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30th Annual Employment Law Update Seminar Tuesday, May 4 COURSE SCHEDULE 8:00 Welcome and Introductory Comments Sarah A. Belger 8:05 Confidentiality: Non-Clients’ Misunderstanding and Mistakes Thomas E. Spahn 9:05 Break 9:15 Annual Update on Employment Law Cases Edward Lee Isler, Thomas E. Strelka 10:15 Break 10:25 Wage and Hour Law in Virginia Tevis Marshall, Joshua H. Erlich 11:25 Break 11:35 What the Biden Administration Holds in Store for Employment Law John M. Bredehoft, Kristina H. Vaquera 12:35 Lunch 1:00 Virginia's New Employment Laws Craig J. Curwood, King F. Tower 2:00 Break 2:10 Disability and Leave: Hot Topics in a Post-Pandemic World David L. Greenspan, Alexis H. Ronickher 3:10 Break 3:20 Update on Non-Compete Law in Virginia Sarah A. Belger, Todd A. Leeson 4:20 Adjourn 30th Annual Employment Law Update Seminar 2021 Seminar Written Materials THIS MATERIAL IS PRESENTED WITH THE UNDERSTANDING THAT THE PUBLISHER AND THE AUTHORS DO NOT RENDER ANY LEGAL, ACCOUNTING OR OTHER PROFESSIONAL SERVICE. IT IS INTENDED FOR USE BY ATTORNEYS LICENSED TO PRACTICE LAW IN VIRGINIA. BECAUSE OF THE RAPIDLY CHANGING NATURE OF THE LAW, INFORMATION CONTAINED IN THIS PUBLICATION MAY BECOME OUTDATED. AS A RESULT, AN ATTORNEY USING THIS MATERIAL MUST ALWAYS RESEARCH ORIGINAL SOURCES OF AUTHORITY AND UPDATE INFORMATION TO ENSURE ACCURACY WHEN DEALING WITH A SPECIFIC CLIENT'S LEGAL MATTERS. IN NO EVENT WILL THE AUTHORS, THE REVIEWERS, OR THE PUBLISHER BE LIABLE FOR ANY DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF THIS MATERIAL. THE VIEWS EXPRESSED HEREIN ARE NOT NECESSARILY THOSE OF THE VIRGINIA LAW FOUNDATION. © 2021 Virginia Law Foundation. All rights reserved. Anyone seeking to license the use of these materials, in whole or in part, should make the request to [email protected]. Virginia CLE is the educational division of the Virginia Law Foundation (VLF), which is an IRS 501(c)(3) nonprofit organization established in 1974. The VLF is the leading philanthropy in Virginia supporting the Rule of Law, access to justice, and law-related education. It is the largest and one of the few Virginia charities that is devoted to continuing legal education as part of its core mission. The VLF also provides grants benefitting Virginians throughout the Commonwealth. Our grantmaking capacity is substantially enhanced by the generosity of donors, where one hundred percent of unrestricted gifts are currently applied to augment grants. Additionally, the net funds collected annually from Virginia CLE seminars and publications are reinvested into our mission, and a considerable portion is applied to the VLF endowment to help support future grants. As a result, your support of Virginia CLE is also allowing our thriving charitable work to achieve even greater success. For more information about how to support the Virginia Law Foundation, please visit www.virginialawfoundation.org ABOUT THE SPEAKERS Sarah A. Belger, Quarles & Brady LLP / Washington, DC Sarah Belger is a member of the Labor & Employment group who focuses her practice on employment-related litigation. She is a trial lawyer with first-chair trial experience and also defends employers before federal, state and appellate courts, administrative agencies and in arbitration settings. Sarah counsels and defends clients in claims under Title VII, the American Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), the Employee Retirement Income Security Act (ERISA), the Family and Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA), the Uniformed Services Employment and Reemployment Rights Act (USERRA), and other federal, state and local laws. In addition to her litigation experience, Sarah also advises clients on employment policies and procedures, internal investigations, drafting executive agreements, and disability accommodation. She represents a wide variety of companies and industries, including government contractors, professional services, IT, health care, hospitality, and nonprofit organizations. Legal Services • Labor & Employment Education and Honors George Washington University Law School (J.D., 2004) Washington and Lee University (B.A., magna cum laude, 1999) Bar Admissions • • District of Columbia Maryland Virginia Court Admissions • • • U.S. Court of Appeals, 4th Circuit U.S. Court of Appeals, 6th Circuit U.S. District Court, District of Columbia U.S. District Court, District of Maryland U.S. District Court, Eastern District of Virginia U.S. District Court, Western District of Virginia Professional and Civic Activities • • • • • • • • • Fairfax Bar Association (Member) District of Columbia Bar (Member) Virginia Bar Association (Member) iii Professional Recognition • • • • Selected for inclusion in The Best Lawyers in America® 2019-2020 (Employment Law: Management) Selected for inclusion in Washington D.C. Super Lawyers® - Rising Stars 2013 - 2017 (Employment Litigation: Defense, Employment and Labor) Selected for inclusion in Virginia Super Lawyers® - Rising Stars 2012- 2017 (Employment Litigation: Defense, Employment and Labor) Virginia Business Magazine "Legal Elite" 2015-2017 John M. Bredehoft, Kaufman & Canoles, P.C. / Norfolk John Bredehoft is a member of the firm of Kaufman and Canoles. His practice includes all aspects of employment, discrimination, and non-competition law, including public accommodations discrimination. He is an experienced federal litigator and is a member of the firm’s Credit Union initiative. He is a member, long-time Council member, and former chair of the Virginia Bar Association section on Labor Relations and Employment Law; he has been honored by the Section with its Francis V. Lowden Award. He is a past Chair of the Board of Governors of the Virginia State Bar Section on the Education of Lawyers; headed the Virginia State Bar program on professionalism for law students for a number of years, and is a past member of the Virginia State Bar Standing Committee on Professionalism. He is admitted to practice in Virginia, Maryland, and the District of Columbia. He is an honors graduate of Harvard College (History) and of the Harvard Law School. Craig J. Curwood, Butler Curwood, PLC / Richmond Craig J. Curwood has been a plaintiffs’ employment lawyer in Richmond since 1999. In 2021 he formed Butler Curwood, PLC with partners Harris Butler, Zev Antell and Paul Falabella. Craig represents plaintiffs in all types of employment litigation including discrimination, sexual harassment, FMLA, FLSA, USERRA, workplace violence, defamation, class action and multiplaintiff discrimination and wage/hour claims. Craig also advises and represents executives involved in disputes over employment contracts, severance packages, and non-compete agreements. Craig also is honored to represent first responders in all types of employment-related matters including wage theft and discrimination. For over 20 years Craig has delivered pro bono representation to cancer patients and their family members through Richmond-based nonprofit CancerLINC (Legal Information Network for Cancer) in ensuring accommodations, benefits, approval of family/medical leave, and recovering damages for discrimination or wrongful terminations based on cancer diagnosis, treatment, or caregiving responsibilities for a family member with cancer. Craig is a graduate of James Madison University (1995) and University of Richmond School of Law (1999). He is currently the Vice Chair of the Virginia Bar Association’s Section on Labor & Employee Relations. iv Joshua H. Erlich, The Erlich Law Office. PLLC / Arlington Joshua Erlich is the founder and principal of The Erlich Law Office, PLLC in Arlington, VA. He focuses on the litigation of employment and civil rights cases. Mr. Erlich has experience as first chair in state and federal litigation, as well as administrative hearings. Mr. Erlich's practice revolves around bringing fairness to the workplace. His docket often includes sex and gender discrimination, including cases involving sexual assault, race discrimination, and wage theft. His civil rights cases focus on police and prison abuses, including excessive force, unconstitutional searches, and false arrest. He also counsels small and medium sized businesses regarding employment issues. Mr. Erlich has been named in Washingtonian Magazine's list of D.C.'s Best Lawyers, Virginia Business Magazine’s “Legal Elite,” and recognized as a "SuperLawyer" in both Virginia and Washington, D.C. David L. Greenspan, McGuireWoods LLP / Tysons David Greenspan is a trial lawyer whose practice focuses on proactive counseling and aggressive litigation of employee mobility disputes and complex employment matters. Mr. Greenspan works with his clients to identify and resolve issues before they become adversarial in nature. Mr. Greenspan also serves his clients as a zealous advocate in litigation, arbitration and other administrative proceedings. Mr. Greenspan is an experienced litigator with first-chair trial experience. Mr. Greenspan regularly represents employers in state and federal courts and administrative agencies throughout the country. He has also litigated many employee mobility cases. On the plaintiff side, he has obtained injunctions that prohibited people from competing against firm clients. On the defense side, he has effectively represented employers who have hired employees with non-compete or confidentiality agreements. Mr. Greenspan regularly counsels corporate clients on a wide range of labor and employment topics including the protection of corporate assets through the use of employee agreements and corporate policies, wage and hour matters, compliance with Title VII, the ADA, the FMLA, the WARN Act and USERRA. Mr. Greenspan has also developed an area of interest in executive employment agreements. In this regard, he has worked with CEOs in various industries, former corporate general counsel, prominent elected officials no longer in office, and one Hall of Fame NBA coach. Mr. Greenspan is a well-regarded public speaker who has conducted myriad presentations and training seminars throughout country as a presenter for private employers, municipalities, educational academies, and trade associations. Mr. Greenspan regularly speaks on topics including protection of corporate assets; prevention of illegal discrimination, harassment and retaliation in the workplace; the complexities and intersection of the ADA, FMLA and related state laws; and general management relations topics. Mr. Greenspan also serves as an instructor at the Northern Virginia Criminal Justice Academy with respect to the training of senior command staff in labor law and management issues in law enforcement. v Mr. Greenspan serves as the Tysons Office Pro Bono Partner and is an active member of Firms in Service, a consortium of local firms and corporate legal departments dedicated to improving the quality and quantity of pro bono services in the Northern Virginia area. He also serves on the Board of Directors for Legal Services of Northern Virginia. Edward Lee Isler, Isler Dare P.C. / Tysons Corner Edward Lee Isler is a founding Partner of the law firm of Isler Dare, P.C. in Tysons Corner-Vienna, Virginia. The Firm’s practice is dedicated solely to the representation of management in labor and employment matters. A native of McLean, Virginia, Eddie graduated in 1983 from the University of Virginia with a B.A. in Government and Economics. In 1987, Eddie graduated from the College of William & Mary, Marshall-Wythe School of Law, where he served as a member of the Board of Editors of the William & Mary Law Review and was inducted into the Order of the Coif. Upon graduation, Eddie served for a year as a judicial clerk to the Honorable James C. Turk, Chief Judge for the U.S. District Court, Western District of Virginia. Before establishing Isler Dare Ray Radcliffe & Connolly (previously Ray & Isler) in 1997, Eddie spent seven years practicing labor and employment law in Washington, D.C. with the national firm, Gibson, Dunn & Crutcher, and two years with a regional labor and employment firm. From 2010-2012, Eddie served a two year term as the Chair of the Virginia Bar Association, Labor and Employment Law Section. He is a longstanding member of the Planning Committee for the Virginia CLE Annual Employment Law Update. He is also an author of Virginia Employment Practices and Forms, co-author and co-editor of Virginia Business Torts, both published by the Virginia Law Foundation, and a co-author of the Virginia Wage and Hour Handbook, published by the Virginia Chamber of Commerce Legal Reference Series. Eddie has been named repeatedly by Virginia Business Magazine as one of Virginia’s Legal Elite for employment law, and has been recognized by Chambers USA, The Best Lawyers in America, and Washingtonian Magazine as one of the leading employment lawyers in Virginia. He also was recently recognized by SuperLawyers Magazine as one of the top 50 lawyers in Virginia and as one of the Top 10 lawyers in the Washington, D.C. metropolitan area. Eddie resides with his wife, Kimberly, and children, Emily, Lindsay, Christy, and Michael in Oakton, Virginia. He coaches youth basketball and is active in his children’s school, Dominion Christian School, and his church, McLean Presbyterian. Todd A. Leeson, Gentry Locke / Roanoke Todd has over 30 years of experience representing and advising Virginia employers in employment and labor law matters and litigation. He regularly defends employment claims in Virginia courts and before agencies including the EEOC, National Labor Relations Board (NLRB), DOL, OSHA (whistleblower and retaliation claims), and the Virginia Division of Human Rights. His experience includes the defense of companies as to alleged violations of Title VII, ADA, ADEA, FLSA, FMLA, the NLRA, and Virginia’s employment laws. Todd regularly drafts, enforces, and/or litigates non-compete agreements and executive employment contracts. In addition, he has considerable experience representing management in labor union matters including union vi avoidance campaigns, unfair labor practice charges and labor arbitrations. He also represents Virginia colleges in various student conduct matters including Title IX and sexual misconduct complaints. Todd is rated “AV/Preeminent” by Martindale-Hubbell, is repeatedly named one of the Best Lawyers in America in Labor & Employment Law, and has regularly been named to various lists, including Virginia Legal Elite and Virginia Super Lawyers. He graduated from the College of William and Mary, and the Notre Dame Law School. Tevis Marshall, Ogletree Deakins / Richmond Tevis Marshall is a shareholder and founding member of the Richmond, Virginia office of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., a leading employment law firm with 53 offices across the United States, Europe, Canda and Mexico. Tevis has been recognized by Best Lawyers in America, named in Virginia Business Magazine’s “Legal Elite,” and is a Fellow of the American Bar Foundation. He regularly counsels employers on a broad range of workplace issues, including personnel policies, hiring, disciplining, terminating, reasonable accommodations, FMLA leave and workplace investigations. He has also assisted clients with managing onsite investigations from the EEOC and the U.S. Department of Labor. In addition to advising employers on workplace issues, Tevis litigates cases on a wide range of topics, including discrimination, harassment, retaliation, Title VII, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), overtime and wage violations under the Fair Labor Standards Act (FLSA), the Family Medical Leave Act (FMLA), the Employee Retirement Income Security Act of 1974 (ERISA), non-compete agreements, wrongful termination and other general employment matters. Tevis has handled matters before the EEOC, the Department of Labor, the Financial Industry Regulatory Authority (FINRA) and numerous state and federal courts. Alexis H. Ronickher, Katz, Marshall & Banks, LLP / Washington, DC Alexis Ronickher is a partner at Katz, Marshall & Banks, LLP, a nationally prominent plaintiff’s employment law and whistleblower firm. Her practice focuses on representing clients in complex, often high-profile, employment and whistleblower matters. Ms. Ronickher has litigated cases nationwide in federal and state courts, as well as in administrative proceedings. Her public successes include: representing a hair stylist in a sexual harassment and retaliation trial that resulted in a jury verdict of $2.3 million in favor of her client and representing whistleblowers in successful qui tam lawsuits that settled for $20 million and $10 million. She has represented clients in cases against national figures including multiple congressmen, a federal judge, and a cabinet secretary. Ms. Ronickher has also represented numerous other whistleblowers and employees in cases that have successfully resolved confidentially. Ms. Ronickher has earned many awards, including being honored as a “Best Lawyer in America” vii for employment law since 2020, a “Super Lawyer” in Washington, D.C. since 2019, and recognized as a “Rising Star” by Law360 in 2018, just one of five employment lawyers nationally to earn this designation. She speaks frequently about whistleblower protections, sexual harassment, and employment law, has written extensively on employment law matters, and has appeared in numerous national and local media related to her cases and employment law matters. Thomas E. Spahn, McGuireWoods LLP / McLean Thomas E. Spahn practices as a commercial litigator with McGuireWoods in Tysons Corner, Virginia. Tom was selected as the 2013 and the 2020 metro-Washington DC "Lawyer of the Year" for "Bet the Company Litigation" by The Best Lawyers in America (Woodward/White, Inc.). In 2018, Virginia Lawyers Weekly selected him for inclusion in the inaugural Virginia Lawyers Hall of Fame. Tom has served on the ABA Standing Committee on Ethics and Professional Responsibility, and is a Member of the American Law Institute and a Fellow of the American Bar Foundation. He has spoken at over 2,000 CLE programs throughout the U.S. and in several foreign countries. Through links on his website bio, Tom has made available to the public: his summaries of over 1,600 Virginia and ABA legal ethics opinions, organized by topic; a 300 page summary of his two-volume 1,500 page book on the attorney-client privilege and work product doctrine; over 1,000 weekly email alerts about privilege and work product cases; materials for over 40 ethics programs on numerous topics, totaling about 10,000 pages of analysis. Tom graduated magna cum laude from Yale University and received his J.D. from Yale Law School. Thomas E. Strelka, Strelka Employment Law / Roanoke Tommy is a nationally renowned employment and civil rights attorney. Tommy's practice focuses on employment-related claims originating from age discrimination, race discrimination, discrimination based upon an employee's disability, unpaid wages and overtime compensation, sexual harassment and other civil rights related matters including whistle blower claims. Tommy regularly works in conjunction with the Virginia Education Association to represent teachers across the Commonwealth in need of legal assistance. Tommy's other areas of practice include defense of serious criminal charges and general civil litigation. Tommy has also effectively litigated numerous high-profile First Amendment / Freedom of Speech cases. A native of Roanoke County, Virginia, Tommy Strelka received his undergraduate degree from the University of Mary Washington in Fredericksburg, Virginia, before receiving his law degree from the University of Richmond School of Law. After graduating law school, Tommy served as judicial law clerk to the Honorable James C. Turk in the United States District Court for the Western District of Virginia. Upon finishing his federal trial clerkship, Tommy completed a state appellate clerkship for the Honorable Lawrence L. Koontz, Jr., in the Supreme Court of Virginia. Education University of Mary Washington, B.A. University of Richmond School of Law, J.D. Bar and Court Admissions Virginia Bar (includes all Virginia state courts) U.S. District Court for the Western District of Virginia viii U.S. District Court for the Eastern District of Virginia U.S. Court of Appeals, 4th Circuit The Supreme Court of the United States Professional Affiliations Roanoke Bar Association National Employment Lawyers Association Ted Dalton Inn of Court Awards and Recognition Named First-Tier Best Law Firms in Virginia, Employment Law, in U.S. News & World Reports, 2020 In 2012 Mr. Strelka was awarded Young Lawyer of the Year by the Roanoke Bar Association for his "dedicated service to the Roanoke Bar Association, to the community, and to the legal profession." Mr. Strelka has been regularly listed in Super Lawyers magazine since 2012 in the field of employment litigation. Mr. Strelka has been listed in Virginia Business Magazine as a Legal Elite Young Attorney (attorneys under 40 years of age) in Employment Litigation since 2012. Since 2014, Mr. Strelka has been listed in Virginia Business Magazine among the Legal Elite in Employment Law. In 2018, Mr. Strelka was listed in Virginia Business Magazine Legal Elite in the category of Corporate Counsel. Mr. Strelka regularly lectures on the subject of ethics in the law and particularly, ethics as applied to employment law. He has presented ethics CLEs at State Bar events, at the Virginia Bar Association Labor & Employment Law Conference, and private engagements. Mr. Strelka is a member of the Fourth Circuit Judicial Conference. Mr. Strelka frequently appears on television, radio and online media to discuss the topics of employment law, federal litigation and civil rights. He has been interviewed by The Huffing Post, and affiliates for Fox, NBC, ABC, CBS and National Public Radio. Tommy’s hobbies includes writing fictional legal thrillers King F. Tower, Woods Rogers PLC / Roanoke King Tower is a member of Woods Rogers’ Appellate, Education, and Labor and Employment practice groups. He assists employers with employment law litigation, labor-management relations, and offers counsel to businesses on employment-related matters. King’s experience as a labor and employment attorney includes defending claims under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and Title VII. He has extensive experience providing strategic guidance to clients on conducting internal audits of corporate compliance, employment policies, and other critical decisions. King also assists federal contractors in preparing affirmative action programs and represents them during government audits. King has served as lead negotiator in collective bargaining and has represented employers in grievance and arbitration proceedings. ix Best Lawyers in America named King as the 2019 Roanoke Lawyer of the Year for Labor LawManagement. He received an AV® Preeminent Rating from Martindale-Hubbell for Employment Litigation and is recognized by Chambers USA for Labor and Employment Law. He is a frequent speaker at national and regional programs for organizations such as the American Bar Association, the Federal Labor Standards Legislation Committee, and Virginia SHRM. Kristina H. Vaquera, Jackson Lewis PC / Norfolk Kristina Vaquera is a principal with the firm of Jackson Lewis P.C. in Norfolk. Her practice is focused on assisting employers with their workplace issues, counseling and litigation. She represents employers in federal and state court lawsuits and agency investigations and charges covering a wide range of statutes and subjects, including anti-discrimination and civil rights laws, wrongful termination claims, wage and hour laws, restrictive covenants, and leave of absence issues. Her litigation practice includes both state and federal litigation, as well as class and collective actions, including FLSA, FCRA, and discrimination claims. She also represents clients in labor and employment mediation and arbitration. She is admitted to practice in Virginia and Maryland. x TABLE OF CONTENTS 30th Annual Employment Law Update CONFIDENTIALITY: PART III (NON-CLIENTS’ MISUNDERSTANDING AND MISTAKES) Thomas E. Spahn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 ANNUAL UPDATE ON EMPLOYMENT LAW CASES Edward Lee Isler Thomas E. Strelka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 WAGE AND HOUR LAW IN VIRGINIA Joshua Erlich Tevis Marshall I. The Fair Labor Standards Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 A. Executive Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 B. Administrative Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3 C. Learned Professional Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-4 D. Creative Professional Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-4 E. Computer Employee Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-5 F. Outside Sales Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-5 G. Highly Compensated Employee Exemption . . . . . . . . . . . . . . . . . . . . III-6 II. Virginia Worker Misclassification Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-7 III. U.S. Department of Labor Guidance for Employer’s Obligation to Exercise Reasonable Diligence in Tracking Teleworking Employees’ Hours of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-8 xi IV. Virginia Overtime Wage Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-12 WHAT THE BIDEN ADMINISTRATION HOLDS IN STORE FOR EMPLOYMENT LAW John M. Bredehoft Kristina H. Vaquera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1 VIRGINIA’S NEW EMPLOYMENT LAWS Craig Curwood King Tower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1 DISABILITY AND LEAVE - HOT TOPICS IN A POST-PANDEMIC WORLD David L. Greenspan Alexis H. Ronickher I. II. III. IV. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1 A. Federal Private Sector Disability Law - ADA . . . . . . . . . . . . . . . . . . . VI-1 B. Virginia Disability Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2 Vaccination issues and Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3 A. Can An Employer Request Employees to Receive Vaccinations? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3 B. If Reporting of an Employee’s COVID-19 Vaccination Status Is Allowed, What Can an Employer Require With Respect to Proof of Vaccination? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-4 C. Can Employers Relax Mask Requirements for Vaccinated Employees? