Court Opinion

ID: 9960427
Source: CourtListenerOpinion
Date Created: 2024-04-16 14:07:54.123327+00
Date Added: 2024-06-11T08:19:27.584778
License: Public Domain

SYLLABUS

This syllabus is not part of the Court’s opinion. It has been prepared by the Office
of the Clerk for the convenience of the reader. It has been neither reviewed nor
approved by the Court and may not summarize all portions of the opinion.

Comprehensive Neurosurgical, P.C. v. The Valley Hospital (A-52-22) (087469)

Argued November 29, 2023 -- Decided April 16, 2024

FASCIALE, J., writing for a unanimous Court.

       The Court considers The Valley Hospital’s challenge to a jury verdict in favor
of a group of eleven neurosurgeons and their practice group, Comprehensive
Neurosurgical, P.C. (collectively, plaintiffs). A jury awarded plaintiffs $24,300,000
in damages based on their claim that Valley did not deal with them fairly or act in
good faith when it granted another group of neurosurgeons exclusive privileges in
areas for which plaintiffs had held privileges.

        Plaintiffs joined Valley’s medical staff in 2003. Over the years, they
expanded their group, and they helped grow Valley’s neurosurgical programs and
facilities as well. In addition to holding core hospital and admitting privileges,
plaintiffs were given the right to “cover” the Emergency Room (ER) by treating
“unassigned” ER patients who arrive to the ER on an emergency basis and are not
any other neurosurgeon’s established patient. Plaintiffs’ practice at Valley primarily
derived from treating those “unassigned” ER patients. Plaintiffs also received
“specialized privileges” authorizing them to use the “Biplane” and “Gamma Knife”
equipment they helped implement.

       When a new hospital opened six miles from Valley in 2013, plaintiffs obtained
privileges there as well. In 2015, Valley granted a different group of neurosurgeons
exclusive rights to use the “Biplane” and “Gamma Knife” equipment and to treat
“unassigned” ER patients, thereby revoking plaintiffs’ privileges in those areas.
Plaintiffs allege that grant of exclusive rights was not a valid administrative
healthcare decision, but rather a form of retaliation for their perceived disloyalty in
joining the new hospital. Valley alleges that the decision was valid in part because
plaintiffs were diverting patients from Valley to the new hospital.

       Plaintiffs filed a complaint against Valley. Following summary judgment
motions, two claims reached the jury: (1) a breach of contract claim seeking money
damages, in which plaintiffs alleged that Valley had breached its Medical Staff
Bylaws (the Bylaws) by failing to provide plaintiffs with a hearing; and (2)
plaintiffs’ breach of the implied covenant of good faith and fair dealing claim, for
                                          1
which they also sought money damages. The trial court determined that plaintiffs’
challenge to Valley’s grant of exclusive privileges as an invalid administrative
determination was “subsumed” within the implied covenant claim because the “same
arguments” could be used for both.

       At trial, plaintiffs presented emails from Valley’s general counsel turned over
by Valley during the discovery process. Prior to discovery, the parties agreed that
any inadvertent disclosures could be “clawed back,” and Valley attempted to “claw
back” the emails from counsel, asserting that they were protected by the attorney-
client privilege. Plaintiffs’ counsel also stressed in summation that Valley had
presented little evidence that plaintiffs had diverted patients from Valley to the new
hospital. Counsel made that argument despite knowing that materials plaintiffs had
submitted in discovery showed sixty cases of patient transfers that were excluded
from admission because Valley learned of them only after granting exclusive rights
to the other neurosurgery group. The jury ultimately found no cause of action on the
breach of contract claim based on the lack of a hearing, but it awarded damages
based on the breach of implied covenant claim.

       Valley appealed, and the Appellate Division affirmed both the denial of
summary judgment and the jury’s verdict. Valley petitioned for certification,
arguing that summary judgment should have been granted in its favor because courts
traditionally defer to hospitals’ administrative healthcare policy decisions that
“genuinely serve[] a legitimate public-health objective,” Berman v. Valley Hospital,
103 N.J. 100, 107 (1986), “including the selection of [its] medical staff,” Desai v. St.
Barnabas Medical Center, 103 N.J. 79, 90 (1986). Valley argues in the alternative
that substantial cumulative errors tainting the jury verdict require a new trial.
According to Valley, the jury was improperly permitted -- through an unclear verdict
sheet and instructions -- to find that Valley had breached an implied covenant of
good faith and fair dealing. Valley also contends that the jury verdict was tainted by
the erroneous admission into evidence of privileged emails and by the misleading
remarks plaintiffs’ attorney made in summation. The Court granted certification.
254 N.J. 210 (2023).

HELD: Plaintiffs’ good faith and fair dealing claim properly survived summary
judgment, but the jury was not correctly charged or asked to rule on that claim. The
trial judge failed to instruct the jury that the only underlying contract to which the
implied covenant could attach to had to be one beyond the rights afforded by the
Bylaws. Adding to the significant uncertainty created by the jury charge and verdict
sheet are the improper admission into evidence of the privileged emails and the
improper remarks by plaintiffs’ attorney. Those errors, cumulatively, had the
capacity to lead the jury to reach a verdict it would not have otherwise reached and
thus deprived Valley of a fair trial.

                                           2
1. A claim for breach of the covenant of good faith and fair dealing that is implied
by law into every contract requires a plaintiff to demonstrate that the defendant’s
alleged misdeeds prevented the plaintiff from enjoying the full benefit of a particular
bargain. Although medical staff bylaws impose reciprocal legal obligations and
rights between those who agreed to be bound, those obligations do not give rise to a
traditional contract, to a claim for the traditional contract remedy of damages, or to a
separate breach of the implied covenant claim. Instead, when a hospital violates its
medical staff bylaws, equitable relief may be available. Thus, plaintiffs here would
have been entitled to a hearing if Valley had violated the Bylaws by failing to
provide one in the first place; the jury, however, expressly found that Valley did not
violate the Bylaws. The Bylaws cannot constitute the underlying contract for
purposes of plaintiffs’ separate breach of the implied covenant claim. (pp. 28-34)

2. Just as the Bylaws here offer no ground for a breach of an implied covenant of
good faith and fair dealing claim, Valley’s administrative healthcare decision to
award exclusive privileges to a particular group cannot on its own give rise to a
claim for breach of the implied covenant of good faith and fair dealing. A hospital
may not act in bad faith and simultaneously serve a “genuine” healthcare objective
based on “reasonable and reliable” information. See Desai, 103 N.J. at 91-93.
Physicians who are adversely affected by a hospital’s administrative healthcare
decision may challenge that decision by arguing that it was not made in accordance
with the standard set forth in Desai. Here, however, the trial judge concluded that
plaintiffs’ challenge to the Valley’s grant of exclusive privileges was “subsumed”
with their implied covenant claim. As a result, the legal principles related to
Valley’s administrative decision became relevant only as to its defense to the implied
covenant claim, and not as an asserted basis for money damages. (pp. 34-38)

3. The final basis advanced in the course of this litigation for finding that Valley
was bound to act in good faith and deal fairly with plaintiffs is an alleged implied
contract between the parties, one that goes “beyond the Bylaws.” Plaintiffs allege
that, from Valley’s initial offer to join and collaboratively build Valley’s
neuroscience department and from the parties’ course of dealings since plaintiffs
joined, it can be reasonably inferred that an implied contract existed between
plaintiffs and Valley that would allegedly support their expectation to indefinitely
maintain their privileges and rights absent a valid administrative healthcare decision
providing otherwise. In the event that plaintiffs could demonstrate that all the
fundamental elements of contract formation had been established, their theory of an
agreement beyond the rights afforded by the Bylaws would be contractual in nature.
Among the three possible sources to support plaintiffs’ claim here -- the Bylaws,
Valley’s administrative healthcare decision, and the alleged implied-in-fact contract
between plaintiffs and Valley -- the only alleged source of mutual obligation to
which the implied covenant of good faith and fair dealing could properly attach to is
the implied-in-fact contract. (pp. 38-41)
                                           3
4. The Court explains how the evidence in the record, taken in the light most
favorable to plaintiffs, was sufficient to raise a factual dispute as to whether there
was an implied-in-fact contract between plaintiffs and Valley and whether Valley
acted in bad faith in revoking certain of plaintiffs’ privileges, such that the claim
properly survived summary judgment. Although the claim properly reached the jury,
however, the jury charge and verdict sheet did not properly instruct the jurors on the
elements of the claim. Notably, the jury was given no law on how to measure
Valley’s defense to the implied covenant claim, and consideration of the jury charge
as a whole raises significant doubt as to whether the jury found the underlying
contract for plaintiffs’ implied covenant claim to be some implied or oral agreement
beyond the Bylaws, or just the Bylaws. The jury could have come to a different
result had it been correctly instructed on the contract claims, especially because the
underlying contract on the implied covenant claim -- purportedly an endless right to
treat “unassigned” ER patients with special tools -- was not in writing. (pp. 41-52)

5. The emails between Valley and its general counsel for the purpose of legal
advice, rather than business purposes, are protected by the attorney-client privilege.
Valley did not place its general counsel’s pre-litigation legal advice “in-issue,” nor
did it call its general counsel as a witness. Valley’s inadvertent disclosure of the
emails -- allegedly consisting of 352 pages -- in the course of an exchange of about
57,000 documents in roughly two months did not amount to waiver of the attorney-
client privilege. The parties’ discovery agreement’s claw-back provision anticipated
precisely such an inadvertence. And admission of the emails into evidence was not
harmless. Select emails in many ways became the centerpiece of plaintiffs’ case.
On remand, if plaintiffs attempt to introduce emails from the batch Valley attempted
to claw back, the judge should conduct a document-by-document review to
determine whether the emails are privileged and thus not admissible. (pp. 52-58)

6. Certain comments by plaintiffs’ trial counsel in summation were improper.
Plaintiffs’ trial counsel knew that Valley had evidence of sixty cases of patient
transfers. The summation remarks implied, however, that there was evidence of only
two cases of patient transfers, and that inaccurate statement impacted Valley’s
contention that it made a valid healthcare decision. (pp. 58-61)

7. The cumulative errors here deprived Valley of a fair trial and warrant a new one.
The Court sets forth specific guidance for the remand proceedings. (pp. 61-62)

      REVERSED. The verdict on the implied covenant claim is VACATED,
and the matter is REMANDED for further proceedings.

CHIEF JUSTICE RABNER and JUSTICES PATTERSON, SOLOMON,
PIERRE-LOUIS, WAINER APTER, and NORIEGA join in JUSTICE
FASCIALE’s opinion.
                                          4
SUPREME COURT OF NEW JERSEY
   A-52 September Term 2022
             087469

          Comprehensive
    Neurosurgical, P.C., d/b/a
      North Jersey Brain and
     Spine Center, Patrick A.
    Roth, MD, Roy D. Vingan,
     MD, George J. Kaptain,
     MD, Daniel E. Walzman,
     MD, Hooman Azmi, MD,
       Harshpal Singh, MD,
    Kangmin Daniel Lee, MD,
    Reza J. Karimi, MD, Bruce
       C. Zablow, MD, Ugo
        Paolucci, MD, and
     Mohammed Faraz Khan,
               MD,

     Plaintiffs-Respondents,

                v.

