Court Opinion

ID: 4580572
Source: CourtListenerOpinion
Date Created: 2020-10-26 18:15:12.093192+00
Date Added: 2024-06-11T13:43:41.544242
License: Public Domain

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                                  2020 Pa. Super. 258

    CABOT OIL AND GAS CORPORATION                     IN THE SUPERIOR COURT
    AND GASSEARCH DRILLING SERVICES                      OF PENNSYLVANIA
    CORPORATION

                             Appellees

                        v.

    CHARLES F. SPEER, SPEER LAW FIRM,
    P.C., EDWARD CIARIMBOLI, CLANCY
    BOYLAN AND FELLERMAN & CIARIMBOLI

                             Appellants                 No. 1926 MDA 2019

                Appeal from the Order Entered October 31, 2019
             In the Court of Common Pleas of Susquehanna County
                        Civil Division at No: 2017-00936

BEFORE: PANELLA, P.J., STABILE, J., and MUSMANNO, J.

OPINION BY STABILE, J.:                           FILED OCTOBER 26, 2020

        In this action for wrongful use of civil proceedings (“Dragonetti Act”)1

and other claims, Appellants, Charles F. Speer, Speer Law Firm, P.C., Edward

Ciarimboli, Clancy Boylan, and Fellerman & Ciarimboli, appeal a discovery

order compelling them to produce their tax returns and other financial

documents to counsel for Appellees, Cabot Oil and Gas Corporation and

Gassearch Drilling Services Corporation. The order limited disclosure of the

documents to counsel for Appellees and prohibited disclosure to Appellees

themselves, a type of order known as “attorneys’ eyes only” (“AEO”).

Appellants contend that this order violates their privacy rights as well as

privacy rights of their spouses and law partners.        We have jurisdiction to

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1   42 Pa.C.S.A. §§ 8351-8354.
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address this question under the collateral order doctrine embodied in Pa.R.A.P.

313. We affirm because the AEO order properly balances Appellants’ privacy

interests with Appellees’ right to obtain Appellants’ financial information for

the purpose of seeking punitive damages.

      Appellees allege the following in their Dragonetti complaint.     Prior to

2012, Appellant Speer, a Missouri lawyer, routinely filed suits against pig farm

operators based on alleged damages from odors and other purported

nuisances. Complaint, ¶ 22. After Missouri enacted legislation at the end of

2011 that put an end to Speer’s pig farm lawsuits, Speer set his sights on

Pennsylvania’s natural gas industry, thus “switch[ing] his focus from pigs to

rigs.” Id., ¶ 25. Speer and Speer Law teamed up with Appellants Edward

Ciarimboli, Clancy Boylan and the firm of Fellerman & Ciarimboli to commence

nuisance claim lawsuits against natural gas operators in Pennsylvania. Id.,

¶¶ 27-28. One of their Pennsylvania clients, Raymond Kemble, filed a federal

lawsuit against Appellees in 2009 and entered a settlement agreement with

Appellees in 2012. Id., ¶¶ 32-33, 49-53.

      In 2017, despite knowing that Kemble had settled with Appellees in

2012, Appellants filed a second federal lawsuit against Appellees in 2017

alleging state law claims for negligence and nuisance. Id., ¶¶ 62-84. Counsel

for Appellees advised Speer that the complaint in the second federal lawsuit

was frivolous because its allegations were time-barred and released by the

2012 settlement, and it failed to satisfy federal requirements for diversity

jurisdiction. Id., ¶¶ 86-87. Appellees filed a motion to dismiss the complaint

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for lack of subject matter jurisdiction. Id., ¶ 90. Appellants filed a motion to

dismiss all defendants pursuant to Fed.R.C.P. 41(a)(2).2 Id., ¶ 91. On June

9, 2017, the federal court granted Appellants’ motion. Id., ¶ 94.

       In August 2017, Appellees filed a complaint in the Court of Common

Pleas of Susquehanna County asserting the Dragonetti claim against

Appellants and Kemble and demanding a jury trial.3 Appellants filed an answer

to the complaint with new matter.

