CLL Academy, Inc. v. Academy House Council ( 2020 )

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2020 Pa. Super. 89
CLL ACADEMY, INC. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
ACADEMY HOUSE COUNCIL, ROBERT :
VOGEL, BRUCE KLEINSTEIN, CAROLE :
GIAMPALMI, LINDA RINK, MICHAEL : No. 446 EDA 2019
GOLDMAN, ROBERT WASHBURN, :
JOHN DOE MEMBERS OF ACADEMY :
HOUSE COUNCIL 1-10 AND :
PARKWAY CORPORATION :
:
:
APPEAL OF: ACADEMY HOUSE :
COUNCIL ON BEHALF OF THE UNIT :
OWNERS OF ACADEMY HOUSE :
CONDOMINIUM ("AH COUNCIL)" :
AND INDIVIDUAL MEMBERS OF AH :
COUNCIL, ROBERT VOGEL, BRUCE :
KLEINSTEIN, CAROLE GIAMPALMI, :
LINDA RINK, MICHAEL GOLDMAN :
AND ROBERT WASHBURN :
Appeal from the Order Dated January 14, 2019
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): October Term, 2017, No. 03791
BEFORE: BOWES, J., OLSON, J., and FORD ELLIOTT, P.J.E.
OPINION BY BOWES, J.: FILED APRIL 06, 2020
Academy House Council appeals on behalf of the Unit Owners of
Academy House Condominium and the individually named council members
(collectively “AHC”), and challenges the trial court’s order compelling it to
divulge allegedly attorney-client privileged communications and attorney work
product to opposing counsel “for attorneys’ eyes only,” to enable CLL
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Academy, Inc.(“CLL”) to respond to claims of privilege.1 After thorough
review, we vacate that portion of the order compelling disclosure to opposing
counsel for their eyes only, and remand for further proceedings consistent
herewith.
Before us is an action for tortious interference with contractual relations
and prospective contractual relations, commercial disparagement, and civil
conspiracy instituted by CLL against AHC. CLL pled the following. CLL owns
the parking garage underneath the Academy House building in which the
Academy House Condominium is located. See Amended Complaint,
12/18/17, at ¶1. When CLL refused to pay AHC hundreds of thousands of
dollars in construction costs for structural repairs it did not owe, AHC
embarked on a plot with Parkway Corporation to alienate CLL’s parking
customers. Id. CLL alleges that AHC made false statements to residents
regarding CLL’s refusal to pay, and solicited Parkway Corporation, the owner
of a nearby parking garage, to offer below-market rates targeting CLL’s
customers in order to entice them away from CLL. Id. at ¶2. In addition, CLL
claims that AHC marketed the reduced rate to its residents in order to induce
them to leave CLL and to punish CLL for its refusal to pay. Id. Consequently,
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1
This non-final discovery order is ripe for appellate review as a collateral order
because it compels AHC to disclose allegedly privileged communications to
CLL, albeit for attorney’s eyes only. See Yocabet v. UPMC Presbyterian,
119 A.3d 1012, 1016 n.1 (Pa.Super. 2015) (applying collateral order doctrine
under Pa.R.A.P. 313 to discovery orders compelling production of materials
purportedly subject to a privilege); see also Ben v. Schwartz, 729 A.2d 547
(Pa. 1999) (recognizing immediate appealability of orders requiring the
divulgence of materials claimed to be privileged).
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CLL lost a substantial number of monthly customers and the attendant
revenue. Id. at ¶5.
The collection dispute between AHC and CLL over the latter’s obligation
to pay for construction costs is the subject of a separate contract/declaratory
judgment action pending between the parties. The docket indicates that CLL
asked the court to consolidate these actions, but consolidation was denied by
order of June 5, 2008.
Numerous documents have been exchanged during the course of
discovery herein. For purposes of this appeal, the following facts are
pertinent. CLL moved to compel production of documents Bates-stamped
AHCD 1459-AHCD 1574. It alleged that the communications were not
protected work product because they were not communications of
“representatives of a party other than the party’s attorney” reflecting mental
impressions and opinions as to the value or merit of a claim or defense.
Rather, CLL contended that they were communications reflecting the mental
impression of the individual parties. See Plaintiff’s Motion to Compel AH
Defendants to Produce Documents Bate-Stamped AHCD 1459-AHCD 1574
Unredacted Except for Specific Reference to Legal Advice or Mental
Impressions of the Attorneys of the Obermayer Firm, at 2. Additionally, CLL
maintained that most of the communications related to a different lawsuit
between the parties, and furthermore, they were created months before the
instant action was filed, and hence, not protected. Id. Finally, CLL alleged
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that since the state of mind of the AHC defendants was at issue, the
documents were evidentiary and not covered by Rule 4003.3.