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-6 D. Can an Employer Require Employees Be Identified in Some Way As to Whether They Are Vaccinated or Not? . . . . . . . . . . . . . . . . . . . VI-6 Accommodations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-7 A. Remote Working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-7 B. Accommodating Employees Who Cannot Be Vaccinated . . . . . . . . VI-11 Federal Protected Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-12 A. The Family Medical Leave Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-13 xii V. B. The Families First Coronavirus Response Act . . . . . . . . . . . . . . . . . VI-13 C. The American Rescue Plan Act of 2021 . . . . . . . . . . . . . . . . . . . . . . VI-15 ADA and Marijuana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-16 A. Marijuana Use Regulation - Federal Law . . . . . . . . . . . . . . . . . . . . . VI-16 B. Marijuana Use Regulation - State Law . . . . . . . . . . . . . . . . . . . . . . . VI-17 C. Marijuana - Updates from the Commonwealth . . . . . . . . . . . . . . . . . VI-18 UPDATE ON NON-COMPETE LAW IN VIRGINIA Sarah Belger Todd Leeson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1 xiii Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) CONFIDENTIALITY: PART III (NON-CLIENTS' MISUNDERSTANDING AND MISTAKES) Hypotheticals Thomas E. Spahn McGuireWoods LLP Copyright 2018 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 1 You and your law school roommate meet every month or so for lunch to discuss your careers. Yesterday your former roommate said that she was tempted to file a bar complaint against a lawyer on the other side of a case she is handling. That lawyer knew that your former roommate's box of trial exhibits had been accidentally delivered to the wrong floor in the courthouse. When your former roommate could not find the exhibits, she had to ask the court for a short delay in the trial -- which she had found embarrassing and which she feared had angered the judge who later ruled against her on some evidentiary matters. When she later learned that the adversary's lawyer knew that the exhibits had been delivered to the wrong floor, she confronted him -- asking why he had not been courteous enough to let her know of the delivery person's mistake. The other lawyer replied that his knowledge was "information relating to the representation" of his client, and thus protected by Rule 1.6. Your former roommate's experience prompted a lunch-time discussion between you and her about the intersection of ethics and professionalism. Should the ethics rules prohibit unprofessional behavior? YES NO I-A-1 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 2 You represent an oil refinery accused by a local newspaper of generating emissions that make local residents ill. None of the residents have filed lawsuits or even contacted your client, but you worry that the articles might stir up local opposition to your client's operations. You plan to interview residents in several nearby neighborhoods, and ask them whether they have experienced any problems -- but you wonder about any disclosure obligations about your role. What must or may you tell a local resident before beginning a substantive conversation? (A) You must disclose to the resident your role in representing the oil refinery. (B) You must disclose to the resident your role in representing the oil refinery, but only if you know or reasonably should know that the resident misunderstands your role. (C) You may not disclose to the resident your role in representing the oil refinery, unless your client consents. I-A-2 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 3 You represent the father of a young man who committed suicide while incarcerated in the county jail. You contacted a county corrections officer, who knew that you would probably add him to the litigation you plan to file. Although there is some dispute about your conversation with the officer, he later claimed that you told him that he would be covered by the county's insurance policy. The county has claimed that you violated the ethics rules prohibiting lawyers from giving any legal advice to adverse unrepresented persons. If you told the corrections officer that he would be covered by the county's insurance policy, have you violated an ethics rule? YES NO I-A-3 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 4 You represent the wife in a divorce case. The husband has not retained a lawyer. You plan to communicate with the husband, and explain to him that you represent his wife. You would also like to send him a property settlement agreement, and ask him to sign it. May you ask an unrepresented person to sign legal documents as long as you describe your role in representing the adversary? YES NO I-A-4 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 5 In your new position as a prosecutor, you have been increasingly dealing with illegal alien defendants. Some of them do not have lawyers, and you wonder whether you can propose plea agreements to unrepresented criminal defendants if their acquiescence to the agreement would render them vulnerable to deportation. What do you do? (A) You must disclose to the illegal alien the risks of acquiescing to the plea agreement. (B) You may disclose to the illegal alien the risks of acquiescing to the plea agreement, but you don't have to. (C) You may not disclose to the illegal alien the risks of acquiescing to the plea agreement. I-A-5 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 6 You are preparing for settlement negotiations, and have posed several questions to a partner whose judgment you trust. (a) May you advise the adversary that you think that your case is worth $250,000, although you really believe that your case is worth only $175,000? YES (b) NO May you argue to the adversary that a recent case decided by your state's supreme court supports your position, although you honestly believe that it does not? YES (c) NO Your client (the defendant) has instructed you to accept any settlement demand that is less than $100,000. If the plaintiff's lawyer asks "will your client give $90,000?," may you answer "no"? YES NO I-A-6 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 7 You are trying to settle a complex case involving both automobile liability policies and workers compensation coverage. The lawyer representing your adversary clearly does not understand her client's right to subrogation in connection with proceeds of an uninsured motorist policy. You conclude that she does not understand the law in this area. What do you do? (A) You must disclose the adverse law to your adversary. (B) You may disclose the adverse law to your adversary, but you don't have to. (C) You may not disclose the adverse law to your adversary, unless your client consents. I-A-7 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 8 On behalf of your client, you just made a $100,000 offer to buy land from a farmer and his wife (who are represented by an unsophisticated lawyer). You know that the farmer thinks that your client's offer contains a provision under which your client would assume an existing mortgage -- although the offer does not. What do you do? (A) You must disclose the absence of the provision. (B) You may disclose the absence of the provision, but you don't have to. (C) You may not disclose the absence of the provision, unless your client consents. I-A-8 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 9 You are representing the seller in negotiating a complex transaction memorialized in a 50-page draft agreement. One provision indicates that buyer's sole remedy for seller's breach of a covenant not to compete is return of the consideration allocated in the agreement for the covenant not to compete. Near the end of the drafting process, the buyer amends another provision in the agreement so that only one dollar is allocated to consideration for the covenant not to compete -- which essentially renders the covenant meaningless (because seller's breach would at most result in one dollar of damages). When you advise your client of the buyer's mistake, she directs you to keep it secret. What do you do? (A) You must disclose the buyer's mistake. (B) You may disclose the buyer's mistake, but you don't have to. (C) You may not disclose the buyer's mistake, unless your client consents. I-A-9 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 10 Since late yesterday afternoon, you have been furiously exchanging draft contracts with a transactional counterparty. You finally reached agreement on the last few provisions, which the adversary's lawyer says she will write up while you head home for an hour or two of sleep. When you returned to the office this morning to check what the other lawyer prepared, you realize that she left out an important term (favorable to her client) to which you had agreed during the final negotiation discussion. (a) (b) What do you do when dealing with your client? (A) You must disclose the adversary's mistake to your client. (B) You may disclose the adversary's mistake to your client, but you don't have to. (C) You may not disclose the adversary's mistake to your client. What do you do when dealing with the adversary's lawyer? (A) You must disclose the adversary's mistake to the adversary's lawyer. (B) You may disclose the adversary's mistake to the adversary's lawyer, but you don't have to. (C) You may not disclose the adversary's mistake to the adversary's lawyer, unless your client consents. I-A-10 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 11 You generally represent plaintiffs in personal injury cases. Months ago, you reached a very complicated settlement arrangement with an insured defendant and its insurance company, which involves the latter making monthly payments to your client over the course of ten years. You told your client what payments to expect from the insurance company. After your client told you the first few checks from the insurance company exceeded what you told the client to expect, you determine that the insurance company apparently has miscalculated the amount it should pay under the complicated settlement agreement. What do you do? (A) You must disclose the miscalculation to the insurance company. (B) You may disclose the miscalculation to the insurance company, but you don't have to. (C) You may not disclose the miscalculation to the insurance company, unless your client consents. I-A-11 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 12 You have not seen a judge quite as angry as this morning, when he asked you why you had not told the court and the litigants about your plan to declare bankruptcy late yesterday afternoon. The court had set aside three weeks for a trial which was set to start today, but which has now been put off by the bankruptcy filing. The court pointed out that your client's adversary had brought in witnesses from across the country, including very expensive expert witnesses. The court also noted the jury panel's inconvenience. The court bluntly tells you that she is inclined to severely sanction you for what you did -- unless you can convince her that your confidentiality duty prevented you from disclosing your client's bankruptcy plans. What do you do? (A) You must disclose your client's bankruptcy plans to the court. (B) You may disclose your client's bankruptcy plans to the court, but you don't have to. (C) You may not disclose your client's bankruptcy plans to the court, unless your client consents. I-A-12 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 13 You are defending a young mother against a charge that she murdered her infant daughter because her childcare responsibilities impeded her social life. The prosecution has gathered damaging entries from your client's home computer, but appears to have overlooked some even more incriminating entries -- showing that someone used your client's computer to do a Google search for "fool-proof suffocation methods" on the day that your client's daughter was last seen alive. What do you do? (A) You must disclose the incriminating searches to the prosecution. (B) You may disclose the incriminating searches to the prosecution, but you don't have to. (C) You may not disclose the incriminating searches to the prosecution, unless your client consents. I-A-13 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 14 You represent the plaintiff in a personal injury case. After several months of intense negotiations, it appears that you are nearing a settlement agreement with the defendant. However, you just learned that your client and his brother (whom the defendant recently deposed, and whom you envisioned as a key trial witness) were killed in a car accident. (a) (b) What do you do about your client's death? (A) You must disclose your client's death to the adversary. (B) You may disclose your client's death to the adversary, but you don't have to. (C) You may not disclose your client's death to the adversary. What do you do about the witness's death? (A) You must disclose your witness's death to the adversary. (B) You may disclose your witness's death to the adversary, but you don't have to. (C) You may not disclose your witness's death to the adversary. I-A-14 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 15 As the other side in a trial closes its case, you realize that the adversary's lawyer forgot to move into evidence a fairly important exhibit. You quickly huddle with your cocounsel to see what (if anything) you should do. From your experience, the judge handling the case would almost always allow a party to temporarily reopen its case to admit an exhibit like this. What do you do? (A) You must disclose the mistake to the adversary. (B) You may disclose the mistake to the adversary, but you don't have to. (C) You may not disclose the mistake to the adversary, unless your client consents. I-A-15 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 16 Your client asked you to check with the other side's lawyer (with whom you have a very friendly relationship) to see if the other side intends to appeal a trial victory that you won several weeks ago. When you call the other lawyer to ask about her intent, you learn that the other side intends to appeal -- but quickly realize that the other lawyer has miscalculated the appellate deadline. You do not say anything about it during the call, but reflect upon this issue immediately after hanging up. What do you do? (A) You must disclose the miscalculation to the adversary. (B) You may disclose the miscalculation to the adversary, but you don't have to. (C) You may not disclose the miscalculation to the adversary, unless your client consents. I-A-16 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 17 You have spent years earning a good reputation in your local court, but you worry that a troublesome client's actions might destroy it. In a hearing yesterday, you made several material factual representations to the court based on what your client had earlier told you. After the hearing, he confessed that some of the factual representations were wrong. Although your representations to the court did not constitute evidence, you immediately told your client that you had to correct your misstatements. However, he knew enough about your ethics duties to insist that you maintain the confidentiality of your post-hearing discussion and his confession -- and not correct your earlier representations. What do you do? (A) You must disclose the correct facts to the court. (B) You may disclose the correct facts to the court, but you don't have to. (C) You may not disclose the correct facts to the court, unless your client consents. I-A-17 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 18 You know that you cannot knowingly make false statements to courts, but you now face a more subtle issue. You have scheduled a TRO hearing for tomorrow morning -- and you do not know whether the adversary or his lawyer will be there. Your client has told you about several material and very damaging facts that would weaken your effort to obtain a TRO. Your client has asked you not to disclose those facts to the court if the other side fails to raise them. (a) (b) What do you do if the adversary and her lawyer appear at the hearing? (A) You must disclose the adverse material facts to the court if the other side does not. (B) You may disclose the adverse material facts to the court if the other side does not, but you don't have to. (C) You may not disclose the adverse material facts to the court if the other side does not, unless your client consents. What do you do if the adversary and her lawyer do not appear at the hearing? (A) You must disclose the adverse material facts to the court. (B) You may disclose the adverse material facts to the court, but you don't have to. (C) You may not disclose the adverse material facts to the court, unless your client consents. I-A-18 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 19 Through several years of extensive discovery and frequent hearings in state court litigation, you and your colleagues have always been more diligent than your adversary's lawyers. The latest upcoming hearing is no exception. Your adversary's brief fails to cite several unfavorable decisions that one of your brightest new associates has found. One of the unfavorable decisions is from the circuit court where you are litigating, and another even worse decision is from a circuit court in another part of your state. When you advised your client of the bad decisions, she asked you to keep that research confidential -- relying on some of your own statements to her about the breadth of your state's confidentiality duty. (a) (b) What do you do about the unfavorable law from your circuit court? (A) You must disclose the adverse law to the court. (B) You may disclose the adverse law to the court, but you don't have to. (C) You may not disclose the adverse law to the court, unless your client consents. What do you do about the unfavorable law from the other circuit court? (A) You must disclose the adverse law to the court. (B) You may disclose the adverse law to the court, but you don't have to. (C) You may not disclose the adverse law to the court, unless your client consents. I-A-19 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 20 You have been worried for weeks about your client's fate in an upcoming hearing. She had already been convicted of one check-kiting crime and the judge has a reputation for toughness on repeat offenders. To your surprise, when the judge asks the prosecutor if your client has any prior convictions, the prosecutor tells the judge that there have been no prior convictions. Your mind starts to race as you consider what you should do. (a) (b) What do you do? (A) You must disclose the prosecutor's mistake to the court. (B) You may disclose the prosecutor's mistake to the court, but you don't have to. (C) You may not disclose the prosecutor's mistake to the court, unless your client consents. If the prosecutor turns to your client and asks "Right?" may you and your client remain silent? YES (c) NO If the judge asks "Is that right?" may you and your client remain silent? YES NO I-A-20 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals ABA Master McGuireWoods LLP T. Spahn (4/13/16) Hypothetical 21 You represented a criminal defendant in a case tried by a judge without a jury. The judge announced from the bench that she found your client guilty of a felony. However, you were pleasantly surprised, and bit perplexed, when you received the court's final order -- because the judge mistakenly marked the "misdemeanor" box on the post-verdict form. What do you do? (A) You must disclose the mistake to the court. (B) You may disclose the mistake to the court, but you don't have to. (C) You may not disclose the mistake to the court, unless your client consents. I-A-21 77254330_1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) CONFIDENTIALITY: PART III (NON-CLIENTS' MISUNDERSTANDING AND MISTAKES) Hypotheticals and Analyses* Thomas E. Spahn McGuireWoods LLP * These analyses primarily rely on the ABA Model Rules, which represent a voluntary organization's suggested guidelines. Every state has adopted its own unique set of mandatory ethics rules, and you should check those when seeking ethics guidance. For ease of use, these analyses and citations use the generic term "legal ethics opinion" rather than the formal categories of the ABA's and state authorities' opinions -- including advisory, formal and informal. ______________________ © 2018 McGuireWoods LLP. McGuireWoods LLP grants you the right to download and/or reproduce this work for personal, educational use within your organization only, provided that you give proper attribution and do not alter the work. You are not permitted to re-publish or re-distribute the work to third parties without permission. Please email Thomas E. Spahn ([email protected]) with any questions or requests. 65829543_8 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) TABLE OF CONTENTS Hypo No. Subject Page (A) Ethics Versus Professionalism 1 Difference Between Ethics and Professionalism ..................................... 1 (B) Dealing with Unrepresented Persons 2 Disclosing Lawyers' Role........................................................................... 5 3 Distinguishing Between Legal Advice and Opinion ................................ 33 4 Preparing Legal Documents for Unrepresented Persons' Signature ..................................................................................................... 42 Application to Prosecutors ........................................................................ 51 5 (C) Non-Client's Misunderstanding and Mistakes in Negotiations and Transactions 6 Negotiation/Transactional Adversaries' Misunderstanding of Clients' Intent .............................................................................................. 57 7 Negotiation/Transactional Adversaries' Legal Misunderstanding ......... 68 8 Negotiation/Transactional Adversaries' Factual Misunderstanding ....................................................................................... 72 9 Transactional Adversaries' Substantive Mistakes ................................... 86 10 Transactional Adversaries' Scrivener's Errors ........................................ 94 11 Transactional Adversaries' Post-Agreement Mistakes ........................... 107 (D) Non-Client's Misunderstanding and Mistakes in Litigation 12 Clients' Silence About Litigation Tactics.................................................. 110 13 Litigation Adversaries' Factual Misunderstanding .................................. 118 65829543_8 i Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master Hypo No. McGuireWoods LLP T. Spahn (4/13/16) Subject Page 14 Clients' or Witnesses' Death ...................................................................... 126 15 Litigation Adversaries' Minor Litigation Mistakes ................................... 136 16 Litigation Adversaries' Major Case-Dispositive Mistakes ....................... 141 (E) Courts' Misunderstanding and Mistakes 17 Lawyers' Duty to Correct Their Earlier Misstatements to Courts ........... 153 18 Courts' Factual Misunderstanding Based on the Absence of Material Facts .............................................................................................. 156 19 Courts' Legal Misunderstanding Based on Litigants' Failure to Cite Relevant Law ....................................................................................... 164 20 Courts' Factual Misunderstanding Based on Litigation Adversaries' Mistakes ........................................................................... 181 21 Courts' Scrivener's Errors ......................................................................... 197 65829543_8 ii Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Difference Between Ethics and Professionalism Hypothetical 1 You and your law school roommate meet every month or so for lunch to discuss your careers. Yesterday your former roommate said that she was tempted to file a bar complaint against a lawyer on the other side of a case she is handling. That lawyer knew that your former roommate's box of trial exhibits had been accidentally delivered to the wrong floor in the courthouse. When your former roommate could not find the exhibits, she had to ask the court for a short delay in the trial -- which she had found embarrassing and which she feared had angered the judge who later ruled against her on some evidentiary matters. When she later learned that the adversary's lawyer knew that the exhibits had been delivered to the wrong floor, she confronted him -- asking why he had not been courteous enough to let her know of the delivery person's mistake. The other lawyer replied that his knowledge was "information relating to the representation" of his client, and thus protected by Rule 1.6. Your former roommate's experience prompted a lunch-time discussion between you and her about the intersection of ethics and professionalism. Should the ethics rules prohibit unprofessional behavior? MAYBE Analysis It is important to distinguish between ethics and professionalism/civility. Every state's ethics rules represent a balance between lawyers' primary duty to diligently represent their clients, and some countervailing duty to others within the justice system (or sometimes, to the system itself). In many situations, lawyers following the ethics rules might have to take steps that the public could consider unprofessional. For example, lawyers often must maintain client confidences when the public might think they should speak up -- disclosing a client's past crime, warning the victim of some possible future crime, etc. In less dramatic contexts, lawyers generally 65829543_8 I-B-1 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) must remain silent if their adversary's lawyer misses some important legal argument or defense, etc. Thus, ethics principles focus on lawyers' duties to their clients, and the limited ways in which those duties can be "trumped" by duties to others. In contrast, professionalism has a much more modest focus. Professionalism speaks to lawyers' day-to-day interactions with other lawyers, with clients, with courts, and with others. Professionalism involves courtesy, civility, and the Golden Rule. When the ethics rules require lawyers to disagree with adversaries or their lawyers, professionalism calls for lawyers to do so without being personally disagreeable. Applicable Ethics Rules To be sure, the bar can discipline lawyers for extreme misconduct amounting to a lack of courtesy. For instance, under ABA Model Rule 4.4(a), [i]n representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person. ABA Model Rule 4.4(a) (emphasis added). The ABA Model Rules Preamble similarly explains that [a] lawyer should use the law's procedures only for legitimate purposes and not to harass or intimidate others. A lawyer should demonstrate respect for the legal system and for those who serve it, including judges, other lawyers and public officials. ABA Model Rules Preamble [5] (emphasis added). The ethics rules thus set a very low minimum standard of conduct. They do not condemn all actions that "embarrass, delay, or burden" third persons. Instead, the 65829543_8 I-B-2 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ethics rules only prohibit actions that "have no substantial purpose" other than to prejudice third persons in that way. Not surprisingly, not many actions fall below this line. Even the dimmest of lawyers can normally find some other arguable reason to have undertaken an unprofessional act. Ethics Rules Allowing Lawyers to Act Professionally The ethics rules describe several occasions during the course of an attorneyclient relationship when lawyers have more power than they might realize to act professionally -- without falling short of their clear ethical duty to act as diligent client advocates. First, lawyers establishing an attorney-client relationship can limit the scope of the representation so it "exclude[s] specific means that might otherwise be used to accomplish the client's objective" -- such as "actions . . . that the lawyer regards as repugnant or imprudent" (lawyers can either make their services available only under this condition, or agree with the client to such a limit). ABA Model Rule 1.2 cmt. [6]. Second, during the course of the representation clients generally set the objectives, but "normally defer to the special knowledge and skill of their lawyer with respect to the means to be used to accomplish their objectives, particularly with respect to technical, legal and tactical matters." ABA Model Rule 1.2 cmt. [2]. Thus, lawyers "may have authority to exercise professional discretion in determining the means by which a matter should be pursued." ABA Model Rule 1.3 cmt. [1]. Third, although lawyers must diligently represent their clients, "[a] lawyer is not bound, however, to press for every advantage that might be realized for a client." ABA Model Rule 1.3 cmt. [1]. Fourth, although a lawyer "shall act with reasonable diligence and promptness in representing a client" (ABA Model Rule 1.3), "[t]he lawyer's duty to act with reasonable diligence does not require the use of offensive tactics or preclude the treating of all persons involved in the legal process with courtesy and respect." ABA Model Rule 1.3 cmt. [1] (emphasis added). 65829543_8 I-B-3 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Fifth, a lawyer may withdraw from representing a client (even if there is "material adverse effect on the interests of the client" (ABA Model Rule 1.16(b)(1))) if "the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement." ABA Model Rule 1.16(b)(1) & (4) (emphasis added). All of these provisions provide a framework for lawyers to act professionally while fulfilling their ethical duties. Best Answer The best answer to this hypothetical is MAYBE. b 12/10, 1.16 65829543_8 I-B-4 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Disclosing Lawyers' Role Hypothetical 2 You represent an oil refinery accused by a local newspaper of generating emissions that make local residents ill. None of the residents have filed lawsuits or even contacted your client, but you worry that the articles might stir up local opposition to your client's operations. You plan to interview residents in several nearby neighborhoods, and ask them whether they have experienced any problems -- but you wonder about any disclosure obligations about your role. What must or may you tell a local resident before beginning a substantive conversation? (A) You must disclose to the resident your role in representing the oil refinery. (B) You must disclose to the resident your role in representing the oil refinery, but only if you know or reasonably should know that the resident misunderstands your role. (C) You may not disclose to the resident your role in representing the oil refinery, unless your client consents. (B) YOU MUST DISCLOSE TO THE RESIDENT YOUR ROLE IN REPRESENTING THE OIL REFINERY, BUT ONLY IF YOU KNOW OR REASONABLY SHOULD KNOW THAT THE RESIDENT MISUNDERSTANDS YOUR ROLE Analysis The ethics rules' treatment of lawyers' communications with unrepresented persons seems counterintuitive and open to mischief. 