Audi of America, Inc. v. Bronsberg & Hughes Pontiac, Inc.
MEMORANDUM OPINION - The Court having found that the 54 documents set forth on Wyoming Valleys privilege log are subject either to the common-interest privilege or are otherwise protected by the attorney-client privilege, Audis motion to compel further production of these documents is DENIED. Signed by Magistrate Judge Martin C. Carlson on June 8, 2017. (kjn)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AUDI OF AMERICA, INC.,
BRONSBERG & HUGHES
PONTIAC, INC., d/b/a WYOMING
Civil No. 3:16-CV-2470
(Magistrate Judge Carlson)
The purpose of this Order is to address and resolve a discovery dispute over
the defendant’s assertion that 54 documents that have been withheld from
production in this case are privilege communications, either subject to the attorneyclient privilege or the common-interest privilege, which is an extension of the
attorney-client privilege to instances involving two or more parties who share a
substantially identical legal interest, permitting counsel to share communications
without waiving the privilege.
The plaintiff has moved the Court to compel
production, arguing that no privilege applies. Upon consideration, and for the
reasons explained below, the Court agrees that the limited set of documents
identified on the defendant’s privilege log are subject to the common-interest and
attorney-client privileges, and therefore need not be disclosed. The plaintiff’s
motion to compel will therefore be denied.
On December 13, 2016, Audi of America, Inc., (“Audi”) brought this breach
of contract action, alleging that Bronsberg & Hughes Pontiac, Inc., d/b/a Wyoming
Valley Audi (“Wyoming Valley”) breached certain terms of an Audi Dealer
Agreement into which the parties entered on January 1, 1997, when it entered into
an Asset and Real Estate Purchase Agreement (the “Purchase Agreement”) with
the Napleton Group (“Napleton”). Audi alleged that the Purchase Agreement,
which was signed on July 11, 2016, included the sale of Wyoming Valley’s Audi
assets in violation of Audi’s own right of first refusal and its right to refuse to
consent to the transaction on reasonable grounds. (Doc. 1.) In January of 2017,
Audi sought, and obtained, a preliminary injunction from the district court,
temporarily enjoining Wyoming Valley from consummating the Purchase
Agreement while this litigation was pending. (Doc. 30.) That order currently
remains in effect, and the district court has scheduled a further hearing for June 28,
2017, to assess whether to maintain the injunction.
While the parties prepare for that hearing, they have been engaged in
discovery that has at times been contentious.
This order addresses one such
disagreement relating to Wyoming Valley’s assertion that some 54 documents that
would otherwise be responsive to Audi’s discovery requests are shielded by the
attorney-client privilege, the common-interest privilege or otherwise are
confidential attorney work product.
On February 21, 2017, the Court ordered Wyoming Valley to produce four
categories of documents to Audi within 20 days, including “[c]ommunications
between Wyoming Valley and [Napleton] relating to the [Purchase Agreement] or
the First Addendum,” and “Wyoming Valley’s internal documents regarding the
[Purchase Agreement] and First Addendum.” (Doc. 46.) Wyoming Valley took
steps to gather, review, and produce the required responsive information, including
by reviewing information not only in Wyoming Valley’s custody but also with
documents in the possession of Arangio & George, Wyoming Valley’s outside
legal counsel who helped to negotiate the underlying transaction between
Wyoming Valley and Napleton. According to Wyoming Valley, this review was a
substantial undertaking, and resulted in the production of more than 13,000
responsive documents, including a substantial quantity of communications between
Wyoming Valley and Napleton about the Purchase Agreement and the First
Addendum over which Wyoming Valley made no claim of privilege.
In the Court’s order directing the production of responsive documents, the
Court also ordered Wyoming Valley to “provide the plaintiff and the Court with a
detailed privilege log identifying the document and privilege being invoked” with
respect to any responsive document being withheld on the basis of privilege or
work product protection.
