June 2003 Vol

Good Morning, Mr. Parker, This is the

Plaintiff's Lawyer Calling...

As veteran trial lawyers know, most corporate clients find the courtroom a strange and perilous place. The prospect that the opposing lawyer might call the corporate client’s employees or former employees to seek an interview during the litigation heightens the discomfort. Under the liberal rules established by the Ohio courts, that prospect is not an unlikely one.

There are ethical rules that define the circumstances under which a lawyer can communicate with an opposing corporation’s employees or former employees during litigation. This may be puzzling to clients because, generally, a business person can contact anyone he wants in transacting his business. A lawyer, however, must abide by the rules that govern his profession. The groundrules are different if a lawyer proposes to contact his opponent’s former employees, as opposed to its current employees. Under Disciplinary Rule 7-104(A)(1), a lawyer may not communicate with the following current employees of an opposing corporation: (1) an employee who supervises, directs or regularly consults with the corporation’s attorney concerning the matter at issue; (2) an employee who has the authority to obligate the corporation with respect to the matter at issue; and (3) an employee whose act or omission in connection with the matter at issue may be imputed to the corporation for purposes of civil or criminal liability.

DR 7-104(A)(1) allows communication with former employees without notification to or consent of the corporation’s attorney so long as: (1) the former employee is not represented by his or her own counsel in the matter at issue; (2) the former employee has not asked the corporation’s counsel to provide representation in the matter at issue; (3) the opposing attorney obtains the former employee’s consent to be interviewed; (4) the opposing attorney informs the former employee not to divulge any communications that the former employee may have had with corporate or other counsel; (5) the opposing attorney fully explains that he is representing a client adverse to the corporation’s interests; and (6) the opposing attorney does not provide an unrepresented former employee with any advice other than to seek counsel in the matter. See Opinion 2005-3 (Feb. 4, 2005), Opinion 96-1 (Feb. 2, 1996) and Opinion 90-20 (Aug. 17, 1990), Board of Commissioners on Grievance and Discipline, Supreme Court of Ohio.

A corporate attorney cannot assert blanket representation of all current and former employees in order to frustrate otherwise-permitted communications. If a lawyer is prohibited from engaging in a communication with an employee or former employee of an opponent corporation, he may not circumvent that prohibition by asking his client or anyone else to engage in the prohibited communication. DR 7-104(A)(1) applies to employees of government agencies in the same manner as it applies to employees of corporations. See Opinion 92-7, Board of Commissioners on Grievances and Discipline, Supreme Court of Ohio (Apr. 10, 1992); Johnson v. Ohio Dept. of Youth Servs., 231 F. Supp. 2d 690 (N.D. Ohio 2002).

Ohio courts have not proven responsive in addressing alleged violations of these ethical rules. In Smith v. Cleveland Clinic Found., 151 Ohio App.3d 373 (Ohio Ct. App. 2003), plaintiff filed a wrongful termination lawsuit against the corporate employer. The plaintiff’s attorney contacted and interviewed the opposing corporation’s employees involved in the decision not to renew the plaintiff’s contract. The plaintiff’s attorney did not notify the defendant of these communications. The defendant sought disqualification of the plaintiff’s attorney for violating DR 7-104(A)(1). The trial court granted the defendant’s motion for disqualification but, on appeal, the appellate court reversed, holding that disqualification was an improper remedy because the defendant had failed to show that it was prejudiced.

In Davis v. Washington Co. Open Door, Home, 2000 U.S. Dist. LEXIS 20007 (S.D. Ohio 2000), the Court held that an attorney was permitted to contact and interview an opposing corporation’s former employee without notifying the corporation’s attorney. In United States v. Beiersdorf-Jobst, Inc., 980 F. Supp. 257 (N.D. Ohio 1997), the Court denied a corporate defendant’s motion for a protective order that would have required the plaintiff’s attorney to notify and obtain consent from the defendant’s attorney before engaging in ex parte communications with any former employees, to maintain a list of all former employees contacted with notes related to such interviews and to make the list available to the corporation. In Huther v. Mac Tools, 1993 U.S. Dist. LEXIS 21234 (S.D. Ohio 1993), as in Beiersdorf-Jobst, the Court denied a motion for a protective order to prevent ex parte communications with an opposing corporation’s former employees. In Summers v. Rockwell International Corp., Inc., 1993 U.S. Dist. LEXIS 21173 (S.D. Ohio 1993), the Court refused to impose a “brightline” test that would prohibit all contact with an opposing corporation’s former employees.

Therefore, under the ethical rules as promulgated by the Supreme Court of Ohio, any current employee who was neither a regular contact with outside counsel, a corporate decision maker or a “point person” on a particular dispute may be a prospect for communication from an opposing attorney. In my experience as a trial lawyer, it is unusual for an opposing attorney to attempt to contact a corporate client’s current employees. If it does occur, however, and if the contacted employee fails to report the communication, the case may proceed without any knowledge on the part of corporate counsel that employees were contacted. This is perhaps the most troublesome prospect because without knowing if an employee has been contacted there is no way for corporate counsel to assess whether his opponent has engaged in unethical conduct.

