Holland, G. v. The Physical Therapy Institute ( 2023 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
GLENN HOLLAND : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
THE PHYSICAL THERAPY INSTITUTE, :
INC., SHANNON VISSMAN AND RYAN :
CHRISTOFF : No. 1515 WDA 2021
:
Appellants :
Appeal from the Order Entered December 10, 2021
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD-18-011160
BEFORE: OLSON, J., DUBOW, J., and COLINS, J.
MEMORANDUM BY COLINS, J.: FILED: MARCH 17, 2023
The Physical Therapy institute, Inc. (“PTI”), Shannon Vissman, and Ryan
Christoff (collectively, “Appellants”) appeal from the six-part discovery order
that, inter alia, required the Appellants to provide an array of documents
dealing with financial and investment-related matters as well as
communications with counsel. On appeal, the Appellants chiefly contend that
the lower court erred by not conducting an in camera review of the disputed
documents prior to making its ruling. Moreover, the Appellants assert that the
court committed various errors of law or abuses of discretion through its six
discrete determinations. In response, in addition to substantively refuting the
Appellants’ arguments, Appellee Glenn Holland argues that we should quash
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 Retired Senior Judge assigned to the Superior Court.
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this appeal, as it was taken from a non-appealable interlocutory order. We
quash in part, affirm in part, and remand this matter with instructions.
Despite being in a pre-trial posture, this matter features a complicated
factual and procedural history. As best can be gleaned from the record,1
Holland has filed a four-count complaint against the Appellants, with his
amended complaint stating claims in breach of contract,2 breach of fiduciary
duty, and unfair trade practices.3 Holland requests punitive damages at each
claim.
By way of background, PTI is a Pennsylvania corporation that owns
physical therapy clinics in Western Pennsylvania, including one in the
Pennsylvania city of Warrendale. In turn, Vissman and Christoff own PTI.
Meanwhile, Holland, a physical therapist and former salaried employee of PTI,
worked as the Center Manager of PTI’s Warrendale location.
Related to his position as Center Manager, Holland signed an
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1 We note that, as it stands, there are discrepancies between the parties and
the court as to several important dates and events, likely due to where this
case presently falls within the civil litigation continuum.
2 Holland maintains that the Appellants breached both an employment
agreement and a partnership agreement, with both claims emanating from
the same document. See Amended Complaint in Civil Action, at 6-7 (asserting
breach of employment agreement against PTI and breach of partnership
agreement against Christoff and Vissman).
3 Although not specified in the amended complaint, we presume Holland’s
unfair trade practices claim is pursuant to the Pennsylvania Unfair Trade
Practices and Consumer Protection Law (“UTPCPL”). See 73 P.S. §§ 201-1 et
seq.
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employment agreement with PTI in 2013. Pursuant to that agreement, while
still receiving a salary, Holland was eligible for a management bonus that was
the equivalent of forty-nine percent of the Warrendale location’s net income,
as defined by the agreement. However, the agreement also required Holland
to, inter alia, abide by PTI’s policies, maintain appropriate patient records, and
promptly prepare and file the records of all professional services provided to
patients. The agreement further contained a noncompete clause and
prohibited him from obtaining a personal interest in, broadly, non-PTI physical
therapy offices or practices within a fifteen-mile radius “of any Holland facility
operated by PTI.” Employment Agreement, 1/9/13, at 4.
The agreement’s Exhibit B specified two additional ways in which
Holland would be compensated as it pertained to future contributions to PTI.
Specifically, as written: (1) Holland had “the option, upon mutual agreement
of [Holland] and PTI in writing … to participate in the funding of any newly
founded PTI facility,” id., at Ex. B, with compensation comparable to that of
the Warrendale location; and (2) if Holland did not contribute capital, but had
“material ongoing involvement in … a newly founded PTI facility, then upon
mutual agreement of [Holland] and PTI in writing,” id., he “may be eligible for
additional compensation of up to [twenty-five percent],” id., of that facility’s
net income.
According to the Appellants, in spring of 2018, Holland had conveyed to
PTI that he intended to open a new non-PTI facility that was within fifteen
miles of the Warrendale location (identified as “Hopewell/Monaca”), which PTI
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believed violated the agreement’s non-compete clause. Moreover, PTI
contends that around that same point in time, it started to receive numerous
employee reports of Holland’s actions that PTI also deemed to be violative of
the agreement, which included him allegedly editing employee time records
and treating patients without proper record-keeping.