1908 ABA Canons A 1908 ABA Canon dealt with ex parte communications with represented and unrepresented persons in the same canon -- entitled "Negotiations with Opposite Parties." A lawyer should not in any way communicate upon the subject of controversy with a party represented by counsel; much less should he undertake to negotiate or compromise 65829543_8 I-B-5 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) the matter with him, but should deal only with his counsel. It is incumbent upon the lawyer most particularly to avoid everything that may tend to mislead a party not represented by counsel, and he should not undertake to advise him as to the law. ABA Canons of Professional Ethics, Canon 9 (emphasis added). Thus, ABA Canon 9 prohibited lawyers' misrepresentation when dealing with unrepresented persons, and prohibited lawyers from advising such persons "as to the law." In two 1930s opinions, the ABA provided some guidance. In 1931, the ABA explained that a lawyer could not provide legal advice to a divorce adversary. ABA LEO 58 (12/14/31) ("A member of the Association asks whether a lawyer who is consulted by a client who desires to procure a divorce, may properly confer with the adverse party in an attempt to get the adverse party to agree to a divorce and whether he may, at a conference with his client and the adverse party, give the adverse party legal advice in an attempt to secure the adverse party's consent to what will, in effect, be an agreed action. It is, of course, assumed that the adverse party is not at the time represented by counsel. . . . It would be a violation of Canon 9 for a lawyer consulted by a client who desires to procure a divorce to confer with the adverse party in an attempt to get the adverse party to agree to the divorce. A conference of the nature indicated in the question might easily lead to the giving of advice to the adverse party. Canon 9 provides that 'it is incumbent upon the lawyer most particularly to avoid everything that may tend to mislead a party not represented by counsel, and he should not undertake to advise him as to the law.' The proper procedure for the lawyer representing a party seeking a divorce, and having occasion to communicate with the adverse party not represented by counsel, would be to limit the communication as nearly as possible to a statement of the proposed action, and a recommendation that the adverse party should consult independent counsel. But the disapproval herein expressed should not be understood as condemning the laudable and proper efforts which an attorney may make to bring about a reconciliation between his client and an adverse spouse not represented by counsel, when such efforts involve no discussion of the facts which furnish, or might furnish, grounds for divorce." (emphasis added)). 65829543_8 I-B-6 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Two years later, the ABA issued another opinion in a non-divorce setting. The ABA again warned the lawyer against giving advice to an unrepresented injured worker, but somewhat surprisingly explained that the lawyer could provide a settlement document for the worker to sign. ABA LEO 102 (12/15/33) ("A member of the Association requests an opinion from the committee on the following question: 'Under the Workmen's Compensation Law of this state, compromise and lump sum settlements must be made on the joint petition of the employee and employer and with the approval of a court of competent jurisdiction. In rare instances is the employee ever represented by an attorney. Usually, the attorney for the employer, or the employer's insurer, prepares the petition, agreement of settlement and judgment; the employee appears in proper person and the employer through his or its attorney. Is it unethical or professionally improper for the attorney to so act?' . . . The question presented is not difficult to answer as to professional propriety. Cannon 9, among other things, provides, 'It is incumbent upon the lawyer most particularly to avoid everything that may tend to mislead a party not represented by counsel and he should not undertake to advise him as to the law.' It is not professionally improper for the master's attorney to prepare settlement papers between master and servant in a personal injury claim of the servant where the statute compensating the servant for personal injuries provides that compensation for the injury may be made in a lump sum settlement on the joint petition of the master and servant, and approved by a court of competent jurisdiction. When the servant has no attorney, and the master's attorney is called upon by the master to prepare the papers to effectuate the agreed settlement, the attorney in drafting the settlement papers should refrain from advising the servant about the law, and particularly must avoid misleading the servant concerning the law or the facts. The attorney also should advise the court that he represents the master, or insurer; that he has prepared the papers in settlement, which had theretofore been agreed upon between the master and the servant; that the servant has no counsel; and that the servant is present in court in proper person. Within these limitations, the committee sees no professional impropriety in an attorney so acting." (emphases added)). 1969 ABA Code of Professional Responsibility The 1969 ABA Model Code of Professional Responsibility also combined lawyers' communications with represented and unrepresented person in the same rule, although the latter appeared in a separate subsection. 65829543_8 I-B-7 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) During the course of his representation of a client a lawyer shall not . . . [g]ive advice to a person who is not represented by a lawyer, other than the advice to secure counsel, if the interests of such person are or have a reasonable possibility of being in conflict with the interests of his client. ABA Model Code DR 7-104(A)(2) (footnote omitted). A Mississippi Supreme Court decision discussed the difference between Canon 9 and the ABA Model Code provision. Canon 9 was succeeded by DR 7-104 of the Code of Professional Conduct and Ethical Consideration 7-18. DR 7-104's prohibitory language expresses essentially the same mandate as did Canon 9, but there are noticeable differences. The language in DR 7-104(A)(2) speaks in terms of an unrepresented "person" rather than Canon 9's "party," omits the proscription against "misleading" such a person and, while Canon 9 proscribed giving an unrepresented person "advice" as to the "law," DR 7104(A)(2) speaks merely of "advice" without the qualifying language. Nevertheless, ABA Informal Opinion No. 1140 (adopted January 20, 1970) declares that the effect of former Canon 9 and DR 7-104(A)(2) "appears to be substantially the same," and DR 7-104(A)(2) ["]therefore simply carries forward the meaning and intent" of Canon 9. See ABA Informal Opinion #1140. Attorney Q v. Miss. State Bar, 587 So. 2d 228, 232 (Miss. 1991). Shortly after the ABA adopted its 1969 ABA Model Code, it issued three opinions involving lawyers' ex parte communications with an unrepresented divorce adversary. In 1970, the ABA held that a lawyer could not ask an unrepresented adversary to sign documents in which the adversary relinquished any rights. ABA Informal LEO 1140 (1/20/70) ("'What violation of professional ethics is involved in obtaining from a defendant in a domestic relations case a 'waiver' such as is widely used in (State)? Acopy [sic] of such waiver is attached.' The form in question waives the issuance of and service of summons, waives any right to contest the jurisdiction or venue of the court and agrees that the case be submitted to the court in term time or in vacation and without further 65829543_8 I-B-8 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) notice to the defendant. The form also waives notice to take depositions and agrees that depositions may be taken at any time without notice and without formality. . . . If the party to whom the waiver is presented is not represented by counsel, then both the present Canon 9 and Disciplinary Rule 7-104(A)(2) would seem to prohibit the procedure regarding which you have inquired. The former states: . . . It is, therefore, the opinion of the Committee under both the present Canons of Ethics and the Code of Professional Responsibility that a violation of proper ethical conduct would be involved in the procedure which you describe." (emphasis added)). Approximately two years later, the ABA reaffirmed its earlier position, despite a new "no-fault" divorce statute. ABA Informal LEO 1255 (12/15/72) [Reconsideration of 1140] ("On July 6, 1972, the Legislature enacted a new 'no-fault' divorce Act (S17, LB-820). You sent us a copy of a form of 'Appearance and Responsive Pleading of Respondent' which has been prescribed by the Supreme Court of under Section 7 of said Act which directed the Supreme Court to prescribe the form of all pleadings required by the Act. Neither the Act nor the Court gave any instruction with regard to the subject of your inquiry: i.e., whether it is ethical to submit or to mail such an Appearance and Responsive Pleading to the other party in a domestic relations case for signature where that other party is not represented by an attorney, if the respondent is simultaneously advised to see the attorney of his choice and the plaintiff's attorney knows of no contested issue. You noted that this appears to be unethical under our Informal Opinion 1140 and ask that we reconsider that Opinion in the light 'of the enclosed pleading prepared by the Supreme Court of .' [sic] Since, on the facts you state, a Responsive Pleading is involved the plaintiff's lawyer would be improperly advising both parties. The fact that the Court prescribed the form of the Responding [sic] Pleading is irrelevant to the issue you present. The question is not before us whether in such a case a plaintiff's lawyer may properly submit to the respondent for signature a waiver of the issuance and service of the summons and complaint and entry of appearance. Your suggestion that in some such instances 'there was really nothing being contested' does not meet the requirement of Disciplinary Rule 7-104(A)(2) that an attorney should not represent both parties even if there is 'a reasonable possibility of . . . conflict' of interests. In our judgment the practice of the plaintiff's lawyer submitting such a pleading to an unrepresented defendant for signature in a domestic relations case is susceptible of abuse and is unethical." (emphasis added)). 65829543_8 I-B-9 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) About three months later, the ABA backed off a bit from its earlier position, separating prohibited legal advice from the permissible forwarding of documents to an unrepresented person for signature. ABA Informal LEO 1269 (5/22/73) ("Our Informal Opinion 1255, dated December 15, 1972, advised your partner that in the opinion of the Committee it would be subject to abuse and unethical for an attorney to submit or mail an appearance and responsive pleadings to the other party in a domestic relations case for signature where the other party is not represented by an attorney. We also reaffirmed Informal Opinion 1140. The preparation and submission of responsive pleadings to an unrepresented party would in the opinion of the Committee constitute the giving of advice in contravention of DR 7-104(A)(2). Your letter of January 6, 1973, now raises the question of whether it would be proper for plaintiff's counsel in a domestic relations case to submit to an unrepresented defendant for signature a waiver of the issuance and service of summons and the entry of an appearance. As long as these documents are not accompanied by or coupled with the giving of any advice to the defendant, they would constitute only communication with an unrepresented party and, accordingly, would be ethical and proper as not being violative of the prohibitions of the Code." (emphasis added)). These three ethics opinions (which dealt with divorce, as did many early legal ethics opinions) started with an understandable position equating lawyers' preparation for signature of legal documents with unethically providing of legal advice to an unrepresented person. But the ABA then shifted, permitting lawyers to provide such legal documents. 1983 ABA Rules of Professional Conduct ABA Model Rule 4.3. In 1983, the ABA Model Rules took a different approach. In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. 65829543_8 I-B-10 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ABA Model Rule 4.3 (as of 1983). A comment provided guidance. An unrepresented person, particularly one not experienced in dealing with legal matters, might assume that a lawyer is disinterested in loyalties or is a disinterested authority on the law even when the lawyer represents a client. During the course of a lawyer's representation of a client, the lawyer should not give advice to an unrepresented person other than the advice to obtain counsel. ABA Model Rule 4.3 cmt. (as of 1983) (emphasis added). Thus, the 1983 ABA Model Rules not only dropped the advice prohibition to a comment, it also used the word "should" -- instead of articulating an absolute prohibition. The Model Code Comparison surprisingly explained that the earlier ABA Model Code provision was not a "direct counterpart to the rule." There was no direct counterpart to this Rule in the Model Code. DR 7-104(A)(2) provided that a lawyer shall not "[g]ive advice to a person who is not represented by a lawyer, other than the advice to secure counsel." ABA Model Rules Code Comparison (as of 1983). To be sure, there are some differences. First, the 1969 ABA Model Code required lawyers' initial disclosure of their role -but in a surprisingly limited set of circumstance. One might have expected the rule to always require such disclosure. But ABA Model Rule 4.3 only requires lawyers to: (1) avoid "state[ing] or imply[ing]" that the lawyer is "disinterested" (which would amount to a misrepresentation); (2) correct the "misunderstanding" of the unrepresented person, but only when the lawyer "knows or reasonably should know" that the 65829543_8 I-B-11 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) unrepresented person "misunderstand the lawyer's role in a matter." This is a surprisingly narrow disclosure duty. Second, ABA Model Rule 4.3 dropped into a comment the prohibition on lawyers giving advice. The ABA/BNA Journal cited a 2002 ABA report in explaining the reason for what the Journal describes as a demotion. When the Model Rules of Professional Conduct replaced the Model Code in 1983, the prohibition against 'advice' was demoted to the comment because of the 'difficulty of determining what constitutes impermissible advice-giving." ABA Report to the House of Delegates, No. 401 (February 2002); Model Rule 4.3, Reporter's Explanation of Changes. ABA/BNA Lawyers' Manual on Profession Conduct, 71:505, July 28, 2004. Whatever the reason for the ABA's relegation to a comment of the prohibition on lawyers giving advice to unrepresented persons, the ABA apparently later regretted that move. A reporter's note in the 2000 Restatement discusses this. The scope of ABA Model Rule 4.3 with respect to giving advice to an unrepresented nonclient is unclear. The ABA Model Rule, quoted above, plainly does not carry forward the prohibition of the ABA Model Code. Indeed, absence of such a prohibition has been regretted by the drafter of the ABA Model Rules. See 2 G. Hazard & W. Hodes, The Law of Lawyering § 4.3:102, at 747-48 (1991 supp.) (regretting decision of drafters of ABA Model Rules to omit prohibition against "giving advice" from ABA Model Rule 4.3). The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. b (2000) (emphasis added). As in other areas, many states retained the advice prohibition in their rules. [As of 2002], [e]leven of the jurisdictions adopting the Model Rules did, however, retain a version of the Model Code's advice prohibition in their black-letter rule. ABA Report to 65829543_8 I-B-12 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) the House of Delegates, No. 401 (February 2002); Model Rule 4.3, Reporter's Explanation of Changes. ABA/BNA Lawyers' Manual on Profession Conduct, 71:505, July 28, 2004. The 2000 Restatement noted the same phenomenon. On the other hand, the Comment to ABA Model Rule 4.3 states that "during the course of a lawyer's representation of a client, the lawyer should not give advice to an unrepresented person other than the advice to obtain counsel." Whether the Comment is merely advisory or, if mandatory, whether it is consistent with the Rule itself has not been frequently determined in decided cases. . . . Several jurisdictions have explicitly retained the prohibition of the ABA Model Code against giving legal advice. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. b (2000) (emphasis added). As explained below, the ABA moved the advice prohibition back into the black letter rule in 2002. Third, it was unclear whether the comment prohibited lawyers from giving advice ("other than the advice to obtain counsel") to unrepresented persons applied only to adverse unrepresented persons. The pertinent comment sentence does not explicitly state that, but the previous sentence implies it. An unrepresented person, particularly one not experienced in dealing with legal matters, might assume that a lawyer is disinterested in loyalties or is a disinterested authority on the law even when the lawyer represents a client. During the course of a lawyer's representation of a client, the lawyer should not give advice to an unrepresented person other than the advice to obtain counsel. ABA Model Rule 4.3 cmt. (as of 1983) (emphasis added). 65829543_8 I-B-13 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Some critics noted ABA Model Rule 4.3's confusion about the role of adversity in analyzing the communications. The reporter's note in the 2000 Restatement (which is discussed more fully below) noted the first issue. The heading of DR 7-104 refers to "one of adverse interest" (emphasis supplied). No similar language is found in either subpart of its operative text, and apparently no court has so limited the rule. ABA Model Rules of Professional Conduct, Rule 4.3 (1983) contains no similar heading. . . . On the other hand, the operative provisions of those rules, as well as the Section, come into play when the unrepresented nonclient is prejudicially misled. That presumably would occur only in the context of adverse interests between the nonclient and the lawyer's client. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. c (2000). ABA Model Rule 1.13. In another ABA Model Rule adopted in 1983, the ABA applied ABA Model Rule 4.3's basic principle in a specific setting -- when lawyers communicate with a corporate client's constituent. In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when it is apparent that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing ABA Model Rule 1.13(d) (as of 1983). A comment provided some guidance. There are times when the organization's interest may be or become adverse to those of one or more of its constituents. In such circumstances the lawyer should advise any constituent, whose interest the lawyer finds adverse to that of the organization of the conflict or potential conflict of interest, that the lawyer cannot represent such constituent, and that such person may wish to obtain independent representation. Care must be taken to assure 65829543_8 I-B-14 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) that the individual understands that, when there is such adversity of interest, the lawyer for the organization cannot provide legal representation for that constituent individual, and that discussions between the lawyer for the organization and the individual may not be privileged. When such a warning should be given by the lawyer for the organization to any constituent individual may turn on the facts of each case. ABA Model Rule 1.13 cmt. (as of 1983) (later numbered as cmt. [10], [11]). Restatement In 2000, the American Law Institute adopted its Restatement (Third) of Law Governing Lawyers (2000). As in other areas, the Restatement articulated an approach that the ABA eventually adopted (the ABA Model Rules' 2002 changes are discussed below). The Restatement predictably prohibits lawyers' representation when communicating with unrepresented parties, and then describes lawyers' disclosure obligation -- which follow the ABA Model Rules in recognizing the obligation only in certain circumstances. In the course of representing a client and dealing with a nonclient who is not represented by a lawyer: (1) the lawyer may not mislead the nonclient, to the prejudice of the nonclient, concerning the identity and interests of the person the lawyer represents; and (2) when the lawyer knows or reasonably should know that the unrepresented nonclient misunderstands the lawyer's role in the matter, the lawyer must make reasonable efforts to correct the misunderstanding when failure to do so would materially prejudice the nonclient. The Restatement (Third) of Law Governing Lawyers § 103 (2000). 65829543_8 I-B-15 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The Restatement explains the rule's purpose. Active negotiation by a lawyer with unrepresented nonclients is appropriate in the course of representing a client. In dealing with an unrepresented nonclient, a lawyer's words and actions can result in a duty of care to that person, for example, if the lawyer provides advice . . . . Lawyers should in any event be trustworthy. Moreover, by education, training, and practice, lawyers generally possess knowledge and skills not possessed by nonlawyers. Consequently, a lawyer may be in a superior negotiating position when dealing with an unrepresented nonclient, who therefore should be given legal protection against overreaching by a lawyer. The Restatement (Third) of Law Governing Lawyers § 103 cmt. b (2000) (emphasis added). A comment explains the obvious prohibition on lawyers' misrepresentations. This Section states two general requirements. First, the lawyer must not mislead the unrepresented nonclient to that person's detriment concerning the identity and interests of the person whom the lawyer represents. For example, the lawyer may not falsely state or imply that the lawyer represents no one, that the lawyer is disinterestedly protecting the interests of both the client and the unrepresented nonclient, or that the nonclient will suffer no harm by speaking freely. Such a false statement could disarm the unrepresented nonclient and result in unwarranted advantage to the lawyer's client. The Restatement (Third) of Law Governing Lawyers § 103 cmt. b (2000) (emphasis added). The comment also addresses lawyers' surprisingly narrow disclosure obligation. Second, the lawyer is subject to a duty of disclosure when the lawyer knows or reasonably should know that the unrepresented nonclient misunderstands the lawyer's role in the matter and when failure to correct the misunderstanding would prejudice the nonclient or the nonclient's principal. 65829543_8 I-B-16 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Id. (emphasis added). As in other areas, the Restatement offers a more subtle analysis than the ABA Model Rules' comments. For instance, the Restatement makes the understandable point that lawyers' disclosure obligation depends in part on the unrepresented person's sophistication. Application of the rule of this Section depends significantly on the lawyer's role, the status and role of the unrepresented nonclient, and the context. For example, a lawyer for an employee dealing with an official of an employer in a dispute over compensation may typically assume that the official will understand the lawyer's role once it is stated that the lawyer represents the employee. A lawyer dealing with a sophisticated business person will have less need for caution than when dealing with an unsophisticated nonclient. The Restatement (Third) of Law Governing Lawyers § 103 cmt. b (2000). The Restatement next explains the basic principle's application even in nonadversarial settings. As explained above, the Restatement's reporter's note indicates that the ABA Model Rule dropped the explicit reference to adversity that had appeared in the ABA Model Code. This Section applies to a lawyer's dealings with both unrepresented nonclients of adverse interest and those of apparently congruent interest. The Section applies to a lawyer's work in litigation, transactions, and other matters. It also applies to a lawyer representing a corporation or other organization in dealing with an unrepresented nonclient employee or other constituent of the organization. The Restatement (Third) of Law Governing Lawyers § 103 cmt. c (2000). Turning to real-life scenarios, the Restatement confirms that lawyers may negotiate transactions with unrepresented adversaries. 65829543_8 I-B-17 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In a transaction in which only one of the parties is represented, that person is entitled to the benefits of having a lawyer . . . . The lawyer may negotiate the terms of a transaction with the unrepresented nonclient and prepare transaction documents that require the signature of that party. The lawyer may advance the lawful interests of the lawyer's client but may not mislead the opposing party as to the lawyer's role. See also § 116, Comment d (lawyer has no obligation to inform unrepresented nonclient witness of privilege to refuse to testify or to answer questions that may incriminate). The Restatement (Third) of Law Governing Lawyers § 103 cmt. d (2000) (emphasis added). Interestingly, the Restatement supports the removal of a "legal advice" reference, explaining that lawyers are essentially giving "legal advice" when they provide information or documents to unrepresented persons. Formerly, a lawyer-code rule prohibited a lawyer from giving "legal advice" to an unrepresented nonclient. That restriction has now been omitted from most lawyer codes in recognition of the implicit representations that a lawyer necessarily makes in such functions as providing transaction documents to an unrepresented nonclient for signature, seeking originals or copies of documents and other information from the nonclient, and describing the legal effect of actions taken or requested. The Restatement (Third) of Law Governing Lawyers § 103 cmt. d (2000) (emphasis added). The Restatement then provides several illustrations. Lawyer represents Insurer in a wrongful-death claim asserted by Personal Representative, who is not represented by a lawyer. The claim concerns the death of Decedent assertedly caused by an insured of Insurer. Under applicable law, a settlement by Personal Representative must be approved by a tribunal. Personal Representative and Insurer's claims manager have agreed on a settlement 65829543_8 I-B-18 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) amount. Lawyer prepares the necessary documents and presents them to Personal Representative for signature. Personal Representative, who is aware that Lawyer represents the interests of Insurer, asks Lawyer why the documents are necessary. Lawyer responds truthfully that to be effective, the documents must be executed and filed for court approval. Lawyer's conduct is permissible under this Section. The Restatement (Third) of Law Governing Lawyers § 103 illus. 1 (2000) (emphasis added). One might have thought that the lawyer's explanation that courts must approve any settlement documents amounts to "legal advice." But as explained above, the Restatement deliberately avoided any prohibition on giving legal advice -- instead extending the prohibition to misrepresentations. The next illustration involves an adversary who seems to misunderstand the lawyer's role. Lawyer represents the financing Bank in a home sale. Buyer, the borrower, is not represented by another lawyer. Under the terms of the transaction, Buyer is to pay the legal fees of Lawyer. Buyer sends Lawyer a letter stating, "I have several questions about legal issues in the house purchase on which you are representing me." Buyer also has several telephone conversations with Lawyer in which Buyer makes similar statements. In the circumstances, it should be apparent to Lawyer that Buyer is assuming, perhaps mistakenly, that Lawyer represents Buyer in the transaction. It is also apparent that Buyer misunderstands Lawyer's role as lawyer for Bank. Lawyer must inform Buyer that Lawyer represents only Bank and that Buyer should not rely on Lawyer to protect Buyer's interests in the transaction. The Restatement (Third) of Law Governing Lawyers § 103 illus. 