United States of America v. Sierra Pacific Industries et al, No. 2:2009cv02445 - Document 92 (E.D. Cal. 2010)
Court Description: ORDER granting 68 Motion for Protective Order and granting in part 69 Motion for Discovery. Signed by Magistrate Judge Edmund F. Brennan on 11/15/10. (Hinkle, T)
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United States of America v. Sierra Pacific Industries et al Doc. 92 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 UNITED STATES OF AMERICA, 11 Plaintiff, 12 No. CIV S-09-2445 JAM EFB vs. 13 SIERRA PACIFIC INDUSTRIES, et al., 14 Defendants. ORDER / 15 This matter was before the court on September 22, 2010, for hearing on Sierra Pacific 16 17 Industries’ (hereafter “SPI”) August 27, 2010 motion for discovery and the United States’ 18 August 25, 2010 motion for a protective order. Assistant U.S. Attorneys Kelli Taylor and Todd 19 Pickles appeared on behalf of the plaintiff, the United States. Attorneys William Warne, Mike 20 Thomas, Annie Amaral, and Meghan Baker appeared on behalf of defendant SPI. Attorney 21 Richard Linkert appeared on behalf of the Walker defendants and related trusts. 22 I. SPI’s Motion for Discovery Partially Granted For the reasons stated on the record, the motion for discovery was partially granted and 23 24 partially denied. The court granted SPI two days and four hours to depose Joshua White and the 25 same amount of time to depose Dave Reynolds. The court granted SPI an additional ten 26 //// 1 Dockets.Justia.com 1 depositions beyond the number of depositions the parties had already agreed upon,1 as discussed 2 at the hearing. That bench ruling is confirmed by this written order. 3 II. 4 5 6 United States’ Motion for Protective Order is Granted Following extended oral argument, the court submitted for further consideration the United States’ motion for a protective order. That motion is now granted. The United States argues that an attorney for SPI, Michael Schaps, questioned Forest 7 Service employees regarding matters SPI considers relevant to this litigation, and that this 8 contact violated the rules of professional responsibility barring contact with represented parties. 9 It is undisputed that Schaps did communicate with Forest Service employees, and that the 10 communication occurred without notice to or consent from the attorneys representing the United 11 States and without resort to the Federal Rules of Civil Procedure as they pertain to discovery. It 12 is also undisputed that Schaps did not inform those employees that he was an attorney 13 representing SPI in this pending litigation. However, SPI asserts that the communications were 14 protected by the First Amendment and thus did not violate professional responsibility rules. 15 The United States seeks an order requiring counsel for SPI to produce a list of all of 16 plaintiff’s employees who have been contacted by SPI’s counsel or persons acting at the 17 direction of counsel, together with the dates of the contacts, and a description of what 18 representations were made by counsel or counsel’s agent(s) before the employees were 19 questioned. The United States also requests that counsel for SPI be ordered to produce to the 20 plaintiff the originals and all copies of all notes or other documents that concern or relate to the 21 communications by plaintiff’s employees and SPI’s counsel and/or agents. The motion also 22 seeks an order requiring SPI’s counsel (including those acting on behalf of counsel) to inform 23 any federal employee they contact in the course of this litigation that they are attorneys (or 24 25 26 1 The United States had already agreed to 15 federal depositions, in addition to the 23 depositions that were scheduled or had been taken in state court, and three additional depositions that were to be taken as expert depositions. 2 1 representatives of attorneys) working on behalf of SPI in litigation brought by plaintiff against 2 SPI involving the Moonlight Fire. Finally, the motion seeks an order precluding SPI from using 3 information obtained by the ex parte communications with the Forest Service employees. 4 A. The Parties’ Arguments 5 The parties have described in the Joint Statement filed September 15, 2010 their 6 respective versions of what occurred. Dckt No. 78 (“Jt. Stmt.”). While their characterizations of 7 the contacts in question are sharply at odds, certain key facts regarding the communications with 8 the government’s employees are not seriously disputed. 