On April 5, 2017, Wyoming Valley
submitted a 315-entry privilege log to the Court and to counsel. It appears that
after this time, the parties continued to meet and confer over Wyoming Valley’s
privilege claims, resulting in Wyoming Valley producing additional documents,
along with another shorter privilege log.1
Audi has challenged Wyoming Valley’s argument that the 54 documents
identified on the privilege log are privileged and non-discoverable, and the Court
has reviewed the documents in camera. Audi disputes that any of the documents
are subject to privilege or work-product protection, and therefore has requested
that the Court compel Wyoming Valley to disclose all of them. Wyoming Valley
maintains that nearly all of the documents exchanged between counsel for
Wyoming Valley and Napleton which are identified on the privilege logs constitute
work product and that all of them are subject to the common-interest privilege,
arguing in turn that each of these documents was either prepared in anticipation of
litigation, or constituted attorney work product that was permissibly exchanged
between counsel for Wyoming Valley and Napleton because of these parties’
The parties also engaged in additional discovery relating to Audi’s motion for
contempt, an issue that has now become moot since the undersigned declined to
certify a contempt to the district court.
alleged shared legal and commercial interest in defending against Audi’s attacks on
the Purchase Agreement and what they perceived as threatened litigation.
This discovery dispute presents a close question, and one that is made
somewhat more difficult to resolve because although Pennsylvania law recognizes
the common-interest privilege that Wyoming Valley has asserted, Pennsylvania
courts have provided very limited guidance in terms of the privilege’s application.
The Court’s review of the way the privilege has been interpreted and applied by
other courts within the Third Circuit teaches that one of the most salient factors to
be considered is the kind of interest that the parties claim to share. It is clear that
purely commercial interests are insufficient to support the common-interest
privilege, but it is also true that the privilege is not vitiated simply because parties
share commercial interests, so long as they also share substantial legal interests.
This consideration has particular relevance in this case, where the interests
shared by Wyoming Valley and Napleton were unquestionably commercial in that
both entities were motivated to complete their transaction, but they were also
increasingly of a legal nature, particularly after Audi and other manufacturers
notified them about concerns that they had regarding the Purchase Agreement and
its alleged impact on the manufacturers’ rights under their own contracts with
Audi and other manufacturers formally notified Wyoming Valley in late
September 2016 of specific concerns that they had with the transaction, and
counsel for Wyoming Valley and Napleton promptly began working in tandem to
address Audi’s stated concerns, which strongly suggested that Audi’s concerns
were legal in nature and that Audi was seeking to enforce its claimed rights under
contract and state law.
It is telling that Wyoming Valley does not claim a
common-interest privilege over any document that existed or was exchanged
before Audi and the other manufacturers sent letters outlining their concerns and
specific demands, as this presents a clear moment where the parties recognized that
they shared a legal interest in addressing Audi’s challenge.
Although it is a close issue, we find that Wyoming Valley and Napleton had
sufficiently shared legal and commercial interests in coordinating the responses to
Audi to shield the documents on Logs 1 and 3 from disclosure pursuant to the
common-interest privilege. The Court’s conclusion might have been different if
Wyoming Valley and Napleton were seeking to shroud in secrecy documents
relating to their negotiations or contractual back-and-forth relating to the Purchase
Agreement itself. The fact that they restricted their assertion of the privilege to
specific communications occurring after late September 2016, when the
manufacturers put them on notice regarding potential legal challenges to the
transaction, supports a finding that the common-interest privilege was
appropriately invoked for this narrow set of documents.
Moreover, review of those documents themselves supports the Court’s
finding that they should be withheld from production since these documents are, in
large part, transmittal correspondence between counsel for Wyoming and Napleton
that makes clear the parties’ joint effort to address the legal issues that Audi had
raised with them. Very often, these documents are simply cover letters or emails
that accompanied draft documents that the parties were sharing for comment, and
which would subsequently be provided to Audi in substantially the same form. In
other cases, the correspondence is some brief acknowledgment of communication
received from Audi’s counsel, and scheduling further discussions between the
dealerships in order to prepare a concerted response that addresses the issues Audi
was pressing.2 Although the Court recognizes that Audi may mine these limited
pieces of correspondence for significance that might not be immediately apparent,
the Court finds that the probative value of the correspondence itself is in large
measure especially limited and thus this entire discovery dispute ultimately winds
up being about withheld communications which often have very little apparent
substance to them.
