*1 Before the Court is Plaintiff Providence Title Company's Motion to Compel Financial Information and Documents from Defendant Truly Title Company. (Dkt. #165). Truly responded in opposition to the motion, (Dkt. #170), and Providence filed a reply, (Dkt. #173). Having considered the motion, the briefing, and the applicable law, the Court concludes that the motion should be GRANTED.

The facts and background of this case are more fully set out in the Court's previous Memorandum Opinion and Order. Providence Title Co. v. Truly Title, Inc., 547 F.Supp.3d 585, 593–94 (E.D. Tex. 2021). Relevant here, Providence and Truly are competitors in the Texas title insurance market. In 2019, they unsuccessfully negotiated Truly's potential acquisition of Providence. After negotiations failed, Truly successfully recruited a number of Providence's senior employees in North Texas, including its then-president, Tracie Fleming.

Providence asserts that Tracie Fleming was a Providence officer and director when she agreed to work for Truly in December 2020. She continued as Providence's president until February 3, 2021. In the interim, Providence alleges that Tracie Fleming recruited Mark Fleming, her husband and a Providence team leader, to join her at Truly, in violation of her fiduciary duty. (Dkt. #153 ¶¶ 23–24, 66, 68). Providence further alleges that Tracie Fleming was also involved in negotiating employment offers for Providence employees who Mark Fleming recruited for Truly. (Dkt. #153 ¶ 66). According to Providence, Tracie Fleming used her knowledge of Providence's compensation structure, which Providence asserts is trade-secret information, to develop such offers in conjunction with Truly, which also had access to this information following the acquisition negotiation. (Dkt. #165 at 2–3).

Providence also maintains that Tracie Fleming spent her final weeks at Providence accessing and reviewing Providence's customer lists, which Providence claims are trade secrets. (Dkt. #153 ¶ 45); (Dkt. #165 at 2). Following the Flemings’ departure for Truly, twenty-one Providence employees[1] joined them to open Truly offices in Alliance, Cleburne, Burleson, and Southlake, Texas. (Dkt. #165 at 3).

Based on these allegations, Providence asserts that Tracie Fleming breached her fiduciary duty as an officer and director of Providence and that Truly aided and abetted that breach. Providence further contends that Tracie Fleming's and Truly's actions amounted to misappropriation of trade secrets. Based on these claims, Providence seeks disgorgement of Truly's profits and damages for Truly's alleged unjust enrichment.

Providence now seeks discovery regarding the profitability of the twenty-one former Providence employees and the new Truly offices, arguing that this information is relevant to Providence's claims for disgorgement and unjust enrichment. Specifically, Providence served the following requests for production on Truly:

(Dkt. #165 at 3–4); (Dkt. #165-8 at 6–7). After Truly refused to provide documents responsive to these requests, (Dkt. #165-8 at 6–7), Providence filed the instant motion to compel. Truly opposes the motion, arguing that the requested discovery is not relevant to Providence's claim that Truly aided and abetted Tracie Fleming's breach of fiduciary duty or its claim of misappropriation of trade secrets. Truly further argues that Providence's causes of action do not entitle Providence to disgorgement of Truly's profits or to revenues by which Truly was allegedly unjustly enriched.

It is well established that “control of discovery is committed to the sound discretion of the trial court.” Williamson v. U.S. Dep't of Agric., 815 F.2d 368, 382 (5th Cir. 1987). A party may obtain discovery regarding any nonprivileged matter relevant to any party's claim or defense, so long as the information sought is proportional to the needs of the case. FED. R. CIV. P. 26(b)(1). Information “need not be admissible in evidence to be discoverable.” Id. And to be relevant, “a document or information need not, by itself, prove or disprove a claim or defense or have strong probative force or value.” Samsung Elecs. Am., Inc. v. Yang Kun Chung, 321 F.R.D. 250, 280 (N.D. Tex. 2017).

