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Nesselrotte v. Allegheny Energy

July 22, 2008

TONI M. NESSELROTTE, PLAINTIFF,
v.
ALLEGHENY ENERGY, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM OPINION and ORDER

Pending before this Court is a determination of the applicability of the attorney-client privilege as well as other related matters precipitated by Defendants' Motion for Submission of Documents Under Seal and Incorporated Memorandum of Law [91], filed by Defendants Allegheny Energy Inc., Allegheny Energy Service Corporation, and David B. Hertzog ("Defendants") on December 6, 2007. Accordingly, over the ensuing six months, the parties provided the Court with extensive briefing, the Court held two hearings, the Court referred the matter to a Special Master, the parties filed responses to said Master's Report and Recommendation, and the Court conducted its own in camera review, all culminating in the instant Memorandum Opinion and Order.

At the outset, the Court wishes to highlight the import of the matters raised here, namely the application of attorney client privilege and the work product doctrine. While countless courts have opined on the sanctity of the privileges, in a case involving a corporate general counsel's (attorney) retaliation lawsuit against a former employer (client), the Court eloquently and concisely ruminated on the significance of the attorney client relationship:

The attorney/client relationship is one that is highly valued by society and protected in the law. The relationship between lawyer and client is as sensitive a relationship as can exist and demands absolute confidence on the part of the client in order to thrive.

Klages v. Sperry Corp., No. 83-3295, 1984 WL 49135 (D.C. Pa. 1984). Here, it is beyond dispute that the lawyer (Plaintiff) breached that confidence.

FACTUAL BACKGROUND

This action stems from Plaintiff's former employment with Defendants as a senior in-house attorney in their legal department,*fn1 which ended with her termination on October 31, 2004. On October 11, 2004, Defendant Allegheny Energy notified Plaintiff of her termination from her employment with Allegheny Energy, effective October 31, 2004. Thereafter, and potentially until her last day of employment,*fn2 Plaintiff copied and removed hundreds of documents from Allegheny premises ("Allegheny documents"), which are the subject of the instant motion.*fn3

On October 16, 2006, Plaintiff filed a Complaint in this Court, alleging discrimination and retaliation under the Age Discrimination in Employment Act of 1967 ("ADEA"), as amended, 29 U.S.C. § 621, et seq., Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e, et seq., and the Pennsylvania Human Relations Act ("PHRA"), 43 P.S. § 951, et seq. Specifically, Plaintiff pleads five counts: (1) age discrimination under the ADEA against the Allegheny Defendants; (2) retaliation under the ADEA against the Allegheny Defendants; (3) gender discrimination under Title VII against the Allegheny Defendants; (4) discrimination and retaliation under the PHRA against the Allegheny Defendants; and (5) discrimination and retaliation under the PHRA against Defendant Hertzog. On October 30, 2007, after the Court granted in part and denied in part Defendants' Motion for Leave to File Amended Answer and Counterclaims, (see Docket No. 73), Defendants filed Defendants' First Amended Answer and Counterclaims, (see Docket No. 75), in which they added counterclaims for breach of common law fiduciary duty and breach of contract. In their counterclaims, based on Plaintiff's removal of confidential, proprietary, and attorney-client privileged information from Allegheny Energy without authorization, Defendants allege that Plaintiff breached her fiduciary duty to Allegheny Energy (Count 1) and violated Allegheny Energy's Code of Business Conduct and Ethics ("Ethics Code") and Employee Confidentiality Agreement ("Confidentiality Agreement") (Count 2).*fn4 Thereafter, the Court granted Defendants' Motion for Reconsideration adding the affirmative defense of after-acquired evidence, (see Docket No. 88), and Defendants filed Defendants' Third Amended Answer and Counterclaims to Plaintiff's Amended Complaint, (see Docket No. 92).

On November 2, 2007, Plaintiff filed a Motion for Protective Order (Docket No. 77), which the Court granted on November 16, 2007 (Docket No.85). In said Order, the Court ordered Plaintiff as well as Plaintiff's counsel to produce all Allegheny documents in her/their custody by November 26, 2007. (Docket No. 85). On November 21, 2007, Plaintiff filed a Motion for Reconsideration as to the Court's November 16, 2007 Order, (Docket No. 87), which the Court denied on December 4, 2007 and ordered the Plaintiff to comply with said Order within seven days. (Docket No. 90).

PROCEDURAL BACKGROUND

On December 6, 2007, Defendants filed the instant motion (Docket No. 91). On December 17, 2007, Plaintiff filed Plaintiff's Brief in Opposition to Defendants' Motion for Submission of Documents Under Seal and Incorporated Memorandum of Law (Docket No. 93). On December 19, 2007, the parties filed a Consented Request for Oral Argument Regarding Defendants' Motion for Submission of Documents Under Seal, (Docket No. 96), which the Court granted the next day and set for oral argument. On January 14, 2008, Defendants filed Defendants' Reply Brief in Support of Motion for Submission of Documents Under Seal (Docket No. 102). On January 17, 2008, the Court held a motion hearing, at which counsel for the Defendants orally requested an in camera review of specified documents as to the applicability of the attorney-client privilege, which the Court construed as a motion for determination of privilege. (See Docket No. 103). At the hearing, Defendants submitted to the Court as well as to Plaintiff a Declaration of David M. Feinberg*fn5 and a Privilege Log*fn6 and the Court set a deadline for Plaintiff's response. The Court adjourned the hearing until March 7, 2008.

Given the nature of the dispute and recognizing the ability of the Special Master ultimately appointed with consent of counsel, on January 25, 2008, the Court issued an Order referring the matter to a Special Master (William Pietragallo, II),*fn7 in order to inform the Court as to the "applicability of the attorney client privilege and/or the work product doctrine to certain documents in dispute." (Docket No. 105 at 1).*fn8 The Court ordered the parties to share the costs of the special master.

On February 15, 2008, the Special Master held a proceeding with the parties and their counsel in attendance, at which the Special Master outlined the scope of his assignment and counsel argued their respective positions.*fn9

On February 19, 2008, Plaintiff filed Plaintiff's Response to Defendants' Privilege Log Dated January 16, 2008 (Docket No. 110).

On or about February 25, 2008, the Court received a Report and Recommendation of the Special Master.*fn10 The Special Master also provided copies of his Report and Recommendation to the parties through counsel. On February 29, 2008, Defendants filed Defendants' Response to Report and Recommendation of Special Master (Docket No. 117). On March 3, 2008, Plaintiff filed Plaintiff's Response and Objections to Special Master William Pietragallo's Report and Recommendation (Docket No. 120). On the same day, Defendants filed Defendants' Reply Brief in Support of the Declaration of David M. Feinberg and Attached Privilege Logs (Docket No. 119).

On March 7, 2008, the Court held another motion hearing, at which the Court heard continued argument on the pending motion for determination of privilege as well as the ...


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