Custom Designs & Mfg. Co. v. Sherwin-Williams Co.

• Decision Date: 15 February 2012
• Citation: 2012 PA Super 33,39 A.3d 372
• Parties: CUSTOM DESIGNS & MANUFACTURING COMPANY, et al., Appellee v. SHERWIN–WILLIAMS COMPANY, Appellant.
• Court: Pennsylvania Superior Court

2012 PA Super 33

39 A.3d 372

CUSTOM DESIGNS & MANUFACTURING COMPANY, et al., Appellee

v.SHERWIN–WILLIAMS COMPANY, Appellant.

Superior Court of Pennsylvania.

Argued Oct. 26, 2011.Filed Feb. 15, 2012.

Thomas Finarelli, Philadelphia, for appellant.

Kevin P. Smith, Ft. Washington, for appellee.

BEFORE: DONOHUE, OLSON and STRASSBURGER ^*, JJ.OPINION BY STRASSBURGER, J.:

Sherwin–Williams Company (Sherwin–Williams) appeals the trial court order entered on March 31, 2011, in which the trial court granted the motion to compel discovery filed by Custom Designs & Manufacturing Company's (Custom Designs) upon a finding that two memoranda in the possession of Sherwin–Williams are discoverable and not protected by attorney-client privilege. We affirm.

The trial court aptly summarized the relevant factual and procedural history of this case.

At all times relevant hereto, the Plaintiff Custom Designs & Manufacturing Company, Inc. (Custom Designs) was engaged in whole or in part in the business of manufacturing and/or assembling custom cabinets.

On or about November 4, 2002, the building and corresponding business in which Custom Designs was located was significantly damaged by fire.

On or about May 21, 2004, Custom Designs filed a civil action against the Defendant Sherwin[-]Williams alleging in whole or in part that Sherwin [-]Williams' products self-heated or spontaneously-combusted, thereby causing the subject fire and resulting damages.

The day after the fire, more specifically on November 5, 2002, Mr. Joseph Schreck [ (Schreck) ], a marketing representative for Sherwin[-]Williams, and another employee, Mr. Robert Myers [ (Myers) ] visited the site of the fire. The purpose of the visit, in whole or in part, was to offer assistance and help the owners out. During this visit, Schreck and Meyers allegedly talked to a Mr. Bob Lastarza [ (Lastarza) ], an employee of Custom Designs. Mr. Lastarza allegedly told them that, prior to the fire, he saw the “flickering of lights.”

On or about November 21, 2002; Defendant Sherwin[-] Williams was placed on notice of a potential claim.

On or about December 5, 2002, Mr. Schreck prepared and authored two memoranda that were directed to Attorney Ronald M. Tamburrino [ (Tamburrino) ], counsel for Sherwin[-]Williams. [In a 2004 discovery request, Custom Designs requested copies of statements and or summaries of interviews of any persons having knowledge of the fire. Sherwin–Williams responded to Custom Designs' interrogatory that the only known statements were either (1) already in the possession of Custom Designs or (2) contained within the Pennsylvania State Police Fire Investigation Report. During depositions on June 22, 2010, Schreck and Meyers testified to the existence of two memoranda prepared by Schreck regarding Schreck's observations of the scene the day following the fire and the conversation with Lastarza.] Mr. Schreck does not recall whether he prepared these memoranda on his own or whether he was asked to prepare same. One of the memoranda, in whole or in part, addresses the subject matter of the Lastarza conversation noted above.

[Custom Designs] made a formal request for these memoranda. [Sherwin–Williams] had objected to the production of these documents on the basis of attorney-client privilege and attorney work product protection.¹

[Custom Designs] correspondingly filed a Motion to Compel the production of these documents. The matter was presented to the Discovery Master, Attorney Richard Campagna. By Decision dated October 29, 2010, the Discovery Master granted [Custom Designs'] Motion concluding that he finds “nothing objectionable in the documents submitted ...”Trial Court Order, 3/31/2011, at 1–2 (internal citations and paragraph numbering omitted).

Sherwin–Williams appealed from the Discovery Masters' order. Both parties submitted briefs to the trial court. On March 31, 2011, the trial court issued an order denying Sherwin–Williams' appeal and granting Custom Design's request to compel discovery. This appeal followed.

Sherwin–Williams asks us to consider whether “intra-company communications concerning an impending claim to the in-house counsel responsible for providing legal advice with respect to that claim [are] protected by the attorney-client privilege.” Sherwin–Williams' Brief at 2.

