author: JANE BLAND, Justice.

text:
    UNIVERSAL COMPUTER SYSTEMS, INC., Universal Computer Consulting, Ltd., Universal Computer Services, Inc., and Dealer Computer Services, Inc., Appellants, v. DEALER SOLUTIONS, L.L.C., Dealer Solutions Holdings, Inc., ADP, Inc., SMC Investment, Inc. f/k/a SWT Investments, Inc., Southwest Toyota, Inc. d/b/a Sterling McCall Toyota, SMC Luxury Cars, Inc. d/b/a Sterling McCall Lexus, and Business Solutions, Inc., Appellees, ADP, Inc., Cross-Appellant, v. Universal Computer Systems, Inc., Cross-Appellee.
    No. 01-04-01088-CV.
    Court of Appeals of Texas, Houston (1st Dist.).
    Nov. 23, 2005.
    Rehearing Overruled Dec. 15, 2005.

      John C. Allen, Houston, TX, for Appellants.
    John L. Dagley, Campbell Harrison & Wright, Robin L. Harrison, Campbell Harrison & Dagley, L.L.P., Christopher M. Brown, Jenkens & Gilchrist, Houston, TX, for Appellees.
    Panel consists of Chief Justice RADACK and Justices ALCALA and BLAND.
   OPINION

JANE BLAND, Justice.

The parties in this trade secrets case agreed to arbitrate their claims against each other, and did so, but not before a lengthy discovery battle in the trial court. The trial court confirmed the arbitrators’ decision, from which the losing parties appeal. Appellate review of the confirmation of arbitration decisions is very limited, as such decisions are meant to be final in all but exceptional cases. We hold that the facts presented here are not exceptional under the applicable caselaw. We further hold that the trial court should not have issued a discovery order limiting the presentation of certain evidence before the arbitrators, but the arbitrators allowed the evidence and considered it in any event, thus ameliorating any harm. We therefore affirm the trial court’s confirmation of the arbitrators’ decision.

Appellants Universal Computer Systems, Inc., Universal Computer Consulting, Ltd., Universal Computer Services, Inc., and Dealer Computer Services, Inc. (collectively “UCS”) appeal the judgment confirming an arbitration award in favor of appellees Dealer Solutions, L.L.C., Dealer Solutions Holdings, Inc. (collectively “DSI”), SMC Investment, Inc. f/k/a SWT Investments, Inc., Southwest Toyota, Inc. d/b/a Sterling McCall Toyota, SMC Luxury Cars, Inc. d/b/a Sterling McCall Lexus (collectively “Sterling McCall”), and Business Solutions, Inc. (“BSI”), and cross-appellant ADP, Inc. (“ADP”). UCS contends that (1) the trial court had no authority to enter an order defining the scope of UCS’s trade, secrets claim to be heard at the arbitration hearing; (2) the trial court abused its discretion by imposing this discovery sanction before sending the ease to arbitration; and (3) the arbitrators’ decision is a gross mistake because the arbitrators (a) ignored the plain and unambiguous language of a license agreement between UCS and Sterling McCall, (b) failed to recognize three Texas cases involving trade secret waiver, (c) found that DSI did not use UCS’s trade secrets, (d) failed to recognize disgorgement damages, and (e) found that UCS’s trade secret misappropriation claim is preempted by federal copyright law. In its cross-appeal, ADP asserts that, although the arbitrators correctly decided the preemption issue, should we decide otherwise, then ADP is entitled to injunctive relief.

Factual and Procedural Background

UCS provides computer systems to car dealerships. In 1985, UCS contracted to license software to Sterling McCall. The contract required Sterling McCall to keep confidential “the programs and software” covered under the agreement. The contract also contained a provision requiring arbitration of “any claim, grievance, or controversy between customer and UCS ... arising out of this agreement!/]”

In 1994, Sterling McCall and BSI, a software consulting firm, contracted to develop a dealer management computer system called “CARMan” to replace Sterling McCall’s existing UCS system. The following year, Sterling McCall and BSI formed another entity, DSI, to continue developing the CARMan system. DSI employees had offices at the Sterling McCall body shop and had access to the UCS computer system. In early 1997, DSI displayed CARMan at the National Automobile Dealers Association annual convention. ADP acquired DSI in early 1999.

UCS sued in March 1999, alleging that appellees misappropriated UCS’s trade secrets by accessing the UCS software at Sterling McCall to assist in designing and perfecting CARMan. In addition, UCS alleged that Sterling McCall breached the confidentiality provision of its license agreement with UCS. ADP counterclaimed for misappropriation of trade secrets against UCS, alleging that UCS obtained ADP’s software without permission and used it to develop competing products.

The Discovery Dispute

In April 1999, DSI propounded interrogatories to UCS asking it to identify each trade secret it contended DSI had misappropriated. UCS responded by naming its various software applications and programs. Dissatisfied with UCS’s response, DSI moved to compel UCS to supplement its answers to the interrogatories with information specifically identifying the trade secrets DSI allegedly misappropriated. Pursuant to the recommendation of the special master appointed by the trial court to handle discovery disputes, the court granted DSI’s motion to compel.

UCS filed a supplemental response in which it clarified that DSI and BSI allegedly “accessed every UCS software application used at [Sterling McCall,]” all of which UCS provided on a confidential basis. Still dissatisfied with UCS’s response, DSI filed a second motion to compel. Pursuant to the special master’s recommendation, the trial court granted DSI’s second motion to compel, stayed all discovery by UCS, and ordered UCS to pay DSI $250 in attorney’s fees.

In its second supplemental response, UCS clarified that DSI allegedly had “misappropriated the architecture, structure, and design” of the overall UCS computer system at Sterling McCall, as well as the individual application packages. DSI filed another motion to compel, asserting that UCS’s response “failed to specifically identify a single trade secret that UCS might have.” On June 15, 2000, the trial court, on recommendation of the special master, once again granted DSI’s motion to compel. Specifically, the court ordered UCS to supplement its response as follows:

[UCS] shall amend [its] answers to Defendants’ First Set of Interrogatories ... to specifically and separately identify, as [it] ha[s] heretofore failed to do, ... each particular process, formula, pattern, device, compilation of information, or other matter that is the subject of this case that [UCS] contend[s] is a trade secret accessed or misappropriated by [appellees], by separately stating each such trade secret and describing the nature, subject matter, and details of each such trade secret with sufficient particularity to show its unique and secret nature to separate it from the general knowledge of those involved in automobile dealership management and the specific knowledge of those skilled in automobile dealership management systems.
If [UCS] claim[s] that the overall “structure, architecture and design of its computer system as'a whole” is a trade secret misappropriated by [appellees], [UCS] shall specifically identify such system as a trade secret and describe with sufficient particularity how its’ [sic] combination of identified trade secret and non-trade secret characteristics, features functionalities and components interact and work together, and are adapted, implemented, integrated and applied to form a whole unified process, design and operation which is unique and secret in combination and which separates it from the general knowledge of those involved in automobile dealership management and specific knowledge of those skilled in automobile dealership management systems.

The trial court also continued the discovery stay against UCS and ordered it to pay DSI $500 in attorney’s fees.

