The Austin Business Court (Third Division) has denied a motion to reconsider its prior ruling allowing Plaintiff in an antitrust suit to obtain discovery of a Defendants’ customer list.
The facts in SafeLease Insurance Services LLC v. Storable, Inc., et al. (2025 Tex. Bus. 28; Cause No. 25-BC03A-0001; July 18, 2025) are as follows. SafeLease provides tenant insurance for to self-storage facilities. It uses licensed facility-management software (FMS) to maintain customer data. Storable both provides the license to SafeLease’s customers and competes with them by providing tenant insurance through its subsidiaries. Despite early talks of a formal partnership between the two parties, Storage removed SafeLease’s access to the available FMS data of their mutual customers for “security purposes.”
SafeLease filed suit in December 2024, claiming that Storable had violated state antitrust law by blocking its data access, specifically that Storable was attempting to leverage its position to achieve a monopoly in the tenant-insurance market. The case was subsequently removed to the Austin Business Court. In May 2025 the parties filed discovery-dispute letters under Business Court Local Rule 4(d) regarding whether Storable should be compelled to produce documents identifying the names and addresses of Storable’s customers. The court ordered production of some of the disputed information, including customer information, noting that Storable did not assert that the customer information constituted a trade secret. Storable filed a motion for reconsideration, making the trade secret argument for the first time.
In an opinion by Judge Andrews, the court denied the motion. Her analysis addressed two questions: 1) did Storable preserve its trade-secret privilege argument, and 2) if so, does the privilege bar production of Storable’s customer list? The court answered no to both questions. Storable alleged that it had raised the trade-secret privilege in its discovery letter and in response to the request for production. The court, however, ruled that Storable failed to satisfy Rule 193.3(a), TRCP. Under Rule 193.3(a), in order to preserve a privilege from written discovery, a party “must state—in the response (or an amended or supplemental response) or in a separate document—that: : (1) information or material responsive to the request or required disclosure has been withheld, (2) the request or required disclosure to which the information or material relates, and (3) the privilege or privileges asserted.”
Storable cited Rule 193.2(f) for the proposition that a party need not object to discovery requests on the basis of privilege. Instead, the party must merely witthold the allegedly privileged material and produce a privilege log asserting the privilege. Storable argued that it raised the privilege claim earlier than required. The court agreed that a party should not object to written discovery based on privilege, but the rules clearly require the party to inform the requesting party know that it is asserting the privilege and withholding documents. Storable missed a the first step required by Rule 193.3(b), that is, asserting the privilege before producing a privilege log (if the requesting party asks for it). Additionally, in this case the parties knew exactly what the request involved: Storable’s customer lists. “Under these circumstances,” Judge Andrews wrote, “if Storable believed that list was a trade secret and privileged from production, it is difficult to see why Storable never mentioned that to anyone before the Court’s ruling.”
Storable contended that it asserted the privilege in its responses to SafeLease’s requests for production by objecting that the request for customer data sought “confidential, proprietary, and commercially sensitive information to the highest degree.” But Storable failed to specify that it withheld documents responsive to the request or to identify the trade-secret privilege as the basis for withholding. Merely stating in the discovery-dispute letter to the court that is customer list was “highly confidential” did not satisfy Rule 193.3. Nor did Storable preserve the privilege by asserting it in its post-ruling motions. Storable argued that it complied with the rule because its post-ruling motion was a “separate document,” but, as Judge Andrews observed, “[u]nder a hyperliteral interpretation of ‘separate document,’ a party could simply write an assertion of privilege on a sheet of paper, shove that sheet of paper in a desk drawer where no one else would see it, and satisfy Rule 193.3(a).” Rather, “separate document” means “a document exchanged among the parties in the course of discovery.”
