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Wednesday, September 03, 2014

Ind. Decisions - Supreme Court issues a second opinion today

In TP Orthodontics, Inc., Christopher Kesling, DDS, MS, Adam Kesling, and Emily Kesling, et al. v. Andrew Kesling, Individually and as Trustee of the Andrew C. Kesling Trust Dated March 28, 2001 et al., a 20-page, 5-0 opinion, Justice David writes:

Following the initiation of a derivative suit by sibling minority shareholders, TP Orthodontics’ board of directors formed a special litigation committee (the “SLC”) to investigate the derivative claims pursuant to Ind. Code § 23-1-32-4 (2007). After a year-long investigation, the SLC produced the report that is at issue here. As a result of the report’s recommendations, TPO filed a motion to dismiss certain derivative claims and attached a heavily redacted version of the report in support of its motion. Approximately 120 of the report’s 140 pages had been redacted “to prevent disclosure of attorney-client privileged information and attorney-work product prepared in anticipation of litigation.” (Appellant’s App. at 183.)

Seeking access to the unredacted report in order to challenge the SLC’s conclusions on one of only two grounds permitted by Indiana law, the sibling shareholders filed a motion to compel production of the full report. The trial court granted the sibling shareholders’ motion, and the Court of Appeals affirmed on interlocutory appeal. After holding oral argument, we granted TPO’s petition to transfer and are now faced with resolving two valid but competing interests: the siblings shareholders’ desire to access the full SLC report in order to contest the SLC’s conclusions, and TPO’s desire to protect privileged attorney-client communications and attorney work product potentially contained within the SLC report. * * *

An in camera review “should be a rare procedure in discovery disputes” because it “requir[es] the trial court to expend a great amount of time and energy.” Richey, 594 N.E.2d at 445; Canfield v. Sandock, 563 N.E.2d 526, 531 (Ind. 1990). But here, such an expenditure of resources is worthwhile. Under these and similar circumstances, the trial court serves as a gatekeeper whose sole obligation at this stage of the proceeding is to review the SLC report to determine what is or is not privileged attorney-client communication and what is or is not privileged attorney work product. It will not look for evidence on the ultimate issue, i.e. whether the SLC conducted a good faith investigation. Should the trial court determine that the SLC report contains privileged attorney-client communication and/or privileged attorney work product, it will redact the privileged information before ordering the release of the redacted SLC report to the derivative plaintiffs. However, absent derivative plaintiffs’ valid or unasserted claims of attorney-client privilege or work product privilege, SLC reports are to be presumptively disclosed.

Posted by Marcia Oddi on September 3, 2014 02:54 PM
Posted to Ind. Sup.Ct. Decisions