UCS moved to set aside the trial court’s June 15, 2000 order. The trial court held an evidentiary hearing on UCS’s objection on July 10-11, 2000, and UCS supplemented its response for a third time on July 14, 2000. In its third supplemental response, UCS stated that

DSI misappropriated the architecture, structure, and design of the UCS computer system as a whole.... UCS’ unique combination of features and functions into a unified and integrated computer system, and the way those components fit together to form the unique whole, was a protectable trade secret that was misappropriated by DSI.

Along with its third supplemental response, UCS also filed a proposed order referring the , case to arbitration. In a letter dated July 14, 2000, DSI objected to UCS’s third supplemental response, but advised the trial court that the parties had agreed to the entry of an order referring the case to arbitration.-

The trial court held another hearing on August 7, 2000, at which time it upheld its June 15, 2000 order and advised UCS that it would be required to file a fourth supplemental response by September 18, 2000. The trial judge also informed the parties that he would grant their agreed order to arbitrate, but would not sign it until October 2, 2000.

UCS filed its fourth supplemental response on September 18, 2000 and attached thousands of pages of information describing how the UCS software works. DSI requested and set a hearing for October 16, 2000 concerning the trial court’s anticipated entry of the agreed order to arbitrate. DSI then filed a motion to dismiss for discovery abuse based on UCS’s alleged failure to identify a single trade secret.

The trial court signed the agreed order to arbitrate on October 2, 2000. One week later, DSI moved to set aside the arbitration order pending resolution of its motion to dismiss. The trial court granted DSI’s motion, withdrew the arbitration order, and ordered that the agreed order to arbitrate would “be enforced at a future date.”

On January 25, 2001, the trial court entered an order on DSI’s motion to dismiss, finding that although UCS had failed to adequately answer the interrogatories, sanctions were not yet justified. Instead, the court “established a presumption of the non-existence of any trade secret ... claimed by [UCS], subject to [UCS] being required during the next 30 days to adequately answer such interrogatories as directed and to rebut the presumptions of the non-existence of trade secrets[.]” The court also observed that “[UCS] ha[s] stipulated that the only trade secret being claimed by [it] in th[is] action is the overall structure, architecture and design of its computer system as a whole and not any individual process, formula, pattern, device or compilation of information or other matter.”

UCS filed its fifth supplemental response on February 21, 2001, asserting that its data fields, “unique combination of functionality of [its] software programs[,]” overall structure and architecture of its software programs, unique formats of the reports generated by its software, and “combination of reporting functionality” are all trade secrets. DSI subsequently filed a second motion to dismiss for discovery abuse based on UCS’s alleged refusal to specifically describe any trade secret.

On December 10, 2001, pursuant to the special master’s recommendation, the trial court denied DSI’s second motion to dismiss, but ordered that “[UCS]’s evidence in support of its claim that its automobile dealership management software system is a trade secret shall be limited to its proof set forth in its responses and supplemental responses to interrogatories submitted to [appellees] prior to September 1, 2001.” Two days later, UCS again moved to compel arbitration. DSI responded that, before ruling on the motion to compel arbitration, the trial court should clarify the evidentiary limitation imposed in its December 10, 2001 order.

After holding a hearing, the trial court granted in part and denied in part the motion to compel arbitration and ordered as follows:

All parties and all claims alleged in this case shall be referred to arbitration for the resolution of such claims. However, the Court’s order referring this matter to arbitration will be entered by the Court only after (1) [appellees] have an opportunity to seek clarification of the December 10, 2001 Order denying Defendants’ Second Motion to dismiss for Discovery Abuse from the Special Master ..., and (2) all parties have had an opportunity to object to the Special Master’s order and obtain a ruling on such objections by the Court.

UCS filed a petition for a writ of mandamus in this Court, complaining of the trial judge’s partial denial of its motion to compel arbitration. In re Universal Computer Sys., Inc., No. 01-02-00343-CV, 2002 WL 538978, at *1 (Tex.App.-Houston [1st Dist.] Apr. 8, 2002, orig. proceeding) (not designated for publication). We declined to grant mandamus relief. Id.

On May 9, 2002, the trial court clarified its December 10, 2001 order as follows:

[UCS] ha[s] stipulated that the only trade secret being claimed by [it] in [its] action is the overall structure, architecture and design of [its] computer system as a whole and not any individual process, formula, pattern, device or compilation of information or other matter.
[UCS’s] evidence identifying and describing [its] claimed trade secret shall be limited to [its] interrogatory responses served on February 21, 2001, which [UCS] ha[s] stipulated are a complete description of [its] claimed trade secret.

With these orders in hand, the parties proceeded to arbitration.

The Arbitration

A panel of three arbitrators conducted the arbitration hearing, which lasted three weeks. After noting UCS’s stipulation regarding the theory of its case set forth in the trial court’s January 25, 2001 order, the arbitrators initially decided to “follow the [cjourt’s order,” and “hold [UCS] to its burden of structure, architecture, and design.” However, when DSI objected that UCS’s evidence exceeded its February 21, 2001 interrogatory responses, the arbitrators allowed the evidence and decided to carry the issue with the case. Thereafter, on numerous occasions, the arbitrators declined to limit the testimony or introduction of evidence by UCS based on the trial court’s May 9, 2002 order. UCS proceeded to put on nearly two weeks of testimony, followed by one week of testimony from appellees.

The arbitrators issued their corrected decision on November 25, 2003. A majority of the panel found as follows:

Under the Order of May 9, 2002, the only trade secret claimed by UCS is the overall structure, architecture and design of its computer system as a whole and not any individual process, formula, pattern, device or compilation of information or other matter. May 9, 2002 Order. UCS’s evidence identifying and describing the claimed trade secret is limited to its interrogatory responses served on February 21, 2001_ Because UCS’s February 21, 2001 interrogatory responses do not in fact describe overall structure, architecture and design of the UCS computer system as a whole, UCS is barred from proving the necessary element of a claim for misappropriation of trade secrets.
Even if UCS’s evidence describing its alleged trade secret were not limited to UCS’s February 21 Responses, UCS’s evidence at trial demonstrated, at most, that some defendants obtained from the UCS system a partial list of UCS data fields, features, and functionalities. These do not constitute the overall architecture, structure, and design of the UCS system as a whole. Furthermore, in light of the unrebutted direct evidence of the substantial differences between CARMan and UCS, the circumstantial evidence presented by UCS as to misappropriation and use does not meet UCS’ burden to prove these elements by a preponderance of the evidence.
UCS has failed to establish the existence of a trade secret other than its code, which was not misappropriated by defendants.

A majority of the panel also decided that, even though it was “unnecessary” to reach the copyright preemption issue, given the majority’s finding that UCS had failed to prove its trade secret misappropriation claim, the panel would decide the issue because the parties had extensively briefed it. Relying on Texas caselaw, a majority of the arbitration panel concluded that federal copyright law preempted UCS’s claim for misappropriation of trade secrets.

With respect to ADP’s counterclaim, a majority of the panel found that UCS misappropriated ADP’s trade secret object code, but ADP’s misappropriation claim similarly was preempted. The panel majority noted that, “[i]f this legal conclusion [regarding preemption] is incorrect, ADP would be entitled to an injunction prohibiting UCS from running ADP’s code from the UCS offices either by way of a dial-up modem or on a system it has misappropriated, or by any other means.”

