Opinion 2006-6

(September 2006)

The inquirer is a law firm that represents defendants in a number of class actions pending in federal and state courts. The inquirer posits the following facts relevant to its inquiry:
1. In the class actions of the types it handles a named defendant often may have ongoing business relations with the named plaintiff or members of the purported plaintiff class during the pendency of the lawsuit. The ongoing relations will sometimes require direct communication between the defendant and both named and unnamed class members.
2. The inquiry is directed to cases in which corporations are alleged to be unnamed class members and such corporations are large, sophisticated entities – with either existing in house counsel, regularly retained outside counsel, or both to advise and protect their interests – which would either already know about the pending action or would be made aware of it and have the sophistication to understand the implications of such an action in talking with defendant’s counsel.

The inquirer refers to opinions from state and federal courts in Pennsylvania on the general question of whether, prior to certification of a class, communications between defense counsel and putative class members is permitted.

The inquirer asks if prior to class certification, may counsel for defendant properly communicate ex parte with existing in house or outside counsel for unnamed corporate members of the putative class so long as such counsel for the unnamed members of the putative class are made aware of the pending class action.

For the reasons that follow, the Committee is of the opinion that such contact, under the narrow circumstances presented in the inquiry, does not violate the Pennsylvania Rules of Professional Conduct (the “Rules”), but cautions that such contact, like other communications with putative class members, is subject to oversight and regulation by the court before which the class action is pending.

Rule 4.2, entitled “Communication with Person Represented by Counsel”, provides as follows:
In representing a client, a lawyer shall not communicate about the subject of the representation with a person 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 to do so by law, or a court order.

In the class action context, the issue Rule 4.2’s applicability is complicated by the question of whether and when any attorney-client relationship may be deemed to exist between class counsel and unnamed putative members of a class.

The majority rule in most jurisdictions is that, after a class action is filed but prior to certification of a class, contact between counsel for a defendant and members of the putative class is permitted. The Restatement 3d, Law Governing Lawyers, § 99, comment l (2003) is consistent with this approach:

l. A communication with class member. A lawyer who represents a client opposing a class and a class action is subject to the anti-contact rule of this Section. For the purposes of this Section, according to the majority of decisions, once the proceeding has been certified as a class action, the members of the class are considered clients of the lawyer for the class; prior to certification, only those class members with whom the lawyer maintains a personal client-lawyer relationship are clients. Prior to certification and unless the court orders otherwise, in the case of competing putative class actions, a lawyer for one set of representatives may contact class members who are only putatively represented by a competing lawyer, but not class representatives or members known to be directly represented in the matter by the other lawyers. (emphasis supplied).

Consistent with this majority rule, at least one advisory ethics opinion has confirmed that the no contact rule [Rule 4.2 in Pennsylvania] does not apply before class certification. See, N.Y.C.Eth.Op. 2004-1, 2004 WL 2155078 (2004).

In Pennsylvania, there are no reported appellate decisions addressing the issue. However, there are at least two reported trial court decisions that reach a result contrary to the Restatement view. See, e.g., Braun v. Wal-Mart Stores, Inc., 2003 WL 247695 (Phila.C.P. 2003) (holding that Wal-Mart could not discuss issues relating to the pending class action with its current employees who are also putative class members, even prior to class certification); Dondore v. NGK Metals Corp., 152 F.Supp. 2d 662 (E.D.Pa. 2001) holding that a defendant in a federal action could not contact putative members of a state court class action in a related lawsuit, for purposes of interviewing those members, without the consent of counsel for the claim in the state action, even though the class had not yet been certified. In Lewis v. Bayer, AG, 2002 WL 1472339 (C.P. Phila. 2002) the court, while observing that no Pennsylvania appellate courts had addressed the issue, found that it was unnecessary to make a determination of the issue because the defendant was otherwise authorized by law to contact the putative class members, an authorization which took that contact outside the scope of Rule 4.2.

Recognizing that Pennsylvania law is not settled on this issue, the Committee feels the inquiry presented is clearly distinguishable from the facts before the court in either Dundore, supra or Braun v. Wal-Mart Store, Inc., supra. In both of those cases, the court was concerned about the potential for abuse “which may arise when unsophisticated putative class members are interviewed by counsel”, Braun v. Wal-Mart Stores Inc., 2003 WL at 3, Dundore v. NGK Metals Corp., 152 F.Supp. 2d at 666. In the inquiry presented, the parties with whom the inquirer seeks to communicate are corporations, not individuals, and the communication would occur through counsel, (albeit not class action counsel). In Ethics Opinion 2000-11 this Committee held that under certain circumstances, even where outside counsel has appeared on behalf of an organization, in house counsel may still represent the organization for purposes of Rule 4.2, such that communications with in house counsel are not violations of Rule 4.2. The Committee believes this is one of those circumstances, in light of the unique relationship between class counsel and the unnamed putative class members.

The concerns expressed in the reported Pennsylvania opinions regarding the possibility of undue influence by defense counsel on unsophisticated and unrepresented individual members of a class are absent where, as here, the inquiry would be directed to counsel for putative class corporate defendants, rather than the defendants themselves. Moreover, the inquirer has indicated that counsel would be advised of the pendency of the class action. Such a result does not seem to the Committee to violate the underlying policy of Rule 4.2, noted by the Court in Dundore, supra, as being “to prevent lawyers from taking advantage of uncounselled lay persons…”. 152 F.Supp. 2d at 666.

Under the circumstances presented, the Committee is of the view that prior to certification of a class, Rule 4.2 is not violated by communications with between defense counsel and counsel for putative corporate class members, so long as those concerned are made aware of the pending class action, at which point counsel will be in a position to weigh and consider the communications in light of the pending action.

The Committee observes that in the class action context, there is a significant body of law concerning court imposed limitations on communications between putative class members and counsel for the defendant and/or the representative plaintiffs as part of the Court’s responsibility to exercise oversight over the conduct of the actions. In Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981) the Supreme Court held that a trial court in a class action under Federal Rule 23(d) had broad authority to control class actions and the conduct of parties and their counsel. That authority includes the ability to enter orders limiting communications between counsel and class members based on “a clear record and specific finding that reflect a weighing of the need for a limitation and a potential interference with the rights of the parties” 452 U.S. at 101-102.

1. Rule 4.2, by its own terms, does not apply to communications otherwise permitted by law. Similarly, it does not apply to communications unrelated to the matter in which the party is represented. Thus, to the extent the inquirer is asking about the propriety of communications unrelated to matters at issue on the class action litigation, the Committee’s view is that there is no ethical restriction in such communications.
2. Pa. R. Civ. Pro. 1713 has equivalent provisions authorizing the Court to enter orders regarding the conduct of the proceedings.

One result of the Gulf Oil decision was to strike down standing orders automatically prohibiting or limiting communications without appropriate fact finding and a record. Nevertheless, it is clear both from Gulf Oil and subsequent decisions, that courts may, and do enter orders limiting communications based upon a clear showing of need. See, e.g., Dundore, Supra.

While the Committee is of the view that R.P.C. 4.2 does not, in and of itself, bar contact of the narrowly defined type that forms the subject of the inquiry, whether such communications will run afoul of a particular court’s views as to appropriate conduct as part of its oversight of the class action is beyond the purview of this Committee. In many cases advance disclosure and, where appropriate, guidance from the court may be the most prudent course prior to initiating such communications.

CAVEAT: The foregoing opinion is advisory only and is based upon the facts set forth above. The opinion is not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any court. It carries only such weight as an appropriate reviewing authority may choose to give it.