Handy v. Del. River Surgical Suites, LLC
Handy v. Del. River Surgical Suites, LLC
2020 WL 3549203 (E.D. Pa. 2020)
February 6, 2020
Attorney-Client Privilege
Waiver
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Summary
The Court denied Plaintiff's Cross-Motion in Limine to allow access to privileged communications and documents between BCOS and its counsel. The Court found that the attorney-client privilege is important and that BCOS's current management holds the privilege, so Plaintiff may not access the documents. The ruling applies to all ESI, including emails, documents, and other communications.
ROBERT HANDY, Plaintiff,
v.
DELAWARE RIVER SURGICAL SUITES, LLC d/b/a BUCKS COUNTY SURGICAL SUITES, et al., Defendants
CIVIL ACTION NO. 19-1028
United States District Court, E.D. Pennsylvania
Filed February 06, 2020

Counsel

Edward T. Kang, Beth A. Hurley, Kandis L. Kovalsky, Michael Weinert, Kang Haggerty & Fetbroyt LLC, Philadelphia, PA, for Plaintiff.
Gabriel Montemuro, Patricia Collins, William T. MacMinn, Antheil Maslow & MacMinn, LLP, Doylestown, PA, Samuel W. Cortes, Fox Rothschild LLP, Exton, PA, for Defendant Delaware River Surgical Suites, LLC.
Gabriel Montemuro, Patricia Collins, William T. MacMinn, Antheil Maslow & MacMinn, LLP, Doylestown, PA, for Defendants Kieran D. Cody, Charles B. Burrows, Ninad D. Sthalekar, Thomas H. Vikoren, Sean Butler, Jung Park, Douglas A. Boylan.
Ashley L. Beach, Christopher M. Lambe, Samuel W. Cortes, Fox Rothschild LLP, Exton, PA, for Defendant Thomas E. Mackell, M.D., Ltd

ORDER

*1 AND NOW, this 6th day of February 2020, upon consideration of Plaintiff's Cross-Motion in Limine (Doc. No. 68), Nominal Defendant, Thomas E. Mackell, M.D., Ltd. d/b/a Bucks County Orthopedic Specialists' (“BCOS”) Response in Opposition to Plaintiff's Cross-Motion in Limine (Doc. No. 86), Plaintiff's Reply in Support of his Cross-Motion in Limine (Doc. No. 91), and in accordance with the statements of the Court during the telephone conference with counsel for the parties held on February 3, 2020, it is ORDERED that Plaintiff's Cross-Motion in Limine (Doc. No. 68) is DENIED.[1]
 
*2 BY THE COURT:
 
