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In re Environmental Insurance Declaratory Judgment Actions

Decided: May 6, 1991.


Weiss, L., J.s.c.


These consolidated cases involve environmental insurance declaratory judgment actions. Without encumbering the record, it is apparent to all parties in these consolidated cases that pre-trial discovery will be voluminous, extended and, to a great degree, burdensome to the parties and the court. At the last liaison committee meeting, it was brought to the court's attention that the issue of interviewing former employees of the various insureds was becoming a matter of contention which had to be addressed and accordingly resolved. Both plaintiffs' and defendants' counsel have sought the guidance of this court on how to conduct such interviews to avoid any subsequent claims of breaching the rules of professional conduct (hereinafter "RPC").

All parties recognize that the standard to apply to the issue before this court has been clearly enunciated by Judge Vincent J. Poppiti.

In the courts of Delaware (and also in New Jersey), the hallmark of justice under the law in civil litigation cannot be expediency marred by deception, but must rather be truth -- to require anything less would, in my view, debase the system and belittle all who serve it. [ Monsanto v. Aetna Casualty & Surety Co., 593 A.2d 1013, 1022 (Del.Super.Ct.1990).]

The following is this court's opinion with respect to this issue.

Discovery is a necessary tool to allow all parties to prepare a case for trial. Free and unencumbered investigation has been the guiding principal in the preparation of a lawsuit. The New Jersey rules of civil procedure incorporate said policy to prevent an adversary from hiding information which will be used to ambush a party at the time of trial, i.e., interrogatories, depositions, production of documents and supplying expert reports. For all practical purposes, there exists no reason why an attorney should come before the court without full knowledge

of his adversary's case and the witnesses who will testify. Many judges believe that discovery rules, in their present day context, have become a method of beating an adversary into submission and forcing a settlement of the case rather than incurring the exorbitant expense that exists in conducting discovery in a complex case.

The hallmark of any action taken by an attorney is to conduct himself at the highest level of fairness and integrity. These very same standards are also translated to an attorney's clients and any other persons involved in pursuing a claim on a party's behalf. These standards are set forth in the RPC, specifically 4.1, 4.2, 4.3 and 3.4. In order to understand the purpose of these rules, it is necessary to understand the roles these parties are playing in the discovery process.

As part of their duty to defend, insurers have a duty to investigate the factual allegations of any underlying liability action which could be brought against the policyholder by third parties. In addition, insurers also have a duty to investigate whether coverage exists under the policy for a particular claim. During this investigation process, the policyholder has a duty to cooperate with its insurers and its agents/employees as to the factual allegations of any possible underlying liability actions. Whether a duty to cooperate with an insurer with respect to a coverage investigation exists is not as clear.

Once an insurer has denied coverage, the policyholder no longer has a duty to cooperate with its carrier in the course of their investigation. Once coverage has been denied, any insurance company contact with the insured becomes improper. As such, carriers may resort to using the claim investigation process as a means of obtaining pre-litigation coverage discovery after a coverage determination has been made. By engaging in such conduct, insurers are able to prepare their case while the insured remains unaware that the lawsuit is in the offing. The propriety of such conduct raises many questions.

In this respect, the issue of the proper use of investigators by carriers in the course of a coverage lawsuit surfaces. These investigators have been hired by attorneys or their clients to solicit information from former employees of policyholders. Further, many of these investigators have allegedly undertaken ex parte interviews without informing the former employees of the interests they represent and of the adverse nature of those interests. As such, these investigators are considered to be engaged by the attorney and it is incumbent upon the attorney to inform and enforce the standards of professional conduct as set forth in the RPC. This standard is addressed in RPC 5.3(b) which states in pertinent part:

Responsibilities Regarding Nonlawyer Assistants. . . .

(b) a lawyer having direct supervisory authority over the non-lawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer. . . .

There is no doubt that irrespective of whether the carrier or the attorney hired the investigator, it is the duty and responsibility of the attorney to insure proper conduct and compliance with the RPC. As the court in Upjohn v. Aetna Casualty & Surety Co., (W.D.Mich. July 13, 1990), aff'd., (W.D.Mich. Jan. 18, 1991), 768 F. Supp. 1186, stated with respect to abiding by the Michigan Code of Professional Conduct.

It is improper for a lawyer or his or her representative to obtain information without following the guidelines set forth in the advisory opinion and then use this information in a lawsuit. Ethical considerations are as applicable to representatives of lawyers as to lawyers themselves. Further, not to impose these rules when a lawyer's investigator acts improperly would render the rules relatively meaningless. [(slip opinion at 2)]

Accordingly, an attorney must insure that his clients and any other representatives abide by the standards set forth in the RPC.

RPC 4.2 does not bar ex parte communications with former employees.

Having determined that there exist guidelines which must be followed by both direct and indirect parties to a lawsuit, the next issue to be resolved is whether former employees

are parties to a lawsuit. With respect to this question, it is necessary to address RPC 4.2 which states:

Communication with a Person Represented by Counsel

In representing a client, a lawyer shall not communicate about the subject of the representation with a party 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 by law to do so.

Historically, an attorney has been barred from discussing the subject matter of a proceeding with an adverse party who is represented by counsel. As such, RPC 4.2 in general terms precluded an attorney or someone acting on his behalf, from communicating with a party that the attorney knows is represented by counsel. "The purpose of this restriction is to preserve the integrity of the attorney-client relationship by protecting a represented party from the superior knowledge and skill of opposing counsel." Curley v. Cumberland Farms, Inc., 134 F.R.D. 77, 85 (D.N.J.1990). See generally Frey v. Department of Health & Human Services, 106 F.R.D. 32 (E.D.N.Y.1985); Wright v. Group Health Hospital, 103 Wash. 2d 192, 691 P. 2d 564 (1984); University Patents, Inc. v. Kligman, 737 F. Supp. 325 (E.D.Pa.1990).

However, it is important to note that this rule is silent as to contact with former employees. Although the language of the rule does not address former employees, plaintiffs in these consolidated cases contend that the rule must be read to encompass certain types of former employees. In light of this argument, it is ...

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