Clade v. Larsen, 838 S.W.2d 277, 282 (Tex. 1992). Whether or not the discovery rule applies here is certainly not clear cut. There is no Texas precedent precisely on point. Generally speaking, the Texas Supreme Court has applied the discovery rule only to a limited number of cases, see, e.g., Burns v. Thomas, 786 S.W.2d 266 (Tex. 1990) (legal malpractice); Kelley v. Rinkle, 532 S.W.2d 947 (Tex. 1976) (credit libel); Gaddis, 417 S.W.2d at 580-81 (medical malpractice), but has never applied it to a misappropriation-of-trade-secrets claim.
CA cites Reynolds-Southwestern Corp. v. Dresser Industries, Inc., 438 S.W.2d 135 (Tex. Ct. App. 1969), as an example of a Texas court applying the discovery rule to a misappropriation-of-trade-secrets claim. However, the Reynolds-Southwestern case is not controlling, because (1) it was not a decision of the Texas Supreme Court, (2) the cross-action that was in "essence" a misappropriation-of-trade-secrets claim also involved allegations of fraud, making it unclear whether the discovery rule would have been applied in the absence of the fraud component, and (3) the cross-action was barred by the statute of limitations regardless of whether or not the discovery rule applied. See id. at 140.
In Texas, the discovery rule applies only to "inherently undiscoverable causes of action", Mann v. A.H. Robins Co., 741 F.2d 79, 81 (5th Cir. 1984), that is, cases in which the plaintiff did not and could not have known of the injury at the time it occurred. See Seibert v. General Motors Corp., 853 S.W.2d 773, 776-77 (Tex. App. 1993). As a consequence, when applying the discovery rule, Texas courts generally make a point of highlighting the special considerations warranting its application in a particular case. See, e.g., Kelley, 532 S.W.2d at 949 (discussing policy considerations behind applying discovery rule to credit-libel case).
Texas first adopted the discovery rule in Gaddis v. Smith 417 S.W.2d 577, a case in which a physician negligently left surgical sponge inside a patient, and the patient did not discover it until she had another operation more than four years later. Noting that "it is a virtual certainty that the patient --has no knowledge on the day following the surgery -- nor for a long time thereafter -- that a foreign object was left in the incision", the Gaddis court held that foreign object malpractice cases were appropriate subjects for application of the discovery rule. 417 S.W.2d at 580.
Later, when the Texas Supreme Court extended the discovery rule to legal malpractice actions, it emphasized both the difficulty a layperson has in recognizing an injury from legal malpractice when it happens and the fiduciary relationship between and attorney and client. See In the Matter of Gleasman, 933 F.2d 1277, 1282 (5th Cir. 1991) (discussing Willis, 760 S.W.2d 642). It also observed that following the general accrual rule in legal malpractice cases would have the adverse effect of encouraging attorneys to breach their duty of full disclosure to their clients. See Willis, 760 S.W.2d at 645, cited in Gleasman, 933 F.2d at 1282.
In a variety of other settings, Texas courts have explicitly declined to apply the discovery rule to § 16.003(a) and its immediate predecessor, Tex. Rev. Stat. Ann. art. 5526. See Clade, 838 S.W.2d at 282 (malpractice action against architect); Seibert, 853 S.W.2d at 776 (personal injury action involving defective seat-belt design); Davis v. Aetna Casualty & Surety Co., 843 S.W.2d 777, 778 (Tex. Ct. App. 1992) (suit against insurance company that denied claim for workers' compensation benefits); Hues v. Warren Petroleum Co., 814 S.W.2d 526, 529 (Tex. Ct. App. 1991) (gas leak); Robinson, 550 S.W.2d at 19 (medical misdiagnosis); see also Saenz, 951 F.2d at 668 (tort action against ladder manufacturer).
In response to a certified question from the fifth circuit, Moreno v. Sterling Drug, Inc., 850 F.2d 1047 (5th Cir. 1988), the Texas Supreme Court definitively stated that the discovery rule does not apply to § 16.303(b), the portion of the limitations statute covering wrongful-death claims. Moreno, 787 S.W.2d at 354 (analyzing Tex. Civ. Prac. & Rem. Code § 16.003(b)). Unfortunately, while some states permit certification from a federal district court, see, e.g., Conn. R. App. P. § 4168 (West 1992) (certified questions from federal courts to Connecticut Supreme Court); Ky. R. Civ. P. 76.37 (West 1992) (certification of question of law to Kentucky Supreme Court), Texas does not. See Tex. R. App. P. 114(a) (West 1993) ("Supreme Court of Texas may answer questions of law certified to it by the Supreme Court of the United States or a Court of Appeals of the United States"). Therefore, I am unable to certify to the Texas Supreme Court the question of whether the discovery rule applies to § 16.003(a) in a misappropriation-of-trade-secrets action. If this matter comes to the attention of the second circuit, they may feel it appropriate to certify this question to the Texas Supreme Court for an authoritative disposition of this issue.
An application of the discovery rule to this case would establish its application for all misappropriation-of-trade-secrets cases. See Willis, 760 S.W.2d at 644 ("question when a cause of action accrues is a judicial one, and to determine it in any particular case is to establish a general rule of law for a class of cases" (quoting Fernandi v. Strully, 35 N.J. 434, 173 A.2d 277, 285 (N.J. 1961)); Gaddis, 417 S.W.2d at 580-81 (same). Because it would be presumptuous to assume that the Texas Supreme Court would extend the discovery rule to all misappropriation-of-trade-secret claims, as well as misappropriate for a federal district court in New York to expand Texas' law in this manner, cf. Tennimon v. Bell Helicopter Textron, Inc., 823 F.2d 68, 72 (5th Cir. 1987) ("If any court were to hold that the discovery rule is an exception to this seemingly unambiguous declaration of he Texas Legislature, it should be a Texas court in the first instance, not a federal court sitting in a diversity case."); Saenz, 951 F.2d at 668 (federal court sitting in diversity must follow lead of Texas Supreme Court), I decline to make an unprecedented expansion of the discovery rule by applying it to the facts of this case.
No decision of the Texas Supreme Court compels an application of the discovery rule to this situation. Therefore, CA's trade-secret claim is dismissed on statute-of-limitations grounds, because it was filed over two years after the cause of action accrued, although within two years of CA's discovery of the wrong.
CA's motion to reopen discovery and trial is denied as moot.
The clerk is directed to enter judgment dismissing the complaint.
Dated: Uniondale, New York
August 20, 1993.
GEORGE C. PRATT
U. S. CIRCUIT JUDGE
(sitting by designation)
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