[J-26A-2018 and J-26B-2018]

IN THE SUPREME COURT OF PENNSYLVANIA

WESTERN DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

PITTSBURGH HISTORY AND 

LANDMARKS FOUNDATION, A 

PENNSYLVANIA NON-PROFIT 

CORPORATION; LANDMARKS 

FINANCIAL CORPORATION, A 

PENNSYLVANIA NON-PROFIT 

CORPORATION; HENRY P. HOFFSTOT, 

JR.; DAVID E. BARENSFELD; PETER H. 

STEPHAICH; PATRICK R. WALLACE; 

ALEXANDER SPEYER; AND HENRY P. 

HOFFSTOT, III

v.

ARTHUR P. ZIEGLER, JR.; MARK S. 

BIBRO; JACK R. NORRIS; PITTSBURGH

HISTORY AND LANDMARKS 

FOUNDATION, A PENNSYLVANIA NONPROFIT CORPORATION; AND 

LANDMARKS FINANCIAL 

CORPORATION, A PENNSYLVANIA 

NON-PROFIT CORPORATION

APPEAL OF: ARTHUR P. ZIEGLER JR., 

MARK S. BIBRO, JACK R. NORRIS, 

PITTSBURGH HISTORY AND 

LANDMARKS FOUNDATION AND 

LANDMARKS FINANCIAL 

CORPORATION

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No. 53 WAP 2017

Appeal from the Order of the 

Commonwealth Court entered April 

21, 2017 at No. 113 CD 2016, 

vacating the Order of the Court of 

Common Pleas of Allegheny County 

entered September 21, 2015 at No. 

GD 13-23355, and remanding.

ARGUED: April 11, 2018

PITTSBURGH HISTORY AND 

LANDMARKS FOUNDATION, A 

PENNSYLVANIA NON-PROFIT 

CORPORATION; LANDMARKS 

FINANCIAL CORPORATION, A 

PENNSYLVANIA NON-PROFIT 

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No. 54 WAP 2017

Appeal from the Order of the 

Commonwealth Court entered April 

21, 2017 at No. 113 CD 2016, 

vacating the Order of the Court of 
[J-26A&B-2018] - 2

CORPORATION; HENRY P. HOFFSTOT, 

JR.; DAVID E. BARENSFELD; PETER H. 

STEPHAICH; PATRICK R. WALLACE; 

ALEXANDER SPEYER; AND HENRY P. 

HOFFSTOT, III

v.

ARTHUR P. ZIEGLER, JR.; MARK S. 

BIBRO; JACK R. NORRIS; PITTSBURGH 

HISTORY AND LANDMARKS 

FOUNDATION, A PENNSYLVANIA NONPROFIT CORPORATION; AND 

LANDMARKS FINANCIAL 

CORPORATION, A PENNSYLVANIA 

NON-PROFIT CORPORATION

APPEAL OF: HENRY P. HOFFSTOT, JR.; 

DAVID E. BARENSFELD; PETER H. 

STEPHAICH; PATRICK R. WALLACE; 

ALEXANDER SPEYER; AND HENRY P. 

HOFFSTOT, III

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Common Pleas of Allegheny County 

entered September 21, 2015 at No. 

GD 13-23355, and remanding.

ARGUED: April 11, 2018

OPINION

JUSTICE BAER DECIDED: JANUARY 23, 2019

Before this Court are questions involving the applicability of the attorney-client 

privilege in a corporate derivative action lawsuit brought by former board members of two 

nonprofit corporations against current board members. As explained more fully herein, 

we respectfully reject, for purposes of proceedings related to a motion to dismiss 

derivative litigation, the Commonwealth Court’s adoption of a qualified attorney-client 

privilege as set forth in Garner v. Wolfinbarger, 430 F.2d 1093 (5

th Cir. 1970), which we 

view as inconsistent with our prior caselaw emphasizing predictability in the application 

of the attorney-client privilege. We, however, affirm the Commonwealth Court’s decision 
[J-26A&B-2018] - 3

not to apply the fiduciary or co-client exceptions to the attorney-client privilege under the 

facts at bar. Accordingly, we vacate the orders of the trial court and the Commonwealth 

Court and remand the matter to the trial court for further proceedings consistent with this 

opinion. 

I. Introduction

While a detailed discussion of the law is set forth infra, we initially provide an

introduction to the basic legal concepts applicable to the subject dispute. As noted, this 

case involves questions of how the attorney-client privilege should apply in the context of 

derivative litigation. Generally, in derivative litigation, dissenting shareholders (in the case 

of a for-profit company) or dissenting members (in the case of a nonprofit corporation) 

attempt to assert claims as derivative plaintiffs on behalf of the corporation often alleging 

misdeeds by its current management. In such cases, both the derivative plaintiffs and 

current management claim to be acting in the interest of the corporation, which as an 

inanimate entity cannot act on its own. Taken to the extremes, courts are therefore faced 

with balancing the need to protect current management from baseless harassing litigation 

brought by disgruntled derivative plaintiffs with the need to allow derivative plaintiffs acting 

in good faith an opportunity to litigate legitimate derivative actions to protect the 

corporation from nefarious acts of current management.

In our decision in Cuker v. Mikalauskas, 692 A.2d 1042 (Pa. 1997), see infra at 29, 

we implemented a paradigm for addressing derivative litigation by adopting Sections 

7.02-7.10 and 7.13 of the American Law Institute, Principles of Corporate Governance: 

Analysis and Recommendations (1994) (“ALI Principles”). Cuker clarified that derivative 

plaintiffs, who believe that current management are acting against the interests of the 

corporation, should present the corporation with a “demand” that it pursue litigation or 

other action for the benefit of the corporation, often against current management. In 
[J-26A&B-2018] - 4

response, the corporation, acting through its current management, may form an

independent committee to investigate the claims and determine whether to pursue the 

action demanded. If it declines to take action and the derivative plaintiffs pursue their 

own derivative action in court, the corporation acting through its current management can 

file a motion to dismiss the case based upon the committee’s determination. In such a 

case, a court will review the committee’s determination not to pursue the derivative 

litigation, giving substantial deference to the committee’s decision pursuant to the 

business judgment rule.

1

 

The question presented in the case at bar concerns to what extent current 

management, after filing a motion to dismiss based upon the committee’s 

recommendation, must provide derivative plaintiffs with access to materials that would 

otherwise not be subject to discovery pursuant to the attorney-client privilege. At base, 

the issue is who should be deemed to hold the attorney-client privilege for the corporation

and what is the extent of the privilege, when arguably both the derivative plaintiffs and the 

current management claim to be acting on behalf of the corporation. Current 

management would argue that they hold an absolute privilege, subject only to limited 

disclosure as specifically required by our adoption of the ALI Principles, as will be 

discussed herein. Derivative plaintiffs would contend that the attorney-client privilege 

should not apply to them based upon the idea that they are bringing the claim for the 

 

1 As explained in more detail infra, this Court officially adopted the “business judgment 

rule” in Cuker. We explained that “the business judgment rule reflects a policy of judicial 

noninterference with business decisions of corporate managers, presuming that they 

pursue the best interests of their corporations, insulating such managers from secondguessing or liability for their business decisions in the absence of fraud or self-dealing or 

other misconduct or malfeasance.” Cuker, 692 A.2d at 1046.
[J-26A&B-2018] - 5

corporation, who is the “client,” and by asserting exceptions established in our caselaw 

such as the fiduciary exception and/or the co-client exception.

2

In Cuker, we adopted in bulk several sections of the ALI Principles including 

Section 7.13(e), which specifically addresses attorney-client privilege as it relates to a 

motion to dismiss derivative litigation. However, we did not discuss the provision in detail

nor did we address the Comments to Section 7.13(e), which invoke the seminal decision 

of Garner v. Wolfinbarger, 430 F.2d 1093 (5

th Cir. 1970). The court in Garner essentially 

provided a middle ground for applying the attorney-client privilege in which current 

management could assert the privilege against the derivative plaintiffs, but the privilege 

would be subject to the right of the derivative plaintiffs to show “good cause” why the 

privilege should not apply. The Court of Appeals then set forth a non-exclusive list of nine 

factors for courts to consider when determining whether the plaintiffs demonstrated good 

cause. The Garner good cause analysis has been characterized as creating a “qualitied 

 

2 Briefly, the fiduciary exception provides that the attorney-client privilege cannot be 

invoked by a trustee of a trust against the beneficiary of a trust where the legal advice 

was obtained to guide trust management, given that trustees are tasked with providing 

beneficiaries with information regarding the management of the trust. 

Similarly, the attorney-client privilege cannot be invoked by one client against another 

client where the clients have been represented jointly by an attorney (“co-client” or “jointclient”) or where the clients have pursued a common defense through separate counsel 

(“common interest”). In such cases, the clients are deemed to have waived the privilege 

during the period of joint representation or shared defense. 

While Pennsylvania courts have applied the fiduciary and common interest exceptions, it 

does not appear that this Court has specifically addressed them. See, e.g., Follansbee 

v. Gerlach, 56 Pa. D. & C. 4th 483, 485 (Allegheny C.C.P. 2002); In re Condemnation by 

City of Philadelphia in 16.2626 Acre Area, 981 A.2d 391, 397 (Pa. Cmwlth. 2009). This 

Court has previously applied the joint-client exception. See, e.g., Tracy v. Tracy, 105 

A.2d 122, 125 (Pa. 1954) (observing that the privilege does not apply “if the attorney 

represented both parties to the transaction, in which case no communications in relation 

to the common business are privileged in favor or against either, but only against a 

common adversary”). 
[J-26A&B-2018] - 6

attorney-client privilege.” While the Garner good cause analysis has been followed by 

the majority of courts that have considered it, it has been rejected by several courts and 

criticized by scholars as creating uncertainty in the application of the attorney-client 

privilege. We now consider its applicability under Pennsylvania law in the context of a 

corporation’s motion to dismiss derivative litigation.

