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Estate of Paterno v. National Collegiate Athletic Association ("NCAA")

Superior Court of Pennsylvania

July 25, 2017

ESTATE OF JOSEPH PATERNO; AL CLEMENS, MEMBER OF THE BOARD OF TRUSTEES OF PENNSYLVANIA STATE UNIVERSITY, WILLIAM KENNEY, AND JOSEPH V. PATERNO JR. (JAY), FORMER FOOTBALL COACHES AT PENNSYLVANIA STATE UNIVERSITY
v.
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION (NCAA), MARK EMMERT, INDIVIDUALLY AND AS PRESIDENT OF NCAA, AND EDWARD RAY, INDIVIDUALLY AND AS FORMER CHAIRMAN OF THE EXECUTIVE COMMITTEE OF THE NCAA, AND PENNSYLVANIA STATE UNIVERSITY APPEAL OF: PEPPER HAMILTON, LLP GEORGE SCOTT PATERNO, AS DULY APPOINTED REPRESENTATIVE OF THE ESTATE AND FAMILY OF JOSEPH PATERNO; RYAN MCCOMBIE, ANTHONY LUBRANO, AL CLEMENS AND ADAM TALIAFERRO, MEMBERS OF THE BOARD OF TRUSTEES OF PENNSYLVANIA STATE UNIVERSITY; PETER BORDI, TERRY ENGELDER, SPENCER NILES, AND JOHN O'DONNELL, MEMBERS OF THE FACULTY OF PENNSYLVANIA STATEUNIVERSITY; WILLIAM KENNEY AND JOSEPH V. ("JAY") PATERNO, FORMER FOOTBALL COACHES AT PENNSYLVANIA STATE UNIVERSITY; AND ANTHONY ADAMS, GERALD CADOGAN, SHAMAR FINNEY, JUSTIN KURPEIKIS, RICHARD GARDNER, JOSH GAINES, PATRICK MAUTI, ANWAR PHILLIPS AND MICHAEL ROBINSON, FORMER FOOTBALL PLAYERS OF PENNSYLVANIA STATE UNIVERSITY Appellees
v.
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION (NCAA); MARK EMMERT, INDIVIDUALLY AND AS PRESIDENT OF THE NCAA; AND EDWARD RAY, INDIVIDUALLY AND AS FORMER CHAIRMAN OF THE EXECUTIVE COMMITTEE OF THE NCAA, AND THE PENNSYLVANIA STATE UNIVERSITY Appellants THE ESTATE OF JOSEPH PATERNO; AL CLEMENS, MEMBER OF THE BOARD OF TRUSTEES OF PSU, AND WILLIAM KENNEY AND JOSEPH V. PATERNO, FORMER FOOTBALL COACHES AT PENNSYLVANIA STATE UNIVERSITY Appellees
v.
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION (NCAA); MARK EMMERT, INDIVIDUALLY AND AS PRESIDENT OF THE NCAA; AND EDWARD RAY, INDIVIDUALLY AND AS FORMER CHAIRMAN OF THE EXECUTIVE COMMITTEE OF THE NCAA, AND THE PENNSYLVANIA STATE UNIVERSITY Appellants

         Appeal from the Order Entered May 8, 2015, September 11, 2014, May 5, 2015 In the Court of Common Pleas of Centre County Civil Division at No: No: 2013-2082

          BEFORE PANELLA, STABILE, and DUBOW, JJ.

          OPINION

          STABILE, J.

         These interlocutory appeals arise from orders directing production of documents over objections of attorney-client privilege and work product protection. After careful review, we affirm in part, reverse in part, and remand for further proceedings.[1]

         The questions before us pertain to work done by Freeh Sporkin & Sullivan, LLP ("FSS, ")[2] on behalf of a Special Investigations Task Force (the "Task Force") created by The Pennsylvania State University ("Penn State" and, collectively with FSS, Appellants). The Task Force comprises Penn State trustees, faculty, alumni, and students. Penn State created the Task Force to investigate its handling of the well-publicized scandal involving former assistant football coach Jerry Sandusky. On November 4, 2011, the Commonwealth of Pennsylvania charged Sandusky with committing serial sexual offenses against minor boys on Penn State's campus. A jury found Sandusky guilty on multiple counts and he is currently serving 30 to 60 years of incarceration.[3]

         On July 12, 2012, FSS produced a report (the "Freeh Report") detailing its investigation of Penn State's handling of the Sandusky scandal. According to the Paterno parties[4] (collectively "Plaintiffs" or "Appellees"), the Freeh Report concluded that the late Joseph V. Paterno, former Penn State head football coach, was aware of allegations of Sandusky's conduct before Sandusky retired in 1999 but failed to take action to address that conduct. Plaintiffs' Second Amended Complaint, 10/13/14, at ¶ 67, 104. "According to the [Freeh Report], Penn State officials conspired to conceal critical facts relating to Sandusky's abuse from authorities, the [Penn State] Board of Trustees, the Penn State community, and the public at large. Id.

