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JONES v. SCIENTIFIC COLORS

November 5, 2001

NORMAN JONES, ET AL., UNITED STATES EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PLAINTIFF,
v.
SCIENTIFIC COLORS, INC., D/B/A APOLLO COLORS, INC., DEFENDANT.



The opinion of the court was delivered by: Ian H. Levin, United States Magistrate Judge.

MEMORANDUM OPINION AND ORDER

Before the court is the Jones Plaintiffs Amended Motion for Sanctions and to Disqualify.

The subject motion concerns undercover investigations performed by Defendant (Apollo Colors) at its Rockdale, Illinois plant and the production of the reports of these investigations. Plaintiffs' threshold assertion is that Mr. Dan Kinsella and his law firm, Rooks, Pitts & Poust (Defendant's counsel) as well as Apollo's management directed covert undercover investigations of Apollo employees in which investigators made direct contact with two of Plaintiffs; namely, Franklin Thompson and Douglas George. Plaintiffs argue that these direct contacts are in contravention of the Rules of Professional Conduct prohibiting contact with an individual represented by counsel. In addition, Plaintiffs assert that Defendant withheld the production of documents containing the reports of the covert investigations until May 23, 2001, when Defendant produced for the first time documents numbered 31167 to 32017. Pls.' Am. Mot. at 1-2.

In this motion, Plaintiffs' present four arguments.

(1) Plaintiffs' first argument is that Defendant violated the Rules of Professional Conduct by making contact with a person represented by counsel. Pls.' Am. Mot. at 2. Specifically, Local Rule ("LR") 83.54.2 provides:

During the course of representing a client a lawyer shall not communicate or cause another to communicate [on the subject of representation] with a party the lawyers knows to be represented by another lawyer in that matter unless the first lawyer has obtained the prior consent of the lawyer representing such other party or as may otherwise be authorized by law.*fn1

In addition, LR 83.58.4(a) provides that a lawyer shall not: (1) violate or attempt to violate the Rules of Professional Conduct; (2) induce another to engage in conduct, or give assistance to another's conduct, when the lawyer knows that conduct will violate these rules; (3) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; or (4) engage in conduct that is prejudicial to the administration of justice. Id. at 2-3.

Plaintiffs' cite case law indicating that the purpose of the professional responsibility rules stated, supra, is to prevent opposing counsel from taking advantage of the other party and to protect a party from the over-reaching of opposing counsel. Blanchard v. Edgemark Fin. Corp., 175 F.R.D. 293, 301 & n.10 (N.D. Ill. 1997); Pls.' Am. Mot. at 3. In Midwest Motor Sports, Inc. v. Arctic Cat Sales, 144 F. Supp.2d 1147, 1158 (D.S.D. 2001), the court recognized that, "[a] lawyer may not direct an investigative agent to communicate with a represented person in circumstances where the lawyer herself would be prohibited from doing so." (citations omitted).The court held that the undercover investigation conducted by attorneys for a litigant, which included direct contact with the opposing party, violated the Rules of Professional Conduct. (Pls.' Am. Mot. at 3-4.) Moreover, Plaintiffs cite In the Matter of Searer, 950 F. Supp. 811 (W.D. 1996) in which the District Judge herein interpreted Rule 4.2 of the Michigan Rules of Professional Conduct (quotation on page 4, Pls.' Am. Mot.).

(2) Plaintiffs' second argument is that Mr. Kinsella and his law firm wilfully violated the Rules of Professional Conduct by directing an investigation that included direct contact with Plaintiffs. Pls.' Am. Mot. at 4. Plaintiffs contend that beginning in January, 1999, Defendant and its attorneys initiated an investigation of Apollo employees. (Ex. B, Report of January 26, 1999). Pls.' Am. Mot. at 4. Defendant's counsel has described the investigation as follows:

There's no question this was in anticipation of litigation. We were trying to develop a legal theory of defense at that time. That's why we hired these undercover employees, that why we got the reports. Very Simple. Ex. C (Transcript of Proceedings from April 3, 2001), p. 9. (Pls.' Am. Mot. at 4.)

On April 22, 1999, Plaintiffs' counsel warned Rooks, Pitts & Poust that, "I have been informed that Apollo is conducting interviews at the Rockdale Plant. Please be advised that we have not nor will we authorize any contact with our clients." Ex. D (copy of letter); Pls.' Am. Mot. at 5.*fn2 Despite the letter, Plaintiffs allege that Defendant and its counsel continued the undercover investigation. Pls.' Am. Mot. at 5. In addition, the investigators completed written reports and directed them to Mr. Kinsella and selected management at Apollo Colors.*fn3 Id.

