Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
5-23-1995
Glenmede Trust v Thompson
Precedential or Non-Precedential:
Docket 94-2189
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"Glenmede Trust v Thompson" (1995). 1995 Decisions. Paper 139.
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 94-2189
___________
GLENMEDE TRUST COMPANY;
PEPPER, HAMILTON & SCHEETZ,
Petitioners
vs.
B. RAY THOMPSON, JR.; JUANNE J. THOMPSON;
CATHERINE V. THOMPSON; ADELLA S. THOMPSON;
B. RAY THOMPSON, III; SARAH THOMPSON TARVER;
REBEKAH L. THOMPSON; B. RAY THOMPSON, JR., AS
TRUSTEE OF FIVE THOMPSON FAMILY TRUSTS;
JUANNE J. THOMPSON, AS TRUSTEE OF FIVE THOMPSON
FAMILY TRUSTS; DALE A. KEASLING, AS TRUSTEE OF
FIVE THOMPSON FAMILY TRUSTS,
Respondents
vs.
THE HONORABLE HERBERT J. HUTTON, UNITED
STATES DISTRICT JUDGE,
Nominal Respondent
___________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ No. 92-cv-05233)
___________
Argued
March 29, 1995
Before: MANSMANN, COWEN and LEWIS, Circuit Judges.
(Filed May 23 , 1995)
___________
William A. Slaughter, Esquire
Alan J. Davis, Esquire (ARGUED)
Ballard, Spahr, Andrews &
Ingersoll
1735 Market Street
51st Floor
Philadelphia, PA 19103
COUNSEL FOR PETITIONER GLENMEDE TRUST COMPANY
William T. Hangley, Esquire (ARGUED)
Sara M. Staman, Esquire
Hangley, Aronchick, Segal & Pudlin
One Logan Square
Philadelphia, PA 19103
COUNSEL FOR PETITIONER PEPPER, HAMILTON & SCHEETZ
Michael C. Spencer, Esquire (ARGUED)
Milberg, Weiss, Bershad,
Hynes & Lerach
One Pennsylvania Plaza
49th Floor
New York, NY 10119
James J. Binns, Esquire
James J. Binns, P.A.
The Mellon Bank Center, 39th Floor
1735 Market Street
Philadelphia, PA 19103
COUNSEL FOR RESPONDENTS
___________
OPINION OF THE COURT
__________
MANSMANN, Circuit Judge.
Before us is a Petition for Writ of Mandamus filed by a
law firm and its client, a trust company which is a defendant in
the underlying diversity action involving claims for breach of
fiduciary duty, fraud, breach of contract and negligence, arising
from the trust company's role in a stock repurchase transaction.
They jointly seek a writ directing the district court to vacate
and reverse its orders compelling the law firm to comply with a
subpoena duces tecum requesting its file relating to all work it
performed for the client regarding the repurchase transaction.
They also seek a writ directing the district court to
vacate and reverse its order denying their request for a
protective order to enforce the umbrella of confidentiality
established by a confidentiality agreement stipulated to by the
parties to the underlying dispute, but which was never embodied
in an order of the district court. In that regard, the specific
issue we must decide is whether general allegations of
embarrassment and injury to professional reputations and client
relationships satisfies the "good cause" requirement for the
issuance of an umbrella protective order pursuant to our recent
decision in Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir.
1994). The law firm and its client assert that they will be
unable to rectify the harm to their reputations and client
relationships if the law firm's privileged documents are publicly
disseminated.
We find that although they have established that there
are no alternative avenues of appeal for these discovery orders,
the law firm and the client trust company have failed to
establish their clear and indisputable right to the writ. They
failed to establish "good cause" for the protection of all of the
law firm's file documents pursuant to the confidentiality
agreement. Nor have they demonstrated that the district court
erred in determining that the scope of the client's waiver of the
attorney-client privilege, by injecting the client's reliance on
advice of counsel as an issue in the underlying action, extended
to the entire transaction, including back-up documents.
Accordingly, we decline to issue the requested writs.
I.
Glenmede Trust Company ("Glenmede") is a Pennsylvania
trust company that serves as the trustee for several charitable
trusts, including the Pew Charitable Trusts.1 Glenmede also
serves as a trustee for a number of private trusts and acts as an
investment advisor pursuant to a written contract for other
clients. B. Ray Thompson, Jr., several members of his family2
and the trustees3 of five trusts established by B. Ray Thompson,
Sr. for the benefit of his five grandchildren (collectively "the
Thompson Family") were investment advisory clients of Glenmede.