      The Valley Hospital,
      The Board of Trustees
     of the Valley Hospital,
       and Valley Hospital
    President Audrey Meyers,

     Defendants-Appellants,

               and

     Neurosurgical Associates
     of New Jersey, P.C., and
    Anthony D’Ambrosio, MD,

                1
                     Defendants.

        On certification to the Superior Court,
                  Appellate Division.

      Argued                       Decided
  November 29, 2023              April 16, 2024

Christopher S. Porrino argued the cause for appellants
(Lowenstein Sandler, and Wollmuth Maher & Deutsch,
attorneys; Christopher S. Porrino, of counsel and on the
briefs, and Robert G. Nuse and R. Scott Thompson, on
the briefs).

Peter G. Verniero argued the cause for respondents (Sills
Cummis & Gross, attorneys; Peter G. Verniero, Joseph B.
Fiorenzo, and Stephen M. Klein, of counsel and on the
briefs, and James M. Hirschhorn and Michael S. Carucci,
on the briefs).

Ross A. Lewin argued the cause for amicus curiae New
Jersey Hospital Association (Faegre Drinker Biddle &
Reath, attorneys; Ross A. Lewin, of counsel and on the
brief).

Ross A. Lewin submitted a brief on behalf of amicus
curiae American Hospital Association (Faegre Drinker
Biddle & Reath, attorneys; Ross A. Lewin, of counsel
and on the brief).

Daniel B. Frier submitted a brief on behalf of amici
curiae The Medical Society of New Jersey and the
American Medical Association (Frier Levitt, attorneys;
Daniel B. Frier, Todd Mizeski, Nicole M. DeWitt,
Theresa M. DiGuglielmo, and Conor R. McCabe, on the
brief).

                          2
           JUSTICE FASCIALE delivered the opinion of the Court.

      In this appeal, The Valley Hospital (Valley) challenges a jury verdict in

favor of a group of eleven neurosurgeons and their practice group,

Comprehensive Neurosurgical, P.C., d/b/a/ North Jersey Brain & Spine Center

(collectively, plaintiffs). A jury awarded plaintiffs $24,300,000 in damages

based on their claim that Valley did not deal with them fairly or act in good

faith when it granted another group of neurosurgeons exclusive privileges in

areas for which plaintiffs had held privileges.

      Valley first argues that the trial judge should have granted summary

judgment in its favor because courts traditionally defer to hospitals’

administrative healthcare policy decisions that “genuinely serve[] a legitimate

public-health objective,” Berman v. Valley Hospital, 103 N.J. 100, 107 (1986),

“including the selection of [its] medical staff,” Desai v. St. Barnabas Medical

Center, 103 N.J. 79, 90 (1986). Valley argues in the alternative that

substantial cumulative errors tainting the jury verdict require a new trial.

According to Valley, the jury was improperly permitted -- through an unclear

verdict sheet and instructions -- to find that Valley had breached an implied

covenant of good faith and fair dealing. Valley also contends that the jury

verdict was tainted by the erroneous admission into evidence of privileged

                                        3
emails and by misleading remarks that plaintiffs’ attorney made in summation

when he emphasized Valley’s lack of evidence on an issue despite knowing

that such evidence existed.

      Although we find that plaintiffs’ good faith and fair dealing claim

properly survived summary judgment, we agree that the jury was not correctly

charged or asked to rule on that claim. The trial judge failed to instruct the

jury that the only underlying contract to which the implied covenant could

attach to had to be one beyond the rights afforded by Valley’s Medical Staff

Bylaws (the Bylaws). Adding to the significant uncertainty created by the jury

charge and verdict sheet are the improper admission into evidence of the

privileged emails and the improper remarks by plaintiffs’ attorney.

      Despite the deference with which we consider jury verdicts, we find that

those errors, cumulatively, had the capacity to lead the jury to reach a verdict

it would not have otherwise reached and deprived Valley of a fair trial.

Accordingly, we reverse the appellate court’s judgment, vacate that part of the

verdict on plaintiffs’ implied covenant of good faith and fair dealing claim,

and remand for further proceedings consistent with this opinion.

                                        I.

      We derive the factual overview that follows from the evidence and

testimony presented at trial. Mindful that a substantial retrial will follow our

                                        4
decision, we endeavor to attribute differing accounts to the parties that made

them, and also emphasize that no factual findings may be inferred from the

overview presented here.

      Plaintiffs -- initially a group of two neurosurgeons -- joined the Valley

Hospital Medical Staff Organization (Medical Staff) in 2003. 1 Upon arrival,

plaintiffs received “core privileges” allowing them to perform common

neurosurgery procedures, and “admitting privileges” permitting them to admit

their already-established patients into Valley. Valley also gave plaintiffs the

right to “cover” the Emergency Room (ER) by treating “unassigned” ER

patients who arrive to the ER on an emergency basis and are not any other

neurosurgeon’s established patient. Plaintiffs’ practice at Valley primarily

derived from treating those “unassigned” ER patients.

      Over the following years, plaintiffs expanded their practice from two to

up to twelve neurosurgeons. Additional neurosurgeons and practice groups

also obtained privileges and joined the Medical Staff. For example, Dr.

1
  Valley’s Medical Staff is an organization “responsible to the governing body
of the hospital.” See N.J.A.C. 8:43G-16.1 (titled “Medical staff structural
organization”).
                                       5
Anthony D’Ambrosio of the Columbia Neurosurgical Network-NJ (the

Columbia Group) joined the Medical Staff in July 2007.2

      With plaintiffs’ help, Valley’s programs and facilities grew during that time

as well. Plaintiffs helped establish Valley’s “Spine Center,” contributed to the

creation of Valley’s “Neuro-oncology program,” and introduced specialized

neurosurgical equipment, such as the “Biplane” angiography system and the

“Gamma Knife” radiosurgery procedure, which allowed the neurosurgeons to

perform minimally invasive surgeries rather than “opening” patients’ skulls.

Valley granted “specialized privileges” to the physicians in plaintiffs’ practice

group who focused their craft on treating stroke and aneurysm patients. The

“specialized privileges” authorized them to use the “Biplane” and “Gamma

Knife” equipment they helped implement. 3

      By 2008, Valley had opened its “Neuroscience Center of Excellence,”

which included a “Comprehensive Stroke Center.” According to testimony by

a Valley executive, Valley sought to enhance its programs further by creating a

2
 The record does not clearly reflect whether other physicians in the Columbia
Group joined at the same time as Dr. D’Ambrosio. Further, a solo practitioner,
Dr. Duncan Carpenter, and a third practice group, Bergen Passaic
Neurosurgery, also joined Valley at some point prior to 2015.
3
  The record is unclear as to how many members of plaintiffs’ practice group
were granted “specialized privileges” for those devices and how many
additional surgeons were granted the same privileges.

                                         6
“Neuroscience Strategic Planning Committee” tasked with “implementing

alignment strategies” between Valley and the neurosurgeons on the Medical

Staff. One such “alignment strategy” included a possible co-management

agreement. 4 The Valley executive testified that the Columbia Group was

“pretty excited” about the possibility of a co-management structure while

plaintiffs’ group “was skeptical.”

      Meanwhile, six miles down the road from Valley, Hackensack

University Medical Center took over a hospital that had previously closed and

began the process of reopening it as “Hackensack University Medical Center at

Pascack Valley” (Hackensack). Valley launched several attempts to prevent

that reopening, including a lawsuit where it relied principally on N.J.S.A.

26:2H-8 to argue there was no “need” to open a new medical facility in the

area. Valley ultimately lost that suit on appeal, and Hackensack opened

around June 2013. Hackensack thereafter granted plaintiffs privileges to treat

patients at Hackensack. In a meeting with plaintiffs, Valley’s President and

CEO, Audrey Meyers, expressed that she disliked how plaintiffs

simultaneously held privileges and leadership positions at both Valley and

Hackensack.

4
  Generally, a co-management agreement is an agreement between hospitals
and physicians to align with one another and to work with each other toward
common goals.
                                       7
      According to Valley, its satisfaction with plaintiffs’ performance

deteriorated over time, exacerbated by concerns over plaintiffs’ relationship

with Hackensack. In 2014, Valley’s Vice President of Planning and

Government Relations, Gail Callandrillo, along with Valley’s data analysis

team and one independent consultant, evaluated Valley’s neurosurgical

services. Specifically, they compared “data relating to volume, quality,

utilization and complication rates” between patients cared for by the Columbia

Group and plaintiffs. That analysis served as the basis for a study authored by

Callandrillo and outside counsel, which the parties have called the “White

Paper.”

      Valley’s White Paper stated that plaintiffs had lower inpatient and

outpatient volumes, performed fewer neurosurgery procedures at Valley,

maintained a higher leakage rate, 5 and overall rendered a lower quality of

patient care than did the Columbia Group. The White Paper also suggested

that plaintiffs had engaged in so-called “patient transfers,” which involved

“accruing patients from [Valley’s] Emergency Department consult and

subsequently performing [] procedures at another facility, presumably

[Hackensack] given their strong connection to that organization.” After

5
  “Leakage” is a term used to describe when a hospital’s patient obtains
healthcare outside the hospital network. One consequence of leakage is loss of
revenue.
                                       8
ultimately concluding that the Columbia Group outperformed plaintiffs, the

White Paper recommended that Valley enter into an exclusive agreement with

the Columbia Group (the Exclusive Agreement).

      Meyers and the Staff Development Committee of the Valley Board of

Trustees then presented the White Paper to the entire Valley Board of

Trustees, recommending that Valley enter into the Exclusive Agreement. The

Board agreed, and in December 2015, Valley and the Columbia Group signed

the Exclusive Agreement providing the Columbia Group with the exclusive

right over Valley’s “unassigned” ER patients, as well as exclusive access to

the “Gamma Knife” and “Biplane” equipment.

      Thereafter, Meyers notified plaintiffs about the Exclusive Agreement.

She explained that the Columbia Group was given exclusive rights to Valley’s

“unassigned” ER patients but that plaintiffs were still permitted to admit and

treat their established patients. Plaintiffs demanded Valley “immediately

revoke” the Exclusive Agreement and asserted that its practical effect revoked

their privileges. Plaintiff Patrick Roth testified that being cut off from treating

“unassigned” ER patients meant that plaintiffs’ practice was “dead in the

water” because “all strokes are emergency by definition” and therefore most

stroke patients are “unassigned.”

                                         9
      The parties dispute whether plaintiffs complied with the procedural

requirements for requesting a hearing in accordance with the Bylaws. Those

Bylaws, initially approved by Valley’s governing body in 1984 and amended

twenty-seven times since, govern procedures for physician appointment and

reappointment, set physician qualifications, provide for the conferral of

hospital privileges, and afford certain procedural rights, including a hearing

under certain circumstances. As relevant here, if promptly requested in

writing, Medical Staff members may be entitled to a hearing under the Bylaws

upon receipt of a “notice of a corrective action . . . which if ratified . . . would

adversely affect the [member’s] appointment, reappointment to the Medical

Staff, or clinical privileges on the Medical Staff.” (emphasis added).