Notably, Wyoming Valley has previously produced some of this correspondence, but has done
so in redacted form to mask the substance of counsel’s observations or commentary about the
legal issues presented.
Accordingly, following review of the parties’ briefs and the documents
submitted in camera, the Court agrees with Wyoming Valley’s assertion that the
common-interest privilege applies to each of the documents identified on Logs 1
and 3 because Wyoming Valley has effectively demonstrated that it shared with
Napleton the kind of substantial parallel legal interests are necessary for the
common-interest privilege to be applicable to this narrow set of documents, much
of it correspondence between counsel.
That the parties may have shared a
commercial interest both in seeing this transaction through to closing, and in
overcoming Audi’s opposition to the deal, does not mean that the dealerships did
not also have substantially similar legal interests vis a vis Audi, which was seeking
to protect its alleged rights under its contract with Wyoming Valley.
It is difficult to read Audi’s correspondence in September 2016 as doing
anything less than threatening formal legal action and making specific legal
demands, which Wyoming Valley and Napleton had a shared interest in
addressing. Although they may have previously been on opposite sides of an
arms’ length transaction, in the fall and winter of 2016, Wyoming Valley’s and
Napleton’s interests converged more closely, and became increasingly intertwined
such that Napleton has recently been permitted to intervene in this case to defend
the transaction that Audi has attacked. Therefore although the parties may not
have shared common legal interests prior to the fall of 2016, the Court finds that
they did so after Audi’s September 28, 2016 letter.
That letter presented a
common legal threat to the parties’ common commercial interests. Confronted by
this common legal threat, we believe that the parties now had a common legal
interest in coordinating a response to this threatened litigation. Because the Court
finds that these shared legal interests support invocation of the common-interest
privilege, the Court will deny Audi’s efforts to compel production of the
documents identified on Logs 1 and 3 as to which the common-interest privilege
has been asserted.3
In addition, Wyoming Valley has asserted that six other documents that were
shared between its counsel and its broker, the Tim Lamb Group, which was
engaged to advise the dealership with respect to the Purchase Agreement, may be
withheld pursuant to the attorney-client privilege. Because the Court finds that the
attorney-client privilege extends to such correspondence, Wyoming Valley’s
assertion of the privilege will be sustained, and Audi’s efforts to compel
production of these six documents will be denied.4
These documents include entries 96, 97, 98, 113, 119, 126, 131, 135, 137, 138,
139, 140, 143, 155, 157, 159, 165, 166, 168, 172, 174, 200, 201, 205, 211, 212,
213, 217, 220, 222, 225, 240, 245, 247, 252, 256, 271, 272, 273, 274, 299, 311,
312, 313, and 314.
Wyoming Valley has also argued that many of these documents also constitute
confidential attorney work product. Because the application of the commoninterest and attorney-client privileges to the small set of documents in this matter is
sufficiently clear, there is no need to give separate and further consideration to
The Attorney-Client and Common-Interest Privileges
Wyoming Valley relies upon the attorney-client privilege, the commoninterest privilege, and the work-product doctrine to justify its decision to withhold
a number of documents that would otherwise be responsive to Audi’s discovery
The United States Court of Appeals for the Third Circuit has summarized
the purposes of, and distinctions between, the attorney-client privilege and the
work-product doctrine, and the importance of limiting recognition of evidentiary
privileges when necessary to achieve their purposes, as follows:
Though they operate to protect information from
discovery, the work-product doctrine and the attorneyclient privilege serve different purposes. The purpose
behind the attorney-client privilege is “ ‘to encourage
clients to make full disclosure of facts to counsel so that
he may properly, competently, and ethically carry out his
representation. The ultimate aim is to promote the proper
administration of justice.’ ” In re Impounded, 241 F.3d
308, 316 (3d Cir. 2001) (quoting In re Grand Jury
Proceedings, 604 F.2d 798, 802 (3d Cir. 1979)). The
work-product doctrine, by contrast, “promotes the
adversary system directly by protecting the
confidentiality of papers prepared by or on behalf of
whether some or all of these documents may also be withheld on the grounds that
they are work product.
attorneys in anticipation of litigation.
attorneys’ work product promotes the adversary system
by enabling attorneys to prepare cases without fear that
their work product will be used against their clients.”
