Koen Book Distributors v. Powell, Trachtman, Logan, Carrle, Bowman & Lombardo, P.C.

212 F.R.D. 283, 2002 U.S. Dist. LEXIS 24743, 2002 WL 31926381
CourtDistrict Court, E.D. Pennsylvania
DecidedDecember 13, 2002
DocketNo. CIV.A.02-971
StatusPublished
Cited by11 cases

This text of 212 F.R.D. 283 (Koen Book Distributors v. Powell, Trachtman, Logan, Carrle, Bowman & Lombardo, P.C.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Koen Book Distributors v. Powell, Trachtman, Logan, Carrle, Bowman & Lombardo, P.C., 212 F.R.D. 283, 2002 U.S. Dist. LEXIS 24743, 2002 WL 31926381 (E.D. Pa. 2002).

Opinion

MEMORANDUM

BARTLE, District Judge.

This is a legal malpractice action. Plaintiffs have filed a motion for production of thirty-one documents which the defendants Powell, Trachtman, Logan, Carrie, Bowman & Lombardo, P.C. and Michael J. Curry, Esquire (hereinafter collectively, defendant law firm) have withheld on the ground of attorney-client privilege and/or attorney’s work product.

[284]*284The relevant facts for present purposes are as follows. Plaintiffs, wholesalers and distributors of books, retained the defendant law firm for advice concerning a security interest from one of its customers, Crown Books Corporation (“Crown”). After Crown filed for bankruptcy, the law firm continued to represent plaintiffs as creditors in the bankruptcy proceeding. Ultimately, plaintiffs became dissatisfied with the law firm’s services and on July 9, 2001 informed the firm that they were considering a malpractice action against it. Nonetheless, they continued to retain the firm until August 13, 2001, when they terminated its services. During this period, plaintiffs were consulting with other counsel concerning the quality of the defendants’ representation.

In the meantime, between July 9 and August 13, several lawyers in the defendant law firm who were actually doing the work for plaintiffs consulted with another lawyer in the firm concerning ethical and legal issues that had arisen out of the portent of a malpractice action. Various internal documents among the lawyers of the firm were generated during these few weeks. These are the documents which are the subject of the current motion.

This diversity action is governed by the law of Pennsylvania1 which defines the attorney-client privilege by statute:

In a civil matter counsel shall not be competent or permitted to testify to confidential communications made to him by his client, nor shall the client be compelled to disclose the same, unless in either case this privilege is waived upon the trial by the client.

42 Pa. Cons.Stat. Ann. § 5928.

The Court of Appeals, most recently in Montgomery County v. Microvote Corp., has applied the following elements in explaining the operation of the privilege in Pennsylvania:

(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his or her subordinate, and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion of law or (ii) legal services or (iii) assistance in some legal proceeding, and (d) not for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.

175 F.3d 296, 301 (3d Cir.1999) (citing Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 32 F.3d 851, 862 (3d Cir.1994)).

The attorney-client privilege is the oldest of the communication privileges known to the law. Its purpose is “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). “[T]he privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.” Id. at 390, 101 S.Ct. 677.

It is clear that the attorney-client privilege applies in the corporate setting when an employee seeks legal advice from in-house counsel and the other criteria outlined above are met. Id. at 389-90,101 S.Ct. 677. The issue before us is whether the privilege similarly shields documents from discovery by a client when one lawyer seeks legal advice from a fellow lawyer in their law firm concerning that client which has threatened to initiate a legal malpractice action against the lawyer or the firm.

My colleague, Judge Thomas O’Neill, faced a like issue a number of years ago in In re Sunrise Securities Litigation, 130 F.R.D. 560 (E.D.Pa.1989). That was a multidistriet litigation arising out of the collapse of the [285]*285Sunrise Savings and Loan Association. One of the defendants was a Philadelphia law firm that had served as Sunrise’s general counsel. An issue before the court was whether the firm had properly withheld from discovery on the ground of the attorney-client privilege a number of documents to and from lawyers in the same firm who' had consulted with each other during the time when the firm was general counsel to Sunrise and after the Sunrise litigation against the firm had been instituted. The court explained that a law firm owes a fiduciary duty to a client and may not engage in conflicting representations absent the exceptions set forth in Rule 1.7 of the Pennsylvania Rules of Professional Conduct.2 Otherwise, to the extent that the seeking or obtaining of legal advice by one lawyer from another lawyer inside the firm “implicates or creates a conflict of interest,” the attorney-client privilege between the lawyers in the firm is vitiated.3 Id. at 597.

The seminal ease in this circuit seems to be Valente v. Pepsico, Inc., 68 F.R.D. 361 (D.Del.1975). That was a class action by minority shareholders and by warrant holders of Wilson’s Sporting Goods Co. (“Wilson”) against Pepsico, Inc. (“Pepsico”), the majority stockholder of Wilson. The dispute centered on the value of the minority shares and warrants as a result of the merger of Wilson into Pepsico. Several documents which Pepsico had withheld from discovery were prepared by the general counsel of Pepsico and forwarded to its president. At the time, the general counsel also sat on the Board of Directors of Wilson. The court found that he owed a fiduciary obligation to both companies which were then separate entities and ordered the documents to be produced. The court stated:

It is a common, universally recognized exception to the attorney-client privilege, that where an attorney ..serves two clients having common interest and each party communicates to the attorney, the communications are not privileged in a subsequent controversy between the two ____ The fiduciary obligations of an attorney are not served by his later selection of the interests of one client over another.

Id. at 368 (citations omitted).

Thus, we must determine whether the defendant law firm engaged in a conflict of interest, that is, representation adversely implicating or affecting the interests of the plaintiffs, when it was receiving .information from and/or providing legal advice to several of its lawyers while at the same time continuing to represent those plaintiffs. As Sunrise

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212 F.R.D. 283, 2002 U.S. Dist. LEXIS 24743, 2002 WL 31926381, Counsel Stack Legal Research, https://law.counselstack.com/opinion/koen-book-distributors-v-powell-trachtman-logan-carrle-bowman-paed-2002.