      Without conducting a hearing, Valley responded that its actions did not

constitute a revocation of plaintiffs’ privileges and refused to “immediately

revoke” the Exclusive Agreement.

                                         II.

                                         A.

      In late January 2016, plaintiffs filed a verified complaint and order to

show cause (OTSC) in the Chancery Division. Plaintiffs alleged that

             [t]he Valley Defendants have unilaterally sought to
             terminate the rights and Medical Staff privileges of
             [plaintiffs] for entirely improper reasons, including:
             (1) [Meyers] sought to punish perceived disloyalty
                                         10
            because [plaintiffs] professionally associated with
            Meyers’ rival at Hackensack University Medical
            Center; and (2) to enforce Meyers’ demand to exclude
            Medicaid and similar financially distressed patients
            from Valley Hospital. To accomplish this wrongful
            objective, they determined to push out [plaintiffs] by
            contracting with [the Columbia Group] to exclusively
            perform nearly all of the procedures [plaintiffs] have
            developed at Valley. Not only were the Valley
            Defendants motivated by illegal purposes -- in flagrant
            disregard of this state’s public policy, which requires
            that hospital’s actions further legitimate patient-care
            needs -- but the Valley Defendants also concocted an
            illegal scheme to deny [plaintiffs] even the right to be
            heard before their privileges are terminated, as required
            by the [Bylaws].

In the Chancery Division, plaintiffs sought to enjoin Valley from allegedly

terminating their hospital privileges and from restricting their ability to treat

“unassigned” ER patients.

      On the initial return date of the OTSC, the chancery judge did not enter

restraints and instead temporarily retained jurisdiction over the entire matter

while the parties conducted expedited discovery. The parties jointly consented

to a protective order enabling either party, if necessary, to “claw back” any

documents that might be inadvertently produced. Over the next approximate

two months of discovery, the parties exchanged over 57,000 documents. Two

significant events transpired during the exchange of discovery.

      The first involved a set of emails that Valley produced. Valley invoked

the protective order to “claw back” emails it claimed to have inadvertently
                                        11
produced. Valley contended that the emails contained legal advice from

Valley’s general counsel, Robin Goldfischer, including suggestions about how

to provide proper documentary support for the hospital’s decision to enter into

the Exclusive Agreement.

      Plaintiffs refused to return the requested emails and instead filed a

motion seeking to retain them. The chancery judge reviewed the emails in-

camera and concluded that they were protected by the attorney-client privilege.

The judge determined, however, that Valley waived the privilege by placing

the White Paper “in-issue” and by disclosing the emails in discovery. Despite

noting that plaintiffs could access the information in the emails “in a less

intrusive manner,” the judge granted plaintiffs’ motion and allowed them to

keep the emails.

      The second significant result of discovery was that Valley found

evidence tending to support its suspicion that plaintiffs were engaging in

patient transfers. Documents produced by plaintiffs revealed that sixty cases

of patient transfers occurred between 2012 and 2014, tending to support what

the White Paper suggested was occurring.

      The chancery judge denied plaintiffs’ application for a permanent

injunction and transferred the case to the Law Division. Valley later

                                       12
unsuccessfully sought reconsideration of the order permitting plaintiffs to keep

the emails.

                                       B.

                                       1.

      In the Law Division, plaintiffs amended the complaint that they filed in

the Chancery Division. In their amended pleading, they alleged that Valley

(1) engaged in an invalid exercise of its discretionary healthcare powers (the

“Berman” claim); (2) violated the doctrine of fundamental fairness;

(3) breached the Bylaws by failing to provide a hearing (the purported “breach

of contract” claim); (4) breached the implied covenant of good faith and fair

dealing; (5) tortiously interfered with prospective economic benefit; and

(6) committed trade libel. 6

      The parties then moved for summary judgment. The trial judge denied

those motions, finding that there existed genuine issues of material fact,

primarily pertaining to whether Valley properly terminated plaintiffs’

privileges.

6
  Plaintiffs also named the Board of Trustees of the Valley Hospital, Meyers,
the Columbia Group (now called Neurosurgical Associates of New Jersey,
P.C.), and Dr. D’Ambrosio as co-defendants. Plaintiffs’ claims against the
Columbia Group and Dr. D’Ambrosio included allegations that they tortiously
interfered with prospective economic advantage and tortiously interfered with
a contract. All claims against the named co-defendants were dismissed on
summary judgment.
                                      13
      Two claims reached the jury: (1) a breach of contract claim seeking

money damages, in which plaintiffs alleged that Valley had breached the

Bylaws by failing to provide them with a hearing; and (2) plaintiffs’ breach of

the implied covenant of good faith and fair dealing claim, for which they also

sought money damages. The trial judge determined that plaintiffs’ challenge

to Valley’s decision to enter into the Exclusive Agreement -- i.e., the

“Berman” claim -- was “subsumed” within the implied covenant claim because

the “same arguments” could be used for both. He therefore treated the Berman

claim and the breach of the implied covenant of good faith and fair dealing

claim as a single count. All other claims were dismissed.

                                       2.

      During the trial, plaintiffs presented arguments about Valley’s alleged

breach of the Bylaws as well as the alleged impropriety of Valley’s

administrative healthcare decision. Specifically, plaintiffs argued that Valley’s

decision to enter into the Exclusive Agreement was a spiteful rebuke for

plaintiffs’ relationship with Hackensack. According to plaintiffs, the White

Paper was not forward-looking research designed to assess Valley’s status and

to determine what changes would best allow Valley’s neuroscience department

to meet the needs of the public. Instead, plaintiffs claimed the White Paper

                                       14
was a “sham” document prepared to justify, retroactively, Valley’s decision to

punish plaintiffs because of perceived disloyalty to Valley.

        Plaintiffs also presented testimony and evidence supporting the mutual

obligations that plaintiffs alleged that they and Valley had agreed to.

According to plaintiffs, those obligations arose from (1) Valley’s persuasion

and encouragement of plaintiffs to join the Medical Staff at a time when its

neuroscience department was relatively undeveloped; (2) plaintiffs’ agreement

to join the Medical Staff believing that Valley wanted plaintiffs to help

transform the hospital into a “Neuroscience Center of Excellence”; and (3)

plaintiffs’ continuing efforts to meet Valley’s goals, which included research,

travel, and applying for State funding support. Dr. Roth testified at trial that in

return, plaintiffs expected to run Valley’s ER “forever”; he explained to the

jury:

              I looked at [Valley’s request] as a quid pro quo,
              meaning you know, we’re going to build this [ER],
              we’re going to modernize it, we’re going to stop this
              flow of patients from outside [Valley] to [other
              hospitals] and . . . we’re going to do a great job of
              manning [the ER] and . . . in return it’s ours to lose.

        Valley opposed the breach of contract claim, arguing that it was not

required to grant a hearing under the Bylaws. On plaintiffs’ breach of the

implied covenant claim, Valley denied that the Bylaws would somehow

                                        15
guarantee plaintiffs privileges in perpetuity, regardless of the best interests of

the hospital or the public. Moreover, Valley defended its decision to enter into

the Exclusive Agreement as a valid exercise of hospital administrative

discretion -- due deference under Berman and Desai -- based on an analysis of

patients’ needs and of the practice groups’ respective performances.

      In developing its defense, Valley attempted to show that its concerns

about plaintiffs diverting patients from Valley to Hackensack were grounded

in reality rather than animus. Valley therefore attempted to question a witness

about the transfers of patients to Hackensack. Plaintiffs’ counsel objected to

that line of questioning, arguing that Valley’s current knowledge of the

transfers -- derived during discovery -- is “irrelevant” to prove that it acted in

good faith back when it entered into the Exclusive Agreement years before.

The trial judge sustained plaintiffs’ objection. Valley’s counsel then requested

that plaintiffs “be precluded from arguing [that the transfers] didn’t happen.”

The transcript reflects that the trial judge did not respond to that request.

      In summation, plaintiffs’ counsel attempted to discredit Valley’s

argument about the patient transfers by noting that Valley only mentioned two

such instances. Plaintiffs’ counsel then went on to ask the jury: “[D]o you

think that if there were more, [Valley] would have presented them to us? Do

you think if they existed, they would have found their way into the [White

                                        16
Paper]?” (emphases added). Valley did not object to the comments. The

summation transcript also reveals that plaintiffs’ counsel referred to the

privileged emails at least three times during summation.

                                         3.

        During the jury charge conference, there was considerable debate among

the parties and the trial judge about how to instruct the jury on contract

formation when medical staff bylaws are involved. Plaintiffs asked that the

jury be instructed according to Joseph v. Passaic Hospital Ass’n, 26 N.J. 557

(1958), to prevent confusion because “[t]here is no offer, acceptance,

consideration in the context of the [Bylaws].” 7 After a dialogue over the

meaning of Joseph, the trial judge stated that plaintiffs “still need to prove the

existence of a contract. And the mere fact that there are [Bylaws] doesn’t

mean that they had a contract for what’s at issue here at trial.”

        Ultimately, as to plaintiffs’ claim that Valley violated the Bylaws by

withdrawing their privileges without a hearing, the judge instructed the jury

that,

              [t]o establish [their] contract claim against the
              defendant[,] plaintiffs must prove that, one, the parties
              entered into a contract containing certain terms.

7
  In Joseph, this Court held that, under the hospital’s medical staff bylaws, the
plaintiff physician was entitled to a hearing before the hospital revoked his
privileges. 26 N.J. at 570.
                                        17
             Two, the plaintiff[s] did what the contract required the
             plaintiffs to do.

             Three, the defendant did not do what the contract
             required the defendant to do. This failure is called a
             breach of the contract.

             Four, the defendant’s breach or failure to do what the
             contract required caused a loss to the plaintiffs.

In his more detailed instructions on contract formation principles, the judge

explained:

             There is no requirement that a contract be in writing,
             that it be dated, or that it be signed by either party. It
             can be entirely oral or it can [be] partly oral and partly
             in writing. A contract can be made of several different
             documents if the parties intended that their agreement
             would include the various documents together.

             Express or implied contract. A contract may be
             expressed, or implied, or it may be a mixture of the two.
             An expressed contract is one in which the parties have
             shown their agreements by words. Expressed contracts
             include those in which the parties have orally stated the
             terms to each other or have placed the terms in writing.
             An implied contract is one in which the parties show
             their agreement by conduct. For example if someone
             provides services to another under circumstances that
             do not support the idea that they were donated or free[,]
             the law implies an obligation to pay the reasonable
             value of services. Thus, an implied contract is an
             agreement and for -- from the parties conduct or from
             the circumstances surrounding their relationship.

             In other words, a defendant may be obligated to pay for
             services rendered for defendant by plaintiff if the
             circumstances are such that the plaintiff reasonably
             expected the defendant to compensate plaintiff and if a
                                        18
            reasonable person in defendant’s position would know
            that plaintiff was performing the services expecting that
            the defendant would pay for them.

He continued by describing to the jury the weight to be given to the parties’

reasonable expectations and course of dealing in determining the terms of a

contract.

