dwt.com Blurred Lines: Ethical Considerations in the Representation of Individuals & Corporate Entities 1 Michael A. Aparicio, Of Counsel, Davis Wright Tremaine LLP Lisa Barrow, Senior Counsel, Kaiser Foundation Health Plan, Inc. Lori Roeser, Associate General Counsel, Seyfarth Shaw LLP 4 th Annual January CLE Marathon Thursday, January 15, 2015

dwt.com Overview  Examination of the considerations and ethical dilemmas presented when: – An attorney is representing the company as well as an individual; and – A company representative’s interests may be adverse to the company.  Considerations: – Confidentiality – Loyalty – Attorney-Client Privilege 2

dwt.com 3 Representing Individuals In Litigation Examining the considerations and ethical dilemmas presented when an attorney is representing a company as well as an individual in litigation

dwt.com Representing Individuals In Litigation  Yanez v. Plummer, 221 Cal. App. 4 th 180 (3d Dist. 2013) – Workplace injury where Michael Yanez (plaintiff) was the only potential witness to an accident involving a coworker (Garcia) – The defendant-employer (Union Pacific) claimed that Garcia had not been injured – Yanez had given two sworn statements to Union Pacific First Statement: suggesting did not actually see Garcia’s accident Second Statement: stating he had actually seen the accident – Yanez was deposed by Garcia’s attorney 4

dwt.com Representing Individuals In Litigation  Yanez v. Plummer, 221 Cal. App. 4 th 180 (3d Dist. 2013) – Before the deposition, Yanez expressed concern to the Union Pacific in-house attorney (Plummer) about not being represented by an attorney – Yanez also stated that his testimony would not likely be favorable to the company, and he was therefore worried about his job – Plummer told Yanez not to worry, that he (Plummer) would be Yanez’s lawyer because Yanez was a Union Pacific employee, and if he testified truthfully, his job was safe – Plummer also confirmed with Yanez before the deposition that he had not actually seen the accident 5

dwt.com Representing Individuals In Litigation  Yanez v. Plummer, 221 Cal. App. 4 th 180 (3d Dist. 2013) – Yanez testified consistently: he had not actually seen the accident – Garcia’s attorney got Yanez to state that he was aware of the accident right after it happened – Plummer impeached Yanez using the second sworn statement (“I saw Boby [Garcia] slip & fall down on oil soaked floor”) 6

dwt.com Representing Individuals In Litigation  Yanez v. Plummer, 221 Cal. App. 4 th 180 (3d Dist. 2013) – After the deposition, Yanez was subjected to discipline for “dishonesty” based on his sworn statements and deposition testimony – Yanez was fired – He sued Plummer for malpractice, claiming Plummer violated ethical obligations when Plummer cross-examined Yanez in deposition, eventually resulting in termination – The trial court issued summary judgment – The Court of Appeal reversed 7

dwt.com Representing Individuals In Litigation  Yanez – What Went Wrong? – Conflicts Yanez and Union Pacific occupied adverse positions regarding Garcia's FELA lawsuit against Union Pacific: “Yanez — working with Garcia when Garcia was injured, and the only percipient witness to Garcia's accident — was aware of several unsafe work conditions that may have contributed to Garcia's injury.” Plummer was aware of the adversity before the deposition—the second sworn statement Plummer did not advise Yanez of the conflict Plummer did not obtain a written waiver of the conflict – Loyalty? – Confidentiality? 8

dwt.com Representing Individuals In Litigation  Yanez – What Went Wrong? – Cal. Rule of Prof. Conduct 3-600: (E) A member representing an organization may also represent any of its directors, officers, employees, members, shareholders, or other constituents, subject to the provisions of rule – Cal. Rule of Prof. Conduct 3-310: (C) A member shall not, without the informed written consent of each client: (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or (2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or... 9

dwt.com Representing Individuals In Litigation  Yanez – What Else Could Have Gone Wrong? – At trial, presumably after the “limited” representation for deposition only has concluded, could Plummer impeach Yanez? – Lawsuit was about Yanez’ termination. What if Yanez had not been terminated as a result of this case, but instead terminated later for other reasons? Would Plummer be precluded from representing the company in Yanez’ wrongful termination claim? – Is Attorney-Client Privilege between Union Pacific and Yanez joint, and therefore no privilege? – Did Plummer also have to obtain informed written consent from Union Pacific? – What if Yanez had disclosed to Plummer that he and Garcia had set out all along to manufacture Garcia’s injury? Could Plummer use that disclosure against Yanez? Against Garcia in the lawsuit? 10

