The Houston Livestock Show and Rodeo won’t have to disclose the exact dollar amounts it pays to each concert performer during the 23-day extravaganza after an appellate court recently determined that the information is a trade secret.
The Wednesday ruling from Houston’s First Court of Appeals came in a lawsuit involving Dolcefino Communications, a for-hire investigative firm run by former longtime Houston television news reporter Wayne Dolcefino. He had requested the nonprofit’s financial records, as is allowed under Section 22.353 of the Texas Business Organizations Code, which governs the public’s right to inspect and copy the financial records of nonprofit corporations.
At issue on appeal was whether the rodeo could redact the exact figures it paid to each performer as protected trade secrets. The issue of whether redaction under Section 22.353 of the Texas Business Organizations Code is allowed was one of first impression that no Texas court had previously addressed.
The panel agreed with the HLSR that the information should be protected and noted, “Dolcefino did not establish that disclosure of HLSR’s trade secret information is necessary for any purpose.”
The Houston Livestock Show and Rodeo is a charitable nonprofit corporation that has donated hundreds of millions of dollars since its inception to youth and education-related initiatives. The HLSR is an annual weeks-long show that includes rodeo events, livestock auctions and nightly concert performances by popular musicians.
Taylor Swift, Cardi B, Elvis Presley, Los Tigres Del Norte, George Strait, Selena, Beyoncé, Justin Bieber and Johnny Cash are among those who have performed at the event since its inception in 1942.
In July 2018, HLSR redacted the individual amounts paid to each performer, but included the aggregate amount paid to all performers and gave Dolcefino access to the general ledger for inspection.
When Dolcefino and HLSR disagreed about whether the law required the rodeo to show how much money is paid to each individual performer, or whether showing the annual total amount paid to all performers was sufficient under the law, both sides took the matter to court seeking declarations.
HLSR filed notice of appeal with the court in July 2022, about a month after Harris County District Judge Rabeea Sultan Collier determined the rodeo had failed to establish that those specific dollar amounts paid to each individual performer is a trade secret.
In a declaration filed with the court, HLSR’s president and CEO Joel Cowley said the specific dollar amounts paid to each performer is a closely guarded secret and something only six people — Cowley, the general counsel, the chief financial officer, the managing director, the manager of entertainment and concert production and the controller — within the organization know.
Cowley explained that even the artists don’t know how much other artists are paid and are bound by contract not to disclose the figure. Should that information get out to the general public, Cowley argued, it would impact the rodeo’s ability to compete to secure top talent for the event, which in turn would affect turnout and the economic impact and charitable contributions that flow from that.
HLSR argued that while the public has a right to inspect the books, it is entitled to protect its trade secrets. Dolcefino argued that Section 22.353 doesn’t allow a nonprofit to redact any information from its books and records.
“[W]e hold that HLSR established that the amount of fees it pays to individual concert performers is a trade secret and that the public’s right to inspection under Section 22.353 does not trump HLSR’s right to protect its trade-secret information,” the panel determined. “HLSR is thus entitled to redact the fees it pays to individual concert performers from its general ledgers prior to disclosure to Dolcefino under Section 22.353.”
Vinson & Elkins partner Patrick W. Mizell, who represented HLSR, said this was a hard fought case that presented an important issue.
“It hinders negotiations if the amount paid to a superstar is known to the others,” he said in a statement to The Lawbook. “The rodeo respects the public’s right to know the general finances of a Texas non-profit … They are gratified that the individual amounts can remain confidential.”
Counsel for Dolcefino did not respond to a request for comment Friday.
Dolcefino Communications has until Aug. 15 to file a motion for rehearing.
Justices Veronica Rivas-Molloy, Richard Hightower and April Farris sat on the panel.
Dolcefino Communications is represented by Jeff Diamant of Houston.
HLSR is also represented by Catherine B. Smith and Brooke A. Noble of Vinson & Elkins.
The case number is 01-22-00491-CV.