EASTERN APPROACH REHABILITATION, LLC et al v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al

Filing 43

MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE J. CURTIS JOYNER ON 7/20/17. 7/21/17 ENTERED AND COPIES E-MAILED.(ti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
STATE FARM MUT. AUTO. INS. CO.,
ET AL.,

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Plaintiffs,
v.
LEONARD STAVROPOLSKIY, ET AL.,
Defendants.
EASTERN APPROACH REHABILITATION,
LLC, ET AL.,

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Plaintiffs,
v.
STATE FARM MUT. AUTO. INS. CO.,
ET AL.,
Defendants.

CIVIL ACTION
NO. 15-cv-5929

CIVIL ACTION
NO. 16-cv-1374

MEMORANDUM
Joyner, J.

July 20, 2017

Before the Court are Defendants’ Motion to Compel the
Depositions of Richard Castagna, Esquire, Matthew Moroney,
Esquire, and Warren Holland, Esquire (Doc. No. 55) and
Plaintiffs’ Response in Opposition thereto, and Motion for
Protective Order (Doc. No. 67), along with various replies and
supplemental briefing (Doc. Nos. 68, 72, and 74).

1

For the

following reasons, we will deny Defendants’ Motion to Compel and
grant Plaintiffs’ Motion for a Protective Order.1
I.

Background and Applicable Law2
Defendants seek to compel the depositions of Plaintiffs’

attorneys of record in this case in order to discover information
regarding the nature of any investigations into Defendants that
Plaintiffs conducted prior to November 2013.
1-28, 64).

(Doc. No. 55, at ¶¶

Because Plaintiffs filed their lawsuit on October 30,

2015, such information may be relevant to Defendants’ argument
that Plaintiffs’ fraud claims are barred by Pennsylvania’s twoyear statute of limitations.
No. 55, at ¶ 67.

See 42 Pa.C.S.A. § 5524(7); Doc.

Plaintiffs, meanwhile, seek a protective order

precluding Defendants from seeking depositions of their counsel.3
1

For purposes of this Memorandum and accompanying Order,
“Plaintiffs” means State Farm Auto Insurance Company and State Farm
Fire and Casualty Company, while “Defendants” means Dr. Leonard
Stavropolskiy, Dr. Joseph Wang, Eastern Approach Rehabilitation, LLC,
and Aquatic Therapy of Chinatown, Inc.
2

We write primarily for the parties and do not repeat here the
facts and allegations, which are set forth in E. Approach Rehab.,LLC
v. State Farm Mut. Auto. Ins. Co., No. 16-CV-1374, 2016 WL 3078036, at
*1 (E.D. Pa. June 1, 2016), State Farm Mut. Auto. Ins. Co. v.
Stavropolskiy, No. 15-CV-5929, 2016 WL 2897427, at *1 (E.D. Pa. May
18, 2016), and State Farm Mut. Auto. Ins. Co. v. Stavropolskiy, No.
15-CV-5929, 2016 WL 627257, at *1 (E.D. Pa. Feb. 17, 2016).
3

A court may, “for good cause, issue an order to protect a party
or person from annoyance, embarrassment, oppression, or undue burden
or expense, including . . . forbidding the disclosure or discovery.”
Fed. R. Civ. P. 26(c)(1)(A). “Rule 26(c) is broader in scope than the
attorney work product rule, attorney-client privilege and other
evidentiary privileges because it is designed to prevent discovery
from causing annoyance, embarrassment, oppression, undue burden or
expense not just to protect confidential communications.” Boughton v.
Cotter Corp., 65 F.3d 823, 829-30 (10th Cir. 1995).

2

Generally speaking, “material that is relevant to the
subject matter involved in the action is discoverable as long as
it is not privileged.”

Premium Payment Plan v. Shannon Cab Co.,

268 F.R.D. 203, 204 (E.D. Pa. 2010); see also Fed. R. Civ. P.
26(b)(1).

Although depositions of opposing counsel are

“generally disfavored in federal courts,” Guantanamera Cigar Co.
v. Corporacion Habanos, S.A., 263 F.R.D. 1, 8 (D.D.C. 2009)
(citing Hickman v. Taylor, 329 U.S. 495, 513 (1947)), it is
nevertheless clear that opposing counsel will sometimes possesses
relevant non-privileged information.