Westinghouse Elec. Corp. v. Republic of the Philippines,
951 F.2d 1414, 1428 (3d Cir. 1991) (citations omitted).
In re Chevron Corp., 633 F.3d 153, 164 (3d Cir. 2011).
Rule 501 of the Federal Rules of Evidence provides, in relevant part, as
[I]n civil actions and proceedings, with respect to an
element of a claim or defense as to which State law
supplies the rule of decision, the privilege of a witness,
person, government, State, or political subdivision
thereof shall be determined in accordance with State law.
Fed. R. Evid. 501. Accordingly, in diversity actions, such as the instant litigation,
the law governing evidentiary privileges is supplied by the courts of the state in
which the federal court sits. See, e.g., Rhone-Poulenc Rorer v. Home Indem. Co.,
32 F. 3d 851, 861 (3d Cir. 1994); Maertin v. Armstrong World Indus., Inc., 172
F.R.D. 143, 147 (D.N.J. 1997); McDowell Oil Serv., Inc. v. Interstate Fire & Cas.
Co., 817 F. Supp. 538, 545 (M.D. Pa. 1993) (in diversity action, party’s assertion
of attorney-client privilege governed by state law); see also Serrano v. Chesapeake
Appalachia, LLC, 298 F.R.D. 271, 280 (W.D. Pa. 2014) (observing that in
diversity actions a court “must look to state law for applicable legal principles on
issues of privilege.”).
The attorney-client privilege is meant to facilitate “full and frank
communication between attorneys and their clients.” Wachtel v. Health Net, Inc.,
482 F.3d 225, 231 (3d Cir. 2007). The privilege “recognizes that sound legal
advice or advocacy serves public ends and that such advice or advocacy depends
upon the lawyer’s being fully informed by the client.” Upjohn v. United States,
449 U.S. 383, 389 (1981). The privilege “applies to any communication that
satisfies the following elements:
it must be ‘(1) a communication (2) made
between [the client and the attorney or his agents] (3) in confidence (4) for the
purposes of obtaining or providing legal assistance for the client.’ ”
Teleglobe Communications Corp., 493 F.3d 345, 359 (3d Cir. 2007) (quoting the
Restatement (Third) of the Law Governing Lawyers § 68 (2000)). Thus, the
privilege reaches “[c]onfidential disclosures by a client to an attorney made in
order to obtain legal assistance.” Fisher v. United States, 425 U.S. 391, 403
(1976); see also In re Ford Motor Co., 110 F.3d 954, 965 n.9 (3d Cir. 1997)
(communication made by client and an attorney are privileged if made “for the
purpose of securing legal advice.”); United States v. Amerada Hess Corp., 619
F.2d 980, 986 (3d Cir. 1980).
The privilege applies both to information that the client provides to the
lawyer for purposes of obtaining legal advice, as well as to the advice the attorney
furnishes to the client. To this end, the Supreme Court has explained that “the
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.” Upjohn, 449 U.S. at 390.
While recognizing the value served by the privilege, courts must also be
mindful that the privilege obstructs the truth-finding process and should therefore
be “applied only where necessary to achieve its purpose.” Wachtel, 482 F.3d at
231; see also Westinghouse Elec. Corp., 951 F.2d at 1423. Therefore because the
purpose of the privilege is to protect and promote the “dissemination of sound legal
advice,” it applies only to communication conveying advice that is legal in nature,
as opposed to where the lawyer is providing non-legal, business advice. Wachtel,
482 F.3d at 231; see also Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 152
F.R.D. 132, 137 (N.D. Ill. 1993) (stating that the privilege is inapplicable where
the legal advice is incidental to business advice); Hardy v. New York News, Inc.,
114 F.R.D. 633, 643 (S.D.N.Y. 1987) (“The attorney-client privilege is triggered
only by a client’s request for legal, as contrasted with business advice[.]”).
