Indergit v. Rite Aid Corporation et al
Filing
315
OPINION AND ORDER: I write to resolve the parties' dispute concerning whether counsel for defendants in other actions pending in California may directly contact and speak with three individuals who have opted in to the Fair Labor Standards Act, 29 U.S.C. §§201 et seq. ("FLSA"), claims asserted in this action without the presence of those individuals' counsel in this action. Accordingly, for all the reasons set forth above, I conclude that: Counsel for Rite Aid, oth er than Rite Aid's counsel in this action, may contact Lockhart, Gauger and Jens directly and interview them, limited to theirsupervision of plaintiffs in the California actions who are not parties in this action. (As further set forth in this Order.) (Signed by Magistrate Judge Henry B. Pitman on 10/31/2016) Copies Sent By Chambers (cf)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
YATRAM INDERGIT, on behalf
of himself and all others
similarly situated,
Plaintiff,
:
:
RITE AID CORPORATION and RITE
AID OF NEW YORK, INC.,
08 Civ. 9361 (JPO)(HBP)
:
-against-
:
OPINION
AND ORDER
:
:
Defendants.
:
-----------------------------------X
PITMAN, United States Magistrate Judge:
I.
Introduction
I write to resolve the parties' dispute concerning
whether counsel for defendants in other actions pending in
California may directly contact and speak with three individuals
who have opted in to the Fair Labor Standards Act, 29 U.S.C. §§
201 et seq. ("FLSA"), claims asserted in this action without the
presence of those individuals' counsel in this action.
For the
reasons set forth below, I conclude that they may, but with
certain restrictions.
II.
Facts
This action is brought under both the FLSA and the New
York Labor Law ("Labor Law") on behalf of current and former
Store Managers of Rite Aid stores.
Plaintiffs allege in princi-
pal part that defendants have mis-classified them as being exempt
from the overtime provisions of the FLSA and the Labor Law;
plaintiffs claim that although they were given the title of Store
Manager, in truth, they lacked the discretion to perform managerial duties and were not, therefore, exempt from the statutes'
overtime provisions.
Plaintiffs allege that Rite Aid's District
Managers exercised true managerial discretion and controlled the
actions of Store Managers to such a degree that the Store Managers cannot be found to be exempt employees under either the FLSA
or the Labor Law.
The action has been conditionally certified as
a collective action pursuant to 29 U.S.C. § 216(b) with respect
to the FLSA claim and certified as a class action pursuant to
Fed.R.Civ.P. 23(b)(3) with respect to the Labor Law claim; the
class certification is limited to liability issues only.
See
Indergit v. Rite Aid Corp., 293 F.R.D. 632 (S.D.N.Y. 2013).
than 200 plaintiffs have "opted in" and joined in the FLSA
claims.
2
More
In addition to this action, there are a number of
individual- and multi-plaintiff actions pending in California
asserting similar misclassification claims under the California
counterpart to the Labor Law; the plaintiffs in those California
actions have not opted in to the collective FLSA claim asserted
in this action.
In connection with its efforts to prepare for trial in
these California actions, Rite Aid Corporation ("Rite Aid") seeks
an Order declaring that it may contact and speak with three
individuals -- Steven Lockhart, Nicholas Gauger and David Jens -outside the presence of counsel for the collective and the class
in this action.
Lockhart, Gauger and Jens were formerly Store
Managers and were subsequently promoted to District Managers; as
District Managers, they supervised a number of the plaintiffs in
the California actions.
Lockhart is still employed by Rite Aid
as a District Manager; Gauger and Jens are no longer employed by
Rite Aid.
Lockhart, Gauger and Jens have all opted into the FLSA
collective in this action based on their prior employment as
Store Managers1 and all have expressed a desire to have counsel
1
Rite Aid originally sought leave to speak with a fourth
individual -- David Vandecaveye. Vandecaveye was formerly a
Store Manager in California who was also promoted to District
Manager; he had opted in to the FLSA claim in this action.
Vandecaveye has recently withdrawn from the collective and is,
(continued...)
3
present during any interviews by Rite Aid's counsel.
