Commonwealth Phys. Network, LLC v. Manganiello, C.

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH PHYSICIAN : IN THE SUPERIOR COURT OF
NETWORK, LLC : PENNSYLVANIA
:
:
v. :
:
:
CHARLES M. MANGANIELLO, M.D. :
: No. 175 MDA 2021
Appellant :
Appeal from the Order Entered December 29, 2020
In the Court of Common Pleas of Luzerne County
Civil Division at No(s): 2020-04496
BEFORE: PANELLA, P.J., KUNSELMAN, J., and KING, J.
DISSENTING MEMORANDUM BY PANELLA, P.J.:FILED NOVEMBER 21, 2022
While I agree that discovery is to be liberally allowed so long as it may
reasonably lead to the revelation of admissible evidence, it is equally true that
“no effective system of discovery can be designed which is not subject to
abuse.” Explanatory Comments to the Rules of Civil Procedure, Depositions
and Discovery – 1978. Abuse prevention relies primarily on self-discipline
amongst the bar. See id. However, where attorneys are not disciplined, the
courts must act to prevent abuse. See id.
At the outset, I emphasize that I do not conclude that Commonwealth
is attempting to abuse the system, nor that the majority is condoning such
conduct. Rather, I write to highlight that abuse prevention is impossible where
courts do not exercise at least a modicum of control over the system. As a
baseline, then, courts must scrupulously ensure that all discovery requests
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comply with Pa.R.Civ.P. 4003.1(b): that all discovery requests must be
reasonably calculated to lead to the discovery of admissible evidence. While
this hurdle is quite low, it is not non-existent. After reviewing the record here,
I conclude that Commonwealth is unable to clear the Rule 4003.1(b) hurdle,
and I therefore dissent.
Here, Manganiello challenges the trial court’s orders granting
Appellee's discovery requests, despite, upon my review, Appellee's failure to
establish a compelling need for the discovery documents requested, which
purportedly include privileged materials and private information relating to
Manganiello’s patients and unrelated business decisions. Manganiello argues
that the discovery requests in issue are impermissibly vague, overly broad
because they address factual matters which are not relevant at this stage of
the litigation, and are therefore not reasonably calculated to lead to the
discovery of evidence admissible at this time. Most importantly, in my opinion,
until there is a disposition by the trial court that Manganiello breached the
contracts with Commonwealth, as alleged by Commonwealth in its Second
Amended Complaint, the discovery requests are premature and are designed
to invade Manganiello’s personal business dealings and handling of his
patients. Simply stated, Commonwealth’s requests seek information not
discoverable until Commonwealth establishes that Manganiello breached the
contracts; until that time, this personal and business information is protected
by Manganiello’s privacy rights. “Our Supreme Court has recognized that the
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privacy interests protected by the federal Constitution receive the same
protections from Pennsylvania's Constitution.” Jones v. Faust, 852 A.2d
1201, 1203 (Pa. Super.2004).
Cases concerning the constitutional right to privacy involve two
separate interests: (1) the individual interest in avoiding
disclosure of personal matters; and (2) the interest in making
certain kinds of important decisions. Id. at 1205–06. However,
“the right [to privacy] is not an unqualified one; it must be
balanced against weighty competing private and state
interests.” Id. at 1207 (quoting Stenger v. Lehigh Valley
Hospital Center, 530 Pa. 426, 434, 609 A.2d 796, 800 (1992)).
Berkeyheiser v. A-Plus Investigations, Inc., 936 A.2d 1117, 1125–26
(Pa. Super. 2007).
This interlocutory appeal arises from Commonwealth’s Second Amended
Complaint, which alleged that Dr. Manganiello breached several contracts with
Commonwealth. The first contract is an asset purchase agreement, which
includes a non-compete clause. The second contract is an employment
contract which contains a confidentiality agreement. The asset purchase
agreement directly referenced the employment agreement.