Prior to September 11, 1990, both the Pew Charitable Trusts and
the Thompson family held substantial shares of Oryx Energy
Company stock; the Pew family's Oryx holdings totalled in excess
of 25 million shares and the Thompson family's Oryx holdings
totalled approximately 2.9 million shares. In mid-1990, Glenmede
broached, with Oryx management, the subject of a direct buy-back
of Oryx shares held by the Pew Charitable Trusts. Oryx was
willing to repurchase a maximum of 18 million shares at a premium
price per share but requested that buy-back discussions be kept
1
. The Pew Charitable Trusts are comprised of the Pew
Memorial Trust, the J. Howard Pew Freedom Trust, the Mabel Pew
Myrin Trust, the Trust under Paragraph 9 of the Will of J. N.
Pew, Jr., and the Trust under the Will of Ethel Pew.
2
. These include B. Ray Thompson's wife, Juanne J.
Thompson, and his five children, Adella S. Thompson, Sarah
Thompson Tarver, Rebekah L. Thompson, Catherine V. Thompson and
B. Ray Thompson, III.
3
. The trustees are B. Ray Thompson, Jr., Juanne J.
Thompson and Dale A. Keasling.
confidential. Given the limitations on the buy-back, Glenmede
consulted its counsel, Pepper, Hamilton & Scheetz, as to whether
the Oryx transaction could be extended to include Glenmede's
private trust and investment advisory clients.4
Pepper Hamilton issued an Opinion Letter dated
September 6, 1990 advising Glenmede that the buy-back transaction
could not be structured to include private clients of Glenmede as
to do so may violate Internal Revenue Code prohibitions on
private foundations.5 Pepper Hamilton further advised Glenmede
that it could not notify its private clients of the buy-back
negotiations between Oryx and Glenmede acting in its capacity as
trustee of the Pew Charitable Trusts. On September 11, 1990,
Oryx repurchased through Glenmede 18 million of its common shares
held by the Pew Charitable Trusts and converted the remaining 7.3
million common shares held by the Pew Charitable Trusts to
convertible preferred shares. Allegedly, based on the Opinion
Letter from Pepper Hamilton, Glenmede excluded its private
clients with holdings of Oryx stock from the buy-back
transaction.
4
. Pepper Hamilton had a long-standing relationship with
Glenmede and the Pew family. It incorporated Glenmede in 1956,
drafted the trust instruments for the Pew charitable trusts
administered by Glenmede, and attended all meetings of Glenmede's
Board of Directors. A partner of Pepper Hamilton always served
as the secretary and a board member of Glenmede.
5
. The Opinion Letter contained Pepper Hamilton's legal
"opinion concerning the inclusion of certain private trusts and
estates in transactions which may be undertaken by the Glenmede
Trust Company on behalf of the charitable trusts for which it is
trustee."
In September of 1992, the Thompson family brought an
action against Glenmede, its parent Glenmede Corporation, a
number of Glenmede officers and directors and the Chairman and
CEO of Oryx, who was dismissed from this action, asserting, inter
alia, claims for breach of fiduciary duty, fraud, breach of
contract, and negligence, all allegedly arising from Glenmede's
role in the September 11, 1990 buy-back transaction, in which
Oryx repurchased 18 million of its shares from Glenmede as
trustee of the Pew Charitable Trusts. Glenmede raised as its
Fourteenth affirmative defense to these charges that it "was
advised by counsel that it was legally precluded by Internal
Revenue Code prohibitions from including Oryx shares held by
other accounts in the repurchase transaction."
Glenmede concedes that the impact of placing at issue
its reliance on advice of counsel was a waiver of the attorney-
client privilege limited to the subject matter placed at issue.
Glenmede admitted only to a waiver of the attorney-client
privilege relating to the subject matter of the Opinion Letter,
which it submits is broader than tax advice which is the primary
subject of the Opinion Letter, but narrower than the totality of
the advice rendered regarding the buy-back transaction.6 In
accordance with its position, Glenmede produced the Pepper
Hamilton Opinion Letter and a draft Opinion Letter in response to
discovery requests served by the Thompson family.
6
. Glenmede admitted at oral argument that the waiver was
broader than tax advice but narrower than the entire transaction.
Glenmede, however, did not offer further specificity regarding
the scope of its waiver of the attorney-client privilege.
