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Southeastern Pennsylvania Transportation Authority v. Caremarkpcs Health

December 9, 2008


The opinion of the court was delivered by: L. Felipe Restrepo United States Magistrate Judge


Before the Court is Defendant CaremarkPCS Health, L.P.'s ("Caremark") Memorandum of Law (Doc. No. 105) objecting to the production of certain documents pursuant to the attorney-client privilege. See Def.'s Mem. 1. Caremark's in-house attorney that worked on the contract at issue in this litigation, Sara Hankins, Esquire, has submitted an affidavit in support of Defendant's position. (Doc. No. 110). See Hankins Aff. ¶ 4. Caremark maintains that all communications at issue were "authored for the primary purpose of both obtaining and providing legal advice relative to the contract," and that all individuals involved in the communications were "directly involved in at least some aspect of the negotiation or finalization of the SEPTA contract." Def.'s Mem. 2, 5-6.

Plaintiff Southeastern Transportation Authority's ("SEPTA") Letter Memorandum (Doc. No. 106) argues that the documents are not privileged. See Pl.'s Mem. 1. SEPTA seeks production of e-mail strings, memoranda, and draft documents sent between those Caremark employees who worked on the SEPTA account and contract negotiations and Caremark's in-house counsel and paralegal responsible for providing legal advice on the SEPTA contract.*fn1 See Def.'s Amended Supp. Priv. Log. SEPTA argues that the "primary purpose" of these communications between business personnel and in-house legal staff was to obtain business advice, not legal advice and contends that in some cases, any potential privilege was waived because the documents were too widely disseminated. See Pl.'s Mem. 3-4, 6-8, 10, 12-13.

The Court finds that Caremark has satisfied its burden of proving that the documents are covered by the attorney-client privilege and need not be produced. The Court has reviewed these documents in camera, and will explain the application of the attorney-client privilege to each document below.*fn2


"Pennsylvania privilege law governs this dispute because the underlying action arises under Pennsylvania law." Santer, 2008 U.S. Dist. LEXIS 23364, at *2 (citing Fed. R. Evid. 501; Montgomery County v. Microvote Corp., 175 F.3d 296, 301 (3d Cir. 1999)). In Pennsylvania, the following elements must be met in order for a party to successfully assert the attorney-client privilege:

(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.

Santer, 2008 U.S. Dist. LEXIS 23364, at *2 (quoting Rhone-Poulenc Rorer v. Home Indem. Co., 32 F.3d 851, 862 (3d Cir. 1994)). The two disputed issues in the present case are whether the contested communications were made primarily to secure legal advice and whether the privilege was waived with respect to certain documents. See e.g., Pl.'s Mem. 1, 6, 8.

The attorney-client privilege has historically been applied only to "communications from a client to an attorney," but "Pennsylvania courts have... developed a corollary doctrine covering communications from an attorney to a client when such communications reflect the communications from the client to the attorney." Santer, 2008 U.S. Dist. LEXIS 23364, at *4-5 n.3 (citations omitted); see also Ford, 110 F.3d at 965 ("the entire discussion between a client and an attorney undertaken to secure legal advice is privileged, no matter whether the client or the attorney is speaking."). Communications with the subordinate of an attorney, such as a paralegal, are also protected by the attorney-client privilege so long as the subordinate is "acting as the agent of a duly qualified attorney under circumstances that would otherwise be sufficient to invoke the privilege." Dabney v. Investment Corp. of America, 82 F.R.D. 464, 465 (E.D. Pa. 1979) (citing 8 Wigmore, Evidence § 2301 (McNaughton Rev. 1961)).