Accordingly, opposing

counsel are not automatically immune from deposition obligations.
The parties disagree on the applicable law for determining
whether to allow a party to depose opposing counsel, and courts
in this district have applied various tests.

See Cambs v. Am.

Express Co., Inc., No. CV 15-428, 2016 WL 4735022, at *2-3 (E.D.
Pa. Sept. 12, 2016) (collecting cases).

Defendants ask us to

follow Frazier v. Se. Pa. Transp. Auth., in which this Court held
that a party may shield its counsel from deposition only by
showing an “undue burden or oppression measured by (1) the extent
to which the proposed deposition promises to focus on central
factual issues, rather than peripheral concerns; (2) the
availability of the information from other sources, viewed with
an eye toward avoiding cumulative or duplicative discovery; and
(3) the harm to the party’s representational rights resulting

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from the attorney’s deposition.”

161 F.R.D. 309, 313 (E.D. Pa.

1995); see also Premium Payment Plan, 268 F.R.D. at 204 (applying
Frazier).
Plaintiffs, meanwhile, contend that the controlling standard
is the “Shelton rule,” named for the Eighth Circuit’s opinion in
Shelton v. Am. Motors Corp., 805 F.2d 1323 (8th Cir. 1986).
Under the Shelton line of cases, “depositions of opposing counsel
are permissible only if: ‘(1) no other means exist to obtain the
information; (2) the information sought is relevant and nonprivileged; and (3) the information sought is crucial to the
preparation of the case.’”

In re Linerboard Antitrust Litig.,

237 F.R.D. 373, 385 (E.D. Pa. 2006) (alteration omitted).
We agree with Plaintiffs that the Shelton rule provides the
appropriate framework for analysis in these cases.

By placing

the burden on the party seeking to depose opposing counsel, the
Shelton rule better safeguards the considerable policy concerns
that arise when a litigant attempts to depose its opponent’s
counsel of record.

See Shelton, 805 F.2d at 1327 (“Taking the

deposition of opposing counsel not only disrupts the adversarial
system and lowers the standards of the profession, but it also
adds to the already burdensome time and costs of litigation.”);
Sterne Kessler Goldstein & Fox, PLLC v. Eastman Kodak Co., 276
F.R.D. 376, 380-81 (D.D.C. 2011) (“Allowing depositions of
opposing counsel, even if these depositions were limited to

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relevant and non-privileged information, may disrupt the
effective operation of the adversarial system by chilling the
free and truthful exchange of information between attorneys and
their clients.”).

And unlike Frazier, the Shelton rule has been

endorsed by three Courts of Appeals.

See Nationwide Mut. Ins.

Co. v. Home Ins. Co., 278 F.3d 621, 628 (6th Cir. 2002); Boughton
v. Cotter Corp., 65 F.3d 823, 830 (10th Cir. 1995) (holding that
a trial court “has the discretion to issue a protective order
against the deposition of opposing counsel when any one or more
of the three Shelton criteria for deposition . . . are not met”)
(emphasis deleted); Shelton, 805 F.2d 1323; see also Chao v.
Aurora Loan Servs., LLC, No. C 10-3118 SBA LB, 2012 WL 5988617,
at *3 (N.D. Cal. Nov. 26, 2012) (“District courts in this
district and elsewhere in the Ninth Circuit recognize Shelton as
the leading case on attorney depositions.”); but see In re
Subpoena Issued to Dennis Friedman, 350 F.3d 65, 72 (2d Cir.
2003).4

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Writing for the Second Circuit, then-Judge Sotomayor rejected
Shelton and, in dicta, proposed a more flexible approach, whereby a
trial court “takes into consideration all of the relevant facts and
circumstances to determine whether the proposed deposition would
entail an inappropriate burden or hardship.” Friedman, 350 F.3d at
72. “Such considerations may include the need to depose the lawyer,
the lawyer’s role in connection with the matter on which discovery is
sought and in relation to the pending litigation, the risk of
encountering privilege and work-product issues, and the extent of
discovery already conducted.” Id. To date, the Second Circuit’s
approach has not been adopted by any other circuit. Although Friedman
has been favorably cited by at least one sister court in our circuit,
see Sandvik Intellectual Prop. AB v. Kennametal, Inc., No.
2:10-CV-00654, 2012 WL 2288554, at *1 (W.D. Pa. June 18, 2012),

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II.