3

 

II. Factual and Procedural Background

The nonprofit corporations involved in this matter are the Pittsburgh History and 

Landmarks Foundation (“the Foundation”) and its subsidiary, the Landmarks Financial 

Corporation (“the Corporation”), which manages the Foundation’s endowment of 

approximately $100 million. The plaintiffs are five former members of the Boards of 

Trustees (“Boards”) of the Foundation and the Corporation who allege that they were 

improperly and ineffectively removed from the Boards in an attempt to thwart their 

oversight of the Foundation’s president, whom they believed was engaging in actions that 

were improper and not in accord with the Foundation’s mission (hereinafter “Derivative 

 

3 We recognize that the General Assembly recently amended both the Business 

Corporation Law and the Nonprofit Corporations Law by adopting Subchapter F, entitled 

“Derivative Actions,” within the relevant chapter addressing issues relating to “Officers, 

Directors and [Shareholders or Members].” 15 Pa.C.S. §§ 1781-84, 15 Pa.C.S. §§ 5781-

84, respectively. These provisions generally codified, with some alterations, preexisting 

Pennsylvania jurisprudence, as adopted in Cuker, regarding derivative actions. 

Moreover, the amendments explicitly apply the paradigm to nonprofit corporations. See, 

e.g., 15 Pa.C.S. § 5781 cmt. (explaining that “this subchapter generally follows the 

sections of the ALI Principles adopted in Cuker, while elaborating and revising certain 

portions of those sections of the ALI Principles as they apply to nonprofit corporations”).

The new statutory provisions do not expressly include Section 7.13(e) of the ALI 

Principles, which addresses the attorney-client privilege in regard to motions to dismiss 

derivative actions. As the new enactment became effective during the appellate 

proceedings in this case, the parties have not presented argument regarding the 

applicability of the new statutes. We defer to the trial court in the first instance to 

determine the relevance of the new provisions on remand.
[J-26A&B-2018] - 7

Plaintiffs”).

4 The defendants are the aforementioned long-time president of the 

Foundation (the “President”), the chair of the Foundation’s Board of Trustees at the time 

the Derivative Plaintiffs were removed from the Boards, and the subsequent chair of the 

Foundation’s Board of Trustees (hereinafter “Current Management”). 

The Derivative Plaintiffs’ claims in the underlying derivative litigation stem from 

Current Management’s actions in 2012-2013. Reduced to its essence, in June 2012, the 

Foundation’s Board created a Governance Task Force to review various practices of the 

Foundation. In addition to a variety of other improvements, the Task Force recommended

that both Boards be reduced substantially in number. The Foundation Board approved 

this recommendation and removed all trustees then serving from both Boards; 

subsequently, significantly smaller boards were elected (hereinafter we will refer to the 

old and new boards of both entities as the “Original Board(s)” and the “Reconstituted 

Board(s),” respectively).

5

 As a result of these consolidations, Derivative Plaintiffs lost 

their seats on the Boards. 

Derivative Plaintiffs view the above actions as an improper scheme by the 

Foundation President to avoid supervision by the Original Board members, especially in 

regard to investments favored by the President. They contend that the absence of 

supervision could harm the Foundation and the Corporation. Moreover, they maintain 

that the removal of the original trustees and reconstitution of the smaller boards with new 

trustees was improper under the entities’ bylaws; accordingly, they refer to their removal 

as “purported” and contend that the Original Board remains the true board. Conversely, 

 

4 While we recognize that the individual plaintiffs were members of either the Foundation 

Board or the Corporation Board and that the distinction would matter as to the discovery 

attainable by each individual plaintiff, we need not distinguish between the plaintiffs for 

purposes of this appeal. 

5 Derivative Plaintiffs also allege that the Board did not adopt various recommendations 

in the Task Force’s report that the President disfavored.
[J-26A&B-2018] - 8

Current Management maintain that the process was proper and that the Reconstituted 

Board is the true board.

In accord with standard procedures for bringing a derivative action adopted by this 

Court in Cuker, Derivative Plaintiffs filed a written demand on the Foundation and the 

Corporation in October 2013 to bring an action against Current Management, which 

attached a draft complaint setting forth derivative claims against Current Management. 

As is appropriate when faced with a demand, the Reconstituted Boards of the Foundation 

and the Corporation met separately and agreed to form a joint Independent Investigation 

Committee (“Committee” or “IIC”), in November 2013, to investigate the allegations made 

in Derivative Plaintiffs’ demand. The Committee was charged with determining whether 

it was in the Foundation’s and the Corporation’s best interest to engage in litigation 

against Current Management or to take other action.

After Current Management sent Derivative Plaintiffs a letter indicating that the 

Committee would be composed of Reconstituted Board members rather than Original 

Board members, Derivative Plaintiffs filed their complaint against Current Management in 

the trial court in December 2013 without waiting for the Committee to complete its 

investigation of their demand. This action was in accord with their view that the 

Reconstituted Board was invalid and therefore could not appoint its own members to act 

as an independent reviewing entity, essentially evaluating the propriety of its own 

existence. 

Counts I and II of the complaint presented derivative claims of breach of fiduciary 

duty brought on behalf of the Foundation and the Corporation, respectively, asserting that 

Current Management’s actions in removing the Original Board members were contrary to 

the bylaws and the interests of the Foundation and Corporation and, alternatively, that 

the actions were intended to solidify the President’s power and silence his critics, which 
[J-26A&B-2018] - 9

was not in the interest of the Foundation and the Corporation. In Count III, Derivative 

Plaintiffs sought a declaratory judgment that Current Management acted improperly in 

removing the Original Boards. Finally, in Count IV, Derivative Plaintiffs asserted that

Current Management’s actions violated the Foundation’s and Corporations’ bylaws, 

resulting in a breach of their contract to comply with the bylaws. As the remedy for all 

counts, Derivative Plaintiffs asked for an injunction preventing the operation of the 

Reconstituted Boards and an order restoring the Original Boards, which would include 

Derivative Plaintiffs.

6

In January 2014, Derivative Plaintiffs served on Current Management a First Set 

of Requests for Production. This set of requests resulted in extensive discussions 

between counsel in regard to the production of electronically stored information, including 

a searchable database to address the potentially immense production and the 

applicability of the attorney-client privilege to the requested production. While Current 

Management produced a large volume of information, the information they withheld 

serves as the basis for the current dispute.

While the litigation continued on Derivative Plaintiffs’ claims, the Committee issued 

its report to the Foundation and the Corporation in August 2014 with an addendum in 

March 2015. The Committee concluded that reconstitution of the Boards was proper and 

consistent with the business judgment rule.

7 Accordingly, the Committee concluded that 

 

6 Derivative Plaintiffs also sought a declaratory judgment that the removal of the Original 

Board and reinstatement of the Reconstituted Board was improper as part of Count III. 

As Counts III and IV are not before this Court, we will not address these claims herein.

7

In a prior motion, the parties had disputed whether the business judgment rule, as 

defined supra at 4 n.1, applied to nonprofit corporations, with Derivative Plaintiffs claiming 

that it did not apply. The trial court ultimately determined that the business judgment rule 

applied to nonprofit corporations. Derivative Plaintiffs are not seeking review of that issue 

in the current appeal because it is not reviewable as part of this interlocutory appeal. Pls.’ 

Br. at 14 n.3. 
[J-26A&B-2018] - 10

it would not be in the best interest of the Foundation and the Corporation to pursue the 

derivative claims submitted by Derivative Plaintiffs. Current Management provided the 

report and addendum to Derivative Plaintiffs’ counsel. In response to the Committee’s 

report, the Boards separately voted to reject the Plaintiffs’ demand. 

Subsequently, in April 2015, Current Management filed a motion to dismiss Counts 

I and II of the Derivative Plaintiffs’ derivative action. They observed that the motion to 

dismiss was filed in compliance with the procedure for addressing derivative claims

adopted by this Court in Cuker. Current Management emphasized that the opinion in

Cuker instructed trial courts to engage in limited review of board decisions to terminate 

derivative litigation under specified criteria relating to the independence and legitimacy of 

an investigating committee, see infra at 29. Current Management asserted that those

standards had been satisfied in this case by the Committee’s extensive and independent 

investigation and report. Therefore, they maintained that both Boards had properly 

exercised their business judgment in accepting the Committee’s recommendation to 

terminate the litigation demanded by Derivative Plaintiffs. Accordingly, Current 

Management argued that they had satisfied the requirements of Cuker and that Counts I 

and II of Derivative Plaintiffs’ litigation should be dismissed. This motion to dismiss is

apparently still pending in the trial court.

While Current Management’s motion to dismiss was pending in the trial court, 

Derivative Plaintiffs filed a motion to compel in June 2015 that is directly at issue in the 

current appeal. Derivative Plaintiffs sought to compel Current Management to produce 

the following items which Current Management had withheld claiming attorney-client 

privilege: 

(1) all materials involving [Foundation and Corporation 

attorneys] whose purported status as counsel has been used 

as a basis to withhold materials responsive to Derivative 

Plaintiffs’ First Set of Requests for Production,
[J-26A&B-2018] - 11

(2) all materials provided to or generated by the Independent 

Investigation Committee including but not limited [to] all legal 

opinions given to the IIC relating to the subject of the IIC 

Report, and 

(3) to complete their document production responsive to 

Derivative Plaintiffs’ First Set of Requests for Production.