Rite Aid's
counsel has represented that it wishes to speak with Lockhart,
Gauger and Jens only with respect to their employment as District
Managers and their supervision of plaintiffs in the California
actions; Rite Aid has represented that it will not pose any
questions to the three concerning their time as Store Managers.
In addition, Rite Aid has represented that if its application is
granted, all of its contact with Lockhart, Gauger and Jens will
be through counsel other than the counsel that represents it in
this action and that no information received from Lockhart,
Gauger and Jens in any interviews will be disclosed to Rite Aid's
counsel in this action.
III.
Analysis
The present dispute requires analysis of the ethical
limitations on an attorney's ability to contact directly a party
of adverse interest who is represented by counsel.
Because the dispute spans two jurisdictions -- New York
and California -- an initial issue would ordinarily be what
1
(...continued)
therefore, no longer a party in this action and no longer
represented by counsel for the collective in this action. There
is no dispute that Rite Aid's counsel is free to contact and
speak with Vandecaveye directly.
4
jurisdiction's rules of professional conduct apply.2
Happily,
that issue need not be resolved in this case because the relevant
rules of the two competing jurisdictions are the same in all
material respects.
New York Rule of Professional Conduct 4.2 provides:
(a) In representing a client, a lawyer shall not communicate or cause another to 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 prior consent of the
other lawyer or is authorized to do so by law.
*
*
*
Comment
[1] This Rule contributes to the proper functioning of
the legal system by protecting a person who has chosen
to be represented by a lawyer in a matter against
possible overreaching by other lawyers who are participating in the matter, interference by those lawyers
with the client-lawyer relationship, and un-counseled
disclosure of information relating to the representation.
[2] Paragraph (a) applies to communications with any
party who is represented by counsel concerning the
matter to which the communication relates.
*
*
*
2
Although no statute mandates the application of state rules
of professional conduct to actions pending in federal court,
neither side disputes their applicability here. See generally
United States v. Hammad, 858 F.2d 834, 837 (2d Cir. 1988);
Jackson v. Bloomberg, L.P., 13 Civ. 2001 (JPO), 2015 WL 1822695
at *2 (S.D.N.Y. Apr. 22, 2015) (Oetken, D.J.).
5
[4] This Rule does not prohibit communication with a
represented party or person or an employee or agent of
such a party or person concerning matters outside the
representation. For example, the existence of a controversy between a government agency and a private
party or person or between two organizations does not
prohibit a lawyer for either from communicating with
nonlawyer representatives of the other regarding a
separate matter. Nor does this Rule preclude communication with a represented party or person who is seeking advice from a lawyer who is not otherwise representing a client in the matter. A lawyer having independent justification or legal authorization for communicating with a represented party or person is permitted to do so.
*
*
*
[7] In the case of a represented organization, paragraph (a) ordinarily prohibits communications with a
constituent of the organization who: (i) supervises,
directs or regularly consults with the organization's
lawyer concerning the matter, (ii) has authority to
obligate the organization with respect to the matter,
or (iii) whose act or omission in connection with the
matter may be imputed to the organization for purposes
of civil or criminal liability. Consent of the organization's lawyer is not required for communication with
a former unrepresented constituent. If an individual
constituent of the organization is represented in the
matter by the person's own counsel, the consent by that
counsel to a communication will be sufficient for
purposes of this Rule. In communicating with a current
or former constituent of an organization, a lawyer must
not use methods of obtaining evidence that violate the
legal rights of the organization. See Rules 1.13, 4.4.
N.Y. Rules Prof'l Conduct 4.2, codified at 22 N.Y.C.R.R. §
1200.0.
Rule 2-100 of the California Rules of Professional
Conduct provides:
6
(A) While representing a client, a member shall not
communicate directly or indirectly about the subject of
the representation with a party the member knows to be
represented by another lawyer in the matter, unless the
member has the consent of the other lawyer.
(B) For purposes of this rule, a "party" includes:
(1) An officer, director, or managing agent of a
corporation or association, and a partner or managing agent of a partnership; or
(2) An association member or an employee of an
association, corporation, or partnership, if the
subject of the communication is any act or omission of such person in connection with the matter
which may be binding upon or imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission
on the part of the organization.