2 (2000). This illustration presents a fairly obvious case. It would have been interesting if the Restatement had offered a more subtle and difficult scenario. Perhaps the Restatement 65829543_8 I-B-19 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) would not have known how to describe a lawyer's disclosure obligation if the adversary had not so clearly seemed to believe the lawyer was advising him or her. The Restatement then focuses on lawyers' disclosure obligation within a corporate client entity -- offering a parallel to ABA Model Rule 1.13. One comment warns that lawyers' failure to describe their role to a possibly adverse corporate constituent might result in a constituent's reasonable argument that the lawyer also represented the constituent. A lawyer for an organizational client, whether inside or outside legal counsel . . . , may have important responsibilities in investigating relevant facts within the organization. In doing so, the lawyer may interview constituents of the organization, who in some instances might have interests that differ from those of the organization and might be at personal risk of criminal prosecution or civil penalties. A constituent may mistakenly assume that the lawyer will act to further the personal interests of the constituent, perhaps even against the interests of the organization. Such a mistake on the part of the constituent can occur after an extended period working with the lawyer on matters of common interest to the organization and the constituent, particularly if the lawyer has formerly provided personal counsel to the constituent, and may be more likely to occur with inside legal counsel due to greater personal acquaintanceship. Such an assumption, although erroneous, may be harmless so long as the interests of the constituent and the organization do not materially conflict. However, when those interests do materially conflict, the lawyer's failure to warn the constituent of the nature of the lawyer's role could prejudicially mislead the constituent, impair the interests of the organization, or both. An adequate clarification may in some instances be required to protect the interest of the organization client in unencumbered representation. Failing to clarify the lawyer's role and the client's interests may redound to the disadvantage of the organization if the lawyer, even if unwittingly, thereby undertakes concurrent representation of both the organization and the constituent. Such a finding 65829543_8 I-B-20 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) could be based in part on a finding that the lawyer's silence had reasonably induced the constituent to believe that the lawyer also represented the constituent. On forming a clientlawyer relationship with a constituent of an organization client . . . . Among other consequences, the lawyer may be required to withdraw from representing both clients because of the conflict. The Restatement (Third) of Law Governing Lawyers § 103 cmt. e (2000) (emphases added). The Restatement then essentially warns lawyers not to go overboard the other way -- because emphasizing the lawyers' role unnecessarily might impede the lawyers' ability to obtain information the corporate client needs. The lawyer's duty to clarify the nature of the constituentlawyer relationship depends on the circumstances, and assessing the nature of such a duty requires balancing several considerations. In general, the lawyer may deal with the unrepresented constituent without warning provided the lawyer reasonably believes, based on information available to the lawyer at the time, that the constituent understands that the lawyer represents the interests of the organization and not the individual interests of the constituent . . . . In such a situation, no warning to the nonclient constituent is required even if the constituent provides information or takes other steps against the constituent's own apparent best interests and even if the lawyer, were the lawyer representing only the constituent, would advise the constituent to be more guarded. The absence of a warning in such a situation will often be in the interests of the client organization in assuring that the flow of information and decisionmaking is not impaired by needless warnings to constituents with important responsibilities or information. The Restatement (Third) of Law Governing Lawyers § 103 cmt. e (2000). A parallel reporter's note criticizes ABA Model Rule 1.13 as possibly going too far. 65829543_8 I-B-21 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) On the duty not to mislead a constituent, two general questions arise: (1) in what circumstances does a duty to warn arise; and (2) what is the minimal content of a warning when required? On the first issue, ABA Model Rules of Professional Conduct, Rule 1.13(d) (1983) provides: "In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when it is apparent that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing." Rule 1.13(d) is susceptible of a reading that mandates warning in every instance of adversity between organization and constituent, without regard to whether the constituent misapprehends the situation or to any lack of threatened prejudice to the constituent. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. e (2000) (emphasis added). The Restatement notes a mismatch between what was then ABA Model 1.13 and a comment -- explicitly adopting what it perceives as the black letter rule's narrower disclosure obligation. On the second issue -- what is the required content of a warning when one is mandated -- the above-quoted Comment to Rule 1.13 mentions several warnings: (1) that the lawyer cannot provide legal services to the constituent (although such a warning could be literally misleading, because consent of both organization and constituent may cure any conflict that otherwise bars representation by the lawyer); (2) that the constituent may wish to retain independent counsel (which may be true in some instances while not true and needlessly alarming in many others); and (3) that discussions between the lawyer and the constituent are not privileged (which is true as to the constituent, but, if the communication is privileged at all, not as to the organization). Each of the warnings may be problematical in many settings and should be regarded as suggestive only. None seems specifically required by ABA Model Rule 1.13(d) itself. The present Section and Comment follow ABA Model Rule 1:13(d) rather than its arguably more expansive 65829543_8 I-B-22 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Comment with respect to the content of a required warning and require only that the lawyer's role be clarified. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. e (2000). The Restatement describes the circumstances requiring disclosure. The present Section and Comment take the position that such a duty arises only when the lawyer is or reasonably should be aware that the constituent mistakenly assumes that the lawyer is representing or otherwise protecting the personal interests of the constituent, that the lawyer will keep their conversation confidential from others with authority in the organization, or that there is no material divergence of interest between constituent and organization -- and when failure to warn would materially and detrimentally mislead the person. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. e (2000). The Restatement then shifts back to a scenario in which corporate clients' lawyers must correct a corporate constituent's confusion. When the lawyer does not have a reasonable belief that the constituent is adequately informed, the lawyer must take reasonable steps to correct the constituent's reasonably apparent misunderstanding, particularly when the risk confronting the constituent is severe. For example, the constituent's expression of a belief that the lawyer will keep their conversation confidential from others with decisionmaking authority in the organization or that the interests of the constituent and the organization are the same, when they are not, would normally require a warning by the lawyer. In all events, as required under this Section, a lawyer must not mislead an unrepresented nonclient about such matters as the lawyer's role and the nature of the client organization's interests with respect to the constituent. The Restatement (Third) of Law Governing Lawyers § 103 cmt. e (2000) (emphasis added). 65829543_8 I-B-23 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The Restatement then closes with a discussion of lawyers' vulnerability to ethics charges or disqualification if they violate the disclosure obligations. Professional codes provide for discipline of lawyers . . . for violation of the rule of the Section. A statement of an unrepresented nonclient induced by a lawyer's violation of this Section may be excluded from evidence in a subsequent proceeding. A document or other agreement induced by a lawyer's violation of the Section may be denied legal effect if found to have been obtained through misrepresentation or undue influence or otherwise in violation of public policy. In some situations, a lawyer's activities in violation of this Section may require the lawyer to exercise care to protect the interests of the unrepresented nonclient to the extent stated in other Sections . . . . When necessary in order to remedy or deter particularly egregious violations of this Section, a court may order disqualification of an offending lawyer or law firm. The Restatement (Third) of Law Governing Lawyers § 103 cmt. f (2000). 2002 ABA Model Rules Changes The ABA did not revise ABA Model Rule 4.3, the comment, or the Model Code Comparison until 2002. At that time, the ABA moved back into the black letter rule the prohibition on lawyers giving advice to unrepresented persons -- explicitly indicating that the prohibition only applied when lawyers deal with adverse unrepresented persons. The current rule reads as follows: In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure 65829543_8 I-B-24 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client. ABA Model Rule 4.3 (emphasis added to show the 2002 addition). Also in 2002, the ABA expanded what had previously been the sole comment -deleting the sentence about lawyers providing legal advice (which had been moved to the black letter rule), and apparently expanding the occasions on which lawyers must identify their role. Thus, the first comment indicates as follows: An unrepresented person, particularly one not experienced in dealing with legal matters, might assume that a lawyer is disinterested in loyalties or is a disinterested authority on the law even when the lawyer represents a client. In order to avoid a misunderstanding, a lawyer will typically need to identify the lawyer’s client and, where necessary, explain that the client has interests opposed to those of the unrepresented person. For misunderstandings that sometimes arise when a lawyer for an organization deals with an unrepresented constituent, see Rule 1.13(f). ABA Model Rule 4.3 cmt. [1] (emphasis added to show the sentence added in 2002). Finally, in 2002 the ABA added a lengthy second comment providing additional guidance. The Rule distinguishes between situations involving unrepresented persons whose interests may be adverse to those of the lawyer’s client and those in which the person’s interests are not in conflict with the client’s. In the former situation, the possibility that the lawyer will compromise the unrepresented person’s interests is so great that the Rule prohibits the giving of any advice, apart from the advice to obtain counsel. Whether a lawyer is giving impermissible advice may depend on the experience and sophistication of the unrepresented person, as well as the setting in which the behavior and comments occur. This Rule does not prohibit a lawyer from negotiating the terms of a transaction or settling a dispute with an unrepresented person. So long as the lawyer has explained that the lawyer represents an adverse 65829543_8 I-B-25 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) party and is not representing the person, the lawyer may inform the person of the terms on which the lawyer's client will enter into an agreement or settle a matter, prepare documents that require the person's signature and explain the lawyer's own view of the meaning of the document or the lawyer's view of the underlying legal obligations. ABA Model Rule 4.3 cmt. [2] (emphasis added). Although this new comment warns lawyers about the danger of providing legal advice to adverse unrepresented persons, it somewhat surprisingly confirms that lawyers may still prepare documents for adverse unrepresented persons' signature. State Rules Most states adopted the basic ABA Model Rule 4.3 approach. But several states retained the prohibition on lawyers' advice to unrepresented persons left out of ABA Model Rule 4.3 in 1983. Several jurisdictions have explicitly retained the prohibition of the ABA Model Code against giving legal advice. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. b (2000). As also explained above, the ABA added that prohibition back to the black letter rule in 2002, which eliminated any divergence between the ABA Model Rules and those states. As in other situations, some states have adopted a variation of ABA Model Rule 4.3. New Jersey Rule 4.3 ("In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. If the person is a director, officer, employee, member, shareholder or other constituent of an organization concerned with the subject of the lawyer's representation but not a person defined by RPC 1.13(a), the lawyer shall also 65829543_8 I-B-26 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ascertain by reasonable diligence whether the person is actually represented by the organization's attorney pursuant to RPC 1.13(e) or who has a right to such representation on request, and, if the person is not so represented or entitled to representation, the lawyer shall make known to the person that insofar as the lawyer understands, the person is not being represented by the organization's attorney."). Case Law The case law reflects courts' differing positions on lawyers' freedom to communicate with unrepresented persons. Older case law tended to emphasize lawyers' disclosure obligations when communicating with unrepresented parties. Some decisions even required that lawyers use prescribed "scripts" when engaging in such communications. McCallum v. CSX Transp., Inc., 149 F.R.D. 104, 112, 113 (M.D.N.C. 1993) (finding plaintiffs' lawyer violated Rule 4.3 when communicating with an unrepresented person; "The ABA Model Rule 4.3 imposes an obligation on an attorney to convey to the unrepresented witness the truth about the lawyer's role, representative capacity, and that he is not disinterested."; "In the instant case, the Court finds that plaintiffs' investigator not only failed to take these precautions but violated them in some instances (at least with MidSouth) by not fully disclosing his representative capacity and the true nature of the interview, and by not informing the employees of their right to refuse to be interviewed and to have their counsel present. It is not clear that this occurred with all of the employees. However, further exploration of this matter is not needed. The Court declines to impose any sanctions other than that which have already been imposed with respect to the similar violations with regard to MidSouth employees."). Neil S. Sullivan Assocs., Ltd. v. Medco Containment Svcs., 607 A.2d 1386, 1390 (N.J. Super. Ct. 1992) (approving plaintiffs' lawyer's ex parte telephone interview with defendant's former employee, but only under strict guidelines; "Plaintiff's counsel must abide by the guidelines of RPC 4.3 which dictate how an attorney should conduct an interview with an unrepresented person. Plaintiff's counsel should disclose her role in this litigation, the identity of her client, and the fact that the former employer is a party adverse to her client. Likewise, plaintiff's attorney may not seek to elicit any privileged information."). 65829543_8 I-B-27 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In re Envtl. Ins. Declaratory Judgment Actions, 600 A.2d 165, 171, 173 (N.J. Super. Ct. 1991) (allowing lawyers for plaintiff and defendant to conduct informal interviews of plaintiffs' former employees, but only following guidelines; "In short, RPC 4.3 requires more than the investigator identifying himself to the party being interviewed. '. . . Rule 4.3, read in conjunction with Rule 4.2, requires more than a simple disclosure by the investigator of his identity qua investigator. To hold otherwise would in my judgment violate at least the spirit of the Rules. Rule 4.2 suggests that a relevant inquiry is whether an individual is represented since the Rule is only applicable if the lawyer 'knows' that the individual is 'represented by another lawyer.' The Rules contemplate that former employees, unrepresented by counsel, be warned of the respective positions of the parties to the dispute. [Monsanto, supra, 593 A.2d at 1017-18]'"; "[T]his court will require all parties to this action who intend to interview former employees to abide by the guidelines set by this court as a prerequisite to any interview. No interview of any former employee shall be conducted unless the following script is used by the investigator or attorney conducting the interview: '(1) I am a (private investigator/attorney) working on behalf of . I want you to understand that and several other companies have sued their insurance carriers. That said action is pending in the Union County Superior Court. The purpose of the lawsuit is to determine whether insurance companies will be required to reimburse for any amounts of money must pay as a result of environmental property damage and personal injury caused by . I have been engaged by to investigate the issues involved in that lawsuit between and , its insurance company; (2) Are you represented by an attorney in this litigation between and ?'"; "'If answer is 'YES,' end questioning.'"; "'If answer is 'NO,' ask: (3) May I interview you at this time about the issues in this litigation?'"; "'If answer is 'NO,' end questioning.'"; "'If answer is 'YES,' substance of interview may commence.'"). Monsanto Co. v. Aetna Cas. & Sur. Co., 593 A.2d 1013, 1017 & n.3, 1018, 1019, 1019-20. 1020 (Del. Super. Ct. 1990) (granting plaintiff's motion for a protective order following defendants' lawyer's violations of Rule 4.3; "The defendants assert that an investigator whose firm has been retained by a lawyer complies with Rule 4.3 by simply stating that he is an investigator seeking information. To support this contention the defendants have submitted the affidavits of two ethics experts, Professor Stephen Gillers and Professor Geoffrey C. Hazard, Jr. The defendants also assert that Rule 4.3 is designed to protect unrepresented persons from receiving legal advice or divulging information to an attorney whose interests are actually or potentially adverse to those of the unrepresented person."; "'I am mindful of additional affidavits filed by Professors Gillers and Hazard in the Motion for Reargument filed in the National Union [Nat'l Union Fire Ins. Co. of Pittsburgh v. Stauffer Chem. Co., Del. Super. C.A. No. 87C-SE-11-1-CV (filed Sept. 2, 1987)] 65829543_8 I-B-28 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) matter discussed supra at footnote 1. I am simply not persuaded by the analysis of these respected academicians. Indeed, I choose to accept an earlier analysis of Professor Hazard developed in a context removed from the heat of partisan litigation.'" (emphasis added); "In my view Rule 4.3, read in conjunction with Rule 4.2, requires more than a simply disclosure by the investigator of his identity . . . . To hold otherwise would in my judgment violate at least the spirit of the Rules. Rule 4.2 suggests that a relevant inquiry is whether an individual is represented since the Rule is only applicable if the lawyer 'knows' that the individual is 'represented by another lawyer.' The Rules contemplate that former employees, unrepresented by counsel, be warned by the respective positions of the parties to the dispute. Indeed, Professor Hazard recognized that 'suitable controls and correctives can be envisioned that would prevent unjust advantage being realized from . . . unfair tactics.' Hazard Aff. Para. 13." (emphasis added); noting that the court had ordered defendant to send the following letter to any unrepresented person the defendant's lawyer wished to interview; "[R]ecognizing the need to take control of the process, the court further ordered that Aetna could not interview any former employee unless it first delivered to such employee a letter written by the magistrate which reads as follows: 'ATTACHMENT A'; '(Investigator's Letterhead)'; '"Dear: This letter is being delivered to you pursuant to an order of a federal court. Please read the letter carefully so that you can decide whether or not you would be willing to allow me to interview you at a location of your convenience regarding your former employer, Upjohn.'"; "'I am a private investigator who has been retained by certain insurers who are defendants in a lawsuit brought by your former employer. The lawsuit concerns Upjohn's efforts to obtain insurance coverage for certain environmental claims that have been made against Upjohn concerning various sites.'"; "'In connection with the lawsuit, I am attempting to gather information about the manner in which Upjohn operated these sites. Such information may help my clients support their position against Upjohn that there is no insurance coverage for the environmental claims that are involved in the lawsuit. For that reason, I would like to interview you about these subjects.'"; "'You have no obligation to agree to an interview. On the other hand, there is nothing that prevents you from agreeing to be interviewed. Whether or not you agree to an interview, you may be asked to give testimony in this case.'"; "'Upjohn is willing to answer any questions you may have about this request for an interview, and to provide a lawyer to be with you for the interview if you desire or in the event that you are subpoenaed to testify. You are under no obligation to contact Upjohn if you do not want to. However, if you wish to do so, you may call [Upjohn's telephone number].'"; "'If you are agreeable to an interview, you will be asked to sign a copy of this letter acknowledging that you have read the letter and have voluntarily agreed to be interviewed.'"; "I am satisfied that it is appropriate to conclude that when the investigators did not determine if former employees were represented by counsel, when the investigators did not clearly identify themselves as working 65829543_8 I-B-29 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) for attorneys who were representing a client which was involved in litigation against their former employer, when investigators did not clearly state the purpose of the interview and where affirmative misrepresentations regarding these matters were made, Rule 4.2 and Rule 4.3 were violated.'"). In 2000, the Restatement noted that some decisions required what could be characterized as a Miranda warning. [A] number of decisions have stated an obligation on the part of the lawyer to advise the unrepresented nonclient to obtain the assistance of independent counsel, a requirement that goes beyond those stated in the Section or Comment. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. b (2000). More recent case law tends to take exactly the opposite position -deemphasizing lawyers' disclosure obligation when dealing with unrepresented adversaries. Todd v. Montoya, No. Civ. 10-0106 JB/WPL, 2011 U.S. Dist. LEXIS 14435, at *41, *44-45, *45 (D.N.M. Jan. 12, 2011) (concluding that a plaintiff's lawyer and his investigator did not violate Rule 4.3 in communicating with the father of a corrections officer involved in an incident for which the plaintiff sued; "The Defendants argue that rule 16-403 also requires a lawyer to state the reason for the interview and inform the unrepresented person that counsel may be present in the interview, and that he or she may refuse to give the interview. . . . The Court does not find the cases upon which the Defendants rely persuasive in its interpretation of rule 16-403's requirements." (emphasis added); "[The Court] will not interpret rule 16-403 to require that a lawyer inform an unrepresented person that counsel may be present in the interview and that he may refuse to give the interview. The Court believes that the New Mexico Rules of Professional Conduct require only that a lawyer make clear that he is not disinterested and the nature of his or her role when dealing with an unrepresented person whose interests conflict with his or her client's interests' and that a lawyer not give legal advice to the unrepresented person, other than the advice to secure counsel." (emphasis added); "It is important for the Court not to add requirements that the Rules of Professional Conduct do not contain, even if, in a particular circumstance, the Court might wish there had been a little more clarity. The ABA and the New Mexico courts have carefully struck a balance between the right to seek the truth and the right to counsel. A freewheeling court, adding requirements, could upset that balance. The Court should not disturb the balance the ABA and the New 65829543_8 I-B-30 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Mexico courts have struck by adding requirements, then confusing what conscientious and professional lawyers and investigators may do, and perhaps chilling informal discovery, which often informs pre-filing whether there is a case or not, quickly and relatively inexpensively, two things formal discovery often does not do." (emphasis added)). In re Jensen, 191 P.3d 1118, 1129 (Kan. 2008) (analyzing a situation in which a father's lawyer contacted the client's former wife's new husband's employer to ask about the new husband's income; ultimately concluding that the lawyer violated Kansas's Rule 3.4(a) and 8.4(a) by advising the new husband's employer that he did not have to appear in court, although the employer was under a subpoena to appear in court; also finding that the lawyer's statement that the employer did not have to appear in court violated Rule 4.1(a); rejecting a Bar panel's conclusion that the lawyer also violated Rule 4.3 by not explaining to the new husband's employer what role it was playing; explaining that the Bar had not established that "it was highly probable that Jensen [husband's lawyer] should have known of" the witness's confusion (emphasis added); ultimately issuing a public censure of the lawyer). Andrews v. Goodyear Tire & Rubber Co., Inc., 191 F.R.D. 59, 79, 79-80 (D.N.J. 2000) (finding that a plaintiff employee's lawyer did not violate Rule 4.3 in communicating with non-party management employee of defendant corporation; "If the approaching attorney ascertains that the person is neither actually represented by the organization's attorney nor has a right to such representation, the attorney has an obligation to 'make known to the person that insofar as the lawyer understands, the person is not being represented by the organization's attorney'" (citation omitted); "Nowhere in RPC 4.3 is there an obligation to secure any of this information before initiating contact with a potential witness. The Special Committee on RPC 4.2 clearly anticipated direct communication between an approaching attorney and the potential fact witness under RPC 4.3. Thus, the Magistrate Judge's ruling with respect to whether, pursuant to RPC 4.3, Bergenfield [Plaintiff's lawyer] was obligated to determine if Guffey [Manager for Defendant] was in the litigation control group or otherwise represented by counsel 'before making contact' with Guffey is clearly erroneous." (emphases added); "Prior to addressing the substantive conversation between Bergenfield and Guffey in order to determine if Bergenfield violated the RPCs, this Court must first note that Bergenfield was not obligated to follow an exact script when speaking with Guffey. If that were the case, the Special Committee on RPC 4.2 would have suggested a general script to be universally applied by practitioners. Furthermore, it is simply impractical to suggest, as Goodyear does, that every attorney, seeking to determine if a current employee of an organization is represented, is required to read in robot-like fashion from the same script. In fact, this Court believes such a requirement would seriously hinder an investigation by an attorney into the merits of the case. In spite of that belief, 65829543_8 I-B-31 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) this Court recognizes that there should be a general format to which an approaching attorney should adhere in confronting a current or former employee of an organization which would insured that an attorney is abiding by his ethical obligations." (emphasis added)). Pritts v. Wendy's of Greater Pittsburgh Inc., 37 Pa. D. & C.4th 158, 167 (C.P. Allegheny, 1998) (denying defendant's motion for a protective order requiring that plaintiff's lawyer give what the court called a "Miranda" warning to unrepresented persons with which the plaintiff's lawyer communicates; "Obviously, an attorney violates Rule 4.3 if the attorney causes an unrepresented person to believe that he or she has an obligation to submit to an interview or if the attorney disregards the request of an unrepresented person that the interview be terminated. However, Rule 4.3 does not impose a 'Miranda' requirement that unrepresented persons be advised that they have the right to refuse to be interviewed or to be interviewed only with the company's attorney present. Furthermore, since Rule 4.2 does not extend to former employees, this rule cannot be the source of any 'Miranda' requirement. Consequently, there is no source for this 'Miranda' requirement in the Rules of Professional Conduct." (emphases added)). Shearson Lehman Bros., Inc. v. Wasatch Bank, 139 F.R.D. 412, 418 (D. Utah 1991) (granting plaintiff's motion to conduct ex parte interviews of defendant bank's former tellers; "[M]entioned by the ABA Committee on Ethics and Professional Conduct were the ethical rules regarding the attorney-client privilege and Rule 4.3 which governs an attorney's dealings with an unrepresented party. It should be noted, however, that these two ethical restraints do not exhaust the list of potential rules which may apply to ex parte contact with former employees of a corporate party. Fortunately, the court is not called upon to compile such a list. Suffice it to say that the full spectrum of ethical requirements that bind the attorney in any other situation is equally binding when the attorney engages in ex parte contact with an unrepresented former employee of an opposing organizational party."). Best Answer The best answer to this hypothetical is (B) YOU MUST DISCLOSE TO THE RESIDENT YOUR ROLE IN REPRESENTING THE OIL REFINERY, BUT ONLY IF YOU KNOW OR REASONABLY SHOULD KNOW THAT THE RESIDENT MISUNDERSTANDS YOUR ROLE. B 10/15 65829543_8 I-B-32 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Distinguishing Between Legal Advice and Opinion Hypothetical 3 You represent the father of a young man who committed suicide while incarcerated in the county jail. You contacted a county corrections officer, who knew that you would probably add him to the litigation you plan to file. Although there is some dispute about your conversation with the officer, he later claimed that you told him that he would be covered by the county's insurance policy. The county has claimed that you violated the ethics rules prohibiting lawyers from giving any legal advice to adverse unrepresented persons. If you told the corrections officer that he would be covered by the county's insurance policy, have you violated an ethics rule? (B) NO (PROBABLY) Analysis The 1908 ABA Canons indicated that lawyers should not undertake to advise [an unrepresented party] as to the law. ABA Canons of Professional Ethics, Canon 9. The 1969 ABA Model Code similarly indicated that a lawyer shall not . . . [g]ive advice to a person who is not represented by a lawyer, other than the advice to secure counsel. ABA Model Code DR 7-104(A)(2). Thus, the ABA Model Code's prohibition extended to any advice, not just advice about the law. The 1983 ABA Model Rules did not include the advice prohibition in the black letter rule ABA Model Rule 4.3 (as of 1983). A comment included that prohibition. During the course of a lawyer's representation of a client, the lawyer should not give advice to an unrepresented person other than the advice to obtain counsel. 