Commonwealth alleged that Dr. Manganiello breached the employment
agreement by, among several other allegations, using a non-licensed person
to authorize his prescriptions to patients. As a result, Commonwealth notified
Dr. Manganiello on January 14, 2020, that it was suspending his employment
pending an investigation. Shortly thereafter, Commonwealth concluded that
Dr. Manganiello was not cooperating with its investigation and notified Dr.
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Manganiello that it would terminate his employment after the appropriate
notice period.
Commonwealth subsequently initiated this action, seeking to enjoin Dr.
Manganiello’s continued practice of medicine within the area covered by the
asset purchase agreement’s non-compete clause. Commonwealth also sought
liquidated damages for the breach of each agreement.
Dr. Manganiello has conceded that he continued to practice medicine
after Commonwealth’s notice. He contends that since it was Commonwealth
who first breached the contracts, he was no longer bound by the non-compete
agreement.
So, right from the start, the universe of relevant evidence in this matter
is constricted. The only legal issue in dispute which is relevant at this stage of
the litigation is whether there was a breach of the contract by either party. As
such, the only material factual issues in dispute are Commonwealth’s
allegations that Dr. Manganiello materially breached the employment contract
before Commonwealth suspended his employment.
The universe of relevant evidence is further restricted by
Commonwealth’s election of liquidated damages:
[P]arties who agree to include a liquidated damages clause in their
contract, and do so properly, cannot later claim entitlement to
actual damages; rather, in keeping with the law of contracts, the
parties must be bound by their bargain. This is true whether the
complaint avers that the amount of liquidated damages is
insufficient to fully compensate or excessive in light of the actual
damage caused.
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Carlos R. Leffler, Inc. v. Hutter, 696 A.2d 157, 162 (Pa. Super. 1997).
Combined with Commonwealth’s election to seek an injunction pursuant to
the non-compete clause, the amount of monetary damages should
Commonwealth prevail is not in material dispute.1
With this knowledge in mind, I turn to Commonwealth’s proposed
discovery requests.
In Request for Production 1, Commonwealth requested “all employee
time and payroll records of [Dr. Manganiello’s current office] reflecting time
that you or any individual working to support your medical practice … have
worked or payments made to any employee working to support your medical
practice from January 1, 2020, to the present.” Based on the pleadings of both
parties, there is no indication that Dr. Manganiello operated out of his current
office until well after January 14, 2020. Therefore, this information cannot
lead to admissible evidence on the issue of whether Commonwealth had cause
to suspend Dr. Manganiello on January 14, 2020. This request is not
reasonably calculated to lead to admissible evidence.
In Request for Production 2, Commonwealth requested “a copy of any
appointment diary, chronology, log, calendar, appointment book, or schedule
reflecting medical care that you provided or were scheduled to provide which
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1Even in the absence of a conclusion that the “gist” of Commonwealth’s action
sounds in contract, the election of liquidated damages would foreclose
Commonwealth’s claim for tortious interference with contractual relations.
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was kept by you or any individual on your behalf from January 1, 2020 to the
present.” Given the only material dispute of fact concerns whether Dr.
Manganiello breached the contracts prior to January 14, 2020, this request is
overbroad. While there is some remote possibility that patient appointments
after January 14, 2020, could lead to admissible evidence, that is not the
standard set forth in the Rules. The standard is whether the request appears
reasonably calculated to lead to admissible evidence. Without more
justification from Commonwealth, I conclude the request for information about
patients beyond January 14, 2020, does not appear to be reasonably
calculated to lead to admissible evidence.
In Request for Production 3, Commonwealth sought “all documents
concerning, evidencing or reflecting any communication between you (or any
individual on your behalf) and any current or former CPN employee, including
without limitation Cheri Rash, from January 1, 2020, to the present.” The trial
court concluded that this request was relevant to the question of whether Dr.
Manganiello solicited Commonwealth’s clients in contravention of the non-
compete clause. As I have already noted, this is not a subject of material
dispute. Without a different rationale from Commonwealth, I cannot conclude
that this request is reasonably likely to lead to admissible evidence on the sole
factual dispute of whether Dr. Manganiello breached the employment
agreement prior to January 14, 2020.