         The National Collegiate Athletic Association ("NCAA"), defendant[5] in this action, adopted the Freeh Report in support of a consent decree whereby Penn State accepted the NCAA's imposition of sanctions for violations of the NCAA's constitution and bylaws. Id. at ¶¶ 88-89, 98. According to the consent decree:

Head Football Coach Joseph V. Paterno failed to protect against a child sexual predator harming children for over a decade, concealed Sandusky's activities from the [Penn State] Board of Trustees, the University community and authorities, and allow[ed] [Sandusky] to have continued, unrestricted and unsupervised access to the University's facilities and affiliation with the University's prominent football program.

Id. at ¶ 104a (quoting the NCAA consent decree). Likewise, the consent decree provided that other coaches and staff "ignored red flags" of Sandusky's conduct. Id. at ¶ 104c (quoting the NCAA consent decree). Plaintiffs alleged that the NCAA "knew or should have known that the Freeh Report was an unreliable rush to judgment and that the conclusions reached in the report were unsupported. Id. at ¶ 90. Further, Plaintiffs alleged that the NCAA "also knew or should have known that by accepting the Freeh Report as a basis for imposing sanctions instead of following the NCAA's own rules and procedures […] they would dramatically increase the publicity given to its unreliable conclusions and effectively terminate the search for truth." Id.

         Plaintiffs alleged various causes of action, including defamation, commercial disparagement, breach of contract, and interference with contractual relations. Shortly after filing suit, Plaintiffs served on FSS notice of intent to subpoena all of FSS's files relating to its preparation of the Freeh Report. FSS and Penn State (the latter having been added to this action as a nominal defendant), objected on grounds of attorney-client privilege and work product. On September 11, 2014, the trial court overruled most of the objections, thus requiring production of a large number of documents. On October 8, 2014, Appellants appealed from the September 11, 2014 order (captioned above at 1709 MDA 2014). Likewise, Appellants filed in the trial court motions for a stay pending appeal (see Pa.R.A.P. 1732(a)) and a protective order (see Pa.R.C.P. No. 4012). The trial court denied relief by order of November 20, 2014. This Court affirmed the denial of the stay.

         On January 22, 2015, while the appeal at number 1709 was pending, Plaintiffs filed a motion in the trial court to enforce the subpoena. The trial court granted that motion on May 8, 2015. The trial court reasoned that it lacked jurisdiction to consider Appellants' claims of privilege and work product, as those issues were before this Court in the appeal pending at number 1709. The trial court therefore enforced the subpoena without considering Appellants' objections. Appellants filed appeals from that order (captioned above at 877 and 878 MDA 2015). This Court denied Appellants' application for stay by order of June 19, 2015. Thus, FSS already has produced the documents at issue in this appeal. Should Appellants succeed in this appeal, documents will have to be returned to FSS and not used as evidence.

         This case involves several million documents. Among those are approximately 3.5 million documents the parties refer to as "source documents, " or documents that FSS gathered from Penn State's servers and records custodians. The parties generally agree that attorney-client privilege and work product doctrine do not prevent discovery of the source documents unless those documents divulge privileged communications. The second category, "non-source documents" comprises documents generated by FSS, such as notes and summaries of 430 interviews conducted by FSS attorneys and investigators from Freeh Group International Solutions, LLC ("FGIS") and other internal FSS memoranda. On April 26, 2014, this Court remanded this matter and requested further clarification of the documents at issue, including a privilege log identifying objections to specific documents or categories of documents. We also directed the parties to list and identify any documents ordered to be produced over Appellants' objections, grouping such documents by category where practicable. Finally, we directed the trial court to prepare an opinion explaining its reasons for overruling or granting protection of documents.

         Post-remand, the parties have significantly pared down the number of documents still in dispute. In its opinion of August 12, 2016, the trial court reasoned that the Task Force, not Penn State, was the client of FSS. Thus, Penn State did not have standing to assert attorney-client privilege as to communications between FSS and the Task Force. Trial Court Opinion, 8/12/16, at 3. Further, the trial court held that many of the non-source documents were not discoverable because they were irrelevant to the Plaintiffs' causes of action:

The integral relevant issue in this case is whether Defendants adopted the allegedly false findings of the Freeh Report either with knowledge that the findings were false, or with reckless disregard of the findings' truth or falsity. […] When considering this issue in conjunction with FSS's attorney work product, the relevance of the work product to Plaintiffs' claims turns on whether FSS communicated or shared the work product with Defendants. Whether FSS acted with actual malice or reckless disregard for the truth in reaching the findings in the Freeh Report is wholly irrelevant to whether Defendants acted with said requisite state of mind. Therefore, any attorney work product which remained internal amongst the FSS team of attorneys is irrelevant to Plaintiffs' claims in this case and is not discoverable.

Id. at 8-9 (italics in original).

