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Nesselrotte v. Allegheny Energy

July 23, 2008


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


On October 11, 2004, Defendant Allegheny Energy notified Plaintiff, an in-house attorney, of her termination from her employment with Allegheny Energy, effective October 31, 2004. Thereafter and until her last day of employment,*fn1 Plaintiff copied and removed hundreds of documents ("Allegheny documents").*fn2

Pending before the Court for consideration is a Motion for Monetary Sanctions and for Disqualification of Plaintiff's Counsel [115], filed by Defendants, Allegheny Energy Inc., Allegheny Energy Service Corporation and David B. Hertzog ("Defendants"), in which they request disqualification of Plaintiff's counsel as well as monetary sanctions and attorneys' fees and costs based on "his unethical conduct in failing to alert Allegheny of his possession--for nearly 3 years--of Allegheny's privileged documents." (Docket No. 115 at 7). For the following reasons, the Court denies Defendants' motion.


Defendants filed the instant motion on February 26, 2008. After the Court granted her an extension of time to respond, on March 14, 2008, Plaintiff Nesselrotte filed Plaintiff's Memorandum of Law in Opposition to Defendants' Motion for Monetary Sanctions and Disqualification of Plaintiff's Counsel (Docket No. 155). On March 17, 2008, Defendants filed Defendants' Supplement to Motion for Monetary Sanctions and for Disqualification of Plaintiff's Counsel (Docket No. 156) and the Declaration of John Kostuch in support of their motion (Docket No. 157). On March 24, 2008, Defendants filed Defendants' Reply in Support of Motion for Monetary Sanctions and Disqualification of Plaintiff's Counsel (Docket No. 161). On March 31, 2008, in line with the Court's March 25, 2008 Order, (Docket No. 164), Defendant filed a Notice of Filing Privileged and/or Confidential Exhibits Under Seal. (See Docket No. 171). On April 1, 2008, Plaintiff filed Plaintiff's Brief in Opposition to Defendants' Supplement to Motion for Monetary Sanctions and for Disqualification of Plaintiff's Counsel (Docket No. 172). On April 9, 2008, Defendants filed Defendants' Reply in Support of Supplemental Motion for Monetary Sanctions and Disqualification of Plaintiff's Counsel. On April 23, 2008, the Court held a motion hearing, in which it heard oral argument on the pending motion.*fn3 At the conclusion of the hearing, the Court instructed the parties to meet and attempt to agree as to the exhibits presented at the hearing (all from the Defendants). (See Transcript at 207:10-14). Thereafter, on April 29, 2008, Defendants filed their Notice of Filing Exhibits Used at the April 23, 2008 Hearing, in which they attached a complete set of the demonstrative exhibits presented at the hearing but indicated that the Plaintiff did not consent to the Notice. (Docket No. 185). Thus, on April 30, 2008, Plaintiff filed a Motion for Leave to File Response to Defendants' Exhibits (Docket No. 187), which the Court granted on the same day and instructed Plaintiff to file her response on or before May 9, 2008 (Docket No. 188). Thereon, Plaintiff filed Plaintiff's Response to Defendants' Exhibits, in which she, in her words, seeks to place the exhibits in their "proper context." (Docket No. 191 at 1). On May 12, 2008, Defendants filed another Notice of Filing, to which they attached copies of the Pennsylvania Rules of Professional Conduct, including current versions as well versions in effect in 2004. (Docket No. 192). Lastly, on May 16, 2008, Plaintiff filed certain exhibits under seal (specifically, exhibits C, D, F, G, L, M, N, O), (see Docket No. 193), which the Court had previously granted her leave to do. Needless to say, the instant motion is fully briefed and ripe for disposition.


Defendants request the following in terms of relief: (1) disqualify Plaintiff's counsel from further representation of Plaintiff in this case; (2) require Plaintiff and her counsel, jointly and severally, to reimburse Defendants for fees and costs relating to this case dating back to May of 2007; and (3) prohibit Plaintiff's counsel from seeking recovery from Defendant of any fees and costs "expended by Plaintiff's counsel in responding to or otherwise attempting to thwart through motion practice the return of Allegheny's privileged and confidential documents to Allegheny." (Docket No. 115 at 16). The Court shall consider Defendants' motion in this manner.