In response to the Thompson family's concern regarding
the production of financial records, the parties stipulated to a
"Confidentiality Order" restricting the disclosure of documents
to be produced and establishing measures to maintain
confidentiality pending an appeal from final judgment. As
evidenced by the terms of the confidentiality agreement, the
parties contemplated the wholesale adoption of that agreement by
the district court. Although it was filed with the district
court for approval, it was never endorsed in an order of court.
Nevertheless, the parties complied with its terms, including the
filing of pleadings under seal.
On July 30, 1993, the Thompson family served a subpoena
duces tecum on Pepper Hamilton, requesting its entire file
concerning services performed for Glenmede in connection with the
buy-back transaction. Pepper Hamilton and Glenmede objected to
the production of Pepper Hamilton's file on the basis of the
attorney-client privilege. On October 18, 1993, the Thompson
family filed a motion to compel the production of the file,
arguing that Glenmede waived the attorney-client privilege
because it raised reliance on advice of counsel pertaining to the
buy-back transaction as an affirmative defense to the Thompson
family's claims. The Thompson family further contended that
Glenmede's concern regarding the production of Pepper Hamilton's
file was unwarranted given the protection afforded by the
confidentiality agreement to which the parties stipulated.
By Memorandum and Order dated December 14, 1993, the
district court granted the Thompson family's motion to compel,
concluding that Glenmede waived its attorney-client privilege
concerning all communications, whether written or oral, to or
from counsel, regarding the buy-back transaction. The district
court ordered that Pepper Hamilton produce its entire file for
services performed on behalf of Glenmede pertaining to the buy-
back transaction, including all back-up documents to the Opinion
Letter. Glenmede and Pepper Hamilton moved for reconsideration
of that Memorandum and Order, challenging the district court's
conclusion that their invocation of the defense of reliance on
advice of counsel resulted in a waiver of the attorney-client
privilege encompassing all services Pepper Hamilton performed in
connection with the buy-back transaction.7 Glenmede asserted
that its waiver was limited to tax advice embodied in the Opinion
Letter. By Memorandum and Order dated April 8, 1994, the
district court rejected Glenmede's motion for reconsideration on
the basis that the Opinion Letter discussed a number of issues in
addition to tax advice, including insider trading and the
financial ramifications of the transaction. The district
court also concluded that Pepper Hamilton's involvement in
structuring and closing the transaction required the production
of back-up documents to the Opinion Letter to permit the Thompson
family to analyze the reasonableness of Glenmede's reliance on
the advice of counsel.
7
. At no time did Pepper Hamilton and/or Glenmede seek an
in camera inspection of the file documents they sought to
preclude from discovery.
Glenmede and Pepper Hamilton did not seek a writ of
mandamus for immediate relief from the district court's orders
compelling the production of documents; they opted to defer
appellate review of the district court's rulings until final
judgment. Instead, Pepper Hamilton produced in excess of 13,000
documents in compliance with the district court's orders.
On June 20, 1994, Glenmede and the other defendants
filed a motion for summary judgment under seal, attaching several
Pepper Hamilton file documents for which the attorney-client
privilege had been asserted but deemed waived by the district
court. On June 27, 1994, the Thompson family challenged the
"confidential" designation of the Pepper Hamilton file documents
and notified Glenmede of their intent to treat them as non-
confidential.8 On July 18, 1994, Glenmede and Pepper Hamilton
moved for a Protective Order objecting to the Thompson family's
wholesale challenge to the confidentiality of the documents. The
8
. The confidentiality agreement provided a mechanism for
challenging the designation of documents as "confidential" --
provide notification to the producing party of challenge to
confidentiality, the parties confer in an attempt to resolve the
challenge and, if no agreement can be reached, seek court
intervention. The Thompson family mounted this challenge despite
their representations to the district court that Glenmede and
Pepper Hamilton's concerns regarding public disclosure were
unwarranted in light of the protection afforded by the stipulated
confidentiality agreement. Given our expectation that parties
operate in good faith during discovery, we note that this
challenge closely followed our decision in Pansy v. Borough of
Stroudsburg, 23 F.3d 772 (3d Cir. May 2, 1994), regarding the
impropriety of the issuance of broad confidentiality orders,
which signaled a shift from the previous practice of judicial
endorsement of such stipulations.
Thompson family cross-moved to unseal the summary judgment
documents filed under seal by Glenmede and the other defendants.