That same year, on May 17, 2018, PTI terminated Holland for cause,
stating in the corresponding notice that Holland had been in willful breach of
various aspects of the agreement and had habitually acted neglectful in his
conduct. Prior to that decision, PTI retained the law firm of Wilson Sonsini
Goodrich & Rosati (“Wilson Sonsini”) to explore the information that had been
contained in the employee reports discussing Holland’s conduct.
After several email exchanges between Holland’s counsel and an
attorney at Wilson Sonsini, Holland filed the present lawsuit in August 2018.
Correspondingly, the Appellants retained separate counsel and then filed an
answer, new matter, and counterclaims.
During discovery, Holland’s counsel deposed Christoff. At that
deposition, Christoff was asked various questions about Wilson Sonsini’s
handling of the investigation into Holland’s actions and the consequent
employee reporting of those actions. According to Christoff, predicated on
what was uncovered during the inquiry, the recommendation from Wilson
Sonsini was that Holland should be terminated.
Thereafter, Holland sought to discover the Appellants’ communications
with Wilson Sonsini under the belief that the Appellants, in utilizing Wilson
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Sonini’s services, had put counsel’s advice at issue in this case. Holland then
filed a motion to compel the Appellants to produce documents that had been
withheld under claims of privilege and identified on a privilege log. This filing
led to the court conducting an in camera review of four documents, deeming
three of them to not be privileged and ordering those to be produced. The
fourth document, PTI’s engagement letter with Wilson Sonsini, was
determined to be privileged.
After these determinations, Holland issued subpoenas, seeking both
documents and testimony from Wilson Sonsini as well as two of its attorneys,
Marina Tsatalis, Esq., and Stuart Williams, Esq., who had been involved in the
employee-complaint investigation. The Appellants challenged these
subpoenas pursuant to Pennsylvania Rule of Civil Procedure 4009.21,
eventually also filing motions for protective orders to quash the subpoenas,
objecting on the bases of the attorney-client privilege and work-product
doctrine. As indicated by the lower court:
Holland attempted to subpoena records from Wilson Sonsini
because a principal of PTI testified late in the case that Wilson
Sonini told them before Glenn Holland was terminated that Glenn
Holland had engaged in theft. [Plaintiff’s counsel] had notes from
the investigation. Nothing in the notes concludes that [Holland]
engaged in theft. [T]he agreement with PTI says [Holland] can’t
be terminated for theft unless he is convicted of it, [a]nd there
hasn’t even been a prosecution for theft. At this time counsel for
Wilson Sonsini alleged his clients had not been properly served
with a subpoena and therefore this issue was not properly before
the [c]ourt. In an effort to “cut to the chase” the [c]ourt asked
counsel for Wilson Sonsini if he had the authority to accept the
subpoena on behalf of his clients[.] Counsel informed the [c]ourt
he did not have any such authority. Counsel for PTI informed the
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[c]ourt it did not have any additional documents to produce other
than the three already produced pursuant to the [c]ourt’s [o]rder.
The [c]ourt then recessed the hearing to allow Wilson Sonsini’s
counsel to confer with his clients regarding acceptance of service
and for PTI’s counsel to confirm all documents had been turned
over.
Immediately upon the commencement of the hearing …
Wilson Sonsini … said it did not have authorization to accept the
subpoenas. … Counsel for PTI then informed the [c]ourt there was
one additional document that had not been produced and was
withheld in error[.] PTI was directed to send the document to the
[c]ourt for review. [At this time,] [c]ounsel for PTI informed the
[c]ourt its representation had been terminated and it would not
be providing the fourth document to the [c]ourt[.] [N]ew counsel
entered an appearance and agreed to review the document and
provide it. The document was eventually produced[.]
… [At a subsequent argument,] [t]he [c]ourt pointed out to
counsel [that] Christoff and Vissman had already testified in
depositions about asking their lawyers to perform an investigation
which they then relied upon.
Trial Court Opinion, 4/12/22, at 2-4 (record citations and some internal
quotation marks omitted). At or around this point, Holland also filed another
motion to compel. Eventually, the lower court expressly denied one of the
Appellants’ motions to quash, but that order went no further in discussing
document production, privileges, or the other subpoenas that had been
sought.
The subpoena seeking documents from Wilson Sonsini requested,
without limitation, all documents exchanged between Wilson Sonsini and the
Appellants relating in any way to Holland. Wilson Sonsini responded by
asserting attorney-client privilege and the work-product doctrine, indicating
that it would then construct a privilege log, which was thereafter produced
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and subsequently amended. Eventually, 293 pages of documents were
identified as responsive to Holland’s subpoena, whereafter 190 pages were
authorized to be produced and 103 were determined to fall under the auspices
of attorney-client privilege or work-product. Those 103 pages are all
associated with events/dates taking place after Holland filed the present
lawsuit.
