Court Must Decide if Firm Documents Are Protected From Discovery

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In litigation it said has "consumed significant judicial resources," the Pennsylvania Superior Court has ruled that a Philadelphia trial judge failed to address why 30 documents he compelled Blue Bell, Pa.-based Kaplin Stewart Meloff Reiter & Stein to hand over to the plaintiffs in a wrongful use of civil proceedings and abuse of process suit were not protected by attorney-client privilege and the work-product doctrine.

In an unreported memorandum decision in de Botton v. Kaplin Stewart Meloff Reiter & Stein, a three-judge panel of the court unanimously vacated Philadelphia Court of Common Pleas Judge Allan L. Tereshko's order requiring Kaplin Stewart to produce 30 documents sought by plaintiffs who alleged the firm and its clients had engaged in the wrongful use of civil proceedings and abuse of process when they filed antitrust claims in federal court.

Senior Judge James J. Fitzgerald III, writing for the court, said Tereshko, following an in camera review, improperly ordered Kaplin Stewart to hand over the requested documents without addressing either the applicability of the attorney-client privilege and work-product doctrine or the fact that the parties had a court-enforced clawback agreement in place that permitted the production of documents without the intent to waive privilege and required that any mistakenly produced documents be returned.

Instead, Fitzgerald said, Tereshko merely focused on the documents' relevance to the claims set forth in the Philadelphia trial court action.

"Moreover, the broad, generalized nature of the court's rationale necessarily precluded individualized explanations as to why the attorney-client privilege or work-product doctrine did not apply to a particular document or discrete category of closely related documents," Fitzgerald said. "Absent any such meaningful discussion, this court is unable to ascertain whether the trial court properly compelled the production of these documents."

The court remanded the case to the trial court to re-examine the documents within the context of the attorney-client privilege and work-product doctrine, as well as the clawback agreement.

Fitzgerald was joined by Judges Kate Ford Elliott and Sallie Updyke Mundy.

In de Botton, according to Fitzgerald, defendants Kaplin Stewart and its clients BPG Real Estate Investors, Campus Investors Office B, Campus Investors 25, Campus Investors I Building, Campus Investors H Building, Campus Investors D Building, Campus Investors Cottages, Campus Investors Office 2B, Ellis Preserve Owners Association, Kelly Preserve Owners Association, Cottages at Ellis Owners Association, Genber/Management Campus, Berwind Property Group, Executive Benefit Partnership Campus, Management Partnership Benefit, and Ellis Acquisition—collectively referred to in the opinion as "BPG"—originally filed two antitrust claims against plaintiffs Claude de Botton, Newtown Square East, National Developers and Newtown G.P.—collectively referred to as "de Botton"—in the U.S. District Court for the Eastern District of Pennsylvania.

The federal suit alleged attempted monopolization under Section 2 of the Sherman Act and antitrust conspiracy under Section 1 of the Sherman Act, claiming de Botton took illegal steps to thwart BPG's efforts to develop land in the Philadelphia suburb of Newtown Township, Fitzgerald said.

The suit also alleged state claims of business disparagement, tortious interference, abuse of process and civil conspiracy, according to Fitzgerald.

In April 2010, however, the federal court dismissed the two federal claims and transferred the case to the Delaware County Court of Common Pleas for disposition of the remaining state claims, Fitzgerald said.

In October 2010, meanwhile, de Botton filed its wrongful use of civil proceedings and abuse of process suit against Kaplin Stewart and BPG in Philadelphia trial court, according to Fitzgerald.

BPG filed a motion to stay the Philadelphia lawsuit and transfer it to the Delaware County trial court, but a Delaware County judge denied the petition, relying on de Botton's counsel's assurance that discovery for the Philadelphia suit would be conducted with "'laser-like precision'" limited only to the issues of whether Kaplin Stewart and BPG committed a wrongful use of civil proceedings and abuse of process in filing the federal suit, Fitzgerald said.

In April 2011, according to Fitzgerald, de Botton served Kaplin Stewart and BPG with interrogatories and requests for documents in the Philadelphia action.

Kaplin Stewart and BPG objected, citing the attorney-client privilege and work-product doctrine, and the parties executed a clawback agreement, which the court approved, Fitzgerald said.

Kaplin Stewart then handed over 290 pages of work product and a privilege log listing withheld documents, according to Fitzgerald.

In February 2012, Fitzgerald said, de Botton filed a motion to compel Kaplin Stewart to produce additional documents for in camera review by the trial court.

According to Fitzgerald, Tereshko granted the motion, reasoning, "'At the heart of this wrongful use of civil process action are the very communications which [Kaplin] seek[s] protection for under the attorney-client privilege or the attorney work-product doctrine. Therefore, they are relevant and discoverable and ostensibly not covered by the cited privileges.'"

But Fitzgerald said Tereshko's rationale did not adequately address the privilege issues or the clawback agreement.

Fitzgerald said that, under the 2007 Superior Court case Nationwide Mutual Insurance v. Fleming, the party asserting attorney-client privilege with regard to requested documents bears the initial burden of proof to show that the information is privileged.

If a court finds that it is, the burden then shifts to the party requesting the information to show that privilege has been waived or that there is an exception allowing the information to be disclosed.

"The Fleming court conducted a comprehensive, detailed review of the document in question in resolving whether privilege attached," Fitzgerald said, adding that, under the Superior Court's 2003 ruling in Gocial v. Independence Blue Cross, a trial judge should also review each document individually to determine "'the relevance of each [document] or explain why the privileges raised were inapplicable.'"

In addition, Fitzgerald said, the Superior Court's 2011 en banc ruling in Barrick v. Holy Spirit Hospital of the Sisters of Christian Charity held that "'documents ordinarily protected by the attorney work-product doctrine may be discoverable if the work product itself is relevant to the underlying action.'"

The Barrick court also held that the "'work-product privilege ... cannot be overcome, however, by merely asserting that the protected documents reference relevant subject matter,'" according to Fitzgerald.

"The court's heavy emphasis on the documents' purported relevance to establishing the claims in the Philadelphia County lawsuit did not justify the court's de facto holding that the attorney-client privilege and work-product doctrine did not apply to the documents in question," Fitzgerald said of Tereshko's order.

Counsel for de Botton, Theodore Chylack of Sprague & Sprague in Philadelphia, said he viewed the ruling as the Superior Court "giving the trial court the opportunity to provide more detail."

Kaplin Stewart attorney Pamela M. Tobin, who is handling the case for the firm, could not be reached for comment.

Counsel for BPG, William T. Mandia of Stradley Ronon Stevens & Young in Philadelphia, also could not be reached.

Zack Needles can be contacted at 215-557-2493 or zneedles@alm.com. Follow him on Twitter @ZNeedlesTLI.

(Copies of the 23-page opinion in de Botton v. Kaplin Stewart Meloff Reiter & Stein, PICS No. 14-0224, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.)

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