65829543_8 I-B-33 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ABA Model Rule 4.3 cmt (as of 1983). The Code Comparison inexplicably indicated that There was no direct counterpart to this Rule in Model Code. DR 7-104(A)(2) provided that a lawyer shall not '[g]ive advice to a person who is not represented by a lawyer, other than the advice to secure counsel. . . .' ABA Model Rules Code Comparison (as of 1983). Under current ABA Model Rule 4.3, a lawyer communicating ex parte with unrepresented person. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client. ABA Model Rule 4.3 (emphasis added). A comment provides additional guidance. The Rule distinguishes between situations involving unrepresented persons whose interests may be adverse to those of the lawyer’s client and those in which the person’s interests are not in conflict with the client’s. In the former situation, the possibility that the lawyer will compromise the unrepresented person’s interests is so great that the Rule prohibits the giving of any advice, apart from the advice to obtain counsel. Whether a lawyer is giving impermissible advice may depend on the experience and sophistication of the unrepresented person, as well as the setting in which the behavior and comments occur. This Rule does not prohibit a lawyer from negotiating the terms of a transaction or settling a dispute with an unrepresented person. So long as the lawyer has explained that the lawyer represents an adverse party and is not representing the person, the lawyer may inform the person of the terms on which the lawyer's client will enter into an agreement or settle a matter, prepare documents that require the person's signature and explain the lawyer's own view of the meaning of the document or the lawyer's view of the underlying legal obligations. 65829543_8 I-B-34 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ABA Model Rule 4.3 cmt. [2]. For obvious reasons, it can be very difficult to distinguish between lawyers' impermissible advice and ethically permitted opinions or explanations. In some cases, courts find that lawyers have crossed the line -- violating Rule 4.3 by giving advice to unrepresented persons. In re Tun, Bar Dkt. No. 2009-D381, at 2 (D.C. Office of Bar Counsel Oct. 10, 2013) (issuing an informal admonition against a lawyer who advised an adverse witness that she had no Fifth Amendment grounds to avoid testifying; "When you interviewed SB, you were acting on behalf of your client, Mr. Smith. In addition, you knew that SB was unrepresented and that there was a 'reasonable possibility' that her interests would be 'in conflict' with your client's interests. Therefore, when SB asked you for advice regarding her constitutional rights, you should have said that you could not advise her, or advised her to secure her own counsel. Instead, you advised her that she had no Fifth Amendment grounds to avoid testifying against Mr. Smith. By doing so, you violated Rule 4.3(a)(l)."). In re Jensen, 191 P.3d 1118, 1128 (Kan. 2008) (analyzing a situation in which a father's lawyer contacted the client's former wife's new husband's employer to ask about the new husband's income; ultimately concluding that the lawyer violated Kansas's Rule 3.4(a) and 8.4(a) by advising the new husband's employer that he did not have to appear in court, although the employer was under a subpoena to appear in court; also finding that the lawyer's statement that the employer did not have to appear in court violated Rule 4.1(a); rejecting a Bar panel's conclusion that the lawyer also violated Rule 4.3 by not explaining to the new husband's employer what role is was playing; explaining that the Bar had not established that "it was highly probable that Jensen [husband's lawyer] should have known of" the witness's confusion (emphasis added); ultimately issuing a public censure of the lawyer). Hopkins v. Troutner, 4 P.3d 557, 558, 560 (Idaho 2000) (affirming a judge's order setting aside a settlement, based on the defendant's lawyer's misconduct; relying on Rule 4.3; "Hopkins [Plaintiff, sexually abused by Defendant] expressed to Julian [Defendant's lawyer] a desire to settle the case and stated that he would do so for less than the offers of judgment tendered to other plaintiffs in similar cases filed against Troutner. Julian's affidavit filed in this case provided the following description of their discussion: 'He then solicited what I believe to be the value of this case, after informing me that he would certainly take much less than the Offer of Judgment previously filed herein to the other Plaintiffs. I told him, in my 65829543_8 I-B-35 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) opinion, the case was worth $3,000 to $4,000.'"; "The following statement by the district judge reflects his analysis of what was impermissible about Julian's conduct and why that supported a decision to set aside the order of dismissal: 'I'm not sure I know precisely what overreaching is, because I think it's more on the equitable side of the Court's jurisdiction and less on the legal side. Again I think Mr. Julian has been honest, not unethical and straightforward in this case. But I think when -- if he were to have said, 'You need to get your own -- form your own opinion about that, or find somebody to give you an opinion about that. My client would only pay you three or $4,000,' that's different. But Mr. Hopkins was asking him, 'What's this case worth?' Under circumstances that should have led, I think, Mr. Julian to believe that his answer was going to be relied upon by Mr. Hopkins.'" (emphasis added); a dissenting judge disagreed; "I respectfully dissent from the opinion of the Court. In this case Hopkins made the decision to represent himself. He was competent to understand the nature of the proceedings in which he was involved. It is unrealistic under these circumstances to characterize the statements of Troutner's attorney as legal advice to Hopkins. It was a method of stating how much his client would pay as part of the negotiations initiated by Hopkins. Regardless, even treating the statements as legal advice, the settlement still should not be set aside."; also finding that plaintiff did not rely on defendant's lawyer's statement, because he insisted on more money than the lawyer had mentioned). Attorney Q v. Mississippi State Bar, 587 So. 2d 228, 232, 233 (Miss. 1991) (issuing a private reprimand of a lawyer for violation of Rule 4.3; "Canon 9 was succeeded by DR 7-104 of the Code of Professional Conduct and Ethical Consideration 7-18. DR 7-104's prohibitory language expresses essentially the same mandate as did Canon 9, but there are noticeable differences. The language in DR 7-104(A)(2) speaks in terms of an unrepresented 'person' rather than Canon 9's 'party,' omits the proscription against 'misleading' such a person and, while Canon 9 proscribed giving an unrepresented person 'advice' as to the 'law,' DR 7-104(A)(2) speaks merely of 'advice' without the qualifying language. Nevertheless, ABA Informal Opinion No. 1140 (adopted January 20, 1970) declares that the effect of former Canon 9 and DR 7104(A)(2) 'appears to be substantially the same,' and DR 7-104(A)(2) therefore simply carries forward the meaning and intent' of Canon 9. See ABA Informal Opinion #1140."; "It is important to realize that we interpret Attorney Q's statements from the perspective of a reasonably intelligent nonlawyer in Robinson's position. We are not so much concerned with what Attorney Q may have intended; rather, our focus is upon what Robinson may reasonably have heard and understood. So viewed, we think the only fair interpretation of what Attorney Q said to Robinson is that, once served with the summons, she did not need to worry about the matter and did not need to do anything about it. Attorney Q compounded his felony some forty days later when he had a default judgment entered against Robinson, although he has 65829543_8 I-B-36 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) been formally charged with no disciplinary offense in this regard. . . . In sum, we hold that on January 15, 1985, the Mississippi State Bar had in full force and effect a valid rule providing that, during the course of his representation of a client, a lawyer may not give advice to another who may be reasonably perceived to have conflicting interests where the other is not represented by counsel, other than advice to secure counsel. We find by clear and convincing evidence that Attorney Q committed the acts described in the Complaint and in Part II above and that these acts constitute a violation of the rule."). In contrast, some courts take a surprisingly forgiving view about whether lawyers have impermissibly provided advice to unrepresented persons, or merely offered their opinions or explanations. Hanlin-Cooney v. Frederick Cnty., Md., Civ. Case No. WDQ-13-1731, 2014 U.S. Dist. LEXIS 93602, at *22-23 (D. Md. July 9, 2014) (analyzing the implications of Rule 4.3 in connection with a plaintiff's lawyer's communications with a Frederick County, Maryland corrections officer, in connection with the plaintiff's lawsuit against a county and eventually the officer in connection with plaintiff's deceased son's suicide while an inmate; ultimately finding that plaintiff's lawyer did not violate Rule 4.3; "I do not find that Plaintiff's counsel violated Rule 4.3 by failing to properly identify their client or her interests. Mr. DeGrange [Correctional Officer] readily admitted at the hearing that not only did he understand that Plaintiff's counsel represented the family of Mr. Hanlin, he also understood that he would be sued in connection with Mr. Hanlin's suicide. . . . Similarly, I find no violation of Rule 4.3 by virtue of Plaintiff's counsel's alleged statements to Mr. DeGrange concerning insurance. It is quite clear that, in the present lawsuit, the interests of Plaintiff's counsel and the interests of Mr. DeGrange are adverse. However, as noted above, the Defendants have not established any specific instance where Plaintiff's counsel made a definitive statement concerning insurance. Even if the Defendants were to prove that Plaintiff's counsel affirmatively told Mr. DeGrange that he would be covered by the county's insurance, such a statement would not rise to the level of 'legal advice.' Plaintiff's counsel did not advise Mr. DeGrange to take any action on account of alleged statements concerning insurance. Indeed, any action that Mr. DeGrange would have taken in reliance on such statements is immaterial to his alleged conduct giving rise to his lawsuit." (emphasis added)). Zichichi v. Jefferson Ambulatory Surgery Ctr., LLC, Civ. A. No. 07-2774 SECTION "R" (5), 2008 U.S. Dist. LEXIS 63133, at *14-15, *15-16 (E.D. La. July 22, 2008) (finding that a lawyer did not violate Rule 4.3 when communicating with an unrepresented person; "Plaintiff has also questioned 65829543_8 I-B-37 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) whether it was appropriate for Mr. Blankenship [Defendant's lawyer] to communicate with plaintiff, when he was unrepresented, regarding the termination of his JASC membership."; "Although Mr. Blankenship informed Dr. Zichichi of his client's position on plaintiff's membership interest in JASC, the Court does not find that by doing so Mr. Blankenship was giving plaintiff legal advice in violation of Rule 4.3. Comment 2 of the ABA Annotated Model Rules of Professional Conduct provides: 'So long as the lawyer has explained that the lawyer represents an adverse party and is not representing the person, the lawyer may . . . explain the lawyer's own view of . . . the underlying legal obligations.' Ann. Mod. Rules Prof. Cond. Rule 4.3 (6th Ed. 2007). Dr. Zichichi was aware that Mr. Blankenship represented JASC, and Dr. Zichichi's own affidavits and declarations indicate that he knew his interests were adverse to JASC before he called Mr. Blankenship on January 25, 2007. Furthermore, Mr. Blankenship did nothing more than give his opinion of the underlying legal obligations and told plaintiff to obtain counsel." (emphasis added)). Barrett v. Va. State Bar, 611 S.E.2d 375, 377078, 378, 379 (Va. 2005) (reversing the Virginia State Bar's three year suspension of a lawyer who communicated ex parte with his unrepresented wife after the they separated; finding that the lawyer did not violate Rule 4.3, but affirming the Bar's finding that the lawyer had violated other rules; remanding; "The Board found that Barrett [husband] violated this rule because it concluded certain statements in two electronic mail ('e-mail') communications he wrote to Rhudy [wife] after the separation, but before she retained counsel, constituted legal advice. On July 25, 2001, Barrett sent an e-mail to Rhudy containing the following: 'Venue will not be had in Grayson County. Virginia law is clear that venue is in Virginia Beach. . . . Under the doctrine of imputed income, the Court will have to look at your skills and experience and determine their value in the marketplace. . . . You can easily get a job . . . [making] $2,165.00 per month. . . . In light of the fact that you are living with yourparents [sic] and have no expenses . . . this income will be more than sufficient to meet your needs. I . . . just make enough to pay my own bills . . . Thus, it is unlikely that you will . . . obtain spousal support from me. I . . . will file for . . . spousal support to have you help me pay you [sic] fair share of our $200,000+ indebtedness. Since I am barely making it on my income and you have income to spare, you might end up paying me spousal support. . . . In light of the fact that . . . I . . . am staying in the maritial [sic] home . . . I believe that I will obtain the children. . . . You will have to get a job to pay me my spousal support. . . . The Court will prefer the children staying with a [parent], . . . there is no question that I can set up a home away from home and even continue to home school our kids. Therefore, it is likely that you will lose this fight. And of course, if I have the kids you will be paying me child support. . . . I am prepared for the fight.'" (emphases added);; "Barrett sent Rhudy another e-mail on September 12, 2001, in which he included the following: 'I will avail 65829543_8 I-B-38 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) myself of every substantive law and procedural and evidentiary rule in the books for which a good faith claim exists. This means that you, the kids and your attorney will be in Court in Virginia Beach weekly. . . You are looking at attorney's expenses that will greatly exceed $10,000. . . . I will also appeal . . . every negative ruling . . . causing your costs to likely exceed $30,000.00. . . . You have no case against me for adultery. . . . [The facts] show[] that you deserted me. . . . Your e-mails . . . show . . .that you were cruel to me. This means that I will obtain a divorce from you on fault grounds, which means that you can say goodbye to spousal support. . . . I remain in the marital [sic] home . . . I have all the kids [sic] toys and property, that your parents' home is grossly insufficient for the children, that I can home school the older kids while watching the younger whereas you will have to put the younger in day care to fulfill your duty to financially support the kids, I believe that I will get the kids no problem. . . . The family debt . . . is subject to equitable distribution, which means you could be socked with half my lawschool [sic] debt, half the credit care [sic] debt, have [sic] my firm debt, etc.'" (emphases added); "[U]pon our independent review of the entire record, we find that there was no sufficient evidence to support the Board's finding that Barrett's e-mail statements to Rhudy were legal advice rather than statements of his opinion of their legal situation. Therefore, we will set aside the Board's findings that Barrett violated Rule 4.3(b)."). Maryland LEO 2002-17 (2002) ("You have inquired as to whether it is permissible for an attorney to send a notice of default under a lease and a draft of a complaint for breach of that lease to a party to a lease who is not represented by counsel. Your intention in sending the communication in this form is to induce that party into compliance with the terms of the lease."; "Since your communications with the unrepresented party to the lease are nothing more than a transmission of your client's position that there has been a breach by that party for which your client intends to sue if that party fails to take steps to comply therewith, there is nothing improper in communicating that information to the unrepresented party, provided Rules 4.1 and 4.3 are adhered to." (emphasis added)). Brown v. Lange, 21 P.3d 822, 832 (Alaska 2001) (noting the difference between the ABA Model Rules and Alaska Rule 4.3, and finding that a plaintiff's lawyer did not improperly give "advice" to an unrepresented defendant; "Rule 4.3 and its Alaska commentary address the issue of communicating with unrepresented litigants in a way that might cause them to misunderstand the opposing lawyer's true intentions and interests. But compliance with Cook [Cook v. Aurora Motors, Inc., 503 P.2d 1046 (Alaska 1972)], Salomon [City of Valdez v. Salomon, 637 P.2d 298 (Alaska 1981)] and Hertz [Hertz v. Berzanske, 704 P.2d 767 (Alaska 1985)] creates no such danger. These cases require a plaintiff's attorney, before applying for default, 'to inquire into [the defendant's] intent to proceed and to inform [the 65829543_8 I-B-39 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) defendant] of [plaintiff's] intent to seek a default.' Because the core purpose of this requirement is to ensure full disclosure of an impending conflict, nothing in Rule 4.3 or the Alaska commentary could conceivably bar such inquiry and notice." (footnote omitted); "The court nonetheless suggests possible problems arising from a sentence of commentary that appears in Model Rule 4.3; this Model Rule commentary warns: 'During the course of a lawyer's representation of a client, the lawyer should not give advice to an unrepresented person other than the advice to obtain counsel.' But Alaska's commentary to Rule 4.3 conspicuously omits this sentence of the Model Rule commentary, even though the Alaska rule incorporates the rest of Model Rule 4.3's commentary. Because the omitted commentary strays so far from the text of the Rule itself, Alaska's decision to omit the commentary is hardly surprising. Moreover, even if the Model Rule's comment did apply in Alaska, it would not advance the court's position, since a plaintiff's attorney who notifies a pro se defendant that the plaintiff intends to apply for a default cannot plausibly be deemed to be giving the kind of 'advice to an unrepresented litigant' that the commentary forbids." (emphasis added; footnotes omitted)). First Nat'l Bank of St. Bernard v. Assavedo, 764 So. 2d 162, 163, 164(La. Ct. App. 2000) (finding a debtor was not improperly given "advice" by an employee of the creditor's law firm, who suggested that the debtor call the bank; "The defendants- reconvenors- relators, the Assavedos, were sued by bank on a promissory note. Dolores Assavedo was served with the citation and petition. She telephoned the attorney for the bank to inquire about the lawsuit (apparently using the attorney's name and telephone number appearing on the petition). She did not reach the attorney himself but spoke instead to an unnamed employee in the attorney's law firm office. The law firm employee told Mrs. Assavedo to have her son, Lonnie Assavedo, call a Mr. Rodney Loar at the bank."; "We do not believe that the employee who told Mrs. Assavedo to have her son call the bank gave 'advice' within the meaning of Rule 4.3. The term 'advice,' in the legal context, contemplates something of more substance than occurred in the discussion between the law firm employee and Dolores Assavedo in the present case. In this case, all that occurred of substance (allegedly) was later discussion between the bank employee and the Assavedos. Further, it is neither unusual nor undesirable for debtors to negotiate directly with their creditors without the intervention of counsel, so it cannot be said that the law firm acted maliciously. If the bank employee did act improperly, that was not the fault of the law firm employee. Also, Mrs. Assavedo sought to discuss the bank's lawsuit and, in terms of attorneys not taking advantage of unrepresented lay persons (the apparent policy of Rule 4.3), it probably was best that the law office directed Mrs. Assavedo to the bank rather than the law office dealing more extensively with Dolores Assavedo."). 65829543_8 I-B-40 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Best Answer The best answer to this hypothetical is (B) PROBABLY NO. B 10/15 65829543_8 I-B-41 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Preparing Legal Documents for Unrepresented Persons' Signature Hypothetical 4 You represent the wife in a divorce case. The husband has not retained a lawyer. You plan to communicate with the husband, and explain to him that you represent his wife. You would also like to send him a property settlement agreement, and ask him to sign it. May you ask an unrepresented person to sign legal documents as long as you describe your role in representing the adversary? (A) YES Analysis The 1908 ABA Canon dealing with lawyers' communications with unrepresented persons did not address those lawyers' preparation of documents for presentation to the unrepresented persons. ABA Canons of Professional Ethics, Canon 9. In 1933, an ABA legal ethics opinion indicated that lawyers could prepare settlement papers for presentation to and signing by an unrepresented person. ABA LEO 102 (12/15/33) ("A member of the Association requests an opinion from the committee on the following question: 'Under the Workmen's Compensation Law of this state, compromise and lump sum settlements must be made on the joint petition of the employee and employer and with the approval of a court of competent jurisdiction. In rare instances is the employee ever represented by an attorney. Usually, the attorney for the employer, or the employer's insurer, prepares the petition, agreement of settlement and judgment; the employee appears in proper person and the employer through his or its attorney. Is it unethical or professionally improper for the attorney to so act?' . . . The question presented is not difficult to answer as to professional propriety. Cannon 9, among other things, provides, 'It is incumbent upon the lawyer most particularly to avoid everything that may tend to mislead a party not represented by counsel and he should not undertake to advise him as to the law.' It is not professionally improper for the master's attorney to prepare settlement papers between master and servant 65829543_8 I-B-42 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) in a personal injury claim of the servant where the statute compensating the servant for personal injuries provides that compensation for the injury may be made in a lump sum settlement on the joint petition of the master and servant, and approved by a court of competent jurisdiction. When the servant has no attorney, and the master's attorney is called upon by the master to prepare the papers to effectuate the agreed settlement, the attorney in drafting the settlement papers should refrain from advising the servant about the law, and particularly must avoid misleading the servant concerning the law or the facts. The attorney also should advise the court that he represents the master, or insurer; that he has prepared the papers in settlement, which had theretofore been agreed upon between the master and the servant; that the servant has no counsel; and that the servant is present in court in proper person. Within these limitations, the committee sees no professional impropriety in an attorney so acting." (emphases added)). The 1969 ABA Model Code did not explicitly discuss lawyers' preparation of documents for presentation to unrepresented persons. ABA Model Code DR 7104(A)(2). A year after adopting the ABA Model Rules, the ABA took a narrow view of what lawyers could do in these circumstances. ABA Informal LEO 1140 (1/20/70) ("'What violation of professional ethics is involved in obtaining from a defendant in a domestic relations case a 'waiver' such as is widely used in (State)? Acopy [sic] of such waiver is attached.' The form in question waives the issuance of and service of summons, waives any right to contest the jurisdiction or venue of the court and agrees that the case be submitted to the court in term time or in vacation and without further notice to the defendant. The form also waives notice to take depositions and agrees that depositions may be taken at any time without notice and without formality. . . . If the party to whom the waiver is presented is not represented by counsel, then both the present Canon 9 and Disciplinary Rule 7-104(A)(2) would seem to prohibit the procedure regarding which you have inquired. . . . It is, therefore, the opinion of the Committee under both the present Canons of Ethics and the Code of Professional Responsibility that a violation of proper ethical conduct would be involved in the procedure which you describe." (emphasis added)). Approximately two years later, the ABA reaffirmed its earlier position, despite a new "no-fault" divorce statute. 65829543_8 I-B-43 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ABA Informal LEO 1255 (12/15/72) (Reconsideration of 1140) ("On July 6, 1972, the Legislature enacted a new 'no-fault' divorce Act (S17, LB-820). You sent us a copy of a form of 'Appearance and Responsive Pleading of Respondent' which has been prescribed by the Supreme Court of under Section 7 of said Act which directed the Supreme Court to prescribe the form of all pleadings required by the Act. Neither the Act nor the Court gave any instruction with regard to the subject of your inquiry: i.e., whether it is ethical to submit or to mail such an Appearance and Responsive Pleading to the other party in a domestic relations case for signature where that other party is not represented by an attorney, if the respondent is simultaneously advised to see the attorney of his choice and the plaintiff's attorney knows of no contested issue. You noted that this appears to be unethical under our Informal Opinion 1140 and ask that we reconsider that Opinion in the light 'of the enclosed pleading prepared by the Supreme Court . . . .' Since, on the facts you state, a Responsive Pleading is involved the plaintiff's lawyer would be improperly advising both parties. The fact that the Court prescribed the form of the Responding Pleading is irrelevant to the issue you present. The question is now before us whether in such a case a plaintiff's lawyer may properly submit to the respondent for signature a waiver of the issuance and service of the summons and complaint and entry of appearance. Your suggestion that in some such instances 'there was really nothing being contested' does not meet the requirement of Disciplinary Rule 7-104(A)(2) that an attorney should not represent both parties even if there is 'a reasonable possibility of . . . conflict' of interests. In our judgment the practice of the plaintiff's lawyer submitting such a pleading to an unrepresented defendant for signature in a domestic relations case is susceptible of abuse and is unethical." (emphasis added)). About three months later, the ABA backed off a bit from its earlier position, separating prohibited legal advice from the permissible forwarding of documents to an unrepresented person for signature. ABA Informal LEO 1269 (5/22/73) ("Our Informal Opinion 1255, dated December 15, 1972, advised your partner that in the opinion of the Committee it would be subject to abuse and unethical for an attorney to submit or mail an appearance and responsive pleadings to the other party in a domestic relations case for signature where the other party is not represented by an attorney. We also reaffirmed Informal Opinion 1140. The preparation and submission of responsive pleadings to an unrepresented party would in the opinion of the Committee constitute the giving of advice in contravention of DR 7-104(A)(2). Your letter of January 6, 1973, now raises the question of whether it would be proper for plaintiff's counsel in a domestic relations case to submit to an unrepresented defendant for signature a waiver 65829543_8 I-B-44 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) of the issuance and service of summons and the entry of an appearance. As long as these documents are not accompanied by or coupled with the giving of any advice to the defendant, they would constitute only communication with an unrepresented party and, accordingly, would be ethical and proper as not being violative of the prohibitions of the Code." (emphasis added)). The 1983 ABA Model Rules did not explicitly address lawyers' preparation of documents. ABA Model Rule 4.3. The 2000 Restatement permits lawyers to prepare transactional documents for unrepresented persons' signature. In a transaction in which only one of the parties is represented, that person is entitled to the benefits of having a lawyer . . . . The lawyer may negotiate the terms of a transaction with the unrepresented nonclient and prepare transaction documents that require the signature of that party. The lawyer may advance the lawful interests of the lawyer's client but may not mislead the opposing party as to the lawyer's role. The Restatement (Third) of Law Governing Lawyers § 103 cmt. d (2000) (emphasis added). An illustration confirms this approach. Lawyer represents Insurer in a wrongful-death claim asserted by Personal Representative, who is not represented by a lawyer. The claim concerns the death of Decedent assertedly caused by an insured of Insurer. Under applicable law, a settlement by Personal Representative must be approved by a tribunal. Personal Representative and Insurer's claims manager have agreed on a settlement amount. Lawyer prepares the necessary documents and presents them to Personal Representative for signature. Personal Representative, who is aware that Lawyer represents the interests of Insurer, asks Lawyer why the documents are necessary. Lawyer responds truthfully that to be effective, the documents must be executed and filed for court approval. Lawyer's conduct is permissible under this Section. 