Gottschall v. Jones & Laughlin Steel Corp.

• Decision Date: 09 November 1984
• Citation: 333 Pa.Super. 493,482 A.2d 979
• Parties: V.P. GOTTSCHALL, Appellant, v. JONES & LAUGHLIN STEEL CORPORATION. V.P. GOTTSCHALL, and V.P. Gottschall, as custodian under the Uniform Gifts to Minors Act for Nicholas P. Gottschall and Teresa Gottschall, Minors, All In Their Own Behalf, and for all others similarly situated v. JONES & LAUGHLIN STEEL CORPORATION, A Corporation, and Paul Thayer, Raymond A. Hay, Thomas C. Graham, G.E. Smith and D.T. Kalil. Appeal of V.P. GOTTSCHALL.
• Court: Pennsylvania Superior Court

Page 979

482 A.2d 979

333 Pa.Super. 493

V.P. GOTTSCHALL, Appellant, v. JONES & LAUGHLIN STEEL CORPORATION.

V.P. GOTTSCHALL, and V.P. Gottschall, as custodian under the

Uniform Gifts to Minors Act for Nicholas P. Gottschall and

Teresa Gottschall, Minors, All In Their Own Behalf, and for

all others similarly situated v. JONES & LAUGHLIN STEEL CORPORATION, A Corporation, and Paul

Thayer, Raymond A. Hay, Thomas C. Graham, G.E.

Smith and D.T. Kalil.

Appeal of V.P. GOTTSCHALL.

Superior Court of Pennsylvania.

Argued May 15, 1984.

Filed Sept. 7, 1984.

Reargument Denied Nov. 9, 1984.

V. Gottschall, Pittsburgh, in pro. per.

Donald C. Winson, Pittsburgh, for appellee.

Before CAVANAUGH, POPOVICH and HESTER, JJ.

HESTER, Judge:

Appellant, as both named party-plaintiff and counsel of record for the class of plaintiff shareholders, instituted a class action against his former employer, Jones & Laughlin Steel Corporation (hereinafter referred to as "J & L"), and five individuals who were officers of J & L and/or its parent. Appellant was an attorney for J & L from 1969 until his termination in 1979. From 1971 through 1979 he was an Assistant Secretary of J & L and from 1976 through 1979 he was an Assistant General Counsel of J & L. Appellant had responsibility for J & L's compliance with securities law.

Appellant, at the time this suit was initiated, October 29, 1980, was a preferred shareholder in J & L along with his two children. Appellant alleges in this class action, inter alia, appellees depressed the price of the preferred stock, failed to disseminate information and issued erroneous material information to the class.

As both plaintiff and counsel, appellant subsequently filed another lawsuit against J & L requesting the involuntary dissolution of J & L pursuant to § 2107 of the Pennsylvania Business Corporation Law. 15 P.S. § 1001 et seq.

In both suits appellees petitioned the lower court to disqualify appellant as plaintiff and counsel of record. Appellees assert appellant's lawsuits breach the attorney-client privilege and undermine the Pennsylvania Code of Professional Responsibility, Canons 4 and 9. Canon 4 prohibits an attorney from using client confidences in suits against a former client. Canon 9 prohibits the appearance of impropriety.

In support of its petitions to disqualify appellant, appellees submitted to the trial judge appellees' affidavits and documents from J & L's files to demonstrate that appellant's past representation of J & L was substantially related to the subject matter of the present actions. Subsequently, appellant filed in both suits petitions to disqualify counsel for J & L.

The trial judge scheduled a hearing to resolve the petitions to disqualify and stayed both actions pending resolutions of the petitions. Concomitantly, the trial judge issued protective orders in both suits to insure the confidentiality of J & L's documentation of their espoused attorney-client privilege until the hearing conducted to resolve the matters set forth in the petitions.

Appellant then appealed the protective orders in both actions. Upon appellant's motion, this Court stayed the trial court's hearing to resolve the petitions to disqualify. Appellees moved to quash the appeals on the basis that they were interlocutory. This Court directed the parties to brief and argue the jurisdictional propriety of the appeals together with the merits.

