Opinion
Docket No. 218-2019-CV-00933 Docket No. 218-2019-CV-01683
10-15-2020
Atlantic Anesthesia, P.A. v. Ira Lehrer, et al.
ORDER
In Docket No. 218-2019-CV-933, Plaintiff brought an action against Ira Lehrer alleging claims for breach of contract, tortious interference with prospective economic advantage and contractual relations, and misappropriation of trade secrets. In Docket No. 218-2019-CV-1683, Plaintiff brought an action against Nathan Jorgensen and George Kenton Allen, alleging the same claims, as well as claims for breach of fiduciary duty and civil conspiracy. On March 2, 2020, the cases were consolidated. Presently before the Court is a discovery dispute submitted by letter brief pursuant to Commercial Dispute Docket Standing Order 10. The Court held a hearing on August 19, 2020. Upon consideration of the pleadings, arguments, and applicable law, the Court GRANTS Plaintiff's request that it conduct an in camera review of the contested communications.
Plaintiff has since moved to amend its complaint against Lehrer to include a claim for breach of fiduciary duty.
Factual Background
For purposes of the current order, the Court finds the following pertinent facts. Since 1992, Wentworth-Douglas Hospital ("WDH") contracted exclusively with Atlantic Anesthesia, P.A. ("Atlantic") to provide anesthesia and pain management services to its patients. Lehrer and Jorgensen were two of the owners of Atlantic. In 2014, Atlantic became a wholly owned subsidiary of North American Partners in Anesthesia ("NAPA"). As a result, Lehrer and Jorgensen became employees of Atlantic, which began operating as NAPA-NH. In their new roles, Lehrer served as Atlantic's Chairman for the Department of Anesthesiology at WDH and Jorgensen served as the Medical Director of the Seacoast Pain Institute of New England. Atlantic hired Allen in 2016 as an anesthesiologist servicing WDH.
For ease of reference, the Court will refer to Atlantic and NAPA-NH collectively as Atlantic in this order.
In 2016, WDH and Atlantic entered into a new agreement that ran from December 1, 2016, to November 30, 2019. This agreement would automatically renew for successive three-year terms unless either party provided written notice of its intent not to renew the agreement at least 180 days prior to the expiration of the contract term.
In November 2018, the President and CEO of WDH met with Lehrer and informed him that the hospital was contemplating not renewing its contractual relationship with Atlantic. That same month, Lehrer sent an email to Jorgensen and Allen indicating a desire to develop a strategy on whether they would stay with Atlantic or become employees of WDH. In January 2019, Defendants jointly hired counsel to explore their employment obligations and options should they leave Atlantic. On April 11, 2019, WDH invited Lehrer and any other interested anesthesiologists he knew to attend a meeting. On May 2, 2019, WDH and Defendants executed a Common Interest Agreement, which became effective immediately. On May 6, 2019, Lehrer and others attended the meeting. On May 20, 2019, WDH held another meeting that Lehrer's colleagues attended, though Lehrer himself was not present. At no point did any of the Defendants inform Atlantic of WDH's plans.
On May 22, 2019, WDH provided written notice to Atlantic that it did not intend to renew the agreement after its expiration in November 2019. In that same letter, WDH proposed a one-year extension until November 30, 2020. Although some discussion between the parties took place regarding the one-year extension, WDH rescinded the offer on June 18, 2019. Atlantic performed an internal review to determine why WDH would seek to terminate the agreement, during which it learned that Defendants had engaged in discussions about leaving and working for WDH directly. As a result, Atlantic placed Lehrer on administrative leave before terminating his employment on July 11, 2019. Plaintiff filed its suit against Lehrer shortly thereafter.
Analysis
During discovery, Lehrer disclosed all written communications he had with WDH prior to May 2, 2019. However, he has refused to disclose conversations he had with WDH after that date, claiming the communications are privileged pursuant to the common interest doctrine. Rule of Evidence 502(b) provides that:
A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client . . . by the client or the client's representative or the client's lawyer or a representative of the lawyer to a lawyer or a representative of a lawyer representing another party in a pending action and concerning a matter of common interest therein.Plaintiff argues the common interest doctrine is inapplicable, maintaining that a key requirement is that there be a pending action at the time the communications were made, which there was not in this case. Defendants argue that the rule should be interpreted more broadly to cover communications regarding circumstances that the parties believe will result in litigation. The Court finds it need not reach a determination on this issue. Even assuming the privilege applies to the communications, the Court finds Defendants have made a sufficient showing that the crime-fraud exception applies in this case.