9 The parties agree that Schaps attended a Forest Service sponsored field trip to a fuel 10 reduction project site on the Plumas National Forest. Id. at 2, 24. It is undisputed that the 11 excursion was open to the public. The Unites States complains, however, that while on the field 12 trip Schaps specifically questioned Forest Service employees about fuel breaks, fire severity, and 13 what contract provisions the Forest Service requires for fire prevention in timber sale projects, 14 and that he did so without disclosing that he was seeking information regarding pending 15 litigation and that he was an attorney representing a party opposed to the government in that 16 litigation. Id. at 4 (citing Tompkins, Garcia, Wood and Suihkonen Declarations). Had he made 17 those disclosures, the government argues, the Forest Service employees could have sought legal 18 counsel before engaging in the communications with and responding to questions by the 19 government’s opposing counsel. According to the government’s employees, Schaps, again 20 without disclosing his status as opposing counsel, also asked their opinions as to several 21 hypothetical questions concerning these topics. The United States further contends that when the 22 District Ranger specifically asked him if he was representing anyone, Schaps failed to disclose 23 the fact that he was representing SPI in this litigation, and further failed to inform the employees 24 //// 25 //// 26 //// 3 1 that he considered the issues he was inquiring about relevant to the pending litigation.2 Id. at 4. 2 The United States also asserts that Schaps used his iPhone to record parts of his discussions with 3 the Forest Service employees. Id. at 4-5. 4 SPI argues that the Forest Service chose to organize the event and to invite the public, 5 including a local news reporter. Id. at 24. SPI notes that the Forest Service identified the topics 6 to be addressed and invited the public’s input. Id. SPI contends that its attorney’s participation 7 in the event, including his conversations with Forest Service employees, was constitutionally 8 protected activity under the First Amendment. SPI also asserts that its attorney was not required 9 to reveal his status as counsel for SPI and that he was “unconstitutionally interrogated” when 10 Forest Service employees asked him whether he represented anyone. Id at 24-25. 11 B. Applicable Legal Authority 12 Local Rule 180(e) states that attorneys before this court must comply with the Rules of 13 Professional Conduct of the State Bar of California (hereafter “California Rules”). Local Rule 14 180(e) further provides that in the absence of an applicable California standard, the Model code 15 of Professional Responsibility of the American Bar Association may be considered as guidance. 16 Rule 2-100 of the California rules states: “[w]hile representing a client, a member shall 17 not communicate directly or indirectly about the subject of the representation with a party the 18 member knows to be represented by another lawyer in the matter, unless the member has the 19 consent of the other lawyer.”3 20 21 22 23 24 25 26 2 The government alleges that Schaps made several false representations to Forest Service employees as to his status and whether he was representing anyone during the course of his discussions with and questioning of those employees. Id. at 3-4. The government argues that these false statements violated the standards of professional conduct required by Local Rule 180(e), Cal. Bus. & Prof. Code § 6068(d) and ABA Model Rules 4.1(a) and 8.4(c). Because the court grants the instant motion on grounds that the communications violated the no contact rule, the court does not address this issue. 3 This prohibition includes contacts with employees of a represented party where the communication concerns material acts or omissions of the employee or may elicit statements that constitute an admission of the part of the organization. Rule 2-110(B)(2). As discussed below, 4 1 Rule 2-100(C)(1) contains a “public officer” exception to the no contact rule. According 2 to a proposed, but not formally adopted, opinion by the state bar, the public officer exception 3 allows for contact with a represented party or employee if the communication is with: 6 a person whom a communication would be constitutionally protected by the First Amendment right to petition the government. Such a person would be one who, for example, has the authority to address, clarify or alter governmental policy; to correct a particular grievance; or to address or grant an exemption from regulation. 