Parties may seek relevant documents and information by serving requests for production under Federal Rule of Civil Procedure 34. Rule 37, in turn, allows a discovering party to move for an order compelling production if a party fails to produce documents requested under Rule 34. FED. R. CIV. P. 37(a)(1), (a)(3)(B)(iv). The party resisting the requested discovery “must show specifically how each discovery request is not relevant or otherwise objectionable.” Carr v. State Farm Mut. Auto. Ins. Co., 312 F.R.D. 459, 463 (N.D. Tex. 2015) (citing McLeod, Alexander, Powel & Apffel, P.C. v. Quarles, 894 F.2d 1482, 1485 (5th Cir. 1990)). The opposing party must provide any argument in support of its objection in response to the motion to compel; otherwise, it waives the objection. Id.

Providence argues that the requested discovery of certain of Truly's financial information is relevant to: (1) its claim against Truly and Tracie Fleming for misappropriation of trade secrets, which Providence avers would entitle it to damages for Truly's alleged unjust enrichment; and (2) its claims for breach of fiduciary duty against Tracie Fleming and aiding and abetting that breach against Truly, which Providence avers entitles it to disgorgement of Truly's profits. Truly disagrees as to both points, objecting to the discovery solely on relevance grounds. The Court considers each of the parties’ arguments in turn.

A. Relevance to Claims for Misappropriation and Unjust Enrichment

*3 Providence brings claims against Fleming and Truly for misappropriation of trade secrets under both the federal Defend Trade Secrets Act (“DTSA”) and the Texas Uniform Trade Secrets Act (“TUTSA”). (Dkt. #153 ¶¶ 43–51, 56–62). Under both statutes, three types of damages are available for recovery: (1) actual loss caused by the misappropriation; (2) unjust enrichment that is “not addressed” or “not taken into account” in computing the damages for actual loss; or (3) a “reasonable royalty” for the misappropriator's unauthorized disclosure or use of a trade secret. 18 U.S.C. § 1836(b)(3)(B); TEX. CIV. PRAC. & REM. CODE § 134A.004(a).

Providence argues that the requested discovery is relevant to the second category of potential damages for its misappropriation claim, unjust enrichment. Truly disagrees, arguing initially that Providence has not pleaded a cause of action that would entitle Providence to recover damages for unjust enrichment. (Dkt. #170 at 1). Based on a plain reading of the federal and state trade-secret misappropriation statutes, that argument fails on its face.

Truly further argues that the requested financial information is not relevant to unjust enrichment because Providence did not explain in its motion the types of damages that it contends are “not taken into account” or “not addressed” in computing Providence's actual damages. (Dkt. #170 at 8–9 (quoting 18 U.S.C. § 1836(b)(3)(B); TEX. CIV. PRAC. & REM. CODE § 134A.004(a))). But as the Texas Supreme Court has said, a “ ‘flexible and imaginative’ approach is applied to the calculation of damages in misappropriation-of-trade-secrets cases.” Sw. Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 710 (Tex. 2016) (quoting Univ. Computing Co. v. Lykes–Youngstown Corp., 504 F.2d 518, 538 (5th Cir. 1974)). And damages for misappropriation can “take several forms, including the value of the plaintiff's lost profits, the defendant's actual profits from the use of the secret, the value a reasonably prudent investor would have paid for the trade secret, the development costs the defendant avoided by the misappropriation, and a reasonable royalty”—as every misappropriation case “is controlled by its own peculiar facts and circumstances.” Id. at 711 (emphasis added) (citation and quotation omitted); see also id. at 728, n.13 (noting the potential application of Restatement (Third) of Unfair Competition § 45, which states that, “[o]ne who is liable to another for an appropriation of the other's trade secret ... is liable for the pecuniary loss to the other caused by the appropriation or for the actor's own pecuniary gain resulting from the appropriation, whichever is greater”).

Remedies for misappropriation may therefore allow an entity to recover its lost profits or the pecuniary gain garnered by the misappropriating party. Accordingly, information that bears on a misappropriating party's alleged pecuniary gain is relevant to damages, particularly given the “extremely low” bar for relevance at the discovery stage—lower than the already low bar for relevance under Federal Rule of Evidence 401. U.S. ex rel. Becker v. Tools & Metals, Inc., No. 3:05-2301-L, 2011 WL 856928, at *2 (N.D. Tex. Mar. 11, 2011); see also Novick v. Shipcom Wireless, Inc., 946 F.3d 735, 741 (5th Cir. 2020). Here, the requested financial information is relevant to Truly's potential pecuniary gain from its alleged misappropriation of trade secrets. It is therefore relevant to Providence's claim.