       In June 2018, Appellees served document requests on Appellants

seeking their tax returns, bank records, and net worth information for years

2013 to the present. Appellants responded to these requests with claims of

privilege and objections that they were burdensome, vexatious and not likely

to lead to admissible evidence. Appellants did not assert that the document

requests violated their own privacy rights or privacy rights of third persons.

       On August 6, 2019, Appellees filed a motion to compel production of

these documents. One day later, on August 7, 2019, the trial court granted

Appellees’ motion to compel and ordered Appellants to turn over the

documents on or before September 30, 2019.

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2 Fed.R.C.P. 41(a)(2) provides that, except in circumstances not relevant
here, “an action may be dismissed at the plaintiff's request only by court order,
on terms that the court considers proper.”

3 Appellees also sued Appellants for tortious interference with contract and
sued Kemble for breach of contract and permanent injunctive relief.

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       On August 15, 2019, Appellants filed a motion for reconsideration

arguing that (1) the discovery order violated Pa.R.C.P. 4003.7, the rule

governing punitive damages discovery,4 (2) the court ignored its previous

order that Appellants need not answer Appellees’ document requests until the

court held a hearing on punitive damages discovery, and (3) the court failed

to provide Appellants an opportunity to file a written response to Appellees’

motion to compel.           Appellants did not contend in their motion for

reconsideration that the discovery order violated their privacy rights.5

       On September 9, 2019, the court scheduled a hearing for October 25,

2019 on Appellants’ motion for reconsideration. Ten days later, Appellants

filed a written response to Appellees’ motion to compel. This response raised,

for the first time, the issue that is the centerpiece of the present appeal: a

claim that the discovery order violated Appellants’ privacy rights. Appellants,

however, only argued that the discovery order violated their own privacy

rights, not privacy rights of their spouses or law partners. Similarly, during

the hearing on the motion, Appellants contended that the discovery order

infringed their privacy rights, but not those of their spouses or partners.

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4 Pa.R.C.P. 4003.7 provides, “A party may obtain information concerning the
wealth of a defendant in a claim for punitive damages only upon order of court
setting forth appropriate restrictions as to the time of the discovery, the scope
of the discovery, and the dissemination of the material discovered.”

5 Appellants merely argued that the evidence establishing a prima facie case
for punitive damages discovery might vary from Appellant to Appellant.
Motion For Reconsideration, ¶ 15.

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      On October 31, 2019, the trial court denied Appellants’ motion for

reconsideration and ordered Appellants to produce the requested documents

within sixty days. The court found punitive damages discovery permissible

because Appellees “submitted evidence of intentional, willful and wanton

conduct by [Appellants] in filing a second federal litigation with full knowledge

of the prior settlement agreement between [Appellees] and [Kemble].” Order,

10/31/19, at n.1. The court declared this discovery “confidential” and ordered

counsel for Appellees not to “copy, disclose or utilize the contents of [this]

discovery for any purpose without leave of court” or “disclose [this] discovery

in any manner to any persons or entities, including Appellees, unless

[Appellees’] counsel obtains court approval for the disclosure.” Id., ¶¶ 3-5.

The court directed that following termination of the litigation, the order’s

confidentiality provisions would remain binding, and counsel for Appellees

must destroy this discovery and verify that they had done so. Id., ¶¶ 6-7.

      On November 27, 2019, Appellants filed a notice of appeal under the

collateral order doctrine.   Appellants filed a Pa.R.A.P. 1925 statement of

matters complained of on appeal claiming that the October 31, 2019 discovery

order violated their privacy rights and asserting, for the first time, that this

order violated the privacy rights of their spouses and law partners. Pa.R.A.P.

1925 Statement, ¶¶ 1-2. The trial court did not file a Pa.R.A.P. 1925 opinion.

      Appellants raise three issues in this appeal:

      A. Whether this appeal falls within the collateral order doctrine
      pursuant to Pa.R.A.P. 313.

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       B. Whether the trial court’s failure to limit the scope of the punitive
       damages discovery was an error of law.

       C. Whether this appeal was timely taken from the October 31,
       2019 order, which was a new amended order with substantial
       modifications from the trial court’s August 7, 2019 order.