On October 21, 1994, the district court heard arguments
on the pending motions.9 It directed the parties to negotiate
the issues raised in the motion for protective order and to
present a motion for the confidential treatment of particular
documents or categories of documents. Glenmede, Pepper Hamilton
and the Thompson family, however, were unable to reach an
agreement regarding the confidential status of the Pepper
Hamilton file documents. By Memorandum and Order dated November
22, 1994, the district court granted the Thompson family's motion
to amend the complaint to assert claims against individual Pepper
Hamilton attorneys, quoting from a number of the Pepper Hamilton
file documents. By Memorandum and Order dated November 29, 1994,
the district court denied Glenmede and the other defendants'
motion for summary judgment.
On November 30, 1994, Glenmede and Pepper Hamilton
filed an emergency motion to seal court records and for
protective order, seeking to seal both the district court's
November 22, 1994 Memorandum and Order and the October 21, 1994
hearing transcript, pending consideration of their motion for
protective order to keep the Pepper Hamilton documents
9
. The motions included Glenmede and the other defendants'
motion for summary judgment, Glenmede's motion for protective
order and the Thompson family's motion to add Pepper Hamilton
attorneys as defendants on the basis of information culled from
the Pepper Hamilton file documents, a motion to compel the
production of documents and a motion to unseal the record.
confidential and for use only in these proceedings. By
Memorandum and Order dated December 2, 1994, the district court
denied Glenmede and Pepper Hamilton's initial motion for
protective order and granted the Thompson family's motion to
unseal the record.10 The district court determined that the
confidentiality agreement did not satisfy Pansy's "good cause"
requirement nor did Glenmede and Pepper Hamilton establish that
disclosure of the Pepper Hamilton documents would cause them a
defined and serious harm.
On December 13, 1994, Glenmede and Pepper Hamilton
filed this petition for a writ of mandamus directing the district
court to vacate and reverse its December 14, 1993 and April 8,
1994 Memoranda and Orders compelling the production of the Pepper
Hamilton file documents and its December 2, 1994 order denying
confidentiality protection for those file documents. In
addition, they seek a writ directing the district court: to
place under seal its November 22 and 29, 1994 Memoranda and
Orders, the October 21, 1994 hearing transcript and all briefs
and pleadings that reference the Pepper Hamilton file documents;
to remove all references to those Memoranda and Orders from all
public access computer databases and district court records; and
to order that the Memoranda and Orders not be published in any
reporter. Glenmede and Pepper Hamilton contend that the district
10
. The district court did not dispose of Glenmede and
Pepper Hamilton's emergency motion to seal court records and for
protective order until January 12, 1995 when it issued a
Memorandum and Order denying the unopposed motion.
court's denial of the protective order has revealed the Pepper
Hamilton file documents to the public, which cannot be remedied
on appeal from final judgment. The public dissemination of the
Pepper Hamilton documents is the harm sought to be averted via
this mandamus petition.
II.
This is an appeal from discovery orders which are not
appealable as final decisions within the meaning of 28 U.S.C. §
1291. See Haines v. Liggett Group Inc., 975 F.2d 81 (3d Cir.
1992). Our jurisdiction is premised upon the All Writs Act,
which provides that the federal courts "may issue all writs
necessary or appropriate in aid of their respective jurisdictions
and agreeable to the usages and principles of law." 28 U.S.C.A.
§ 1651(a) (West 1994). The issuance of the writ must aid some
present or potential exercise of appellate jurisdiction. See
Westinghouse v. Republic of the Philippines, 951 F.2d 1414, 1422
(3d Cir. 1991). Since this diversity action is potentially
within our appellate jurisdiction, we have jurisdiction to
consider the petition for a writ of mandamus.
Nonetheless, our writ power should be invoked only in
extraordinary situations, see Kerr v. United States Dist. Court
for Northern Dist. of California, 426 U.S. 394, 402 (1976), i.e.,
only in limited circumstances where a party seeking issuance has
no other adequate means to attain the desired relief and
establishes that the right to the writ is clear and indisputable.
Haines, 975 F.2d at 89. Once these prerequisites are met, the
issuance of the writ is a matter of discretion. Id.
Although mandamus is an appropriate means of immediate
appellate review of orders compelling the production of documents
claimed to be protected by privilege or other confidentiality
interest, Glenmede and Pepper Hamilton chose not to seek a writ
of mandamus to prevent the production of the privileged Pepper
Hamilton documents, instead relying on the protection afforded by
the stipulated confidentiality agreement. See Bogosian v. Gulf
Oil Corp., 738 F.2d 587, 591 (3d Cir. 1985). We must ascertain
whether mandamus is an appropriate means of immediate appellate
review of an order compelling the production of privileged
documents after those documents have been produced to the
discovering party.
