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Feature Article

WHEN IS IT OKAY TO HAVE EX PARTE DISCUSSIONS WITH A COMPANY’S CURRENT OR FORMER EMPLOYEES?
Your company is sued for sexual harassment, and the plaintiff’s attorney wants to interview some of your employees in order to help prove the case. The company has engaged outside counsel to represent it in the case, of which the plaintiff’s attorney is aware. Can the company prevent the plaintiff’s attorney from talking to its employees? In Virginia, the answer is not so clear cut, and depends on such variables as whether the intended witnesses are current or former employees, whether the witnesses were in a position of responsibility so that they could bind the company with their testimony, and whether the case is being heard in federal versus state court. The result has been quite a bit of confusion on both sides of this issue.

The analysis begins with Virginia Rule of Professional Conduct 4.2, which generally prohibits a lawyer from communicating with a person the lawyer knows to be represented by another lawyer in the matter without the consent of the other lawyer. This Rule is fairly easy to apply in the case of individual parties, since a person either does or does not have an attorney in a case. The more difficult issue is in the case of corporate parties, since corporations are made up of any number of individuals with varying degrees of corporate responsibility.

Comment 4 to Rule 4.2 says that in the case of a company, the prohibition on ex parte communications extends to “control group” employees, or persons who may be regarded as the “alter ego” of the company. But what exactly do these terms mean? Courts in Virginia have struggled for a uniform approach to defining “control group” or “alter ego” employees. Most recently in a nursing home medical malpractice case, a Circuit Court judge in Lancaster County held that the plaintiff’s attorney could not talk to any current employees of the nursing home, even those employees the Court found to be outside of the control group.

Another issue involves whether the prohibition extends to former employees. Although Comment 4 expressly states that the prohibition in Rule 4.2 does not apply to a company’s former employees, some federal courts in Virginia have nonetheless refused to allow ex parte communications with former employees. The most cited decision for this is Armsey v. Medshares Management, in which a federal judge in Abingdon prohibited ex parte discussions with former employees on the ground that the plaintiff’s purpose was to impute liability to the defendant through the former employees’ statements.

Given this lack of controlling precedent, what is a company to do when faced with this situation? Perhaps the best advice is to be proactive, since once these ex parte discussions take place with an opposing counsel, whether permitted under the Rules or not, the information is out there and the damage is hard to undo. With respect to current employees, companies should have an express policy requiring employees to notify the general counsel or other senior management if they are contacted by an opposing counsel. At least this way you can challenge the attempted witness interview with the Court before it actually takes place.
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The Court Report

FAIRFAX JUDGE SETS ASIDE $1.8M VERDICT, FINDING EMPLOYER IS NOT LIABLE FOR EMPLOYEE’S CAR ACCIDENT
As a general rule in Virginia, employers are not liable for injuries their employees cause while commuting to and from work. A recent Fairfax County case presented the Circuit Court with a slight variation on that theme. In Wu v. Wirthlin Worldwide, Inc., an employee, after meeting her supervisor at a cafe and while returning to her office to retrieve files for a presentation she planned to give the following day, was involved in a car accident that injured the plaintiff. The injured plaintiff sued the company, claiming that the employee was performing work-related duties at the time of the accident. A Fairfax jury awarded the plaintiff a whopping $1.8 million. However, Circuit Court Judge Leslie Alden set aside that $1.8 million verdict against the company, on the basis that Wirthlin Worldwide was not liable for injuries its employee caused in the accident since the employee was in essence commuting to work to pick up the files. Judge Alden found unpersuasive the argument that because the employee had been at a restaurant meeting just before the accident, the employee’s trip back to the office to pick up the files was more than mere commuting. Companies should be aware that if the employee had been talking business on her cell phone at the time of the accident, or perhaps even engaged in a personal conversation using a work-issued cell phone, there is a much higher probability that the company would have been found liable for the damages caused by the employee’s accident even if the trip was found to be strictly commuting.
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VIRGINIA EMPLOYEE CAN’T SUE BOSS FOR WRONGFUL TERMINATION
The Virginia Federal Court in Roanoke recently issued a favorable decision for supervisors and managers, wherein it refused to allow an employee’s state common law claim of wrongful discharge against his supervisor in her personal capacity to go forward. This case is apparently one of first impression in Virginia regarding an employee’s ability to sue both the company employer as well as the employee’s supervisor for such a claim. Most federal discrimination statutes already foreclose individual supervisor liability. The Court in Lucker v. Cole Vision Corp. determined that an employee may only make a valid claim of wrongful discharge against the company employer since the company is who he had an employment contract with. The employee had alleged that his supervisor fired him for failing to go along with a fraudulent promotion which could have resulted in the revocation of the employee’s professional license and subjected him to possible criminal charges. Despite the allegations of the supervisor’s personal involvement in this employment decision, the Court dismissed the employee’s claim against the supervisor.