It is far more commonplace for an opponent’s attorney to contact former employees. An opposing attorney’s wide-ranging ability to interview former employees is a concern, particularly in circumstances in which an employee may have left the company under unpleasant circumstances, affording him incentive to shade the truth and damage his former employer. It is even more likely that a former employee will not report an attempted interview than it is that a current employee will fail to do so. For this reason, the prospect for unpleasant surprise in litigation increases. Although it is most advisable for corporate counsel to attempt to interview his corporate client’s former employee before his opponent has the opportunity to do so (assuming he learns about the former employee first), there is no guarantee that the former employee will agree to an interview. Moreover, it is unethical for corporate counsel to instruct the former employee to decline an interview from opposing counsel. He must leave it to the discretion of the former employee to determine whether he will speak with opposing counsel.

Turning to “the other side of the coin,” your corporate counsel may interview an opposing corporation’s current or former employees so long as his conduct comports with the above-described ethical rules. It is unwise, however, to “push the envelope.” Indeed, a determination not to interview an opposing corporation’s current employees at all is generally the wisest course. If your corporate counsel attempts an interview that even arguably violates ethical rules, it can prove highly damaging not only to the corporate counsel’s professional standing but also to the corporation’s prospects in the lawsuit. If there is any possibility that your corporate counsel may be deemed to have engaged in unethical behavior, it can prejudice your standing with the court severely. For these reasons, supporting ethical behavior by your lawyer is not only the right thing to do but the practical thing to do.

Although the Ohio courts are more liberal than those in many states in allowing these communications, for the most part Ohio lawyers seem unwilling to risk an ethical violation by engaging in an arguably prohibited communication. Nonetheless, the prospect that your opponent may seek to communicate with your present or former employees should be sufficiently troublesome to warrant remedial steps. First, you should leave no stone unturned in disclosing to your attorney the names and addresses of all current and former employees who may have relevant information. To the extent possible and economical, you should authorize your attorney to interview such persons, particularly including critical former employees, promptly. Second, your personnel should be aware of the ethical ground rules and report any attempted communication by opposing counsel. Third, your corporate counsel should respond to any arguably improper communication by an opponent decisively. A decisive response may take the form of a motion filed with the Court or a complaint to your opponent’s local bar association. Before you file a motion or make a complaint, you should have a high level of confidence that you are on firm ground. Although Ohio courts seem reluctant to sanction offending lawyers, responding decisively to ethical violations should deter your opponent from further questionable conduct.

Bill Leahy is a Shareholder in the Litigation Practice Group of Buckingham, Doolittle & Burroughs, LLP. He can be reached at wleahy@bdblaw.com or 216.453.4280. Mr. Leahy was assisted in researching this article by Cleveland Summer Associate Amy Scheurman.

Alternative dispute resolution is a formal-sounding term that really encompasses two procedural mechanisms for bringing closure to legal disputes between parties. One mechanism is mediation, and the second is arbitration. Although the two are different they can often work together.

Mediation is the more informal of the processes. It involves a neutral third person, namely a mediator, whose function is to facilitate or encourage settlement. The mediator has no decision-making authority. She does not receive, weigh or rule upon evidence. Her job is simply to break down what are common communication barriers between the parties, help move those parties off what are often “absolute” positions at the outset of the mediation and, hopefully, get the parties to explore and think about settlement options that they had not previously considered.

A good mediator is more than simply a listener even though that is an important part of what she does. Similarly, an effective mediator is not merely a messenger of what each party wants. A mediator is kind of like a settlement igniter. At the end of the day, her function is assist the parties in arriving at a point where they can walk away from a case with a settlement that each can live with.

Virtually every civil case in Florida is ultimately assigned to mediation. There are exceptions for certain categories of cases under the Rules of Civil Procedure, but the exceptions are extremely rare. Most courts, as part of an order setting a case for trial, will simultaneously direct that mediation take place within a given period of time. Alternatively, the parties can consent to mediation even before being ordered to do so by a judge.

Pre-suit mediation is also not unusual. Some contracts require mediation before filing a lawsuit or a claim for arbitration. Sometimes, in anticipation of and in an effort to minimize legal fees and costs, parties will agree to mediate a dispute before beginning formal legal action.

Arbitration, by contrast, is more formal although it is still less formal than an actual trial in court, in that the rules of evidence and procedure are usually relaxed. Unlike the mediator, however, the arbitrator receives, weighs and rules upon evidence. In addition, the arbitrator has decision-making authority. Either at the end of the arbitration or shortly thereafter, the arbitrator will make a ruling.

There are two types of arbitration—binding and non-binding arbitration. In binding arbitration, once the arbitrator makes her decision, a party’s ability to appeal or challenge that decision is very limited. By and large, absent unusual circumstances, each party is going to be bound by the decision.