Glenmede and Pepper Hamilton properly exercised their
right to oppose the production of the privileged documents;
however, when faced with the choice of seeking immediate relief
through mandamus or producing the documents pursuant to the
stipulated confidentiality agreement, Glenmede and Pepper
Hamilton opted to produce the privileged documents. They relied
on the fact that the Thompson family had adhered to the terms of
the confidentiality agreement through the time of production and
the Thompson's representation to the district court that Glenmede
and Pepper Hamilton's concerns regarding public disclosure were
unwarranted in light of the protection afforded by that
agreement.11 The district court's subsequent denial of Glenmede
and Pepper Hamilton's request for a protective order to enforce
the umbrella of the confidentiality agreement stripped Glenmede
and Pepper Hamilton of all means of appellate review, except this
post-production mandamus petition, to remedy potential damage
from the public disclosure of the Pepper Hamilton documents.12
Hence, there are no other avenues of appellate review available
to Glenmede and Pepper Hamilton to attempt to protect the
privileged documents, which they produced in reliance on the
confidentiality agreement, from widespread dissemination. It is
in recognition of these unique circumstances that we proceed to
review whether there is a clear and indisputable right to the
writ regarding both the protective order and the order compelling
the production of the Pepper Hamilton files. See Cipollone, 785
F.2d at 1118.
11
. We appreciate that our decision in Pansy, decided
shortly after the production occurred, surprised many by our
questioning the judicial endorsement of broad confidentiality
agreements:
Disturbingly, some courts routinely sign
orders which contain confidentiality clauses
without considering the propriety of such
orders, or the countervailing public
interests which are sacrificed by the orders.
23 F.3d at 785.
12
. The protective order sought by Glenmede and Pepper
Hamilton and denied by the district court was to protect the
umbrella of confidentiality established by the confidentiality
agreement. The district court has not ruled on the
confidentiality of individual documents or categories of
documents. Thus, Glenmede and Pepper Hamilton may still seek a
protective order to maintain the confidentiality of specific
categories of documents or individual documents.
III.
The district court's denial of Glenmede and Pepper
Hamilton's request for a protective order was an exercise of the
district court's discretion. Mandamus is not available for abuse
of discretion but we may exercise mandamus jurisdiction regarding
the denial of a protective order if we find that the district
court committed a clear error of law. Cipollone, 785 F.2d at
1118. The district court applied Pansy v. Borough of
Stroudsburg, 23 F.3d 772 (3d Cir. 1994), and concluded that
public policy considerations strongly militated against judicial
sanctioning of the broad pre-Pansy confidentiality agreement
proffered by the parties. The district court did not commit a
clear error of law requiring our issuing a writ of mandamus.
A party seeking a protective order over discovery
materials must demonstrate that "good cause" exists for the
protection of that material. Fed. R. Civ. P. 26(c); Pansy, 23
F.3d at 786. "Good cause" is established when it is specifically
demonstrated that disclosure will cause a clearly defined and
serious injury. Id. Broad allegations of harm, unsubstantiated
by specific examples, however, will not suffice. Id. Glenmede
and Pepper Hamilton bore the burden of establishing "good cause"
to protect the umbrella of confidentiality established by the
confidentiality agreement.
In Pansy, we recognized several factors, which are
neither mandatory nor exhaustive, that may be considered in
evaluating whether "good cause" exists:
1) whether disclosure will violate any privacy
interests;
2) whether the information is being sought for a
legitimate purpose or for an improper purpose;
3) whether disclosure of the information will cause a
party embarrassment;
4) whether confidentiality is being sought over
information important to public health and safety;
5) whether the sharing of information among litigants
will promote fairness and efficiency;
6) whether a party benefitting from the order of
confidentiality is a public entity or official;
and
7) whether the case involves issues important to the
public;
23 F.3d at 787-91. Although we have recognized that the district
court is best situated to determine what factors are relevant to
the dispute, we have cautioned that the analysis should always
reflect a balancing of private versus public interests --
Discretion should be left with the court to
evaluate the competing considerations in
light of the facts of individual cases. By
focusing on the particular circumstances in
the cases before them, courts are in the best
position to prevent both the overly broad use
of [confidentiality] orders and the
unnecessary denial of confidentiality for
information that deserves it . . . .
Id. at 789 (quoting Arthur R. Miller, Confidentiality, Protective
Orders, and Public Access to the Courts, 105 Harv. L. Rev. 427,
492 (1991)).
