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February 05, 2014 Articles

Ethical Issues in Communications with Proposed Class Members

Practical considerations prior to establishing direct communication.

By Arthur Owens

As class-action filings become commonplace, general practitioners should be aware of certain ethical and practical issues that may arise with respect to attorney communications to putative, or prospective, class members before a class-certification motion under Rule 23 is made. Before contacting putative class members, defense counsel and proposed class counsel must consider ethical and practical issues.. The determination as to whether the proposed class members are actually parties to the action is not resolved until the court considers a motion for class certification, which does not generally occur until significant discovery has been exchanged between the parties. The ethical issues related to attorney communications with proposed class members are generally caused by the uncertainty as to the status of these putative class members in this intervening or limbo period.

Proposed class counsel’s communication with members of the proposed class can implicate ethical issues concerning solicitation of clients and the fairness of the proceeding. Defense counsel’s communication with members of the proposed class can also raise ethical questions concerning the prohibition on communication with represented parties, as the proposed class members can be deemed clients of class counsel. Additionally, there are concerns related to the content of individual settlement communications between defense counsel and members of the putative class.

The standard ethical prohibitions on ex parte communications with represented parties remain firmly in place in the context of a class-action suit. See ABA Model Rules of Prof’l Conduct R. 4.2. However, the issue can become unclear where an attorney seeks to communicate with a member of a proposed class before a class is certified by the court. Courts generally distinguish between communications occurring before a class is certified pursuant to Rule 23 and those occurring after a certification motion is granted. In the pre-certification context, the proposed class counsel is generally considered only to represent the named parties but may owe a fiduciary duty to the entire class after filing a class-action complaint. In re Gen. Motors, 55 F.3d 768, 801 (3d Cir. 1995).

An ABA formal opinion reached the conclusion that communications between defense counsel and putative class members do not presumptively violate the Models Rules of Professional Responsibility because there is no attorney-client relationship between plaintiffs’ counsel and members of an un-certified, putative class. See ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 07-445 (2007). Despite this distinction, courts maintain the authority to regulate and censure attorneys who send deceptive communications, such as misleading communications in a pre-certification context. See Fla. Bar v. Went For It, Inc., 515 U.S. 618, 115 S. Ct. 2371, 132 L. Ed. 2d 541 (1995). Further, Rule 23(d) explicitly authorizes the court to regulate communications with putative class members even before class certification. Under Rule 23(d)(1), courts are permitted to “impose sanctions on the representative parties or intervenors” and “deal with simple procedural matters.” In this regard, district courts have both the duty and the broad discretion to limit such communications, but this discretion is not without limits. See Bobryk v. Durand Glass Mfg. Co., 2013 WL 5574504 (D.N.J. 2013). Courts will consider whether the communications at issue were coercive or misleading or seeking to deter individuals from participating in the collective action. Courts will also consider First Amendment issues in determining whether such communications should be curtailed.

Proposed Class Counsel Issues
Proposed class counsel faces some distinct hurdles with respect to the decision to communicate with proposed class members before certification is granted. First, class counsel should take steps to ensure that such communications do not have the effect of creating an attorney-client privilege, which could give rise to malpractice liability or conflict-out class counsel from representing plaintiffs with adverse interests in subsequent proceedings. In Barton v. United States District Court for the Central District of California, 410 F.3d 1104, 1107 (9th Cir. 2005), the court held that questionnaire responses by class members that were solicited by the website of an attorney who contemplated a class-action suit “were submitted in the course of an attorney-client relationship” and therefore were protected attorney-client communications. The court focused on the ambiguous manner in which the website disclaimer was drafted, and reasoned that the prospective class members had reason to believe an attorney-client relationship was formed. To avoid such issues, counsel’s disclaimer should focus on the expectations and rights of the prospective class member who answers the question.