The employee worked as an optician and manager of Sears Optical in the Roanoke Valley View Mall. He became concerned about the legality of the company’s advertisements for 50% off eye glasses. His lawsuit alleges that although the company was offering 50% off of a pair of eyeglasses, the promotional package required the customer to also purchase a $25 warranty and a $10 lens care kit. These additional costs were allegedly not itemized and the company did not allow customers to refuse the extra charges. The employee consulted with an attorney regarding the advertisement and alleges that his counsel advised him that if he participated knowingly in the illegal advertisements, his optician license may be revoked or suspended and that he could be prosecuted by the governmental authorities for participating in a fraudulent scheme.

The employee alleges that he immediately contacted his supervisor and informed her of these concerns. In response, the supervisor instructed the employee to continue offering the promotion without an itemization of costs, to which he refused. Thereafter, the supervisor terminated him. The Court considered the public policy exception to the employment at-will doctrine, but concluded that an employee cannot complain that someone who never employed him wrongfully terminated that employment.

This case also deals with the jurisdictional issue in wrongful termination cases of where a lawsuit may be heard, i.e., state or federal court. Typically, it is easier for a defendant to dismiss a claim prior to trial in the Federal Courts rather than in Virginia state courts. For federal court diversity jurisdiction, both defendants in a case must be from different states than the plaintiff. Since it common for a company to be incorporated in another state, such as Delaware, employees usually end up in Federal Court if they cannot find another resident of Virginia to join into the lawsuit as a defendant. In this case, the employee’s claims were initially filed in the Roanoke City state court because the supervisor and the employee were both from Virginia; therefore, diversity of the parties was not present for federal court jurisdiction. Once the employee’s claim against the supervisor was dismissed, the company could proceed with its defense in the Federal Court.

Full court opinion(PDF)...
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LOCAL LIMOUSINE COMPANY PREVENTS FORMER EMPLOYEE FROM COMPETING
As a recent case in Loudoun County amply demonstrates, the limousine industry in the Washington, D.C. metropolitan area is an intensely competitive business. With only two months remaining in a one year non-compete, the Loudoun County Circuit Court has enforced the non-compete agreement of a former manager of International Limo and prohibited him from providing the same or similar services as an employee or consultant for competitor Reston Limo. The Court found that the hardship that International Limo faced as a result of the former employee working for a competitor outweighed the hardship to the former employee and Reston Limo.

Before Jeffrey Morris was terminated by International Limo on July 6, 2004, he had worked for the company for 14 years and ran all aspects of the business including sales, pricing and overall operations. Morris had entered into a non-compete agreement with International Limo that prohibited him from engaging in the business of providing the same or similar services as International Limo within a 75 mile radius and with any of International Limo’s customers, for a period of one year after his employment terminated.

Almost seven months after he was terminated by International Limo, Morris was hired by Reston Limo, a local competitor. International Limo sent “cease and desist” letters to Morris and Reston Limo warning that Morris was in violation of his non-compete agreement. Although Morris formally resigned as an employee of Reston Limo in response to the letters, he continued to work for Reston Limo as an independent contractor, apparently providing services that were both similar to and different than those provided by International Limo. After learning that Morris was still working there, International Limo sued and asked the Court to issue an injunction against Morris and Reston Limo.

The Court’s decision to enforce the agreement and issue an injunction relied on a balancing of the hardships to each party -- concluding that the harm to International Limo outweighed any harm to the defendants. Without an injunction, the Court found, International Limo faced harmful economic disadvantage and Morris and Reston Limo would be economically advantaged. The Court noted that in the first two months that Morris began working at Reston Limo, he had successfully solicited business from a customer of International Limo. Notably, the only harm that the Court found for Morris and Reston Limo would be that they would have to abide by the terms of the non-compete, that Morris had already agreed to, for only two more months since the restriction would be lifted on July 6, 2005.

The Court’s order was specifically tailored to enjoin Morris from providing services that were similar to those that he provided at International Limo. Ultimately, because the non-compete agreement was sufficiently limited and some of the employment responsibilities at each of the two limousine companies were different, Morris was able to continue some of his training services and administration of small business set-aside contracts at Reston Limo.
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LOCAL CIA OPERATIVE CANNOT PURSUE RACE DISCRIMINATION CLAIM
A recent appellate decision likely explains why we rarely see employment discrimination cases coming out of Central Intelligence Agency. The Fourth Circuit Court of Appeals has upheld the outright dismissal of a CIA operative’s Title VII race discrimination lawsuit based on what is commonly known as the “state secrets” privilege. Under this doctrine, if the evidence needed to resolve the factual questions in a discrimination case would expose classified information, then in such instance, protecting state secrets takes precedence over an individual employee’s access to the court system. The Fourth Circuit found that the state secrets privilege applied in the case of Sterling v. Tenet, and dismissed the case without getting to the actual merits of the employee’s discrimination claims.