We recognize the distinguishable factual context of
Pansy, from the facts of this appeal. In Pansy, a newspaper
sought access to a settlement agreement entered into between the
Borough of Stroudsburg and its former police chief who had sued
the Borough after being demoted and suspended for allegedly
mishandling parking meter money. 23 F.3d at 776. The public
interest in Pansy was "particularly legitimate" given that one of
the parties to the action was a public entity. Id. at 786. The
public interest in access to information under freedom of
information laws was the overriding factor that tipped the
balance in favor of not granting a confidentiality order which
would prevent disclosure pursuant to freedom of information laws.
Id. at 791-92. Here, Glenmede and Pepper Hamilton assert that
there is no legitimate public interest to be served by widespread
dissemination of the Pepper Hamilton documents. See Pansy, 23
F.3d at 788 ("[I]f a case involves private litigants, and
concerns matters of little legitimate public interest, that
should be a factor weighing in favor of granting or maintaining
an order of confidentiality."). They contend they will be harmed
by the Thompson family's disclosure of the privileged documents
to other Glenmede clients who were excluded from the transaction
and to the media. They are unable, however, to articulate any
specific, cognizable injury from that dissemination.
Under Pansy, "[b]road allegations of harm,
unsubstantiated by specific examples or articulated reasoning" do
not support a good cause showing. Id. at 786. Glenmede and
Pepper Hamilton do not describe their harm other than in
generalized allegations of injury to reputation and to
relationships with clients. For instance, Glenmede and Pepper
Hamilton assert that the Thompsons' primary goal in reversing
their position on confidentiality "is to publicize their
allegations of a scheme between Glenmede and [Pepper Hamilton] in
order to maximize the embarrassment and potential economic damage
which such averments could generate to those institutions'
relationships with their clients and the public." Petition at
30. General allegations of injury to reputation and client
relationships or embarrassment that may result from dissemination
of privileged documents is insufficient to justify judicial
endorsement of an umbrella confidentiality agreement.13 We have
13
. Moreover, the record of this case compels us to deny
the requested writ despite our recognition of the importance of
protecting the attorney-client privilege. See Haines v. Liggett
Group Inc., 975 F.2d 81, 90 (3d Cir. 1992). We reiterate that
the district court was never asked to perform an in camera
inspection of any of the documents in conjunction with the
request for protective order. In fact, when the district court
requested that the parties segregate the documents into separate
categories for consideration of confidentiality, the parties were
unable to agree. Nor did Glenmede and Pepper Hamilton seek a
protective order for specific documents that may prove harmful to
their client relationships and/or reputations. As the district
court noted:
[Glenmede and Pepper Hamilton] do not seek a
Confidentiality Order. Rather they seek to
protect the confidentiality agreement
stipulated to by the parties. An "umbrella"
of confidentiality already exists, but now
the defendants must show good cause for
protecting that confidentiality agreement.
December 2, 1994 Memorandum and Order at 5.
At oral argument, we questioned whether Glenmede and
Pepper Hamilton may seek relief through an independent breach of
contract action stemming from the Thompson family's public
dissemination of the file documents. (The only disclosure to
date by the Thompson family of which we are aware was to aid the
filing of a separate action by a similarly-situated plaintiff.)
typically viewed the "embarrassment" factor in terms of non-
pecuniary harm to individuals; however, the primary measure of
the well-being of a business is pecuniary. See Cipollone, 785
F.2d at 1121. Glenmede and Pepper Hamilton have failed to
sustain their burden of demonstrating they will sustain a
specific injury from the public dissemination of the privileged
documents sufficient to warrant the entry of an umbrella
protective order.
In Pansy, we emphasized the strong public interest in
open proceedings. See 23 F.3d 772. See also Miller v. Indiana
Hosp., 16 F.3d 549, 551 (3d Cir. 1994) ("While we have recognized
that there are certain delineated areas where openness is not the
norm . . . [citations omitted], these cases are the exception.").
The allegations lodged against Glenmede stemming from its
involvement in the buy-back transaction impact the claims or
potential claims of other Glenmede clients who were excluded from
the transaction. Federal courts should not provide a shield to
potential claims by entering broad protective orders that prevent
public disclosure of relevant information. The sharing of
information among current and potential litigants is furthered by
open proceedings. See Pansy, 23 F.3d at 787 ("Circumstances
(..continued)
Pepper Hamilton, however, conceded at oral argument that the
Thompson family's challenge to the confidential designation
affixed to the file documents comported with the literal terms of
the agreement, if not with the spirit of the agreement. The
agreement contemplated challenges to the confidential designation
of documents; however, neither Pepper Hamilton nor Glenmede
anticipated a wholesale challenge to confidentiality of the
Pepper Hamilton file.