Truly additionally argues that the requested discovery is not relevant to Providence's alleged actual losses, which Truly argues “can only be quantified or calculated from Providence's internal financial statements,” as “only Providence has data on how profitable its [lost] employees would have been ... [and] on what customers/revenues it lost to Truly.”[3] (Dkt. #170 at 3). Truly is mistaken. Though Providence's financial records may arguably be a better marker of the profitability of its former employees and former customers, it does not follow that Truly's financial records are wholly irrelevant to these calculations. For example, information regarding the revenues and customers that a former Providence employee generates or brings in at Truly is relevant to Providence's alleged damages, particularly as to Providence's purported lost profits.

*4 Lastly, the Court notes that the parties dispute which alleged trade secrets—Providence's employee salary data or its customer lists—are at issue for the relevance determination in this motion. Compare (Dkt. #170 at 3–4, 9 (Truly discussing Providence's employee salary and profitability data as the relevant trade secret)), with (Dkt. #173 at 4–5 (Providence stating that “Truly goes to great lengths to argue why its own financial information is not relevant to Providences’ [sic] employee salary and office revenue data[,] [b]ut this is a straw man argument that simply distracts from the actual claim at issue ... [i.e.,] Providence's claim for unjust enrichment based on Truly and Tracie Fleming's misappropriation of Providences’ [sic] trade secret customer lists and marketing strategies.”)).[4] Because Providence's claims for misappropriation of both categories of alleged trade secrets are live claims in this case, the distinction does not change the outcome here.[5]

In sum, Providence's claims for misappropriation of trade secrets remain at issue. Because the financial information sought by Providence is relevant to Providence's remedies and purported damages associated with these claims, the requested discovery will be allowed.

B. Relevance to Claims for Aiding & Abetting and Disgorgement

Providence also argues that the requested discovery of certain of Truly's financial information is relevant to its claims for disgorgement based on Truly's alleged aiding and abetting of Tracie Fleming's breach of fiduciary duties.

However, the Court doubts the viability of this claim. The Texas Supreme Court “has not expressly decided whether Texas recognizes a cause of action for aiding and abetting.” First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 224 (Tex. 2017) (citing Juhl v. Airington, 936 S.W.2d 640, 643 (Tex. 1996)). Acknowledging Parker, the Fifth Circuit has held that “no such claim exists in Texas,” and federal district courts may not recognize an aiding-and-abetting claim under Texas law because “a federal court exceeds the bounds of its legitimacy in fashioning novel [common-law] causes of action not yet recognized by state courts.” In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig., 888 F.3d 753, 781 (5th Cir. 2018) (citing Johnson v. Sawyer, 47 F.3d 716, 729 (5th Cir. 1995)). Binding Fifth Circuit precedent therefore appears to preclude this Court from recognizing a cause of action for aiding and abetting.

*5 By separate Order on today's date, the Court will require briefing on the Court's potential sua sponte dismissal of this cause of action. Unless and until the Court determines that it can recognize Providence's cause of action for aiding and abetting, the Court will not compel discovery solely related to this claim. However, because the requested discovery is relevant to Providence's misappropriation claims, the Court will require Truly to respond to the three disputed requests for production.

Finally, when a court grants a party's motion to compel production under Federal Rule of Civil Procedure 37(a)(3), Rule 37(a)(5)(A) authorizes the court to order the non-movant to pay any reasonable expenses incurred by the movant in rendering the motion, including attorney's fees. FED. R. CIV. P. 37(a)(3), (5). Accordingly, Providence should provide to the Court briefing regarding expenses, including evidence of its reasonable expenses incurred in pursuing this motion to compel.

For the foregoing reasons, it is ORDERED that Plaintiff Providence Title Company's Motion to Compel Financial Information and Documents from Defendant Truly Title Company, (Dkt. #165), is GRANTED.

So ORDERED and SIGNED this 13th day of May, 2022.