As further discovery, Holland’s counsel also deposed Vissman in his
personal capacity,4 which, similar to the Christoff deposition, inquired into
communications with Wilson Sonsini. In addition, Vissman was asked about
his business interests in other states, with Baylife Physical Therapy (“Baylife”),
which has clinics in Florida and Colorado, being specifically named as one of
his interests. Notably, all of the Baylife clinics were managed out of the same
address, the one utilized by PTI. In addition, Vissman indicated that a private
equity group was the majority owner of Baylife and, too, that Wilson Sonsini
had some level of ownership interest.
Several days after this deposition, Holland filed a hybrid motion to
compel and motion for sanctions. After Holland filed five additional
supplements to this motion and oral argument was heard, the court issued
the ultimate order giving rise to the current appeal. Therein, the court stated
that:
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4Vissman had already been deposed in his capacity as corporate designee of
PTI.
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(1) [Appellants] shall provide complete responses to [Holland’s]
Amended Requests for Production of Documents and
Interrogatories Directed to [Appellants] on July 15, 2021;
(2) [Appellants] shall provide financial information for … any new
clinics in Florida, Colorado or elsewhere – including Baylife, under
the terms of the Court’s July 28, 2020 Order;
(3) [Appellants] shall provide all documents exchanged with
Wilson Sonsini regarding investment/ownership in clinics;
(4) Wilson Sonsini shall provide the documents identified in its
amended privilege log and all documents not previously provided;
(5) Shannon Vissman’s deposition shall be reconvened to testify
about Wilson Sonsini, the advice it provided to him and PTI about
Monaca/Hopewell, and the investments Wilson Sonsini made in
new clinics;
(6) [Appellants] shall produce information about their personal net
worth and financial capacity heretofore withheld, and Shannon
Vissman shall be required to testify about how he paid for the
Florida house he purchased in 2018.
Order, 12/10/21, at 1-2 (numbering added). The court justified its
determination, in part, by illuminating that, based on the record, “the law firm
which allegedly investigated and decided … Holland engaged in theft may have
had a pecuniary interest in not having to share any ownership interest with …
Holland and [further that] PTI has several ownership interests which were not
previously disclosed in discovery.” Trial Court Opinion, 4/12/22, at 4.
After this order was issued, the Appellants filed a motion for
reconsideration, but that motion was never decided by the lower court.
However, the Appellants filed a timely notice of appeal from the discovery
order, and the relevant parties have complied with their respective obligations
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under Pennsylvania Rule of Appellate Procedure 1925. Accordingly, this matter
is ripe for disposition.
On appeal, the Appellants present four questions:
1. Did the lower court err in compelling (1) Appellants’ lawyers to
produce privileged documents, specifically in doing so without
conducting in camera review; and (2) Vissman to testify about
the advice his lawyer provided to him?
2. Did the lower court err in compelling the production of
information regarding the Appellants’ personal net worth as
responsive to an alleged punitive damages claim and in doing
so without setting any specific restrictions on that discovery?
3. Did the lower court err in compelling Appellants to produce
confidential financial records of non-party-owned entities?
4. Did the lower court err in compelling the production of
confidential financial records that Holland never requested
during discovery?
Appellants’ Brief, at 6-7.
Preliminarily, we must address the arguments raised in Holland’s motion
to quash filed in this Court,5 as questions concerning order appealability
implicate this Court’s jurisdiction. See Jacksonian v. Temple Univ. Health
Sys. Found., 862 A.2d 1275, 1279 (Pa. Super. 2004) (citation omitted). 6
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5 In response to Holland’s January 31, 2022 motion to quash, this Court issued
a per curiam order denying his motion without prejudice “to raise before the
Merits Panel.” Order, 3/17/22. Holland implicitly renewed his motion in his
appellee brief through further discussion of the collateral order doctrine,
identified infra. See Appellee’s Brief, at 2-9, 71, 77.
6 Despite the lower court’s order having six distinct components, for ease of
disposition, we address Holland’s motion within the context of the questions
the Appellants present in this appeal.
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Holland asserts that we do not have jurisdiction because the appealed-from
order is not final, see Pa.R.A.P. 341; Barak v. Karolizki, 196 A.3d 208, 215
(Pa. Super. 2018) (establishing that an appeal, under normal circumstances,
requires a final order), nor one that is interlocutory, yet appealable, see
Pa.R.A.P. 311 (by right); Pa.R.A.P. 1311 (by permission).