Appellants’ Brief at 9.

       In essence, Appellants argue that the October 31, 2019 order violates

their privacy rights and the corresponding rights of their spouses and law

partners by requiring production of tax returns, bank records and net worth6

documents from 2013 onward. Appellees ask us to quash this appeal because

it does not satisfy the collateral order doctrine and is untimely. Alternatively,

Appellees argue that discovery of Appellants’ financial documents is proper in

view of their right to seek punitive damages under the Dragonetti Act, and the

trial court safeguarded Appellants’ privacy by restricting access to their

documents to Appellees’ counsel.

       We first observe Appellants cannot appeal the October 31, 2019 order

on the ground that it infringes the privacy rights of their spouses and law

partners, because Appellants lack standing to assert the alleged deprivation

of another’s rights. Commonwealth v. Butler, 291 A.2d 89, 90 (Pa. 1972)

(“appellant lacks standing to assert the alleged deprivation of another’s

constitutional rights”). Under the Rules of Civil Procedure, Appellants’ spouses

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6Net worth is “the amount by which assets exceed liabilities.” Sprague v.
Walter, 656 A.2d 890, 920 (Pa. Super. 1995).

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or law partners could have moved to intervene in this case to assert and

protect their rights. Pa.R.C.P. 2327(4) (“At any time during the pendency of

an action, a person not a party thereto shall be permitted to intervene . . . if

the determination of such action may affect any legally enforceable interest

of such person whether or not such person may be bound by a judgment in

the action”). They have not yet taken this step, and Appellants cannot act as

their litigation proxies. Even if the law permitted Appellants to raise their

spouses’ and law partners’ claims, Appellants waived this argument by failing

to raise it during trial court proceedings. The first time that Appellants argued

that their spouses’ and law partners’ privacy rights were infringed was in their

Rule 1925 statement during this appeal. Appellants cannot raise issues for

the first time in a Rule 1925(b) statement. Commonwealth v. Coleman, 19
A.3d 1111, 1118 (Pa. Super. 2011) (issues raised for first time in Rule 1925(b)

statement are waived).7

       Next, we address whether Appellants have the right to appeal the

privacy issue on their own behalf under the collateral order doctrine.       The

collateral order doctrine is articulated in Pa.R.A.P. 313, which provides:

       (a) General rule.--An appeal may be taken as of right from a
       collateral order of a trial court or other government unit.

       (b) Definition.--A collateral order is an order separable from and
       collateral to the main cause of action where the right involved is
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7 Nonetheless, since we affirm the trial court’s order, as a practical matter,
the privacy rights of covered spouses and partners subject to the order are
protected to the same extent as those of Appellants.

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      too important to be denied review and the question presented is
      such that if review is postponed until final judgment in the case,
      the claim will be irreparably lost.
Id. To satisfy the collateral order doctrine, the appellant must demonstrate

that the order “1) is separable from and collateral to the main cause of action;

2) involves a right too important to be denied review; and 3) presents a

question that, if review is postponed until final judgment in the case, the claim

will be irreparably lost.”   Linde v. Linde, 222 A.3d 776, 783 (Pa. Super.

2019). The first prong, separability, occurs when we can address the issue

surrounding the disputed order without analyzing the ultimate issue in the

underlying case. Id. As for the second prong, importance, “it is not sufficient

that the issue be important to the particular parties.” Geniviva v. Frisk, 725
A.2d 1209, 1214 (Pa. 1999). Instead, the issue “must involve rights deeply

rooted in public policy going beyond the particular litigation at hand.” Id. We

must interpret the collateral order doctrine narrowly, and each of the above

prongs must be clearly present for us to deem an order collateral. Melvin v.

Doe, 836 A.2d 42, 47 (Pa. 2003).

      “[T]he question of whether the collateral order doctrine has been met is

jurisdictional in nature.” Shearer v. Hafer, 177 A.3d 850, 855 (Pa. 2018).

“Where an order satisfies Rule 313’s three-pronged test, an appellate court

may exercise jurisdiction even though the order is not final.” Id. at 857. “If

the test is not met, [] and in the absence of another exception to the final

order rule, there is no jurisdiction to consider an appeal of such an order.” Id.