      The judge twice instructed the jurors about plaintiffs’ “theory” on their

breach of contract claim:

            Plaintiffs claim the following terms were part of the
            contract. That a hearing was provided in The Valley
            Hospital bylaws for the purpose of resolving any matter
            bearing on professional privileges, competency,
            personal conduct, or any other matters involving or
            related to the hospital bylaw or the medical staff bylaw
            rules and regulations.

            Plaintiff[s] further claim that the parties intended this
            to mean that the plaintiffs were entitled to a hospital
            hearing before The Valley Hospital entered an
            agreement with [the Columbia Group] to make [the
            Columbia Group] the exclusive provider at The Valley
            Hospital for Emergency Department on-call duties for
            unassigned patients, gamma knife services, and
            neurointerventional biplane angiography services.

            The Valley Hospital contends that the bylaws did not
            require a hearing to be held in these circumstances
            because the decision to enter the agreement with [the
            Columbia Group] was a hospital-wide decision.

This first set of instructions on plaintiffs’ theory of breach thus focused

exclusively on the Bylaws as the underlying contract, despite the judge’s

                                        19
instruction to the jury on the law governing express or implied contracts and

the parties’ expectations and course of dealings. But when the judge next

instructed the jury on plaintiffs’ “claims of breach,” he added a statement that

plaintiffs claimed that “defendant breached the contract by conducting a sham

study and failing to provide them with a hospital hearing prior to terminating

their access to the Emergency Department on-call schedule for unassigned

patients, gamma knife services, and neurointerventional biplane angiography

services.” (emphasis added).

      The trial judge then provided the following instructions about the

allegation that Valley separately breached the implied covenant of good faith

and fair dealing:

            Implied terms, covenant of good faith, and fair dealing.
            The plaintiffs . . . in this case contend that [Valley]
            breached what is known as the implied covenant of
            good faith and fair dealing. In addition to the expressed
            terms of a contract[,] the law provides that every
            contract contains an implied covenant of good faith and
            fair dealing.    This means that even though not
            specifically stated in the contract it is implied or
            understood that each party to the contract must act in
            good faith and deal fairly with the other party in
            performing or enforcing the terms of the contract.

            ....

            The plaintiff[s] in this case claim[] that the defendant
            Valley breached the implied covenant [of] good faith
            and fair dealing by encouraging plaintiffs to join Valley
            and take over the Emergency Department call schedule
                                       20
[and] invest time, resources, and efforts to modernize
the practice of neurosurgery at Valley, but then unfairly
and dishonestly barring plaintiffs from using the tools
and facilities they developed.

Plaintiffs further contend that Valley breached the
covenant of good faith by making a predetermined
decision to exclude plaintiffs[,] creating a sham study
by changing metrics to achieve its intended goal of
skewing [plaintiffs’] results to show poor quality[,] and
negotiat[ing] [a] contract with the [Columbia] Group
before the study even began. To prevail on this claim[,]
the plaintiff[s] must prove each of the following three
elements by a preponderance of the evidence.

First, the plaintiff[s] must prove that some type of
contract existed between the parties. There can [be] no
breach of the covenant of good faith and fair dealing
unless the parties had a contract.

Second, the plaintiff[s] must prove that the defendant
acted in bad faith with the purpose of depriving the
plaintiff[s] of rights or benefits under the contract.

Third, the plaintiff[s] must prove that the defendant’s
conduct caused the plaintiff[s] to suffer injury, damage,
loss, or harm.

Express or implied contract. If you find that a contract
existed between the parties, you must then determine
whether the defendant violated the implied covenant of
good faith and fair dealing. Did the defendant act in
bad faith with the intent to deprive the plaintiff[s] of
rights or benefits under the contract? As to this element
you must decide whether the defendant acted with bad
faith to interfere with the plaintiffs’ right to receive
benefits of the contract.

....

                           21
            In summary, if you find that the plaintiff[s] [have]
            proven by a preponderance of the evidence, one, the
            existence of some type of contract, two, that the
            defendant although acting consistently with the
            contract’s terms acted in bad faith with the intent to
            deprive the plaintiff[s] of [their] reasonable
            expectations under the contract, and, three, the
            plaintiff[s] sustained loss as a result of such action, then
            you must find for the plaintiff[s].

      The judge concluded his instructions on plaintiffs’ two claims -- the

breach of contract claim and the breach of the implied covenant of good faith

and fair dealing claim -- by providing guidance as to the award of damages,

specifying that damages were available for both the breach of contract and

breach of covenant claim.

                                        4.

      The verdict sheet presented the jury with two claims, each determined by

three questions.

      The first three questions on the six-question verdict sheet related to what

the sheet labeled as plaintiffs’ “Breach of Contract” claim:

            1. Have the plaintiffs, Comprehensive Neurosurgical
            PC, proven by a preponderance of the evidence that
            there was an enforceable contract between plaintiffs
            and defendants?

            If “yes” proceed to Question # 2, If “no” proceed to
            Question # 4.

                                        22
              2. Did the defendants breach the contract with the
              plaintiff[s], Comprehensive Neurosurgical PC, by
              terminating the services without holding a hearing?

              If “yes” proceed to Question # 3, If “no” proceed to
              Question # 4.

              3. What amount of damages, if any, [have] the
              plaintiff[s],  Comprehensive    Neurosurgical   PC
              established that the defendant owe[s] them for any
              breach of contract?

The jury voted 6-0 that there was a contract between plaintiffs and Valley

(question one) and then voted 5-1 that Valley did not breach that contract by

declining to hold a hearing before revoking plaintiffs’ privileges (question

two). The jurors thus found no cause of action on the breach of contract claim

and did not reach question three concerning damages on that claim.

      Significantly, after question three, the verdict sheet instructed the jurors

as follows:

              If you have awarded damages in Question #3, then skip
              Questions #4, #5, and #6[.]

Thus, if the jury awarded damages on the breach of contract claim -- failure to

grant a hearing under the Bylaws -- then the jurors were instructed not to reach

plaintiffs’ second claim dealing with the implied covenant of good faith and

fair dealing. Because the jury did not award damages in question three, the

jurors considered the remaining three questions on the verdict sheet, presented

                                        23
under a separate heading entitled “Breach of Covenant of Good Faith and Fair

Dealing”:

             4. Do you find by a preponderance of the evidence that
             the Valley Hospital and Comprehensive Neurosurgical
             PC entered into a contract?

             If “yes” proceed to Question #5, If “no” cease your
             deliberations.

             5. Do you find by a preponderance of the evidence that
             the defendant, The Valley Hospital violated the
             Covenant of good faith and fair dealing with the
             purpose of depriving the plaintiffs, Comprehensive
             Neurosurgical, PC of their reasonably expected rights
             or benefits under the contract?

             If “yes” proceed to Question #6, If “no” cease your
             deliberations.

             6. What amount of damages, if any, [have] the
             plaintiff[s], Comprehensive Neurosurgical, PC
             established that the defendant, The Valley Hospital
             owe[s] them for the violation of the covenant of good
             faith and fair dealing?

The jury answered questions four and five in the affirmative by a 6-0 vote and,

in question six, the jury awarded plaintiffs $24,300,000 in damages by a 5-1

vote.

        Valley moved for a judgment notwithstanding the verdict or in the

alternative, a new trial on the implied covenant claim because according to

Valley, plaintiffs had no reasonable expectations under the Bylaws that they

                                       24
would have privileges in perpetuity. The judge denied those motions,

reasoning that

            [t]he jury was presented with testimony from multiple
            witnesses regarding the history of the relationship
            between the two parties and the extent of that
            relationship [--] which went beyond the bounds of the
            [B]ylaws. The jury was within its rights to find that
            [plaintiffs] had a reasonable expectation of continuing
            this relationship with [Valley] in much the same way as
            it had since 2005.

            [(emphasis added).]

                                       C.

      Valley appealed, challenging both the denial of summary judgment and

the verdict in favor of plaintiffs on the implied covenant of good faith and fair

dealing claim. Valley further argued that the verdict was legally deficient and

tainted by (1) reference to Valley’s privileged emails, which it should have

been permitted to claw back, and (2) improper summation remarks by

plaintiffs’ counsel about the absence of evidence of patient transfers, given

that such evidence undisputedly existed but was not admissible.

      The Appellate Division affirmed both the trial judge’s denial of

summary judgment and the jury’s verdict. The appellate court found that

Valley was not entitled to summary judgment on the implied covenant claim,

reasoning that the covenant of good faith and fair dealing could have attached

to an underlying contract beyond the rights afforded by the Bylaws. The
                                       25
appellate court also found that the jury was not tainted by the admission into

evidence of privileged attorney-client emails or the challenged summation

comments.

                                       D.

      We granted Valley’s petition for certification, limited to the

consideration of plaintiffs’ implied covenant claim, as well as “whether

defendants waived the attorney-client privilege for certain communications,

and whether plaintiffs’ counsel made improper or misleading comments during

summation about transferring patients that require a new trial.” 254 N.J. 210

(2023). We also granted motions from the New Jersey Hospital Association

(NJHA), the American Hospital Association (AHA), and the Medical Society

of New Jersey and the American Medical Association (jointly, MSNJ) to

appear as amici curiae.

                                       III.

      Valley argues it is entitled to summary judgment on the implied

covenant of good faith and fair dealing claim. It maintains that the Bylaws

cannot serve as an underlying contract and that the implied covenant claim is

duplicative of the breach of contract claim. If the Court disagrees, Valley

requests that we remand for a new trial because the jury was substantially

tainted by the erroneous admission of privileged attorney-client emails and by

                                       26
improper summation remarks. At oral argument before us, Valley conceded

that every contract has an implied covenant of good faith and fair dealing but

suggested that the jury misunderstood that such an underlying contract could

be the Bylaws.

      Plaintiffs asserted at oral argument that their implied covenant claim was

properly before the jury and that the jury was appropriately charged on that

claim. Acknowledging that there must be an underlying contract to make such

a claim, plaintiffs argue that the parties’ “historical relationship” supports the

existence of an implied contract, one that goes beyond the rights afforded

under the Bylaws. Plaintiffs reiterate that Valley waived the attorney-client

privilege by placing the White Paper “in-issue” and that Valley’s disclosure of

the emails containing legal advice to and from Goldfischer was not

inadvertent. Alternatively, if there was no waiver and the summation

comments are deemed improper, plaintiffs argue that any error is harmless

given the “extensive remaining evidence.”

      NJHA and AHA support Valley’s position. NJHA argues that a

hospital’s administrative healthcare decision cannot be challenged on contract-

based theories seeking monetary relief. Allowing otherwise, NJHA claims,

would undermine the broad deference courts afford a hospital’s administrative

healthcare decision under Berman. AHA emphasizes that medical staff bylaws

                                        27
organize the medical staff into a cohesive unit and that upholding this

“unprecedented” verdict would impair a hospital’s ability to make decisions

for patients and communities.

      MSNJ supports plaintiffs’ arguments and urges that hospitals should be

held “to the standard of good faith and fair dealing” to prevent “abuse” of the

credentialing process because such “abuse” would harm patient care, increase

medical costs, unfairly question qualified physicians, and interfere with

physicians’ medical practices. MSNJ asserts that providing an exclusive

agreement to a loyal practice group, while punishing a non-loyal group, is

contrary to a nonprofit hospital’s charitable purpose and is harmful to the

healthcare system.