Following the arbitration proceeding, DSI and ADP moved to confirm the arbitration award, while UCS moved to vacate the award. The trial court confirmed the arbitration award on December 30, 2003.

Analysis

Pre-Arbitration Orders

UCS contends that the trial court abused its discretion by not sending the case immediately to arbitration and by seeking to limit the evidence UCS could introduce at the arbitration hearing through discovery orders entered after the case should have been sent to arbitration. UCS characterizes the trial court’s May 9, 2002 order restricting the evidence UCS could introduce at the arbitration hearing as an improper death-penalty sanction.

“Once a party seeking to compel arbitration establishes that an agreement [to arbitrate] exists ..., and that the claims raised are within the agreement’s scope, the trial court has no discretion but to compel arbitration and stay its proceedings pending arbitration.” Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996) (orig.proceeding) (quotation omitted); see also Pepe Int’l Dev. Co. v. Pub Brewing Co., 915 S.W.2d 925, 929 (Tex.App.-Houston [1st Dist.] 1996, no writ) (“If the court finds the arbitration provision valid, it shall order arbitration.”); In re Jebbia, 26 S.W.3d 753, 757 (Tex.App.-Houston [14th Dist.] 2000, orig. proceeding) (“If the movant has proven there is an arbitration agreement, as a matter of law, the court must compel arbitration, and a presumption arises that all disputed issues between the parties must be arbitrated.”). Furthermore,

in deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims. Whether “arguable” or not, indeed even if it appears to the court to be frivolous, the [party’]s claim ... is to be decided, not by the court asked to order arbitration, but as the parties have agreed, by the arbitrator. “The courts, therefore, have no business weighing the merits of the grievance, considering whether there is equity in a particular claim, or determining whether there is particular language in the written instrument which will support the claim. The agreement is to submit all grievances to arbitration, not merely those which the court will deem meritorious.”

AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 649-50, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers v. Am. Mfg. Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 1346, 4 L.Ed.2d 1403 (1960)).

Thus, once the parties presented the agreed order to compel arbitration and UCS moved to compel arbitration, the trial court should not have delayed in referring the case to arbitration to undertake further discovery matters and to enter orders attempting to curtail the proceedings before the arbitrators as a result of its discovery rulings. See John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 918, 11 L.Ed.2d 898 (1964) (“ ‘[P]rocedural’ questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator.”).

Both the record and the arbitrators’ decision reflect, however, that notwithstanding the trial court’s order, the arbitrators ultimately considered all of UCS’s evidence — not just the matters set forth in its interrogatory responses. In particular, although DSI objected that UCS’s presentation of evidence to the arbitration panel exceeded the scope of its February 21, 2001 interrogatory responses, in contravention of the trial court’s May 9, 2002 order, the arbitrators allowed UCS to adduce two weeks of testimony. UCS neither contended that it had additional evidence to present nor objected that the arbitrators had precluded it from introducing any further evidence because of the trial court’s order. Moreover, UCS did not argue in closing that its ability to present evidence was restricted.

The arbitration panel majority made extensive findings of fact. It then presented alternative grounds to support its judgment. First, it concluded that the trial court’s order kept UCS from raising the evidence to support a trade secret misappropriation claim. Second, the panel concluded that appellees did not misappropriate trade secrets, after considering all of UCS’s evidence:

Even if UCS’s evidence describing its alleged trade secret were not limited to UCS’s February 21 Responses, UCS’s evidence at trial demonstrated, at most, that some defendants obtained from the UCS system a partial list of UCS data fields, features, and functionalities. These do not constitute the overall architecture, structure, and design of the UCS system as a whole. Furthermore, in light of the unrebutted direct evidence of the substantial differences between CARMan and UCS, the circumstantial evidence presented by UCS as to misappropriation and use does not meet UCS’ burden to prove these elements by a preponderance of the evidence.

We therefore hold that UCS has not shown that the trial court’s May 9, 2002 order probably caused the rendition of an improper judgment, because the arbitration panel majority alternatively concluded that UCS did not meet its burden based upon the evidence. See Tex.R.App. P. 44.1(a)(1) (“No judgment may be reversed on appeal on the ground that the trial court made an error of law unless the court of appeals concludes that the error complained of probably caused the rendition of an improper judgment[.]”).

The Arbitration Decision

UCS contends that the arbitrators made a gross mistake by (1) ignoring the plain and unambiguous language of the license agreement between UCS and Sterling McCall, (2) failing to address three Texas cases involving trade secret waiver, (3) finding that DSI did not use UCS’s trade secrets, (4) fading to recognize disgorgement damages, and (5) finding that UCS’s trade secret misappropriation claim is preempted by federal copyright law. Ap-pellees respond that because the parties agreed the Texas General Arbitration Act governs this arbitration, the Texas common law “gross mistake” standard is inapplicable. Rather, appellees assert, UCS is confined to raising one or more of the four exclusive grounds for vacatur set forth in the Texas General Arbitration Act.

We agree that the Texas General Arbitration Act governs this dispute. Although the arbitration provision contained in the license agreement between UCS and Sterling McCall does not reference the Texas General Arbitration Act, the parties’ subsequent Agreed Order to Stay Action and Compel Arbitration specifically incorporates it:

The final arbitration award shall be subject to appeal, by way of a motion to modify, correct or vacate all or any part of the award filed in this Court and, thereafter, to the courts of appeals having jurisdiction, pursuant to the Texas General Arbitration Act.
To the extent not addressed herein, the rules of the Texas General Arbitration Act shall govern the arbitration.

We therefore conduct our review under the Texas General Arbitration Act.

Pursuant to the Texas General Arbitration Act, a court may vacate an arbitration award under only four circumstances: (1) “the award was obtained by corruption, fraud, or other undue means;” (2) there was evident partiality, corruption, or willful misconduct by an arbitrator that prejudiced the rights of a party; (8) the arbitrators exceeded their powers, refused to postpone the hearing on good cause shown, refused to hear material evidence, or conducted the hearing in a substantially prejudicial manner; or (4) “there was no agreement to arbitrate, the issue was not adversely determined in a proceeding under Subchapter B, and the party did not participate in the arbitration hearing without raising the objection.” Tex. Civ. Prac. & Rem.Code Ann. § 171.088(a)(1)-(4) (Vernon 2005). UCS does not contend any of these circumstances apply to this arbitration proceeding.

Appellees urge that UCS is limited to these statutory grounds for vacatur, and thus UCS’s appeal is without merit. We note, however, that the Texas Supreme Court recently declined an invitation to hold that a party governed by the Texas General Arbitration Act is limited to the statutory grounds for vacatur and cannot rely upon the common law “gross mistake” standard. Callahan & Assocs. v. Orangefield Indep. Sch. Dist., 92 S.W.3d 841, 844 (Tex.2002). After observing that “[n]either party disputes that the [Texas General Arbitration] Act governs the contract[,]” and “[t]he statutory grounds allowing a court to vacate ... an award are limited to those the Act expressly identifies[,]” the Texas Supreme Court “assume[d] without deciding that [petitioner] may rely on the gross mistake standard under the common law to attack the arbitrator’s award[.]” Id. Thus, like the Texas Supreme Court, we assume without deciding that UCS may rely on the common law gross mistake standard in this case in seeking to set aside the trial court’s confirmation of the arbitrators’ decision.