65829543_8 I-B-45 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The Restatement (Third) of Law Governing Lawyers § 103 illus. 1 (2000) (emphasis added). A Restatement reporter's note expressly indicates that the Restatement rejects some states' prohibition on preparing such documents. Some authorities interpret their lawyer code to prohibit a lawyer from preparing substantive legal documents for the unrepresented nonclient's signature -- again, a position not followed here. The Restatement (Third) of Law Governing Lawyers § 103 reporter's note cmt. b (2000). In 2002, the ABA revised ABA Model Rule 4.3. Among other things, a new comment explicitly permits lawyers to prepare documents for unrepresented persons. The Rule distinguishes between situations involving unrepresented persons whose interests may be adverse to those of the lawyer’s client and those in which the person’s interests are not in conflict with the client’s. In the former situation, the possibility that the lawyer will compromise the unrepresented person’s interests is so great that the Rule prohibits the giving of any advice, apart from the advice to obtain counsel. Whether a lawyer is giving impermissible advice may depend on the experience and sophistication of the unrepresented person, as well as the setting in which the behavior and comments occur. This Rule does not prohibit a lawyer from negotiating the terms of a transaction or settling a dispute with an unrepresented person. So long as the lawyer has explained that the lawyer represents an adverse party and is not representing the person, the lawyer may inform the person of the terms on which the lawyer's client will enter into an agreement or settle a matter, prepare documents that require the person's signature and explain the lawyer's own view of the meaning of the document or the lawyer's view of the underlying legal obligations. ABA Model Rule 4.3 cmt. [2] (emphasis added). Most states seem to follow the new ABA Model Rule approach, which permits lawyers' preparation of documents for unrepresented persons' signatures. 65829543_8 I-B-46 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Several North Carolina legal ethics opinions reflect the general trend in favor of lawyers' document preparation in such settings. A 2003 North Carolina legal ethics opinion adopted a per se prohibition on lawyers preparing demonstrably harmful pleadings for unrepresented persons' signatures. North Carolina LEO 2002-6 (1/24/03) ("The Ethics Committee has been asked, on a number of occasions, whether a lawyer representing one spouse in an amiable marital dissolution may prepare for the other, unrepresented, spouse simple responsive pleadings that admit the allegations of the complaint. It is argued that, if this practice is allowed, the expense of additional legal counsel will be avoided and the proceedings will be expedited. The committee has consistently held, however, that a lawyer representing the plaintiff may not send a form answer to the defendant that admits the allegations of the divorce complaint nor may the lawyer send the defendant an 'acceptance of service and waiver' form waiving the defendant's right to answer the complaint. . . . The basis for these opinions is the prohibition on giving legal advice to a person who is not represented by counsel." (emphasis added)). Two lengthy 2015 North Carolina legal ethics opinions issued on the same day take a more subtle approach. The first legal ethics opinion explained that lawyers may prepare pleadings for an unrepresented persons' signature and filing unless the pleadings would amount to relinquishment of the unrepresented persons' "significant rights." North Carolina LEO 2015-1 (4/17/15) (explaining that lawyers may prepare court documents for unrepresented adversaries, but not if the documents amount to providing legal advice to the adversaries or if the documents involve the adversaries relinquishing "significant rights"; "The survey of the existing opinions demonstrates that some pleadings or filings that solely represent the interests of one party to a civil proceeding may be prepared by a lawyer representing the interests of the opposing party."; "However, because of the prohibitions in Rule 4.3, a lawyer may not draft a pleading or filing to be signed solely by an unrepresented opposing party if doing so is tantamount to giving legal advice to that person. A lawyer may draft a pleading or filing to be signed solely by an unrepresented opposing party if 65829543_8 I-B-47 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) the document is necessary to settle the dispute with the lawyer’s client and will achieve objectives of both the lawyer’s client and the unrepresented opposing party. Pursuant to Rule 4.4(a), which prohibits the use of 'means' that have no substantial purpose other than to embarrass, delay, or burden a third person, when presenting a pleading or filing for execution, the lawyer must avoid using tactics that intimidate or harass the unrepresented opposing party." (emphasis added); "In applying these guiding principles, a lawyer must avoid the overreaching which is tantamount to providing legal advice to an unrepresented opposing party. The lawyer should consider whether (1) the rights, if any, of the unrepresented opposing party will be waived, lost, or otherwise adversely impacted by the pleading or filing, and the significance of those rights; (2) the pleading or filing solely represents the position of the unrepresented opposing party (e.g., an answer to a complaint); (3) the pleading or filing gives the unrepresented opposing party some benefit (e.g., acceptance of service to avoid personal service by the sheriff at the person’s home or work place); (4) the legal consequences of signing the document are not clear from the document itself (e.g., the hidden consequences of signing a waiver of right to file an answer in a divorce proceeding has hidden consequences); (5) the pleading or filing goes beyond what is necessary to achieve the client’s primary objectives; or (6) the pleading or filing will require the signature of a judge or other neutral who can independently evaluate the pleading or filing. If a disinterested lawyer would conclude that the unrepresented opposing party should not agree to sign the pleading or filing under any circumstances without advice of counsel, or the lawyer is not able to articulate why it is in the interest of the unrepresented opposing party to rely upon the lawyer’s draft of the document, the lawyer cannot properly ask the unrepresented opposing party to sign the document." (emphasis added); "[A] lawyer may prepare the following pleadings or filings for an unrepresented opposing party: an acceptance of service, a confession of judgment, a settlement agreement, a release of claims, an affidavit that accurately reflects the factual circumstances and does not waive the affiant’s rights, and a dismissal with (or without) prejudice pursuant to settlement agreement or release. However, prior to obtaining the signature of the unrepresented opposing party on the pleading or filing, the person must be given the opportunity to review and make corrections to the pleading or filing. It is recommended that the pleading or filing include a written disclosure that indicates the name of the lawyer preparing the document, and specifies that the lawyer represents the other party and has not and cannot provide legal advice to the unrepresented opposing party except the advice to seek representation from independent counsel." (emphasis added); "A lawyer should not prepare on behalf of an unrepresented opposing party a waiver of right to file an answer to a complaint, an answer to a complaint, or a waiver of exemptions. A waiver of notice of hearing should only be prepared for the unrepresented opposing party if the lawyer is satisfied that, upon analysis of the considerations indicated above, the lawyer is not asking the 65829543_8 I-B-48 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) unrepresented opposing party to relinquish significant rights without obtaining some benefit." (emphasis added); "Neither of the above lists of pleadings or filings is intended to be exhaustive. Before determining whether a pleading or filing may be prepared for an unrepresented opposing party, the lawyer must conclude that she is able to comply with the guiding principles above." (emphasis added)). On the same day, another North Carolina legal ethics opinion similarly tried to "thread the needle" in connection with lenders' lawyers' preparation of foreclosure waiver documents for unrepresented mortgage borrowers. North Carolina LEO 2015-2 (4/17/15) (explaining a lender's lawyer may prepare and obtain a signature from an unrepresented borrower on a waiver of foreclosure notice and right to a foreclosure hearing, unless the waiver was part of the borrower's primary residence mortgage's loan modification package; noting that "[i]t is common practice for lenders dealing with defaulted loans in excess of $100,000 to require Notice Parties to execute a N.C. Gen. Stat. §45-21.16(f) waiver in connection with a forbearance, modification, or reinstatement agreement" -- which allow the borrowers to waive the right to notice and hearing in a non-judicial foreclosure; posing the question as follows: "May a lawyer who represents the lender on a debt of $100,000 or more draft a N.C. Gen. Stat. §45-21.16(f) waiver form and provide the waiver form to unrepresented Notice of Parties for execution?"; answering as follows: "Yes, provided the lawyer complies with the requires of N.C. Gen. Stat. §45-21.16 and with Rule 4.3 (Dealing with Unrepresented Persons). However, in the consumer context, when the property subject to foreclosure is the borrower's primary residence, compliance with Rule 4.3 prohibits a lawyer from drafting the waiver form for inclusion in a loan modification package for execution by the unrepresented borrower."; noting the North Carolina Bar's earlier application of Rule 4.3; "The Ethics Committee has previously considered whether a lawyer may prepare documents for execution by an unrepresented person. 2004 FEO 10 rules that the lawyer for the buyer in a residential real estate closing may prepare a deed as an accommodation to the needs of her client, the buyer, provided the lawyer makes the disclosures required by Rule 4.3 and does not give legal advice to the seller other than the advice to obtain legal counsel. Similarly, 2009 FEO 12 holds that a lawyer may prepare an affidavit and confession of judgment for an unrepresented adverse party as long as the lawyer explains who he represents and does not give the unrepresented party legal advice."; also noting that North Carolina LEO 2002-6 (1/24/03) and other earlier legal ethics opinions "held that a lawyer may not prepare an answer or an acceptance of service and waiver form for an unrepresented opposing party"; ultimately approving the lender's lawyer's preparation of the 65829543_8 I-B-49 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) waiver documents; "Therefore, except as noted below, preparing a N.C. Gen. Stat. §45-21.16(f) waiver form for unrepresented Notice Parties is not tantamount to giving legal advice to an unrepresented person and the lender’s lawyer may draft the waiver and give it to unrepresented Notice Parties if the lawyer does not undertake to advise the unrepresented Notice Parties concerning the meaning or significance of the waiver form or state or imply that the lawyer is disinterested."; noting an exception to this general rule; "There is an exception to this holding in the consumer context. When the property subject to foreclosure is the borrower’s primary residence, compliance with Rule 4.3 prohibits a lawyer from drafting a waiver form for inclusion in a loan modification package for execution by the unrepresented borrower. In this context, preparation of the waiver form is tantamount to giving legal advice to an unrepresented person because the waiver prospectively eliminates a significant right or interest of the unrepresented person -- the borrower's right to notice of foreclosure upon default on the new or modified loan -- and there is a substantial risk that an unsophisticated, distressed borrower will not understand this."; also concluding that the analysis would be the same if the lawyer prepared and delivered the waiver "in conjunction with other lender prepared documents"; "Comment [2] to Rule 4.3 clarifies that Rule 4.3 does not prohibit a lawyer from negotiating the terms of a transaction or settling a dispute with an unrepresented person. So long as the lawyer has explained that the lawyer represents an adverse party, the lawyer may inform the unrepresented person of the terms on which the lawyer's client will enter into an agreement or settle a matter and may prepare documents that require the unrepresented person's signature. In dealing with unrepresented Notice Parties, however, the lender’s lawyer must fully disclose that the lawyer represents the interests of the lender and will draft the documents consistent with the interests of the lender. The lawyer may not give any legal advice to the Notice Parties except the advice to obtain legal counsel. Rule 4.3.") (emphases added) Best Answer The best answer to this hypothetical is (A) YES. B 10/15 1/16 65829543_8 I-B-50 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Application to Prosecutors Hypothetical 5 In your new position as a prosecutor, you have been increasingly dealing with illegal alien defendants. Some of them do not have lawyers, and you wonder whether you can propose plea agreements to unrepresented criminal defendants if their acquiescence to the agreement would render them vulnerable to deportation. What do you do? (A) You must disclose to the illegal alien the risks of acquiescing to the plea agreement. (B) You may disclose to the illegal alien the risks of acquiescing to the plea agreement, but you don't have to. (C) You may not disclose to the illegal alien the risks of acquiescing to the plea agreement. (A) YOU MUST DISCLOSE TO THE ILLEGAL ALIEN THE RISKS OF ACQUIESCING TO THE PLEA AGREEMENT Analysis The ABA Model Rules have always recognized that prosecutors' duties differ in at least some ways from lawyers in other contexts. ABA Model Rule 3.8 is entitled "Special Responsibilities of a Prosecutor," and lists some of those different duties. And ABA Model Rule 3.8 cmt. [1] articulates the conceptual basis for the different duties. A prosecutor has the responsibility of a minister of justice and not simply that of an advocate. ABA Model Rule 3.8 cmt. [1]. In addressing prosecutors' communications with unrepresented persons, ABA Model Rule 3.8(c) provides that 65829543_8 I-B-51 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The prosecutor in a criminal case shall . . . not seek to obtain from an unrepresented accused a waiver of important pretrial rights, such as the right to a preliminary hearing. ABA Model Rule 3.8(c). A comment provides additional guidance. In some jurisdictions, a defendant may waive a preliminary hearing and thereby lose a valuable opportunity to challenge probable cause. Accordingly, prosecutors should not seek to obtain waivers of preliminary hearings or other important pretrial rights from unrepresented accused persons. Paragraph (c) does not apply, however, to an accused appearing pro se with the approval of the tribunal. Nor does it forbid the lawful questioning of an uncharged suspect who has knowingly waived the rights to counsel and silence. ABA Model Rule 3.8 cmt. [2]. Not surprisingly, the country's focus on illegal aliens -- the term used by the IRS code1 -- implicates ethics principles. One of the complicating factors involves federal statute defining "deportable" aliens those convicted of a broad series of crimes, including state crimes. Any alien who -- (I) is convicted of a crime involving moral turpitude committed within five years (or 10 years in the case of an alien provided lawful permanent resident status under section 1255(j) of this title) after the date of admission, and (II) is convicted of a crime for which a sentence of one year or longer may be imposed, is deportable. 8 U.S.C. § 1227(a)(2)(A)(i)(I-II) "Moral turpitude" standard can be very difficult to analyze. 1 As of December, 2015, an official Internal Revenue Service document used and defined the term "Illegal Alien." IRS Immigration Terms and Definitions Involving Aliens, Internal Revenue Service ("A general summary of U.S. immigration terminology follows": "Illegal Alien": "Also known as an 'Undocumented Alien,' is an alien who has entered to United States illegally and is deportable if apprehended, or an alien who entered the United States legally but who has fallen 'out of status' and is deportable."). 65829543_8 I-B-52 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The key United States Supreme Court case comes from the private side, not the prosecutorial side. In Padilla v. Kentucky, the United States Supreme Court held that a private lawyer provided ineffective assistance of counsel by not advising his client who faced deportation by pleading guilty in a marijuana-related offense. Padilla v. Kentucky, 559 U.S. 356, 359-60 & n.1 (2010) ("Petitioner Jose Padilla, a native of Honduras, has been a lawful permanent resident of the United States for more than 40 years. Padilla served this Nation with honor as a member of the U. S. Armed Forces during the Vietnam War. He now faces deportation after pleading guilty to the transportation of a large amount of marijuana in his tractor-trailer in the Commonwealth of Kentucky. . . . Padilla's crime, like virtually every drug offense except for only the most insignificant marijuana offenses, is a deportable offense under 8 U.S.C. § 1227(a)(2)(B)(i). In this postconviction proceeding, Padilla claims that his counsel not only failed to advise him of this consequence prior to his entering the plea, but also told him that he "'did not have to worry about immigration status since he had been in the country so long.'" . . . . Padilla relied on his counsel's erroneous advice when he pleaded guilty to the drug charges that made his deportation virtually mandatory. He alleges that he would have insisted on going to trial if he had not received incorrect advice from his attorney. Assuming the truth of his allegations, the Supreme Court of Kentucky denied Padilla postconviction relief without the benefit of an evidentiary hearing. The court held that the Sixth Amendment's guarantee of effective assistance of counsel does not protect a criminal defendant from erroneous advice about deportation because it is merely a 'collateral' consequence of his conviction. . . . In its view, neither counsel's failure to advise petitioner about the possibility of removal, nor counsel's incorrect advice, could provide a basis for relief. We granted certiorari . . . to decide whether, as a matter of federal law, Padilla's counsel had an obligation to advise him that the offense to which he was pleading guilty would result in his removal from this country. We agree with Padilla that constitutionally competent counsel would have advised him that his conviction for drug distribution made him subject to automatic deportation. Whether he is entitled to relief depends on whether he has been prejudiced, a matter that we do not address. Since Padilla, courts have set aside illegal aliens' sentences based on such ineffective assistance of counsel claims. Xia v. United States, Nos. 14-CV-10029 & 12-CR-934-9 (RA), 2015 U.S. Dist. LEXIS 94058, at *1, *10-11, *11, *11-12, *13, *13-14 (S.D.N.Y. July 20, 2015) 65829543_8 I-B-53 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ("Shu Feng Xia, a noncitizen now serving a sentence of a year and a day after pleading guilty to conspiracy to commit immigration fraud, moves to vacate, set aside, or correct his sentence pursuant to 28 U.S.C. § 2255. Although he makes many arguments in support of his motion, Xia's principal claim is that his counsel was constitutionally ineffective for failing to direct the Court's attention to the deportation consequences of a sentence of one year or more. Xia argues that a sentence of less than a year -- that is, even two fewer days than what he received -- would have prevented him from being designated an 'aggravated felon' under federal immigration law and thus could have saved him from mandatory deportation. For the reasons that follow, Xia's motion will be granted."; "Beginning in the mid-1980s, Congress enacted a series of laws that have increasingly favored the deportation of noncitizens who commit crimes. . . . The Supreme Court has recognized that these changes in the law 'have dramatically raised the stakes of a noncitizen's criminal conviction.' Padilla v. Kentucky, 559 U.S. 356, 364, 130 S. Ct. 1473, 176 L. Ed. 2d 284 (2010)."; Padilla thus recognized that the Sixth Amendment guarantee of the effective assistance of counsel requires that a lawyer 'inform her client whether his plea carries a risk of deportation.'" (citation omitted); "The question in this case concerns not convictions (resulting from guilty pleas or otherwise), but sentencing -- the second of the twin triggers that can lead to a noncitizen's deportation for committing a crime. Specifically, the question is whether the Sixth Amendment's guarantee of the effective assistance of counsel requires that a noncitizen's lawyer inform the sentencing judge that a given sentence carries an increased risk of deportation. On the facts of this case, the answer must be yes."; "Padilla makes plain that criminal defense attorneys cannot reasonably be tasked with the responsibility of becoming immigration law experts. Where, however, the adverse deportation consequences of a particular sentence are 'truly clear,' the logic of Padilla instructs that the obligation to alert a sentencing judge to those consequences is 'equally clear.'" (citation omitted); "This case falls into the latter category. While counsel did apprise the Court that Xia faced deportation, he characterized that prospect as certain, leading the Court to believe that the exercise of its discretion in imposing sentence had no bearing on the likelihood of Xia's deportation. That characterization was mistaken, and the Government does not now contend otherwise. As explained below, 'the terms of the relevant immigration statute are succinct, clear, and explicit,'. . . in providing that the risk of deportation for someone in Xia's shoes is directly affected by the term of his sentence -- with the one-year mark serving as a bright line between possible deportation and certain deportation. As a consequence of counsel's failure to draw the Court's attention to that unambiguous provision of federal immigration law, Xia now faces mandatory removal when he might have avoided it. And because he has established that his sentence would likely have been lower had the Court been told of that consequence, his sentence must be set aside."). 65829543_8 I-B-54 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Not surprisingly, some of these ineffective assistance claims have failed. Wisconsin v. Ortiz-Mondragon, 866 N.W.2d 717, 720-21 (Wis. 2015) ("We conclude that Ortiz-Mondragon is not entitled to withdraw his no-contest plea to substantial battery because he did not receive ineffective assistance of counsel. Specifically, his trial counsel did not perform deficiently. Because federal immigration law is not 'succinct, clear, and explicit' in providing that Ortiz-Mondragon's substantial battery constituted a crime involving moral turpitude, his attorney 'need[ed] [to] do no more than advise [him] that pending criminal charges may carry a risk of adverse immigration consequences.' See Padilla [v. Kentucky, 559 U.S. 356, 369 (2010)]. OrtizMondragon's trial attorney satisfied that requirement by conveying the information contained in the plea questionnaire and waiver of rights form -namely, that Ortiz-Mondragon's 'plea could result in deportation, the exclusion of admission to this country, or the denial of naturalization under federal law.' Counsel's advice was correct, not deficient, and was consistent with Wis. Stat. § 971.08(1)(c) (2011-12). In addition, Ortiz-Mondragon's trial attorney did not perform deficiently by failing to further research the immigration consequences of the plea agreement. Because Ortiz-Mondragon failed to prove deficient performance, we do not consider the issue of prejudice." (footnote omitted)). Prosecutors also have to deal with this issue. Specifically they must determine if they may enter into plea agreements with illegal aliens without disclosing the possible effect on the illegal alien's status in the United States. This can be very complicated, because many state offenses can trigger deportation. State criminal offenses that trigger mandatory deportation include, for example, a shoplifting offense with a one year suspended sentence; misdemeanor possession of marijuana with the intent to sell; or sale of counterfeit DVDs with a one year suspended sentence. Heidi Altman, Prosecuting Post-Padilla: State Interests and the Pursuit of Justice for Noncitizen Defendants, 101 Geo. L.J. , 10-11 (footnotes omitted. This article described many states' requirement that judges disclose the deportation implication of a plea bargain -- but argued for a similar obligation by prosecutors. 