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
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.)
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.
(4) Plaintiffs' fourth argument is that Mr. Kinsella and his law firm
should be disqualified and otherwise sanctioned due to their wilful
violation of LR. 83.54.2 (plus Plaintiffs' counsel did not authorize
to have any contact with their clients). Ex. C (Transcript of
April 3. 2001), p. 10; Ex. D; Pls.' Am. Mot. at 10. Plaintiffs' argue that
sanctions are warranted because of the court's July 10, 2001 order,
specifically finding that "Attorney Kinsella has acknowledged that the
undercover investigation was initiated at his instance." Order at 3. Pls'
Mot. at 2, 10. Moreover, the court further recognized that "Mr. Kinsella
was involved in directing the investigation." Id. Plaintiffs, further,
contend that because Defendant and its counsel willfully withheld
investigative reports, concealed their ethical violations for two years,
and made misrepresentations regarding the covert investigation, sanctions
should be imposed on Defendant and its counsel. Pls.' Am. Mot. at 10.
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, ...