Pursuant to Rule of Evidence 502(d)(1), "[t]here is no privilege . . . [i]f the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit in the future what the client knew or reasonably should have known to be a crime or fraud." Many courts have taken a broad view of this exception and applied it to types of conduct other than strict crimes or frauds. Specifically, these courts have determined that a breach of fiduciary duty is sufficient to trigger the exception. See, e.g., Harris Mgmt., Inc. v. Coulombe, 151 A.3d 7, 17 (Me. 2016) ("In this context, fraud must be understood broadly as a generic term, embracing all multifarious means which human ingenuity can devise, and which are resorted to by one individual to get advantage over another by false suggestions or by suppression of truth, and includes all surprise, trick, cunning dissembling, and any unfair way by which another is cheated."); Mueller Indus., Inc. v. Berkman, 927 N.E.2d 794, 808-09 (Ill. App. Ct. 2010), abrograted on other grounds by People v. Radojcic, 998 N.E.2d 1212 (Ill. 2013) (finding parallels between fraud and the intentional breach of fiduciary duties); Steelvest, Inc. v. Scansteel Serv. Center, Inc., 807 S.W.2d 476, 487 (Ky. 1991) ("We would presume to place the breach of fiduciary relationship on an equal par with fraud and deceit."). While the New Hampshire Supreme Court has not yet weighed in on this issue, the Court finds the reasoning of the foregoing cases persuasive. Therefore, to the extent Plaintiff makes a sufficient showing that the communications at issue were made in furtherance of a breach of fiduciary duty, Defendants are not entitled to the attorney-client privilege.
The party invoking the crime-fraud exception must "present evidence: (1) that the client was engaged in (or was planning) criminal or fraudulent activity when the attorney-client communications took place; and (2) that the communications were intended by the client to facilitate or conceal the criminal or fraudulent activity." In re Grand Jury Proceedings, 417 F.3d 18, 22 (1st Cir. 2005). "It is often hard to determine whether the attorney-client relationship has been misused by the client for crime or fraud without seeing the document, or hearing the testimony, as to which the privilege is claimed." Id. "To overcome this problem . . . judges have sometimes been willing to review privileged materials by themselves in camera and then decide whether the other side is entitled to it." Id.
The United States Supreme Court has endorsed the practice of reviewing privileged material in camera for purposes of determining whether the crime-fraud exception applies. See United States v. Zolin, 491 U.S. 554 (1989). In that case, the Court noted that "in camera inspection is a smaller intrusion upon the confidentiality of the attorney-client relationship than is public disclosure." Id. at 572. Therefore, "a lesser evidentiary showing is needed to trigger in camera review than is required ultimately to overcome the privilege," and the threshold "need not be a stringent one." Id. "Before engaging in in camera review to determine the applicability of the crime-fraud exception, the judge should require a showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies." Id. The Court observed:
Once that showing is made, the decision whether to engage in in camera review rests in the sound discretion of the district court. The court should make that decision in light of the facts and circumstances of the particular case, including, among other things, the volume of materials the district court has been asked to review, the relative importance to the case of the alleged privileged information, and the likelihood that the evidence produced through in camera review, together with other available evidence then before the court, will establish that the crime-fraud exception does apply.Id.
Here, the communications between Lehrer and WDH first arose out of a discussion about the possibility of WDH terminating its contract with Atlantic. Despite having fiduciary obligations to Atlantic, Lehrer never informed it of WDH's plans. The fact that Lehrer and the other doctors hired counsel and drafted a Common Interest Agreement with WDH demonstrates that they recognized the potential legal ramifications of their actions, including fiduciary duty considerations. The timing of and circumstances surrounding the communications strongly suggest that they may establish operative facts supporting Plaintiff's breach of fiduciary duty claims. Moreover, the communications Defendants seek to protect are relatively few in number, and the Court will be able to quickly ascertain whether they contain statements that fall within the crime-fraud exception.
In light of the foregoing, the Court finds that Plaintiff has established a sufficient threshold showing that justifies an in camera review of the contested communications. Defendants shall submit copies of all communications they seek to protect for the Court's review within thirty (30) days of the clerk's notice of this order. SO ORDERED. October 15, 2020
Date
/s/_________
Judge David A. Anderson
Clerk's Notice of Decision Document Sent to Parties on 10/15/2020