CLL requested that the Discovery Master order AHC to produce these
documents unredacted for in camera review, and following such review, to
issue recommendations to the court to order production “without redactions
except for specific reference to legal advice or mental impressions of the
attorneys at the Obermayer firm.” Id.
AHC supplied a privilege log with regard to the fifteen documents at
issue, its proposed redactions, and the Master conducted in camera review.
The Master recommended, in some instances, different redactions than those
proposed by AHC. The trial court adopted the recommendations of the Master,
and ordered AHC to produce the documents as redacted by the Master to CLL.
Order, 12/20/18.
AHC sought reconsideration on January 8, 2019, and requested that a
hearing be scheduled and that counsel be permitted to submit ex parte
argument “to provide additional context behind the internal communications
at issue and the nature of the correspondence and strategy being discussed
therein.” See Motion for Reconsideration, 1/8/19, at ¶6. AHC attached
correspondence in which the Master had conveyed his willingness to meet ex
parte to consider AHC’s additional arguments in favor of AHC’s proposed
redactions. See id. at Exhibit I. By letter dated December 14, 2018, CLL’s
counsel advised the Master that he objected to “an ex parte private meeting
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between the Discovery Master and opposing counsel,” as AHC would have “an
opportunity to make arguments for reconsideration to which we cannot
respond to protect our client’s interests.” See Motion for Reconsideration,
1/8/19, at Exhibit G. CLL’s counsel suggested that argument be held on an
“attorney’s eyes only” basis. The Master ultimately did not meet privately
with AHC in order to avoid “creat[ing] an unnecessary procedural issue.” Id.
at ¶5; see also id. at Exhibit I. Instead, the Master supplied the trial court
with a copy of the documents as redacted by AHC, and a separate copy of the
same documents highlighting his proposed redactions. See id. at Exhibit J.
CLL maintained throughout that it needed to view the unredacted documents,
and suggested that they be produced for “attorneys’ eyes only” for that
purpose.
The trial court granted reconsideration in part, and agreed to entertain
argument. It then ordered AHC to produce the fifteen documents without
redactions that were originally refused protection by the Master “on an
attorney’s eyes only” basis. Order, 1/14/18, at 3. AHC timely appealed to
this Court.
AHC presents four issues for our review:
1. Did the trial court err in its December 20 and January 14 Orders
when it ordered counsel for AH[C] Defendants to produce
certain un-redacted internal communications among AH[C] set
forth in AHC D001460-1471, 1479-1480 and 1573 without
ruling on the relevancy of each document or explaining why the
privilege asserted in each communication at issue was
inapplicable?
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2. Did the trial court err in its December 20 and January 14 Orders
when it ordered counsel for AH[C] to produce certain un-
redacted internal communications among AH[C] set forth in
AHCD001460-1471, 1479-1480 and 1573, where the
disclosure of such communications would reveal: (a) advice
and strategy provided to AH[C] by it legal counsel in response
to legal questions and inquiry raised by AH[C] regarding a
separate, active legal dispute between CLL and AH[C]: (b) legal
advice sought by AH[C] regarding a separate, active legal
dispute between CLL and AH[C]; and/or (c) the substance of
communications made by AH[C] to its counsel regarding a
separate, active legal dispute between CLL and AH[C]?
3. Did the trial court err in its December 20 and January 14 Orders
when it ordered counsel for AH[C] Defendants to produce
certain un-redacted internal communications among AH[C] set
forth in AHCD001460-1471, 1479-1480 and 1573, where the
disclosure of such communications would reveal AH[C]’s
mental impressions, conclusions, and /or opinions regarding
the value and merit of claims and defenses and litigation
strategy and tactics of a separate legal dispute between CLL
and AH[C]?
4. Are the December 20 and January 14 Orders contradictory to
the trial court’s earlier order dated August 8, 2019, which
permitted AH[C] Defendants to redact “specific reference[s] to
legal advice or mental impressions of the attorneys at the
Obermayer firm” and any mental impressions, conclusions, or
opinions, regarding the value or merit of a claim or a defense
or litigation strategy or tactics expressed by a party’s non-
attorney representative?”
Appellant’s brief at 5-6.