Notwithstanding those general precepts, collateral orders that are not
otherwise appealable may be appealed from if they satisfy the rigid dictates
of Rule 313. See Pa.R.A.P. 313(a)-(b) (defining what is known as the
“collateral order doctrine”). Manifesting as a three-part test, an appealable
collateral order is one that: “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.” In re Bridgeport Fire Litigation, 51
A.3d 224, 230 n.8 (Pa. Super. 2012) (citation omitted). If any one component
of that test is not satisfied, we have no jurisdiction to adjudicate the
corresponding appeal. See Spainer v. Freeh, 95 A.3d 342, 345 (Pa. Super.
2014).
By way of further elaboration:
For the first prong of the analysis under Pa.R.A.P. 313(b), a court
must determine whether the issue(s) raised in the order are
separable from the central issue of the ongoing litigation. Under
the second prong, in order to be considered too important to be
denied review, the issue presented must involve rights deeply
rooted in public policy going beyond the particular litigation at
hand. An issue is important if the interests that would potentially
go unprotected without immediate appellate review of that issue
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are significant relative to the efficiency interests sought to be
advanced by the final judgment rule. Furthermore, with regard to
the third prong of the analysis, our Supreme Court explained that
whether a right is adequately vindicable or effectively reviewable,
simply cannot be answered without a judgment about the value
interests that would be lost through rigorous application of a final
judgment requirement.
Bogdan v. American Legion Post 153 Home Assoc., 257 A.3d 751, 755-
56 (Pa. Super. 2021) (citation omitted) (formatting altered).
The Appellants’ first claim on appeal asserts that the court erred when
it required the production of documents subject to privilege and work product
concerns and contained within Wilson Sonsini’s privilege log and further
ordered Vissman to be deposed as to, inter alia, privileged matters.7 These
two contentions correspond, ordinally, to the fourth and fifth obligations
contained in the at-issue order. See Order, 12/10/21, at 1-2.
“Generally, discovery orders are deemed interlocutory and not
immediately appealable, because they do not dispose of the litigation. On the
other hand, discovery orders requiring disclosure of privileged materials
generally are appealable under Rule 313 where the issue of privilege is
separable from the underlying issue.” Meyer-Chatfield Corp. v. Bank Fin.
Servs. Grp., 143 A.3d 930, 936 (Pa. Super. 2016) (citations omitted).
Significantly, Pennsylvania courts have held that discovery orders
involving potentially confidential and privileged materials are
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7 Pursuant to the order, Vissman also is required to testify as to “investments
Wilson Sonsini made in new clinics,” Order, 12/10/21, at 2, which, given the
remaining components of the order, will be addressed in tandem with
Appellants’ issue number three.
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immediately appealable as collateral to the principal action. This
Court has also recognized that an appellant’s colorable claim of
attorney-client and attorney work-product privilege can establish
the propriety of immediate appellate review.
Berkeyheiser v. A-Plus Investigations, Inc., 936 A.2d 1117, 1123-24 (Pa.
Super. 2007); see also Commonwealth v. Flor, 136 A.3d 150, 155 (Pa.
2016) (“[D]iscovery orders rejecting claims of privilege and requiring
disclosure constitute collateral orders that are immediately appealable under
Rule 313.”); Gocial v. Independence Blue Cross, 827 A.2d 1216, 1220 (Pa.
Super. 2003) (“[O]ur courts held that [an] appellant’s colorable claim of
attorney-client and attorney work-product privilege ma[ke] appellate review
proper.”).
Based on a review of the order and what it purports to allow for
discovery in its fourth and fifth items, i.e., Wilson Sonsini’s client-related
documents that were subsequently reduced to a privilege log as well as the
required oral disclosure as to the advice of counsel given to Vissman by Wilson
Sonsini, the Appellants have raised a colorable claim that these matters
include attorney-client communications or protected attorney work product.
Accordingly, the Appellants have inherently satisfied the three-pronged test
required for applicability of the collateral order doctrine,8 and we have
jurisdiction to adjudicate the Appellants’ substantive claim.
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8 Separability is evident, as review of the privileged nature of these
documents/prospective statements, at this juncture, is separable from what
(Footnote Continued Next Page)
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Substantively, the Appellants seek, prior to production, in camera
review of the documents that potentially implicate the attorney-client privilege
and work-product doctrine. As with all discovery-related issues, “in reviewing
the propriety of a discovery order, our standard of review is whether the trial
court committed an abuse of discretion. However, to the extent that we are
faced with questions of law, our scope of review is plenary.” Gormley v.
Edgar, 995 A.2d 1197, 1202 (Pa. Super.2010), citing Berkeyheiser, 936
A.2d at 1125. Moreover, “[t]he application of the attorney-client privilege and
the work product doctrine are questions of law over which our standard of
review is de novo and our scope of review is plenary.” CLL Acad., Inc. v.