65829543_8 I-B-55 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Prior to Padilla, approximately half of the fifty states already had a statute on the books requiring judges to issue advisals regarding immigration consequences to noncitizen defendants entering a plea of guilty, and this number has subsequently increased. Judicial inquiries into immigration consequences of a plea or into counsel's advice regarding immigration consequences of a plea or into counsel's advice regarding immigration consequences demand scrutiny for various reasons. By engaging in inquiries into citizenship or immigration status, judges run the risk of compelling disclosure of privileged attorney-client communication or violating noncitizen defendants' Fifth Amendment right against self-incrimination. Apart from these legal considerations, there is the practical consideration that a nervous defendant taking a plea in front of a criminal judge will rarely be able to meaningfully process the many formalized warnings included in the plea colloquy. While these warnings may be administered in a way that is supportive of the spirit of Padilla, they are no replacement for meaningful advice by counse. Id. at 21 (footnotes omitted). Some state legal ethics opinions impose such a requirement on prosecutors as an ethics mandate. Virginia LEO 1876 (3/19/15) (prosecutors aware that non-citizen defendants without court-appointed counsel in a court which does not conduct plea colloquies may not offer a plea deal in exchange for a guilty plea without advising the defendant to obtain legal advice, or request that the court conduct a colloquy, about the plea deal's deposition implications). Best Answer The best answer to this hypothetical is (A) YOU MUST DISCLOSE TO THE ILLEGAL ALIEN THE RISKS OF ACQUIESCING TO THE PLEA AGREEMENT. B 10/15, 1/16 65829543_8 I-B-56 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Negotiation/Transactional Adversaries' Misunderstanding of Clients' Intent Hypothetical 6 You are preparing for settlement negotiations, and have posed several questions to a partner whose judgment you trust. (a) May you advise the adversary that you think that your case is worth $250,000, although you really believe that your case is worth only $175,000? (A) YES (b) May you argue to the adversary that a recent case decided by your state's supreme court supports your position, although you honestly believe that it does not? (A) YES (MAYBE) (c) Your client (the defendant) has instructed you to accept any settlement demand that is less than $100,000. If the plaintiff's lawyer asks "will your client give $90,000?," may you answer "no"? MAYBE Analysis In some situations, lawyers must assess whether the lawyer must or may disclose protected client information to correct a negotiation or transactional adversary's misunderstanding. Such negotiations or transactions can occur in a purely commercial setting or in connection with settling litigation. The analysis frequently involves characterized statements that the lawyer or lawyer's client has made -- which might have induced the adversary's misunderstanding. This in turn sometimes involves distinguishing between harmless 65829543_8 I-B-57 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) statements of intent and wrongful statements of fact. Most authorities label the former "puffery" -- as if giving it a special name will immunize such statements from common law or ethics criticism. The latter type of statement can run afoul of both common law and ethics principles significantly. The ethics rules prohibit misrepresentation regardless of the adversary's reliance or lack of reliance, and regardless of any causation. Under ABA Model Rule 4.1 and its state counterparts, [i]n the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6. ABA Model Rule 4.1 The first comment confirms that lawyers do not have an obligation to volunteer unfavorable facts to the adversary. A lawyer is required to be truthful when dealing with others on a client's behalf, but generally has no affirmative duty to inform an opposing party of relevant facts. ABA Model Rule 4.1 cmt. [1] (emphasis added). Comment [2] addresses the distinction between factual statements and what many call "puffing." This Rule refers to statements of fact. Whether a particular statement should be regarded as one of fact can depend on the circumstances. Under generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or 65829543_8 I-B-58 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) value placed on the subject of a transaction and a party's intentions as to an acceptable settlement of a claim are ordinarily in this category, and so is the existence of an undisclosed principal except when nondisclosure of the principal would constitute fraud. Lawyers should be mindful of their obligations under applicable law to avoid criminal and tortious misrepresentation. ABA Model Rule 4.1 cmt. [2] (emphasis added). Not surprisingly, it can be very difficult to distinguish between ethical statements of fact and ethically permissible "puffing." Perhaps because of this difficulty in drawing the lines of acceptable conduct, the ABA explained in one legal ethics opinion that judges should not ask litigants' lawyers about the extent of their authority.1 The Restatement takes the same necessarily vague approach -- although focusing more than the ABA Model Rules on the specific context of the statements. A knowing misrepresentation may relate to a proposition of fact or law. Certain statements, such as some statements relating to price or value, are considered nonactionable hyperbole or a reflection of the state of mind of the speaker and not misstatements of fact or law . . . . Whether a misstatement should be so characterized depends on whether it is reasonably apparent that the person to whom the statement is addressed would regard the statement as one of fact or based on the speaker's knowledge of facts reasonably implied by the statement or as merely an expression of the speaker's state of mind. Assessment depends on the circumstances in which the statement is made, including the past relationship of the negotiating persons, their apparent sophistication, the plausibility of the statement on its face, the phrasing of the statement, related 1 ABA LEO 370 (2/5/93) (unless the client consents, a lawyer may not reveal to a judge the limits of his settlement authority or advice to the client regarding settlement; the judge may not require the disclosure of such information; a lawyer may not lie in response to a direct question about his settlement authority, although "a certain amount of posturing or puffery in settlement negotiations may be an acceptable convention between opposing counsel.") 65829543_8 I-B-59 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) communication between the persons involved, the known negotiating practices of the community in which both are negotiating, and similar circumstances. In general, a lawyer who is known to represent a person in a negotiation will be understood by nonclients to be making nonimpartial statements, in the same manner as would the lawyer's client. Subject to such an understanding, the lawyer is not privileged to make misrepresentations described in this Section. Restatement (Third) of Law Governing Lawyers § 98 cmt. c (2000) (emphasis added). A 2015 California legal ethics opinion distinguished between statements that amount to harmless "puffery" and those that cross the line into knowing misrepresentations. Some statements obviously violate the ethics rules, because they involve demonstrably false statements of objectively provable facts. California LEO 2015-194 (2015) (analyzing the following scenario, and finding that the lawyer's representation constituted a factual statement rather than puffery; "While the settlement officer is talking privately with Attorney and Plaintiff, he asks Attorney and Plaintiff about Plaintiff's wage loss claim. Attorney tells the settlement officer that Plaintiff was earning $75,000 per year, which is $25,000 more than Client was actually earning; Attorney is aware that the settlement officer will convey this figure to Defendant, which he does." (emphasis added); "Attorney's statement that Plaintiff was earning $75,000 per year, when Plaintiff was actually earning $50,000, is an intentional misstatement of a fact. Attorney is not expressing his opinion, but rather is stating a fact that is likely to be material to the negotiations, and upon which he knows the other side may rely, particularly in the context of these settlement discussions, which are taking place prior to discovery. As with Example Number 1, above, Attorney's statement constitutes an improper false statement and is not permissible." (emphasis added)). California LEO 2015-194 (2015) (analyzing the following scenario, and finding that the lawyer's representation constituted a factual statement rather than puffery; "In response to Plaintiff's settlement demand, Defendant's lawyer informs the settlement officer that Defendant's insurance policy limit is $50,000. In fact, Defendant has a $500,000 insurance policy." (emphasis added); "Defendant's lawyer's inaccurate representations regarding Defendant's policy limits is an intentional misrepresentation of fact intended 65829543_8 I-B-60 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) to mislead Plaintiff and her lawyer. See Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 76 [131 Cal.Rptr.2d 777] (plaintiffs 'reasonably relied on the coverage representations made by counsel for an insurance company'). As with Example Number 1, above, Defendant's lawyer's intentional misrepresentation about the available policy limits is improper." (emphasis added)). Some statements are also demonstrably false, but seem somewhat less objective than the easily analyzed misstatements. California LEO 2015-194 (2015) (analyzing the following scenario, and finding that the lawyer's representation constituted a factual statement rather than puffery; "In the settlement conference brief submitted on Plaintiff's behalf, Attorney asserts that he will have no difficulty proving that Defendant was texting while driving immediately prior to the accident. In that brief, Attorney references the existence of an eyewitness to the accident, asserts that the eyewitness's account is undisputed, asserts that the eyewitness specifically saw Defendant texting while driving immediately prior the accident, and asserts that the eyewitness's credibility is excellent. In fact, Attorney has been unable to locate any eyewitness to the accident." (emphasis added); "Attorney's misrepresentations about the existence of a favorable eyewitness and the substance of the testimony the attorney purportedly expects the witness to give are improper false statements of fact, intended to mislead Defendant and his lawyer. Attorney is making representations regarding the existence of favorable evidence for the purpose of having the Defendant rely on them. The attorney has no factual basis for the statements made. Further, Attorney's misrepresentation is not an expression of opinion, but a material representation that "a reasonable [person] would attach importance to . . . in determining his choice of action in the transaction in question . . ." (Charpentier v. Los Angeles Rams (1999) 75 Cal.App.4th 301, 313 [89 Cal.Rptr.2d 115], quoting Rest.2d Torts § 538). Thus, Attorney's misrepresentations regarding the existence of a favorable eyewitness constitute improper false statements and are not ethically permissible. This is consistent with Business and Professions Code section 6128(a) . . ., and Business and Professions Code section 6106 . . ., which make any act involving deceit, moral turpitude, dishonesty or corruption a cause for disbarment or suspension." (emphasis added)). The existence of an eyewitness can be proven true or false. The question would presumably be closer if the lawyer directly testified that an eyewitness saw the accident, 65829543_8 I-B-61 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) but stretched a bit when proclaiming to the adversary that the eyewitness will support the lawyer's client's version of the facts. The 2015 California legal ethics opinion also included an illustration of classic permissible "puffery." California LEO 2015-194 (2015) (analyzing the following scenario, and finding that the lawyer's representation constituted puffery; "While talking privately outside the presence of the settlement officer, Attorney and Plaintiff discuss Plaintiff's 'bottom line' settlement number. Plaintiff advises Attorney that Plaintiff's 'bottom line' settlement number is $175,000. When the settlement officer asks Attorney for Plaintiff's demand, Attorney says, 'Plaintiff needs $375,000 if you want to settle this case.'" (emphasis added); "Statements regarding a party's negotiating goals or willingness to compromise, as well as statements that constitute mere posturing or 'puffery,' are among those that are not considered verifiable statements of fact. A party negotiating at arm's length should realistically expect that an adversary will not reveal its true negotiating goals or willingness to compromise. Here, Attorney's statement of what the client will need to settle the matter is allowable 'puffery' rather than a misrepresentation of fact. Attorney has not committed an ethical violation by overstating Client's 'bottom line' settlement number." (emphasis added)). The California legal ethics opinion also analyzed a statement that could fall into either category, depending on the facts. California LEO 2015-194 (2015) (finding that a lawyer's threat of bankruptcy when bankruptcy was not available to the client constituted an impermissible false representation of fact; "Defendant's lawyer also states that Defendant intends to file for bankruptcy if Defendant does not get a defense verdict. In fact, two weeks prior to the mediation, Defendant consulted with a bankruptcy lawyer and was advised that Defendant does not qualify for bankruptcy protection and could not receive a discharge of any judgment entered against him. Defendant has informed his lawyer of the results of his consultation with bankruptcy counsel and that Defendant does not intend to file for bankruptcy." (emphasis added); "Whether Defendant's lawyer's representations regarding Defendant's plans to file for bankruptcy in the event that Defendant does not win a defense verdict constitute a permissible negotiating tactic will hinge on the specific representations made and the facts known. Here, Defendant's lawyer knows that Defendant does not intend to file for bankruptcy and that Defendant consulted with bankruptcy counsel before the mediation and was informed that Defendant is not legally 65829543_8 I-B-62 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) eligible to file for bankruptcy. A statement by Defendant's lawyer that expresses or implies that Defendant's financial condition is such that he is in fact eligible to file for bankruptcy is therefore a false representation of fact. The conclusion may be different[,] however, if Defendant's lawyer does not know whether or not his client intends to file for bankruptcy or whether his client is legally eligible to obtain a discharge." (emphasis added)). The California legal ethics opinion's analysis left two issues unaddressed. First, one might think that the defendant's lawyer could ethically state that the defendant intends to declare bankruptcy -- even if a creditor could seek to have the bankruptcy action dismissed or could resist the discharge of any judgment. As long as the bankruptcy filing was not frivolous, one might think that the adversary's ability to challenge the filing (and even have it dismissed) would not prevent the filing itself. Every bar seems to take the position that a plaintiff can file a knowingly time-barred claim, even if the defendant could easily rely on the statute of limitations in seeking the action's dismissal. Perhaps that basic principle does not apply in the bankruptcy setting, but the California Bar could have explained why. Second, the California legal ethics opinion indicated that its "conclusion may be different" if defendant's lawyer "does not know whether or not his client intends to file for bankruptcy." Id. In that scenario, one might wonder how the defendant's lawyer could "state[] that Defendant intends to file for bankruptcy if Defendant does not get a defense verdict." Id. Lawyers generally cannot make such a definite statement if the defendant has not authorized it. (a) A 1980 American Bar Foundation article explains that this type of tactic does not violate the ethics rules. It is a standard negotiating technique in collective bargaining negotiation and in some other multiple-issue negotiations for 65829543_8 I-B-63 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) one side to include a series of demands about which it cares little or not at all. The purpose of including these demands is to increase one's supply of negotiating currency. One hopes to convince the other party that one or more of these false demands is important and thus successfully to trade it for some significant concession. The assertion of and argument for a false demand involves the same kind of distortion that is involved in puffing or in arguing the merits of cases or statutes that are not really controlling. The proponent of a false demand implicitly or explicitly states his interest in the demand and his estimation of it. Such behavior is untruthful in the broadest sense; yet at least in collective bargaining its use is a standard part of the process and is not thought to be inappropriate by any experienced bargainer. James J. White, Machiavelli and the Bar: Ethical Limitations on Lying in Negotiation, 1980 Am. B. Found. Res. J. 926, 932 (1980) (emphases added; footnote omitted). An ABA legal ethics opinion defines this type of statement as harmless puffery rather than material misstatement of fact. For example, parties to a settlement negotiation often understate their willingness to make concessions to resolve the dispute. A plaintiff might insist that it will not agree to resolve a dispute for less than $ 200, when, in reality, it is willing to accept as little as $ 150 to put an end to the matter. Similarly, a defendant manufacturer in patent infringement litigation might repeatedly reject the plaintiff's demand that a license be part of any settlement agreement, when in reality, the manufacturer has no genuine interest in the patented product and, once a new patent is issued, intends to introduce a new product that will render the old one obsolete. In the criminal law context, a prosecutor might not reveal an ultimate willingness to grant immunity as part of a cooperation agreement in order to retain influence over the witness. A party in a negotiation also might exaggerate or emphasize the strengths, and minimize or deemphasize the weaknesses, of its factual or legal position. A buyer of products or services, for example, might overstate its confidence in the availability of alternate sources of supply to reduce the appearance of dependence upon the supplier 65829543_8 I-B-64 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) with which it is negotiating. Such remarks, often characterized as "posturing" or "puffing," are statements upon which parties to a negotiation ordinarily would not be expected justifiably to rely, and must be distinguished from false statements of material fact. ABA LEO 439 (4/12/06) (emphases added). The opinion makes essentially the same point a few pages later. [S]tatements regarding negotiating goals or willingness to compromise, whether in the civil or criminal context, ordinarily are not considered statements of material fact within the meaning of the Rules. Thus, a lawyer may downplay a client's willingness to compromise, or present a client's bargaining position without disclosing the client's "bottom line" position, in an effort to reach a more favorable resolution. Of the same nature are overstatements or understatements of the strengths or weaknesses of a client's position in litigation or otherwise, or expressions of opinion as to the value or worth of the subject matter of the negotiation. Such statements generally are not considered material facts subject to Rule 4.1. Id. (emphases added). This sort of statement represents the classic type of settlement "bluffing" that the authorities seem to condone, and most lawyers expect during settlement discussions. (b) As explained above, courts and bars anticipate that lawyers will exaggerate the strength of their factual and legal positions. For instance, the 1980 American Bar Foundation article explains this common practice. In writing his briefs, arguing his case, and attempting to persuade the opposing party in negotiating, it is the lawyer's right and probably his responsibility to argue for plausible interpretations of cases and statutes which favor his client's interest, even in circumstances where privately he has advised his client that those are not his true interpretations of the cases and statutes. 65829543_8 I-B-65 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) White, 1980 Am. B. Found. Res. J. at 931-32. (c) The American Bar Foundation article poses this question, but has a difficult time answering it. Assume that the defendant has instructed his lawyer to accept any settlement offer under $100,000. Having received that instruction, how does the defendant's lawyer respond to the plaintiff's question, "I think $90,000 will settle this case. Will your client give $90,000?" Do you see the dilemma that question poses for the defense lawyer? It calls for information that would not have to be disclosed. A truthful answer to it concludes the negotiation and dashes any possibility of negotiating a lower settlement even in circumstances in which the plaintiff might be willing to accept half of $90,000. Even a moment's hesitation in response to the question may be a nonverbal communication to a clever plaintiff's lawyer that the defendant has given such authority. Yet a negative response is a lie. Id. at 932-33 (emphasis added). Some ethicists providing advice to lawyers in this situation might advise those lawyers to plan ahead -- by foregoing such settlement authority or otherwise telling the adversary at the very beginning of the settlement negotiations about how the lawyer might or might not respond to questions during the negotiations. The article describes this "solution" as unrealistic. It is no answer that a clever lawyer will answer all such questions about authority by refusing to answer them, nor is it an answer that some lawyers will be clever enough to tell their clients not to grant them authority to accept a given sum until the final stages in negotiation. Most of us are not that careful or that clever. Few will routinely refuse to answer such questions in cases in which the client has granted a much lower limit than that discussed by the other party, for in that case an honest answer about the absence of authority is a quick and effective method of changing the opponent's settling point, and it is one that few of us will forego when our authority is far below that requested by the 65829543_8 I-B-66 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) other party. Thus despite the fact that a clever negotiator can avoid having to lie or to reveal his settling point, many lawyers, perhaps most, will sometime be forced by such a question either to lie or to reveal that they have been granted such authority by saying so or by their silence in response to a direct question. Id. at 933 (emphases added). It would be easy to reach the opposite conclusion in this setting -- arguing that the adversary could not reasonably expect an honest answer to such a question. Instead, the adversary might be hoping to gain some insight into the possible outcome of negotiations by examining both the verbal and non-verbal responses to such a question. The article's author ultimately concludes that lying is not permissible in this setting, but concedes that "I am not nearly as comfortable with that conclusion" as in situations involving more direct deception. Id. at 934. Best Answer The best answer to (a) is (A) YES; the best answer to (b) is (A) MAYBE YES; the best answer to (c) is MAYBE. B 8/11, 1/15, 10/15, 2/16 65829543_8 I-B-67 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Negotiation/Transactional Adversaries' Legal Misunderstanding Hypothetical 7 You are trying to settle a complex case involving both automobile liability policies and workers compensation coverage. The lawyer representing your adversary clearly does not understand her client's right to subrogation in connection with proceeds of an uninsured motorist policy. You conclude that she does not understand the law in this area. What do you do? (A) You must disclose the adverse law to your adversary. (B) You may disclose the adverse law to your adversary, but you don't have to. (C) You may not disclose the adverse law to your adversary, unless your client consents. (C) YOU MAY NOT DISCLOSE THE ADVERSE LAW TO YOUR ADVERSARY, UNLESS YOUR CLIENT CONSENTS Analysis Lawyers sometimes assess whether they must or may disclose protected client information to correct a negotiation/transactional adversary's misunderstanding about the law. Although ethics rules and authorities have debated knowledge of the law's protection under ABA Model Rule 1.6 and other confidentiality rules, the issue is largely mooted by the majority approach concluding that lawyers generally have no duty to correct adversaries' misunderstanding of the law that was not induced by some misrepresentation. 65829543_8 I-B-68 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Not surprisingly, bar groups and others which stress lawyers' confidentiality duty deemphasize or even prohibit lawyers' disclosure of some legal development that benefits the adversary but harms the client. For instance, in the run-up to the ABA's 1983 adoption of its ABA Model Rules, the American Trial Lawyers issued its own proposed ethics principles. One example indicated that a lawyer representing a real estate buyer would violate the ethics rules by advising the seller about a zoning change (successfully sought by that lawyer) that would obviously have increased the real estate's value. A lawyer represents a client negotiating the purchase of real estate. During negotiations, the parties and their lawyers discuss the adverse effect of existing zoning restrictions, which prevent commercial development of the property. Just prior to formalizing an agreement of sale, however, the buyer learns that his lawyer has persuaded the zoning board to change the zoning to permit commercial use. The buyer decides not to tell the seller about the imminent zoning change. The buyer's lawyer would commit a disciplinary violation by informing the seller. Am. Lawyer's Code of Conduct, Proposed Revision of the Code of Prof'l Responsibility, illus. 1(d), Comm'n on Prof'l Responsibility, Roscoe Pound-Am. Trial Lawyers Found., Revised Draft (May 1982) (emphasis added). Most authorities hold lawyers do not have a duty to disclose adverse law to a negotiation adversary. Philadelphia LEO 2005-2 (4/2005) ("The inquirer represents a truck driver who suffered serious injuries in a motor vehicle accident during the course of his employment. The driver of the other vehicle was at fault. The inquirer pursued three sources of recovery for the client: (1) workers compensation benefits; (2) a third party claim against the driver of the other vehicle who has a policy limit of $25,000, and (3) underinsured motorist benefits with a policy limit of $100,000. The workers compensation insurer is paying lost wage and medical benefits. The insurance company for the other driver has tendered 65829543_8 I-B-69 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) the $25,000 policy limit. Inquirer has not yet settled the underinsured motorist claim, but inquirer believes that the full $100,000 will be offered to the client. The workers compensation insurance adjuster, in discussing with the inquirer the workers compensation subrogation lien, limited the discussion of the lien to the $12,000 net proceeds to the client from the thirdparty action and stated that there could be no subrogation lien in the underinsured motorist action. This, according to the inquirer, is wrong as a matter of law. In fact, according to the inquirer, workers compensation carriers have the right to a subrogation lien in the proceeds of an uninsured motorist action. The inquirer's question is whether he or she has an ethical obligation to disclose to the workers compensation insurance adjuster that the law permits the carrier to have a subrogation lien in the proceeds from the underinsured motorist claim. Of course, if inquirer made this disclosure, the adjuster would demand a share of the client's recovery from the underinsured motorist claim. Pennsylvania Rule of Professional Conduct 4.1 (the 'Rules') does not compel disclosure because the inquirer has not made a false statement of material fact or law. The omission at issue, i.e., the failure to correct the mistake of law, is not the kind of false statement Rule 4.1 would prohibit. Furthermore, the committee concludes that Rule 8.4's prohibition of dishonesty, fraud, deceit or misrepresentations does not require the correction of the adjuster's mistake of law. Finally, Rule 3.3 does not compel disclosure because there have been no representations of law made to a tribunal in the facts presented. For these reasons, the committee has concluded that the inquirer has no ethical duty to comment on the adjuster's mistake of law." (emphasis added). ABA LEO 387 (9/26/94) (posing the following question: "Does a lawyer have an ethical duty to inform an opposing party that the statute of limitations has run on the claim over which they are negotiating?"; answering as follows: "[T]he lawyer is not ethically obligated to reveal to opposing counsel the fact that her client's claim is time-barred in the context of negotiations"). Rhode Island LEO 94-40 (7/27/94) ("The inquiring attorney represents a plaintiff in a personal injury matter. The attorney believes that his/her client's claim may be barred by a recent development in Rhode Island case law. Notwithstanding this information, an out-of-state insurance company made an offer of settlement. The attorney asks if the continuation of negotiations regarding a settlement with the insurance company would violate any ethical rules in light of the change in case law. . . . A lawyer generally has no affirmative duty to inform an opposing party of statutory or case law adverse to his/her client's case. Since the inquiring attorney is not making false representations in this matter, Rule 4.1 is not being violated." (emphasis added)). 