*
*
*
DISCUSSION
*
*
*
Paragraph (B) is intended to apply only to persons
employed at the time of the communication. (See Triple
A Machine Shop, Inc. v. State of California (1989) 213
Cal.App.3d 131 [261 Cal.Rptr. 493].)
*
*
*
See also Nalian Truck Lines, Inc. v. Nakano Warehouse & Transp.
Corp., 6 Cal. App. 4th 1256, 1261-62, 8 Cal. Rptr. 2d 467, 470
(2d Dist 1992) (finding that paragraph B is limited to current
control group members and current employees); accord
United States Equal Emp't Opportunity Comm'n v. Placer ARC, 147
F. Supp. 3d 1053, 1063-64 (E.D. Cal. 2015) (same).
7
To the extent that Rite Aid seeks to interview Lockhart, Gauger and Jens with respect to their supervision of the
plaintiffs in the California actions, Rite Aid's counsel may
contact these individuals directly because communications limited
to these individuals' work as District Managers does not relate
to the subject of collective counsel's representation.
Rite Aid
has represented that it seeks to speak with these three individuals solely about what they did as District Managers, supervising
the plaintiffs in the California action.
As noted above, the
plaintiffs in the California actions are not parties in this
action, and the extent of their discretion is, therefore, not a
subject of collective counsel's representation.
To the extent
Lockhart, Gauger and Jens worked as District Managers, they were
working in the precise position that plaintiffs claim possessed
true managerial control.
Thus, collective counsel cannot be
representing them with respect to their work as District Managers.
Rite Aid's representations that contact with these individ-
uals will be through counsel other than its counsel in this
action and that any information provided by these individuals
will not be shared with Rite Aid's counsel in this action provide
further protection against any possible overreaching by Rite Aid.
In addition, Rite Aid has the right to preclude collective counsel from attending its interviews with Lockhart, Gauger
8
and Jens.
To the extent Rite Aid's counsel seeks to speak with
Lockhart -- a current Rite Aid employee -- to prepare Rite Aid's
defense in the California actions, the conversation is shielded
by Rite Aid's attorney-client privilege.
"It is well established
that the privilege applies to communications between corporate
counsel and a corporation's employees, made 'at the direction of
corporate superiors in order to secure legal advice from counsel.'"
In re Gen. Motors LLC Ignition Switch Litig., 80 F. Supp.
3d 521, 527 (S.D.N.Y. 2015) (Furman, D.J.), quoting Upjohn Co. v.
United States, 449 U.S. 383, 394 (1981); accord Commodities
Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 348 (1985).
Although neither the Supreme Court nor the Court of Appeals have
reached the issue, it also appears that the privilege extends to
conversations between "corporate counsel and former employees of
the corporation, so long as the discussion related to the former
employee's conduct and knowledge gained during employment."
In
re Refco Inc. Sec. Litig., 07 MDL 1902 (JSR), 08 Civ. 3065 (JSR),
08 Civ. 3086 (JSR), 2012 WL 678139 at *2 (S.D.N.Y. Feb. 28, 2012)
(Rakoff, D.J.) (collecting cases); accord Admiral Ins. Co. v.
United States Dist. Court for Dist. of Arizona, 881 F.2d 1486,
1493 (9th Cir. 1989); In re Coordinated Pretrial Proceedings, 658
F.2d 1355, 1361 n.7 (9th Cir. 1981); In re Gen. Motors LLC
Ignition Switch Litig., supra, 80 F. Supp. 3d at 527.
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Thus, Rite
Aid's counsel's conversations with Gauger and Jens -- former
District Managers -- concerning their conduct and duties while
employed by Rite Aid would also be within the attorney-client
privilege.
Because the privilege is Rite Aid's and not the
personal privilege of Lockhart, Gauger or Jens, none of these
individuals has the ability to waive the privilege; only Rite Aid
can waive the privilege.