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      Appellants satisfy all three prongs of the collateral order doctrine. They

satisfy the first prong, separability, because it is possible to address whether

Appellants’ financial records are discoverable without analyzing the merits of

Appellees’ actions against Appellants under the Dragonetti Act or for tortious

interference with contract. J.S. v. Whetzel, 860 A.2d 1112, 1117 (Pa. Super.

2004) (in personal injury action, defendant’s expert medical witness appealed

order requiring production of all 1099 tax forms from 1999 to 2002 from any

insurance company or attorney; held that admissibility of 1099 forms “may

be addressed without analyzing [defendant’s] alleged negligence in the

automobile accident”).

      Appellants fulfill the second prong, importance, because they have a

significant privacy interest in their tax returns. Dougherty v. Heller, 138
A.3d 611, 629 n.10 (citing Cooper v. Schoffstall, 905 A.2d 482, 485 n.3 (Pa.

2006) (individuals have “privacy interest in information contained in federal

tax returns. . . . Such information is made confidential per federal statute”);

J.S., 860 A.2d at 1117 (defense witness’s privacy interest in information on

federal 1099 tax forms raised “sufficiently important public policy concern” for

purposes of collateral order doctrine).    Further, Appellants have a privacy

interest in their bank records and net worth documents.          Merithew v.

Valentukonis, 869 A.2d 1040, 1043 (Pa. Super. 2005), abrogated on other

grounds, Rae v. Pennsylvania Funeral Directors Association, 977 A.2d
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1121 (Pa. 2009)8 (discovery order compelling defendant to disclosure her

complete financial worth implicated her privacy interest in her financial

information and raised sufficiently important public policy concern to satisfy

second prong of collateral order doctrine).

       Appellants meet the third prong, irreparable harm, because their privacy

rights in their financial documents will be irreparably lost if review of this

question “is postponed until final judgment in this case.” Linde, 222 A.3d at

783; Merithew, 869 A.2d at 1043 (in motor vehicle accident case,

defendant’s privacy interest in her financial worth would be irreparably lost if

she complied with discovery order to disclose financial information instead of

taking collateral order appeal).

       Appellees argue that even if Appellants satisfy the collateral order

doctrine, we must quash Appellants’ appeal as untimely because (1)

Appellants failed to appeal within thirty days after entry of the August 7, 2019

order granting Appellees’ motion to compel, and (2) Appellants’ motion for

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8 Merithew applied a “whole order approach” to the collateral order doctrine
by ruling, in effect, that if one issue in an order satisfies the collateral order
doctrine, the entire order was subject to review. Id., 869 A.2d at 1044
(determining whether information sought in discovery order was relevant, an
issue that is not “separable from and collateral to the main cause of action”).
In Rae, our Supreme Court held that this “whole order approach” was
incorrect, and that “the collateral order rule’s three-pronged test must be
applied independently to each distinct legal issue over which an appellate court
is asked to assert jurisdiction pursuant to Rule 313.” Id., 977 A.2d at 1130.
Rae thus abrogated Merithew to the extent that Merithew applied the
“whole order approach” to the collateral order doctrine.

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reconsideration of this order did not toll the time for appealing, since the trial

court did not grant the motion within thirty days after August 7, 2019. We

disagree.

      In Estate of Petro, 694 A.2d 627 (Pa. Super. 1997), the administrator

of an estate filed a petition demanding that the decedent’s daughters return

certain assets to the estate.    On September 9, 1994, the Orphans’ Court

denied the petition, and on July 10, 1995, the court denied the administrator’s

exceptions.   The administrator filed a motion for new trial nunc pro tunc,

prompting the court to enter an order staying the entry of final judgment

pending receipt of evidence on the motion. On March 11, 1996, the court

denied the motion for new trial, and on March 29, 1996, the court entered

judgment. The administrator appealed. This Court held that the appeal was

timely even though the administrator appealed more than thirty days after

the July 10, 1995 order denying his exceptions.        We emphasized that the

administrator’s petition seeking return of assets was “collateral to the main

cause of action here, the administration of the assets inventoried in the

estate.” Id., 694 A.2d at 630. All of the orders between September 1994

and March 1996, we continued, related to this collateral matter. Id. There is

no rule, however, that a collateral order must be appealed within thirty days

after its entry; Rule 313(a) only provides that an appeal “may” be taken from

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a collateral order.9 Id. at 631. Since there were multiple orders concerning