Pls.’ Br. in Supp. of Mot. to Compel at 4. In addition, Derivative Plaintiffs sought 

permission to speak with Attorney Anne Nelson, who was General Counsel to the 

Foundation and Corporation between 2007 and December 2012. Derivative Plaintiffs

wanted to discuss with Attorney Nelson the substance of her potential testimony in the 

case.8 

Derivative Plaintiffs argued that Current Management should provide them access 

to all the documents which Current Management provided to the Committee to develop 

the report, given that Current Management is relying upon the Committee’s report to 

argue for the dismissal of Derivative Plaintiffs’ claims. These documents would include 

those allegedly related to the dissolution and reconstitution of the Boards as well as the 

President’s alleged attempt to suppress the Derivative Plaintiffs’ criticism of his actions.

9

 

Derivative Plaintiffs asserted several bases for the inapplicability of the attorneyclient privilege that they continue to advance before this Court. They interpreted ALI 

 

8 According to Derivative Plaintiffs, Attorney Nelson provided one of the Derivative 

Plaintiffs with her notes while he was a trustee and she was General Counsel. Derivative 

Plaintiffs assert that those notes support their claims relating to the process leading to the 

dissolution and reconstitution of the Boards. 

9 Derivative Plaintiffs assert that they did not seek the communications with the 

Foundation’s or Corporation’s counsel relating to the current litigation other than those 

specifically allowed under Cuker’s adoption of ALI Principles Section 7.13, discussed 

infra. Pls.’ Br. in Supp. of Mot. to Compel at 12, 17. 
[J-26A&B-2018] - 12

Principles Section 7.13(e),10 as adopted in Cuker, to require Current Management to 

produce all documents given to the Committee that related to legal opinions regarding the 

subject matter of the Committee’s report and also claimed that they could demonstrate 

good cause why the privilege should not apply to this derivative action. As discussed in 

detail infra, Derivative Plaintiffs additionally invoked the fiduciary and the co-client 

exceptions.11

In response to the motion to compel, Current Management framed Derivative 

Plaintiffs’ argument as essentially claiming that the attorney-client privilege did not apply 

in derivative litigation. They argued that Derivative Plaintiffs failed to provide any caselaw 

for their broad pronouncement. Current Management instead averred that this Court 

already provided a framework for addressing the attorney-client privilege in derivative 

 

10 While the ALI Principles, including Section 7.13(e) and its Comments, are discussed in 

detail infra at 31, the subsection provides in full as follows:

§ 7.13 Judicial Procedures on Motions to Dismiss a Derivative 

Action Under § 7.08 or § 7.11

* * * *

(e) Privilege. The plaintiff’s counsel should be furnished a 

copy of related legal opinions received by the board or 

committee if any opinion is tendered to the court under 

§ 7.13(a). Subject to that requirement, communications, both 

oral and written, between the board or committee and its 

counsel with respect to the subject matter of the action do not 

forfeit their privileged character, and documents, memoranda, 

or other material qualifying as attorney’s work product do not 

become subject to discovery, on the grounds that the action 

is derivative or that the privilege was waived by the production 

to the plaintiff or the filing with the court of a report, other 

written submission, or supporting documents pursuant to 

§ 7.13. 

11 In the course of the litigation, the parties have referenced various related doctrines 

including the co-client, joint-client, and common interest exceptions, see supra at 5 n.2. 

We will adopt the use of the term “co-client exception” to refer to the general argument 

presented by Plaintiff and use the more specific terms when relevant.
[J-26A&B-2018] - 13

litigation by adopting the ALI Principles in Cuker. In contrast to Derivative Plaintiffs’ 

interpretation of ALI Principles Section 7.13(e), which would essentially require Current 

Management to give Derivative Plaintiffs all of the documents given to the Committee, 

Current Management argued that Section 7.13(e) entitled Derivative Plaintiffs only to “a 

copy of the [Committee] Reports (and all supporting documentation filed with the Court) 

and, to a more limited extent, formal legal opinions that were provided to [the Committee].” 

Defs.’ Br. in Opp’n to Pls.’ Mot. to Compel at 5. Current Management also rejected 

Derivative Plaintiffs’ application of the fiduciary exception and the co-client exception to 

the derivative litigation scenario and asserted that the Garner good cause doctrine, see 

infra at 35, was inconsistent with Pennsylvania’s attorney-client privilege. 

III. Decisions of the Trial Court and Commonwealth Court

In September 2015, the trial court granted Derivative Plaintiffs’ motion to compel 

in substantial part by ordering Current Management to provide “all materials provided to 

or generated by the [Committee], including all related legal opinions and communications” 

and allowed Derivative Plaintiffs to “discuss with Anne Nelson the legal advice that she 

provided to the [Committee] and communications with the [Committee], as well as any 

non-privileged subjects.” Tr. Ct. Order dated Sept. 18, 2015.

After Current Management appealed the order, the trial court provided an opinion 

in support of its decision. In short, the court adopted Derivative Plaintiffs’ argument that 

the attorney-client privilege does not apply in derivative actions. Tr. Ct. Op. at 2-3. The 

court opined “that in order to determine the independence and investigative adequacy of 

a special litigation committee such as the IIC, Plaintiff[s’] counsel must be allowed to 

access documents to which the committee itself had access.” Id. at 11. The court also 

favored Derivative Plaintiffs’ broad interpretation of Section 7.13(e), opining that it did not 
[J-26A&B-2018] - 14

expressly recognize attorney-client protection for “documents that existed before the 

creation of the IIC and were not generated by counsel to the IIC,” but instead only 

specifically exempted communications between the committee and its counsel. Id. at 11. 

Therefore, it concluded that “pre-existing documents submitted to the [Committee] must 

be produced once the [Committee’s] report was submitted to the court.” Id. at 12.

The trial court additionally addressed Current Management’s arguments relating 

to the fiduciary and the common interest exceptions. The trial court summarized the 

fiduciary exception as providing that a trustee of a trust cannot invoke the privilege against 

the trust’s beneficiary and instead has a duty “to furnish the beneficiaries with full and 

complete information regarding the trust.” Id. at 13 (citing Follansbee v. Gerlach, 56 Pa.

D. & C. 4

th 483, 486-87 (Allegheny C.C.P. 2002)). The trial court opined that the fiduciary 

exception applied here “because this is a derivative action involving a trust.” Id. at 12.

The trial court then concluded that the provision applied even though the Derivative 

Plaintiffs were not beneficiaries of a trust because they were acting for the benefit of the 

Foundation and the Corporation, which held the attorney-client privilege. 

The trial court also determined that the “common interest exception applies 

because Plaintiffs were members of [the Foundation and/or Corporation] at the time the 

materials in question were generated.” Id. It viewed the exception as providing “that 

when parties with a common interest have counsel and later become adverse, neither 

party can assert the attorney-client or work product privileges as to materials during the 

period of common interest.” Id. at 14. 

Finally, the trial court granted Derivative Plaintiffs’ request for permission to speak 

to Attorney Nelson, the Foundation’s former General Counsel, prior to her deposition. It 

observed that Attorney Nelson only served as General Counsel while Derivative Plaintiffs

were still members of the Boards. Therefore, under the common interest analysis set 
[J-26A&B-2018] - 15

forth above, it concluded that attorney-client privilege did not apply to preclude Derivative 

Plaintiffs access during the relevant time period because “[Attorney] Nelson and Plaintiffs

had a common interest at the time she represented” the Foundation. Id. at 16. 

In April 2017, a unanimous, en banc panel of the Commonwealth Court vacated 

the trial court’s order and remanded the matter for further proceedings.12 In re: Pittsburgh 

History and Landmarks Foundation, 161 A.3d 394 (Pa. Cmwlth. 2017). As explained 

below, the court concluded that the trial court erred in ordering Defendants to produce to 

Plaintiffs all the documents that had been provided to the Committee based upon the trial 

court’s erroneous conclusion that the fiduciary and common interest exceptions applied 

and instead remanded for consideration of whether more limited discovery would be 

justified under the Garner good cause analysis. 

To analyze the question, the Commonwealth Court turned to the ALI Principles

adopted in Cuker, recognizing that they provide a paradigm for derivative litigation. It 

explained that Section 7.13(e) specifically addressed the attorney-client privilege. The 

Commonwealth Court observed that the Comment to Section 7.13(e), as well as the 

Reporter’s Note, referenced the nine-factor Garner “good cause” analysis as an 

“accepted doctrine” applicable to attorney-client privilege in derivative litigation. Id. at 

 

12 The Current Management originally filed the appeal in the Superior Court which 

transferred the case to the Commonwealth Court in December 2015, because the 

Commonwealth Court has appellate jurisdiction over “[a]ll actions or proceedings relating 

to corporations not-for-profit arising under Title 15 (relating to corporations and 

unincorporated associations)” and actions involving the corporate affairs of not-for-profit 

corporations. 42 Pa.C.S. § 762(5). The Commonwealth Court ordered the parties to brief 

the basis for an appeal of the order given that the order appealed was not final. Cmwlth. 

Ct. Order of Feb. 22, 2016.