Next the court addressed whether Local Rule 4(d) impeded Storable’s ability to raise the trade-secret privilege before the court’s ruling on the discovery-dispute letter. Rule 4(d) limits discovery letters to 700 words. Storable’s letter added up to 609 words. As the court pointed out, Storable left nearly 100 words on the table that could have been used to assert that the customer list was a privileged trade secret. Six words—“The requested documents are trade secrets”—would have taken care of it. Storable argued further that the discovery-dispute letters were merely “pre-motion letters,” implying “that it did not expect the parties’ discovery dispute to be resolved without further briefing.” Judge Andrews pointed out, however, that Rule 4(d) “expressly advises parties that the Court may decide the discovery dispute based on the letters alone, without further briefing.” The whole point of Rule 4(d) is to expedite the resolution of discovery disputes and move the case along.
The court then turned to the merits question of whether the trade-secret privilege set out in Rule 507 barred production. Rule 507 provides that, once a party has asserted the privilege, the requesting party must establish that “the information is necessary for a fair adjudication of its claims.” If the party meets that burden, the trial court should compel discovery, subject to a protective order, after weighing “the degree of the requesting party’s need for the information with the potential harm of disclosure to the resisting party.” Here Storable had the initial burden to show that its customer list constituted a trade secret. SafeLease argued that the list could not qualify as a trade secret because it did “not have independent economic value to Storable’s competitors.” Under Texas law, customer lists do not usually qualify “when potential customers are a readily ascertained class.” SafeLease argued that Storable’s FMS customers came from such a class, i.e., self-storage facilities. They can be looked up on the internet, and at least one website aggregates their locations for the convenience of potential lessees.
The court, however, determined that it did not have to resolve that issue because even if the list was a trade secret, its production was “necessary for the fair adjudication of SafeLease’s claims, and the Agreed Protective Order and the Court’s subsequent rulings provide adequate protection against disclosure.” SafeLease demonstrated that the list was necessary because “its antitrust claim is premised on the theory that Storable is attempting to leverage its monopoly in the FMS industry to gain a monopoly in the tenant-insurance industry.” Since determination of the merits of the dispute directly involved market share and how market share should be calculated based on Storable’s customer list, the litigation couldn’t go on without that information.
Storable’s offer to provide the total number of its FMS customers did not go far enough, for the simple reason that SafeLease should not have to take Storable’s word for it without verifying the information from the list itself. Judge Andrews pointed out that Storable did not promote trust in its word when it kept lowering the number of FMS customers it claimed to have, from the 33,000 as represented by its corporate represenative to 30,000 in the TI hearing. (It also changed its website a few days after the TI hearing to revise the number downward.) Storable also offered to allow a third party to view the list while it remained in Storable’s possession, but this didn’t fly, either. The sheer numbers involved, as well as breaking down Storable’s submarkets or investigating the accuracy of per-unit calculations performed by Storable’s expert, made production of the list (subject to a protective order) mandatory.
Storable’s last throw was to argue that SafeLease should not get the list because Storable is entitled to summary judgment on SafeLease’s antitrust claim (although that had not yet been adjudicated). As Judge Andrews pointed out, SafeLease’s antitrust claim depended on getting discovery of the customer list so that it could “determine whether [SafeLease’s FMS customers’] insurance providers were denied FMS access or whether Storable otherwise limited their insurance provider options.” SafeLease further needed to know who the customers were so that it could seek discovery from those insurance providers and how Storable’s market conduct has affected them. In any event, SafeLease should at least have the opportunity to make its antitrust case on the merits rather than have it predetermined by shutting down discovery.
At the request of both parties, the court entered an Agreed Protective Order designating the list as Outside Counsel’s Eyes Only (OCEO), thus limiting disclosure to specific persons involved in the case and excluding SafeLease and its employees from viewing the material. access to SafeLease’s experts and attorneys of record. This protection would mitigate any danger that may arise from the disclosure of the list. In response to Storable’s fear that a subsequent appellate court ruling that the Business Court had no jurisdiction would leave the list exposed, Judge Andrews noted that the Rule 11 agreement should take care of that, but if it didn’t, the appellate court could provide appropriate ancillary relief. As a result, the Court denied Storable’s Motion for Reconsideration.
TCJL Intern Satchel Williams researched and prepared the first draft of this article.