Acad. House Council, 231 A.3d 884, 888 (Pa. Super. 2020) (citation
omitted).
The statute governing attorney-client privilege states that: “[i]n a civil
matter counsel shall not be competent or permitted to testify to confidential
communications made to him by his client, nor shall the client be compelled
to disclose the same, unless in either case this privilege is waived upon the
trial by the client.” 42 Pa.C.S.A. § 5928.
To invoke application of the attorney-client privilege, four
elements must be established:
1) The asserted holder of the privilege is or sought to become a
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is fundamentally a breach of contract action; the privileges, themselves, are
deeply rooted in public policy; and if these potentially privileged pieces of
information were disclosed, there would be no effective means of review
available.
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client.
2) The person to whom the communication was made is a member
of the bar of a court, or his subordinate.
3) The communication relates to a fact of which the attorney was
informed by his client, without the presence of strangers, for the
purpose of securing either an opinion of law, legal services or
assistance in a legal matter, and not for the purpose of committing
a crime or tort.
4) The privilege has been claimed and is not waived by the client.
Ford-Bey v. Pro. Anesthesia Servs. of N. Am., LLC, 229 A.3d 984, 990–
91 (Pa. Super. 2020) (cleaned up).
To claim attorney-client privilege, the asserting party
bears the initial burden of producing sufficient facts to show that
he has properly invoked the privilege for the communications that
he has declined to disclose. This often entails an affidavit,
statement, or testimony clarifying the circumstances under which
the communication was made. The trial court must determine
whether the facts support the asserted privilege. If the trial court
finds that the party invoking privilege has proffered proof to
satisfy the test, the burden shifts to the party seeking disclosure
to set forth facts showing that disclosure should be compelled
either because the privilege has been waived or because an
exception to the privilege applies. Absent a sufficient showing of
facts to support the privilege, the burden does not shift and the
communications are not protected.
Id., at 991. We also note that “[a] privilege log provides an acceptable format
to identify documents, the applicable privilege, and the basis upon which
privilege is claimed.” Carlino E. Brandywine, L.P. v. Brandywine Vill.
Assocs., 260 A.3d 179, 197 (Pa. Super. 2021) (footnote omitted). Although
we have illuminated that attorney-client privilege can be waived by the client,
we emphasize that, specifically, “[i]n-issue waiver occurs when the privilege-
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holder asserts a claim or defense, and attempts to prove that claim or defense
by reference to the otherwise privileged material.” Commonwealth v.
Harris, 32 A.3d 243, 253 (Pa. 2011) (citation omitted)
As to work-product protections, our Rules of Civil Procedure exclude
discovery that discloses “the mental impressions of a party’s attorney or his
or her conclusions, opinions, memoranda, notes or summaries, legal research
or legal theories.” Pa.R.C.P. 4003.3.
Here, despite there being a privilege log, the court found that the
Appellants necessarily waived any privilege to communications surrounding
the investigation, as they testified that they relied upon the investigation of
Wilson Sonini when they made the decision to fire Holland. See Trial Court
Opinion, 4/12/22, at 5. In contrast, the Appellants indicate that “they never
relied on Wilson Sonsini’s investigation of the issues raised by staff to fire
Holland.” Appellants’ Brief, at 41 (writing, further, that it was exclusively
Christoff’s testimony at issue, not Vissman’s, and that “Christoff merely
answered the questions Holland’s attorney asked … with Christoff’s testimony
in fact refuting Holland’s claimed reliance on advice of counsel[]”).9
Upon our review, we find that the record remains unclear at this juncture
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9 The Appellants also distinguish between communications they had with
Wilson Sonsini prior to Holland filing the current lawsuit and the
communications that transpired after that event, arguably for wholly litigation
purposes. However, given our disposition of this issue, which compels remand,
we need not delve into potential timing issues.
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whether the Appellants intend to invoke the Wilson Sonsini investigation as a
defense at trial. The court, in finding that the Appellants had waived attorney-
client and work-product privileges did not conduct any in camera review of
the most recent round of ordered documents, despite “having already
conducted an in[]camera review once in this matter[.]” Trial Court Opinion,
4/12/22, at 7. While Christoff testified in his deposition about Wilson Sonsini’s
advice vis-à-vis the termination of Holland’s employment, the Appellants did
not raise this issue in their pleadings nor did they include a defense of reliance
on the advice of counsel in their answer and new matter.