The application of the attorney-client privilege and the work product
doctrine are questions of law over which our standard of review is de novo
and our scope of review is plenary. Bousamra v. Excela Health, 210 A.3d
967, 973 (Pa. 2019). In evaluating claims of privilege, we are mindful of our
High Court’s recent observations:
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We have often recognized the conflict inherent in the attorney-
client privilege. On the one hand, our precedent disfavors
evidentiary privileges which are in tension with the truth-
determining process of the justice system, as they result in the
exclusion of evidence. Nevertheless, we have emphasized the
need for protection of various types of communications though the
establishment of privileges. Of these privileges, the attorney-
client privilege is often considered ‘the most revered.’ The
attorney-client privilege as codified by the General Assembly, 42
Pa.C.S. § 5928, and applied by our courts is intended to foster
open discussion between counsel and client. Only with full
information from the client can an attorney provide relevant and
sound legal advice.
Pittsburgh History & Landmarks Found. v. Ziegler, 200 A.3d 58, 80 (Pa.
2019) (internal citations and question marks omitted).
Notably, the attorney-client privilege does not end when representation
ceases. See Commonwealth v. Hutchinson, 434 A.2d 740, 744 (Pa.Super.
1981) (privilege which attaches to statements made to lawyer or his agents
survives the termination of the attorney-client relationship). Moreover, the
privilege survives the death of the client. See Swidler & Berlin v. United
States, 524 U.S. 399, 410 (1998). Where, as here, there are two ongoing
lawsuits between CLL and AHC, attorney-client privileged communications
made in relation to one lawsuit do not lose their vitality in the other.
The work-product doctrine is codified in Pennsylvania Rule of Civil
Procedure 4003.3. The privilege belongs to the attorney. BouSamra, supra
at 975. We start from the premise that anything denoted in Rule 4003.1 is
discoverable, “even though prepared in anticipation of litigation or trial by or
for another party or by or for that other party’s representative, including his
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or her attorney, consultant, surety, indemnitor, insurer or agent.” Pa.R.C.P.
4003.3. However, with respect to the representative of a party, other than
the party’s attorney, “discovery shall not include disclosure of his or her
mental impressions, conclusions or opinions respecting the value or merit of
a claim or defense or respecting strategy or tactics.” Id. The explanatory
comments to the Rule state that its essential purpose is to keep the files of
counsel free from examination by the opponent. It provides “a privileged area
within which [an attorney] can analyze and prepare [a] client’s case . . . by
enabling attorneys to prepare cases without fear that their work product will
be used against their clients.” Barrick v. Holy Spirit Hosp. of the Sisters
of Christian Charity, 32 A.3d 800, 812 (Pa.Super. 2011), aff'd 91 A.3d 680
(Pa. 2014) (quoting T.M. v. Elwyn, Inc., 950 A.2d 1050, 1062 (Pa.Super.
2008)).2
Preliminarily, we address AHC’s complaint that the trial court erred in
ordering it to produce the fifteen documents subject to claims of privilege
without redaction for the “attorneys’ eyes only” of opposing counsel. AHC
contends that the “ruling is contradictory to the underlying policy behind the
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2 CLL argues, inter alia, that AHC waived work product protection by
communicating the information to third parties. The latter argument is a
misstatement of the law of waiver of work-product privilege. See Bousamra
v. Excela Health, 210 A.3d 967 (Pa. 2019) (holding that disclosure to third
parties alone does not constitute waiver of work-product protection, but only
disclosures that can reasonably be expected to reach one’s adversary).
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privileges, which is to prevent disclosure to the other side.” Appellant’s brief
at 29. We agree.
The privilege log is the primary source for determining whether
attorney-client privilege or work-product privileges apply.3 Where the log
alone does not permit meaningful analysis of the underlying claim or the scope
of the asserted privilege, in camera review is available. See Pa.R.C.P. 4003.3.
As we acknowledged in Berg v. Nationwide Mutual Ins. Co., 44 A.3d 1164,
1179 (Pa.Super. 2012), “[i]n camera review is a valuable tool for determining
the validity of privilege claims, and in many instances, it is difficult to make
an informed decision regarding privilege without such an inspection.”
In camera review was conducted herein, and the Discovery Master and
the trial court ruled on AHC’s proposed redactions to the fifteen documents at
issue. AHC moved for reconsideration. CLL sought “attorneys’ eyes only”
disclosure of the unredacted documents, arguing that they could not
determine whether any exceptions applied without seeing the documents
themselves. CLL cited no authority suggesting that it was entitled to see
unredacted documents subject to claims of privilege that were already the
subject of in camera review, and we know of none. Had the documents been
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3 A privilege log usually takes the form of a chart describing documents or
other communications claimed to be privileged. The log usually includes such
information as the date and type of the communication, its author, the
recipients, a general description of the subject matter, and the applicable
privilege.