Yet, our review of an arbitration decision is “extremely narrow” because Texas law favors arbitration. IPCO-G. & C. Joint Venture v. A.B. Chance Co., 65 S.W.3d 252, 256 (Tex.App.-Houston [1st Dist.] 2001, pet. denied). An arbitration award has the same effect as the judgment of a court of last resort, and a reviewing court may not substitute its judgment for that of the arbitrators merely because it would have reached a different result. J.J. Gregory Gourmet Servs., Inc. v. Antone’s Imp. Co., 927 S.W.2d 31, 33 (Tex.App.-Houston [1st Dist.] 1995, no writ). Because arbitration is favored as a means of dispute resolution, every reasonable presumption must be indulged to uphold the arbitrators’ decision, and none is indulged against it. CVN Group, Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex.2002). Review is so limited that a court may not vacate an arbitration award even if it is based upon a mistake of fact or law. Vernon E. Faulconer, Inc. v. HFI Ltd. P’ship, 970 S.W.2d 36, 39 (Tex.App.-Tyler 1998, no pet.) (citing Jamison & Harris v. Nat'l Loan Investors, 939 S.W.2d 735, 737 (Tex.App.-Houston [14th Dist.] 1997, writ denied)).

Texas common law allows a reviewing court to set aside an arbitration award “only if the decision is tainted with fraud, misconduct, or gross mistake as would imply bad faith and failure to exercise honest judgment.” IPCO, 65 S.W.3d at 256 (quoting Teleometrics Int'l Inc. v. Hall, 922 S.W.2d 189, 193 (Tex.App.-Houston [1st Dist.] 1995, writ denied)). “Gross mistake results in a decision that is arbitrary or capricious. An honest judgment made after due consideration given to conflicting claims, however erroneous, is not arbitrary or capricious.” Bailey & Williams v. Westfall, 727 S.W.2d 86, 90 (Tex.App.-Dallas 1987, writ refd n.r.e.). The party seeking to vacate an arbitration award has the burden of demonstrating how the arbitrators made a gross mistake. Anzilotti v. Gene D. Liggin, Inc., 899 S.W.2d 264, 267 (Tex.App.-Houston [14th Dist.] 1995, no writ).

UCS asserts that the arbitrators made a gross mistake for several reasons. First, UCS contends that the panel majority improperly ignored the license agreement between UCS and Sterling McCall as a whole, and instead adopted a “strained interpretation” that parsed out the individual phrases “software,” “program,” and “licensed copy” as including only the raw code. UCS insists that this interpretation cannot be squared with the purpose of the agreement — which was to keep the programs, software, and manifestations of the software confidential — and is “sufficiently absurd” to justify vacatur of the award. Appellees respond that the arbitration panel heard evidence, and properly found, that UCS publicly disclosed (1) the functionality of the UCS system, (2) the data items the UCS system uses to perform its operations, (3) the manuals describing how the UCS system operates, (4) the screens displayed on the end user’s terminal on the UCS system, and (5) the reports or output from the UCS system. Thus, appellees contend, the panel majority properly interpreted the license agreement narrowly.

It is not our province to determine the proper construction of the parties’ license agreement. See House Grain Co. v. Obst, 659 S.W.2d 903, 907 (Tex.App.-Corpus Christi 1983, writ ref'd n.r.e.) (holding that “[i]t is not necessary for us to determine the proper construction of the contract between the parties” because to do so would allow the parties “to essentially re-litigate the arbitration proceedings”). Instead, our review is limited to whether the arbitrators’ failure to adopt UCS’s interpretation of the license agreement constitutes bad faith or a failure to exercise honest judgment. The record contains conflicting evidence as to the interpretation and breach of the agreement. Thus, nothing before us suggests that the arbitrators acted in bad faith or failed to exercise honest judgment, both with respect to UCS’s claim for misappropriation of trade secrets and its claim for breach of contract against Sterling McCall. We hold UCS’s first ground for vacating the award to be without merit.

Next, UCS asserts that the arbitrators made a gross mistake by failing to address three leading Texas cases regarding trade secret waiver. According to UCS, the panel majority incorrectly found that UCS lost any trade secret protection by demonstrating the UCS system and distributing software overviews to thousands of third parties without expressly obligating the third parties to maintain confidentiality. UCS also contends the arbitrators’ finding that DSI did not use UCS’s trade secrets because the DSI software is not a copy of the UCS system is a “gross distortion of well-settled law[J” However, “[t]hese alleged errors in the application of substantive law by the arbitrators during the proceedings in arbitration are not reviewable by the court on a motion to vacate an award.” Jamison, 939 S.W.2d at 737; see also Baker Hughes Oilfield Operations, Inc. v. Hennig Prod. Co., 164 S.W.3d 438, 443 (Tex.App.-Houston [14th Dist.] 2005, no pet.) (“Any error of law made by the arbitrators ... cannot be reviewed by a court confirming the award.”). Thus, we hold UCS’s second and third grounds for vacating the award to be without merit.

Next, UCS contends that the arbitrators made a gross mistake in refusing to recognize disgorgement damages as measured by the value of the stolen trade secret. The arbitration panel majority concluded that, even had UCS proven its trade secret misappropriation claim, UCS did not prove that it sustained actual damages, and any unjust enrichment damages were speculative. In Callahan, the Texas Supreme Court considered whether a failure to award damages constitutes a gross mistake. Callahan, 92 S.W.3d at 843-44. The arbitrator in Callahan determined that the defendant was liable for the plaintiff’s defective driveway, but failed to award damages despite the record evidence about the costs plaintiff incurred to replace the driveway. Id. The Texas Supreme Court held as follows:

[A]n arbitrator does not violate the common law simply by failing to award damages. See Teleometrics Int’l, Inc. v. Hall, 922 S.W.2d 189, 193 (Tex.App.Houston [1st Dist.] 1995, writ denied) (Gross mistake, as a common law ground for setting aside an arbitration award, is a mistake that implies bad faith or failure to exercise honest judgment.).

Id. at 844. Likewise, we hold that the arbitrators in this case did not commit a gross mistake sufficient to set aside the arbitration award by failing to award damages to UCS. Thus, we hold UCS’s fourth ground for vacating the award to be without merit.

Finally, UCS contends that the arbitrators made a gross mistake in finding that its trade secret misappropriation claim is preempted by federal copyright law. According to UCS, the arbitrators based their decision on an “impossibly strained interpretation” of Butler v. Continental Airlines, Inc., 31 S.W.3d 642 (Tex.App.-Houston [1st Dist.] 2000, pet. denied), and, in any event, that decision is not the majority view outside Texas. ADP asserts that Texas adheres to the minority rule, and the arbitrators therefore properly followed Butler in holding that trade secret misappropriation claims involving the wrongful copying of computer software are preempted by federal copyright law. However, on cross-appeal, ADP maintains that, should we disagree with the arbitrators’ conclusion, then ADP is entitled to an injunction against UCS, as automatically provided for in the arbitration decision.