Therefore, in light of this ambiguity, we conclude that a remand is
appropriate. On remand, the court must ascertain whether the Appellants
intend to utilize any of the “otherwise privileged material” contained in the at-
issue documents in order to establish a defense at trial or otherwise rely upon
them at trial.10 If the Appellants are willing to stipulate that such documents
will not ultimately come into contention or that none of counsel’s advice will
become an issue at trial, then pursuant to Yocabet v. UPMC Presbyterian,
119 A.3d 1012 (Pa. Super. 2015), the court should thereafter conduct in
camera review of the potentially privileged material and make corresponding
determinations as to whether those documents are discoverable for an
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10 This determination would apply to both documents contained within the
privilege log and, too, Vissman’s compelled testimony addressing the advice
that his lawyer provided to him.
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unrelated reason. See id., at 1029; see also Berg v. Nationwide Mut. Ins.
Co., 44 A.3d 1164, 1179 (Pa. Super. 2012) (“In camera review of disputed
claims of privilege is often necessary and appropriate.”).
If the Appellants are unwilling to stipulate, then the court is obligated to
ascertain the extent the Appellants have invited discovery by placing attorney-
client and work-product-related documents and communications at issue in
the ultimate resolution of the case. “The scope of waiver of privileged
materials must be determined by the extent to which the privileged material
has been placed in issue. Because privilege waivers do not waive the attorney-
client privilege or work product doctrine as to all material counsel may
possess, our precedent requires an issue-specific analysis of waiver.” Carlino
E. Brandywine, L.P., 260 A.3d at 204 (citation omitted). As relevant to this
case, such an issue-specific waiver analysis would require the court’s
consideration of, for example, whether communications between the
Appellants and Wilson Sonsini predated Holland’s termination and thus could
have influenced that decision. Regardless of whether waiver is found, the court
should conduct an in camera review to ensure that documents which retain
their privilege or are otherwise undiscoverable are not disseminated.
The Appellants next contest whether the lower court should have
ordered production of their personal net worth information. See Order,
12/10/21, at 2 (obligating, inter alia, Vissman to testify as to how he paid for
a house in Florida). Holland apparently seeks such information to pursue a
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punitive damages claim at trial.
The plain text of the order requires the Appellants to produce “personal
net worth” and “financial capacity” documents. Cases have found satisfaction
of the collateral order doctrine when addressing discovery requests for
individuals’ “tax returns, bank records[,] and net worth documents[.]” See,
e.g., Cabot Oil and Gas Corporation v. Speer (Cabot Oil), 241 A.3d 1191,
1196 (Pa. Super. 2020) (internal footnote omitted). In finding the three
prongs to be met, Cabot Oil held that: (1) it was possible to address the
discoverability of these types of records without delving into, as it related to
that case, the underlying Dragonetti Act violation claim; (2) people have a
significant privacy interest in their tax returns; and (3) irreparable harm would
follow if review was postponed, given the aforesaid privacy interests at stake.
Id., at 1197-98.
We see no basis to conclude differently in the present matter. There is
clear separability between the causes of action asserted in Holland’s complaint
and the privacy concerns raised on appeal; the Appellants have a deeply-
rooted interest in maintaining the confidentiality of their personal financial
information; and if such information were to be obtained through discovery,
the Appellants would be without clear recourse if that information became
publicly available. Therefore, the Appellants’ appeal as to this element of the
trial court’s discovery order satisfies the collateral order doctrine.
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Under Rule 4003.7, “[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.” Pa.R.C.P.
4003.7.
Distilled down, the Appellants claim that because this case is principally
a breach of contract action, punitive damages are not available as a matter of
law. See Appellants’ Brief, at 46. The Appellants also assert that even if
Holland were ultimately successful at trial and punitive damages were
conceptually available, none of their own conduct would warrant punitive
damages. Finally, the Appellants believe that the court erred by “failing to
include any restrictions as to the timing, scope, or dissemination of net worth
information.” Id.
Our caselaw makes clear that Holland’s breach of contract and unfair
trade practices claims do not allow for the recovery of punitive damages. See
Richards v. Ameriprise Fin., Inc., 152 A.3d 1027, 1035 (Pa. Super. 2016),
citing McCauslin v. Reliance Fin. Co., 751 A.2d 683, 685 (Pa. Super. 2000)
(stating that claims under the UTPCPL do “not ‘confer a right to [impose]
punitive damages’”); DiGregorio v. Keystone Health Plan East, 840 A.2d
361, 370 (Pa. Super. 2003) (en banc) (providing that a litigant cannot
“recover punitive damages for an action solely sounding in breach of
contract”). However, our courts have permitted recovery of punitive damages
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in cases involving breach of fiduciary duty claims. See, e.g., Hutchison ex