However, before addressing the merits of Defendants' requested relief, the Court first wishes to address three arguments proffered by Plaintiff, which, in the Court's estimation, fail to directly speak to the issue of disqualification: (1) Defendants have conceded that Plaintiff's use of privileged documents is "proper" and hence, the doctrine of judicial estoppel prohibits Defendants from asserting a contrary position at this point; (2) the prior presiding Judge's decision on a motion to compel represents the law of the case which prevents Defendants from relitigating the issue here; and (3) Rule 1.6 of the Code of Professional Conduct allowed Plaintiff to disclose privileged documents. (See generally Docket No. 155 at 2-12).*fn4

First, Plaintiff asserts that Defendants have adopted two "inconsistent" positions and thus, the doctrine of judicial estoppel prevents Defendant from arguing the latter. Specifically, the two purported "inconsistent" positions are as follows: (1) Rule 1.6(c) of the Rules of Professional Conduct trumps the attorney-client privilege, allegedly asserted by counsel for Defendants during the deposition of David Williams and subsequently, to the Court during oral argument arising out of the same deposition on August 21, 2007, (Docket No. 155 at 3); and, (2) Defendants' current position, namely that "Rule 1.6 provides no relief to Plaintiff as it relates to her taking of and use of what otherwise may be privileged documents," (Docket No. 155 at 4). While the Court agrees that the latter represents Defendants' position (in some form), the complete context of the former demonstrates that counsel for Defendants' recitation as to Rule 1.6 constituted an explanation of Plaintiff's position, not Defendants' position:

So, Your Honor, with regard, you know, whether they were on notice and whether we've always asserted the privilege, there's no dispute here whatsoever that we've always asserted and have maintained the privilege.

What they [i.e., Plaintiff and her counsel] are falling under, Your Honor, is a rule which we have also put before you, which is Rule 1.6, Confidentiality of Information, and for an attorney, in this case the Plaintiff, Ms. Nesselrotte, in a case where the attorney is preparing her case, matters that are necessary for the presentation of her case, that that trumps the privilege. (Deposition of David Williams at 37:15-22). At best, Plaintiff's argument is without merit.

Second, Plaintiff asserts that the doctrine of the "law of the case" prevents Defendants from relitigating "the merits of Defendants' argument that Plaintiff and her counsel engaged in wrongdoing as it relates to the documents that Plaintiff copied and retained from her employment at Allegheny Energy." (Docket No. 155 at 6). Specifically, Plaintiff relies on the July 23, 2007*fn5 Order (Docket No. 48), denying Defendants' Motion to Compel Responses to Certain Interrogatories and Requests for Production of Documents (Docket No. 44). According to Plaintiff, because the Court denied Defendants' request to return all copies of documents that she removed from her employment, said Order represents the law of the case and Defendants may not relitigate this issue. (See Docket No. 155 at 5-7). This argument fails for three reasons. First, at the most basic level, the merits of the instant motion were not briefed or ruled upon by the Court in the July 23, 2007 Order in any meaningful way whatsoever. Second, while Defendants' motion to compel touched on Plaintiff's removal of documents and requested the return of the same, (see Docket No. 45 at 10-11), as this Court has previously noted, (see Docket No. 73, at 8 n.8), Defendants did not finish the deposition of the Plaintiff until August 20, 2007, more than two months after they filed the motion to compel. Thus, the prior Judge did not have the benefit of all of the facts depicting the Plaintiff's conduct. And third, even in light of the July 23, 2007 Order, the Court ordered Plaintiff (and her counsel) to submit to it all Allegheny Energy documents in her custody. (See Docket No. 85). Upon reconsideration, the Court addressed and rejected the precise argument raised here, noting (1) no conflict exists between the Court's July 23, 2007 Order (denying the motion to compel) and the Court's November 16, 2007 Order (instructing Plaintiff to submit all Allegheny Energy documents to the Court), and, to the extent a conflict exists, (2) the circumstances occurring after July 23, 2007, in particular the conclusion of Plaintiff's deposition and the filing of counterclaims by the Defendants, provide ample grounds for the Court's latter order. (See Docket No. 90). In other words, the Court has previously rejected Plaintiff's "law of the case" argument and the Court does so again here.

Third and finally, Plaintiff's argument regarding Rule 1.6(c)(4) misses the point of Defendants' motion for disqualification. At issue in the pending motion is Plaintiff's removal of documents and Plaintiff's counsel retention of said documents for over three years, until ordered otherwise by the Court. In raising the application of Rule 1.6(c)(4) here, Plaintiff seeks to argue the convergence of Rule 1.6(c)(4) and the attorney-client privilege. While Plaintiff attempts to blur the line between (1) her decision to remove documents and her counsel's retention of the same and (2) whether Rule 1.6 trumps the attorney-client privilege, the Court sees a clear distinction between the two inquiries. The Court reads Defendants' instant motion as challenging Plaintiff's method of removal of documents and counsel for Plaintiff's retention of the same, not the ...

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