One recognized extension of the attorney-client privilege, which effectively
extends the privilege to privileged communications that are disclosed to another
lawyer is the community of interest or “common interest” privilege. Pennsylvania
law recognizes the common-interest privilege, but the parties and the Court have
uncovered relatively few decisions from Pennsylvania courts actually applying it
or defining its reach.
See Karoly v. Mancuso, 65 A.3d 301, 315 (Pa. 2013)
(observing that “under the prevailing law of this Commonwealth, the joint-client or
common-interest privilege could potentially apply.”); see also In re Condemnation
by City of Phila., 981 A.2d 391, 396-98 (Pa. Commw. Ct. 2009); Gelman v. W2
Ltd., 2016 WL 8716248, at *3 (E.D. Pa. Feb. 5, 2016) (observing that
Pennsylvania courts have given the common-interest privilege “very little
attention”). The common-interest privilege is not a standalone privilege, but is in
effect an extension of the attorney-client privilege, which protects counsel’s ability
to communicate with counsel for another party with whom his client has a shared
legal interest without waiving the attorney-client privilege.
In the absence of substantial guidance from Pennsylvania’s own courts, the
Court looks to decisions from the other courts that have addressed the scope of the
privilege, and its application. The common-interest privilege “allows attorneys
representing different clients with similar interests to share information without
having to disclose it to others.” In re Teleglobe Communications Corp., 493 F.3d
345, 364 (3d Cir. 2007). The purpose of the privilege is to protect communications
shared between different individuals or entities and their legal counsel where the
communications are “ ‘part of an on-going and joint effort to set up a common
defense strategy.’ ” In the Matter of Bevill, Bresler & Schulman Asset Mgmt.
Corp., 805 F.2d 120, 126 (3d Cir. 1986) (quoting Eisenberg v. Gagnon, 766 F.2d
770, 787 (3d Cir. 1985)). In order to be entitled to rely on the common-interest
privilege, the members of the asserted community of interest “must share at least a
substantially similar legal interest.” Teleglobe, 493 F.3d at 365 (emphasis added).
“The mere overlap of commercial and legal interests ‘does not negate the effect of
the legal interests in establishing a community of interest.’ ” MobileMedia Ideas
LLC v. Apple Inc., 890 F. Supp. 2d 508, 517 (D. Del. 2012) (quoting Teleglobe,
493 F.3d at 365).
In other words, “[s]ubstantial, not sole, legal interest is
The Common-Interest Privilege Covers the Entries on Log 1 that
Post-Date September 27, 2016
In late September 2016, Volkswagen, BMW, Audi and other manufacturers
sent formal letters to Wyoming Valley, copying their counsel, declaring that the
submission of the Purchase Agreement without apportionment of the purchase
price – something that lies at the heart of the instant lawsuit – constituted a
“material breach of the Volkswagen Dealer Agreement and a violation of
Pennsylvania law.” (Doc. 173, Ex. D.) In its letter, Volkswagen stated that it was
preserving “any and all of its contractual and statutory rights, relating to the APA
and otherwise to the proposed transaction between Wyoming Valley and the
Napleton Auto Group.”
Audi sent a substantially identical letter the
following day, also copying its outside counsel.
(Doc. 173, Ex. E.)
consideration of the form and tone of this correspondence, the Court agrees that the
manufacturers’ challenges to the Purchase Agreement, which explicitly referred to
alleged violations of law and material breaches of contracts, made litigation
reasonably foreseeable, and inspired a change in the relationship between
Wyoming Valley and Napleton, which now began exchanging correspondence
with one another through their respective counsel not only to negotiate the
transaction, but to address the manufacturers’ concerns and thinly veiled threats of
Although Wyoming Valley and Napleton were previously parties to an
arms’ length transaction to which they could, in some respects, be considered
adverse to one another, after Audi sent a letter challenging the contract that they
had negotiated, these parties had a shared legal as well as commercial interest in
defending against Audi’s efforts to disrupt the deal.