Contracts in certain industries routinely provide for binding arbitration. Arbitration provisions are common, for example, in construction contracts. The standard AIA construction contract contains language that not only requires the owner and general contract to arbitrate any dispute between them but may also bind subcontractors and suppliers of the general contractor to arbitration.

Conversely, non-binding arbitration is, as the term suggests, just that, non-binding. A party who wishes to appeal or challenge an unfavorable award in a non-binding arbitration can do so. Often, however, there are consequences. For example, in court-ordered, non-binding arbitration in Broward County, Florida, if a party rejects an arbitration award but receives a less favorable judgment at trial, he will be ordered to pay the other party’s attorney’s fees.

In cases where a contract requires the parties to arbitrate rather than litigate in court, mediation is often still an important part of the process. In arbitrations before the American Arbitration Association, mediation before a final arbitration hearing is the norm. The same is true for securities arbitrations conducted pursuant to the rules of the National Association of Security Dealers.

With increasingly more congested court calendars and a growing backlog of cases, mediation and arbitration are attractive alternatives to resolve disputes. Mediation gives the parties the ultimate power to decide and direct their own fate. Arbitration, because it is less formal than a trial and does not ordinarily involve expensive and time-consuming discovery, can enable a party to be heard much more quickly than he or she would in state or federal court.

Scott Topolski is a Partner in the Litigation Practice Group of Buckingham, Doolittle & Burroughs, LLP. He can be reached at stopolski@bdblaw.com or 561.995.2987.

The 2005 real estate market in Florida continues to be rosy. New residents continue to arrive in Florida at the average rate of 1,000 per day, and there does not appear to be any let up in the flow. Some of the new residents become part of the burgeoning workforce; others are retiring baby boomers. Another set, which may also fall into either of the above categories, are foreigners from many countries including, most notably, Canada and South America. These new residents require, and, as mentioned, are often part of, the expanding workforce needed to provide the services and infrastructure of the expanding South Florida community: new homes, schools, roads, parks, supermarkets, restaurants, retail centers, hospitals, office buildings, warehouses, industrial centers, and so on.

All of these factors create a fast moving real estate market with values escalating more rapidly than the national norm. The average sales price of a home in Fort Lauderdale in November, 2004 was $377,565. This average sales price represents a 28% increase over 2003. The median sale price of a home in Fort Lauderdale in November, 2004 was $294,000. This represents a 23% increase over 2003. Nationally, the average November, 2004 home sales price was $255,100 and the median home sales price was $175,000. One can see that the Florida prices are dramatically higher than their national counterparts. Bolstering the market is the average 30 year fixed mortgage, which has remained below 6%, thus enabling residents to obtain higher priced homes at lower interest rates.

Another exciting trend is the revitalization of downtown areas, business centers and industrial developments. As downtown areas become more populated, the available real estate decreases. Gentrification of blighted city areas is on the increase. Urban areas, such as Atlantic Avenue in Delray Beach, Florida are in the process of being beautified and urban market rates are rising. Office vacancy rates are going from the double digits to the single digits…for example, in Palm Beach County the 2004 office vacancy rate of 12.2% fell to 9.9%. Similarly, industrial space development is booming. In Palm Beach County, 478,500 square feet of industrial space is now under construction. This will increase the already existing 44.6 million square feet of industrial space.

Nationally, 2005 is predicted to be a strong year for home sales, commercial centers and industrial developments. Florida is not only expected to follow suit, but is expected to continue to be one of the fastest growing states in the nation. The Florida office of Buckingham, Doolittle & Burroughs, LLP is ready, willing and able to assist persons interested in acquiring or selling real property in Florida.

Rana Gorzeck is a Partner in the Real Estate & Construction Practice Group of Buckingham, Doolittle & Burroughs, LLP. She can be reached at rgorzeck@bdblaw.com or 561.995.2997.

Congratulations! to Rebekah Nilges and Nancy Ruggaber (Buckingham Canton^SM) and Andre Willis (Buckingham Boca^SM) for completing the LexisNexis Paralegal Certificate of Mastery Program. Recently, they completed the required coursework in the areas of Initial Case Analysis, Cite Checking, Locating and Profiling People, and Corporate, News and Financial Research.

Others who completed all five modules in the program include Melissa Rinehart (Buckingham Akron^SM), Annelle Baird, Kim Beckett, Ellen Greenberg and Lisa Vrooman (Buckingham Boca^SM), Sheree Amos, Susan Carr, Jennifer Debro, Dawn Grant, Karen Lloyd, Debbie Newbauer, and Amy Studer (Buckingham Canton^SM), Richye Jamieson and Coletta Risko (Buckingham Cleveland^SM), and Nell Chambers, Catherine Hawes, Julianne Hindes, and Sheri Shainfeld (Buckingham Columbus^SM).

Gerald B. Chattman (Buckingham Cleveland^SM) was elected Vice Chair of the National Board of Trustees for the National Center for Non-Profit Excellence.