This column previously analyzed the Commonwealth Court’s decision in Pittsburgh History and Landmarks Foundation, 161 A.3d 394 (Pa. Commw. Ct. 2017), and its potential impact on the attorney-client privilege in derivative litigation. The Pennsylvania Supreme Court subsequently granted petitions for allowance of appeal in the case, setting the stage for the court’s first decision addressing derivative litigation in more than 20 years. The court’s Jan. 23 decision in Pittsburgh History emphasized the strength of the attorney-client privilege in Pennsylvania but its narrow holding leaves significant questions related the application of the privilege in derivative cases unanswered (see Pittsburgh History & Landmarks Foundation v. Ziegler, No 53 WAP (Pa. Jan. 23, 2019)).
Pittsburgh History arose when a group of former board members of two related nonprofit corporations asserted derivative claims against the president and current board members alleging misconduct. The defendant board members formed a putatively independent investigation committee consisting of themselves to investigate the plaintiffs’ allegations and determine whether the corporations should take action against the defendants. The committee generated an investigative report concluding that the defendants’ actions were proper and that the derivative litigation was not in the best interest of the corporations. Relying on the report, the boards of the two corporations voted to reject the derivative plaintiffs’ demands and filed a motion to dismiss the derivative action. The motion relied on the independent committee’s investigation and report.
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