In its subsequent opinion, the Commonwealth Court concluded that the case presented 

an appealable collateral order involving the discovery of materials that were potentially 

subject to the attorney-client privilege and work product doctrine. In re: Pittsburgh History 

and Landmarks Foundation, 161 A.3d 394, 397 (Pa. Cmwlth. 2017) (citing 

Commonwealth v. Blystone, 119 A.3d 306 (Pa. 2015)).
[J-26A&B-2018] - 16

407. The court quoted the Fifth Circuit Court of Appeals in Garner as opining that, in 

derivative actions by stockholders, the protections of the stockholders’ interests “as well 

as those of the corporation and of the public require that the availability of the privilege 

be subject to the right of the stockholders to show cause why it should not be invoked in 

the particular instance.” Id. at 406 (quoting Garner, 430 F.2d at 1103 - 04). 

The Commonwealth Court additionally considered the applicability of Section 85 

of the Restatement (Third) of the Law Governing Lawyers, entitled “Communications 

Involving a Fiduciary Within an Organization.”

13

 The court recognized that this Court has 

often relied upon the Restatement (Third) of the Law Governing Lawyers when 

addressing the parameters of the attorney-client privilege. Id. at 407 (citing Gillard v. AIG 

Ins. Co., 15 A.3d 44 (Pa. 2011)). It opined that, like the ALI Principles, Section 85

 

13 In full, Section 85, entitled “Communications Involving a Fiduciary Within an 

Organization,” provides:

In a proceeding involving a dispute between an organizational 

client and shareholders, members, or other constituents of the 

organization toward whom the directors, officers, or similar 

persons managing the organization bear fiduciary 

responsibilities, the attorney-client privilege of the 

organization may be withheld from a communication 

otherwise within § 68 if the tribunal finds that:

(a) those managing the organization are charged with breach 

of their obligations toward the shareholders, members, or 

other constituents or toward the organization itself;

(b) the communication occurred prior to the assertion of the 

charges and relates directly to those charges; and

(c) the need of the requesting party to discover or introduce 

the communication is sufficiently compelling and the threat to 

confidentiality sufficiently confined to justify setting the 

privilege aside.

Restatement (Third) of the Law Governing Lawyers § 85 (2000).
[J-26A&B-2018] - 17

“essentially adopts the Garner potential exception to the attorney-client privilege in suits 

where there is a fiduciary relationship.” Id. 

The Commonwealth Court then interpreted Section 7.13 of the ALI Principles and 

Section 85 of the Restatement (Third) of the Law Governing Lawyers as allowing courts 

to withhold the “the attorney-client privilege for a communication that occurred prior to the 

assertion of charges [by derivative plaintiffs] and relating directly to those charges” and, 

importantly, viewed it to be “in addition to the limited waiver of the attorney-client privilege 

to legal opinions based on the submission to the trial court of an investigating committee’s 

report in support of a motion to dismiss.” Id. at 408 (emphasis removed). 

Accordingly, the Commonwealth Court vacated the trial court’s order and 

remanded for that court to engage in a Garner good cause analysis to determine whether 

the attorney-client privilege should be withheld in this case. The court seemed to 

contemplate that discovery could be allowed regarding several categories of information 

sought by the Derivative Plaintiffs.

14

 The court opined, however, that the discovery

allowed under the Garner good cause analysis would be more limited than the discovery 

previously ordered by the trial court, specifically emphasizing that it would not provide for 

discovery related to counsels’ advice regarding the pending litigation. Id. at 410. 

The court also interpreted a key phrase of Section 7.13(e), which provides for 

discovery of “related legal opinions,” as only requiring the current management in 

derivative litigation to produce to derivative plaintiffs’ formal legal opinions given to the 

Independent Committee “‘pertaining to the same general subject matter’ as the 

[Independent Committee's] counsel's formal opinion.” Id. at 411 (quoting ALI Principles

 

14 Specifically, the Commonwealth Court opined that the trial court could order discovery 

related to legal advice about “efforts to pack the nonprofit corporation boards,” about 

specified investments of the board, and “about whether a Board could vote out all existing 

Trustees and elect successors based on a state statute, where a Board by-law only 

provided for termination of directors for cause,” if the advice was “rendered at about the 

time of those alleged events and before the current suit was pending.“ Id. at 410.
[J-26A&B-2018] - 18

§ 7.13(e) cmt. e). The court recognized that this terminology related to the process 

contemplated by other provisions of Section 7.13 under which management submits to 

the court, in support of its motion to dismiss, a formal legal opinion that the committee 

has relied upon to conclude that the derivative litigation is not in the best interests of the 

corporation. The Commonwealth Court recognized that Section 7.13(e)’s requirement 

that current management provide derivative plaintiffs with “related legal opinions” was 

“intended to discourage opinion shopping” whereby current management would only 

disclose to the trial court and the derivative plaintiffs those legal opinions that supported 

dismissal of the derivative action. The Commonwealth Court presumed that Current 

Management had to produce legal opinions that pertain to “whether continuing the current 

litigation is in the best interest of the nonprofit corporations.” Id. The court, however, 

warned that it did not provide for the general disclosure of “any legal opinion from any 

time,” which had been provided to the Committee. Id.

The Commonwealth Court next addressed the question of whether Derivative 

Plaintiffs should be permitted to talk with Attorney Nelson, the former General Counsel. 

The court remanded the issue to the trial court to apply the Garner good cause analysis 

to determine whether to withhold the attorney-client privilege but also cautioned that, even 

if the trial court deemed it permissible, any discussion with Attorney Nelson should be 

limited to “communications that were roughly contemporaneous with the events giving 

rise to the litigation,” which would relate to the time period she served as General Counsel 

between 2009-2012. Id.

The Commonwealth Court also briefly addressed the Derivative Plaintiffs’

assertion of the fiduciary exception to the attorney-client privilege. The court faulted the 

trial court for failing to recognize that the fiduciary exception as expressed in Section 84 

of the Restatement (Third) of the Law Governing Lawyers requires the existence of a 
[J-26A&B-2018] - 19

trust. Instead, it agreed with the court in Garner, which used the fiduciary exception as a 

“starting point,” but “struggled . . . to characterize corporate management’s duties as 

being co-extensive with those of a common law trustee.” Id. at 412 (quoting Garner, 430 

F.2d at 1101 - 02). 

Finally, the Commonwealth Court considered Derivative Plaintiffs’ assertion of the 

co-client exception to the attorney-client privilege. The court opined that the Plaintiffs’

claim was based upon an exception provided in Section 75 of the Restatement (Third) of 

the Law Governing Lawyers, addressing the situation where clients are “jointly 

represented by the same lawyer in a matter.” Id. at 412 (quoting Restatement (Third) of 

the Law Governing Lawyers § 75 (2000)). The Commonwealth Court summarized this 

section as providing “that the privilege cannot be raised by one co-client against another 

in subsequent adverse proceedings between them.” Id. at 413 (citing In re Teleglobe 

Communications Corp., 493 F.3d 345 (3

d Cir. 2007)). 

The Commonwealth Court concluded that the application of the co-client exception 

was problematic in the case at bar. Based upon the pleadings in the current case, the 

Commonwealth Court opined that any co-client relationship between Derivative Plaintiffs

and Current Management, as jointly represented by Attorney Nelson, likely dissolved 

sometime between 2009 and 2012, when the interests of the parties diverged such that 

there was no “common” interest. Observing that all parties agreed that the Foundation 

was the true client of Attorney Nelson, the court further noted that precedent addressing 

legal representation of corporations recognized that “corporations must act through 

persons” and that “control of the privilege passes with control of the corporation.” Id.

(citing In re Teleglobe Communications Corp., 493 F.3d at 362). 

As applied to this case, the court concluded that, because Current Management

had control of the Foundation and the Corporation, they also held the privilege for the 
[J-26A&B-2018] - 20

entities. The court, therefore, rejected application of the co-client exception to the current 

litigation and remanded the case to the trial court to engage in a Garner analysis to 

determine if Derivative Plaintiffs demonstrated good cause why the attorney-client 

privilege should not prevent their discovery of the requested documents.

IV. Parties’ Arguments

The parties filed cross-petitions for allowance of appeal raising four issues, which 

this Court granted. Current Management challenged the Commonwealth Court’s 

adoption of the “good cause” analysis as set forth in Garner and Section 85 of the 

Restatement.

15 Derivative Plaintiffs cross-appealed challenging the Commonwealth 

Court’s refusal to apply the fiduciary exception and the co-client exception as basis for 

deeming the attorney-client privilege inapplicable to the documents they seek.16 

 

15 Current Management raised the following Issues:

a. Whether, in the context of derivative litigation, the 

Commonwealth of Pennsylvania will adopt the qualified 

attorney-client privilege, the scope of which is subjectively 

determined, as articulated in the often criticized decision of 

Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970), cert. 

denied, 401 U.S. 974 (1971), and as articulated in the 

Restatement (Third) of the Law Governing Lawyers, § 85, 

where the ambiguous and uncertain scope of such a privilege 

is inconsistent with Pennsylvania Supreme Court precedent 

and in conflict with the Pennsylvania statute codifying the 

attorney-client privilege.

b. Whether, even if this Court adopts Garner’s qualified 

attorney-client privilege as the law of Pennsylvania, such a 

privilege is applicable to derivative litigation that arises out of 

disputes between former Board members and current Board 

members with no corresponding fiduciary relationship.

