex. App.--Dallas 2006, orig.
proceeding); In re Ernst & Young, L.L.P., No. 05-02-00352-CV, 2002 WL 779296, at *2 (Tex.
App.--Dallas April 30, 2002, orig. proceeding) (not designated for publication); Humphreys v. Caldwell,
881 S.W.2d 940, 945 (Tex. App.--Corpus Christi 1994, orig. proceeding); Methodist Home v. Marshall,
830 S.W.2d 220, 222-23 (Tex. App.--Dallas 1992, orig. proceeding); State Farm Mut. Auto. Ins. Co. v.
Engelke, 824 S.W.2d 747, 751 (Tex. App.--Houston [1st Dist.] 1992, orig. proceeding). We find these
authorities distinguishable. In many of the cases cited by Full Staff, the discovery requests involved
general information about whether or not the opposing party had ever been sued on a similar claim,
rather than seeking particular information such as the taking of trade secrets. See Chrysler Corp.,
841 S.W.2d at 850; In re Ernst & Young, 2002 WL 779296, at *2; Caldwell, 881 S.W.2d at 945;
Methodist Home, 830 S.W.2d at 222-23; Engelke, 824 S.W.2d at 751. When discovery of material
related to other lawsuits and complaints was allowed, the information sought had a direct, material
connection to the instant litigation. See Allen, 559 S.W.2d at 803-04 (holding that discovery
information relating to previous lawsuits and complaints was allowed because it was "material to the
issue of causation" because party could establish pattern of disease and because that information
was "unavailable from any other source").

Another case cited by Full Staff held that a party cannot obtain production of documents for its
current lawsuit without regard to the limitations imposed in other lawsuits. See In re Rogers, 200
S.W.3d at 324 (holding that trial court abused its discretion in compelling production of documents
from another lawsuit that were subject to confidentiality agreement or protective orders). Here, Full
Staff is seeking documents from a lawsuit in which all claims were dissmissed pursuant to a
confidential settlement agreement. As discussed previously, settlement agreements protect parties
from the relitigation of the settled claims. See Hallco II, 256 F.3d at 1294-95; Public Citizen, 824
S.W.2d at 813.

Therefore, we hold that the trial court abused its discretion in ordering TSI to produce the documents
in Full Staff's requests for production 8-11 and for ordering the depositions of Donohoe and MSN.
See Colonial Pipeline, 968 S.W.2d at 941. A discovery order compelling discovery that is well outside
the bounds of proper discovery is an abuse of discovery for which the proper remedy is mandamus
relief. Dillard, 909 S.W.2d at 492 (quoting Texaco, 898 S.W.2d at 815).

Conclusion

We conditionally grant TSI's request for mandamus relief as it relates to requests for production 8-11
and the depositions of Donohoe and MSN. The writ will issue only if the trial court fails to amend its
order appropriately. We deny TSI's request for mandamus relief as it relates to requests for
production 12-15. All pending motions are overruled as moot.

Evelyn V. Keyes

Justice


Panel consists of Justices Taft, Keyes, and Alcala.

1. The underlying lawsuit is Technical Solutions, Inc. v. Cheryl R. Kerry and Full Staff, Inc., Cause No.
2007-06188, in the 113th District Court of Harris County, Texas.

2. See Tex. Civ. Prac. & Rem. Code Ann. § 134 (Vernon 2005) (making a person who commits theft
liable for damages resulting from theft, including actual damages, additional damages not to exceed
$1,000, and reasonable costs and attorney's fees).

3. See Tex. Bus. & Com. Code Ann. § 15.51(c) (Vernon 2002).