7 Proposed Formal Opinion Interim No. 98-0002. As the proposed opinion notes, the purpose for 8 the exception is to recognize rights which already exist under the First Amendment.4 4 5 9 As noted above, the ABA Model Rules may be considered by this court as guidance in 10 the absence of an applicable California standard. ABA Model Rule 4.2 is similar to California’s 11 no contact rule, as it also prohibits contact with represented parties (including government 12 agencies and employees) except where the communication is protected under the First 13 Amendment.5 14 The California and ABA rules, while very similar, do vary in their approach to 15 determining whether a given communication with an unrepresented party is protected by the 16 First Amendment right to petition government for a redress of grievances. The ABA rule 17 focuses on the purpose for the communication as well as the level of authority of the government 18 19 20 21 22 23 24 25 26 this appears to be precisely the point of the contacts with the Forest Service personnel that occurred here. 4 There is also an “otherwise authorized by law” exception to the no contact rule under 2100(C)(3). This exception simply recognizes that communications protected by the First Amendment are not prohibited by the no contact rule. Paradoxically, SPI does not argue that the “authorized by law” exception applies. Jt. Stmt. at 37 n.15 (“Finally, the government’s arguments regarding the applicability of Rule 2-100(C)(3)’s “otherwise authorized by law” exception are directed at a straw man. Sierra Pacific does not rely on this exception because Rule 2-100(C)(1)’s exceptions so clearly apply.”) The court will not separately address the “authorized by law” exception, but notes that in this case, as First Amendment protection is at issue, the analysis would be similar to that of the “public officer” exception. 5 The ABA rule protects a represented government entity from unconsented contacts by opposing counsel, but provides an exception to ensure the “right of access to government decision makers.” ABA Formal Ethics Opinion 97-408. 5 1 2 3 4 official being contacted: Rule 4.2 permits a lawyer representing a private party in a controversy with the government to communicate about the matter with government officials having authority to take or to recommend action in the matter, provided that the sole purpose of the communication is to address a policy issue, including settling the controversy. 5 ABA Formal Ethics Opinion 97-408 (emphasis added). Even then, the ABA rule requires 6 reasonable advance notice to the government’s counsel. ABA Model Rule 4.2. Finally, the 7 ABA rule is clear that “[i]n situations where the right to petition has no apparent applicability, 8 either because of the position and authority of the officials sought to be contacted or because of 9 the purpose of the proposed communication, Rule 4.2 prohibits communication without prior 10 11 consent of government counsel.” California’s rule, at least as explained by the state bar’s currently unadopted but proposed 12 formal opinion No. 98-0002, discounts the importance of the purpose of the communication. 13 Instead, the California rule focuses primarily on the level of the public official’s authority. The 14 analysis set out in the unadopted opinion would bar such questioning of a government employee 15 where the employee lacked the authority to decide the matter or policy question addressed in the 16 communication. The public officials at issue in the unadopted opinion were line police officers, 17 and they were determined not to be of the requisite level of authority to be covered by the 18 “public officer” exception of Cal. Rule 2-100(C).6 19 20 21 22 23 24 25 26 6 Ignoring the purpose of the communication entirely is problematic. A focus solely on a public official's level of authority without regard to the purpose of the communication offers little assistance in determining the ultimate question of whether the communication is protected by the First Amendment. However, contrary to the suggestion in unadopted Opinion No. 980002, the emphasis that the California rule places on the public official’s level of authority does not necessarily represent a different approach than the ABA rule. Where the level of authority falls below that necessary to address the policy issue presented, it may be possible to determine, as in the case of the line police officers, that the communication could not have implicated a First Amendment right to seek governmental redress. Otherwise stated, the fact that the purpose for the communication has nothing to do with the exercise of First Amendment rights can be inferred by the lack of authority of the official who was contacted. Obviously, as both the ABA and California rules require, the government official must be one possessing the power to grant the remedy being sought by the contact. But it is the First 6 There are several policy reasons behind these rules. Mitton v. State Bar of Cal. held that 1 2 before any direct communication is made with the opposing party, consent of the opposing 3 attorney is required because “[i]f a party’s counsel is present when an opposing attorney 4 communicates with a party, counsel can easily correct any element of error in the communication 5 or correct the effect of the communication by calling attention to counteracting elements which 6 may exist.” 