Restrictions on Ex Parte Contact with Current or Former Employees And Other Recent Developments

How far can a lawyer go in ex parte contacts with current or former employees of an adverse party? While the rules are still evolving, the trend is toward more limitations than most lawyers would guess. The most recent case on the topic is United States ex rel. O'Keefe v. McDonnell Douglas Corporation, No. 4:93CV02188 GFG (U.S. Dist. Ct., E.D. Mo., March 10, 1997). McDonnell Douglas applied for a protective order against the U.S. Government in a False Claims Act case after the government sent questionnaires to McDonnell's current and former employees. The questionnaire asked for information about mischarging, a central issue in the government's case.

McDonnell argued that the ex parte contacts violated Missouri Supreme Court Rule 4-4.2, which makes it unethical for a lawyer to communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter. The comment to the Rule explains that in the case of an organization, the Rule prohibits communications with persons having managerial responsibility or any other person whose act or omission may be imputed to the organization or whose statement may constitute an admission on the part of the organization.

To decide the case, District Judge Gunn (a former Missouri Supreme Court judge) looked to the latest Missouri Supreme Court precedent, State ex rel. Pitts v. Roberts, 857 S.W.2d 200 (Mo. banc 1993). The Pitts case held that two employees who installed a water heater were considered a "party" for purposes of Rule 4-4.2 because, in that case, which was a suit for damages from negligent installation, their acts or omissions could be imputed to their employer, the defendant.

Applying Pitts, the district court in O'Keefe held that the government could not make ex parte contact with any employee whose conduct could be imputed to McDonnell. There could be ex parte contact with mere "fact" witnesses, however. As to former employees, the district court held that Rule 4-4.2 prohibited contact with any former employees who were, in fact, represented by counsel, as well as any former employees whose statements may subject defendant to liability.

It is the last category, former employees whose statements may subject defendant to liability, that has created so much consternation among the plaintiff's bar, especially for claims requiring evidence of a pattern or practice, such as certain employment discrimination cases. Rule 4-4.2, if strictly enforced, may force parties into more use of formal (and expensive) discovery by deposition rather than by informal investigative methods.

The O'Keefe decision also demonstrated the constrictions Rule 4-4.2 placed on governmental investigations of alleged wrongdoing by an organization. The United States Department of Justice (DOJ) had promulgated a rule which purported to override ABA Model Rule 4.2 (the source for Missouri Rule 4-4.2) and to authorize ex parte communications between DOJ attorneys and anybody in a target organization except a "controlling individual" (defined as a decision maker in the determination of the organization's legal position). Citing a prior decision of the Ninth Circuit and the Missouri case of State ex rel. Atchison, Topeka & Santa Fe RR v. O'Malley, 888 S.W.2d 76 (Mo.App. W.D. 1994), the district court held that the federal government is not authorized to exempt its state-licensed attorneys from complying with state bar ethical rules. Federal authority notwithstanding, the government's lawyers will put their law licenses in jeopardy if they ignore Rule 4-4.2.

Klemme v. Best, No. 78949 (Mo. banc February 25, 1997), considered the question of whether the decision in Donahue v. Shughart, Thomson & Kilroy, P.C., 900 S.W.2d 624 (Mo. banc 1995), eliminated claims against attorneys for breach of fiduciary duty. Donahue was a legal malpractice claim, founded on a petition which alleged various theories in multiple counts. One of the theories was breach of fiduciary duty. In the course of the Donahue opinion, the Court disposed of the count for breach of fiduciary duty with a statement that was later interpreted by the Court of Appeals as eliminating causes of action against attorneys for breach of fiduciary duty. Williams v. Preman, 911 S.W.2d 288 (Mo.App. W.D. 1995). The Supreme Court disagreed with this interpretation of Donahue, overruled Williams v. Preman and affirmed the existence of claims for breach of fiduciary duty against Missouri lawyers.

The elements of a claim against a lawyer for breach of fiduciary duty are: (1) an attorney-client relationship; (2) breach of a fiduciary obligation by the attorney; (3) proximate causation; (4) damages to the client; (5) no other recognized tort encompasses the facts alleged. The last element is a consequence of Donahue, recognizing that a fiduciary duty claim is not an alternative theory available to a plaintiff who has a negligence or breach of contract claim against a lawyer.

Only time will tell whether the Klemme decision has expanded lawyer liability. What conduct will be considered a breach of a fiduciary obligation of an attorney but not a departure from due care or a breach of contract? In Klemme, the lawyer was accused of placing the interests of one client over another. No other examples were given, as the Court did not engage in any advisory opinions on facts not before it.

One issue that was settled in Klemme was plaintiff's argument that a different and longer statute of limitations applied to a claim for breach of fiduciary duty. Klemme was arguing that because breach of fiduciary duty constitutes "constructive fraud," the fraud statute of limitations applied, §516.120(5), and this statute only begins to run after discovery of the facts constituting the fraud. The statute of limitations applicable to other malpractice claims is §516.120(4), and it begins to run when damage is sustained or is objectively capable of ascertainment. In Klemme, the Court held that the latter statute applied. Because Klemme did not file suit until seven years after damage was objectively capable of ascertainment, his suit against his former lawyer was time-barred. Whatever expansion of lawyer liability the Klemme case may have generated did not benefit Mr. Klemme, as the dismissal of his suit was affirmed because of his failure to timely file.

Mental fitness essential for probation revocation.

The issue in State ex rel. Juergens v. Cundiff, No. 79249 (Mo. banc February 25, 1997), was whether a court may proceed to revoke probation where the probationer lacks capacity to proceed. The Court looked to §552.020.1, which provides that no person may be tried, convicted or sentenced so long as he or she lacks capacity to understand the proceedings. Observing that it would strain credulity to find that the general assembly intended to exclude probation revocation proceedings from the meaning of "sentenced," the Court prohibited the trial court from conducting further proceedings with respect to revocation for so long as the probationer lacked capacity to participate.