Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Civ No. 92-cv-05233).
Before: Mansmann, Cowen and Lewis, Circuit Judges.
Before us is a Petition for Writ of Mandamus filed by a law firm and its client, a trust company which is a defendant in the underlying diversity action involving claims for breach of fiduciary duty, fraud, breach of contract and negligence, arising from the trust company's role in a stock repurchase transaction. They jointly seek a writ directing the district court to vacate and reverse its orders compelling the law firm to comply with a subpoena duces tecum requesting its file relating to all work it performed for the client regarding the repurchase transaction.
They also seek a writ directing the district court to vacate and reverse its order denying their request for a protective order to enforce the umbrella of confidentiality established by a confidentiality agreement stipulated to by the parties to the underlying dispute, but which was never embodied in an order of the district court. In that regard, the specific issue we must decide is whether general allegations of embarrassment and injury to professional reputations and client relationships satisfies the "good cause" requirement for the issuance of an umbrella protective order pursuant to our recent decision in Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994). The law firm and its client assert that they will be unable to rectify the harm to their reputations and client relationships if the law firm's privileged documents are publicly disseminated.
We find that although they have established that there are no alternative avenues of appeal for these discovery orders, the law firm and the client trust company have failed to establish their clear and indisputable right to the writ. They failed to establish "good cause" for the protection of all of the law firm's file documents pursuant to the confidentiality agreement. Nor have they demonstrated that the district court erred in determining that the scope of the client's waiver of the attorney-client privilege, by injecting the client's reliance on advice of counsel as an issue in the underlying action, extended to the entire transaction, including back-up documents.
Accordingly, we decline to issue the requested writs.
Glenmede Trust Company ("Glenmede") is a Pennsylvania trust company that serves as the trustee for several charitable trusts, including the Pew Charitable Trusts. Glenmede also serves as a trustee for a number of private trusts and acts as an investment advisor pursuant to a written contract for other clients. B. Ray Thompson, Jr., several members of his family*fn1 and the trustees*fn2 of five trusts established by B. Ray Thompson, Sr. for the benefit of his five grandchildren (collectively "the Thompson Family") were investment advisory clients of Glenmede. Prior to September 11, 1990, both the Pew Charitable Trusts and the Thompson family held substantial shares of Oryx Energy Company stock; the Pew family's Oryx holdings totalled in excess of 25 million shares and the Thompson family's Oryx holdings totalled approximately 2.9 million shares. In mid-1990, Glenmede broached, with Oryx management, the subject of a direct buy-back of Oryx shares held by the Pew Charitable Trusts. Oryx was willing to repurchase a maximum of 18 million shares at a premium price per share but requested that buy-back Discussions be kept confidential. Given the limitations on the buy-back, Glenmede consulted its counsel, Pepper, Hamilton & Scheetz, as to whether the Oryx transaction could be extended to include Glenmede's private trust and investment advisory clients.*fn3
Pepper Hamilton issued an Opinion Letter dated September 6, 1990 advising Glenmede that the buy-back transaction could not be structured to include private clients of Glenmede as to do so may violate Internal Revenue Code prohibitions on private foundations.*fn4 Pepper Hamilton further advised Glenmede that it could not notify its private clients of the buy-back negotiations between Oryx and Glenmede acting in its capacity as trustee of the Pew Charitable Trusts. On September 11, 1990, Oryx repurchased through Glenmede 18 million of its common shares held by the Pew Charitable Trusts and converted the remaining 7.3 million common shares held by the Pew Charitable Trusts to convertible preferred shares. Allegedly, based on the Opinion Letter from Pepper Hamilton, Glenmede excluded its private clients with holdings of Oryx stock from the buy-back transaction.
In September of 1992, the Thompson family brought an action against Glenmede, its parent Glenmede Corporation, a number of Glenmede officers and directors and the Chairman and CEO of Oryx, who was dismissed from this action, asserting, inter alia, claims for breach of fiduciary duty, fraud, breach of contract, and negligence, all allegedly arising from Glenmede's role in the September 11, 1990 buy-back transaction, in which Oryx repurchased 18 million of its shares from Glenmede as trustee of the Pew Charitable Trusts. Glenmede raised as its Fourteenth affirmative defense to these charges that it "was advised by counsel that it was legally precluded by Internal Revenue Code prohibitions from including Oryx shares held by other accounts in the repurchase transaction."
Glenmede concedes that the impact of placing at issue its reliance on advice of counsel was a waiver of the attorney-client privilege limited to the subject matter placed at issue. Glenmede admitted only to a waiver of the attorney-client privilege relating to the subject matter of the Opinion Letter, which it submits is broader than tax advice which is the primary subject of the Opinion Letter, but narrower than the totality of the advice rendered regarding the buy-back transaction.*fn5 In accordance with its position, Glenmede produced the Pepper Hamilton Opinion Letter and a draft Opinion Letter in response to discovery requests served by the Thompson family.
In response to the Thompson family's concern regarding the production of financial records, the parties stipulated to a "Confidentiality Order" restricting the disclosure of documents to be produced and establishing measures to maintain confidentiality pending an appeal from final judgment. As evidenced by the terms of the confidentiality agreement, the parties contemplated the wholesale adoption of that agreement by the district court. Although it was filed with the district court for approval, it was never endorsed in an order of court. Nevertheless, the parties complied with its terms, including the filing of pleadings under seal.
On July 30, 1993, the Thompson family served a subpoena duces tecum on Pepper Hamilton, requesting its entire file concerning services performed for Glenmede in connection with the buy-back transaction. Pepper Hamilton and Glenmede objected to the production of Pepper Hamilton's file on the basis of the attorney-client privilege. On October 18, 1993, the Thompson family filed a motion to compel the production of the file, arguing that Glenmede waived the attorney-client privilege because it raised reliance on advice of counsel pertaining to the buy-back transaction as an affirmative defense to the Thompson family's claims. The Thompson family further contended that Glenmede's concern regarding the production of Pepper Hamilton's file was unwarranted given the protection afforded by the confidentiality agreement to which the parties stipulated.
By Memorandum and Order dated December 14, 1993, the district court granted the Thompson family's motion to compel, concluding that Glenmede waived its attorney-client privilege concerning all communications, whether written or oral, to or from counsel, regarding the buy-back transaction. The district court ordered that Pepper Hamilton produce its entire file for services performed on behalf of Glenmede pertaining to the buy-back transaction, including all back-up documents to the Opinion Letter. Glenmede and Pepper Hamilton moved for reconsideration of that Memorandum and Order, challenging the district court's Conclusion that their invocation of the defense of reliance on advice of counsel resulted in a waiver of the attorney-client privilege encompassing all services Pepper Hamilton performed in connection with the buy-back transaction.*fn6 Glenmede asserted that its waiver was limited to tax advice embodied in the Opinion Letter. By Memorandum and Order dated April 8, 1994, the district court rejected Glenmede's motion for reconsideration on the basis that the Opinion Letter discussed a number of issues in addition to tax advice, including insider trading and the financial ramifications of the transaction. The district court also concluded that Pepper Hamilton's involvement in structuring and closing the transaction required the production of back-up documents to the Opinion Letter to permit the Thompson family to analyze the reasonableness of Glenmede's reliance on the advice of counsel.
Glenmede and Pepper Hamilton did not seek a writ of mandamus for immediate relief from the district court's orders compelling the production of documents; they opted to defer appellate review of the district court's rulings until final judgment. Instead, Pepper Hamilton produced in ...