455 P.2d 753, 758 (1969). Citing Mitton, the California Court of Appeals 7 recognized that “one of the reasons for the ethical rule barring ex parte communication is to 8 prevent injurious disclosures.” Continental Ins. Co. v. Superior Court, 32 Cal. App. 4th 94, 112 9 (1994). The court explained: [A]n important reason why the ethical rules bar ex parte communication is because statements made by the uncounseled party to an opposing attorney might be offered against that party as admissions in court, thereby seriously damaging [the] case....“[T]he lawyer may be required to supervise the manner in which information is elicited to prevent his client from making statements which, through ambiguous use of language, may not accurately or fairly reflect the client's position.” Presence of the attorney at the interview allows counsel to perform properly her duty to ensure that her client’s case is presented in the best possible light. 10 11 12 13 14 Although these types of improvident disclosures may injure a corporation just as they may injure an individual, courts and commentators disagree as to the scope of the prohibition on ex parte contact with corporate employees justified by such dangers. 15 16 17 18 Id. at 112-13 (quoting Sinaiko, Ex Parte Communication and the Corporate Adversary: A New 19 Approach, supra, 66 N.Y.U. L.Rev. 1456, 1471-1472; fns. omitted). 20 //// 21 22 23 24 25 26 Amendment purpose of the communication that is protected. Where the communication does not address matters implicating a request for governmental redress, the “redress” clause of the First Amendment is simply not implicated. Thus, it is counterintuitive to suggest that communications for purposes having nothing to do with seeking governmental redress are nonetheless covered by the First Amendment’s petition-for-redress clause merely because the public official happens to be a policy-making official. However, as discussed below, this difference in approach between the ABA Formal Ethics Opinion 97-408 and Cal. Bar Committee of Professional Responsibility, Proposed Formal Opinion Interim No. 98-0002 is of no consequence here. 7 1 The Ninth Circuit has also recognized this policy purpose: 2 Rule 2-100’s prohibition against communicating with represented parties without the consent of their counsel is both widely accepted and of venerable heritage. The California rule tracks the language of Rule 4.2 of the American Bar Association’s Model Rules of Professional Conduct, which in turn is nearly identical to its predecessor in the Model Code of Professional Responsibility, Disciplinary Rule 7-104(A)(1). A similar prohibition appears under Canon 9 of the ABA’s Canons of Professional Ethics, which were promulgated in 1908. Not simply an American invention, the prohibition has roots which can be traced back to English common law. See, e.g., In Re Oliver, 2 Adm. & Eccl. 620, 622, 111 Eng.Rep. 239, 240 (1835) (“When it appeared that Mrs. Oliver had an attorney, to whom she referred, it was improper to obtain her signature, with no attorney present on her part. If this were permitted, a very impure, and often a fraudulent, practice would prevail.”) (Lord Denman, C.J.). Today some version of the rule is in effect in all fifty American states. 3 4 5 6 7 8 9 10 11 12 13 14 The rule against communicating with a represented party without the consent of that party’s counsel shields a party’s substantive interests against encroachment by opposing counsel and safeguards the relationship between the party and her attorney. . . . the trust necessary for a successful attorney-client relationship is eviscerated when the client is lured into clandestine meetings with the lawyer for the opposition. As a result, uncurbed communications with represented parties could have deleterious effects well beyond the context of the individual case, for our adversary system is premised upon functional lawyer-client relationships. United States v. Lopez, 4 F.3d 1455, 1458-59 (9th Cir. 1993). 15 C. Analysis 16 It is undisputed that SPI’s counsel, Schaps, communicated directly with employees of the 17 Forest Service, that he knew that the Forest Service was represented by counsel in this litigation, 18 and that he did not have the consent of counsel for the United States to engage in the 19 communications. 20 Moreover, while it is not clear how the communications with the Forest Service 21 employees related to the “subject of the representation,” there is little doubt that Schaps’ purpose 22 in questioning the Forest Service employees was to obtain information and evidence to use in 23 this litigation against the government.7 SPI did not offer any other explanation for Schaps’ 24 25 26 7 Rather than dispute whether the communications related to the “subject of the representation,” SPI argued at length in the context of this motion and its motion to take more and longer depositions than provided by Fed. R. Civ. P. 30(a)(2) and (d)(1) that the topics are 8 1 questioning the employees, either in their briefs or at oral argument, and his declaration is silent 2 on the subject. It appears that the effort to gather relevant evidence was unsuccessful, as SPI’s 3 counsel has represented in a letter that “Schaps did not gather any evidence we intend to use.” 4 Dckt. No. 79, Ex. O to Warne Declaration (letter dated August 27, 2010 at 3). Nonetheless, 5 counsel’s letter clearly shows that Schaps was actively seeking information to use in the 6 litigation. See discussion below. Moreover, SPI’s counsel asserted at oral argument that the 7 information it obtained by those communications is protected from disclosure to the government 8 by the attorney work product privilege, thus implying that the information that Schaps gathered 9 on the tour was for the purpose of litigation. 