In the sensitive area of employee disputes, observations and first-hand accounts are of central importance. New York’s highest state court has again confirmed that as long as certain safeguards are employed, plaintiff ’s counsel may seek to gather information directly from former employees of a defendant corporation.
In Muriel Siebert & Co. v. Intuit Inc., 8 N.Y.3d 506, 836 N.Y.S.2d 527 (2007), the New York Court of Appeals revisited its seminal decision in Niesig v. Team I, 76 N.Y.2d 363, 559 N.Y.S.2d 493 (1990), addressing whether counsel may directly contact and interview employees of the opposing party ex parte. Ruling in Niesig in 1990, the Court of Appeals held that ex parte informal communications with current employees of a corporation were permitted if (i) the acts or omissions of the employees in the matter under inquiry were not binding on the corporation, and (ii) the employees were not implementing the advice of counsel.
Although the permissibility of interviewing former employees was not at issue, the Niesig Court did note that the disciplinary rule prohibiting communications directly with a represented party without prior consent of that party’s counsel (Disciplinary Rule 7-104(A)(1)) did not apply to former employees. Not surprisingly, the Court of Appeals relied on Niesig extensively in Muriel Siebert in considering whether defendant’s counsel could informally interview a former employee of plaintiff outside the presence of (and without informing) plaintiff’s counsel.
In Muriel Siebert, the plaintiff discount brokerage firm worked with the defendant, a manufacturer of financial software, to jointly create and operate an internet brokerage service. Plaintiff eventually filed suit against defendant for failing to promote the internet brokerage service to its customers. One of plaintiff’s employees, Nicholas Dermigny, was significantly involved in the events leading up to the lawsuit and was part of plaintiff’s “litigation team” when the lawsuit began. Dermigny eventually left plaintiff ’s employ and refused to be represented by plaintiff ’s counsel when defendant sought to take his deposition.
After Dermigny was terminated by plaintiff and before his scheduled deposition, defendant’s counsel contacted him without plaintiff’s knowledge and arranged for an interview. Before beginning the interview, defense counsel advised Dermigny that he should not disclose any privileged or confidential information, including any conversations with plaintiff ’s counsel or information concerning plaintiff ’s legal strategy; the Court noted that there was no allegation that Dermigny disclosed any such information.
Upon learning of the interview, plaintiff ’s counsel moved to disqualify defense counsel, enjoin them from using any information provided by Dermigny during the interview, and stay the upcoming deposition. The trial court granted the motion because of the “appearance of impropriety,” given the possibility that privileged information had been disclosed during the interview. The Appellate Division reversed and certified the question to the Court of Appeals.
The Court of Appeals affirmed the decision of the Appellate Division and found that there was no basis for disqualifying defense counsel. Relying on the policy rationale enunciated in Niesig, the Court of Appeals held that “so long as measures are taken to steer clear of privileged or confidential information, adversary counsel may conduct ex parte interviews of an opposing counsel’s former employee.” In so holding, the Court noted that there was no disciplinary rule prohibiting these interviews since DR 7-104(A)(1) applies only to current employees and, at the time of the interview, Dermigny “no longer had the authority to bind [plaintiff ] in the litigation, was no longer charged with carrying out the advice of [plaintiff’s] counsel, and did not have a stake in the representation.”
The Court pointed out, however, that attorneys are not free “to elicit privileged or confidential information from an opponent’s former employee.” Rather, citing DR 1-102(a)(5)— which prohibits “conduct that is prejudicial to the administration of justice” — the Court held that, when conducting ex parte interviews, counsel “must still conform to all applicable ethical standards.” The Court made specific reference to authorities, including ABA Formal Opinion 91-359, requiring that attorneys interviewing an adversary’s former employee must “disclose their role in the matter and whom they represent, and must not induce former employees to disclose privileged communications.” Given the precautions that defense counsel had taken, and the fact that Dermigny had not revealed any privileged or confidential information, the Court found that disqualification of defense counsel was not warranted.
The Muriel Siebert decision therefore re-affirms that ex parte interviews of an opponent’s former employees are permissible. Notably, the Court here permitted an ex parte interview of a high-level employee who had access to sensitive and privileged information. The Court did, however, suggest precautionary measures that attorneys should consider taking in connection with such interviews, specifically: (i) advising the witness of counsel’s role and client in the litigation; (ii) cautioning the witness to avoid revealing privileged or confidential information; (iii) cautioning the witness not to answer any questions that would lead to the disclosure of such information; and (iv) confirming that the witness understands those instructions.
Given the Court’s ruling, employers should expect to see more attempts by adversary counsel to informally interview former employees and be cognizant that such communications may be occurring. Such interviews, however, are not without risk. In addition to requiring the precautionary measures set forth, the result in Muriel Siebert seems to have depended, at least in part, on the fact that the witness interviewed ex parte did not actually reveal any confidential or privileged information. Presumably, if confidences had been disclosed, the result might have been different, notwithstanding the precautions that defense counsel took.