Holland v. The Physical Therapy Inst.

1

GLENN HOLLAND v. THE PHYSICAL THERAPY INSTITUTE, INC., SHANNON VISSMAN AND RYAN CHRISTOFF Appellants

No. 1515 WDA 2021

No. J-A22039-22

Superior Court of Pennsylvania

March 17, 2023

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

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

COLINS, J.

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 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 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 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 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 [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 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,...