June 17, 2020

Court Bars Defendant's Direct Communications with Law Firm Customers, Other Class Action Members

Holland & Knight Alert
Peter R. Jarvis | Nellie Q. Barnard

Highlights

  • It is generally well accepted that once a plaintiff class has been certified, counsel for the named plaintiffs represent all members of the class – at least for purposes of Rule of Professional Conduct (RPC) 4.2, the rule prohibiting communications by counsel with adverse represented parties.
  • It also is generally well accepted that parties have the right to speak with each other without any counsel being present since, among other things, RPC 4.2 applies only to lawyers and not to clients.
  • In McKenzie Law Firm, P.A. v. Ruby Receptionists, Inc., however, the U.S. District Court for the District of Oregon ordered that the defendant could not communicate directly with plaintiff class members, a number of whom were lawyers or law firms, even if the defendant did so without any involvement of counsel.

It is generally well accepted that once a plaintiff class has been certified, counsel for the named plaintiffs represent all members of the class – at least for purposes of Rule of Professional Conduct (RPC) 4.2, the rule prohibiting communications by counsel with adverse represented parties.

It also is generally well accepted that parties have the right to speak with each other without any counsel being present since, among other things, RPC 4.2 applies only to lawyers and not to clients. In fact, American Bar Association (ABA) Formal Opinion 11-461 goes further and states that in the absence of a situation that suggests or reflects overreaching, a lawyer may advise a client to speak directly to an adverse represented party and may also advise the client what to say or refrain from saying.

In McKenzie Law Firm, P.A. v. Ruby Receptionists, Inc., No. 3:18-CV-1921-SI, 2020 WL 2789873 (D. Or. May 29, 2020), however, the court ordered that the defendant could not communicate directly with plaintiff class members, a number of whom were lawyers or law firms, even if the defendant did so without any involvement of counsel.

As noted in the opinion, the court has authority under Federal Rule of Civil Procedure (FRCP) 23(d) to issue orders on "procedural matters" so as to "protect class members and fairly conduct the action." Judge Michael Simon further observed that under Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981) and its progeny, FRCP 23(d) has been used to limit not only counsel's but also a defendant's communications to class members when there is a showing of actual or threatened abuse by the party sought to be restrained. Cox Nuclear Med. v. Gold Cup Coffee Servs., Inc., 214 F.R.D. 696 (S.D. Ala. 2003). The movant can meet that standard by showing that 1) a particular form of communication has occurred or is threatened to occur, and 2) the particular form of communication at issue is abusive in that it threatens the proper functioning of the litigation (e.g., communications that coerce prospective class members into excluding themselves from the litigation; communications that contain false, misleading or confusing statements; and communications that undermine cooperation with or confidence in class counsel). Id. at 697-98.

The Decision

Based on the record before it, the court held that the risk of abuse by allowing a continuation of communications between the defendant and its class-member customers about the litigation justified that such communications stop altogether. According to the court, "[u]nsupervised, unilateral communications with the plaintiff class sabotage the goal of informed consent by urging exclusion on the basis of a one-sided presentation of the facts, without opportunity for rebuttal." 2020 WL 2789873 at *5 (internal citation and quotations omitted). And in addition, the risk of abuse is heightened where the defendant has an ongoing business relationship with members of the class. 2020 WL 2789873 at *5 (internal citation and quotations omitted).

The court noted that under Oregon's version of RPC 4.2 (which continues to include the prior prohibition against "caus[ing] another to communicate), an Oregon lawyer could not do what ABA Formal Op 11-461 allows and advise a client to communicate directly with a represented party or advise a client what to say or not to say in such communications. The court then stated that "given that it is clear that there can be no involvement by Defense Counsel, it would be foolhardy for Defendant to initiate any communication with class members about this lawsuit. Thus, no legitimate need would be harmed by restricting Defendant from doing so." Id. at *6. The court also noted that plaintiffs had alleged that the defendant had previously misled class members but did not make an express finding on whether or to what extent misrepresentation occurred. Id.

The court also held that if a class member initiated a communication with the defendant about the litigation, the defendant had to respond that it was prohibited by court order from making any response on the merits of the case. Id. at *7. In contrast, the court had no difficulty holding that the defendant was free to communicate with its customers who were class plaintiffs about everything other than the litigation.

Conclusion and Considerations

Given the court's comment that "it would be foolhardy" for the defendant to communicate with plaintiff class members since the defendant could not, under the Oregon version of RPC 4.2, consult in advance with counsel about what to say or not to say, it is not clear how the court would have resolved the matter in the absence of that version of RPC 4.2 and without an express finding of misleading statements or other abusive conduct by the defendant. It may also be worth noting that the court viewed several of the issues before it as raising close questions. Thus, the extent to which other courts may reach the same conclusion is an open question.

Alternatively, perhaps it is time for Oregon to consider eliminating from its version of RPC 4.2 the prohibition against advising a client what to say or not to say when speaking directly with an opposing represented party.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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