Shearson Lehman Bros. v. Wasatch Bank

139 F.R.D. 412, 1991 U.S. Dist. LEXIS 15604, 1991 WL 223123
CourtDistrict Court, D. Utah
DecidedOctober 25, 1991
DocketNo. 90-C-814A
StatusPublished
Cited by20 cases

This text of 139 F.R.D. 412 (Shearson Lehman Bros. v. Wasatch Bank) is published on Counsel Stack Legal Research, covering District Court, D. Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shearson Lehman Bros. v. Wasatch Bank, 139 F.R.D. 412, 1991 U.S. Dist. LEXIS 15604, 1991 WL 223123 (D. Utah 1991).

Opinion

ORDER

ALDON J. ANDERSON, Senior District Judge.

The parties having submitted memoran-da, the court heard oral argument on Plaintiff’s Motion for Authority to Conduct Ex Parte Interviews on September 13, 1991. The court has carefully considered the arguments presented by both parties and now renders its order granting plaintiff’s motion.

I. Factual Background

Although the parties have indicated some differences between their respective views of the facts underlying the current dispute, for purposes of this motion, the court has proceeded on the basis that the facts essentially are as follows. As of March, 1987, Stanley Erb was employed as an account executive at Shearson’s Provo office. Erb was charged with the responsibility for managing the accounts maintained with Shearson by the Wordperfect Corporation, a computer software business based in Provo, Utah. According to his duties with respect to the Wordperfect accounts, Erb received hand delivery of a check drawn by Wordperfect and payable to “ABP Investments.” Apparently, this check was inadvertently given to Erb, but since Erb’s ostensible objective in receiving the check was to deposit the funds into a Wordper-fect account at Shearson, Erb represented to Wordperfect that he would insure that the funds eventually arrived in the proper account and that Shearson need not write a new check. Contrary to that representation, Erb opened an account at Shearson in the name of ABP Investments. Over the course of the next year, Erb conducted a series of transactions whereby checks were drawn by Shearson on the ABP Investments account payable to ABP Investments. Erb then fraudulently endorsed those checks and deposited the funds in his personal bank account at Wasatch’s Orem, Utah, office.

Wordperfect assigned its rights in this matter to Shearson. Shearson filed suit on September 4, 1990. Its complaint is based primarily on the alleged unreasonable banking practices of Wasatch in that it failed to adequately verify the authenticity of the endorsements or Erb’s authority to deposit checks on behalf of ABP Investments.

After filing its complaint, Shearson obtained, through interrogatories, the identities of twenty-four former employees of Wasatch who were bank tellers during the relevant time periods. Shearson now seeks this court’s permission or authority to contact those former employees ex parte. The narrow question presented for determination is to what extent the ethical rules adopted by this court preclude an opposing attorney from engaging in ex parte contact with the former employees of a represent[414]*414ed corporate party. This narrowly stated issue is one of first impression in this jurisdiction.

II. Discussion

Pursuant to the local rules of practice adopted by this court:

All attorneys practicing before this court, ... shall be governed by and shall comply with the rules of practice adopted by this court and, unless otherwise provided, with the Utah Rules of Professional Conduct, as revised and amended; with the ABA Model Rules of Professional Conduct; and with the decisions of this court interpreting those rules and standards.

Rules of Practice, United States District Court for the District of Utah, 103—1(h) (1991). With respect to the ethical guidelines at issue in this case, both the Utah Rules of Professional Conduct and the ABA Model Rules of Professional Conduct are identical. Effective January 1, 1988, the Utah Supreme Court adopted, verbatim, Rule 4.2 of the ABA Model Rules of Professional Conduct, as Rule 4.2 of the Utah Rules of Professional Conduct. See Model Rules of Professional Conduct Rule 4.2 (1983). That rule provides:

In representing a client, a lawyer shall not communicate about the subject of the representation with a party the 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.

Utah Rules of Professional Conduct 4.2 (1990). Taken on its face, the rule clearly could not apply to ban ex parte contact with former employees unless the applying court broadly construed the textual term “party.” There is no indication in the text of the rule that such a broad construction was anticipated by its drafters. Courts and attorneys attempting to implement the rule are not, however, left entirely without guidance as to the rule’s proper scope. The commentary appended to the rule1 partially explains the application of the rule in a factual context involving a corporate or other organizational party:

In the case of an organization, this Rule prohibits communications by a lawyer for one party concerning the matter in representation with [1] persons having a managerial responsibility on behalf of the organization, and with [2] any other person whose act or omission in connection with that matter may be imputed to the organization for purposes of civil or criminal liability or [3] whose statement may constitute an admission on the part of the organization.

Utah Rule Professional Conduct Rule 4.2 cmt (numbering and emphasis added).

In situations involving ex parte contact with former employees, the first and third categories of persons within the scope of the rule as defined by the comment are inapplicable. See, e.g., Public Serv. Elec. & Gas Co. v. Associated Elec. & Gas Ins. Servs., Ltd., 745 F.Supp. 1037, 1039 (D.N.J.1990) (“Neither section regulates contact with former low level employees.”). Indeed, the parties in the present case have essentially stipulated that the first and third categories encompassing managerial employees and employees whose statements are admissible as admissions of the organizational party do not here apply. See Plaintiff’s Memorandum of Points and Authorities in Support, Doc. 34 at 7 (“Shearson does not seek to interview any current [Wasatch] employees. Therefore, the first and third categories are clearly not applicable to Shearson’s request”); Defendant’s Memorandum in Opposition, Doc. 43 at 5 (“Courts interpreting [the comment] have uniformly found that subsections (1) and (3) apply to current employees of an organization only”). The court must therefore determine the proper construction and application of the second category of persons identified by the comment as within the scope of the rule—those whose acts or omissions in connection with the matter are [415]*415attributable to the organization for civil or criminal liability.

In support of its argument that former employees are not within the scope of Rule 4.2, Shearson relies primarily on Bouge v. Smith’s Management Corp., 132 F.R.D. 560 (D.Utah 1990). Bouge is the only reported case from this court addressing the ethical restraints on an attorney’s contact with persons associated with an opposing organizational party. That case involved a Fair Labor Standards Act action. In the course of discovery, the plaintiff moved to compel the defendant to show cause why plaintiff’s counsel should not be allowed to contact persons then employed by the defendant. Plaintiff sought to contact only low-level grocery store employees in non-management and non-policy-making positions. Magistrate Boyce held that ex parte contact with such low-level non-managerial employees was not prohibited by the then-enacted DR 7-104(A)(l)2 and that the comment to Rule 4.2 was not binding on the court.

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Bluebook (online)
139 F.R.D. 412, 1991 U.S. Dist. LEXIS 15604, 1991 WL 223123, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shearson-lehman-bros-v-wasatch-bank-utd-1991.