In Re Kuntz
124 S.W.3d 179 (2003)
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Rule of Law:
An employee's mere access to documents in the course of employment does not constitute "possession, custody, or control" under Texas discovery rules, and therefore the employee cannot be compelled to produce those documents when sued in their individual capacity.
Facts:
- Hal Kuntz and Vesta Kuntz divorced, signing an Agreement Incident to Divorce (AID).
- The AID entitled Vesta to 25% of future overriding royalty interests Hal might receive from McMoRan Oil & Gas (MOXY) on projects recommended by Hal's employer, CLK Company, L.L.C. (CLK), during their marriage.
- Hal was the general manager and a minority owner of CLK, a geological consulting firm whose only client was MOXY.
- CLK created and sent Letters of Recommendation (LORs) to MOXY regarding oil and gas prospects; copies were kept at CLK's offices.
- Hal had unrestricted access to the LORs at his CLK office.
- A consulting agreement between CLK and MOXY stated that all data, including the LORs, belonged exclusively to MOXY and could not be disclosed without MOXY's consent.
- CLK's operating agreement also obligated Hal to maintain the confidentiality of company and client data.
- When Hal requested permission to release the LORs for the lawsuit, both CLK and MOXY formally denied the request in writing.
Procedural Posture:
- Vesta Kuntz filed a petition in a Texas trial court to enforce the property division terms of her divorce agreement with Hal Kuntz.
- During discovery, Vesta served Hal Kuntz with a request for production seeking all 'positive' Letters of Recommendation (LORs) created by his employer, CLK, during their marriage.
- Hal Kuntz objected, arguing he did not have possession, custody, or control of the documents and that they were privileged trade secrets belonging to MOXY.
- Vesta filed a motion to compel production of the LORs.
- After a hearing, the trial court granted Vesta's motion and ordered Hal Kuntz to produce the requested LORs.
- Hal Kuntz then filed a petition for a writ of mandamus in the Supreme Court of Texas, asking it to order the trial court to vacate its discovery order.
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Issue:
Does an employee's access to documents at his workplace, which are physically possessed by his employer and owned by a third-party client, constitute "possession, custody, or control" under Texas Rule of Civil Procedure 192.3(b), thereby requiring him to produce them in a lawsuit against him in his individual capacity?
Opinions:
Majority - Justice Smith
No. An employee's mere access to documents does not constitute 'possession, custody, or control' as defined by the Texas Rules of Civil Procedure. The definition of 'possession, custody, or control' requires either actual physical possession of the item or a legal right to possession that is equal or superior to the person who has physical possession. Hal Kuntz had neither. The documents were in the physical possession of his employer, CLK, and were owned by MOXY. Hal's ability to access them at work for business purposes is not equivalent to physical possession or a legal right to take them. Forcing him to produce the LORs would require him to illegally take his employer's documents, which would violate his confidentiality agreements with both CLK and MOXY.
Concurring - Justice Hecht
No. While I fully join the Court's opinion, the discovery order should also be vacated for the additional reason that the LORs are privileged trade secrets. Vesta Kuntz failed to establish that obtaining all the LORs immediately is essential to the fair adjudication of her claim, which is required to overcome the trade secret privilege. Her need for the information does not outweigh the harm that would result from disclosing confidential information that is largely irrelevant to any wells MOXY might actually drill in the future.
Concurring - Justice Wainwright
No. I agree with the Court's opinion that Hal Kuntz does not have possession, custody, or control of the documents. The proper procedure would have been for Vesta to seek the documents directly from their owner, MOXY, a non-party to the suit. The trial court was faced with balancing Vesta's right to verify compliance with the divorce decree against MOXY's right to protect its trade secrets. By ordering an individual employee to produce documents owned by a third-party client, the trial court circumvented the proper discovery procedures for non-parties.
Analysis:
This decision provides a crucial clarification of the term "possession, custody, or control" in the context of discovery from an individual who is also a corporate employee. It establishes a clear precedent that separates an employee's access for work purposes from the legal control necessary to compel production, thereby protecting employees from being caught between a court order and their duties to their employer. This ruling forces litigants to follow proper procedures for non-party discovery by seeking documents directly from the corporate entities that own or physically possess them, rather than from individual employees. It reinforces the distinct legal identities of an individual and their corporate employer.
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