         Finally, the trial court addressed summaries of the 430 interviews FSS conducted. Present at each interview were the interviewee, an FSS attorney, and an investigator from FGIS. The attorney and investigator each took notes during the interview, and then prepared and then condensed their notes into an agreed upon interview summary. The trial court addressed summaries as follows:

In the case at bar, several categories of the Privilege Log contain memoranda of interviews prepared by FSS interviewers. These memoranda contain a confluence of the statements made by the interviewees and the mental impressions, conclusions, and opinions of the interviewer. The attorney work product doctrine only applies to the interviewer's mental impressions, conclusions and opinions. Therefore, said memoranda are discoverable so long as the attorney work product portions are redacted.

Id. at 10-11.

         In their post-remand supplemental brief, Appellants argue that the trial court erred in finding that Penn State was not a client of FSS. Appellants' Post-Remand Supplemental Brief at 9. Appellants also argue that the trial court erred in finding "non-transcribed, non-verbatim notes of hundreds of interviews prepared by [FSS] and members of its team, which undisputedly were not signed or otherwise adopted by the interviewees, are not protected from disclosure by the attorney work product doctrine[.]" Id. at 10. Appellees filed separate briefs responding to Appellants' arguments and raising their own challenge to the trial court's finding on relevancy. We will address these issues in turn.

         First, Appellants challenge the trial court's finding that Penn State was not the client of FSS.[6] Whether attorney-client privilege protects a particular communication is a question of law. In re Thirty-Third Statewide Investigating Grand Jury, 86 A.3d 204, 215 (Pa. 2014). Our standard of review is de novo and our scope of review is plenary. Custom Designs & Mfg. Co. v. Sherwin-Williams Co., 39 A.3d 372, 376 (Pa. Super. 2012). "In Pennsylvania, the attorney-client privilege operates in a two-way fashion to protect confidential client-to-attorney or attorney-to-client communications made for the purpose of obtaining or providing professional legal advice." Id. at 376.

         The party asserting privilege bears the burden of producing facts establishing proper invocation of the privilege. Yocabet v. UPMC Presbyterian, 119 A.3d 1012, 1019 (Pa. Super. 2015). "Once the invoking party has made the appropriate proffer, then the burden shifts to the party seeking disclosure to set forth facts showing that disclosure should be compelled either because the privilege has been waived or because an exception to the privilege applies." Id. "Accordingly, [i]f the party asserting the privilege does not produce sufficient facts to show that the privilege was properly invoked, then the burden never shifts to the other party, and the communication is not protected under attorney-client privilege." Custom Designs, 39 A.3d at 376. The trial court determines whether the facts support the asserted privilege. Law Office of Douglass T. Harris, Esq. v. Philadelphia Waterfront Partners, LP, 957 A.2d 1223, 1231 (Pa. Super. 2008) (citing 8 Wigmore, Evidence, § 2322 (McNaughton rev. 1961)).

         Appellants note that Penn State created the Task Force, and that the Task Force has no independent legal identity and no budget of its own. The chair of Penn State's board of trustees-not himself a member of the Task Force-signed the Engagement Letter on behalf of Penn State. Penn State paid for FSS's services, in accordance with the terms of the Engagement Letter. Appellants also rely on a December 22, 2011 letter from Penn State's in-house general counsel to FSS advising FSS that Penn State's president, trustees, and members of the Task Force were of the opinion that FSS represented Penn State. Appellants also rely on a July 22, 2012 letter from Penn State's outside counsel to Freeh stating that FSS represented Penn State. In the July 22, 2012 letter, outside counsel described materials for which Penn State would and would not waive attorney-client privilege. For these reasons, Appellants assert that Penn State was the client.

         Appellees counter that Freeh, in his deposition, testified that the Task Force was FSS's only client, and that FSS did not represent Penn State. Appellees also note that Penn State's general counsel, in her December 22, 2011 letter to FSS, referred to the Task Force as independent and distinct from Penn State and its board of trustees.

         Both parties rely on the November 18, 2011 Engagement Letter ("Engagement Letter"), which outlines the terms of FSS's services. We will review that document in detail. The opening paragraph of that document states:

We are pleased that the Board of Trustees of the Pennsylvania State University […] on behalf of the [Task Force] established by the Trustees […] has engaged us to represent the [Task Force]. […] Accordingly, this is to set forth the basic terms upon which FSS has been engaged to represent the [Task Force], including the anticipated scope of our services and billing policies and practices that will apply to the engagement.

Engagement Letter, 11/18/11, at page 1 (emphasis added). Paragraph one, titled "Scope of Engagement, " provides:

FSS has been engaged to serve as independent, external legal counsel to the [Task Force] to perform an independent, full and complete investigation of the recently publicized allegations of sexual abuse at the facilities and the alleged failure of [Penn State] personnel to report such sexual abuse to appropriate police and governmental authorities. The results of FSS's investigation will be provided in a written report to the [Task Force] and other parties as so directed by the [Task Force].
[…]
It is understood by FSS, the Trustees, and the [Task Force] that FSS will act under the sole discretion of the [Task Force].
[…]
It is also understood by FSS, the Trustees and the [Task Force] that during the course of FSS's independent investigation performed hereunder, FSS will immediately report any discovered evidence of criminality to the appropriate law enforcement ...

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