rel. Hutchison v. Luddy, 870 A.2d 766, 773 (Pa. 2005) (“[A]n award of
punitive damages [is] proper for claims sounding in breach of fiduciary
duty[.]”); B.G. Balmer & Co., Inc. v. Frank Crystal & Company, Inc., 148
A.3d 454, 464-65 (Pa. Super. 2016) (finding punitive damages appropriate
where the underlying claim was breach of fiduciary duty); Viener v. Jacobs,
834 A.2d 546, 561 (Pa. Super. 2003) (same).
Nevertheless, the trial court has not ruled, specifically, as to the
appropriateness or basis for permitting punitive damages, nor has the court
indicated whether the breach of fiduciary duty claim could support a punitive
damages award. While the Appellants state that Holland’s breach of fiduciary
duty claim is derivative of his breach of contract claims, it would be premature
to speculate whether the fiduciary duty issue will ultimately allow for Holland
to seek punitive damages.
On remand, the court must unequivocally determine whether allowing
for punitive damage-related discovery is appropriate. First, as a preliminary
consideration, the court must ascertain if Holland’s breach of fiduciary duty
claim, if successful at trial, could warrant punitive damages against any of the
named Appellants. If it answers that inquiry, to any degree, in the affirmative,
then, secondly, the court must impose restrictions on discovery pursuant to
Rule 4003.7. As it stands now, the Appellants are obligated to “produce
information about their personal net worth and financial capacity” without any
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sort of limitation whatsoever. However, the court, if it is to allow for such
discovery, must put forth “appropriate restrictions” as to the time, scope, and
dissemination of that information. Pa.R.C.P. 4003.7.
In the Appellants’ third question, they ask whether the court erred in
compelling them to produce confidential financial records of non-party-owned
entities. Juxtaposed against the discovery order, the Appellants challenge its
first two components wherein they are required to: (1) provide complete
responses to Holland’s amended requests for production of documents and
interrogatories from July 15, 202111; and (2) provide financial information for
new clinics, including Baylife, in accordance with a preexisting July 28, 2020
order. See Order, 12/10/21, at 1. In summary, the Appellants contend that
because they “have already produced all the financial information of every
physical therapy clinic owned by … PTI … [the discovery order’s effect] is to
compel … Vissman and Christoff to produce (1) financial information regarding
personal investments and (2) financial information belonging to a non-party
entity owning physical therapy clinics that are not owned by … PTI.”
Appellants’ Response in Opposition to [Holland’s] Motion To Quash Appeal, at
16-17.
____________________________________________
11 These requests require Vissman and Christoff to, inter alia, provide balance
sheets, income statements, organizational documents, locational information,
clinic names, and the ownership structures of any clinic opened since January
1, 2015, in which they have any sort of financial or ownership interest. See
Appellants’ Response in Opposition to [Holland’s] Motion To Quash Appeal, at
16 n. 3 (citation omitted).
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It is not entirely clear from the record what documents Vissman and
Christoff possess as it pertains to both their own personal investments and
the records of any non-party entity, namely Baylife. To the extent the
Appellants are asserting the privacy rights of a non-party to the present
action, we emphasize that there is no indication Baylife, or any other
analogous entity, has moved to intervene in this case. As such, the Appellants
“cannot act as their litigation proxies,” Cabot Oil, 241 A.3d at 1196, and are
therefore foreclosed from overcoming the collateral order doctrine as to any
obligation imposed on a non-party. Cf. Dibble v. Penn State Geisinger
Clinic, Inc., 806 A.2d 866, 871 (Pa. Super. 2002) (establishing that business
documents labeled “proprietary” and “confidential,” when considered in light
of the facts of that case, satisfied the collateral order doctrine, allowing for
review of the denial of a confidentiality order sought by the originator of those
documents).
As to those documents possessed by Vissman and Christoff that show
their personal investments in new clinics, those financial documents appear
conceptually akin to bank records, which, as stated earlier, have been held to
satisfy all three prongs of the collateral order doctrine.12 See Cabot Oil, 241
A.3d at 1197-98 (finding that bank records are separable if capable of
independent analysis, privacy interests are inherent to those types of records,
____________________________________________
12 We note that there is a dearth of case law as it pertains to investment-
related information within the context of the collateral order doctrine.
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and that if review was postponed, any adjudication would be moot, given the
pre-existing disclosure). Accordingly, to the extent the Appellants possess
documents related to their personal investments that they are required to now
disclose pursuant to the appealed-from order, they have met the collateral
order doctrine’s tripartite test.
