For the last day of 2009, I thought I’d write about Smith v. United Salt Corp., 2009 WL 2929343 (W.D. Va.), a decision from the United States District Court for the Western District of Virginia regarding a lawyer’s ex parte contact with an opposing party’s employees. Mike Holm and Jim Kinsel discussed Smith in this post in their Unfair Business Practices Blog.

The facts are that the plaintiffs alleged that while they were employed by United Salt, they had been sexually harassed, discriminated and retaliated against, and subjected to assault and battery by United Salt’s manager, all in violation of Title VII of the Civil Rights Act of 1964. Their lawyer sought to conduct ex parte interviews with United Salt employees "not to obtain admissions imputable to the corporation[,]" but "to gather information relevant to the incidents of sexual harassment that occurred on the premises of United Salt." United Salt predictably sought to prevent the interviews from taking place, and asserted that such ex parte contacts were prohibited by Lewis v. CSX Transp., Inc., 202 F.R.D. 464 (W.D. Va. 2001).

The plaintiffs relied on Rule 4.2 of the Virginia Rules of Professional Conduct, which provides that, "[i]n representing a client, a lawyer shall not communicate about the subject of the representation with a person he 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 plaintiffs also pointed out that Comment 7 to Rule 4.2 clarified that "[i]n the case of an organization, this Rule prohibits communications by a lawyer for one party concerning the matter in representation with persons in the organization’s "control group" as defined in Upjohn v. United States, 449 U.S. 383 (1981) or persons who may be regarded as the ‘alter ego’ of the organization." 

The Comment explains that the "control group" test:

prohibits ex parte communications with any employee of an organization who, because of their status or position, have the authority to bind the corporation. Such persons may only be contacted with the consent of the organization’s counsel, through formal discovery or as authorized by law. 

Thus, the plaintiffs argued that because the employees whom their counsel wanted to interview did not have the authority to bind the corporation, they were not within its "control group," and so Rule 4.2 permitted the interviews to take place.

However, the court found that the Lewis court had explained that Rule 801(d)(2)(D) of the Federal Rules of Evidence required a court to look to federal law, and not just the Rules of Professional Conduct, to decide whether ex parte contacts with the corporate defendant’s employees were permissible.

The court distinguished Lewis on the grounds that it involved a plaintiff’s claim under the Federal Employer’s Liability Act for damages resulting from injuries sustained due to the negligence of his employer. Under those circumstances, the plaintiff’s co-workers could make statements regarding the allegedly negligent condition of the empoyer’s equipment that would constitute admissions, even though those employees were not management or otherwise members of the "control group."

That was not the case with the plaintiffs’ claims against Salt Rock and their manager under TItle VII, though, where "the employer is subject to vicarious liability only for acts of supervisory employees." Consequently, only those supervisory employees could impute liability to the employer:

While statements from co-workers regarding the actions of supervisory personnel could be used as evidence to prove that sexual harassment had occurred, those statements, from non-supervisory personnel, would not be an admission imposing liability on the employer. With this distinction in mind, it appears that the rationale for the Lewis decision — to prevent an attorney from circumventing opposing counsel to obtain statements from employees which could be used to impute liability on the employer — is not present in this case.

The court held that the plaintiffs’ counsel could contact the plaintiffs’ co-workers, but not any supervisory or managerial employees.

Holm and Kinsel point out that Smith means that a company involved in a dispute should inform its employees that litigation could result, in which case the other party’s lawyer may contact them. They suggest that the company should also consult its lawyers about what to say to its employees about the potential contact by the other side, which makes sense. But as I read Smith, a corporation’s non-supervisory or managerial employees are under no obligation to talk the opposing party’s lawyer, so that may be the best advice to give the employees. 

And finally, I wish everyone a happy, healthy, and successful 2010!