Botkin Chiarello Calaf won an important ruling on behalf of their clients Alamo Advisors LP and Katzen Marshall & Associates, Inc., in a pair of trade secret disputes filed under the Texas Uniform Trade Secrets Act (TUTSA).

The cases arose out of a long-running dispute between two brothers who owned several businesses (collectively known as “TDS”) together. Several years before litigation began, both Alamo and Katzen Marshall had been engaged by one of the brothers to provide their respective estate planning and valuation services for the business under standard nondisclosure agreements. It was undisputed that neither Alamo Advisors nor Katzen Marshall ever used any of the shared information except to provide the services for which they were respectively retained. But, after the brothers’ dispute escalated, TDS sued the estate planning and valuation advisors under TUTSA, asserting that the information shared with the firms was trade secret information and that the firms’ acquisition of and retention of the information constituted a misappropriation of trade secrets. 

The Court of Appeals rejected that argument in each case. In doing so, it determined that because the firms had acquired the information from a shareholder—i.e., a person entitled by law to access the financial books and records—after-the-fact information about the alleged impropriety by the shareholder did not retroactively create liability for the advisors, nor did the firms’ refusal to return the information constitute a “use” under TUTSA. 

“We are pleased the appellate court rejected appellant’s attempt to expand TUTSA liability and agreed our clients had done nothing improper,” said partner Ryan Botkin. “These two opinions provide helpful guidance in the TUTSA landscape and help clarify the outer limits of the statutory protection.”

In addition to Ryan Botkin, Alamo and Katzen Marshall were represented by Travis Maples.

The cases are Texas Disposal Systems, Inc., et al., v. Alamo Advisors, LP, No. 07-23-00347-CV, and Texas Disposal Systems, Inc., et al., v. Katzen Marshall & Associates, Inc., No. 07-23-00348-CV, both on appeal from Travis County’s 126th District Court and assigned to the Seventh Court of Appeals in Amarillo by the Third Court of Appeals in Austin.