September 6, 1994
Inside counsel for a defendant organization in a class action suit may answer a communication initiated by non-representative class members not otherwise known to be represented by counsel who have contacted the inside counsel during the class "opt out" notice period to inquire about the nature of the class action and how the case affects them.
Inside counsel for a defendant organization may respond to the communication regardless of whether the inside counsel has also filed a court appearance on behalf of the organization defendant in the class action.
If inside counsel for a potential class plaintiff contacts inside counsel for the defendant, future contact with the potential class plaintiff by defense counsel should be through that inside counsel.
References: MRPC 1.4, 4.2.
A distributor of products commenced a class action suit on behalf of all distributors against a manufacturer which is currently represented by inside counsel. Pursuant to the court rules, notice was sent to the class members advising the putative members of the class of their right to be excluded from the lawsuit (i.e. the "opt out" opportunity). Some members of the class, having received this "opt out" notice, have contacted the inside counsel for the defendant manufacturer. These distributors, being familiar with the defendant from prior business dealings, asked questions concerning what the case is about and how it affects them. It is assumed they were seeking this information in part to assist them in making their decision whether to opt out of the class proceeding. Inside counsel asked this committee three questions:
- How such contacts initiated by such putative class members should be handled by inside counsel;
- Whether the answer would be different if inside counsel was not trial counsel for the manufacturer in the matter; and
- Whether the answer would be different if the contacts from the putative class members are made through inside counsel for the distributors rather than by a non-lawyer executive or employee of the distributor.
MRPC 4.2 states:
"In representing a client, a lawyer shall not communicate about the subject of the representation with a party whom the lawyer knows to be represented in the matter by another lawyer, unless the lawyer has the consent of the other lawyer or is authorized by law to do so."
For all questions, Rule 4.2 is triggered regardless of which party initiates the contact. Thus, if it is determined that class counsel for the representative class plaintiff also represents these putative class member distributors, then the lawyer for the defendant could not communicate with them, even if the distributors initiated the contact.
Many courts have noted that the purpose of the ethical restriction of MRPC 4.2 is to preserve the integrity of the attorney-client relationship by protecting a represented party from being taken advantage of by adverse counsel. Curley v. Cumberland Farms Inc, 134 FRD 77, 82 (D NJ 1991); University Patents Inc v. Kligman, 737 F Supp 325, 327 (ED Pa 1990); Frey v. Department of Health and Human Services, 106 FRD 32, 34 (EDNY 1985); Wright by Wright v. Group Health Hosp., 691 P2d 564, 567 (Wash 1984). A represented party should not be placed in a position in which decisions could be made or conclusions reached without benefit of chosen counsel's presence. It is within the purview of the counsel to conduct the representation as is deemed appropriate, and thus counsel can prohibit the direct communication even if the client desires it.
Protection of the lawyer-client relationship has different facets. Primarily, MRPC 4.2, like MRPC 1.4, seeks to assure that a client who is represented by a lawyer is fully informed before making a decision, such as opting out of a class action or settling litigation. Second, it protects clients from being taken advantage of by an opposing lawyer either in (1) tricking a represented party into making ambiguous statements or revealing facts that could later be twisted, manipulated, and potentially abused at trial; (2) distorting a represented party's thinking about the case and undermining confidence in that party's litigation position; (3) undermining a represented party's confidence in the lawyer and possibly creating a conflict of interest and a deterioration of trust between the client and the lawyer; and (4) protecting the client from inadvertently revealing confidential (and otherwise privileged) information to opposing counsel, including conversations with the lawyer.