Plaintiffs assert that the covert investigation targeted direct contact with Plaintiffs to obtain information and facts pertinent to their claims (namely, racially motivated graffiti and conduct). Pls.' Am. Mot. at 5. Plaintiffs cite to eight specific incidents where the investigative reports indicate that the investigator spoke with Plaintiffs Mr. George and/or Mr. Thompson. Id. at 5-6. For example:

February 29, 2000: The investigation was re-initiated on 2/25/00, when our investigator arrived at the work place at 7:00 p.m. Our investigator talked to Doug (George) about the purchasing of drugs and he stated that he had been out of the business as of January 1, 2000. He told everyone in the room that he had stopped selling; Ex. G, p. 20534-20535. Pls.' Am. Mot. at 6.

Plaintiffs contend that Mr. Kinsella and his law firm met with investigators and were given verbal reports. Pls.' Am. Mot. at 7. Mr. Kinsella was also briefed by investigators during telephone conversations. Ex. P, p. 31491. (Pls.' Am. Mot. at 7.) Moreover, Defendant's billing statements reflect a four hour "client office meeting" on March 29, 2000. Ex. O, p. 20005 (Pls.' Am. Mot. at 7.) Plaintiffs, thus, argue that Defendant has the benefit of illegally obtained statements. Pls.' Am. Mot. at 7.)

(3) Plaintiffs third argument is that Defendant and its counsel concealed ethical violations, wrongly withheld documents, and produced a misleading and false privilege log. Pls.' Am. Mot. at 7. Plaintiffs state that Defendant wrongly withheld documents because Defendant responded to Plaintiffs' first request for production of documents ("[a]ll documents relating to all inquiries or investigations conducted as a result of each plaintiffs claim or allegation of discrimination" (par. 19)) by objecting based on work product and attorney-client privileges. Ex. R; Pls.' Am. Mot. at 7-8. Moreover, Defendant stated that "[it] has provided documents that it maintained in response to claims of discrimination that preceded plaintiffs' formal charges of discrimination as documents number 10784-13416." Ex. R; Pls.' Am. Mot. at 8. When Defendant supplemented its response to the first document request, it did not change its answer to paragraph 19. Ex. T; Pls.' Am. Mot. at 8.

Plaintiffs assert that Defendant's discovery responses are false and misleading because Defendant had thousands of pages of documents that were responsive to paragraph 19. Pls.' Am. Mot. at 8. Plaintiffs contend that Defendant withheld documents numbered 31167 to 32017 until May 23, 2001 and provided a false and misleading privilege log because the May 31, 2001 log omitted reference to document numbers 31167 to 32017. Pls.' Am. Mot. at 8. Plaintiffs, therefore, assert that Defendant and its counsel are subject to sanctions under Rule 37(b)(2) for withholding documents and producing a misleading and false privilege log. Pls.' Am. Mot. at 9, 16 (sanctions listed on page 9). (Rule 26(b)(5) requires the disclosure of documents for which a privilege is claimed.) Id. at 9.

Plaintiffs argue that disqualification is necessary to restore integrity to the case and ensure a just and fair trial. Pls.' Am. Mot. at 10. Plaintiffs cite to case law instructing that "[d]isqualification may be ordered as a remedy for a violation of Rule 4.2." Weeks v. Independent Sch. Dis. No. I-89, 230 F.3d 1201, 1211 (10th Cir. 2000) (citations omitted); Pls.' Am. Mot. at 10-11. According to another court, an attorney should be disqualified for violating the rules of professional conduct "when the integrity of the adversarial process is at stake." Papanicolaou v. Chase Manhattan Bank, 720 F. Supp. 1080, 1083 (S.D.N.Y. 1989)(citing Bd. of Ed. v. Nyquist, 590 F.2d 1241, 1246 (2nd Cir. 1979)); Pls.' Am. Mot. at 11. The court reasoned:

Although breaches of Model Rule 4.2 might not necessarily require disqualification, courts considering violations of the Rule cannot abdicate their roles as guarantors of fair process. If a lawyer's violation of Model Rule 4.2 might taint the trial, the lawyer should be disqualified. Id. at 1084; Pls.' Am. Mot. at 11.