this collateral issue, “an appeal of this issue was properly taken when the

collateral matter (the inclusion of assets in [the] estate) was finally

determined,” i.e., following entry of judgment on March 29, 1996. Id. at 631-

32.

       Several years after Petro, in Jones v. Faust, 852 A.2d 1201 (Pa.

Super. 2004), a motor vehicle accident case, the court entered (1) an order

on May 5, 2003 requiring the defendant’s expert witness to produce medical

records of other patients he treated (with their names redacted), (2) an order

on July 14, 2003 directing the expert’s company to pay a fine, and (3) an

order dated July 28, 2003 directing the expert and his company to pay fines

for failing to comply with prior orders.           On August 1, 2003, the expert

appealed. Citing Petro, this Court held that the appeal from the May 5, 2003

order was timely.

       [T]he timeliness of appeals from collateral orders depends not
       upon entry of the order itself, but upon resolution of the collateral
       matter. And, although collateral orders may be appealed within
       30 days of their entry, the substance of the collateral order is not
       forever precluded when an appeal is not taken within this period.
       As the order involved here is a discovery matter, by definition
       preliminary and in addition concerned with resolution of collateral
       issues, clearly no finality is implicated; the appeal from the May
       5th Order is therefore timely, as are the appeals from the July
       14th and 28th Orders.

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9Rule 313(a) remains the same today as it was when this Court decided
Petro.

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Id., 852 A.2d at 1203 (citations omitted).     We have interpreted Jones to

mean that “where [a] collateral matter is resolved through a series of

interlocutory orders, a timely notice of appeal from the last such order will

incorporate a prior order involving segments of same collateral matter.”

McGrogan v. First Commonwealth Bank, 74 A.3d 1063, 1076 n.16 (Pa.

Super. 2013) (citing Jones).

         In the present case, as in Petro and Jones, the trial court entered a

series of interlocutory orders on a collateral matter: the August 7, 2019 order

granting Appellees’ motion to compel production of Appellants’ financial

documents, the September 9, 2019 order scheduling a hearing on Appellants’

motion for reconsideration, and the October 31, 2019 order denying

reconsideration. Appellants’ notice of appeal on November 27, 2019 was a

timely appeal from the October 31, 2019 order that incorporated the August

7, 2019 and September 9, 2019 orders involving the same collateral discovery

issue.

         Having held that the October 31, 2019 discovery order herein is a

appealable collateral order, and that Appellants’ appeal from this order is

timely, we turn to the merits of the appeal.

         “In reviewing the propriety of a discovery order, we determine whether

the trial court committed an abuse of discretion and, to the extent that we are

faced with questions of law, our scope of review is plenary.”     Pasquini v.

Fairmount Behavioral Health System, 230 A.3d 1190, 1194 (Pa. Super.

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2020). The trial court entered an AEO order (1) declaring the discovery of

Appellant’s financial documents “confidential,” (2) directing Appellees’ counsel

not to copy or utilize this discovery or to disclose it anyone, including

Appellees, without court approval, even after termination of this litigation, and

(3) directing Appellees’ counsel to destroy this discovery after termination of

litigation.   Courts have employed AEO orders in a variety of cases.