In summarizing the Appellants’ argument, they contend that discovery
as to their investments in non-PTI clinics is not relevant and hence should not
have been allowed. Based on the language contained in the employment
agreement, Holland has no entitlement to any non-PTI investment. See
Appellants’ Brief, at 66. In effect, “the discovery of Baylife’s confidential
financial records [is] irrelevant and therefore improper.” Id., at 66-67.
The court, however, found that the Appellants are attempting “to hide
behind straw man arguments of corporate structure by claiming PTI does not
own Baylife[.]” Trial Court Opinion, 4/12/22, at 9. The court continued: “[t]his
record is replete with examples put forth by [Holland] showing there is
marginal (if not significant) interplay between PTI and its members and these
new clinics. As minority owners[, the Appellants must] turn over the material
within their possession and control.” Id.
Pursuant to Rule 4003.1, generally speaking, “a party may obtain
discovery regarding any matter, not privileged, which is relevant to the subject
matter involved in the pending action[.]” Pa.R.C.P. 4003.1(a). The lower court
found that such information, regarding investments in non-PTI clinics, was
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relevant to at least one of Holland’s causes of action, given the significant
interplay between Baylife and the individual Appellants, which was uncovered
during the course of this litigation. While the Appellants aver that discovery in
this domain is irrelevant to Holland’s claims, they have not demonstrated to
this Court that the trial court erred or abused its discretion by permitting
discovery into the nexus between the Appellants and Baylife. Therefore, in the
absence of any reason to limit discovery, we affirm the trial court’s order
directing the production of documents regarding the Appellants’ non-PTI
investments, specifically in contemplation of the Baylife-related information.
The Appellants’ fourth issue maintains that the trial court abused its
discretion in compelling financial records that Holland never requested during
discovery. This contested part of the order requires the Appellants to “provide
all documents exchanged with Wilson Sonsini regarding investment/ownership
in clinics[.]” Order, 12/10/21, at 1.
To demonstrate satisfaction of the collateral order doctrine, the
Appellants simply assert that “an appeal of this ruling plainly satisfies Rule
313’s three-pronged test for appealing a collateral order” and that they “have
privacy interests in their communications with their lawyers and their personal
financial information.” Appellants’ Response in Opposition to [Holland’s]
Motion To Quash Appeal, at 20-21. While the documents that the trial court
ordered to be produced appear to target Wilson Sonsini’s investment and
ownership interests in clinics, the relevant portion of the order was broadly
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phrased, and it appears that it could also potentially sweep in legal advice
provided by Wilson Sonsini or Vissman and Christoff’s personal financial
information. Therefore, for the reasons set forth above, we conclude that the
third bullet-point of the order requiring that the Appellants “provide all
documents exchanged with Wilson Sonsini regarding investment/ownership in
clinics” satisfies the collateral order doctrine. Order, 12/10/21, at 1.
On the merits, the Appellants argue, first, that the documents were
never requested by Holland and that the court could not compel discovery as
to which the Appellants did not have the opportunity to object and, second,
that the documents were irrelevant to Holland’s claims as Wilson Sonsini does
not have an ownership interest in PTI, Holland’s former employer.
As explained above, however, the trial court rejected the Appellants’
efforts to curb Holland’s inquiry into the individual Appellants’ ownership of
non-PTI clinics, and the Appellants have not demonstrated grounds for this
Court to overturn the lower court’s determination that such topics are the
proper subject of discovery. Nevertheless, we acknowledge that the discovery
order for documents concerning Wilson Sonsini’s investments in non-PTI
clinics may relate to the discovery ordered concerning the firm’s
recommendation that Holland be fired; as we have remanded on the latter
issue, remand also is necessary to allow the trial court to reassess the
discovery that should be authorized concerning Wilson Sonsini’s investments.
Moreover, we agree with the Appellants that they should have the opportunity
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to object to a discovery request prior to being compelled by court order to do
so.
Accordingly, we remand for the trial court to determine the continued
relevance of Wilson Sonsini’s investments in clinics co-owned with the
Appellants, permit the Appellants to raise objections to such discovery based
upon questions of attorney-client privilege, conduct an in camera review of
documents that are claimed to be privileged prior to production, and assess
whether any requested documents would touch upon the individual Appellants’
personal financial information.
In summary, we quash this appeal in part. We affirm the trial court’s
December 10, 2021 order in part, and we remand, consistent with the dictates
of this memorandum, for the court to more thoroughly explore the attorney-
client privilege and work-product doctrine issues identified herein and to more
fully refine the scope of punitive damages discovery, should the court deem
that such discovery is necessary.
Appeal quashed in part. Order affirmed in part. Case remanded.
Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/17/2023
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