dwt.com Representing Individuals In Litigation  Practical Take-Aways – Avoid limited purpose “deposition only” representations altogether, particularly where interests are not 100% aligned – Provide written disclosure of potential conflicts – Get a written waiver – Make sure your client (Company) also recieves disclosure and provides waiver – Include an Advance Waiver, allowing you to continue to represent the Company if potential conflict turns into actual – Send a “disengagement” letter 11

dwt.com 12 Company Representatives With Adverse Interests Examining the considerations and ethical dilemmas presented when a company representative’s interests may be adverse to the company.

dwt.com Company Representative With Adverse Interests  Identifying the Client California Rule of Professional Conduct 3-600(A): In representing an organization, a member shall conform his or her representation to the concept that the client is the organization itself, acting through its highest authorized officer, employee, body, or constituent overseeing the particular engagement. 13

dwt.com Company Representative Potentially With Adverse Interests  Must Make Identity of Client Clear to Constituents California Rule of Professional Conduct 3-600(D): In dealing with an organization’s directors, officers, employees, members, shareholders, or other constituents, a member shall explain the identity of the client for whom the member acts, whenever it is or becomes apparent that the organization’s interests are or may become adverse to those of the constituent(s) with whom the member is dealing. The member shall not mislead such a constituent into believing that the constituent may communicate confidential information to the member in a way that will not be used in the organization’s interest if that is or becomes adverse to the constituent. 14

dwt.com Company Representative With Adverse Interests  Upjohn Warning (Upjohn Co. v. United States, 449 U.S. 383 (1981)) – Identify yourself as attorney for the company – Purpose of conversation is to provide legal advice to the company – Communication is privileged – Privilege belongs to the company  United States v. Ruehle, 583 F.3d 600 (9 th Cir. 2009) – Perils of not providing Upjohn warning. 15

dwt.com Company Representative With Adverse Interests  What if Executive or other Constituent Takes Action Adverse to the Company? California Rule of Professional Conduct 3-600(B): If a member acting on behalf of an organization knows that an actual or apparent agent of the organization acts or intends or refuses to act in a manner that is or may be a violation of law reasonably imputable to the organization, or in a manner which is likely to result in substantial injury to the organization, the member shall not violate his or her duty of protecting all confidential information as provided in Business and Professions Code section 6068, subdivision (e). 16

dwt.com Company Representative With Adverse Interests  Heightened Duty of Confidentiality in California ABA Model Rule 1.13: If a member acting on behalf of an organization knows that an actual or apparent agent of the organization acts or intends or refuses to act in a manner that is or may be a violation of law reasonably imputable to the organization, or in a manner which is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. California Rule 3-600(B): If a member acting on behalf of an organization knows that an actual or apparent agent of the organization acts or intends or refuses to act in a manner that is or may be a violation of law reasonably imputable to the organization, or in a manner which is likely to result in substantial injury to the organization, the member shall not violate his or her duty of protecting all confidential information as provided in Business and Professions Code section 6068, subdivision (e). 17

dwt.com Company Representative With Adverse Interests  California Business and Professions Code section 6068(e): It is the duty of a lawyer “to maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” 18

dwt.com Company Representative With Adverse Interests  The Rule Provides Guidance: – 3-600(B) the member may take such actions as appear to the member to be in the best lawful interest of the organization. Such actions may include among others: (1) Urging reconsideration of the matter while explaining its likely consequences to the organization; or (2) Referring the matter to the next higher authority in the organization, including, if warranted by the seriousness of the matter, referral to the highest internal authority that can act on behalf of the organization. – 3-600(C) If, despite the member’s actions in accordance with paragraph (B), the highest authority that can act on behalf of the organization insists upon action or a refusal to act that is a violation of law and is likely to result in substantial injury to the organization, the member’s response is limited to the member’s right, and, where appropriate, duty to resign in accordance with rule

dwt.com Conclusions  The answers are not black and white.  Half the battle is spotting the issues.  Seek guidance – outside counsel, senior in-house counsel. 20