16 Derivative Plaintiffs asserted the following issues:

a. Whether the fiduciary duty exception to the attorney-client 

privilege is applicable to discovery sought by either the 

derivative not-for-profit corporate Plaintiff or the purportedly 
[J-26A&B-2018] - 21

A. Current Management’s Appeal - Applicability of Good Cause Analysis

Current Management assert that the good cause analysis as described in Garner 

and Section 85 of the Restatement is contrary to the Pennsylvania statute codifying the 

attorney-client privilege, 42 Pa.C.S § 5928,17 and the caselaw interpreting it. They view 

the statutory privilege as unequivocally instructing that “counsel shall not be competent 

or permitted to testify to confidential communications made to him by his client, nor shall 

the client be compelled to disclose the same.” Defs.’ Br. at 22 (quoting 42 Pa.C.S. 

§ 5928).

Current Management maintain that the Garner good cause analysis is 

fundamentally different from any exceptions to the attorney-client privilege that have been 

countenanced under Pennsylvania jurisprudence. With other exceptions, Current 

 

removed Trustees of the not-for-profit corporation who are 

bringing the derivative action, when the corporation received 

and/or paid for the advice in question which was given 

regarding and at the time of events occurring while the 

individual Derivative Plaintiffs were unquestionably Trustees.

b. Whether the common interest or co-client exception to the 

attorney-client privilege is applicable to discovery sought by 

either the derivative not-for-profit corporate Plaintiff or the 

purportedly improperly removed Trustees of the not-for-profit 

corporation who are bringing the derivative action, when the 

corporation received and/or paid for the advice in question, 

which was given regarding and at the time of events occurring 

while the individual Derivative Plaintiffs were unquestionably 

Trustees.

17 Section § 5928, entitled “Confidential communications to attorney,” provides in full,

In a civil matter[,] counsel shall not be competent or permitted 

to testify to confidential communications made to him by his 

client, nor shall the client be compelled to disclose the same, 

unless in either case this privilege is waived upon the trial by 

the client.

42 Pa.C.S. § 5928.
[J-26A&B-2018] - 22

Management observe that there is certainty as to whether the privilege applies based on 

the subject matter at the time of the communication. For example, the fiduciary exception 

applies only if a fiduciary relationship of a trust exists. Moreover, Current Management

emphasize that if the privilege applies, then it applies absolutely. In contrast, Current 

Management argue that the good cause analysis is not an exception but rather a different 

type of attorney-client privilege, which they view as a “qualified privilege.” They contend 

that the Garner good cause analysis involves “a purely subjective analysis, subjecting 

both counsel and the client to uncertain outcomes of the analysis.” Defs.’ Br. at 31, see 

also id. at 29-30 (reviewing scholarly and judicial criticism of the good cause analysis). 

According to Current Management, the inconsistency engendered would erode the ability 

of clients and counsel to communicate freely about issues relating to the corporation.

For similar reasons, Current Management argue for the rejection of Section 85 of 

the Restatement (Third) of the Law Governing Lawyers. They view Section 85 as 

providing even less predictability than the Garner good cause analysis because, rather 

than utilizing Garner’s nine factors, the Restatement provides for a court to consider 

whether the “need of the requesting party . . . is sufficiently compelling and the threat to 

confidentiality sufficiently confined to justify setting the privilege aside.” Defs.’ Br. at 33 

(quoting Restatement (Third) of the Law Governing Lawyers § 85), Defs.’ Second Br. at 

27.

Current Management next explain that the adoption of Section 7.13 of the ALI 

Principles by this Court in Cuker does not equate to an adoption of the Garner good cause 

analysis. Instead, they contend that the adoption of Section 7.13 can and should be 

interpreted to conform to Pennsylvania’s attorney-client privilege law. They highlight, as 

did the Commonwealth Court, that Section 7.13(e) provides for the limited production of 

“related legal opinions” to derivative plaintiffs if the corporation’s current management 
[J-26A&B-2018] - 23

submits a legal opinion to the court in support of its motion to dismiss the derivative 

litigation. Current Management emphasize that the phrase “related legal opinions” does 

not require the production of all legal opinions received by the corporation, including those 

sought by the Plaintiffs that preexisted the formation of the committee investigating the 

derivative action. They maintain that this limited production is logical because the ALI 

Principles come into play only in the context of a defendant’s motion to dismiss a 

derivative action based upon the recommendation of the independent committee. 

Additionally, Current Management emphasize that a court’s review of the board’s or 

committee’s determination to terminate the derivative litigation involves not the merits of 

the decision but only whether “the board's or committee's determinations fail to satisfy the 

requirements of the business judgment rule.” Defs.’ Second Br. at 31-32 (quoting ALI 

Principles § 7.10). Accordingly, they aver that any production of privileged documents 

that preexisted the formation of the Committee should be considered under standard 

attorney-client privilege rather than under Section 7.13(e)’s provision for the production 

of “related legal opinions.”

In contrast, Derivative Plaintiffs urge this Court to follow the lead of our sister courts 

that have adopted the Garner good cause analysis. They propose that the Garner good 

cause analysis provides “a mechanism to handle attorney-client privilege and work 

product within the unique realm of shareholder derivative litigation involving fiduciary 

aspects.” Pls.’ Br. at 20. To refute Current Management’s reliance on Pennsylvania’s 

statutory attorney-client privilege, they emphasize that other states have incorporated the 

Garner good faith analysis despite having a similar statutory privilege, including Delaware 

in Wal-Mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW, 95 A.3d 

1264 (Del. 2014). 
[J-26A&B-2018] - 24

Derivative Plaintiffs maintain that the Commonwealth Court correctly concluded 

that Section 7.13 and its Comments incorporated the Garner good cause analysis.

Derivative Plaintiffs reject Current Management’s assertion that this Court in Cuker

adopted Section 7.13 only to the extent it is consistent with preexisting Pennsylvania’s

attorney-client privilege law. In contrast, Derivative Plaintiffs argue that our holding in 

Cuker does not suggest a piecemeal adoption of Section 7.13, but rather adopts it in full. 

Pls.’ Br. at 25. 

Derivative Plaintiffs reject Current Management’s complaint that the Garner good 

cause analysis would create uncertainty and inconsistency in application. They assert 

that the detailed nine-factor good cause analysis in Garner provides the necessary 

guidance and observe that the test has been adopted and applied by a number of 

jurisdictions. Id. at 32 (compiling cases adopting Garner). 

Derivative Plaintiffs argue that application of the Garner good cause analysis is 

appropriate in the current case where both Derivative Plaintiffs and Current Management 

were fiduciaries of the Foundation and the Corporation at the time of the relevant 

communications between counsel and the Foundation and Corporation. Derivative 

Plaintiffs assert that they are exercising their fiduciary duties in bringing the derivative 

action for the benefit of the Foundation and the Corporation, which are identified in the 

caption as both plaintiffs and defendants. 

Derivative Plaintiffs additionally support the adoption of the Garner good cause 

analysis by reference to Section 85 of Restatement (Third) of Law Governing Lawyers, 

which, in their view, incorporates a test similar to the Garner good cause analysis, see 

supra at 16 n.13. They highlight that this Court has relied upon this Restatement, 

generally, in the past in regard to other questions related to the attorney-client privilege. 

Id. at 36 (citing Gillard, 15 A.3d at 52). Derivative Plaintiffs contend that this Court in 
[J-26A&B-2018] - 25

Gillard refused a strict construction of the statutory attorney-client privilege and instead 

extended the privilege to include communications from attorneys to clients as well as from 

clients to attorneys, as encompassed in Section 69 of the Restatement. They thus urge 

this Court to look to Section 85 of the Restatement.

B. Derivative Plaintiffs Cross-Appeal

In the event that the Court declines to adopt the Garner good cause analysis, 

Derivative Plaintiffs argue in the alternative for the application of the fiduciary exception 

and the co-client exception. In response, Current Management seek to refute the 

underlying premise of both of Derivative Plaintiffs’ asserted exceptions, which they view 

as based upon Derivative Plaintiffs’ attempts to align themselves with the Foundation and 

Corporation as the clients holding the attorney-client privilege, when Current 

Management argue that Derivative Plaintiffs are merely former board members.

1. Fiduciary Exception

Derivative Plaintiffs explain that under the fiduciary exception, the attorney-client 

privilege cannot be asserted by a trustee against a trust’s beneficiaries where the attorney 

provided advice regarding the management of the trust in which the beneficiaries hold an 

interest. Pls.’ Br. at 49-50 (relying upon Follansbee, 56 Pa. D. & C. 4th 483). Likewise, 

Derivative Plaintiffs argue that Current Management, as trustees owing a fiduciary duty 

to the Foundation and the Corporation, cannot assert the attorney-client privilege against 

the Foundation and the Corporation. They claim that the legal advice sought in this case 

was provided to the Foundation and the Corporation, and those entities hold the privilege

through all the trustees, including Derivative Plaintiffs. Derivative Plaintiffs assert that 

they are bringing the claims for the privilege-holding Foundation and Corporation, and 

therefore, the privilege cannot be asserted by Current Management against them. 
[J-26A&B-2018] - 26

Derivative Plaintiffs seek the reversal of the Commonwealth Court’s conclusion 

that the fiduciary duty exception is inapplicable absent a trust. Derivative Plaintiffs claim 

that the trustees of a nonprofit corporation serve functions similar to trustees for a trust. 

They observe that nonprofit corporations are granted tax-exempt status because they are 

organized to benefit the public, as a trust is organized for the benefit of the beneficiaries. 