Audi’s letter plainly
threatened legal challenge to the transaction, and identified its own legal interests
that it claimed were infringed. The Court finds that Audi’s direct challenge to the
transaction also gave rise to a common legal interest shared by the dealerships in
Counsel may have continued to negotiate the transaction on behalf of their
clients, but the documents submitted for in camera review reflect counsel working
together to formulate legal responses to Audi’s challenge to the deal.
responding to Audi’s threats. Indeed, the Court has recognized this commonality
of interests in the face of Audi’s legal onslaught challenging this agreement and
has found that the fact that Napleton is “a party to the Purchase Agreement that lies
at the heart of this lawsuit, a transaction that Audi seeks to defeat, and enjoin,”
warranted allowing Napleton to intervene in this case. (Doc. 167, at 5.) Moreover,
in the days leading up to the filing of the complaint, Wyoming Valley and
Napleton memorialized what had been apparent since the end of September 2016,
committing themselves to a “Common Interest and Joint Defense Agreement.
(Doc. 173, Ex. E.)
Audi dismisses the dealerships’ asserted common legal interest is a sham,
suggesting that it is really no more than an extension of the parties’ improper
efforts to manipulate the transaction to Audi’s detriment.
argument would have greater resonance if the conduct of Wyoming Valley and
Napleton had not commenced in response to a fairly explicit threat of litigation
from Audi aimed at disrupting this contract. In short, the adversarial tone and
tenor of Audi’s communications crystallized the very common interest which Audi
now decries. Moreover, Audi disregards the case law cited above that supports the
view that parties may have both legal and commercial interests, and that the
existence of commercial interests does not defeat the common-interest privilege so
long as the parties have substantially identical legal interests as well. Here, the
Court finds that this requirement is satisfied, since the limited subset of documents
exchanged between counsel for the dealerships reflect the shared business and
legal interests that animated their responses to Audi’s specific and articulated legal
challenges to the underlying business transaction.
There cannot help but be
overlap in the business and legal interests in play, both from the dealerships’
perspective, and also from Audi’s.
After Audi threatened to challenge the
transaction, the communication between counsel that has been submitted for in
camera review shows itself to be predominantly legal in nature, and in furtherance
of a joint legal strategy against a common foe, and therefore the Court does not
agree with Audi that the interests here were purely commercial in nature.
One of Audi’s principal challenges seems to be that because the dealerships
were on opposite sides of the commercial transaction that Audi challenged, they
can never have a common legal interest in defending the transaction that they
negotiated. We disagree. Although Audi construes some of the case law in this
area narrowly, the Court finds instructive the decision in Louisiana Municipal
Police Employees Retirement System v. Sealed Air Corporation, 253 F.R.D. 300
(D.N.J. 2008), in which the court found that parties to a proposed merger
transaction had sufficiently common legal interests to trigger the common-interest
privilege in defense to the plaintiff’s effort to compel production of documents and
information. In that case, the plaintiff made a similar argument that the parties to
the proposed merger agreement could not have a common legal interest sufficient
to support the privilege, but the court disagreed:
Sealed Air has shown that it had a sufficient common
legal interest with Grace prior to the filing of the first
successor liability suit. Prior to the transaction, both
Grace and Sealed Air anticipated potential litigation
related to asbestos issues.
They also retained a
substantially similar legal interest in defending against
such claims. Plaintiff contends that there was not an
identical legal strategy, but that is beside the point. All
of the participants interests “need not coincide.”
Defendant has established that pre-transaction they
anticipated the same claims and shared a commoninterest in defending against those claims.
defendants have established that the common-interest
privilege precludes the discovery sought.
Id. at 311. Although this case does not involve a merger, it does involve a
commercial transaction for the sale of assets that had the potential to result in legal
challenge, which Audi threatened specifically, and which both parties had a shared
legal interest in defending. Moreover, the nature of the communications that
Wyoming Valley seeks to withhold from production make clear that they were not
exchanged solely or even primarily in furtherance of negotiating a commercial
transaction, but rather to develop a coordinated response to the threat of litigation
from a party that had expressed specific concerns about the deal they had
negotiated. As such, the Court is not troubled by finding that the common-interest
privilege may shield these discrete pieces of communication between counsel from
disclosure, as these documents related directly to the parties’ shared legal interests,
rather than to their divergent commercial interests. We also note that Audi is not
unfairly prejudiced by the invocation of this privilege in this particular since the
privilege that we find only extends to communications which took place after Audi
created this common legal interest by alleging that this transaction violated the law
and constituted a material breach of contract.