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disclosed to CLL’s counsel as ordered, the confidentiality of the
communications would have effectively been destroyed.
We reject the use of the “attorneys’ eyes only” procedure for disputes
over privilege. Furthermore, we are unaware of any instances where it has
been used during in camera review to determine the proper scope of
redactions in privileged communications. The “attorneys’ eyes only”
procedure is not novel. It has been used in conjunction with a stipulated
protective order in situations where confidential business information and
trade secrets were being disclosed. See e.g., Glenn O. Hawbaker v.
Quality Aggregates, 2015 Pa. Dist. & Cnty. Dec. LEXIS 20106 (Alleg. Co.
No. G.D. 13-016072 Nov. 13, 2015) (stipulated protective order designating
sensitive documents such as unredacted asset purchase agreement, bank
escrow accounts, trade secrets or confidential and proprietary pricing
information as “Attorneys' Eyes Only Documents”); Aiken v. Living
Independence for the Elderly - Pittsburgh, 2016 Pa. Dist. & Cnty. Dec.
LEXIS 16805, *3-4 (Alleg. Co. No. GD 14-015284 Aug. 28, 2016) (providing
for designation of documents or portions thereof as “CONFIDENTIAL –
ATTORNEYS’ EYES ONLY” where good faith belief that the materials contain
extremely sensitive trade secret, confidential information or proprietary
information, and disclosure could result in serious and immediate competitive
injury to the producing party). The authority for such agreements stems from
Pa.R.C.P. 4012(9), which governs protective orders and provides for the
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disclosure of trade secrets or other confidential commercial information in a
specifically designated way. See Price v. Buczek Enters. LLC, 2013 Pa.
Dist. & Cnty. Dec. LEXIS 13812 (Alleg. Co. No. GD 13-000269 Apr. 12, 2013);
see also Solutions4networks v. Dqe Communs., 2015 Pa. Dist. & Cnty.
Dec. LEXIS 15777 (Alleg. Co. No. GD 14-014962 March 6, (designating
information as “CONFIDENTIAL-ATTORNEYS EYES ONLY” under the auspices
of Pa.R.C.P. 4012(a)(9)).
We find the “attorneys’ eyes only” procedure to be wholly inconsistent
with the in camera review sanctioned by our rules of civil procedure for
evaluating claims of privilege. Moreover, the disclosure of confidential
commercial information to attorneys who are not in a position to use it to
achieve a competitive edge is quite different from the disclosure of an
attorney’s mental impressions and strategies to opposing counsel in ongoing
litigation.
We find that the trial court erred in ordering “attorneys’ eyes only”
disclosure of unredacted documents subject to claims of attorney-client and
work product privilege for purposes of reconsidering the redactions ordered in
camera. Therefore, we vacate that portion of the January 14, 2019 order
compelling “attorneys’ eyes only” disclosure.
AHC invites us to review the documents and the specific redactions
proposed. We decline to do so for several reasons. First, reconsideration of
the redactions proposed by the Master and adopted by the trial court is
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pending. Until the trial court has finally ruled regarding the redactions and
ordered disclosure of communications claimed to be privileged, this matter is
not ripe for appellate review. Secondly, we do not have the benefit of the trial
court’s reasoning in ruling on the redactions. See Gocial v. Independence
Blue Cross, 827 A.2d 1216, 1223 (Pa.Super. 2003) (remanding for the trial
court to explain its rulings with regard to relevance and privilege). Although
this Court will conduct in camera review, we do so in our appellate capacity.
We rely on the trial court to develop an adequate factual record and provide
the legal rationale for its rulings. Finally, the certified record is inadequate to
undertake such review as the unredacted documents, as well as the redactions
proposed by AHC and those approved by the trial court, are not included
therein.4
For these reasons, we remand to permit the trial court to reconsider its
order regarding redactions in the fifteen documents at issue, without divulging
allegedly privileged communications contained therein, and to enter an
appropriate order. Should AHC wish to provide additional facts to add context
to its claims of privilege, it is within the trial court’s discretion to permit such
supplementation ex parte. CLL has no right to participate in in camera review.
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4 We remind the parties that they are responsible for ensuring that this Court
has the materials necessary to review the issues on appeal, with the ultimate
responsibility resting upon the party raising an issue that requires or access
to those materials. See Note to Pa.R.A.P. 1921. Documents subject to claims
of privilege may be placed under seal in the trial court, made part of the
certified record, and transmitted to this Court. See Pa.R.A.P. 1931(c).
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Order vacated in part. Matter remanded for further proceedings
consistent with this Opinion. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/6/2020
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