Similar to trustees of a trust, the trustees on the Foundation’s and Corporation’s Boards

are required by the bylaws to “administer, manage, preserve and protect the property” of 

the nonprofit corporations. Id. at 47. Derivative Plaintiffs also cite a federal decision 

recognizing that the fiduciary exception has been applied outside of the trust context to 

relationships between “unions and members, lawyers and other lawyers, banks and 

clients, and general partners in both general and limited partnerships.” Pls.’ Reply Br. at 

12-13 (quoting Lugosch v. Congel, 219 F.R.D. 220, 243 (N.D.N.Y. 2003)).

In contrast, Current Management maintain that the fiduciary doctrine can be 

invoked only by one who could be considered a beneficiary of a trust and owed a fiduciary 

duty by the trustee. Explaining the underlying logic of the fiduciary exception, Current 

Management contend that trustees of a trust “are functioning as proxies for the 

beneficiary, and in accordance with the terms of the trust instrument. By definition, 

communications between a trustee and trust counsel are legally equivalent to 

communications with the beneficiaries.” Defs.’ Second Br. at 44. Current Management

assert that the trust paradigm does not apply to Derivative Plaintiffs who are not the 

beneficiaries of a trust. For the fiduciary exception to be relevant, Current Management

contend that Derivative Plaintiffs would have to show that Current Management or the 

Foundation/Corporation owed Derivative Plaintiffs a fiduciary duty. They assert that this 

case “involves the reverse scenario” where Derivative Plaintiffs, as former members of 
[J-26A&B-2018] - 27

the Board of Trustees, owed fiduciary duties to the Foundation or the Corporation. Id. at 

3. 

2. Co-Client/ Exception

Additionally, Derivative Plaintiffs continue to assert the applicability of the co-client

or common interest exception. They summarize these similar doctrines as providing that 

“[w]hen parties with a common interest have counsel and later become adverse, neither 

party can assert the attorney-client privilege or attorney work product privileges as to 

materials generated during the period of common interest.” Pls.’ Br. at 53. They 

additionally assert that our sister courts have applied the common interest and the coclient doctrine “to require a corporation to produce otherwise attorney-client privileged 

materials in suits involving directors of the corporation.” Id. at 54-55 (collecting cases).

Derivative Plaintiffs assert that they share a common interest with the Foundation 

and the Corporation because their “interests never diverged since the [Derivative 

Plaintiffs] are discharging the duty placed upon them by the Bylaws to ‘administer, 

manage, preserve and protect the property’ of the corporation.” Id. at 52. They 

emphasize that they have not sought any recovery for themselves as individuals.

Derivative Plaintiffs further contest the Commonwealth Court’s utilization of the 

presumption that only the current management of a corporation should be deemed to hold 

the privilege for the corporation. Instead, they argue that the presumption should not 

apply when plaintiffs are alleging that the current management obtained control 

improperly.

Current Management respond by arguing that Derivative Plaintiffs have conflated 

two doctrines, which they contend are distinct in that “[t]he common interest doctrine 

applies when multiple clients are represented by separate counsel, and the [co-client]

privilege applies when a single lawyer represents multiple clients.” Defs.’ Second Br. at 
[J-26A&B-2018] - 28

48. First, addressing the common interest doctrine, Current Management explain that the 

doctrine is “an extension of the attorney-client privilege” in which clients represented by 

separate attorneys waive their privilege in regard to each other to allow counsel to 

coordinate their defense, but do not waive the privilege as to third parties. Id. Current 

Management assert that the parties in this case did not utilize separate counsel to 

coordinate a defense against a common adversary. They assert that the doctrine simply 

does not apply to the facts.

Turning to the co-client doctrine, Current Management recognize that it applies 

where a single attorney represents multiple clients. For the doctrine to apply, Current 

Management claim that the clients have to share “an identical or nearly identical legal 

interest, so that their shared attorney can represent them with the candor and loyalty 

required by the ethical rules.” Id. at 51. Current Management assert that no Pennsylvania 

court has ever applied this concept “to eliminate the distinction between a corporation’s 

officers and directors and the corporation itself,” id., in contrast to other states which 

employ a “collective corporate client” approach in which directors are treated as co-clients 

of the corporate counsel. Id. at 52-53. They argue that this approach is antithetical to

Pennsylvania, which instead employs the “entity is the client” approach. Id. at 54. Current 

Management explain that the “entity is the client” approach recognizes that the entity acts

through its current management, and not through former directors, such as Derivative 

Plaintiffs. Id. at 55. 

Moreover, Current Management express concern with a rule that would essentially 

waive the privilege anytime a person in management leaves their position: “To rule 

otherwise would defeat the expectation of confidentiality, and would chill the willingness 

of corporate management to speak candidly about privileged matters, knowing that 
[J-26A&B-2018] - 29

someday one of their number may leave and become adverse to the corporation.” Id. at 

59.

V. Analysis

A. Cuker and the ALI Principles

Prior to addressing the questions in this case, we first review our decision in Cuker

and the ALI Principles adopted therein addressing derivative litigation. In Cuker, a group 

of shareholders made a demand on the company to pursue litigation against some of the 

company’s directors and officers, claiming mismanagement. As in the case at bar, the 

company created a special litigation committee to consider the demand. While the 

committee was investigating, a second group of shareholders filed suit against the 

company’s officers and directors raising similar issues to those of the original

shareholders’ demand. Subsequently, the special litigation committee concluded that 

pursuing the derivative litigation was not in the corporation’s best interest, a decision later 

adopted by the board. The board’s denial precipitated a second action filed by the first 

group of shareholders. Both groups of shareholders litigated the claims on separate 

tracks resulting in inconsistent verdicts, which this Court addressed under our King’s 

Bench powers. 

First, the Court in Cuker clarified that, while no Pennsylvania court had overtly 

adopted the business judgment rule, it had been applied by our courts for over a century. 

The Court summarized the doctrine: “[T]he business judgment rule reflects a policy of 

judicial noninterference with business decisions of corporate managers, presuming that 

they pursue the best interests of their corporations, insulating such managers from 

second-guessing or liability for their business decisions in the absence of fraud or selfdealing or other misconduct or malfeasance.” Id. at 1046. Next, the Court held that the 

business judgment rule applied to management decisions related to derivative litigation, 
[J-26A&B-2018] - 30

concluding that such decisions are “business decisions as much as any other financial 

decisions.” Id. at 1048.

The Court acknowledged confusion in Pennsylvania law caused by the absence

of a “procedural mechanism for implementation and judicial review of the board’s 

decision” to terminate the derivative litigation. Id. Accordingly, the Court provided the 

following structure: “Without considering the merits of the action, a court should determine 

the validity of the board's decision to terminate the litigation; if that decision was made in 

accordance with the appropriate standards, then the court should dismiss the derivative 

action prior to litigation on the merits.” Id. The Court noted that the judicial intervention 

should be minimized and instructed that only limited discovery should be permitted in 

such cases. It provided six factors for trial courts to consider in evaluating a board’s 

decision to terminate derivative litigation.

18

 If the factors are met, then “the business 

judgment rule applies and the court should dismiss the action.” Id. 

 

18 The Court set forth the following six considerations:

[1] whether the board or its special litigation committee was 

disinterested,

[2] whether it was assisted by counsel, 

[3] whether it prepared a written report,

[4] whether it was independent, 

[5] whether it conducted an adequate investigation, and 

[6] whether it rationally believed its decision was in the best 

interests of the corporation (i.e., acted in good faith).

Id. at 1048. 
[J-26A&B-2018] - 31

To implement this broad framework, the Court specifically adopted ALI Principles

Sections 7.02-7.10 and 7.13,19 which it found relevant to the case before it, concluding 

that those “sections set forth guidance which is consistent with Pennsylvania law and 

precedent, which furthers the policies inherent in the business judgment rule, and which 

provides an appropriate degree of specificity to guide the trial court in controlling the 

proceedings.” Id. at 1049. In so doing, the Court noted that it had previously relied upon 

the scholarship of the ALI and that the ALI Principles are “generally consistent with 

Pennsylvania precedent.” Id.

While Cuker addressed the general process of derivative litigation in Pennsylvania 

through the application of the business judgment rule and the adoption of the relevant ALI 

Principles, we now consider in detail one of the adopted sections, specifically Section

7.13, as we grapple with the role of attorney-client privilege in derivative litigation. We 

recognize the conceptual difficulties of the attorney-client privilege in derivative litigation 

where both sides profess to represent the corporation, which is the true client and holder 

of the privilege but which cannot act on its own. Nevertheless, we also observe that 

Pennsylvania courts have utilized the presumption set forth in Commodity Futures 

Trading Commission v. Weintraub, 471 U.S. 343, 348-49 (1985), that current 

management of a solvent corporation has the authority to act on behalf of the corporation, 

including in regard to the attorney-client privilege. See Maleski by Chronister v. Corporate 

Life Ins. Co., 641 A.2d 1, 3 (Pa. Cmwlth. 1994) (citing 15 Pa.C.S. § 1721 (providing that 

all powers . . . vested by law in a business corporation shall be exercised by or under the 

authority of . . . a board of directors”); see also Red Vision Systems, Inc. v. National Real 

 

19 The Court summarized the relevant provisions: “Sections 7.02 (standing), 7.03 (the 

demand rule), 7.04 (procedure in derivative action), 7.05 (board authority in derivative 

action), 7.06 (judicial stay of derivative action), 7.07, 7.08, and 7.09 (dismissal of 

derivative action), 7.10 (standard of judicial review), and 7.13 (judicial procedures).” Id.

at 1049.
[J-26A&B-2018] - 32

Estate Information Services, L.P., 108 A.3d 54, 60-61 (Pa. Super. 2015) (discussing 

Weintraub, 471 U.S. 343).

