Texas Business Court Decision – Friday, May 16, 2025

No. 24-BC11B-0023 Westlake Longview Corp., et al v. Eastman Chemical Co. (Eleventh Div., J. Andrews)

Civil case – Protective Orders. Eastman sells plaintiffs ethylene, which plaintiffs use at their polyethylene plants in Longview, Texas. The parties agreed that a protective order was needed in  this case, and agreed on all provisions save one: whether the protective order should include a separate “Attorney’s Eyes Only” (AEO) designation, and if so, whether AEO material should be disclosed to in-house counsel. After a hearing the court entered a two-tiered protective order containing: (1) a “confidential” designation that protects material from disclosure to people not involved with the litigation and (2) an AEO designation that protects material from disclosure even to the other parties, including their in-house counsel.

1. The case is appropriate for an AEO designation because while plaintiffs and defendant are in a buyer-seller relation, Westlake’s affiliated entities are competitors with Eastman, and these entities share Westlake’s legal department.
2. The information Eastman seeks to shield from Westlake is customer and sales information, including information about Eastman’s customers and commercially sensitive information, including pricing.
3. Having concluded an AEO designation is appropriate, the court must still balance protection against the requesting party’s need to properly litigate the case.
4. To do so, the court employs a burden-shifting paradigm where the designating party bears the initial burden of proving the information is entitled to AEO protection and must put forward evidence that the information is a trade secret or confidential commercial information and that there is a risk the designating party would be harmed if the information is disclosed to the other side; this evidence must be specific and concrete and not vague or conclusory. If the designating party meets this burden, the burden then shifts to the opposing party to demonstrate why it needs access to the information to litigate the case and why providing the information to the party’s outside counsel and experts will not suffice; the party must show the denial will actually prejudice its presentation of the case, rather than merely make litigation more difficult.
5. Here, the parties did not present sufficient evidence to enable the court to perform this balancing test, though they still may do so if a party chooses to challenge an AEO designation under the protective order.
6. Similarly, deciding to grant in-house counsel access to AEO-designated information requires a similar balancing test. Here, counsel for the opposing parties have expressed conflicting beliefs as to whether Westlake’s in-house counsel engage in competitive decision-making (i.e., whether the in-house attorney’s activities, association, and relationship with the client are of a nature that involved the attorney advising the client on or participating in business decisions, as to which the AEO information may have bearing), but neither party presented any evidence on that issue or on the in-house counsel’s need for access to specific AE information (and why outside counsel’s access is inadequate).
7.  Thus the court concludes that the evidence did not support granting in-house counsel access to AEO information. The parties may provide additional evidence in the future if Westlake seeks to modify the order to allow specific in-house counsel AEO access.