Because the limited set of correspondence and documents that Wyoming
Valley has withheld from production are shielded by the common-interest
privilege, Audi’s efforts to compel production of these documents will be denied.
The Attorney-Client Privilege Applies to the Documents on Log 1
Exchanged Between Wyoming Valley and Its Broker
Wyoming Valley has also argued that a small subset of documents on its
privilege log that the dealership exchanged with its broker from the Tim Lamb
Group are subject to the attorney-client privilege. The dealership notes that before
it began negotiations with Napleton, it retained the Tim Lamb Group, a specialized
automobile-dealership broker, which is in the business of helping dealers navigate
all aspects of the sale process, including contract negotiations between prospective
buyers and sellers. According to Wyoming Valley, it worked with Rob Lee, a Tim
Lamb regional director, who helped Wyoming Valley get its dealerships to market,
and who took a lead role in helping to negotiate with Napleton. In some instances,
Mr. Lee participated in communications with Wyoming Valley’s outside counsel
who had been engaged as part of the transaction.
As Wyoming Valley notes, “[t]here is substantial authority for the
communications with agents of the client who facilitate the transmission and
technical interpretation of confidential information flowing between the attorney
and the client.” 1 Testimonial Privileges § 136 (3d ed.) (citing cases). Thus,
privilege persons for purposes of the attorney-client privilege include not only the
lawyer and the client, but also “agents of either who facilitate communications
between them.” Restatement (Third) of the Law Governing Lawyers § 70 (2000).
Courts in Pennsylvania and elsewhere routinely rely upon this rule to uphold
privilege claims involving agents of the client.
See Serrano v. Chesapeake
Appalachia, LLC, 298 F.R.D. 271, 282-83 (W.D. Pa. 2014) (communications
between insurer and carrier, including communication with insured’s administrator
and broker, privileged); SmithKline Beacham Corp. v. Apotex Corp., 232 F.R.D.
467, 476-77 (E.D. Pa. 2005) (“Presence of a third-party, such as a consultant, does
not destroy the attorney-client privilege where that party is the client’s agent or
possesses ‘a commonality of interest with the client.’”) (quoting In re Grand Jury
Investigation, 918 F.2d 374, 386 n.20 (3d Cir. 1990); Am Standard, Inc. v. Pfizer,
Inc., Civ. A. No. 83-834, 1986 WL 9713, at *4 (D. Del. Mar. 31, 1986) (extending
privilege to “material prepared by outside consultants in response to request by . . .
counsel”); see also Levy v. Senate, 34 A.3d 243, 254-55 (Pa. Commw. Ct. 2011).
In this case, Wyoming Valley represents that it has already produced
communications involving Rob Lee that arose in a non-privileged context,
including those that involved Lee and Napleton. On the privilege log, however,
Wyoming Valley has identified only six documents, which are email
communications, involving Lee and Wyoming Valley’s counsel. Each of these
emails was generated in June 2016, at a time when Wyoming Valley’s outside
counsel was helping to facilitate negotiations of the Purchase Agreement. The
content of the emails themselves makes clear that Lee should be deemed a
privileged person who was engaged for purposes of assisting the client and its
counsel specifically with respect to Wyoming Valley’s negotiations of its interests
under the Purchase Agreement. As such, these six pieces of correspondence are
privileged, and Wyoming Valley will not be required to disclose them to Audi.
Accordingly, the Court having found that the 54 documents set forth on
Wyoming Valley’s privilege log are subject either to the common-interest privilege
or are otherwise protected by the attorney-client privilege, Audi’s motion to
compel further production of these documents is DENIED.
So ordered this 8th day of June, 2017.
/s/ Martin C. Carlson
Martin C. Carlson
United States Magistrate Judge
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