Section 7.13, which has been adopted in Pennsylvania, broadly addresses judicial 

procedures for adjudicating motions to dismiss the derivative litigation following 

management’s decision to adopt an independent committee’s recommendation to decline 

to pursue the derivative claims demanded by plaintiffs. Subsection 7.13(a) mandates that 

the corporation “file with the court a report or other written submission setting forth the 

procedures and determinations of the board or committee” in support of the motion to 

dismiss. ALI Principles § 7.13(a). It further requires that “[a] copy of the report or other 

written submission, including any supporting documentation filed by the corporation, shall 

be given to the plaintiff's counsel.” Id. 

Under subsection (c), discovery is permissible only “if the plaintiff has 

demonstrated that a substantial issue exists whether the applicable standards of § 7.08, 

§ 7.09, § 7.10, § 7.11, or § 7.12 have been satisfied and if the plaintiff is unable without 

undue hardship to obtain the information by other means.”20 Id. at § 7.13(c). The 

subsection also cautions trial courts to grant only limited discovery “in the absence of 

special circumstances” and to allow it only in regard to what the court views as relevant 

to the applicable standards of the listed sections and “consistent with an expedited 

resolution of the motion” to dismiss the derivative litigation. Id. 

As noted, Section 7.13 addresses the attorney-client privilege in subsection (e) in 

regard to motions to dismiss derivative litigation based upon the recommendation of the 

independent committee, providing in full as follows:

§ 7.13 Judicial Procedures on Motions to Dismiss a Derivative 

Action Under § 7.08 or § 7.11

* * * *

 

20 The listed sections generally address standards for dismissing litigation. 
[J-26A&B-2018] - 33

(e) Privilege. The plaintiff’s counsel should be furnished a 

copy of related legal opinions received by the board or 

committee if any opinion is tendered to the court under 

§ 7.13(a). Subject to that requirement, communications, both 

oral and written, between the board or committee and its 

counsel with respect to the subject matter of the action do not 

forfeit their privileged character, and documents, memoranda, 

or other material qualifying as attorney’s work product do not 

become subject to discovery, on the grounds that the action 

is derivative or that the privilege was waived by the production 

to the plaintiff or the filing with the court of a report, other 

written submission, or supporting documents pursuant to 

§ 7.13.

Relevantly, the first sentence of subsection (e) requires the corporation to provide 

plaintiff’s counsel not only with the committee’s report which was submitted to the court 

in support of dismissing the derivative litigation under subsection (a), but also a “copy of 

related legal opinions” reviewed by the board or committee, even if not relied upon in the 

dismissal recommendation.21 The Comment to subsection (e) explains that the written 

submission of the committee’s report in favor of dismissing the derivative litigation “waives 

the privilege as to such documents and, to a more limited extent, as to the process of 

their preparation.”22 Id. at cmt. e.

As Current Management in the case at bar accept, the Comment explains that the 

disclosure to derivative plaintiffs of the other “related legal opinions” is consistent with 

long-standing attorney-client jurisprudence involving a party’s utilization of the “reliance 

on counsel defense.” Courts have recognized that a party cannot defend an action by 

claiming reliance upon an attorney’s advice and then refuse to provide the opposing side 

 

21 The remaining portions of subsection (e) address communications between the board 

or the committee and its counsel and that counsel’s work product in regard to the 

derivative litigation. Derivative Plaintiffs assert that they are not seeking this category of 

documents. Accordingly, we will not discuss those provisions.

22 Given the length of Comment (e), we will summarize the relevant portions rather than 

reproducing it in full. 
[J-26A&B-2018] - 34

with that advice. Likewise, the Comment reasons that “it would be unfair if the board or 

committee could rely on legal advice from its counsel that the action was not meritorious 

as a ground for dismissing the action and then deny plaintiff access to the substance of 

that advice.” Id. According to the Comment, this process protects against “opinion 

shopping without chilling the board’s or committee’s access to confidential legal advice.” 

Id. Nevertheless, as indicated in the Reporter’s Note, “additional discovery of the board’s 

or committee’s counsel is not intended by § 7.13(e), even though the tender of the opinion 

to the court might be deemed a waiver of the privilege under traditional formulations of 

the privilege.” Id. at Reporter’s Note 4.

Comment (e) additionally discusses the nine-factor Garner good cause analysis.23

Notably, Comment (e) acknowledges that the Garner good cause analysis has been 

widely adopted by courts confronted with the scenario where a derivative plaintiff is 

attempting to represent the corporation that is the “client” in the attorney-client 

relationship. It explains that the good cause analysis does not deem the privilege to be 

wholly unavailable. Instead, it merely allows plaintiffs to demonstrate “‘good cause’ why 

the privilege should not be applied against” them and provides courts with criteria to 

determine whether plaintiffs have demonstrated the necessary good cause. Id. at cmt. e.

Comment (e) to Section 7.13, however, does not necessarily adopt the Garner

good cause analysis. Instead, the Comment focuses on only two of the nine Garner

factors, specifically “whether the communication is of advice concerning the litigation itself 

and whether the communication related to past or prospective actions.” Id. (quoting 

Garner, 430 F.2d at 1104) (internal quotation marks removed). The Comment 

emphasizes that the cases applying Garner in regard to these two factors have withheld 

the privilege in relation to materials that were “roughly contemporaneous with the events 

 

23

 The Garner factors are set forth in full infra at 36 n.25. 
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giving rise to the litigation” but refused to allow plaintiffs access to communications related 

to the pending derivative litigation. Id.

The Comment highlights that the Garner line of cases, therefore, does not conflict 

with Section 7.13(e) which provides similar protections for communications between 

committee and its counsel concerning the pending litigation and “only requires disclosure

to the plaintiff of the report or other written submission to the court and any supporting 

documentation,” under subsection 7.13(a) for purposes of adjudicating a motion to 

dismiss derivative litigation. Id. Notably, the Comment does not speak to the other seven 

factors, nor does it expressly adopt the test in full.24 Accordingly, we conclude that this 

Court’s adoption in Cuker of Section 7.13 does not equate to an adoption of the Garner 

test, which we consider and ultimately reject in the next sections of this opinion.

B. The Garner Good Cause Analysis

As noted, Derivative Plaintiffs urge the Court to adopt the Garner good cause 

analysis. In Garner, the United States Court of Appeals for the Fifth Circuit considered

the assertion of the attorney-client privilege by a corporation’s current management 

against derivative shareholders, who brought claims on behalf of the corporation alleging 

that the current management engaged in, inter alia, securities violations and fraud to the 

detriment of the corporation as well as the shareholders. 

The Garner court recognized the tension inherent in the attorney-client privilege in 

derivative litigation. It acknowledged that the privilege encourages current management 

 

24 The remaining paragraphs of Comment (e) address issues relating to whether the filing 

or production of documents under Section 7.13(e) results in the waiver of the privilege in 

regard to third parties, including the press. As this issue is not before this Court, we will 

not address it. 

Comment (f), which addresses the work product doctrine, explains that “counsel's notes, 

internal drafts, correspondence with witnesses, and similar materials should normally be 

protected from disclosure under the work product doctrine, regardless of the availability 

of the attorney-client privilege.” ALI Principles § 7.13 cmt f.
[J-26A&B-2018] - 36

to seek the guidance of counsel without the fear that the content of the discussions will 

later be divulged to disgruntled shareholders. Nevertheless, it also observed that 

management acts not for its own benefit but for the shareholders’ benefit, such that the 

shareholders are arguably the clients for purposes of the privilege. Garner, 430 F.3d at 

1101. 

In weighing the equities, the Garner court ultimately rejected a view of the attorneyclient privilege as absolute in derivative litigation and instead reasoned as follows:

The attorney-client privilege still has viability for the corporate 

client. The corporation is not barred from asserting it merely 

because those demanding information enjoy the status of 

stockholders. But where the corporation is in suit against its 

stockholders on charges of acting inimically to stockholder 

interests, protection of those interests as well as those of the 

corporation and of the public require that the availability of the 

privilege be subject to the right of the stockholders to show 

cause why it should not be invoked in the particular instance.

Id. at 1103 - 04. The court then provided nine factors to consider in determining whether 

derivative plaintiffs have demonstrated good cause for piercing the attorney-client 

privilege.

25

 

25 The nine factors are as follows:

[1.] the number of shareholders and the percentage of stock 

they represent; [2.] the bona fides of the shareholders; [3.] the 

nature of the shareholders’ claim and whether it is obviously 

colorable; [4.] the apparent necessity or desirability of the 

shareholders having the information and the availability of it 

from other sources; [5.] whether, if the shareholders’ claim is 

of wrongful action by the corporation, it is of action criminal, or

illegal but not criminal, or of doubtful legality; [6.] whether the 

communication related to past or to prospective actions; [7.] 

whether the communication is of advice concerning the 

litigation itself; [8.] the extent to which the communication is 

identified versus the extent to which the shareholders are 

blindly fishing; [and] [9.] the risk of revelation of trade secrets 
[J-26A&B-2018] - 37

As noted, a number of courts that have considered the issue have adopted this 

framework for attorney-client privilege in derivative litigation. See, e.g., Wal-Mart Stores, 

Inc. v. Indiana Elec. Workers Pension Trust Fund IBEW, 95 A.3d 1264 (Del. 2014); see 

also John W. Gergacz, Attorney-Corporate Client Privilege § 6:2 n.2 (3d, 2018-2 ed.). 