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In Request for Production 4, Commonwealth requested “all documents
concerning, evidencing, or reflecting any communication from January 1,
2020, to the present between you (or any individual on your behalf) and any
individual whom you treated while employed by CPN.” Once again, only
communications to patients from January 1 to January 14 could reasonably
be expected to lead to admissible evidence. Without more justification from
Commonwealth, the request for documents generated after January 14, 2020
does not appear to be reasonably calculated to lead to admissible evidence.
In Request for Production 5, Commonwealth requested “all documents
concerning, evidencing, or reflecting any communication between you (or any
individual on your behalf) and any media outlet, including without limitation
any print or digital publication, from January 1, 2020 to the present.” Similar
to Request 3, the trial court ruled that this request was relevant to
Commonwealth’s claims that Dr. Manganiello was soliciting clients for his
separate practice after January 14, 2020. However, as noted previously, this
is not in dispute. I fail to see how this request could be reasonably calculated
to lead to admissible evidence on the issue of whether Dr. Manganiello
breached the employment contract before January 14, 2020.
In Request for Production 6, Commonwealth sought “all documents
reflecting the status of your employment with [Commonwealth] that you or
any person on your behalf received from any agent, employee or
representative of [Commonwealth] from January 1, 2020 to the present.” At
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the outset, I once again fail to see how this request is reasonably calculated
to lead to admissible evidence on the issue of whether Dr. Manganiello
breached the employment agreement prior to January 14, 2020. Above and
beyond this issue, however, is that even if it were reasonably calculated to
lead to admissible evidence, it is improper. See Eigen v. Textron Lycoming
Reciprocating Engine Div., 874 A.2d 1179, 1189 n.14 (Pa. Super. 2005)
(noting that discovery does not require “a party to supply, at its own expense,
information already under the control or readily available to the opposing
party”). This request seeks documents generated by Commonwealth agents
and sent to Dr. Manganiello. These documents are at least as available to
Commonwealth as they are to Dr. Manganiello, and to request them from Dr.
Manganiello through discovery is an abuse of the process.
Request for Production 7 is the reciprocal of Request 6: it seeks all
documents Dr. Manganiello or his agents sent to Commonwealth regarding his
employment with Commonwealth from January 1, 2020, to the present. For
all of the reasons just discussed regarding Request 6, I would conclude this
request cannot lead to admissible evidence and is further an abuse of the
discovery process seeking documents equally in the possession of
Commonwealth.
Request for Production 8 sought “all documents concerning … any
communication between you (or any individual on your behalf) and any
insurance agent, broker, or provider regarding insurance coverage for your
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medical practice[.]” The trial court overruled Dr. Manganiello’s objection to
this request, concluding the request was relevant to establishing whether Dr.
Manganiello established a practice in contravention of the non-compete
provision. As noted previously, that issue is not in dispute. And, in the absence
of another reason for its relevance, I cannot conclude the request is
reasonably calculated to lead to admissible evidence.
In Request for Production 9, Commonwealth requested “all documents
concerning … any communication between you [or any agent] and any
accountant regarding your medical practice from January 1, 2020, to the
present.” Once again, the trial court overruled Dr. Manganiello’s objection to
this request by concluding that it was relevant to the issue of whether Dr.
Manganiello sought to establish a medical practice in contravention of the non-
compete clause. As before, I conclude this was error, as there is no dispute
that Dr. Manganiello in fact established such a practice – the only factual issue
is whether he was entitled to do so due to his allegation that Commonwealth
was already in breach of the contract.
Request for Production 10 fails for similar reasons. Request 10 sought
“all documents concerning … any communication between you [or any agent]
and any business consultant regarding your medical practice from January 1,
2020, to the present.” The trial court found that this request was relevant to
the issue of whether Dr. Manganiello opened a new medical practice and
solicited clients in violation of the non-compete provision. As set forth before,
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this is in fact not relevant to any factual dispute in this matter, and the trial
court’s reasoning constitutes error.