                                       IV.

      The main issue in this case is the viability of plaintiffs’ claim for breach

of the implied covenant of good faith and fair dealing.

      A covenant of good faith and fair dealing is implied by law into every

contract. Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr.

Assocs., 182 N.J. 210, 224 (2005). The implied covenant of good faith and

fair dealing requires the “parties to a contract to refrain from doing ‘anything

which will have the effect of destroying or injuring the right of the other party

to receive’ the benefits of the contract.” Id. at 224-25 (emphasis added)

                                        28
(quoting Palisades Props., Inc. v. Brunetti, 44 N.J. 117, 130 (1965)). Although

“[p]roof of ‘bad motive or intention’ is vital to” the claim, id. at 225 (quoting

Wilson v. Amerada Hess Corp., 168 N.J. 236, 251 (2001)), such proof is not

enough on its own. Rather, a plaintiff must demonstrate that the defendant’s

alleged misdeeds prevented the plaintiff from enjoying the full benefit of the

terms of a particular bargain. See id. at 226 (“A plaintiff may be entitled to

relief under the covenant if its reasonable expectations are destroyed when a

defendant acts with ill motives and without any legitimate purpose.”

(emphasis added)).

      As this appeal comes to us, the central dispute concerns whether there is

a contractual basis for plaintiffs to claim that their reasonable expectations

were left unmet due to Valley’s alleged unfair dealing. Valley argues that

there is no underlying contract to which plaintiffs’ breach of covenant claim

could attach. Valley therefore contends that the claim should never have

reached the jury. Valley claims, in the alternative, that the jury’s verdict

cannot stand because the jury was never properly instructed that it must find a

valid contract between the parties to find a breach of the implied covenant of

good faith and fair dealing.

      Three separate bases have been tied to Valley’s alleged obligation to act

in good faith: (1) the Bylaws; (2) Valley’s administrative hospital decision to

                                        29
enter into the Exclusive Agreement, which in essence revoked plaintiffs’

privileges to use the “Gamma Knife” and “Biplane” technologies and their

right to treat “unassigned” ER patients; and (3) an alleged oral or implied

contract between the parties that, according to plaintiffs, led them to join

Valley and to strive, over the course of a decade, to build and enhance Valley’s

neuroscience department, while expecting to indefinitely maintain their

privileges and rights absent a valid administrative healthcare decision

providing otherwise. Those three sources are entirely distinct from one

another, and their separate characteristics have important consequences for the

types of claims that can be brought based on each source, the proofs necessary

to prove those claims, and the types of relief available for each claim if

proven.

      We therefore begin our discussion of the breach of covenant claim by

reviewing the nature of the claims that can arise under a hospital’s medical

staff bylaws and, separately, under a hospital’s administrative healthcare

decision, as well as the showing necessary to support the existence of an

implied or oral contract.

                                        30
                                       A.

                                       1.

      Although medical staff bylaws impose reciprocal legal obligations and

rights between those who agreed to be bound -- obligations that have been and

will continue to be reviewed and enforced by a court if necessary -- we hold

that those obligations are not technically “contractual” in nature. We clarify

that while “[t]hose bound together in the common enterprise have reciprocal

rights and duties laid down in the Constitution and [bylaws],” Joseph, 26 N.J.

at 569, medical staff bylaws cannot serve as an underlying contract to support

an alleged breach of an implied covenant of good faith and fair dealing claim,

nor can a violation of those bylaws support an independent claim for money

damages.

      Medical staff bylaws provide internal rules and procedures that govern

the medical staff. Like other states, New Jersey requires hospitals to adopt

medical staff bylaws. See N.J.A.C. 8:43G-16.1(a) (“Bylaws governing all

medical staff members shall be implemented.”); Belmar v. Cipolla, 96 N.J.

199, 208 (1984) (“[H]ospitals must adopt rules, regulations, and bylaws

concerning procedures for admission to staff membership . . . .”). In addition

to establishing physician qualifications, medical staff bylaws afford certain

procedural rights to physicians whose hospital rights and privileges are

                                       31
negatively impacted. But more importantly, medical staff bylaws ensure that

hospitals and physicians provide quality and ethical healthcare.

         However, the fundamental elements of contract formation are missing in

the context of medical staff bylaws -- there is no mutual assent, offer and

acceptance, or consideration. See Weichert Co. Realtors v. Ryan, 128 N.J.

427, 435 (1992) (providing the requirements for an enforceable contract and

noting that when “parties agree on essential terms and manifest an intention to

be bound by those terms,” there is an enforceable contract). Here, there is no

evidence that the parties negotiated or engaged in the “bargained-for exchange

of promises or performance that may consist of an act, a forbearance, or the

creation, modification, or destruction of a legal relation” in the adoption of

Valley’s Medical Staff Bylaws. Shebar v. Sanyo Bus. Sys. Corp., 111 N.J.

276, 289 (1988). The Bylaws existed long before plaintiffs joined the Medical

Staff.

         Moreover, plaintiffs mistakenly relied upon Joseph to support their

contention that medical staff bylaws create a legally binding contract and may

otherwise be used to support a contract claim seeking money damages. Such a

literal reading is misplaced. In Joseph, a surgeon sued a hospital seeking,

among other relief, reinstatement of his “emeritus staff” status. 26 N.J. at 561.

In remanding his equity suit, this Court held that the hospital’s constitution

                                         32
and medical staff bylaws provided the surgeon with a right to a hearing, but

because the hospital failed to honor that right, the hospital’s action was “null.”

Id. at 570, 575.

      In reaching that conclusion, the Court stated that

            [t]hose bound together in the common enterprise have
            reciprocal rights and duties laid down in the
            Constitution and [bylaws] and such as are inherent in
            the nature of the undertaking; and judicial interposition
            may be had to avert unreason and unconscionable and
            excessive action, such as would offend against natural
            justice. The Association’s Constitution and [bylaws]
            are essentially conventional; the compact derives from
            the common consent of the parties and is limited
            accordingly.

            [Id. at 569 (citations omitted).]

As emphasized, medical staff bylaws do impose binding obligations -- such as

the hospital’s obligation to afford a hearing in certain settings -- and “judicial

interposition may be had to avert unreason and unconscionable and excessive

action.” Ibid. But those obligations do not give rise to a traditional contract,

to a claim for the traditional contract remedy of damages, or to a separate

breach of the implied covenant claim.

      Instead, when a hospital violates its medical staff bylaws, equitable

relief may be available. Thus, plaintiffs here, like the plaintiff in Joseph,

would have been entitled to a hearing if Valley had violated the Bylaws by

failing to provide one in the first place. But the Bylaws include no promise
                                        33
that plaintiffs’ privileges would never be limited, and they therefore offer no

basis for the equitable restoration of plaintiffs’ privileges, let alone monetary

damages for any alleged bad faith actions in altering their privileges. And

here, the jury expressly found that Valley did not violate the Bylaws. 8

      In short, the Bylaws cannot constitute the underlying contract for

purposes of plaintiffs’ separate breach of the implied covenant of good faith

and fair dealing claim.

                                        2.

      Just as the Bylaws here offer no ground for a breach of an implied

covenant of good faith and fair dealing claim, Valley’s administrative

healthcare decision to award exclusive privileges to the Columbia Group

cannot on its own give rise to a claim for breach of the implied covenant of

8
  The jury’s no-cause verdict on plaintiffs’ so-called “breach of contract”
claim is not before us and cannot be relitigated. Here, as is often the case, the
Bylaws did not meet the basic elements of contract formation -- mutual assent,
offer and acceptance, and consideration. In such instances, we note that an
alleged breach of medical staff bylaws is not and should not be presented as a
breach of contract claim. The jury should not be instructed on contract
formation or the different types of contracts or asked to find that a contract had
been formed between the parties. Nor should the jury be prompted to award
damages on such a claim. On the verdict sheet in this appeal, there should
have been only one question on the “breach of contract” claim which should
have read: “Under the Bylaws, were plaintiffs entitled to a hearing?” If the
jury had answered that hypothetical question “Yes,” then the judge could have
ordered equitable relief -- a hearing -- not money damages, as question three
impermissibly allowed.
                                         34
good faith and fair dealing, although equitable relief might be available under

certain circumstances.

      We have long held, and we reaffirm here, that hospitals maintain “broad

discretionary powers” in making administrative decisions related to healthcare.

See Desai, 103 N.J. at 90. Courts generally defer to a hospital’s administrative

healthcare decisions given “the intrinsic complexities that abound in the area

of institutional public health care.” Id. at 91-92. And when those decisions

involve the enactment of “broad” hospital policies, like a closed or restrictive

staff-admissions policy, “the freedom of decisional action accorded a hospital

is even greater and judicial review [is] more tolerant,” Berman, 103 N.J. at

107, even though such an admission policy will inevitably have a

discriminatory impact upon some doctors, Desai, 103 N.J. at 91. This includes

a hospital’s decision to enter into an exclusive agreement that grants privileges

to one group of physicians, typically at the expense of another. See, e.g.,

Cipolla, 96 N.J. at 211 (upholding an exclusive contract for anesthesia services

because it “was motivated by the hospital’s desire to [ensure] a high standard

of medical care,” where the benefits included 24-hour coverage, less

administrative issues, and more efficient operating rooms).

      But the discretion afforded to hospitals in making such decisions is not

unlimited: “A hospital exercises its [healthcare] powers ‘in trust,’ ‘for the

                                       35
benefit of the public,’ and ‘in aid of [its] service to the public.’” Berman, 103

N.J. at 106 (second alteration in original) (quoting Greisman v. Newcomb

Hosp., 40 N.J. 389, 403-04 (1963)). In the seminal case of Falcone v.

Middlesex County Medical Society, this Court first recognized that

associations engaged in “activities vitally affecting the health and welfare of

the people” have fiduciary powers that are “to be exercised in [a] reasonable

and lawful manner for the advancement of the interests of the medical

profession and the public generally.” 34 N.J. 582, 596-97 (1961). Two years

later, in Greisman, this Court extended that rationale to the context of a

hospital’s selection of its medical staff. 40 N.J. at 402-04. Since then, this

Court has continuously emphasized the important societal role hospitals play

when enacting healthcare policies. See, e.g., Doe v. Bridgeton Hosp. Ass’n,

Inc., 71 N.J. 478, 487 (1976); Cipolla, 96 N.J. at 208; Desai, 103 N.J. at 86;

Berman, 103 N.J. at 106; Nanavati v. Burdette Tomlin Mem’l Hosp., 107 N.J.

240, 248 (1987).

      And, in recognition of the hospital’s obligations to the public it serves,

we have held that a hospital’s administrative healthcare decision will be

upheld only if that decision: (1) genuinely serves a public healthcare

objective; (2) “is reached in the normal and regular course of conducting the

affairs of the hospital[;] and [(3)] is based on adequate information, regardless

                                       36
of form, origin, or authorship, that is generally considered reasonable and

reliable by professional persons responsibly involved in the [healthcare] field.”