“[D]isclosure of confidential information on an ‘attorneys' eyes only’ basis is a

routine feature of civil litigation involving trade secrets. . . . The purpose of

this form of limited disclosure is to prevent a party from viewing the sensitive

information while nevertheless allowing the party’s lawyers to litigate on the

basis of that information.” In re City of New York, 607 F.3d 923, 935-36

(2d Cir. 2010) (emphasis in original). AEO orders are commonplace in trade

secret litigation, including trade secret cases in Pennsylvania. CLL Academy,

Inc. v. Academy House Council, 231 A.3d 884 (Pa. Super. 2020) (collecting

AEO orders in Allegheny County trade secret cases); see generally Wright

& Miller, 8A Fed. Prac. & Proc. Civ. § 2041 n.11 (3d ed.) (collecting dozens of

cases).   In addition, courts have entered AEO orders to safeguard parties’

privacy interests. See Simpson v. Univ. of Colo., 220 F.R.D. 354, 361 (D.

Colo. 2004) (in sexual harassment case, some diary entries ordered disclosed,

but for attorneys’ eyes only); Sanchez v. Zabihi, 166 F.R.D. 500, 503

(D.N.M. 1996) (in sexual harassment case, interrogatory about prior romantic

or sexual advances narrowed to three years with response for attorneys’ eyes

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only); Rossini v. Ogilvy & Mather, Inc., 798 F.2d 590, 601 (2d Cir. 1986)

(in class action against employer for sexual discrimination, AEO order appears

to have been a proper attempt to balance plaintiffs’ desire for full disclosure

of relevant information against defendant’s desire to preserve privacy of its

employees). Further, we have found at least one court that has imposed an

AEO order when the plaintiff sought discovery relating to their claim for

punitive damages.    Breault v Friedli, 610 S.W.2d 134, 140 (Tenn. App.

1980) (in action alleging fraud in sale of liquor store business, court properly

limited disclosure of defendants’ financial information to counsel only).

      In this case, the trial court properly concluded that Appellees had the

right to punitive damages discovery under Rule 4003.7, based on evidence

that Appellants intentionally and wantonly filed a second federal lawsuit

despite full knowledge of the prior settlement agreement between Appellees

and Kemble. Appellants insist that disclosure of their financial documents will

rob them of their privacy interest in these documents, and that it is impossible

to undo this harm. The right to privacy, however, “is not an unqualified one;

it must be balanced against weighty competing private and state interests.”

Jones, 852 A.2d at 1207. Courts can and should craft discovery orders that

strike a proper balance between Appellants’ privacy interests and the rights of

other parties.   Appellees have the right to seek punitive damages in their

Dragonetti action. See 42 Pa.C.S.A. § 8353(6) (plaintiff in Dragonetti action

may obtain punitive damages “according to law in appropriate cases”). The

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AEO order herein accommodates Appellants’ privacy rights by prohibiting

Appellees themselves from viewing Appellants’ financial information, limiting

access to these documents to Appellees’ attorneys, and requiring Appellees’

attorneys to destroy these documents at the conclusion of litigation. The AEO

order effectuates Appellees’ right to punitive damages discovery by providing

access to Appellants’ financial records while also “setting forth appropriate

restrictions as to . . . the dissemination of the material discovered.” Pa.R.C.P.

4003.7. The AEO order, in short, is a proper exercise of discretion because it

properly balances the parties’ competing interests.10

       For the foregoing reasons, the October 31, 2019 order was appealable

under the collateral order doctrine, and Appellants’ appeal from this order was

timely. On the merits, we conclude that the trial court properly exercised its

discretion by ordering AEO production of Appellants’ financial documents.

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10 We know of only one other Pennsylvania appellate decision concerning AEO
orders—our ruling earlier this year in CLL Academy that an AEO order was
an improper device for resolving the defendant’s attorney-client privilege and
work product doctrine objections to the plaintiffs’ discovery requests. Privilege
logs, CLL Academy said, are the primary method for determining whether
privileges apply, and in camera review is available when privilege logs do not
permit meaningful analysis. Id., 231 A.3d at 889. The AEO order was “wholly
inconsistent with the in camera review sanctioned by our rules of civil
procedure for evaluating claims of privilege.” Id. at 890. We observed that
“disclosure [in trade secret cases] of confidential commercial information to
attorneys who are not in a position to use it to achieve a competitive edge is
quite different from the disclosure of an attorney’s mental impressions and
strategies to opposing counsel in ongoing litigation.” Id.

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      Order affirmed. Case remanded for further proceedings. Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/26/2020

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