The fact that the client is a corporation does not vitiate the attorney-client privilege. Kramer v. Raymond Corp., 1992 U.S. Dist. LEXIS 7418, at *2-3 (E.D. Pa. May 26, 1992) (citing Upjohn Co. v. United States, 449 U.S. 383, 389-90 (1981)). "[T]he privilege applies to communications by a corporate employee concerning matters within the scope of his duties purposefully made to enable an attorney to provide legal advice to the corporation." AAMCO Transmissions, Inc. v. Marino, 1991 U.S. Dist. LEXIS 13326, at *8 (E.D. Pa. Sept. 23, 1991) (citing Upjohn, 449 U.S. 383; Admiral Ins. Co. v. United States Dist. Court, 881 F.2d 1486, 1492 (9th Cir. 1989)). "Likewise, it is clear that the privilege may apply where the communication is to in-house counsel rather than to outside counsel retained for a particular matter." Kramer, 1992 U.S. Dist. LEXIS 7418, at *3 (citing Upjohn, 449 U.S. at 394-95). The "primary purpose" of the communication at issue must be "to gain or provide legal assistance" for the privilege to apply due to the fact that "in-house counsel may play a dual role of legal advisor and business advisor." Kramer, 1992 U.S. Dist. LEXIS 7418, at *3. In this regard, the Third Circuit has held that even when "the decision include[s] consideration of" various business concerns, the attorney-client privilege still applies to the communications if the decision "was infused with legal concerns and was reached only after securing legal advice." Faloney, 2008 WL 2631360, at *5 (quoting Ford, 110 F.3d at 966).

"[T]he'scope of an individual's employment is... highly relevant to the question of maintenance of confidentiality.'" Smithkline Beecham Corp. v. Apotex Corp., 232 F.R.D. 467, 476 (E.D. Pa. 2005) (quoting Smithkline Beecham Corp. v. Apotex Corp., 193 F.R.D. 530, 539 (N.D. Ill. 2000)). "The communications retain their privileged status if they [sic] information is relayed to other employees of officers of the corporation on a need to know basis." Andritz Sprout-Bauer, Inc. v. Beazer East, Inc., 174 F.R.D. 609, 633 (M.D. Pa. 1997). As such, "[t]he'privilege is waived if the communications are disclosed to employees who did not need access to' them." Smithkline, 232 F.R.D. at 476 (quoting Baxter Travenol Lab. v. Abbott Lab., 1987 U.S. Dist. LEXIS 10300, at *14 (N.D. Ill. June 17, 1987)); see also Andritz, 174 F.R.D. at 633 ("Only when the communications are relayed to those who do not need the information to carry out their work or make effective decisions on the part of the company is the privilege lost." (citing In re Grand Jury 90-1, 758 F. Supp. 1411 (D. Colo. 1991))).

It is important to note that the attorney-client privilege usually protects "the communications themselves." Andritz, 174 F.R.D. at 633. However, "[d]ocuments sent to or prepared by counsel incorporating such information for the purpose of obtaining or giving legal advice, planning trial strategy, etc. are protected from compelled disclosure[,]" but "[t]o the extent that purely factual material can be extracted from privileged documents without divulging privileged communications, such information is obtainable." Id. Additionally,

[d]rafts of documents prepared by counsel or circulated to counsel for comments on legal issues are considered privileged if they were prepared or circulated for the purpose of giving or obtaining legal advice and contain information or comments not included in the final version. Allegheny Ludlum Corp. v. Nippon Steel Corp., 1991 U.S. Dist. LEXIS 5173, 1991 WL 61144 at *5 (E.D. Pa. Apr. 15, 1991). "Preliminary drafts of contracts are generally protected by attorney/client privilege, since'[they] may reflect not only client confidences, but also legal advice and opinions of attorneys, all of which is protected by the attorney/client privilege.'" Muller v. Walt Disney Productions, 871 F. Supp. 678, 682 (S.D.N.Y. 1994), quoting Schenet v. Anderson, 678 F. Supp. 1280, 1284 (E.D. Mich. 1988). See also: Upsher-Smith Laboratories, Inc. v. Mylan Laboratories, Inc., 944 F. Supp. 1411, 1444-45. Compare: United States Postal Service v. Phelps Dodge Refining Corp., 852 F. Supp. 156, 163 (E.D.N.Y. 1994).