Desai, 103 N.J. at 91-93. This presupposes good faith. A hospital may not act

in bad faith and simultaneously serve a “genuine” healthcare objective based

on “reasonable and reliable” information. In furtherance of the public’s well-

settled interests in healthcare, we hold that a reasonable, rational, and valid

healthcare decision must be made in good faith. In other words, a hospital

healthcare policy made in bad faith under the guise of a genuine public

healthcare objective cannot withstand judicial scrutiny.

      Physicians who are adversely affected by a hospital’s administrative

healthcare decision, therefore, may challenge that decision by arguing that it

was not made in accordance with the three-part standard set forth in Desai. In

a case concerning a chiropractor who argued that he was impermissibly denied

privileges due to a hospital’s exclusionary staff policy, the Appellate Division

explained:

             While plaintiff was not entitled to any procedural
             protections under the bylaws or the Fourteenth
             Amendment, he was entitled to have his claim reviewed
             under the special standard developed by our courts for
             review of administrative decisions treating exclusion of
             certain categories of practitioners, as distinguished
             from decisions on the qualifications of individual
             applicants. . . . [Greisman, 40 N.J. at 403-04, and
             Falcone, 34 N.J. at 597] permitted judicial review of
             exclusionary policies[] on the theory that hospitals
                                        37
            acted as fiduciaries for the public and could not
            exercise their discretion over staff composition without
            considering the interests of the medical profession and
            the public.

            [Petrocco v. Dover Gen. Hosp. & Med. Ctr., 273 N.J.
            Super. 501, 513-14 (App. Div. 1994) (emphases
            added).]

      Here, the trial judge concluded that plaintiffs’ challenge to the Exclusive

Agreement -- the Berman claim -- was “subsumed” with their implied

covenant claim. As a result, plaintiffs no longer had a stand-alone Berman

claim. Instead, the legal principles of Berman became relevant only as to

Valley’s defense to plaintiffs’ implied covenant claim, which was premised on

an alleged oral or implied contract providing them certain rights and privileges

in perpetuity. At trial, Valley defended against that claim by introducing

evidence to prove that it made a valid healthcare decision by entering into the

Exclusive Agreement. Plaintiffs therefore sought money damages not for a

Berman violation, but rather for an alleged breach of the implied covenant of

good faith and fair dealing, which attached to an alleged oral or implied

contract beyond the rights afforded under the Bylaws.

                                        3.

      The final basis advanced in the course of this litigation for finding that

Valley was bound to act in good faith and deal fairly with plaintiffs is an

alleged implied contract between the parties, one that goes “beyond the
                                       38
Bylaws.” Plaintiffs allege that, from Valley’s initial offer to join and

collaboratively build Valley’s neuroscience department and from the parties’

course of dealings since plaintiffs joined, it can be reasonably inferred that an

implied contract existed between plaintiffs and Valley. That purported

contract allegedly imposed obligations beyond the provisions of the Bylaws.

In the event that plaintiffs could demonstrate that all the fundamental elements

of contract formation had been established, their theory of an agreement

beyond the rights afforded by the Bylaws would be contractual in nature. It

could thus serve as the underlying contract to support a claim for breach of the

implied covenant of good faith and fair dealing and could provide a proper

basis for damages.

      Essentially, plaintiffs argue that an “implied-in-fact” contract existed

between them and Valley. “[C]ontracts implied in fact are no different than

express contracts, although they exhibit a different way or form of expressing

assent than through statements or writings. Courts often find and enforce

implied promises by interpretation of a promisor’s word and conduct in light

of the surrounding circumstances.” Wanaque Borough Sewerage Auth. v.

Township of West Milford, 144 N.J. 564, 574 (1996). And, despite the

difference in the way the contracts are created, an implied-in-fact contract is

generally “as binding as [an] express contract.” Troy v. Rutgers, 168 N.J. 354,

                                        39
365 (2001). “[T]here is no distinction in the effect of the promise whether it is

expressed in writing, or orally, or in acts, or partly in one of these ways and

partly in others.” Ibid. (alteration in original) (quoting Restatement (Second)

of Contracts § 19 cmt. a (Am. Law Inst. 1981)).

      Thus, an implied-in-fact contract may form based on the parties’ actions,

course of conduct, oral expressions, or a combination of the three. See ibid.

And, significantly, an implied-in-fact contract gives rise to the implied

covenant of good faith and fair dealing regarding the performance of that

contract. Guz v. Bechtel Nat’l, Inc., 8 P.3d 1089, 1112 (Cal. 2000) (noting

that the breach of an implied contract “may also constitute a breach of the

implied covenant of good faith and fair dealing” but that, “insofar as the

employer’s acts are directly actionable as a [direct] breach of an implied-in-

fact contract term, a claim that merely realleges that breach as a violation of

the covenant is superfluous”).

      Among the three possible sources to support plaintiffs’ claim here -- the

Bylaws, Valley’s “Berman” decision, and the alleged implied-in-fact contract

between plaintiffs and Valley -- the only alleged source of mutual obligation to

which the implied covenant of good faith and fair dealing could properly

attach to is the implied-in-fact contract. Whether plaintiffs’ implied covenant

claim properly survived summary judgment and was appropriately considered

                                        40
by the jury thus depends on plaintiffs’ implied-in-fact contract theory. We

first consider whether the claim properly survived summary judgment.

                                        B.

      When reviewing a denial of summary judgment, “we apply the same

standard governing the trial court.” Qian v. Toll Brothers, Inc., 223 N.J. 124,

134-35 (2015) (quoting Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584

(2012)). Thus, “view[ing] the evidence in the light most favorable to the non-

moving party,” ibid., summary judgment must be granted if based on “the

pleadings, depositions, answers to interrogatories and admissions on file,

together with the affidavits, if any,” “there is no genuine issue as to any

material fact challenged and . . . the moving party is entitled to a judgment or

order as a matter of law,” Rule 4:46-2(c); Brill v. Guardian Life Insurance Co.

of America, 142 N.J. 520, 528-29 (1995).

      Here, there are two questions pertinent to Valley’s motion to dismiss the

implied covenant claim on summary judgment. First, we must consider

whether there is a factual dispute as to whether an underlying contract, beyond

the rights afforded under the Bylaws, supports the implied covenant claim, and

second, we must decide whether there is a factual dispute concerning Valley’s

alleged bad faith conduct.

                                        41
      As to the first question, the answer is yes. A hospital can give doctors

specific privileges and rights beyond those afforded in the medical staff

bylaws. Here, there is sufficient evidence in the summary judgment record,

when viewed in the light most favorable to plaintiffs, to support the notion that

the parties had a special relationship -- rooted in part in their course of

dealings for more than a decade -- that gave plaintiffs specific rights and

obligations beyond the Bylaws.

      On this point, several provisions in the Bylaws seemingly leave room for

the formation of such an extra agreement. For example, one provision

references the possibility of a Medical Staff member having, in addition to

rights under the Bylaws, “an actual contractual relationship with the Hospital.”

And a 2013 letter from Meyers to Dr. Roth similarly raises the possibility of a

contract beyond any obligations created by the Bylaws. That letter stated:

“Your appointment and clinical privileges also shall be subject to the terms

and provisions of any contract, should you have one with the Hospital.”

      Moreover, whether parties’ interactions rise to the level of creating an

implied contract is generally a question of fact best resolved by the jury. See

Troy, 168 N.J. at 366 (“Whether the parties acted in a manner sufficient to

create implied contractual terms is a question of fact generally precluding

summary judgment.”); Labus v. Navistar Int’l Transp. Corp., 740 F. Supp.

                                        42
1053, 1063 (D.N.J. 1990) (noting, with regard to a claimed oral employment

contract, that “[t]he legitimacy of the representations and the reasonableness of

the employee’s reliance are questions for the finder of fact that are not

appropriate for summary judgment”).

      Looking at the facts in the light most favorable to plaintiffs, as we must

at the summary judgment stage, the record shows plaintiffs “relied upon

Valley’s offer,” joined the Medical Staff, then “for the next dozen years, . . .

invested resources in building up their practice, reputation, and patient base.”

Plaintiffs assert that they helped transform Valley into a “Neuroscience Center

of Excellence.” The parties’ course of dealing supports an implied contract

that, in exchange for stopping the outflow of patients to other hospitals and by

devoting substantial time and resources to “modernizing Valley’s

neurosurgical department” through establishing cutting-edge “Biplane” and

“Gamma Knife” technology and the Valley “Spine Center,” Valley agreed that

plaintiffs could continue to build their medical practice at Valley without any

restrictions on treating “unassigned” ER patients. 9 Such an arrangement --

derived from an alleged implied-in-fact contract, oral contract, or otherwise --

9
  At oral argument before this Court, plaintiffs’ counsel acknowledged that
their privileges were not granted in perpetuity and could have been revoked
provided that Valley’s decision to do so was a valid administrative healthcare
decision.
                                       43
went beyond the Bylaws because the Bylaws did not expressly give plaintiffs

those rights in exchange for modernizing Valley’s neurosurgical center. And

because plaintiffs’ “breach of contract” claim pertains only to whether they

were entitled to a hearing under the Bylaws, plaintiffs’ two “contract” claims

are not duplicative as they are based on two allegedly distinct contracts.

      As to the second question, whether plaintiffs raised a factual dispute

concerning if Valley failed to deal with them fairly and in good faith, plaintiffs

presented evidence that Valley created a “sham” White Paper to justify

“oust[ing]” plaintiffs for being disloyal and entering an Exclusive Agreement

as “a pretext for the exercise of a contractual right to terminate.” See

Seidenberg v. Summit Bank, 348 N.J. Super. 243, 260 (App. Div. 2002)

(noting that breach of the implied covenant of good faith and fair dealing is

usually tied to one of three situations: “(1) when the contract does not provide

a term necessary to fulfill the parties’ expectations; (2) when bad faith served

as a pretext for the exercise of a contractual right to terminate; and (3) when

the contract expressly provides a party with discretion regarding its

performance” (emphasis added) (citations omitted)). Here, plaintiffs adduced

sufficient evidence to raise a genuine question about whether Valley acted in

bad faith by having a predetermined outcome for the White Paper; by

manipulating the data and methodology utilized in creating that paper; and by

                                       44
entering into the Exclusive Agreement based upon animus toward plaintiffs

rather than valid healthcare concerns.

      Therefore, applying our de novo standard of review, we hold that

plaintiffs’ implied covenant of good faith and fair dealing claim, supported by

an alleged implied-in-fact contract, properly survived Valley’s motion for

summary judgment.

                                         C.

      Although we find that plaintiffs’ claim of breach of the implied covenant

of good faith and fair dealing properly reached the jury, there were significant

problems in the jury instructions and verdict sheet that call into question the

jury’s verdict on that claim.

                                         1.

      We review whether the jury was adequately instructed on the law de

novo, affording no deference to the trial judge’s interpretive legal conclusions.

Fowler v. Akzo Nobel Chems., Inc., 251 N.J. 300, 323 (2022). “[A]ppropriate

and proper charges to a jury are essential for a fair trial.” Prioleau v. Ky. Fried

Chicken, Inc., 223 N.J. 245, 256 (2015) (quoting Velazquez ex rel. Velazquez

v. Portadin, 163 N.J. 677, 688 (2000)). A judge must explain “the applicable

legal principles and how they are to be applied in light of the parties’

contentions and the evidence produced in the case.” Viscik v. Fowler Equip.