We must first consider whether this appeal, which is of an interlocutory order, is properly before us. Our Supreme Court has recently held that orders overruling claims of privilege and requiring disclosure are immediately appealable. See Commonwealth v. Harris, 32 A.3d 243 (Pa.2011). Likewise, this Court has recently held that appeals from orders granting discovery in the face of colorable claims of attorney-client privilege are appealable under the collateral order doctrine.² Id.; Law Office of Douglas T. Harris, Esquire v. Philadelphia Waterfront Partners, LP, 957 A.2d 1223, 1228–1229 (Pa.Super.2008). Accordingly, we will consider the merits of the present appeal.

Sherwin–Williams claims that the trial court erred in ordering the production of memoranda authored by Schreck and forwarded to in-house counsel Tamburrino. Sherwin–Williams argues that these documents are privileged as they were created to provide Tamburrino with the relevant facts from which he could begin his legal analysis of the Custom Designs suit.

“The question of whether attorney-client privilege protects a particular communication from disclosure is a question of law. As such, we employ a de novo standard of review and our scope of review is plenary.” Carbis Walker, LLP v. Hill, Barth & King, LLC, 930 A.2d 573, 581 (Pa.Super.2007).

In Pennsylvania, the attorney-client privilege operates in a two-way fashion to protect confidential client-to-attorney or attorney-to-client communications made for the purpose of obtaining or providing professional legal advice. Gillard v. AIG Ins. Co., 15 A.3d 44, 59 (Pa.2011); see 42 Pa.C.S. § 5928. In describing the purpose of the privilege, we have said: “The attorney-client privilege exists to foster a confidence between attorney and client that will lead to a trusting and open dialogue.” Gocial v. Independence Blue Cross, 827 A.2d 1216, 1222 (Pa.Super.2003).

Pennsylvania law imposes a shifting burden of proof in disputes over disclosure of communications allegedly protected by attorney-client privilege. The party invoking a privilege must initially “set forth facts showing that the privilege has been properly invoked; then the burden shifts to the party seeking disclosure to set forth facts showing that disclosure will not violate the attorney-client privilege, e.g., because the privilege has been waived or because some exception applies.” Nationwide Mut. Ins. Co. v. Fleming, 924 A.2d 1259, 1266 (Pa.Super.2007) (citations omitted), aff'd, 605 Pa. 468, 992 A.2d 65 (2010). Accordingly, “[i]f the party asserting the privilege does not produce sufficient facts to show that the privilege was properly invoked, then the burden never shifts to the other party, and the communication is not protected under attorney-client privilege.” Id. at 1267.

Four elements must be satisfied in order to invoke successfully the protections of attorney-client privilege:

1) The asserted holder of the privilege is or sought to become a client.

2) The person to whom the communication was made is a member of the bar of a court, or his subordinate.

3) The communication relates to a fact of which the attorney was informed by his client, without the presence of strangers, for the purpose of securing either an opinion of law, legal services or assistance in a legal matter, and not for the purpose of committing a crime or tort.

4) The privilege has been claimed and is not waived by the client.

Id. at 1264 (citations omitted).

Instantly, the attorney-client privilege has been invoked by a corporate client. As our Commonwealth Court has previously recognized “this privilege attaches to communications made by corporate as well as individual clients.” Maleski v. Corporate Life Insurance Co., 163 Pa.Cmwlth. 36, 641 A.2d 1, 3 (1994) (citing Upjohn v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981)).³

Mindful of these principles, we consider whether the documents at issue in the present case are protected from disclosure by application of attorney-client privilege. The parties concede that the first, second and fourth elements of the test outlined in Nationwide, supra, have been satisfied. Sherwin–Williams' Brief at 7; Custom Designs' Brief at 9. Thus, we focus on the third requirement, whether the communication “relates to a fact of which the attorney was informed by his client, without the presence of strangers, for the purpose of securing either an opinion of law, legal services or assistance in a legal matter[.]” Nationwide, supra.

Relying on the United States Supreme Court's rationale in Upjohn v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981), Sherwin–Williams claims that the communications at issue are protected as they provided Tamburrino with the factual background necessary to begin his analysis of the Custom Designs lawsuit. In Gillard, supra, our Supreme Court adopted the broad range derivative protection of attorney-client privilege advocated by the Court in Upjohn. Further, recent decisions of the Commonwealth Court, as well as federal dispositions from the Eastern District of Pennsylvania, present a consistent and coherent application of Upjohn. See Maleski v. Corporate Life Insurance Co., 163 Pa.Cmwlth. 36, 641 A.2d 1, 3 (1994) (citing Upjohn in holding that attorney-client privilege attaches to communications made by corporate as well as individual clients); Gould v. City of Aliquippa, 750 A.2d 934 (Pa.Cmwlth.2000) (relying on Upjohn in determining that oral statements taken by the City's attorney from City employees authorized to act on behalf of the City were protected by attorney-client privilege); National Railroad Passenger Corp. v....