10 Thus, California Rule 2-100 was violated here unless the “public officer” exception of 11 subsection (C)(1) applies. SPI strenuously argues that the exception applies because its attorney 12 merely attended a tour that was open to the public. SPI discounts the fact that Schaps also 13 questioned Forest Service employees about matters that at least SPI’s counsel believes touch on 14 issues in dispute in the pending litigation. Thus, Schaps states in his declaration that “I believed 15 it was my right to attend the tour, which was open to the public, without providing information 16 regarding my employment or clients.” There can be little doubt that he had that right. The 17 United States concedes as much. Jt. Stmt. at 11. But this statement stops short of addressing the 18 more pressing issue raised by his contact with the plaintiff’s employees. Those employees 19 describe contacts that went well beyond attending a public information tour of a project site. 20 One employee, Garcia, attests that Schaps “asked many questions of the Forest Service 21 employees” on topics “includ[ing] fuel breaks and their potential effects on fire severity, and 22 what types of contract provisions regarding fire precautions the Forest Service requires with 23 respect to timber operators working in National Forests.” Garcia Decl. ¶ 6. In questioning 24 employee Garcia, Schaps continued his line of questions regarding “fuel breaks and fire severity, 25 26 relevant to the litigation and that its attorneys have a right to unfettered contact with the government’s employees in question on these matters. 9 1 including asking [Garcia’s] opinions about hypothetical situations involving fires and fuel 2 breaks.” Id. ¶ 7. Another employee, Tompkins, states in his declaration that he also was 3 questioned by Schaps about fuel breaks and their potential effects on fire severity, and what 4 contract provisions for fire precautions the Forest Service requires of timber operators working 5 in National Forests. Tompkins Decl. ¶ 7. Tompkins also was asked for his opinions as to 6 hypothetical questions involving fires and fuel breaks. Id. at ¶ 9. He also observed Schaps using 7 his iPhone and believes some of the conversations were recorded on it. Id. at ¶ 8. Like Garcia, 8 Tompkins was never informed that Schaps represented SPI in this pending litigation. Id. at ¶ 10. 9 As discussed above, it is clear that evidence gathering, not seeking governmental redress, 10 was the point of Schaps’ contacts. This point is underscored by the statement in SPI’s counsel’s 11 letter that “. . . we have every intention of preserving all evidence gathered through our 12 investigation of the Moonlight Fire, including any gathered as a result of contacts with 13 government employees.” Dckt. No. 79, Ex. O. The letter criticizes the government’s objections 14 to Schaps’ ex parte communication with its employees, arguing that the objections amount to an 15 improper interference with the discovery process. SPI’s letter scolds the government for its 16 objections as “searching for ways to limit discovery by the named defendants in order to increase 17 your chances of prevailing . . . .” Id. at 4; Jt. Stmt. at 33. The letter clearly shows that Schaps’ 18 actions were not an exercise of a First Amendment right to seek redress of a particular grievance, 19 but were rather an attempt to obtain evidence from these employees. This is consistent with 20 SPI’s argument that its counsel has a right to unfettered access to these employees. 