Footnotes
On December 11, 2019, Plaintiff filed his Cross-Motion in Limine to Allow Plaintiff Continued Access to Privileged Communications and Documents Between BCOS and Its Counsel Through May 7, 2019, arguing that BCOS cannot invoke the attorney-client privilege to prevent Plaintiff from accessing communications and documents during Plaintiff's tenure as a director of BCOS. (Doc. No. 68 at 40-43.) Plaintiff contends that “Plaintiff was among the agents at BCOS with management authority who were entitled to be privy to communications between BCOS and its counsel through May 7, 2019[,]” and, for these reasons, Plaintiff has the authority to waive the corporate attorney-client privilege of BCOS. (Id. at 35.) In terms of relief, Plaintiff seeks an Order that (1) Plaintiff may continue to have access to privileged communications between BCOS and its counsel that are in BCOS's possession; and (2) Plaintiff may have access and is entitled to receive relevant communications between BCOS and its counsel until he was terminated from and by BCOS on May 7, 2019. In response to Plaintiff's Cross-Motion, BCOS argues that (1) the Cross-Motion is procedurally improper because it does not seek a ruling on the admissibility of evidence at trial; (2) Plaintiff cannot waive BCOS's attorney-client privilege because he is no longer a director of BCOS; and (3) BCOS has not improperly asserted its attorney-client privilege at depositions.
First, the Court must determine whether state or federal law applies. Plaintiff claims that federal common law applies (Doc. No. 68 at 20-22) to the privilege question, and Defendants claim that Pennsylvania state law applies (Doc. No. 72 at 4-5). Under Federal Rule of Evidence 501, federal privilege laws apply in federal claims and state privilege laws apply in state claims. Fed. R. Evid. 501. Here, this case is before the Court on the basis of federal question jurisdiction. Accordingly, federal common law applies.
Second, although Plaintiff's Cross-Motion was improperly filed as a Cross-Motion in Limine, the Court will rule on the substance of the Cross-Motion. “[A] motion in limine is designed to narrow the evidentiary issues for trial and to eliminate unnecessary trial interruptions.” Bradley v. Pittsburgh Bd. of Educ., 913 F.2d 1064, 1069 (3d Cir. 1990); see also Luce v. United States, 469 U.S. 38, 41 n. 4 (1984) (“Although the Federal Rules of Evidence do not explicitly authorize in limine rulings, the practice has developed pursuant to the district court's inherent authority to manage the course of trials.”). While motions in limine are normally filed to exclude evidence, they can also be used to obtain a ruling that evidence is admissible. Kenneth W. Graham, Jr., 21 Federal Practice and Procedure: Evidence (Wright & Miller) § 5037.10 (2d ed. 2019).
Here, Plaintiff requests access to documents between BCOS and it counsel through May 7, 2019. Contrary to Plaintiff's contention, ordering “access” to certain documents objected to under the attorney-client privilege is not the equivalent to ruling on the admissibility of evidence. See CSX Transportation, Inc. v. Total Grain Mktg., LLC, No. 11-CV-0171-MJR-SCW, 2014 WL 642293, at *2 (S.D. Ill. Feb. 19, 2014) (denying motion in limine as improperly filed when party asked the court to rule that opposing party could not invoke attorney-client privilege). Furthermore, even if Plaintiff's request can be construed as a request for admissibility of evidence, that request is premature. Plaintiff is seeking only to discover those documents and communications, not to admit them into evidence. Compare Fed. R. Evid. 402 (establishing admissibility of relevant evidence), with Fed. R. Civ. P. 26(b)(1) (stating that information “need not be admissible in evidence to be discoverable”). Nevertheless, the Court will rule on the substance of Plaintiff's Cross-Motion. See Amazon Produce Network, L.L.C. v. NYK Line, 679 F. App'x 166, 168 (3d Cir. 2017) (“In determining how to construe an ambiguous motion, we have instructed courts to focus “on the function of the motion, not its caption.” Turner v. Evers, 726 F.2d 112, 114 (3d Cir. 1984); see also Hook v. Hook & Ackerman, Inc., 213 F.2d 122, 128 (3d Cir. 1954) (“The label does not determine the nature of the motion.”).”).
Finally, in ruling on the substance of Plaintiff's Cross-Motion, the Court concludes that BCOS's current management holds the attorney-client privilege, and Plaintiff may not access BCOS's attorney-client privileged documents or communications. “Under federal law, the attorney-client privilege affords the client the right to shield his, her, or its confidential communication with counsel from other parties.” NewSpring Mezzanine Capital II, L.P. v. Hayes, No. CIV.A. 14-1706, 2014 WL 6908058, at *2 (E.D. Pa. Dec. 9, 2014). Clients, who may be a natural person, or a corporation, control the privilege. Id. (citing Commodity Futures Trading Com'n v. Weintraub, 471 U.S. 343 (1985)). “Since a corporation is not a corporeal being, a corporation's leadership exercises control over the corporation's attorney-client privilege.” Id. When a corporation is solvent, “the power to waive the corporate attorney-client privilege rests with the corporation's management and is normally exercised by its officers and directors” and “[d]isplaced managers may not assert the privilege over the wishes of current managers, even as to statements that the former might have made to counsel concerning matters within the scope of their corporate duties.” Commodity Futures, 471 U.S. at 348-49; see also In re Teleglobe Commc'ns Corp., 493 F.3d 345, 372 (3d Cir. 2007), as amended (Oct. 12, 2007) (“control of the privilege passes with control of the corporation”); NewSpring Mezzanine Capital II, L.P., 2014 WL 6908058, at *2 (“In general, when the corporation changes its leadership, the new leaders assume control over the privilege.”).
In support of his Cross-Motion, Plaintiff cites to an Eastern District of Pennsylvania decision that held former officers and directors of the corporations were entitled to discovery of attorney-client privileged documents. Carnegie Hill Fin., Inc. v. Krieger, No. 99-CV-2592, 2000 WL 10446 (E.D. Pa. Jan. 5, 2000) (finding the reasoning in Gottlieb v. Wiles, 143 F.R.D. 241 (D. Colo. 1992) persuasive). However, more recent cases embrace the modern view that when a former officer or director is adverse to the company, the privilege belongs to the corporation, and if asserted, is effective to prevent disclosure to the former officer or director. See Milroy v. Hanson, 875 F. Supp. 646, 650 (D. Neb. 1995); Montgomery v. eTreppid Techs., LLC, 548 F. Supp. 2d 1175, 1187 (D. Nev. 2008); Am. S .S . Owners Mut. P rot. & Indem. Ass'n, Inc. v. Alcoa S.S. Co., 232 F.R.D. 191, 198 (S.D.N.Y. 2005), adhered to in part on reconsideration sub nom. Am. Steamship Owners Mut. Prot. & Indem. Ass'n, Inc. v. Alcoa S .S . C o., No. 04 CIV. 4309 LAK JCF, 2005 WL 2254463 (S.D.N.Y. Sept. 15, 2005).
In this case, Plaintiff was a director of BCOS until May 7, 2019, and is no longer a director or manager of BCOS. (Doc. No. 68 at 42.) Although Plaintiff is a former director and brings this shareholder derivative suit on behalf of BCOS, the issue currently in discovery before the Court is whether Plaintiff remains a shareholder of BCOS and has standing to bring this suit. In advancing his argument that he remains a shareholder of BCOS, Plaintiff claims that BCOS unlawfully terminated his employment without cause. (See Doc. No. 58 (arguing that BCOS unlawfully terminated Plaintiff without cause and Plaintiff should receive documents that are “relevant and critical evidence of Plaintiff's unlawful termination and subsequent unlawful divestment of shares.”)) Whether Plaintiff's termination was lawful is before this Court in Handy v. BCOS, et. al., E.D. Pa. Case No. 19-2357, where Plaintiff brings claims on behalf of himself against BCOS for his allegedly unlawful termination. Thus, Plaintiff's arguments in support of his standing in this case place him in a position that is adverse to BCOS regarding the issue currently in discovery, as evidenced by Plaintiff's concurrent suit in E.D. Pa. Case No. 19-2357. Therefore, the Court concludes that BCOS is the sole client that holds the attorney-client privilege, and Plaintiff may not obtain or access privileged documents or communications over the objection of current management.
Accordingly, Plaintiff's Cross-Motion in Limine will be denied.