As we have discussed, we simply may not review “alleged errors in the application of substantive law by the arbitrators.” Jamison, 939 S.W.2d at 737; see also Monday v. Cox, 881 S.W.2d 381, 385 (Tex.App.-San Antonio 1994, writ denied) (“The courts are not permitted to second-guess the correctness of an arbitrator’s decision on the merits.”). Rather, our review is confined to whether the record indicates the arbitrators acted in bad faith or failed to exercise honest judgment — not whether we agree or disagree with their application of the law. Here, the arbitrators relied on four Texas state and federal cases in deciding the preemption issue, and we find nothing in the record indicating that the arbitrators acted in bad faith or failed to exercise honest judgment. Thus, we hold UCS’s fifth ground for vacating the award to be without merit and overrule the issue raised in ADP’s cross-appeal.

Conclusion

We conclude that the trial court should not have issued a discovery order limiting the presentation of the evidence during the arbitration proceedings, but that the order did not affect the arbitrators’ decision as to the merit of UCS’s claims, and thus did not cause the rendition of an improper judgment. In addition, we conclude that the arbitrators did not commit a gross mistake in finding that UCS had failed to prove its trade secret misappropriation and breach of contract claims. Accordingly, we affirm the judgment of the trial court confirming the arbitration award. All pending motions are denied as moot.

      . Specifically, the trial court ordered UCS, in its supplemental response, to "state specifically the identity of each 'functionality,' 'data field,’ 'rule,' 'reflex,' ^structure,’ 'design,' 'architecture,' 'integration or combination of various components,' 'negative knowledge,' 'method or process utilized for manipulation information,’ 'trigger,' 'calculation code,’ 'formula,' 'distribution,' and ‘format, content, sequence, total structure and record selection of various reports,’ or other feature, function or element of [UCS’s] automobile dealership management system or related written materials that is the subject of this case that [UCS] contend[s] is a trade secret accessed or misappropriated by [appellees]. Each- trade secret claimed by [UCS] shall be separately identified by [it] in such answers.”

      . In response to the trial court's June 15, 2000 order that required UCS to describe its alleged trade secret with more specificity, UCS stated, "This section of material provides examples of seven software applications and their particular role in identifying the UCS system on a whole as a trade secret. Within each document, programs and fields are described with particularity to the interaction of UCS trade secrets and non-trade secrets that have been adapted in such a way as to form a complete unified process which is unique and secret so as to be separated from general dealership knowledge.”

      . Gary McGowan, the Honorable Susan Sous-san, and the Honorable Alvin Zimmerman comprised the arbitration panel.

      . Specifically, the chair arbitrator ruled as follows:
      ARBITRATOR ZIMMERMAN: Right now we're choosing to kind of put our foot in the water and walk through this for a while and see where it takes us. So, we're not prerul-ing that your objection is right or wrong; we're going to carry your objection. We’re not preruling whether he’s overstepping his bounds or not. And that's what we tried to relate to everybody. This is delicate waters with a lot of hills and valleys that we're, frankly, trying to feel our way through.

      . See Butler v. Continental Airlines, Inc., 31 S.W.3d 642 (Tex.App.-Houston [1st Dist.] 2000, pet. denied); see also Butler v. Continental Airlines, Inc., No. Civ.A.01-2194, 2001 WL 1509545 (S.D.Tex. Nov. 19, 2001); Microsource, Inc. v. Superior Signs, Inc., No. CIV. A.3:97-CV-2733-G, 1998 WL 119537 (N.D.Tex. Mar. 9, 1998); Butler v. Continental Airlines, Inc., 116 S.W.3d 286 (Tex.App.-Houston [14th Dist.] 2003, pet. denied).

      . ADP "expressly reserve[d] its right to complain in the event of an appeal of the part of the Award holding that it shall take nothing on its claims [.]"

      . In their brief, appellees contend that the trial court had the authority to enter the May 9, 2002 order under section 171.086 of the Texas General Arbitration Act, which enables a court to enter any order "needed to permit the arbitration to be conducted in an orderly manner and to prevent improper interference or delay of the arbitration." Tex. Civ. Prac. & Rem.Code Ann. § 171.086(a)(6) (Vernon 2005). However, the trial court issued the May 9, 2002 order to resolve the parties’ existing discovery dispute — not to facilitate the arbitration proceeding pursuant to section 171.086. As such, we reject appellees’ contention that the trial court acted within its statutory authority.

      . In fact, at the close of the arbitration hearing, UCS's Chairman and CEO told the panel, "I thank you-all for your attention. It’s been a long three weeks. You-all have seen lots of paper. I appreciate the fact that you-all have given us a hard lesson. I feel like I have had my day in court.”

      . Tex. Civ. Prac. a Rem.Code Ann. §§ 171.001-.096 (Vernon 2005).

      . The provision does state that "[i]f the arbiters fail to select a third [arbiter] within ten (10) days, or should either party hereto fail to select an arbiter, he shall be chosen by a District Judge serving Harris County, Texas.”

      . Subchapter B governs motions and proceedings to compel or stay arbitration.

        . This is because "[s]ubjecting arbitration awards to judicial review adds expense and delay, thereby diminishing the benefits of arbitration as an efficient, economical system for resolving disputes.” CVN Group, Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex.2002).

      . The authorities UCS identifies are Hyde Corp. v. Huffines, 158 Tex. 566, 314 S.W.2d 763 (1958), K & G Oil Tool & Service Co. v. G & G Fishing Tool Service, 158 Tex. 594, 314 S.W.2d 782 (1958), and Schalk v. State, 823 S.W.2d 633 (Tex.Crim.App.1991).

      . See Butler v. Continental Airlines, Inc., 31 S.W.3d 642 (Tex.App.-Houston [1st Dist.] 2000; pet. denied); see also Butler v. Continental Airlines, Inc., No. Civ.A.01-2194, 2001 WL 1509545 (S.D.Tex. Nov. 19, 2001); Microsource, Inc. v. Superior Signs, Inc., No. CIV. A.3:97-CV-2733-G, 1998 WL 119537 (N.D.Tex. Mar. 9, 1998); Butler v. Continental Airlines, Inc., 116 S.W.3d 286 (Tex.App.Houston [14th Dist.] 2003, pet. denied).


source: Caselaw Access Project

author: TERRY JENNINGS, Justice.

license: Public Domain

text:
    THE PAUL GILLRIE INSTITUTE, INC., Paul Gillrie, and John Darmento, Appellants, v. UNIVERSAL COMPUTER CONSULTING, LTD. and Dealer Computer Services, Inc., Appellees.
    No. 01-04-01213-CV.
    Court of Appeals of Texas, Houston (1st Dist.).
    Dec. 8, 2005.
    Rehearing Overruled Feb. 21, 2006.

      Donald W. Gould, II, Johnson, Finkel, DeLuea & Kennedy, Mark Allen Counts, Johnson Deluca Kennedy & Kurisky, Houston, Jennifer S. Stoddard, James D. Blume, Blume & Stoddard, Dallas, TX, for Appellant.
    Rebecca Michelle Moughon, John C. Allen, John C. Allen, P.C., Houston, TX, for Appellee.
    Panel consists of Justices NUCHIA, JENNINGS, and HIGLEY.
   OPINION

TERRY JENNINGS, Justice.

In this libel suit, appellants, the Paul Gillrie Institute, Inc. (“PGI”), Paul Gillrie, and John Darmento bring this accelerated interlocutory appeal challenging the trial court’s order denying their special appearance. In their sole issue, appellants contend that the trial court erred in determining that they were subject to the personal jurisdiction of a Texas court. We affirm.