21 There is little to support the characterization of Schaps’ communications with the 22 employees as an exercise of the right to petition a policy level government official for a change 23 in policy or to redress a grievance. Rather, the facts show and the court finds that he was 24 attempting to obtain information for use in the litigation that should have been pursued through 25 counsel and through the Federal Rules of Civil Procedure governing discovery. SPI surely has 26 the right to conduct discovery. But interviewing Forest Service employees, without notice to 10 1 government’s counsel, on matters SPI considers part of its litigation with the government--even 2 if not successful in obtaining relevant evidence--strikes at and, indeed questions the very policy 3 purpose for the no contact rule. 4 To suggest that the “public official” exception to the rule permits unfettered access to the 5 employees in question here, regardless of the purpose, carries the exception too far. SPI’s 6 counsel argues for an exception so broad that it eviscerates the rule by the mere presence of the 7 government in the litigation. Absent an appropriate exercise of the First Amendment right to 8 seek governmental redress of a grievance(s) or to decide or address a particular issue before the 9 official being contacted, these exceptions have no application here. There is nothing in Schaps’ 10 declaration, or the declarations of the government employees he contacted that supports a 11 conclusion that he was communicating with them as part of a request for governmental redress. 12 Nor do they support a conclusion that he was communicating with a policy-making official or 13 persons with authority to change a policy or grant some specific request for redress that Schaps 14 was presenting. Therefore, the exception of Rule 2-100(C)(1) can have no application here. 15 Rather, the evidence together with SPI’s own arguments demonstrate that, apart from simply 16 attending the tour, Schaps also questioned certain Forest Service personnel, and while doing so 17 was engaged in an attempt to discover and gather evidence and statements from those employees 18 for use in this litigation. He did so without the consent of the government’s counsel and without 19 disclosing either the litigation or his status as opposing counsel in that litigation.8 20 Although ABA Rule 4.2 is not necessarily controlling here, that rule was violated as well. 21 Unconsented questioning of an opposing party’s employees on matters that counsel has reason to 22 believe are at issue in the pending litigation is barred under ABA Rule 4.2 unless the sole 23 purpose of the communication is to exercise a constitutional right of access to officials having 24 25 26 8 The court accepts the explanation in Schaps’ declaration that he believed he had a First Amendment right to attend the tour. But his declaration fails to address or even dispute the government employees’ accounts of the key communications and questioning by Schaps. 11 1 the authority to act upon or decide the policy matter being presented. In addition, advance notice 2 to the government’s counsel is required. 3 4 Thus, under either Cal. Rule 2-100, or the rule that its language tracks,9 Rule 4.2, the communications with the employees here were prohibited. 5 D. Conclusion 6 SPI’s counsel’s communication with the Forest Service employees violated California 7 8 9 Rule 2-100. Accordingly, the court grants the United States’ motion and orders as follows. Within seven days from the date of this order, SPI must identify all federal employees contacted without the knowledge of counsel for the United States in this matter to date, as well 10 as the dates and circumstances of each contact, and produce originals and copies of all 11 recordings or documents relating to such communications. Recordings and documents 12 containing such information that are stored on Schaps’ iPhone or other electronic devices must 13 be accurately copied and produced to the government in electronic format. Upon confirmation 14 from the government that it has received the duplicate copies in a useable electronic format those 15 files shall be deleted from the iPhone or other devices and SPI and its counsel shall not retain 16 copies. SPI shall submit a sworn declaration attesting that all such electronic recordings and 17 documents have been produced and then deleted. 18 The court accepts SPI’s specific representation in the August 27, 2010 Warne letter 19 (appended to the Warne Declaration, Dckt. No. 79, Ex. O at 3) that SPI does not intend to use 20 “any evidence” gathered by Schaps from these disputed contacts. Consistent with that 21 representation, SPI shall be barred from using information obtained through such contacts in this 22 litigation. Likewise, the court accepts SPI counsel’s representation that counsel will “identify 23 [their] relationship to Sierra Pacific and involvement in this litigation before seeking out and 24 interviewing particular government employees about issue related to the Moonlight Fire. [And] 25 26 9 See United States v. Lopez, 4 F.3d at 1458. 12 1 . . . to notice the deposition of control group federal employees if and when [counsel] wish to ask 2 them questions.” Jt. Stmt. at 33, 42 (quoting August 27, 2010 Warne letter). Counsel must hold 3 themselves to that representation and must not engage in such contact in the future. 4 SO ORDERED. 5 DATED: November 15, 2010. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 13
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