United States v. Chen, 99 F.3d 1495,
1502 (9th Cir. 1996) (former employee cannot waive corporation's
privilege); United States v. Ghavami, 882 F. Supp. 2d 532, 538
(S.D.N.Y. 2012) (Francis, M.J.); Winans v. Starbucks Corp., 08
Civ. 3734 (LTS)(JCF), 2010 WL 5249100 at *3 (S.D.N.Y. Dec. 15,
2010) (Francis, M.J.); see United States v. International Bhd. of
Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 119 F.3d
210, 214-15 (2d Cir. 1997) (corporation's privilege belongs to
corporation, not individual employees); United States v. Wells
Fargo Bank N.A., 12 Civ. 7527 (JMF), 2015 WL 3999074 at *2
(S.D.N.Y. June 30, 2015) (Furman, D.J.).
A necessary corollary of the present dispute is what
limits, if any, apply to collective counsel's ability to confer
with Lockhart, Gauger and Jens.
There are no limits on collec-
tive counsel's ability to confer with Lockhart, Gauger and Jens
regarding their work as Store Managers.
This is the very subject
of collective counsel's representation of Lockhart, Gauger and
10
Jens, and there appears to be no dispute that collective counsel
is free to speak with Lockhart, Jens and Gauger concerning this
period without restriction.
With respect to their work as District Managers,
different rules apply to Lockhart than apply to Jens and Gauger.
With respect to his work as a District Manager, Lockhart is a
current employee of a represented, adverse party.
As such,
absent a waiver from Rite Aid, Comment 7 to New York Rule of
Professional Conduct 4.2 and Rule 2-100(A) and (B)(1) of the
California Rules of Professional Conduct prohibit collective
counsel from contacting Lockhart directly with respect to his
duties as a District Manager, and collective counsel are also
prohibited from attempting to elicit from Lockhart any conversations he may have with Rite Aid's counsel concerning his work as
a District Manager.
As noted above, Lockhart's communications
with Rite Aid's counsel would be subject to Rite Aid's attorneyclient privilege, a privilege that Lockhart lacks the ability to
waive.
Winans v. Stabucks Corp., supra, 2010 WL 5249100 at *3.
Collective counsel have greater latitude with respect
to Gauger and Jens.
Because Gauger and Jens are former employ-
ees, the second sentence of Comment 7 to New York Rule of Professional Conduct 4.2 and the Discussion and the case law interpreting Rule 2-100 of the California Rules of Professional Conduct
11
demonstrate that there is no limitation on collective counsel's
contacting Jens and Gauger directly and asking them about their
duties as District Managers, notwithstanding the fact that Rite
Aid is represented.
However, because any conversations Jens and
Gauger may have had with Rite Aid's counsel -- whether before or
after their separation from Rite Aid -- are within Rite Aid's
attorney-client privilege, collective counsel cannot ask Jens or
Gauger about any conversations they may have had with Rite Aid's
counsel concerning their duties as District Managers.3
Winans v.
Stabucks Corp., supra, 2010 WL 5249100 at *3.
In support of their contention that they have the right
to be present during all interviews between Rite Aid's counsel
and Lockhart, gauger and Jens, collective counsel rely on
Jackson v. Bloomberg, L.P., supra, 2015 WL 1822695.
In that
case, plaintiffs -- employees of defendant who worked as Global
Customer Support representatives ("GCUS") -- alleged that they
had been improperly denied overtime premium pay in violation of
both the FLSA and the Labor Law.
Like this action, Jackson had
been conditionally certified as a collective action with respect
to the FLSA claim and certified as a Rule 23 class action with
3
In other words, collective counsel can ask Jens and Gauger
about what they did as District Managers; counsel may not,
however, ask Jens and Gauger what they told Rite Aid's counsel
regarding what they did as District Managers.
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respect to the Labor Law claim.
The issue before the court was
defendant's counsel's request for permission to contact ten
members of the certified class outside of the presence of plaintiff's counsel.
The ten individuals that defendants sought to
interview in Jackson had formerly been GCUS themselves and were
members of the collective and the class by virtue of that fact.
Like Lockhart, Gauger and Jens, the ten interview targets in
Jackson had been promoted to supervisory positions in which they
supervised other members of the collective and the class.
Defendant's counsel sought to interview them concerning their
supervision of other collective and class members.
