Right of Counsel to Contact Employee of Adverse Party Clarified

Thursday, December 4, 2003

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Right of Counsel to Contact Employee of Adverse Party Clarified

C.A. Says Rules Not Violated by Communication With Managers Who Are Not Authorized to Speak for Company

By KENNETH OFGANG, Staff Writer/Appellate Courts

An attorney who contacted two managerial employees of a corporation that was suing his client, without notifying the corporation’s attorney, did not violate State Bar ethics rules, the Fourth District Court of Appeal ruled yesterday.

Div. One overturned San Diego Superior Court Judge Patricia Y. Cowett’s order disqualifying San Diego attorney Dale Larabee and his firm from representing David Snider, the defendant in an unfair competition suit brought by his former employer.

Justice Gilbert Nares, writing for the court, said that Cowett erred in ruling that Larabee’s contacts with the employees—who had oversight of specific activities within the company, but were not involved in its overall management—violated Rule 2-100 of the Rules of Professional Conduct.

The rule prohibits an attorney from contacting a party whom he or she knows to be represented by counsel, absent that counsel’s consent. It also bans contacts with certain principals or employees of an organization that is a party.

Larabee did not violate the rule, Nares said, because the two employees were not officers or directors of the plaintiff corporation and were not “managing agents” in the sense envisioned by the rule, and nothing they said or did in connection with the subject matter of the lawsuit could have been treated as an act or omission of the corporation or a breach of the attorney-client privilege.

The justice also concluded that even if the contacts were improper, counsel should not have been disqualified in the absence of proof the attorney knowingly violated the rule.

Larabee’s client, Snider, is a former sales manager for Quantum Productions, Inc., event design and construction company. After he left to start his own company last year, Quantum sued and claimed he misappropriated confidential and secret business information and used that information to his competitive advantage.

After the case was set for trial, Larabee attempted to get in touch with Toni Lewis, the company’s production manager, and Laura Janikas, one of two sales managers.

Upon learning of those efforts, Quantum’s counsel moved to disqualify Larabee and his firm. Declarations filed in connection with the motion indicated that Larabee had a 10-minute conversation with Janikas regarding issues related to the suit, but was never actually able to meet with Lewis.

Cowett concluded “that the attorney client privilege has been compromised by” Larabee’s contacts with the two women and that the contacts appeared to violate Rule 2-100, and that disqualification was the appropriate sanction.

But Nares concluded that the disqualification order was an abuse of discretion.

The justice reasoned that Lewis and Janikas, while each had employees working under her, were not “managing agents” of Quantum because they were not part of its “control group.”

Neither of them had “discretion or authority” to set corporate policy, and neither was an “executive-level” employee under the corporation’s own definition, Nares wrote.

The two would clearly not have been treated as managing agents under Civil Code Sec. 3294, which allows punitive damages to be assessed against an organization for the torts of such persons, Nares reasoned, concluding there was no reason to define the term differently for purposes of Rule 2-100.

Nor, the justice went on to say, was either woman an employee whose “act or omission...in connection with the matter...may be binding upon or imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization.”

To fall under that portion of the rule, the jurist explained, an employee outside the control group must have actual authority to speak on behalf of the organization or to bind it with respect to the subject of the litigation. There was no evidence Quantum gave Lewis or Janikas such authority, Nares said.

Nares went on to reject the trial judge’s finding that the attorney-client privilege had been breached. Janikas, the only Quantum manager who actually spoke to Larabee about the issues in the lawsuit, never asserted that she divulged privileged information, or even that she was privy to any, the justice noted.

The case is Snider v. Superior Court (Quantum Productions, Inc.), 03 S.O.S. 6159.