The operative claimed CIA management employed discriminatory practices against him by setting higher expectations for him than non-African-American operatives, denying him advantageous opportunities, subjecting him to disparate treatment, and giving him advanced work plans that contained more rigorous requirements than those for non-African-Americans. The operative also alleged he was retaliated against once he lodged a complaint using the CIA’s internal EEO process.

The Fourth Circuit agreed with the district court in saying that the operative could not prove his case without revealing classified information and other state secrets. It noted that in order to pursue the claim, the operative would have to reveal the nature and location of his and other operatives’ employment, their responsibilities, duties, opportunities and performance in the field. The operative’s retaliation claim similarly relied on proving facts that the Court said comprised state secrets, and was likewise dismissed.

This ruling makes it very difficult for employees to assert discrimination claims against the CIA, FBI, or other departments of the Government which can claim the state secrets privilege. One interesting question that has yet to be addressed by the courts is whether the state secrets privilege might also apply to private government contractors whose employees often are called upon to perform many of the same classified and sensitive operations as their public sector counterparts.

Full court opinion (PDF)...
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BUDWEISER EMPLOYEE FIRED FOR DRINKING COORS
A Colorado man has been fired from his job at a Budweiser distributorship after he was seen in public drinking a Coors brand beer. Ross Hopkins was in a bar drinking the Coors beer when he encountered the son-in-law of the Budweiser distributorship’s owner. When the son-in-law saw Hopkins drinking the Coors, he offered to buy him a Budweiser, but Hopkins declined. The Budweiser distributorship claims that by drinking Coors, Hopkins created a conflict of interest with his employer. One manager at the distributorship reportedly told Hopkins that drinking a Coors was “putting food on the competitor’s table, while we are putting food on yours.” Colorado law says employees cannot be fired for engaging in lawful activity while off duty and away from work, subject to some exceptions. In that regard, Colorado law would appear to provide more of a chance for Hopkins to prevail than if this firing had happened in Virginia, given its strong at-will presumption.
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ILLEGAL ALIENS ARE ENTITLED TO WORKERS’ COMPENSATION BENEFITS IN MARYLAND
The Maryland Court of Appeals recently held that an undocumented worker who was injured in a job-related accident can collect benefits under Maryland’s Workers’ Compensation Act, even though he was not legally permitted to be performing the work that led to his injuries. By this decision, Maryland joins the overwhelming majority of other states that provide workers’ compensation benefits to illegal aliens.

While working as a carpenter for Design Kitchen & Baths, Diego Lagos sustained serious injuries to his hand, which required two surgical procedures to correct. He filed for and was granted workers’ compensation benefits by the Maryland Workers’ Compensation Commission. The company appealed that decision, first to the Maryland Circuit Court and then to the Maryland Court of Appeals, on the ground that Lagos’ status as an illegal alien disqualified him from workers’ compensation benefits.

Unlike the workers’ compensation laws from some other states, the Maryland Workers’ Compensation Act does not specifically address whether undocumented workers are entitled to benefits. The Act says an employee is covered as long as they are working “under an express or implied contract of apprenticeship or hire.”

In disputing Lagos’ claim for benefits, the company relied largely on the federal Immigration Reform and Control Act of 1986 to assert that federal immigrations laws prohibit the formation of an employment contract between employers and illegal aliens. With no contract, according to the company, Lagos did not fall within the definition of covered employee under the Maryland workers’ compensation law.

The Maryland Appeals Court rejected the company’s argument, and upheld the award of workers’ compensation benefits to Lagos. The Court noted that the Maryland Workers’ Compensation Act is a remedial statute, and as such, should be “liberally construed” in favor of the injured worker. The Court found that the statutory construction and legislative history also supported the conclusion to cover illegal aliens. Finally, the Court determined that it was in the interest of public policy to include undocumented workers under the statute. Without that protection, the Court surmised, employers could take advantage of illegal aliens and subject them to unsafe work conditions without fear of retribution.

The Maryland Appeals Court noted that the overwhelming majority of states offer workers’ compensation benefits to undocumented workers, including Virginia, Connecticut, New Jersey, Louisiana, Oklahoma, and Pennsylvania. In fact, only one state court decision, by the Wyoming Supreme Court, has construed its workers’ compensation law to exclude undocumented workers.

As this case demonstrates, once an employee goes on your payroll, there is very little an employer can do to avoid a workers’ compensation claim for a qualifying on-the-job injury. The underlying question that received scant attention in this case was how did Lagos come to be employed by Design Kitchen & Baths in the first place, since he did not have a social security number and was not otherwise lawfully permitted to work in this country. It is a crucial responsibility of every employer, no matter what state you are located in, to document the work eligibility of every employee.

Full court opinion (PDF)...
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JUDGE FOR YOURSELF

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© Copyright 2005   Albo & Oblon, L.L.P.,  All rights reserved.
David Oblon, Managing Partner, Albo & Oblon
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