This Court consolidated the appeal in the action requesting involuntary dissolution of J & L (No. 267 Pittsburgh, 1981) with the appeal in the class action (No. 59 Pittsburgh, 1981).

The protective order at No. 59 Pittsburgh, 1981 seals those portions of the record pertaining to appellee's petition to disqualify appellant. Additionally, appellant or any other counsel of record for plaintiffs is prohibited from disclosing the contents of the sealed portions to third parties. ¹ At No. 267 Pittsburgh, 1981, the order prohibits disclosure to third parties, but excepts potential counsel for appellant who agree to be bound by the order, however, written notice must be given to appellees before appellant consults with proposed counsel. ²

Appellant argues the protective orders are final, collateral and injunctive, and therefore, this Court has subject matter jurisdiction to hold the orders are a restraint on appellant's First Amendment rights and his right to secure counsel.

We cannot agree. Appellate jurisdiction attaches only to "final orders", 42 Pa.C.S.A. §§ 702, 742, and in determining what constitutes a final order we consider the principles set forth by the United States Supreme Court in Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), and by the Pennsylvania Supreme Court in Piltzer v. Independence Federal Savings and Loan Assn., 456 Pa. 402, 319 A.2d 677 (1974) and Pugar v. Greco, 483 Pa. 68, 394 A.2d 542 (1978).

A final order is one which ends the litigation, or alternatively, disposes of the entire case. Piltzer, supra. The protective orders do not preclude appellant from further litigating his actions in the lower court, but rather, provide safeguards necessary to protect appellees' asserted attorney-client privilege pending appellees' actual proof of the existence of that privilege.

We must consider the practical ramifications of the orders to ascertain if they terminate appellant's actions. Conaway v. 20th Century Corp., 491 Pa. 189, 420 A.2d 405 (1980); Gordon v. Gordon, 293 Pa.Super.Ct. 491, 439 A.2d 683 (1981), aff'd. mem., 498 Pa. 570, 449 A.2d 1378 (1982).

In Conaway, the trial court sustained defendant's preliminary objections in the nature of a demurrer to plaintiff's complaint. The trial court dismissed plaintiff's action, and sustained the demurrer "in accordance with the above opinion." The above opinion invited, via "reconsideration", the plaintiff to add to the record. The Pennsylvania Supreme Court stated:

Hence, whatever finality the court expressed on the one hand, it destroyed on the other, and the practical ramification of the order of September 29, 1975 was not to put Conaway out of court. Accordingly, the order of September 29, 1975 was not final. [emphasis added].

491 Pa. at 197, 420 A.2d at 409.

Instantly, the orders restrict for a limited period and to a limited class appellant's dissemination of the protected information. Appellant still has the ability to litigate the merits of the petitions to disqualify. The orders sufficiently insure appellant's right to secure counsel. Appellant may in fact be disqualified based on the protected information, but that is the issue to be decided at the pending lower court hearing on the petitions to disqualify.

The appealability of an order or judgment must be determined as of the time the appeal therefrom is filed. If the order appealed from is interlocutory, the appeal may be quashed immediately upon motion. See: Pa.R.A.P. 1972. In such cases, the lack of jurisdiction to entertain an appeal from the interlocutory order cannot be corrected by subsequent events in the same action.

Praisner v. Stocker, 313 Pa.Super.Ct. 332, 343, n.4, 459 A.2d 1255, 1261, n. 4 (1983).

Appellant propounds that his communication with the press, other attorneys or experts, etc., limited by the protective orders, is a matter which is separable from and collateral to the main cause of actions and therefore, the orders are final as determined by the three-part test announced in Cohen v. Beneficial Industrial Loan Corporation, supra.

In Cohen, the issue was the appealability of an order, collateral to a stockholders' derivative action, which denied a petition to require the plaintiff to post security to cover defendant's expenses and counsel fees if plaintiff's action proved unsuccessful. The Supreme Court held the order appealable because the claim adjudicated was "separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.

Praisner v. Stocker, 313 Pa.Super.Ct. at 342, 459 A.2d at 1261 (quoting Cohen v....