Second, particularly in the area of employment-discrimination class-action suits, defense counsel may seek to preclude class counsel from communicating with proposed class members who remain employees of the defendant-employer, who is a represented party. In this context, the plaintiff does have a legitimate need to access information to support its anticipated motion for class certification. Under Rule 23, plaintiffs must demonstrate the prerequisites of numerosity, commonality, typicality, and adequacy of representation to the class. However, where such ex parte communications are directed to management at the defendant-employer, sanctions have been considered and granted. Hammond v. City of Junction City, Kan., 126 F. App’x 886, 889 (10th Cir. 2005); Orlowski v. Dominick’s Finer Foods, Inc., 937 F. Supp. 723, 730 (N.D. Ill. 1996). In this regard, attorneys should be cautioned to not direct ex parte communications to any prospective class member who is also possibly a member of the litigation control group of the defendant.

Finally, class counsel is not permitted to use the class-action process as a method to solicit additional clients and may be precluded from obtaining the identities of putative class members in discovery. Flanigan v. Am. Fin. Sys. of Ga., Inc., 72 F.R.D. 563 (M.D. Ga. 1976). Outside attorneys may be precluded from soliciting putative class members to opt out of a proposed settlement and to pursue direct litigation against the defendant with their firm. In re McKesson HBOC, Inc. Secs. Litig., 126 F. Supp. 2d 1239 (N.D. Cal. 2000).

Defense-Counsel Issues
One of the primary ethical issues for defense counsel concerns communications with proposed class members that are intended to elicit substantive admission from the proposed class, which can be used to dismiss the case or oppose class certification. The touchstone case on this issue is Gulf Oil v. Bernard, 452 U.S. 89 (1981), where the U.S. Supreme Court rejected the argument that defense counsel was per se precluded from communicating with class members before class certification. However, the Court determined that district courts can properly limit pre-certification communications from defense counsel that misrepresent the status of the case or are designed to confuse the putative class members. However, the Gulf Oil Court determined that a district court’s decision to curtail counsel’s communications with the proposed class must be based on “a specific record showing by the moving party of the particular abuses” caused by the disputed or potential communications. The Court reasoned that “such weighing—identifying the potential abuses being addressed—should result in a carefully drawn order that limits speech as little as possible, consistent with the right of the parties under the circumstances.” Thereafter, federal courts have relied on this decision to both limit and allow communications between defense counsel and putative class members, based on the particular facts and the communications sought in each case.

Defense counsel should also be aware of potential restrictions on communications to putative class members that seek to encourage or motivate individual settlement. Rule 23(e) requires court approval of class-action settlements to guard against ineffective representation of absentees’ interests by the representative parties and class counsel. While offers from the defendant to settle individual class claims are not regulated by Rule 23(e), courts are entitled to regulate the content of such settlement offers from defense counsel to prevent the “misleading of class members about the strength and extent of their claims and the alternatives for obtaining satisfaction of those claims.” In re Gen. Motors Corp. Engine Interchange Litig., 594 F.2d 1106, 1139–40 (7th Cir. 1979). Offers to settle from defense counsel to putative class members should contain sufficient information to determine “(1) whether to accept the offer to settle, (2) the effects of settling, and (3) the available avenues for pursuing his claim if he does not settle.” Coercion and a “clear record of abuses” will be established when the court determines that the settlement communications serve to “overpower[] the free will or business judgment of the potential class members.” Keystone Tobacco Co., Inc. v. U.S. Tobacco Co., 238 F. Supp. 2d 151, 158 (D.D.C. 2002).

Practitioners should be aware of the above-noted potential limitations on counsel’s ability to communicate freely with putative class members. As is true in nearly all situations, coercive communication or those that seek to impinge on the fairness of the class-action proceeding should be avoided altogether. The circumstances, results, and consequences of communications to putative class members should be considered in advance of engaging in the communication.

Keywords: litigation, ethics, professionalism, class actions

Arthur Owens is a member of Lum, Drasco, & Positan LLC, in Roseland, New Jersey.

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