Factual and Procedural Background

Appellees, Universal Computer Consulting, Ltd. and Dealer Computer Services, Inc. (collectively, “UCS”), are affiliated companies that provide computer systems to automobile dealerships across the United States. PGI is described as “North America’s leading consultant and advocate for automobile dealers in their quest to reduce technology expense in their dealerships.” Gillrie is the founder of PGI, and both Gillrie and Darmento are directors and employees of PGI. PGI serves a “diverse client base of dealers, CPA firms and attorneys throughout the United States and Canada,” and publishes a trade publication titled “the Journal of Dealership Computing,” six times a year. In its June 2004 journal, which was edited by Darmento, PGI published an article revealing the results of a survey comparing vendors of car-dealership computer systems. The article stated that although “UCS received the highest ratings as each one of their products was scored,” UCS received the lowest scores when customers were asked “to rate the company as a whole.” The article characterized the results of the survey to indicate that customers liked UCS’s products but did not like the company. The journal also contained a headline that stated, in bold, “Survey Shows UCS Clients Want to Leave.” Under this headline, the article asserted that 71% of UCS’s customers, if they had the choice, would not sign up with UCS again, and that, as a whole, more UCS customers were dissatisfied with their computer vendor than customers of any other vendor. Finally, the journal contained several graphs illustrating that UCS received the highest marks in numerous categories, but received the lowest “overall rating” among the rated computer vendors.

Robert Nalley, president of UCS, testified that, in the summer of 2004, he was contacted by Dan Chernault, vice president and chief financial officer of Russell Smith Ford (“Russell Smith”), a UCS customer located in Harris County, Texas. Chernault notified him of the articles contained in PGI’s June 2004 journal. Nalley reviewed the journal and concluded that the statements contained in the journal were defamatory and damaging to UCS’s reputation. Nalley stated that he interpreted the article to represent that it was based on a fair, impartial, and scientifically valid survey.

UCS also presented the affidavit testimony of Chernault, who stated that he is the vice president and chief financial officer of Russell Smith, located in Houston, Texas, he received a copy of PGI’s June 2004 journal, he regarded the statements in the journal to be damaging to UCS’s reputation and derogatory toward UCS, and the article caused him concern about UCS’s services. Chernault also stated that he interpreted the article to represent that it was based on a fair, impartial, and scientifically valid survey.

In September 2004, UCS filed suit against appellants for libel, libel per se, business disparagement, tortious interference with existing contracts, and tortious interference with prospective contractual relationships. In its petition, UCS alleged that the article contained in PGI’s June 2004 journal was a sham, as evidenced by PGI’s refusal to reveal the data upon which the article was based. UCS further alleged that the sham study was motivated by the fact that UCS had recently discredited and embarrassed Gillrie when it pursued a Daubert motion against him in unrelated litigation. UCS brought suit against PGI, and against Gillrie and Dar-mento individually, alleging that they drafted and edited the articles at issue. Appellants filed a special appearance and an answer, subject to their special appearance, generally denying UCS’s allegations.

The relevant facts are largely undisputed. UCS maintains its corporate headquarters and principal place of business in Harris County, Texas. PGI is a Florida corporation; it does not maintain an office in Texas, does not have a registered agent for service of process in Texas, does not have any employees or operations located in Texas, and does not routinely send employees to Texas or recruit employees from Texas. However, PGI employees occasionally make and receive telephone calls from prospective clients in Texas. PGI’s journal is “written, compiled, and published in Florida,” and is sent to Texas through the United States mail. PGI has approximately eighteen active subscribers and thirty non-paying subscribers who are located in Texas and who receive the journal. At least two of the Texas-based paid subscribers are current customers of UCS.

Darmento, the editor of the PGI journal at issue, testified that he is a resident of Florida and that he has not been to Texas since 1990. Darmento also testified that Gillrie is a resident of Florida, that Gillrie traveled to Galveston, Texas in June 2004 to speak at a seminar on behalf of PGI, and that Gillrie travels to Texas once a year for similar seminars.

Standard of Review

The plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the long-arm statute. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex.2002). The burden of proof then shifts to the nonresident to negate all possible grounds for personal jurisdiction. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex.1985). The existence of personal jurisdiction is a question of law, which must sometimes be preceded by the resolution of underlying factual disputes. Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 113 (Tex.App.-Houston [1st Dist.] 2000, pet. dism’d w.o.j.). When the underlying facts are undisputed or otherwise established, we review a trial court’s denial of a special appearance de novo. Id. Where a trial court does not issue findings of fact or conclusions of law with its special appearance ruling, all fact findings necessary to support the judgment and supported by the evidence are implied. BMC Software Belgium, N.V., 83 S.W.3d at 789.

Discussion

In their sole issue, appellants argue that the trial court erred in determining that they are subject to the personal jurisdiction of a Texas court because (1) they have no significant contacts with Texas; (2) they do not have continuous and systematic contacts with Texas and cannot be subject to the general jurisdiction of a Texas court; (3) the “fiduciary shield” doctrine protects Gillrie and Darmento from the general jurisdiction of a Texas court; (4) they are not subject to the specific jurisdiction of a Texas court; and (5) the exercise of jurisdiction over them would violate traditional notions of fair play and substantial justice.

A court may assert personal jurisdiction over a nonresident defendant only if the requirements of both the Fourteenth Amendment’s due process clause and the Texas long-arm statute are satisfied. See U.S. Const. amend. XIV, § 1; Tex. Civ. Prac. & Rem.Code Ann. § 17.042 (Vernon 1997); CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex.1996) (orig.proceeding). The Texas long-arm statute allows a court to exercise personal jurisdiction over a nonresident defendant who does business in Texas. Tex. Civ. Prac. & Rem.Code Ann. § 17.042. A nonresident “does business” in Texas if he, among other things, “commits a tort in whole or in part” in Texas. Id. The Texas Supreme Court has repeatedly interpreted this statutory language “to reach as far as the federal constitutional requirements of due process will allow.” CSR Ltd., 925 S.W.2d at 594 (citations omitted). Therefore, the requirements of the Texas long-arm statute are satisfied if the exercise of personal jurisdiction comports with federal due process limitations. Id.

The United States Constitution permits a state to assert personal jurisdiction over a nonresident defendant only if the defendant has some minimum, purposeful contacts with the state and if the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice. Dawson-Austin v. Austin, 968 S.W.2d 319, 326 (Tex.1998). A nonresident who has purposefully availed himself of the privileges and benefits of conducting business in the state has sufficient contacts with the state to confer personal jurisdiction. CSR Ltd., 925 S.W.2d at 594.

The “purposeful availment” requirement has recently been characterized by the Texas Supreme Court as the “touchstone of jurisdictional due process.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 5.W.3d 777, 784 (Tex.2005). In Michiana, the Texas Supreme Court articulated three important aspects of the purposeful availment inquiry. Id. at 785. First, only the defendant’s contacts with the forum count. Id. This ensures that a defendant is not haled into a jurisdiction solely by the unilateral activities of a third party. Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985)). Second, the acts relied on must be purposeful; a defendant may not be haled into a jurisdiction solely based on contacts that are “random, isolated, or fortuitous.” Id. (citing Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984)). Third, a defendant “must seek some benefit, advantage, or profit by ‘availing’ itself of the jurisdiction” because “[¡Jurisdiction is premised on notions of implied consent — that by invoking the benefits and protections of a forum’s laws, a nonresident consents to suit there.” Id. (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980)).

