Cabot Oil and Gas Corporation v. Speer

241 A.3d 1191

CABOT OIL AND GAS CORPORATION and Gassearch Drilling Services Corporation, Appellees

v.Charles F. SPEER, Speer Law Firm, P.C., Edward Ciarimboli, Clancy Boylan and Fellerman & Ciarimboli, Appellants

No. 1926 MDA 2019

Superior Court of Pennsylvania.

Argued July 7, 2020

Filed October 26, 2020

Kevin C. Hayes and James A. Dougherty, Scranton, and Brian J. Dougherty, Wilkes-Barre, for appellants.

Amy L. Barrette, Pittsburgh, for appellee.

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

OPINION BY STABILE, J.:

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 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 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.

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.

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.

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 , 448 Pa. 128, 291 A.2d 89, 90 (1972) ("appellant lacks standing to assert the alleged deprivation of another's constitutional rights"). Under the Rules of Civil Procedure, Appellants’ spouses 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 too important to be denied review and the question presented is such

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