weighing against confidentiality exist when confidentiality is
being sought over information important to public health and
safety [citation omitted], and when the sharing of information
among litigants would promote fairness and efficiency [citation
omitted]."). Absent a showing that a defined and serious injury
will result from open proceedings, a protective order should not
issue.14
Despite Glenmede and Pepper Hamilton's arguments to the
contrary, the district court was not required to enter a
protective order merely to preserve for appellate review its
determinations that an exception to the attorney-client privilege
applied. We have previously recognized the importance of
preserving the right to appeal a determination that an exception
to the attorney-client privilege applies prior to public
disclosure of the privileged information. In Haines we stated:
Because of the sensitivity surrounding the
attorney-client privilege, care must be taken
that, following any determination that an
exception applies, the matters covered by the
exception be kept under seal or appropriate
court-imposed privacy procedures until all
avenues of appeal are exhausted.
975 F.2d at 97. We did not intend, however, to establish a
steadfast rule that protective orders must always issue to
protect the privileged character of the materials sought in
discovery until all avenues of appeal, including appeal from a
14
. Because it is unnecessary to our decision, we do not
comment as to whether Glenmede and Pepper Hamilton would succeed
in obtaining a protective order regarding specific documents
contained in the Pepper Hamilton file.
final judgment, are exhausted. Requiring the issuance of a
protective order in all circumstances where a district court has
determined that an exception to the attorney-client privilege
applies thwarts our policy of open proceedings absent a showing
of good cause to close them. See Pansy, 23 F.3d 772; Miller, 16
F.3d 549. Such a rule would be tantamount to permitting the
parties to control the use of protective orders.15 This is
especially evident where, as here, the party asserting the
privilege chooses to forego, until final judgment, appellate
review of the district court's determination that an exception to
the attorney-client privilege applies.
The unique evolution of events in this case, however,
bids us to review the district court's determination as to the
scope of Glenmede's waiver of the attorney-client privilege. We
recognize that the district court's denial of the protective
order subsequent to the production of the Pepper Hamilton file
15
. On March 14, 1995, the Judicial Conference of the
United States rejected a proposed amendment to Federal Rule of
Civil Procedure 26(c) that provides in part that: "the court . .
. may, for good cause shown or on stipulation of the parties,
make any order that justice requires to protect a party or person
from annoyance, embarrassment, oppression, or undue burden or
expense. . . ." (Emphasis in original). In addition, the
proposed rule would add a new section 26(c)(3) that provides a
means for modification or dissolution of a protective order on
motion of a party, a person bound by it or a person who has been
permitted to intervene to seek modification or dissolution. The
Judicial Conference recommitted the proposed amendments to Rule
26(c) to the Rules Committee for further study. Judicial
Conference of the United States, Preliminary Report Judicial
Conference Actions, March 14, 1995; Committee on Rules of
Practice and Procedure of the Judicial Conference of the United
States, Report of Advisory Committee on Civil Rules, December 13,
1994.
jeopardized Glenmede and Pepper Hamilton's ability to remedy on
appeal from final judgment the harm, if any, they may suffer as a
result of the public dissemination of the privileged materials.
This turn of events places Glenmede and Pepper Hamilton in the
unfortunate and unforeseeable position of seeking post-production
mandamus relief from the disclosure of privileged information.
IV.
The attorney-client privilege16 may be waived by a
client who asserts reliance on the advice of counsel as an
affirmative defense. See Rhone-Poulenc Rorer, 32 F.3d at 863.
Under such circumstances, the client has made a conscious
decision to inject the advice of counsel as an issue in the
litigation. Id. Although we recognized these propositions in
16
. Communications that may be protected from disclosure
during discovery because of the attorney-client privilege possess
the following characteristics:
(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.
Rhone-Poulenc Rorer Inc. v. Home Indemnity Co., 32 F.3d 851, 862
(3d Cir. 1994).
Rhone-Poulenc, our holding in that case -- that a party does not
lose the privilege to protect attorney-client communications from
disclosure in discovery when his or her state of mind is placed
at issue -- was premised upon the unique facts of that case. 32
F.3d 864. In Rhone-Poulenc, advice of counsel was not raised as
an affirmative defense nor were there any acts evincing a clear
intent to waive the attorney-client privilege by placing at issue
reliance on the advice of counsel. Here, Glenmede raised
reliance on the advice of counsel regarding what parties should
be included in the buy-back transaction as an affirmative defense
to the Thompson family's claims and voluntarily produced the
Opinion Letter and a draft of it in response to discovery
requests.