The Honorable J. Paul Oetken, United States District
Judge, concluded that New York Rule of Professional Conduct 4.2
precluded the contact requested by defendant's counsel because
the contact would concern the subject of plaintiffs' counsel's
representation.
After noting that questions "whether conduct
implicating Rule 4.2 is permissible 'require[] a case-by-case
determination,'" 2015 WL 1822695 at *2, quoting Grievance Comm.
v. Simels, 48 F.3d 640, 649 (2d Cir. 1995), Judge Oetken analyzed
the issue as follows:
The only reason that Bloomberg wishes to speak with the
class member employees at issue here is that they
possess information germane to this lawsuit. Bloomberg
apparently plans to elicit that information by asking
these class members about their experience of supervising GCUS representatives. This line of questioning (as
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restricted by the Contact Order) might not directly
require the employees to talk about their own experiences during the time period for which they are class
members. . . . However, these questions would nonetheless concern the subject of the employees' representation because the central issues in this suit focus on
the employment and supervision of GCUS representatives.
See Campbell v. PricewaterhouseCoopers, LLP, No. CIV.
S-06-2376 (LKK/GGH), 2012 WL 1355742, at *2 (E.D. Cal.
Apr.18, 2012) (rejecting a similar argument). That
Bloomberg's proposed questioning of these class members
would be focused on their experience as supervisors of
GCUS representatives does not make that questioning any
less about the "subject of the representation";
Bloomberg's contrary reading is too narrow to be a fair
reading of the phrase. Accordingly, Rule 4.2 applies
here.
2015 WL 1822695 at *3 (footnote omitted).
I submit that Jackson is distinguishable from the
present case.
The individuals supervised by the interview
targets in Jackson were plaintiffs in that action.
The informa-
tion defense counsel sought to acquire in Jackson related to the
scope of the discretion enjoyed by the plaintiffs in that action
-- the precise subject matter of claims in Jackson.
In this
case, on the other hand, Rite Aid seeks to interview Lockhart,
Gauger and Jens concerning their supervision of store managers
who are not plaintiffs in this action and whose discretion is not
at issue in this action.
Collective counsel in this action is
not advocating for and will not be offering evidence concerning
the Store Managers about whom Lockhart, Gauger and Jens will be
interviewed.
Limiting Rite Aid's direct contact to the period in
14
which Lockhart, Gauger and Jens were District Managers and the
additional conditions that all contact will be through counsel
other than Rite Aid's counsel in this action and that Lockhart,
Gauger and Jens' statements will not be disclosed to Rite Aid's
counsel in this action provides additional protection against
possible overreaching.
Although Lockhart, Gauger and Jens played varying roles
make this a close case, for the reasons set out above, I do not
think that the applicable rules of professional conduct preclude
all direct contact between Rite Aid and these individuals.4
IV.
Conclusion
Accordingly, for all the reasons set forth above, I
conclude that:
1.
Counsel for Rite Aid, other than Rite Aid's
counsel in this action, may contact Lockhart, Gauger
and Jens directly and interview them, limited to their
supervision of plaintiffs in the California actions who
are not parties in this action.
4
In the interest of clarity, I note that my ruling here is
limited to the issue of whether Rite Aid may contact Lockhart,
Gauger and Jens outside the presence of counsel for the
collective. Because the issue is not before me, I express no
opinion on whether Lockhart, Gauger and Jens need to respond to
any contact from Rite Aid.
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2.
Any statements made to Rite Aid's counsel by
Lockhart, Gauger or Jens shall not be communicated,
either directly or indirectly, to Rite Aid's counsel in
this action.
3.
Counsel for the plaintiffs in this action are
prohibited from contacting Lockhart directly concerning
his employment by Rite Aid as a District Manager and
from questioning Lockhart concerning any conversation
he may have with Rite Aid's counsel concerning his work
as a District Manager.
4.
Counsel for the plaintiffs in this action are
prohibited from questioning Gauger and Jens concerning
any conversations they may have with Rite Aid's counsel
concerning their work as District Managers.
Dated:
New York, New York
October 31, 2016
SO ORDERED
H2/i'iiTii7 _/~~
United States Magistrate Judge
Copies transmitted to:
All Counsel
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