                                         45
Co., 173 N.J. 1, 18 (2002) (quoting Rendine v. Pantzer, 276 N.J. Super. 398,

431 (App. Div. 1994), aff’d, 141 N.J. 292 (1995)).

      In addition to outlining the jury’s role and framing the issues to be

decided, the jury charge must “correctly state the applicable law in

understandable language, and plainly spell out how the jury should apply the

legal principles to the facts as it may find them.” Prioleau, 223 N.J. at 256-57

(quoting Velazquez, 163 N.J. at 688). But when “[a] jury instruction . . . has

no basis in the evidence[,] [it] is insupportable, as it tends to mislead the jury.”

Dynasty, Inc. v. Princeton Ins. Co., 165 N.J. 1, 13-14 (2000) (quoting Lesniak

v. County of Bergen, 117 N.J. 12, 20 (1989)).

      Not every improper charge warrants correction. “[A]n erroneous jury

instruction [that] was ‘incapable of producing an unjust result or prejudicing

substantial rights’” does not require a new trial. Prioleau, 223 N.J. at 257

(quoting Mandal v. Port Auth. of N.Y. & N.J., 430 N.J. Super. 287, 296 (App.

Div. 2013)); see also R. 2:10-2. Rather, we will reverse and order a new trial

only when “the jury could have come to a different result had it been correctly

instructed.” Viscik, 173 N.J. at 18. And in construing a jury charge, we

examine it “as a whole, rather than focus on individual errors in isolation” by

considering “the language surrounding an alleged error in order to determine

its true effect.” Ibid.

                                        46
      That includes consideration of how the relevant issues are presented on

the verdict sheet. The “verdict sheet constitutes part of the trial court’s

direction to the jury.” State v. Galicia, 210 N.J. 364, 388 (2012); see also Bolz

v. Bolz, 400 N.J. Super. 154, 161-63 (App. Div. 2008) (assessing a verdict

sheet as part of the jury instructions and concluding that the sheet’s failure to

require a discrete mandatory finding on an issue required reversal and a new

trial). “[D]efects in the verdict sheet are reviewed on appeal under the same

‘unjust result’ standard of Rule 2:10-2 that governs errors in the jury charge.”

Galicia, 210 N.J. at 388.

                                        2.

      Here, we find several defects with the way the jury was charged. The

verdict sheet compounded those problems, and contrary to plaintiffs’

assertions at oral argument, the charge and verdict sheet cannot be “married

together” to uphold the verdict. 10

      The first problem with the final jury charge deals with the law given on

plaintiffs’ “breach of contract” claim concerning the Bylaws. As plaintiffs’

trial counsel himself described at the charge conference: “This is not your

10
   Whether a correct verdict sheet can “cure” deficient verbal jury instructions
is a fact-sensitive question that must be considered on a case-by-case basis.
And here, as we explain, the incorrect verdict sheet compounded the errors in
the jury charge.
                                        47
typical contract action.” Counsel repeatedly stressed to the judge that “[t]here

is no offer, acceptance, [and] consideration in the context of the [Bylaws].”

Plaintiffs’ trial counsel emphasized that charging the jury on basic contract

formation principles, in his words, would “fundamentally mislead” the jurors.

      Plaintiffs’ trial counsel was right. Contract formation principles should

not have been explained in the part of the final jury charge on plaintiffs’ claim

that Valley failed to give them a hearing, and the jury should not have been

prompted through the verdict sheet to determine whether denial of a hearing

was a “breach” that warranted money damages. Had the jury found breach and

awarded damages based on the failure to hold a hearing under the Bylaws, the

verdict on the mislabeled “breach of contract” claim could not stand; as we

explained, all that could have been awarded based on a violation of the Bylaws

was a hearing.

      The second problem with the jury charge is that the discussion of

contract formation was incorrectly included in the count predicated on the

Bylaws and erroneously omitted in the count for which it was indispensable --

the breach of covenant claim. Although plaintiffs rightly note that duplicate

instructions need not be given, finding the existence of a contract, which in

this case had to be one beyond the Bylaws, was an essential element of

plaintiffs’ breach of the implied covenant claim. By failing to instruct the jury

                                       48
on contract formation principles in connection to the only claim where that law

was applicable, the judge only heightened the potential that the jurors would

be led to believe that the Bylaws were a contract that could give rise to the

covenant of good faith and fair dealing.

         This was reinforced by the jury sheet’s instruction that if damages are

granted for breach of the Bylaws, then the jury need not consider the breach of

covenant claim. Based on the way the two claims were presented to the jury,

the jury could have reasonably believed that it was being asked to assess

whether Valley violated the terms of the Bylaws or their spirit. As a result, we

have no way of reasonably knowing on appeal what purported “contract” or

“contracts” the jurors regarded as the foundation for their damages award. To

prevent that confusion, the word “contract” should not have appeared under

count one of the verdict sheet and should have been clarified as a “contract

beyond the rights afforded under the Bylaws” under count two of the verdict

sheet.

         The third problem concerns the judge’s attempt to frame the “parties’

contentions” considering “the applicable legal principles.” Prioleau, 223 N.J.

at 256 (quoting Viscik, 173 N.J. at 18). Valley argued in its defense to

plaintiffs’ breach of covenant claim that it did not act unfairly or in bad faith

but rather made a valid healthcare decision in granting exclusive privileges to

                                         49
the Columbia Group. It is perhaps that defense, predicated on Berman and

Desai, that led the trial judge to conclude that plaintiffs’ challenge to the

Exclusive Agreement (i.e., the “Berman” claim) was “subsumed” within their

implied covenant claim. 11 But that decision disadvantaged both parties

because the jury was never informed of the principles derived from Berman

and Desai.

      Plaintiffs conceded, even in the face of their implied covenant claim,

that Valley had the legal authority to make a valid healthcare decision. To that

point, plaintiffs’ trial counsel requested that the charge include Berman

guidance so that the jury could measure the reasonableness of Valley’s defense

11
   Even though the judge ruled that the Berman claim was “subsumed” in the
implied covenant claim, he expressed apprehension about the appropriate relief
for a pure Berman violation. To be sure, equitable relief is appropriate for a
stand-alone Berman violation. But plaintiffs’ implied covenant claim is
different than a stand-alone Berman claim. It is premised on plaintiffs’ theory
that Valley acted in bad faith -- even before the purportedly pretextual White
Paper was released -- by deciding to enter into a “sham” Exclusive Agreement,
which plaintiffs argued had frustrated their reasonable expectations associated
with an underlying implied or oral contract, one beyond the rights afforded by
the Bylaws, to treat “unassigned” ER patients. The legal theories and remedies
for a Berman claim and plaintiffs’ distinct implied covenant claim are
different; one is not “subsumed” in the other. Nevertheless, plaintiffs have not
challenged the trial judge’s “subsumed” ruling, and instead sought money
damages only on their implied covenant claim. After the “subsumed” ruling,
their contention was not that the public was harmed by the Exclusive
Agreement, but rather, that plaintiffs were harmed and entitled to money
damages because Valley breached the implied covenant of good faith and fair
dealing.
                                        50
that it made a valid healthcare decision. That request for a Berman jury charge

was in essence denied by the trial judge. Although the charge references “the

requirement of an objective healthcare basis” in passing when discussing the

parties’ contentions, that was not enough. For the jury to properly assess the

validity of Valley’s defense, i.e., that Valley acted “entirely lawful[ly] and

appropriate[ly],” the judge needed to fully inform the jury of our

Berman/Desai principles.

      In other words, the charge should have included that a hospital’s

discretionary healthcare decision is “entirely lawful” when it: (1) genuinely

serves a public healthcare objective; (2) is made in the “regular course of

conducting the affairs of the hospital”; and (3) is based on adequate, reliable,

and reasonable information as would be relied upon “by professional persons

responsibly involved in the [healthcare] field.” Desai, 103 N.J. at 91-93. As

plaintiffs concede, a valid healthcare decision would have nullified their

allegation that Valley breached the implied covenant of good faith and fair

dealing. The jury was given no law on how to measure Valley’s defense to the

implied covenant claim.

      Thus, consideration of the jury charge “as a whole,” Viscik, 173 N.J. at

18, raises significant doubt as to whether the jury found the underlying

contract for plaintiffs’ implied covenant claim to be some implied or oral

                                        51
agreement beyond the Bylaws, or just the Bylaws. We reject the contention

that the charge supports the verdict, and we conclude that the jury could have

come to a different result had it been correctly instructed on the contract

claims, especially because the underlying contract on the implied covenant

claim -- purportedly an endless right to treat “unassigned” ER patients with

special tools -- was not in writing.

                                       V.

      In this case, the uncertainty created by the jury charge was cumulatively

exacerbated by two additional errors: the admission into evidence of privileged

communications between Goldfischer and Valley; and plaintiffs’ attorney’s

improper summation comments.

                                       A.

      “[T]he applicability of the attorney-client privilege,” including any

potential waiver of that privilege, is a legal question which we review de novo.

Hedden v. Kean Univ., 434 N.J. Super. 1, 10 (App. Div. 2013). Therefore, a

trial judge’s “interpretation of the law and the legal consequences that flow

from established facts are not entitled to any special deference.” Rowe v. Bell

& Gossett Co., 239 N.J. 531, 552 (2019) (quoting Manalapan Realty, L.P. v.

Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

                                       52
      “[E]nshrined in history and practice,” the attorney-client privilege

applies to communications made “by an individual in his capacity as a client”

for the purpose of “seeking or receiving legal advice from the attorney” with

an expectation that it remain confidential. Stengart v. Loving Care Agency,

Inc., 201 N.J. 300, 315 (2010). The privilege further applies to

communications between a corporation’s general counsel and its officers or

other “authorized representative[s].” See Macey v. Rollins Env’t Servs. (N.J.),

Inc., 179 N.J. Super. 535, 539-41 (App. Div. 1981) (relying on Upjohn Co. v.

United States, 449 U.S. 383 (1981), and holding that “[t]he necessity for full

and open disclosure between corporate employees and in-house counsel . . .

demands that all confidential communications be exempt from discovery”);

N.J.R.E. 504(3). We have emphasized how “the primary justification and

dominant rationale for the” attorney-client privilege is to encourage the “free

and full disclosure of information” because “the public is well served by sound

legal counsel based on full and candid communication between attorneys and

their clients.” Fellerman v. Bradley, 99 N.J. 493, 498, 502 (1985).

      In this case, Valley sought to claw back a batch of emails totaling 352

pages it inadvertently produced during expedited discovery. After conducting

an in-camera review, the chancery judge generally found that

            [t]o the degree that the contested communications were
            sent by or to [Goldfischer], the [emails] fall within the
                                       53
            definition of communications normally protected by the
            attorney-client privilege. The court is satisfied that the
            [emails] sent to or by [Goldfischer] were made for the
            purpose of legal advice rather than business purposes,
            as they relate to legal decisions and required the
            judgment that one normally exercises in a legal, rather
            than a business capacity.