Glenmede and Pepper Hamilton concede that Glenmede
waived the attorney-client privilege regarding the Opinion Letter
and any communications between itself and Pepper Hamilton
pertaining to that letter. They object, however, to the district
court's conclusion that Glenmede's waiver of the attorney-client
privilege encompassed the entire buy-back transaction, including
internal Pepper Hamilton back-up documents to the Opinion Letter
that were never communicated to Glenmede. They submit that it
was clear error for the district court to expand the waiver
beyond the confines of the issue addressed in the Opinion Letter
to all communications, whether written or oral, to or from
counsel concerning the buy-back transaction.17
17
. We note that Glenmede and Pepper Hamilton base their
argument for our finding a limited waiver of the attorney-client
There is an inherent risk in permitting the party
asserting a defense of its reliance on advice of counsel to
define the parameters of the waiver of the attorney-client
privilege as to that advice. That party should not be permitted
to define selectively the subject matter of the advice of counsel
on which it relied in order to limit the scope of the waiver of
the attorney-client privilege and therefore the scope of
discovery. To do so would undermine the very purpose behind the
exception to the attorney-client privilege at issue here --
fairness.
The party opposing the defense of reliance on advice of
counsel must be able to test what information had been conveyed
by the client to counsel and vice-versa regarding that advice --
whether counsel was provided with all material facts in rendering
their advice, whether counsel gave a well-informed opinion and
whether that advice was heeded by the client. See In re ML-Lee
Acquisition Fund II, L.P., 859 F. Supp. 765, 767 (1994). Here,
the advice that Glenmede placed at issue related to the structure
of the transaction -- the identity of the parties and how many of
their shares would be repurchased by Oryx. In fact, the Opinion
Letter indicates that Glenmede requested advice "concerning the
inclusion of certain private trusts and estates in transactions."
(..continued)
privilege exclusively on the confines of the attorney-client
privilege; they do not rely on the separate attorney work product
doctrine to prevent the disclosure of Pepper Hamilton's internal
file documents. See, e.g., Sporck v. Peil, 759 F.2d 312 (3d
Cir.), cert. denied, 474 U.S. 903 (1985); Bogosian v. Gulf Oil
Corp., 738 F.2d 587 (3d Cir. 1984).
Testing the advice of counsel defense regarding why only the Pew
Charitable Trusts were included in the transaction necessarily
encompasses, as Glenmede acknowledges, more than tax advice. We
agree with the district court that Glenmede waived the attorney-
client privilege as to all communications, both written and oral,
to or from counsel as to the entire transaction.
We also agree that Glenmede's waiver encompasses the
back-up documents to the Opinion Letter, which include Pepper
Hamilton's internal research and other file memoranda.18 A
review of these internal documents may lead to the discovery of
admissible evidence regarding what information had been conveyed
to Glenmede about the structure of the buy-back transaction and
the advice of counsel in that regard. Because it is unnecessary
to our holding, we do not determine whether such documents are
relevant for any purpose other than the fact that they may lead
to the discovery of admissible evidence.19
V.
18
. We again note that Pepper Hamilton has not asserted
that these internal file memoranda are protected by the work
product doctrine, which would have required a different analysis
by the district court.
19
. We again note that Pepper Hamilton and Glenmede may
possess other means to protect the confidentiality of some of
these internal documents. They have never sought a protective
order respecting specific internal memoranda that, though
relevant for discovery purposes, may reveal information, such as
clients of Glenmede and Pepper Hamilton or financial information
not relevant to the dispute, that is not of public import.
We also deny Glenmede and Pepper Hamilton's request for
a writ sealing district court opinions and a hearing transcript
and removing all opinions and pleadings referencing the Pepper
Hamilton documents from public access. As we have previously
recognized, the right of access to judicial records is beyond
dispute. See Miller, 16 F.3d at 551; Leucadia, Inc. v. Applied
Extrusion Technologies, Inc., 998 F.2d 157 (3d Cir. 1993). As we
held above, we find that the district court did not err in its
rulings as to the scope of Glenmede's waiver of the attorney-
client privilege and the denial of a protective order requesting
an umbrella of confidentiality for the Pepper Hamilton documents.
Thus, we must also deny Glenmede and Pepper Hamilton's request
for mandamus relief from the dissemination of the Pepper Hamilton
file documents through public access to judicial records.
VI.
For the foregoing reasons, we will deny the requested
writs of mandamus.
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