A defendant’s contacts with a forum can give rise to either general or specific jurisdiction. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex.1991). UCS concedes that this case is one of specific jurisdiction. Specific jurisdiction is established if a defendant’s alleged liability arises from or is related to an activity conducted within the forum. Id. When specific jurisdiction is asserted, the minimum contacts analysis focuses on the relationship between the defendant, the forum, and the litigation. Id. at 228. The exercise of personal jurisdiction is proper when the contacts proximately result from actions of the nonresident defendant that create a substantial connection with the forum state. Id. at 226. The substantial connection between the nonresident defendant and the forum state necessary for a finding of minimum contacts must come about by action or by conduct of the nonresident defendant purposefully directed toward the forum state. Id.

Although it is not determinative, foreseeability is an important consideration in deciding whether the nonresident has purposefully established minimum contacts with the forum state. Id. at 227. The concept of foreseeability is implicit in the requirement that there be a substantial connection between the nonresident defendant and Texas arising from actions or conduct of the nonresident defendant purposefully directed toward Texas. Id.

Minimum Contacts

In the instant case, PGI published an article that allegedly defamed UCS, a corporation with its headquarters and principal place of business in Harris County, Texas; PGI mailed this journal to subscribers across the country, including approximately fifty subscribers located in Texas. Eighteen of the Texas subscribers were paid subscribers, while the other thirty Texas subscribers were non-paid. At least two of the Texas-based paid subscribers are customers of UCS, and at least one of UCS’s current and long-time customers, located in Houston, contacted UCS after receiving the article and expressed concern about UCS’s services. Furthermore, the article was contained in a trade journal targeted at those involved in or related to the automobile industry, and all of the subscribers, including those located both inside and outside of Texas, could have been considered as potential customers or industry contacts.

We find the facts in this case to be comparable to those in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), and Keeton, 465 U.S. 770, 104 S.Ct. 1473, 79 L.Ed.2d 790. In Calder, an entertainer residing in California brought suit in California against a nationally distributed magazine with a “large circulation,” as well as the author and editor of an allegedly defamatory article published in that magazine. Id., 465 U.S. at 785-86, 104 S.Ct. at 1484-85. The author and editor, both residents of Florida, objected to the jurisdiction of the California court. Id. The record established that approximately 600,000 copies of the magazine were circulated in California, out of a total circulation of 5 million. Id., 465 U.S. at 785, 104 S.Ct. at 1484. Finding that “the allegedly libelous story concerned the California activities of a California resident” and that California was “the focal point both of the story and the harm suffered,” the Supreme Court held that jurisdiction over the editor and author in California was proper “based on the effects of their Florida conduct in California.” Id., 465 U.S. at 788-89, 104 S.Ct. at 1486-87. In support of its holding, the Supreme Court noted that the defendants wrote and edited an article that they knew would have a potentially devastating impact upon the entertainer in California, and that the defendants should “reasonably anticipate” being haled into court in California. Id., 465 U.S. at 789-90, 104 S.Ct. at 1487. Similarly, in Keeton, a resident of New York brought suit for libel in New Hampshire against a magazine with its principal place of business in California for publishing allegedly defamatory statements. Id., 465 U.S. at 772, 104 S.Ct. at 1477. Noting that the regular monthly sales of thousands of magazines in New Hampshire could not be characterized as “random, isolated, or fortuitous,” the Supreme Court held that such circulation in the forum state was sufficient to support an assertion of jurisdiction in a libel action based on the contents of the magazine. Id., 465 U.S. at 773-74, 104 S.Ct. at 1478.

Appellants argue that Calder is inapplicable because the alleged defamation “has absolutely no connection to the State of Texas,” the journal does not specifically mention the State of Texas, there was no evidence to show that UCS’s operations were centered in Texas, and there was no evidence that the journal was aimed at Texas or widely circulated in Texas. Here, however, PGI’s allegedly defamatory statements were contained in its trade journal that it sent to approximately fifty customers located in Texas. Moreover, the allegedly defamatory statements concerned UCS, a corporation with its headquarters and principal place of business in Texas.

In regard to appellants’ attempts to distinguish Keeton, we recognize that the circulation of the magazine in Keeton was much more substantial than the circulation of the PGI journal. More importantly, however, the PGI journal is a trade publication with a limited audience targeted to a specific industry, and it is neither surprising nor determinative that the PGI journal has a more limited circulation than that of a nationwide magazine marketed to the general populace. We also note that the record is void of any evidence related to the number of subscribers to the PGI journal, the location of these subscribers, the percentage of subscribers who reside in Texas versus those who reside in other states, the location of the subscribers who responded to the survey and provided the underlying data for the survey, and the exact number of copies sent to the Texas subscribers. To the extent appellants are attempting to bolster their jurisdictional challenge with these facts, they have failed to provide any evidentiary support.

Appellants cite to several cases for the proposition that merely mailing documents into a state is insufficient to become subject to the jurisdiction of that state’s courts. These cases are easily distinguishable. For example, appellants cite the Texas Supreme Court’s statement in National Industrial Sand Ass’n v. Gibson, 897 S.W.2d 769, 774 (Tex.1995), that “[a]n organization that mails national newsletters and notices of acceptance of dues to a member company in Texas has not purposefully established minimum contacts such that it could reasonably foresee being sued in the courts of this State.” However, this statement was made in the context of a general jurisdiction analysis, and has no application to the facts supporting the exercise of specific jurisdiction in this case. Another case cited by appellants, U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 763 (Tex.1977), involved a contract dispute over a contract that was “solicited, negotiated, and consummated” in Oklahoma. In determining that the nonresident in that case had not purposefully conducted activities within Texas, the supreme court noted that the nonresident was merely “a passive customer of a Texas corporation who neither sought, initiated, nor profited from his single and fortuitous contact with Texas.” Id. The holding in U-Anchor does not support appellants’ challenge to the jurisdiction of a Texas court to hear UCS’s libel claims.

Appellants also cite Revell v. Lidov, 317 F.3d 467 (5th Cir.2002), to support their argument that there is no jurisdiction because the publication was not “directed specifically at Texas.” Like the other cases cited by appellants, Revell is distinguishable. In Revell, the Fifth Circuit held that an article posted on a website bulletin board was “presumably directed at the entire world, or perhaps just concerned U.S. citizens,” but “certainly was not directed specifically at Texas.” Id. at 475. Here, appellants directed copies of their journal, which allegedly contained an article defaming a corporation with its headquarters and principal place of business in Texas, to fifty subscribers located in Texas, as well as to an unknown number of subscribers across the country.