      We agree with the chancery judge. Goldfischer dispensed legal advice

to Valley’s officers and employees regarding the legal implications of entering

an exclusive agreement that would adversely impact plaintiffs. That is what

lawyers do and that is exactly what she did here. As Valley’s top lawyer, she

understood that such an agreement could lead to litigation. Consistent with the

rationale for the attorney-client privilege, Goldfischer counseled Valley to

document its reasons for its actions, analyze the data, and act carefully.

Goldfischer’s emails admitted into evidence at trial that were made for the

purpose of legal advice, rather than business purposes, are protected by the

attorney-client privilege.

      Of course, the privilege is not absolute -- a client can waive the attorney-

client privilege by placing legal advice provided by an attorney “in[-]issue.”

Kinsella v. Kinsella, 150 N.J. 276, 300 (1997). In other words, when a party

places an attorney-client “communication which goes to the heart of the claim

in controversy,” as part of their claim or defense, the privilege is waived. Ibid.

(quoting Developments in the Law: Privileged Communications, 98 Harv. L.

                                       54
Rev. 1450, 1637-38 (1985)). Such would be the case, for example, when a

client produces testimony from an attorney that the client acted on advice of

counsel. In that situation, the client cannot then selectively invoke the

privilege by “divulg[ing] whatever information is favorable to its position[,]

and [then] assert the privilege to preclude disclosure of the detrimental facts.”

United Jersey Bank v. Wolosoff, 196 N.J. Super. 553, 567 (App. Div. 1984).

      But that is not what happened here. Contrary to the chancery judge’s

ruling, Valley did not place Goldfischer’s pre-litigation legal advice “in-issue”

by relying on the White Paper. Goldfischer had no direct communication with

plaintiffs or their attorney; she did not author the White Paper; she did not act

as an investigator for the White Paper; and she did not engage in non-legal

activities surrounding the White Paper. And prior to the order allowing

plaintiffs to retain privileged emails, Valley never defended against plaintiffs’

claims by producing Goldfischer as a witness.

      Our conclusions are further supported by the fact that, as the chancery

judge found, plaintiffs could have challenged the merits of the White Paper in

a “less intrusive manner.” And they did just that. Plaintiffs’ trial counsel

cross-examined the analysts and authors of the White Paper and argued to the

jury that Valley acted in bad faith by attempting to “oust” plaintiffs because

they were disloyal to Valley. Plaintiffs could have done that without any

                                        55
reference to Goldfischer’s legal advice. Courts should be circumspect to find

the existence of a waiver of the attorney-client privilege when relevant

information can be secured elsewhere. Doing otherwise would discourage the

“free and full disclosure of information from the client to the attorney.”

Fellerman, 99 N.J. at 498.

      Further clouding the issue of whether Valley waived the attorney-client

privilege is the fact that Valley inadvertently disclosed the Goldfischer emails

during the whirlwind of what could realistically and fairly be described as an

intense court-ordered expedited discovery. It is alleged that approximately

57,000 documents were exchanged in roughly two months, including a batch

of emails allegedly consisting of 352 pages. During those same two months,

from the initial return date of the OTSC in late January 2016 to late March

2016, Valley’s counsel informed plaintiffs that some documents “got through”

and subsequently sent plaintiffs a “claw back” letter pursuant to the parties’

discovery agreement. That agreement anticipated precisely what occurred

here: the inadvertent release of materials that could lawfully be withheld as

privileged given the massive scope of documents involved and the short

timeframe in which they were exchanged. 12

12
  N.J.R.E. 530(c)(2) currently provides that “disclosure does not operate as a
waiver in a state proceeding if: (A) the disclosure is inadvertent; (B) the

                                       56
      Valley’s inadvertent disclosure of the Goldfischer emails, contrary to the

chancery judge’s finding, did not amount to waiver. Valley took “reasonable

steps” to prevent disclosure, which in addition to executing the discovery

agreement, included designating the emails with varying levels of

confidentiality. Valley’s then-counsel acted carefully considering the

expedited exchange of voluminous written discovery -- where approximately

57,000 documents were exchanged in roughly two months.

      Admission of the emails into evidence was not harmless. Select

Goldfischer emails in many ways became the centerpiece of plaintiffs’ case.

In his opening statement to the jury, plaintiffs’ counsel accused Goldfischer of

involvement in a “conspiracy to concoct a reason to try to get rid of

[plaintiffs].” Plaintiffs’ counsel went on to highlight the privileged emails at

length in his summation. And perhaps most prejudicial of all, plaintiffs were

holder of the privilege or protection took reasonable steps to prevent
disclosure; and (C) the holder promptly took reasonable steps to rectify the
error.” (effective July 1, 2020). At the time of the chancery judge’s decision
in this case, N.J.R.E. 530 (July 1, 1993) (codifying N.J.S.A. 2A:84A-29)
governed disclosure of privileged materials. That provision provided that “[a]
person waives the privilege if she, ‘without coercion and with knowledge of
[her] right or privilege, made disclosure of any part of the privileged matter or
consented to such a disclosure made by anyone.’” Stengart, 201 N.J. at 323
(second alteration in original) (quoting N.J.R.E. 530 (July 1, 1993)). Although
we do not find a waiver under either N.J.R.E. 530 standard, we note that the
parties’ focus on inadvertence corresponds more closely to the current
statutory test.
                                        57
permitted to call Goldfischer as a trial witness where she had to answer

questions about her emails admitted at the trial pertaining to her confidential

legal advice.

      Lastly, we note that plaintiffs introduced a handful of the Goldfischer

emails at trial. To be sure, her emails containing legal advice should have

been excluded from admission into evidence. However, the record is unclear

whether the chancery judge conducted a document-by-document review of all

the emails identified in Valley’s claw back letter because of his blanket ruling

that Valley generally waived the attorney-client privilege. On remand, if

plaintiffs attempt to introduce into evidence Goldfischer emails containing

legal advice in the 352-page batch that Valley attempted to claw back, we

instruct the remand judge to conduct a document-by-document review to

determine whether those emails are protected by the attorney-client privilege.

If the remand judge concludes they are protected by the attorney-client

privilege, then those emails will be inadmissible at the remand trial.

                                       B.

      We also find that certain comments by plaintiffs’ trial counsel in

summation were improper. It is well established that “counsel is allowed

broad latitude in summation.” Hayes v. Delamotte, 231 N.J. 373, 387 (2018)

(quoting Colucci v. Oppenheim, 326 N.J. Super. 166, 177 (App. Div. 1999)).

                                       58
But that latitude is not unlimited: “counsel’s comments must be confined to

the facts shown or reasonably suggested by the evidence introduced during the

course of the trial.” Ibid. Counsel cannot “misstate the evidence [or] distort

the factual picture” -- summation comments “must be based in truth.” Bender

v. Adelson, 187 N.J. 411, 431 (2006) (quoting Colucci, 326 N.J. Super. at

177). That includes commenting on the lack of evidence after successfully

excluding such evidence, despite knowing it exists. See, e.g., id. at 433

(holding that counsel improperly asked the jury “[w]here are the outside

independent experts in cardiology?” after successfully moving to exclude two

experts).

      Since no objections were made to the summation comments, we review

for plain error and reverse only if there was an error that “was ‘clearly capable

of producing an unjust result,’ R[ule] 2:10-2; that is, whether there is ‘a

reasonable doubt . . . as to whether the error led the jury to a result it otherwise

might not have reached.’” State v. Dunbrack, 245 N.J. 531, 544 (2021)

(omission in original) (emphasis added) (quoting State v. Funderburg, 225 N.J.

66, 79 (2016)).

      Here, after opening the door by questioning a Valley analyst about

patient transfers, plaintiffs’ counsel successfully prevented Valley from cross-

examining that witness on the patient transfers. The trial judge erred by

                                        59
preventing Valley from introducing this evidence because it tends “to prove or

disprove any fact of consequence to the determination of the action,” N.J.R.E.

401 -- namely, to justify the Exclusive Agreement. A challenge to the

evidence, specifically the timing of Valley’s discovery of the patient transfers,

would go to its weight, not admissibility.

      After this favorable ruling, plaintiffs’ trial counsel surmised to the jury:

            [T]here are two instances that they have mentioned that
            there was a transferred patient . . .

            [D]o you think that if there were more, they would have
            presented them to us? Do you think if they existed, they
            would have found their way into the [White Paper]?
            Because there are none. It isn’t even mentioned in the
            [White Paper].

            [(emphases added).]

Plaintiffs’ trial counsel knew that Valley had evidence of sixty cases of patient

transfers. The summation remarks implied, however, that there was evidence

of only two cases of patient transfers, and that inaccurate statement impacted

Valley’s contention that it made a valid healthcare decision. The comments

impermissibly “exploited a favorable evidentiary ruling . . . to strike an unfair

blow at the defense.” State v. Garcia, 245 N.J. 412, 434 (2021). Although on

their own the remarks might not be “clearly capable of producing an unjust

result,” Rule 2:10-2, we consider the remarks in context with the other

                                        60
substantial trial errors and hold that an unjust result was clearly capable of

being reached.

                                       VI.

      We may reverse a trial court’s judgment and order a new trial when “the

cumulative effect of small errors [is] so great as to work prejudice.” Torres v.

Pabon, 225 N.J. 167, 190 (2016) (alteration in original) (quoting Pellicer v. St.

Barnabas Hosp., 200 N.J. 22, 53 (2009)). In a cumulative error analysis, we

do not merely count the number of mistakes “because even a large number of

errors, if inconsequential, may not operate to create an injustice.” Id. at 191

(quoting Pellicer, 200 N.J. at 55). Rather, “we consider the aggregate effect of

the trial court’s errors on the fairness of the trial.” Ibid. The cumulative errors

here -- by no means inconsequential -- deprived Valley of a fair trial and

warrant a new one.

                                       VII.

      We offer these final thoughts about the remand proceedings. Valley

obtained a no-cause verdict on plaintiffs’ “breach of contract” claim. In other

words, the jury rejected plaintiffs’ claim that they were entitled to a hearing

under the Bylaws. That issue therefore cannot be retried even though, as noted

above, the question of whether Valley violated the Bylaws in altering

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plaintiffs’ privileges without a hearing was improperly presented to the jury

through the instructions and verdict sheet.

      On the other hand, the jury must decide, on retrial, whether Valley

breached an implied covenant of good faith and fair dealing premised on an

underlying contract beyond the rights and obligations afforded by the Bylaws.

And instructions on Berman and Desai must be given to the jury so that

Valley’s defense can be fairly considered. If plaintiffs sustain their burden on

their implied covenant of good faith and fair dealing claim -- without reference

to privileged emails containing legal advice or suggestions about the absence

of evidence regarding patient transfers -- money damages are appropriate.

                                      VIII.

      We reverse the appellate court’s judgment, vacate that part of the verdict

on the implied covenant claim, and remand for further proceedings consistent

with this opinion.

      CHIEF JUSTICE RABNER and JUSTICES PATTERSON, SOLOMON,
PIERRE-LOUIS, WAINER APTER, and NORIEGA join in JUSTICE FASCIALE’s
opinion.

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