The court also recognized that where information obtained in violation of Rule 4.2 goes to the heart of a lawsuit, an attorney had to be disqualified "to protect [the adverse party] from any unfair advantage [they] might have achieved by the improper meeting." Id. at 1085 (citations omitted); Pls' Am. Mot. at 11.

Plaintiffs assert that Mr. Kinsella and his law firm gained an unfair advantage by virtue of information that they obtained with respect to Plaintiffs through the undercover investigations. Pls.' Am. Mot. at 11. Plaintiffs argue that the evidence obtained in violation of Rule 83.54.2 goes to the heart of the lawsuit. Id. Plaintiffs, thus, argue that because they do not know the extent of the information Defendant and its counsel obtained as a result of the investigations, that nothing short of disqualification can "protect [Plaintiffs] from any unfair advantage [Mr. Kinsella, Pitts & Pousti might have achieved by the improper meeting(s). Nyquist, 590 F.2d at 1246.

Plaintiffs argue that Defendant's affirmative defense that it ". . . exercised reasonable care to prevent and promptly correct harassing behavior and that Plaintiffs reasonably failed to take advantage of the preventive and corrective opportunities or to avoid harm otherwise" should be stricken pursuant to Rule 37(b)(2). Pls.' Am. Mot. at 12; Ex. V(Amended Answer and Affirmative Defenses), p. 33, ¶ 7. Plaintiffs assert that the affirmative defense should be stricken because Defendant and its counsel impaired Plaintiffs' ability to conduct discovery and prepare their case by withholding documents and creating a false privilege log. Pls.' Am. Mot. at 12. Plaintiffs deposed Defendant's employees without a full understanding of the evidence. Id. Moreover, the information pertinent to Defendant's affirmative defense was not produced until eight days prior to the close of discovery. Id. Plaintiffs, therefore, assert that striking Defendant's affirmative defense pursuant to Rule 37(b)(2)(C) is an appropriate sanction. Id. at 12-13. Crown Life Ins. Co. v. Craig, 995 F.2d 1376 (7th Cir. 1993)(court upheld default judgment for wilful violation of discovery rules).

Plaintiffs contend that Defendant and its counsel should be ordered to pay for all discovery. Pls.' Am. Mot. at 13. Plaintiffs assert that they did not have the investigative reports (produced on May 23, 2001) containing racially motivated and discriminatory comments when they conducted depositions of Defendant's management, former employees, and experts. Pls.' Am. Mot. at 13-14. Plaintiffs cite to nine incidents of racially motivated and discriminatory conduct identified in the reports that they were not aware of when they completed discovery. Id. Plaintiffs assert that pursuant to Rule 37(b)(2), they should be awarded attorney's fees and costs for all depositions taken to date. Id. at 14-15. In addition, Plaintiffs assert that Defendant should be liable for all continuing discovery costs. Id. Plaintiffs also request additional time to conduct discovery (discovery cutoff was June 1, 2001) to name additional witnesses, supplement experts' reports, etc. Id. 15-16.

Plaintiffs argue that any evidence obtained in violation of Rule 83.54.2 (e.g., information improperly withheld and falsely concealed, Plaintiffs' statements to investigators, any information conveyed to Defendant and its counsel), and not produced until May 23, 2001 should not be introduced. Pls.' Am. Mot. at 15. Plaintiffs, therefore, assert (1) that Defendant should be sanctioned under Rule 37(b)(2)(B) for withholding documents and producing a misleading and false privilege log (asserted, supra, in argument (3), and (2) that additional sanctions (listed on p. 17) should be imposed by the court. Pl.'s Am. Mot. at 17.

I. Defendant's Memorandum in Opposition to Plaintiffs' Amended Motion for Sanctions and to Disqualify.

Defendant asserts that Plaintiffs' amended motion ignores or intentionally overlooks numerous facts and circumstances that they either knew about or should have known about. Def.'s Mem. at 2. For instance, Plaintiffs were aware of the May 24, 2001 deposition of Mr. Perry Myers, the owner of the detective agency, Myers Service, Inc. ("Myers") who performed the undercover investigation. Id. Defendant asserts that, in his deposition, Mr. Myers demonstrated that there was no factual basis for the Plaintiffs' statements concerning Mr. Kinsella. Id. Defendant also contends that Plaintiffs never took depositions of any other individuals who performed the undercover investigations. Id. Moreover, Plaintiffs fail to mention that the undercover reports were disclosed before May 23, 2001 when Defendant asserted a work product privilege regarding them. Id. The District Judge, however, ...


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