Id. (emphasis added).

"A document need not be authored or addressed to an attorney in order to be properly withheld on attorney-client privilege grounds." Smithkline, 232 F.R.D. at 477 (quoting Santrade, Ltd. v. General Elec. Co., 150 F.R.D. 539, 545 (E.D. N.C. 1993)). When the client is a corporation, "privileged communications may be shared by non-attorney employees in order to relay information requested by attorneys." Smithkline, 232 F.R.D. at 477 (citing Santrade, 150 F.R.D. at 545). Additionally, "documents subject to the privilege may be transmitted between non-attorneys... so that the corporation may be properly informed of legal advice and act appropriately." Smithkline, 232 F.R.D. at 477 (quoting Santrade, 150 F.R.D. at 545). Furthermore, the privilege may also extend to certain "documents, [that] while not involving employees assisting counsel, still reflect confidential communications between client and counsel or subordinates of counsel for the purpose of either (1) providing legal services or (2) providing information to counsel to secure legal services." Smithkline, 232 F.R.D. at 477 (citing Cuno, Inc. v. Pall Corp., 121 F.R.D. 198, 202 (E.D.N.Y. 1988)).

However, the "attorney-client'privilege does not shield documents merely because they were transferred to or routed through an attorney.'" Smithkline, 232 F.R.D. at 478 (quoting Resolution Trust Corp. v. Diamond, 773 F. Supp. 597, 600 (S.D.N.Y. 1991)). "What would otherwise be routine, non-privileged communications between corporate officers or employees transacting the general business of the company do not attain privileged status solely because in-house or outside counsel is'copied in' on correspondence or memoranda." Smithkline, 232 F.R.D. at 478 (quoting Andritz, 174 F.R.D. at 633). Therefore, in order to successfully assert the attorney-client privilege, the corporation "must clearly demonstrate that the communication in question was made for the express purpose of securing legal not business advice." Marino, 1991 U.S. Dist. LEXIS 13326, at *9 (citing Teltron, Inc. v. Alexander, 132 F.R.D. 394, 396 (E.D. Pa. 1990); Avianca, Inc. v. Corriea, 705 F. Supp. 666, 676 (D.D.C. 1989)).

The party asserting the attorney-client privilege "bears the burden of proving that it applies to the communication at issue." Sampson v. Sch. Dist. of Lancaster, 2008 WL 4822023, at *3 (E.D. Pa. Nov. 5, 2008) (citing In re Grand Jury Empaneled Feb. 14, 1978, 603 F.2d 469, 474 (3d Cir. 1979)). It is important for the party seeking to assert the privilege to "identify [a] specific attorney with whom a confidential communication was made" in order to satisfy this burden. Smithkline, 232 F.R.D. at 477 (citing United States v. Construction Prods. Research, Inc., 73 F.3d 464, 473 (2d Cir. 1996)). Other relevant considerations are whether the party has specifically identified all recipients of the document, and whether the document was "widely distributed." Smithkline, 232 F.R.D. at 478 ("The recipient lists were limited to between five and twenty-five individuals within a 50,000-person organization.").

In the present case, Sara Hankins, Esquire, has submitted an affidavit asserting that she was employed as Senior Legal Counsel at Caremark at the time the contested communications were made. See Hankins Aff. ¶ 4. She acted as "the principal in-house lawyer advising Caremark[] and its business representatives on the SEPTA contract, and the legal issues surrounding such contract" during that time frame. Id. Further, Ms. Hankins asserts that Joy Kershaw was a paralegal who acted as her subordinate, assisted with the SEPTA contract, and "was responsible for implementing the changes to the draft contract once [Ms. Hankins] had approved them." Id. ¶ 5. Ms. Hankins declares that she and Ms. Kershaw ...

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