I know it’s technically allowed in some instances but I’ve never seen a situation where contacting your opponent’s employees directly (as opposed to, e.g., seeking their depositions) did any good. So I avoid it.
The district court (S.D.N.Y.) recently issued an opinion (available here) in Dareltech v. Xiaomi Inc. denying a motion to disqualify plaintiff’s counsel. Defendant sought disqualification based on plaintiff’s counsel interviewing and recording defendant’s “company representatives at a promotion exhibition without disclosing affiliation in a pending litigation matter[.]”
The court found that, “in gathering information at the event, [plaintiff’s] counsel acted inconsistently with professional ethics, and that [plaintiff] is precluded from using the collected information in further proceedings.” But plaintiff’s counsel’s “conduct does not require disqualification at this time[.]”
The conduct-at-issue arose in the context of defendant’s counsel advising plaintiff’s counsel that defendant believed the Court lacked personal jurisdiction over it because it did not have any Untied States-based subsidiaries. Thereafter, plaintiff’s counsel and his investigator attended a promotional event held by defendant in New York City. They spoke with defendant’s personnel and recorded the conversations on mobile phones. In one recording, an individual stated that he was “with” defendant at its “N.A. division” based in New York City and that it is “kind of like a secret operation.” A week later, defendant submitted a declaration from its Director of North American Business that defendant “does not maintain any offices in the State of New York” nor does it “have any registered agents, sales agents, or employees located in New York.”
After receiving the declaration, plaintiff’s counsel wrote that “[i]t is now clear that your client likely perjured himself when he submitted a declaration with false statements” and presented an “increased settlement demand,” consistent with plaintiff’s counsel’s earlier e-mail “which promised that his prior settlement demand would expire” on a certain date and that “a higher demand would replace it.”
(Side note: I’ve never seen this type of “higher” demand work. Most of my defense clients get a good chuckle out of this tactic. I’d say that the better rule of thumb is that when a plaintiff makes an offer, that offer generally becomes the new ceiling as to what a defendant would ever pay.)
The court ultimately found as follows:
- Plaintiff’s argument that “the conversations did not concern the subject matter of the representation” was unpersuasive. Although the conversation did not involve “the patents and products at issue in this case,” inquiries on defendant’s operations were “directly relevant to [defendant’s] anticipated personal jurisdiction motion.”
- Plaintiff’s counsel was not acting “as a member of the general public attending the event” such that he would be outside of the ethical rules. Here, plaintiff’s counsel “went beyond general attendance or commercial transactions and asked specific, targeted questions related to the scope of [defendant’s] business operations in New York and responsive to proving jurisdiction in this forum.”
- Plaintiff’s counsel’s lack of disclosure of his affiliation with plaintiff was “problematic” and “inconsistent with Rule 4.3.”
- The recordings were undisclosed and the “capture of video constitutes misrepresentation inconsistent with Rule 8.4.” As such, the court precluded plaintiff from further use of information obtained at the promotional event in any subsequent proceeding.
- Because the defendant did not show that plaintiff’s counsel’s conduct “will taint any subsequent trial proceedings”, disqualification was “not warranted at this junction.”
- Finally, the court ruled that plaintiff “shall not engage in any further ex parte contacts with [defendant’s] personnel without notice to [defendant] or permission from this Court.”