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Fundamentals of Litigation

7/19/2009 10:54:15 PM EST

Ex Parte Communications with Former Managers/Employees of Adverse Corporate Parties Are Generally Permitted

By Ted Zwayer

Posted by Ted Zwayer

Rule 4.2 of the ABA Model Rules of Professional Conduct instructs us that “In representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so.” The Comment to Model Rules of Prof’l Conduct R 4.2 further explains that “In the case of an organization, this Rule prohibits communications by a lawyer for one party concerning the matter in representation with persons having a managerial responsibility on behalf of the organization, and with any other person whose act or omission in connection with that matter may be imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization.”

Clearly, an attorney cannot communicate with a person who is in a managerial, leadership, or policy-making position with an organization that the attorney has filed a lawsuit against. Can an attorney, though, contact an unrepresented former employee of an organization that the attorney has filed a lawsuit against? The general rule is yes, as explained in a recent decision by a federal district court in Florida.

The litigation in MCC Mgmt. of Naples v. Arnold & Porter, LLP, 2009 U.S. Dist. LEXIS 44992 (M.D. Fla. May 29, 2009), revolved around the purchase two decades ago of two failed savings and loan associations from the federal government by a thrift institution. The thrift institution later retained the defendants, a national law firm and three of its attorneys, to represent it in litigation against the federal government. The instant litigation was filed in 2007 by the plaintiffs, who possessed certain rights as a result of their prior ownership of the thrift institution and its later sale. The plaintiffs claimed numerous causes of action against the defendants as a result of the representation by defendants of the thrift institution while it was owned and sold by plaintiffs and their predecessors.

The litigation was initially filed in state court in Florida and then removed to federal court by the defendants on the basis of diversity of citizenship. After the removal, the plaintiffs sought to file a second amended complaint. Defendants moved to strike a substantial portion of the second amended complaint on the basis that the specified portions of the second amended complaint were derived from privileged and confidential communications between the defendant law firm and its client, the thrift institution. The defendants asserted that counsel for the plaintiffs had improperly contacted and induced a former executive of the thrift institution to disclose this privileged information.

The former executive in question, a licensed CPA, had been a senior executive with the thrift institution and the primary contact between the thrift institution and the defendant law firm during prior litigation with the FDIC. The former executive told the counsel for the plaintiffs of certain tax deductions that the thrift institution had taken that the plaintiffs were not aware of, and that information constituted the alleged privileged and confidential information.

The court denied the motion to strike the relevant portions of the second amended complaint, concluding that the counsel for the plaintiffs had properly contacted the former executive after the termination of her employment with the thrift institution and that she had not disclosed privileged and confidential information that belonged to the thrift institution. The court held that “An attorney may ethically communicate with a former officer or employee of a corporation on an ex parte basis even though the attorney knows that the corporation is represented by counsel.” The former executive had no authority to speak for or bind the thrift institution. The prohibition against contact “does not apply when the witness is no longer employed by the opposing entity in the lawsuit.”

The federal court in MCC Mgmt. of Naples v. Arnold & Porter was interpreting the Rules Regulating the Florida Bar and followed the rule set forth by the Supreme Court of Florida in H.B.A. Mgmt. v. Estate of Schwartz, 693 So. 2d 541 (Fla. 1997).

“Most importantly, as noted by the ABA committee in its interpretation of the amended rule, Model Rule 4.2 does not prohibit contacts with former officers and employees of a represented corporation, even if they were in one of the categories with which communication was prohibited while they were employed….The focus of the rule and comment remains on those individuals still with the organization and presumably represented by the organization's counsel, while neither contemplating nor prohibiting ex parte communications with former employees…. In summary, we hold that Florida Rule of Professional Conduct 4-4.2 was intended to specifically regulate an attorney's contact with a person represented by counsel and the rule neither contemplates nor prohibits an attorney's ex parte communications with former employees of a defendant-employer.”

Other courts have applied this same reasoning. In a Fair Debt Collection Practices Act lawsuit, a federal court held in Davis v. Creditors Interchange Receivable Mgmt., LLC, 585 F. Supp. 2d 968 (N.D. Ohio 2008), that the Ohio Rules of Professional Conduct permit the contacting of a former employee of an opposing party. “The plaintiff's attorneys may also contact unrepresented former employees of the opposing party ex parte with the former employee's consent….Because the former employee is no longer part of the corporation and no longer speaks for the corporation, the plaintiff's attorney is not limited by the former employee's role at the defendant corporation….The plaintiff's attorneys must, however, inform the former employee not to divulge any communications that the former employee may have had with corporate or other counsel, and the attorney must explain that she represents an interest adverse to the corporation.”

In an employment discrimination case, another federal court ruled that plaintiff employee’s counsel could engage in ex parte communication with the former Human Relations Manager of defendant employer. “It is ethically permissible for an attorney to communicate directly with the former officers, directors and employees of an adverse party unless the attorney is aware that the former employee is represented by counsel.” Bryant v. Yorktowne Cabinetry, Inc., 538 F. Supp. 2d 948, 952 (W.D. Va. 2008).

In Durham v. Advance Stores Co., 2007 U.S. Dist. LEXIS 72989 (S.D. Miss. Sept. 30, 2007), the court stated that it had “found no Mississippi case which squarely addresses the issue of whether an opposing party's counsel may contact a former employee of an adverse party corporation without consulting the former employer's counsel. Although the jurisprudence on this issue has not reached a unanimous consensus throughout the country, overwhelming authority seems to permit such communication.” The court held that contact by the plaintiff’s counsel with two former store managers of the defendant was permitted because Rule 4.2 of the Mississippi Rules of Professional Conduct did not specifically cover former employees, there was no active attorney-client relationship between the former managers and counsel for the defendant, and because the statements of the former managers could not bind the defendant corporation and were not excluded from the hearsay rule as admissions.

Counsel who seek to engage in ex parte communication with a former employee of an adverse corporate party should, of course, tread carefully and comply with the spirit and the letter of the local rules of professional conduct. You should establish with a certainty that the former employee is not represented by any legal counsel, including private counsel, on the matter at hand. You must also refrain from questioning the employee about any information that may be privileged or confidential under the applicable state law.

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