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Nationwide Mutual Insurance Co. v. Fleming

January 29, 2010

NATIONWIDE MUTUAL INSURANCE COMPANY, NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, NATIONWIDE GENERAL INSURANCE COMPANY, NATIONWIDE PROPERTY & CASUALTY INSURANCE COMPANY AND COLONIAL INSURANCE COMPANY OF WISCONSIN F.K.A. COLONIAL INSURANCE COMPANY OF CALIFORNIA, APPELLANTS
v.
JOHN FLEMING, JOSHUA MEEDER, MEEDER FLEMING & ASSOCIATES, INC., MORAINE GROUP, INC., MARY LOU FLEMING, ANDREA MEEDER, ROBERT DEAN, JOHN WILLIAMS, BARBARA REDDICK, RAY KOOSER, SANDY KOOSER, DAVID COLLEY, CONNIE TAYLOR, MICHELE DAUGHERTY, LON MCALLISTER, AND LON MCALLISTER AGENCY, APPELLEES



Appeal from the Order of Superior Court entered May 21, 2007 at No. 207 WDA 2005, affirming the Order of the Butler County Court of Common Pleas entered January 25, 2005 at No. EQ 99-50018. 924 A.2d 1259 (Pa. Super. 2007).

The opinion of the court was delivered by: Mr. Justice Eakin

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, JJ.

ARGUED: March 6, 2008

OPINION IN SUPPORT OF AFFIRMANCE

Appellants, Nationwide Mutual Insurance Company, et al., sued several former agents and their respective insurance agencies, collectively appellees, for breach of contract and intentional interference with contractual relations. Appellants asserted appellees accessed confidential policyholder information on appellants' computer network and provided the information to competitors upon leaving appellants' employ. Appellees argued they were merely participating in permissible post-termination competition, and appellants did not have any proprietary interest in the information. On this basis, appellees counterclaimed, contending appellants brought suit in bad faith. A bench trial ensued.

During trial, appellees' counsel questioned appellants' former president regarding several documents appellants produced during discovery, including Document 529, which they sought to introduce to support their counterclaim. Appellants contended the attorney-client privilege protected Document 529, and only disclosed its recipient list, date, and subject line; they redacted the substantive content. The privileged nature of Document 529 is the issue underlying this appeal; it was filed under seal and remains sealed.

An attorney from appellants' general counsel authored Document 529 and sent it to 15 of appellants' employees, including officers, managers, and three other attorneys. Generally, Document 529 contains this counsel's assessment of the agent defections and appellants' strategy underlying the lawsuits against its former agents. It further states appellants cannot reasonably expect the lawsuits to succeed, and states the "primary purpose" of the litigation is to send a message to current employees contemplating defection.

The trial court held an in camera hearing to determine whether the attorney-client privilege applied to Document 529. Appellees argued appellants waived any privilege when they disclosed Documents 314 and 395, also regarding agent defections. Like Document 529, Document 314 was authored by an attorney from appellants' general counsel office; it outlined why appellants severed their relationship with certain agents and noted the necessity of obtaining information from defecting agents in order to consider appellants' legal options against them and their new employers. It was addressed to seven of appellants' employees, including two other attorneys in appellants' general counsel office. Document 395 was authored by appellants' agency administration director. It set forth additions and changes to the "Reflex Action Plan," appellants' policy for dealing with agent defections, and was sent to 35 of appellants' employees and officers.

The trial court held the voluntary disclosure of Documents 314 and 395 waived the attorney-client privilege with respect to Document 529. It determined appellants used the privilege to their advantage by producing communications in support of their position, but withheld Document 529 as privileged because it did not support their position; the court stated "the attorney-client privilege cannot be used as both a shield and a sword." Trial Court Opinion, 2/16/05, at 4.

Appellants appealed and requested a stay, which the trial court granted. The Superior Court granted appellees' motion to quash the appeal for lack of jurisdiction. By per curiam order, this Court granted review, vacated the Superior Court's order, and remanded to the Superior Court for further proceedings. Nationwide Mutual Insurance Company v. Fleming, 896 A.2d 565 (Pa. 2006) (Nationwide I).

The Superior Court affirmed the trial court's decision regarding Document 529 on alternative grounds. Nationwide Mutual Insurance Company v. Fleming, 924 A.2d 1259, 1269 (Pa. Super. 2007) (Nationwide II).*fn1 Citing codification of the attorney-client privilege, 42 Pa.C.S. § 5928, the court determined it protects only confidential communications from a client to an attorney "made in connection with the providing of legal services or advice." Nationwide II, at 1264 (citations omitted). Communications from attorney to client are privileged only to the extent they contain and would reveal confidential communications from the client. Id.

The court initially set forth Pennsylvania's two-part inquiry for determining whether the attorney-client privilege applies to preclude disclosure: whether the privilege applies to a communication, and if it does, whether client waiver or an exception applies to overcome the privilege and allow disclosure. Id., at 1265-66. The Superior Court also held the client can waive the privilege by disclosing the communication at issue to a third party. Id., at 1265. Additionally, federal decisions have held that when a communication protected by the privilege is voluntarily disclosed, the privilege is waived "for all communications pertaining to the same subject matter." Id. (emphasis in original).

The court noted Document 529 was a communication from counsel to a corporate client, addressing agent defections. Since the privilege only protects attorney-to-client communications containing and revealing confidential client-to-attorney communications, and Document 529 neither contained nor revealed such communications, the court ...


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