Analysis
Our analysis begins and ends with the first Shelton

prong—that is, whether other means exist to obtain the
information than to depose opposing counsel.

Defendants argue

that State Farm’s attorneys of record are the only persons
capable of testifying as to what State Farm knew and did
regarding its investigations into the Defendants’ alleged fraud
prior to November 2013.

(Doc. No. 55, at ¶¶ 2-18).

In

principle, there is no reason State Farm’s counsel of record
would be uniquely qualified to testify as to what their clients
knew and did.

But, pointing to State Farm’s “astounding lack of

recall and extraordinary lack of documentation,” id. at ¶ 71,
Defendants contend that the information they seek cannot be
obtained from State Farm directly.

Because of that, Defendants

contend that outside counsel must be deposed because they are the
only available fact witnesses.
Plaintiffs initially offered two arguments in response.
First, they asserted that they had already disclosed substantial
information regarding their pre-2013 investigative efforts.

And,

indeed, Defendants’ Motion outlines in detail various
investigative efforts undertaken throughout the relevant time

neither party asks us to consider it. In any case, because of the
lack of need to oppose deposing counsel and the risk of encountering
privilege and work-product issues, the Court finds that the outcome
under Friedman would be the same.

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period.

Id. at pp. 6-12.

Second, Plaintiffs argued that the

Defendants’ Motion to Compel was premature since Defendants had
not yet explored their questions about State Farm’s pre-2013
investigative efforts with State Farm’s corporate designee.
Because that avenue could be an alternative means to obtaining
the requested information, Plaintiffs asked us to deny
Defendants’ Motion on that basis alone.

(Doc. No. 67).

In a

reply, Defendants requested that the Court withhold ruling on the
present Motion until after the deposition of Plaintiffs’
corporate designee was complete.

(Doc. No. 68).

That deposition

has now occurred, and Defendants have since filed under seal a
Supplement to its Motion to Compel, with a transcript of the
deposition testimony attached thereto.

(Doc. No. 72).

The transcript of that deposition shows that Plaintiffs’
opposition was well-founded.

State Farm’s corporate designee

testified, inter alia, that around September 2011, Warren
Holland, Esquire, one of the attorneys in this case who
Defendants wish to depose, identified a potential issue in
Defendant Eastern Approach’s medical records while defending a
personal injury lawsuit on behalf of one of State Farm’s
insureds.

(Doc. No. 72, Ex. A, at pp. 198-210).

In particular,

that patient’s medical records noted the same unique range of
motion findings on each physical examination over the course of
treatment.

Id.

That was concerning, State Farm’s corporate

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designee testified, because it may indicate the range of motion
findings were simply cut and pasted across different visits and
could be an indicator of fraud.

Id.

State Farm then requested

that Mr. Holland’s law firm review other Eastern Approach medical
records to determine whether that phenomenon existed elsewhere.
Id.

In or around January 2012, State Farm independently reviewed

three or four claims and found that the range of motion issue
identified by Mr. Holland was not present in those claims.

Id.

At or around that point, early in 2012, State Farm “moved on”
from its investigation.

Id.

Defendants have failed to demonstrate any additional
relevant non-privileged information that outside counsel could
provide that it did not learn (or could not have learned) from
State Farm’s corporate designee.

In their supplemental briefing

filed after the deposition was complete, Defendants now indicate
that they wish to depose outside counsel for purposes of
determining to what extent they worked on their own to generate
more information which they could use to convince State Farm to
target the Defendants with a fraud accusation.

Although

Defendants are correct that such independent work performed by
outside counsel would not be privileged, it is also irrelevant to
any issues in this case.
Because Defendants have failed to carry their burden under
the first Shelton prong, it is unnecessary for the Court to

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determine whether the information sought from outside counsel is
both non-privileged and crucial to Defendants’ preparation of
their case, and we decline to do so.
III.

Conclusion
For the foregoing reasons, Defendants’ Motion to Compel is

denied, and Plaintiffs’ Motion for a Protective Order is granted.
An appropriate Order follows.

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