Other courts, however, have rejected the analysis as inconsistent with their precedent 

relating to the attorney-client privilege. See, e.g., Shirvani v. Capital Investing Corp. Inc., 

112 F.R.D. 389 (D. Conn. 1986); see also Gergacz, §6.2 n.1. Of particular note, Judge 

Wettick of the Allegheny County Court of Common Pleas considered the application of 

the Garner good case analysis in Agster v. Barmada, 43 Pa. D. & C. 4th 353 (Allegheny 

C.C.P. 1999). He rejected the analysis on the basis that “Pennsylvania has a stronger 

attorney-client privilege than the privilege recognized in those jurisdictions that use a 

balancing approach.” Id. at 370. He held that “[a] qualified attorney-client privilege is 

inconsistent with the rulings of the Pennsylvania Supreme Court that the purpose of the 

privilege is to guarantee the confidentiality of an attorney-client communication.” Id. at 

371.

C. Garner and the Attorney-Client Privilege in Pennsylvania

We now consider whether to affirm the Commonwealth Court’s adoption of the 

Garner good cause analysis in light of Pennsylvania’s attorney-client privilege 

jurisprudence.26 We have often recognized the conflict inherent in the attorney-client 

privilege. On the one hand, our precedent disfavors evidentiary privileges which are “in 

 

or other information in whose confidentiality the corporation 

has an interest for independent reasons. 

Id. at 1104

26 As we have previously observed, questions involving application of the attorney-client 

privilege are questions of law. Accordingly, our standard of review is de novo and our 

scope of review is plenary. See, e.g., In re: Thirty-Third Statewide Investigating Grand 

Jury, 86 A.3d 204, 215 (Pa. 2014). 
[J-26A&B-2018] - 38

tension with the truth-determining process of the justice system,” as they result in the 

exclusion of evidence. Levy v. Senate of Pennsylvania, 65 A.3d 361, 368 (Pa. 2013). 

Nevertheless, we have emphasized the need for protection of various types of 

communications though the establishment of privileges. Of these privileges, the attorneyclient privilege is often considered “the most revered.” In re: Investigating Grand Jury of 

Philadelphia County, 593 A.2d 402, 405 (Pa. 1991). 

The attorney-client privilege as codified by the General Assembly, 42 Pa.C.S. 

§ 5928, and applied by our courts is intended to foster open discussion between counsel 

and client. Only with full information from the client can an attorney provide relevant and 

sound legal advice. A client, however, will not reveal all necessary information to counsel 

if she fears that the information could later be disclosed.27 Indeed, we have observed 

that application of the attorney-client privilege does not actually result in the loss of 

evidence in the truth-determining process because “the client would not have written or 

uttered the words absent the safeguards of the attorney-client privilege.” Levy, 65 A.3d 

at 371 (quoting Paul R. Rice, Attorney-Client Privilege in the United States, § 2:3 (2012)). 

In an often-cited explanation, the United States Supreme Court detailed that the 

purpose of the privilege “is to encourage full and frank communication between attorneys 

and their clients and thereby promote broader public interests in the observance of law 

 

27 This Court aptly described the rationale underlying attorney-client privilege over a 

century ago, 

[If the privilege did not apply], then a man about to become 

involved in complicated business affairs, whereby he would 

incur grave responsibilities, should run away from a lawyer 

rather than consult him. If the secrets of the professional 

relation can be extorted from counsel in open court, by the 

antagonist of his client, the client will exercise common 

prudence by avoiding counsel.

National Bank of West Grove v. Earle, 46 A. 268, 269; see also Gillard, 15 A.3d at 49. 
[J-26A&B-2018] - 39

and administration of justice.” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); 

see also Levy, 65 A.3d at 368; Gillard, 15 A.3d at 47 n.1. While the absence of the 

privilege curtails frank discussion and the resulting legal advice, so too does uncertainty 

regarding the application of the privilege. We fully agree that “[a]n uncertain privilege, or 

one which purports to be certain but results in widely varying applications by the courts, 

is little better than no privilege at all.” Upjohn Co., 449 U.S. at 393, see also Levy, 65 

A.3d at 371; Gilliard, 15 A.3d at 51 n.5. To decide whether to engage in communications, 

attorneys and clients must be able to predict whether those communications are protected

by the privilege. 

With this framework in mind, we consider the applicability of the Garner good 

cause analysis to Pennsylvania’s attorney-client privilege in the context of a motion to 

dismiss derivative litigation pursuant to ALI Principle 7.13 as adopted by this Court in 

Cuker. We acknowledge that the Garner analysis is an understandable attempt to provide 

balance in the unusual scenario of derivative litigation where both the defendants, in the 

form of current management, and the plaintiffs, asserting claims for the benefit of the 

corporation, are attempting to speak for the corporation. At its most basic, the nine-factor 

analysis attempts to evaluate if derivative plaintiffs have created enough of a question 

regarding current management’s actions to justify the withholding of the attorney-client 

privilege for the benefit of the corporation, as the true client. 

We conclude that the Garner good cause analysis is inconsistent with the attorneyclient privilege under Pennsylvania jurisprudence because it eliminates the necessary 

predictability of the privilege. Rather than providing clarity and certainty, the Garner test 

requires attorneys and clients to speculate how a court in the future will weigh the nine 

subjective and amorphous factors in an attempt to discern whether a derivative plaintiff 

has brought a sufficient claim to allow the abrogation of the current management’s 
[J-26A&B-2018] - 40

assertion of the attorney-client privilege in regard to legal advice provided by the 

corporation’s lawyers. The reality is that this weighing of the factors would result in current 

managers and the corporation’s attorneys having no meaningful way of determining 

whether their otherwise privileged communications would be later divulged in derivative 

litigation discovery. As a result, corporate management would be less willing to discuss 

issues with corporate counsel, and corporate counsel would caution corporate 

management not to speak with her candidly. As a matter of simple logic, this will result 

in corporate managers being forced to act without necessary legal guidance in an already 

complicated legal environment. We conclude that this is inconsistent with the revered 

nature of the attorney-client privilege in Pennsylvania, and the clarity of it, which has been 

codified by our legislature and applied continuously by our courts. 28 

Moreover, we conclude that the ALI Principles adopted by this Court in Cuker, and 

specifically Section 7.13(e) addressing attorney-client privilege in regard to motions to 

dismiss derivative actions, provide an appropriate framework for derivative litigation, 

making the subjective Garner factors unnecessary.

29 This framework provides the 

derivative plaintiff with a path to challenge the validity of an independent committee’s

decision not to pursue derivative litigation and allows limited discovery, including some 

 

28 Our holding herein should be read against the facts and legal questions presented in 

the case currently before the Court, which solely concerns whether the Commonwealth 

Court was correct in remanding for a Garner good-cause analysis in a case where the 

current management of a corporation has filed a motion to dismiss the litigation based 

upon an independent committee’s recommendation. Although we acknowledge that the

consideration of whether Garner is consistent with Pennsylvania attorney-client privilege 

jurisprudence may have applicability in other scenarios, we reserve judgment on such

questions, which deserve to be considered independently as they may well raise different 

considerations. 

29 As previously mentioned, see supra 6, n.3, the General Assembly has codified our 

adoption of the ALI Principles to some extent. We do not address the exact contours of 

the recently adopted provisions but generally recognize that the statutory provisions, like 

the ALI Principles, provide a framework to address the tensions inherent in derivative 

litigation.
[J-26A&B-2018] - 41

privileged material which would otherwise not be permissible in standard litigation. 

Nevertheless, as noted, the ALI Principles protect the current management team through 

application of the business judgment rule, which has long been a part of Pennsylvania 

jurisprudence. 

In addition to rejecting the Garner good cause analysis, we likewise decline to 

incorporate Section 85 of the Restatement (Third) of the Law Governing Lawyers, which, 

like Garner, utilizes a nebulous analysis of whether the plaintiffs’ needs are “sufficiently

compelling and the threat to confidentiality sufficiently confined to justify setting the 

privilege aside.” Restatement (Third) of the Law Governing Lawyers § 85

D. Applicability of the Fiduciary and Co-Client Exceptions

Regarding Derivative Plaintiffs’ invocation of the fiduciary and co-client exceptions, 

we observe that Derivative Plaintiffs’ argument is essentially based upon their claim that 

they are asserting the rights of the Foundation and the Corporation as clients in the 

attorney-client relationship to whom both Current Management and Derivative Plaintiffs

owe a fiduciary duty as trustees or former trustees. We agree with the Commonwealth 

Court, however, that the derivative relationship involved in this case does not fit within the 

construct of either exception, as the Derivative Plaintiffs are neither owed a fiduciary duty 

by the corporate entities or Current Management nor were Derivative Plaintiffs co-clients 

with the corporate entities or Current Management. Rather than attempt to force the 

derivative fact pattern into these ill-fitting constructs, we instead utilize the procedures 

specifically designed for derivative litigation adopted by this Court in Cuker, which we 

view as providing the appropriate balance between protecting current management under 

the business judgment rule and allowing derivative plaintiffs to assert claims on behalf of 

the corporation. 

VI. Summary
[J-26A&B-2018] - 42

Accordingly, we vacate the orders of the trial court and the Commonwealth Court. 

We additionally remand the matter to the trial court for reconsideration of Derivative 

Plaintiffs’ motion to compel in a manner that is consistent with this opinion.

Chief Justice Saylor and Justices Donohue, Dougherty and Wecht join the opinion.

Justice Todd files a concurring and dissenting opinion.

Justice Mundy files concurring and dissenting opinion in which Justice Todd joins.