Requests 11 and 12 sought all documents pertaining to office or medical
supplies and equipment from January 1, 2020, through January 14, 2020. I
conclude that these requests are generally relevant, as they are limited in
time to a period before January 14, 2020. However, they are still overbroad,
in that any documents relating to business and medical supplies that were left
in Commonwealth’s possession when Dr. Manganiello was suspended are not
relevant to whether Dr. Manganiello was breaching the employment contract
during that time. The proper scope of this request is for documents from
January 1 to 14, 2020, pertaining to office or medical supplies later used in
Dr. Manganiello’s separate practice.
Request for Production 13 is similarly generally relevant but overbroad.
It sought “all documents concerning … any communication between you [or
your agent] and any agent or employee of Geisinger Health System regarding
your medical practice from January 1, 2020, to the present.” For the period of
January 1 to 14, 2020, this request is relevant and reasonably calculated to
lead to admissible evidence. Beyond January 14, 2020, however, these
documents become only remotely likely to lead to relevant, admissible
evidence. Without more justification, I would conclude that this request is
properly limited to January 1 to 14, 2020.
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Request for Production 14 requested “all documents concerning … any
efforts by you [or your agent] to incorporate any business between January
1, 2020 and the present.” For all the reasons I have already set out above,
this request is only relevant to the period of January 1 to 14, 2020. For the
period after January 14, 2020, this request is not reasonably calculated to
lead to admissible evidence.
Request 19 sought “all documents … that you believe support your belief
that [Commonwealth] “further materially breached the Agreement on January
14, 2020[.]” Dr. Manganiello identified two such documents, one of which has
already been produced to Commonwealth. The remaining document is the
January 14, 2020 letter from Commonwealth to Dr. Manganiello informing Dr.
Manganiello that he was suspended. Dr. Manganiello was not required to
produce this document as it was equally available to Commonwealth. See
Eigen, 874 A.2d at 1189 n.14.
In Request 24, Commonwealth sought “all documents … that you believe
support your denial “that [you were obligated, or refused to participate in
[Commonwealth’s] purported ‘compliance investigation,’” as alleged in
Paragraph 55 of your Answer to Motion for Preliminary Injunction.” Dr.
Manganiello identified 11 total documents, which he alleged are already in the
possession of Commonwealth. Ten of these documents are letters from Dr.
Manganiello’s then counsel addressed to Commonwealth. The remaining
document is the “suspension letter” of January 14, 2020. All are likely in the
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possession of Commonwealth. If Commonwealth asserts that it does not have
any record of these documents, then it may request that Dr. Manganiello
produce in discovery. Absent that assertion of record, these documents are
equally available to Commonwealth under Eigen.
Request 25 sought “all documents … that you believe support your belief
that [Commonwealth’s] “protectable business interests are outweighed by
[your] interest in earning a living in [your] chosen profession and the general
interest of the public,” as alleged in Paragraph 61 of your Answer to Motion
for Preliminary Injunction.” Dr. Manganiello objected to this request by
asserting it violated his attorney client privilege and the work product doctrine.
To the extent that he did answer this request, he asserted that “responsive
Pennsylvania caselaw is equally accessible to [Commonwealth] as it is to [Dr.
Manganiello].” I agree with the trial court here, as Dr. Manganiello’s answer
is non-responsive.
Clearly, Commonwealth is seeking any additional documents which
might provide factual support for Dr. Manganiello’s claim. In his appellate
brief, Dr. Manganiello asserts that he “already provided the factual basis
supporting his legal conclusion as well as documents[.]” If this is true, Dr.
Manganiello can offer this statement as his answer, and be subjected to any
remedies reasonably constructed by the trial court if the court finds this
answer to be untruthful or incomplete.
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In Interrogatories 15 and 20, Commonwealth wanted information about
any attempts at soliciting Commonwealth patients for Dr. Manganiello’s
separate practice. As set forth in detail above, I believe this interrogatory must
be restricted to communications occurring before January 14, 2020. There is
no factual dispute that Dr. Manganiello subsequently solicited his former
patients for his separate practice.
For all these reasons, I dissent from the majority’s memorandum
affirming the trial court’s blanket refusal to entertain Dr. Manganiello’s
objections to Commonwealth’s discovery requests.
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