Notwithstanding the importance of these concerns behind MRPC 4.2, two policy considerations urge that the reach of this rule not be overly broad. First, the rule inhibits the opposing counsel in discovering relevant facts about the case. Cf., Diversified Indus. Inc v. Meredith, 572 F2d 596, 602 (CA 8 1977), stating that strict construction of the lawyer-client privilege may be required because of the "adverse effect of its application on the disclosure of truth"; Radiant Burners Inc v. American Gas Ass'n, 320 F2d 314, 323 (CA 7 1963). Second, because Rule 4.2 is a court imposed restriction on free speech, its scope must be narrowly construed in fulfilling its legitimate goals. In a case not involving Rule 4.2, but addressing Fed R Civ P 23 dealing with class actions, the Supreme Court held that a court ordered ban on communication without prior court approval concerning a class action between parties or their counsel and any actual or potential class member who is not yet a formal party is an unconstitutional prior restraint. Gulf Oil Co. v. Bernard, 452 US 89 (1981). The Supreme Court acknowledged the broad duty and authority of federal courts in class actions to enter appropriate orders governing the conduct of counsel and parties, and to restrict certain communications to prevent frustrations of the policy of Fed R Civ P 23 dealing with class actions. 452 US at 100. Nonetheless, the Supreme Court noted:
"[I]t may not exercise the power without a specific record showing by the moving party of the particular abuses by which it is threatened. Moreover, the district court must find that the showing provides a satisfactory basis for relief and that the relief sought would be consistent with the policies of Rule 23 giving explicit consideration to the narrowest possible relief which would protect the respective parties." Gulf Oil Co. v. Bernard, 452 US 89, 102 (1981).
The first question to be addressed in this inquiry is whether the distributors are "known to be represented in the matter by another lawyer," i.e., are the distributors known to be represented by counsel for the named plaintiffs in the class action?
Courts that have addressed the issue have split over whether putative class members, either before or after class certification and prior to the end of the opt out period, are "represented by [class plaintiffs'] counsel" within the meaning of the ethics rule. Impervious Paint Indus v. Ashland Oil, 508 F Supp 720, 723 (WD KY 1981), treated plaintiff class members as represented by counsel and thus subject to the restrictions on contact set out in the ethics rule. The opposite result occurred in Winfield v. St. Joe Paper Co, 20 FEP Cases 1093, 1094 (ND Fla 1977), held that in interpreting the ethics rule:
"The members of the class are not 'parties' in the strict sense of the term; they have not retained counsel to represent them in this matter and, in essence, are relatively passive beneficiaries of the efforts of the plaintiffs in their behalf."
Babbitt v. Albertson's Inc, 1993 WL 128089 (ND CA 1993), similarly held that "the putative class members in the instant case are not represented by class counsel for the purpose of application of the disciplinary rules." That ruling, as in the present inquiry, was post-class certification and prior to the expiration of the opt-out notice period. See also Weight Watchers of Philadelphia Inc v. Weight Watchers Int'l Inc, 455 F2d 770 (CA2 1972), and Nesenoff v. Muten, 67 FRD 500 (EDNY 1974), both of which allowed contact between class action defendants and members of the class.
The issues of principal and agent, and whether a lawyer represents a client, are state law issues and not questions of ethics. It is within the province of this Committee to render informal opinions on the meaning and application of the Michigan Rules of Professional Conduct not issues of Michigan law. Where the Michigan law is unclear, that fact and the reasoning of other state or federal decisions, may, in addition to the policies supporting the ethics rule, help resolve a question of professional ethics.
In light of the division of case authority, the underlying policies of MRPC 4.2, and the potential for unconstitutional prior restraints, a putative member of a certified class who has not yet exercised an option to opt out of the class action, and has not specifically sought representation by the class representative's lawyer or another lawyer, is not "known to be represented in the matter." Thus, a defense lawyer would not be restricted by MRPC 4.2 from communications with that individual. This determination is no different whether the defense counsel is or is not the counsel of record in the class action.
This result leaves any specific regulation of the manner or restrictions on the communication with class members to the trial judge in the specific case.
The Comment to the MRPC 4.2 states that:
"This rule also covers any person, whether or not a party to a formal proceeding, who is represented by counsel concerning the matter in question."
Thus, concerning issue (3), if the inside counsel of a prospective class member contacts defense counsel, the inside counsel "represents" the distributor concerning inquiry about the litigation even if that lawyer is not a plaintiff's counsel in the class action. Thus, all future contact by defense counsel should be with this inside counsel for the putative plaintiff distributor.