In support of their special appearance, appellants also refer to Michiana, 168 S.W.3d at 777. In Michiana, a Texas resident bought a recreational vehicle from a nonresident seller, and brought suit against the seller for an alleged misrepresentation made during a phone call initiated by the buyer. Id. at 781, 784. The seller, a separate legal entity from the manufacturer, was located in Indiana, did not have employees or property in Texas, was not authorized to do business in Texas, did not advertise in Texas or on the Internet, and did not solicit business from the purchaser or from anyone else in Texas. Id. at 784. The supreme court addressed the question of whether suit could be brought in Texas against the seller based on its alleged misrepresentation in this single, unsolicited telephone call. Id. The supreme court held that “because [the seller’s] only contact with Texas was [the buyer’s] decision to place his order from [Texas],” the seller was not subject to the jurisdiction of a Texas court. Id. at 794. Here, unlike in Michmna, the exercise of jurisdiction over PGI, a nonresident, is consistent with the touchstone of purposeful availment. PGI is subject to the jurisdiction of Texas courts, not because of the unilateral activity of a third party, but because of its purposeful contacts with Texas. Additionally, PGI’s mailing of the journal to Texas subscribers is not “random, isolated, or fortuitous.” Finally, by directing the trade journal to Texas subscribers, PGI was seeking a “benefit, advantage, or profit,” and, thus, consented to being sued in Texas for allegedly defamatory statements contained in the journal.

As to the special appearances filed on behalf of Darmento and Gillrie individually, they contend that the trial court erred in denying their special appearances because UCS’s cause of action did not arise out of or relate to their Texas contacts. UCS asserts, with evidentiary support, that Gillrie and Darmento drafted and edited the articles contained in PGI’s journal. In Colder, the Supreme Court stated

Petitioners are correct that their contacts with California are not to be judged according to their employer’s activities there. On the other hand, their status as employees does not somehow insulate them from jurisdiction. Each defendant’s contacts with the forum State must be assessed individually. In this case, petitioners are primary participants in an alleged wrongdoing intentionally directed at a California resident, and jurisdiction over them is proper on that basis.

Id., 465 U.S. at 790, 104 S.Ct. at 1487 (citations omitted). Similarly, UCS is alleging that Gillrie and Darmento are primary participants in tortious conduct directed at it, and UCS is seeking to hold them individually liable for their role in publishing allegedly defamatory statements in a trade article directed by PGI to at least fifty subscribers located in Texas about UCS, a corporation with its headquarters and principal place of business in Texas.

Here, there is a direct relationship between appellants, their purposeful contacts with subscribers located in Texas, and UCS’s claims arising out of alleged defamatory statements made in PGI’s journal. Accordingly, we hold that appellants have established sufficient minimum contacts with Texas to subject them to personal jurisdiction.

Traditional Notions of Fair Play and Substantial Justice

The exercise of personal jurisdiction over a nonresident defendant must also comport with traditional notions of “fair play and substantial justice.” Guardian Royal, 815 S.W.2d at 228. The burden is on the defendant to present a compelling case that the presence of some other considerations renders the exercise of jurisdiction unreasonable. Id. at 231 (quoting Burger King, 471 U.S. at 477, 105 S.Ct. at 2185). In making a determination, a court generally must look to the following factors: (1) the burden on the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the plaintiffs interest in obtaining convenient and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states in furthering substantive social policies. Id. at 228, 231. Only in rare cases will the exercise of jurisdiction not comport with fair play and substantial justice when a nonresident defendant has purposefully established minimum contacts with the forum state. Id. at 231. Furthermore, distance from the forum is generally not sufficient to defeat jurisdiction because the availability of “modern transportation and communication have made it less burdensome for a party sued to defend himself in a state where he engages in economic activity.” McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957).

Here, appellants contend that “the difficulties attendant in calling [them] across state borders to defend themselves in this lawsuit are onerous.” Appellants note that none of the records, files, or witnesses necessary for trial are located in Texas. Appellants also assert that Texas has no interest in adjudicating this case and that, because UCS has the financial resources and ability to seek relief in Florida, it should do so. However, the fact remains that UCS employees and customers, who would likely be called as witnesses in this case, are located in Texas and that UCS documents, which would likely be produced in discovery, may be located in Texas. Furthermore, although it appears that defending this suit in Texas might necessitate unwelcome travel and expense for appellants, these factors alone are not determinative. See Guardian Royal, 815 S.W.2d at 231. Certainly, prosecution of this suit in Florida would involve similar inconveniences for UCS. However, “there is no legal requirement that this hardship must be borne instead by the plaintiff whenever the defendant is not found in the state of the plaintiffs residence.” Wright v. Sage Eng’g, Inc., 137 S.W.3d 238, 253-54 (Tex.App.-Houston [1st Dist.] 2004, pet. denied). Finally, contrary to appellants’ assertion, Texas does have an interest in providing its citizens with a forum to adjudicate claims against citizens of other states who committed tortious acts against its residents. See Guardian Royal, 815 S.W.2d at 232 (recognizing that interests of forum state and plaintiff frequently will justify severe burden placed upon nonresident defendant). Thus, we hold that the exercise of personal jurisdiction over appellants in this case comports with traditional notions of fair play and substantial justice.

Accordingly, because the record indicates that appellants’ contacts with Texas are sufficient to create specific jurisdiction over them and because the exercise of personal jurisdiction over appellants comports with traditional notions of fair play and substantial justice, we further hold that the trial court did not err in denying appellants’ special appearance.

We overrule appellants’ sole issue.

Conclusion

We affirm the order of the trial court.

      . Tex Civ. Prac. & Rem.Code Ann. § 51.014(7) (Vernon Supp.2005).

      . Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).

      . A party may appear specially, without making a general appearance, in order to object to the court's exercise of jurisdiction over it, on the ground that the party is not amenable to process issued by the courts of this State. Tex.R. Civ. P. 120a.

      . It is not entirely clear from the record whether each subscriber receives multiple copies of the newsletter, and whether some of these subscribers furnish their customers with copies of the newsletter or use the information in the newsletter to assist their customers.

      . The Texas Supreme Court has recently noted that " [allegations that a tort was committed in Texas satisfy the Texas Long-Arm Statute, but not necessarily the U.S. Constitution.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 788 (Tex.2005).

      . Accordingly, we need not address appellants' arguments concerning general jurisdiction.

      . Appellants argue that the PGI journal "is available to and read only by a limited number of persons and is not generally available to the public at large.” Rather than defeat the exercise of jurisdiction, we find that this fact actually supports the exercise of jurisdiction in this case.

      . In the journal, PGI listed its “services offered,” including "computer negotiating,” "resolution of dealer-vendor disputes,” and "computer expense reduction,” and PGI further offered "to review any billing or proposal for free.” Additionally, the journal included an article titled "Be Wary of New Release,” which stated that "UCS is releasing another update,” warned dealers that they would be "obligated to update hardware,” and suggested that dealers send PGI their deals for review because "the upgrade is an excellent opportunity to negotiate new terms and prices.”

      . Appellants' arguments concerning the fiduciary shield doctrine were limited to the issue of general jurisdiction, which we do not address here. We also note that this Court has previously held that the fiduciary shield doctrine does not protect a corporate officer from specific personal jurisdiction as to intentional torts or fraudulent acts for which he may be held individually liable. See Wright v. Sage Eng’g, Inc., 137 S.W.3d 238, 250 & n. 9 (Tex.App.-Houston [1st Dist.] 2004, pet. denied); see also Ennis v. Loiseau, 164 S.W.3d 698, 706-07 (Tex.App.-Austin 2005, no pet.); SITQ E.U., Inc. v. Reata Rests., Inc., 111 S.W.3d 638, 651 (Tex.App.-Fort Worth 2003, pet. denied).