65829543_8 I-B-70 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) As in other areas, courts tend to be more result-driven, and occasionally recognize such a duty. Hamilton v. Harper, 404 S.E.2d 540, 542 n.3, 544 (W. Va. 1991) (invalidating a settlement agreement in which plaintiff's lawyer accepted a $100,000 settlement from Nationwide without advising the insurance company that a federal court had recently granted Nationwide a summary judgment in a declaratory judgment case which had eliminated Nationwide's possible liability; "While we do not dispose of this case on the grounds of misrepresentation or fraud, we take a particularly dim view of the Hamiltons' attorney's failure to disclose his knowledge regarding the action taken by the federal court. The preferred course of action for the Hamiltons' counsel, in our opinion, would have required him to voluntarily disclose that information to Nationwide in the spirit of encouraging truthfulness among counsel and avoiding the consequences of his failure to disclose, e.g. this appeal."; finding that the settlement agreement was unenforceable for "failure of consideration," rather than concluding that the plaintiff's lawyer had engaged in fraudulent conduct.). Best Answer The best answer to this hypothetical is (C) YOU MAY NOT DISCLOSE THE ADVERSE LAW TO YOUR ADVERSARY, UNLESS YOUR CLIENT CONSENTS. B 1/15, 10/15 65829543_8 I-B-71 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Negotiation/Transactional Adversaries' Factual Misunderstanding Hypothetical 8 On behalf of your client, you just made a $100,000 offer to buy land from a farmer and his wife (who are represented by an unsophisticated lawyer). You know that the farmer thinks that your client's offer contains a provision under which your client would assume an existing mortgage -- although the offer does not. What do you do? (A) You must disclose the absence of the provision. (B) You may disclose the absence of the provision, but you don't have to. (C) You may not disclose the absence of the provision, unless your client consents. (C) YOU MAY NOT DISCLOSE THE ABSENCE OF THE PROVISION, UNLESS YOUR CLIENT CONSENTS (MAYBE) Analysis The ABA Model Rules recognize a limited duty by lawyers to correct a negotiation adversary's misunderstanding not resulting from the lawyer's or the client's factual misstatements.1 In the course of representing a client a lawyer shall not knowingly: 1 Authorities agree that lawyers must correct their own misstatements or their client's misstatements that might mislead a transactional counterparty. Restatement (Third) of Law Governing Lawyers § 98 cmt. d (2000) ("A lawyer who has made a representation on behalf of a client reasonably believing it true when made may subsequently come to know of its falsity. An obligation to disclose before consummation of the transaction ordinarily arises, unless the lawyer takes other corrective action. . . . Disclosure, being required by law . . . , is not prohibited by the general rule of confidentiality . . . . Disclosure should not exceed what is required to comply with the disclosure obligation, for example by indicating to recipients that they should not rely on the lawyer's statement."); Edward M. Waller, Jr., There are Limits: Ethical Issues in Settlement Negotiations, ABA Litigation Ethics 1 (Summer 2005) (explaining that a lawyer learning that her client had lied to a transactional counterparty must correct the client's lie before consummating a settlement). 65829543_8 I-B-72 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) (b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6. ABA Model Rule 4.1(b). Comment [1] provides some explanation. A lawyer is required to be truthful when dealing with others on a client's behalf, but generally has no affirmative duty to inform an opposing party of relevant facts. A misrepresentation can occur if the lawyer incorporates or affirms a statement of another person that the lawyer knows is false. Misrepresentations can also occur by partially true but misleading statements or omissions that are the equivalent of affirmative false statements. For dishonest conduct that does not amount to a false statement or for misrepresentations by a lawyer other than in the course of representing a client, see Rule 8.4. ABA Model Rule 4.1 cmt. [1] (emphasis added). The Restatement deals in several places with a lawyer's silence in the face of a negotiation/transactional adversary's misunderstanding of facts. In one section, the Restatement explains that A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only: (a) where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material. (b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. (c) where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a 65829543_8 I-B-73 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) writing, evidencing or embodying an agreement in whole or in part. (d) where the other person is entitled to know the fact because of a relation of trust and confidence between them. Restatement of the Law (Second) Contracts, § 161 (1981). A comment sets a fairly high disclosure duty. One party cannot hold the other to a writing if he knew that the other was mistaken as to its contents or as to its legal effect. He is expected to correct such mistakes of the other party and his failure to do so is equivalent to a misrepresentation, which may be grounds either for avoidance under § 164 or for reformation under § 166. . . . The failure of a party to use care in reading the writing so as to discover the mistake may not preclude such relief . . . . In the case of standardized agreements, these rules supplement that of § 211(3), which applies, regardless of actual knowledge, if there is reason to believe that the other party would not manifest assent if he knew that the writing contained a particular term. Like the rule stated in Clause (b), that stated in Clause (c) requires actual knowledge and is limited to non-disclosure by a party to the transaction. Restatement of the Law (Second) Contracts, § 161 cmt. e (1981). The Restatement includes an illustration of this concept. A, seeking to induce B to make a contract to sell a tract of land to A for § 100,000, makes a written offer to B. A knows that B mistakenly thinks that the offer contains a provision under which A assumes an existing mortgage, and he knows that it does not contain such a provision but does not disclose this to B. B signs the writing, which is an integrated agreement. A's non-disclosure is equivalent to an assertion that the writing contains such a provision, and this assertion is a misrepresentation. Whether the contract is voidable by B is determined by the rule stated in § 164. Whether, at the request of B, the court will decree that the writing be reformed to add the provision for assumption is determined by the rule stated in § 166. Restatement of the Law (Second) Contracts, § 161 cmt. e, illus. 12 (1981). 65829543_8 I-B-74 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Another Restatement section states a more obvious rule -- requiring lawyers to comply with any legal compulsion requiring disclosure of facts. A lawyer communicating on behalf of a client with a nonclient may not . . . fail to make a disclosure of information required by law. Restatement (Third) of Law Governing Lawyers § 98(3) (2000). A Restatement comment bluntly states that In general, a lawyer has no legal duty to make an affirmative disclosure of fact or law when dealing with a nonclient. Applicable statutes, regulations, or common-law rules may require affirmative disclosure in some circumstances, for example disciplinary rules in some states requiring lawyers to disclose a client's intent to commit life-threatening crimes or other wrongful conduct. Restatement (Third) of Law Governing Lawyers § 98 cmt. e (2000). Bars and courts have taken differing positions on a lawyer's duty in this setting. Some states have seemingly increased lawyers' disclosure obligation by removing the confidentiality reference. For instance, Virginia's Rule 4.1(b) indicates as follows: [i]n the course of representing a client a lawyer shall not knowingly . . . fail to disclose a fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client. Virginia Rule 4.1(b). Deleting the phrase "unless disclosure is prohibited by Rule 1.6" removes the confidentiality duty's ability to "trump" the disclosure duty. Most authorities go the other way -- requiring lawyers to stay silent in the face of an adversary's factual misunderstanding that the lawyer or the lawyer's client did not induce. 65829543_8 I-B-75 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) For instance, a 1965 ABA legal ethics opinion emphasized lawyers' duty of confidentiality in describing lawyers' approach to negotiations. ABA LEO 314 (4/27/65) (explaining that lawyers who learn that their clients have provided false information to the IRS may withdraw, but may not disclose the client's deception, because the IRS is not a tribunal; "The Committee has received a number of specific inquiries regarding the ethical relationship between the Internal Revenue Service and lawyers practicing before it."; "The Internal Revenue Service is neither a true tribunal, nor even a quasijudicial institution. It has no machinery or procedure for adversary proceedings before impartial judges or arbiters, involving the weighing of conflicting testimony of witnesses examined and cross-examined by opposing counsel and the consideration of arguments of counsel for both sides of a dispute."; "The difficult problem arises where the client has in fact misled but without the lawyer's knowledge or participation. In that situation, upon discovery of the misrepresentation, the lawyer must advise the client to correct the statement; if the client refuses, the lawyer's obligation depends on all the circumstances."; "Fundamentally, subject to the restrictions of the attorney-client privilege imposed by Canon 37 [emphasizing "the duty of a lawyer to preserve his client's confidences"], the lawyer may have the duty to withdraw from the matter. If for example, under all circumstances, the lawyer believes that the service relies on him as corroborating statements of his client which he knows to be false, then he is under a duty to disassociate himself from any such reliance unless it is obvious that the very fact of disassociation would have the effect of violating Canon 37. Even then, however, if a direct question is put to the lawyer, he must at least advise the service that he is not in a position to answer." (emphasis added); withdrawn in ABA LEO 352 (7/7/85), which explained the criticism of ABA LEO 314's position that lawyers may take positions with the IRS "just as long as there is a reasonable basis" for doing so; concluding that lawyers "may advise reporting a position on a [tax] return" even though the lawyer "believes the position probably will not prevail," there is no "substantial authority" supporting the position -- as long as the position satisfies ABA Rule 3.1's requirement that lawyers may assert a position "which includes a good faith argument for an extension, modification or reversal of existing law."). A thoughtful 1980 article published by the American Bar Foundation bluntly stated that all settlement negotiations involve deception. On the one hand the negotiator must be fair and truthful; on the other he must mislead his opponent. Like the poker player, a negotiator hopes that his opponent will overestimate the value of his hand. Like the poker player, in 65829543_8 I-B-76 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) a variety of ways he must facilitate his opponent's inaccurate assessment. The critical difference between those who are successful negotiators and those who are not lies in this capacity both to mislead and not to be misled. James J. White, Machiavelli and the Bar: Ethical Limitations on Lying in Negotiation, 1980 Am. B. Found. Res. J. 926, 927 (1980). Thus, some ethics opinions take a narrow view of lawyers' duty to correct a negotiating counterparty's misunderstanding. N.Y. Cnty. Law. Ass'n LEO 731 (9/1/03) (holding that a litigant's lawyer did not have to disclose the existence of an insurance policy during settlement negotiations, unless the dispute was in litigation and the pertinent rules required such disclosure; "A lawyer has no duty in the course of settlement negotiations to volunteer factual representations not required by principle of substantive law or court rule. Nor is the lawyer obliged to correct an adversary's misunderstanding of the client's resources gleaned from independent, unrelated sources. However, while the lawyer has no affirmative obligation to make factual representations in settlement negotiations, once the topic is introduced the lawyer may not intentionally mislead. If a lawyer believes that an adversary is relying on a materially misleading representation attributable to the lawyer or the lawyer's client, or a third person acting at the direction of either, regarding insurance coverage, the lawyer should take such steps as may be necessary to disabuse the adversary from continued reliance on the misimpression created by the prior material misrepresentation. This is not to say that the lawyer must provide detailed corrective information; only that the lawyer may not permit the adversary to continue to rely on a materially inaccurate representation presented by the lawyer, his or her client or another acting at their direction." (emphases added); "It is the opinion of the Committee that it is not necessary to disclose the existence of insurance coverage in every situation in which there is an issue as to the available assets to satisfy a claim or pay a judgment. While an attorney has a duty not to mislead intentionally, either directly or indirectly, we believe that an attorney is not ethically obligated to prevent an adversary from relying upon incorrect information which emanated from another source. Under those circumstances, we conclude that the lawyer may refrain from confirming or denying the exogenous information, provided that in so doing he or she refrains from intentionally adopting or promoting a misrepresentation."). New York County LEO 686 (7/9/91) ("If, based on information imparted by the client, a lawyer makes an oral representation in a negotiation, which is 65829543_8 I-B-77 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) still being relied upon by the other side, and the lawyer discovers the representation was based on materially inaccurate information, the lawyer may withdraw the representation even if the client objects. The Code of Professional Responsibility does not require the lawyer to disclose the misrepresentation."). Some ethics opinions seem to require such disclosure. A 2015 California legal ethics opinion presented one scenario in which a lawyer would violate the ethics rules by failing to disclose a material fact unknown to the adversary. The scenario involved a lawyer scheduling settlement negotiations in an unemployed client's case against a former employer seeking lost wages, among other things. In the Bar's scenario, the lawyer deliberately scheduled the settlement negotiations the day before the client was to begin a new job, which allowed the client and lawyer to honestly say to the adversary that the client was still unemployed. However, the Bar explained that a wage-loss claim assumes continuing losses in the future -- which would be inconsistent with the lawyer's knowledge that the client would start a new job the next day. California LEO 2015-194 (2015) (finding that a lawyer making a true but misleading statement about a client's employment had a duty to disclose additional facts to avoid an impermissibly misleading statement to an adversary; "The matter does not resolve at the settlement conference, but the parties agree to participate in a follow-up settlement conference one month later, pending the exchange of additional information regarding Plaintiff's medical expenses and future earnings claim. In particular, Attorney agrees to provide additional information showing Plaintiff's efforts to obtain other employment in mitigation of her damages and the results of those efforts. During that month, Attorney learns that Plaintiff has accepted an offer of employment and that Plaintiff's starting salary will be $75,000.00. Recognizing that accepting this position may negatively impact her future earnings claim, Plaintiff instructs Attorney not to mention Plaintiff's new employment at the upcoming settlement conference and not to include any information concerning her efforts to obtain employment with this employer in the exchange of additional documents with Defendant. At the settlement conference, Attorney makes a settlement demand that lists lost future earnings as a component of Plaintiff's damages and attributes a specific dollar amount to that component."; "This example raises two issues: the 65829543_8 I-B-78 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) failure to disclose the new employment, and client's instruction to Attorney to not disclose the information. First, as to the underlying fact of employment itself, assuming that Plaintiff would not be entitled to lost future earnings if Plaintiff found a new job, including in the list of Plaintiff's damages a separate component for lost future earnings is an implicit misrepresentation that Plaintiff has not yet found a job. This is particularly true because the Plaintiff agreed to show documentation of her job search efforts to establish her mitigation efforts, but did not include any documentation showing that she had, in fact, been hired. Listing such damages, then, constitutes an impermissible misrepresentation. See, e.g., Scofield v. State Bar (1965) 62 Cal.2d 624, 629 [43 Cal.Rptr. 825] (attorney who combined special damages resulting from two different auto accidents in separate claims against each defendant, disciplined for making affirmative misrepresentations with the intent to deceive); Pickering v. State Bar (1944) 24 Cal.2d 141, 144 [148 P.2d 1] (attorney who alleged claim for loss of consortium knowing that plaintiff was not married and that her significant other was out of town during the relevant time period violated Business and Professions Code section 6068(d)). Second, Attorney was specifically instructed by Plaintiff, his client, not to make the disclosure. That instruction, conveyed by a client to his attorney, is a confidential communication that Attorney is obligated to protect under rule 3-100 and Business and Professions Code section 6068(e). While an attorney is generally required to follow his client's instructions, rule 3-700(B)(2) requires withdrawal if an attorney's representation would result in a violation of the ethical rules, of which a false representation of fact or implicit misrepresentation of a material fact would be. When faced with Plaintiff's instruction, Attorney should first counsel his client against the misrepresentation and/or suppression. If the client refuses, Attorney must withdraw under rule 3-700(B)(2), as Attorney may neither make the disclosure absent client consent, nor may Attorney take part in the misrepresentation and/or suppression. (California State Bar Formal Opn. No. 2013-189; 8/ see also Los Angeles County Bar Association Opn. No. 520)."). Other bars have also indicated that lawyers in some situations must affirmatively disclose adverse facts to the adversary. Pennsylvania LEO 97-107 (8/21/97) (analyzing a settlement agreement that was premised on a client's inability to convey a timeshare by deed; explaining that after negotiating a settlement agreement but before consummating the settlement, the client's lawyer learned that his client could convey the timeshare by deed; holding that the lawyer must disclose that fact; "Based on my review of these rules, and most importantly that the opposing lawyer by letter to you has expressly stated that the settlement is conditioned on the inability of your client to convey the first time share unit, I 65829543_8 I-B-79 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) am of the opinion that you do have the duty to apprise the opposing lawyer that your client may now be able to convey her interest in her time sharing unit to the second development company. Under the circumstances, to remain silent may be a representation of a material fact by the affirmation of a statement of another person that you know is false." (emphasis added)). Courts show the same dichotomy. Some courts find that lawyers need not disclose adverse facts to an adverse party entering into settlement negotiations before the completion of discovery. Hardin v. KCS Int'l, Inc., 682 S.E.2d 726, 731, 734, 736 (N.C. Ct. App. 2009) (addressing a situation in which a plaintiff settled with the seller of a large boat for any past problems with the boat, and reserved only the right to pursue claims against the seller based on warranty work; rejecting the plaintiff's effort to void the settlement after discovering "that Hardin's boat, while being shipped from Cruisers' manufacturing facility in Wisconsin to North Carolina, had been involved in a collision with a tree"; explaining that "Hardin had the ability by virtue of the civil discovery rules to obtain from defendants -- prior to entering into the settlement agreement -- information about the pre-sale collision. Hardin, therefore, could have, through the exercise of due diligence, learned of the supposed latent defect."; noting that "Hardin cites no authority -- and we have found none -- requiring opposing parties in litigation to disclose information adverse to their positions when engaged in settlement negotiations. Such a requirement would be contrary to encouraging settlements. One of the reasons that a party may choose to settle before discovery has been completed is to avoid the opposing party's learning of information that might adversely affect settlement negotiations. The opposing party assumes the risk that he or she does not know all of the facts favorable to his or her position when choosing to enter into a settlement prior to discovery. On the other hand, the opposing party may also have information it would prefer not to disclose prior to settlement."; also explaining that "Hardin chose to forego discovery, settle his claims, and enter into this general release. Like the plaintiffs in Talton [Talton v. Mac Tools, Inc., 453 S.E.2d 563 (N.C. Ct. App. 1995)], he cannot now avoid the release by arguing that subsequent to signing the release, he learned of facts that would have persuaded him not [to] sign the release when he has not demonstrated that defendants had any duty to disclose those facts."). Brown v. County of Genesse, 872 F.2d 169, 173, 175 (6th Cir. 1989) (reversing a trial court's conclusion that a county had acted improperly in failing to disclose the highest pay level to which a plaintiff might have risen (which was an important element in a settlement); first noting that "counsel for Brown could have requested this information from the County, but 65829543_8 I-B-80 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) neglected to do so. The failure of Brown's counsel to inform himself of the highest pay rate available to his client cannot be imputed to the County as unethical or fraudulent conduct."; criticizing the lower court's analysis; "[T]he district court erred in its alternative finding that the consent agreement should be vacated because of fraudulent and unethical conduct by the County. The district court concluded that the appellant had both a legal and ethical duty to have disclosed to the appellee its factual error, which the appellant may have suspected had occurred. However, absent some misrepresentation or fraudulent conduct, the appellant had no duty to advise the appellee of any such factual error, whether unknown or suspected. 'An attorney is to be expected to responsibly present his client's case in the light most favorable to the client, and it is not fraudulent for him to do so. . . . We need only cite the well-settled rule that the mere nondisclosure to an adverse party and to the court of facts pertinent to a controversy before the court does not add up to "fraud upon the court" for purposes of vacating a judgment under Rule 60(b).'" (emphasis added) (citation omitted); also noting that the county's lawyer was not certain that the claimant misunderstood the facts; "The district court, in the case at bar, concluded that since counsel for the appellant knew that appellee's counsel misunderstood the existing pay scales available to Brown and knew that she could have been eligible for a level "D" promotion at the time the July 9, 1985 settlement had been executed, the consent judgment should be vacated. This conclusion, however, is in conflict with the facts as stipulated, which specified with particularity that appellant and its counsel had not known of appellee's misunderstanding and/or misinterpretation of the County's pay scales, although believing it to be probable."). In contrast, several courts either criticized, imposed liability, refused to dismiss cases or otherwise condemned lawyers who did not disclose adverse facts. Vega v. Jones, Day, Reavis & Pogue, 17 Cal. Rptr. 3d 26, 28-29, 32 n.6, 33, 38 (Cal. Ct. App. 2004) (reversing a dismissal of a fraud action against Jones Day for representing a buyer in a corporate transaction who did not advise the seller of shares of a "toxic" financing deal that adversely affected the value of the shares in the new company that the seller obtained; affirming dismissal of a negligent misrepresentation claim against Jones Day, but declining to find against Jones Day on the fraud claim; noting in the description of the case that Jones Day won summary judgment in other similar cases against it; "A shareholder in a company acquired in a merger transaction sued the law firm which represented the acquiring company for fraud. He alleged the law firm concealed the so-called toxic terms of a third party financing transaction, and thus defrauded him into exchanging his valuable stock in the acquired company for 'toxic' stock in the acquiring company. The law firm demurred. It contended it made no affirmative 65829543_8 I-B-81 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) misstatements and had no duty to disclose the terms of the third party investments to an adverse party in the merger transaction. We conclude the complaint stated a fraud claim based on nondisclosure. The complaint alleged the law firm, while expressly undertaking to disclose the financing transaction, provided disclosure schedules that did not include material terms of the transaction." (emphases added); "The demurrer to Vega's cause of action for negligent misrepresentation was properly sustained by the trial court, since such a claim requires a positive assertion. . . . Since no positive assertions are alleged, other than the comments that the financing was 'standard' and 'nothing unusual,' no claim for negligent misrepresentation is stated."; "Jones Day specifically undertook to disclose the transaction and, having done so, is not at liberty to conceal a material term. Even where no duty to disclose would otherwise exist, 'where one does speak he must speak the whole truth to the end that he does not conceal any facts which materially qualify those stated. . . . One who is asked for or volunteers information must be truthful, and the telling of a half-truth calculated to deceive is fraud.'" (citation omitted) (emphasis added); "Jones Day contends that Vega's claims are barred by the doctrine of res judicata, because Jones Day obtained summary judgment in its favor on fraud claims in earlier lawsuits brought by three other shareholders, who subsequently waived, abandoned and dismissed their respective appeals. Jones Day argues Vega was in privity with each of those three shareholders, because he is also a former shareholder in MonsterBook, his fraud claim is the same as their claims, he knew about their lawsuits, and he is using the same attorney. This relationship, Jones Day contends, is sufficiently close to justify application of the principle of preclusion. Again, we cannot agree."; "While Jones Day obtained summary judgment on fraud claims by three other shareholders, Vega was not a party to those lawsuits."). Statewide Grievance Comm. v. Egbarin, 767 A.2d 732, 735 (Conn. App. Ct. 2001) (suspending for five years a lawyer for making a true but misleading statement -- providing lenders copies of his tax return, but failing to explain that he had not actually paid the taxes; "As a condition to receiving the loans, the defendant provided Sanborn [mortgage company] and the Picards [couple whose property defendant purchased, who also made a $30,000 loan to him] with copies of his 1992 and 1993 federal income tax returns. The defendant's 1992 federal income tax return listed an adjusted gross income of $93,603 and a tax liability of $26,210. His 1993 federal income tax return stated that the adjusted gross income was $116,950, with a tax owing of $31,389."; "As of the date of the closing, however, the defendant had in fact not paid, not even filed for, the amounts due and owing on the 1992 and 1993 federal income tax returns. The defendant did not disclose either to Sanborn or to the Picards that he had not paid his 1992 and 1993 federal income tax obligations."). 65829543_8 I-B-82 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Neb. v. Addison, 412 N.W.2d 855, 856 (Neb. 1987) (suspending for six months a lawyer who knew that an unrepresented counterparty was unaware of a $1,000,000 insurance policy that the lawyer's client had available; "On November 5, 1985, respondent Addison visited the business offices of Lutheran Medical Center, where he met with Gregory Winchester, the business office manager for the hospital. Addison became aware at this meeting that Winchester was under the false impression that State Farm and Allstate were the only two companies whose policies were in force in connection with the accident. Rather than disclose the third policy, Addison negotiated for a release of the hospital's lien based upon Winchester's limited knowledge. Winchester agreed to release the lien in exchange for $45,000 of the State Farm settlement of $100,000, and an additional $15,000 if and when Medina settled with Allstate, plus another $5,000 if the settlement proceeds from Allstate exceeded $40,000. Subsequent to this agreement the hospital learned of the third policy, and thereafter informed the Sea Insurance Company that it did not consider the release binding, since it was obtained by fraudulent misrepresentations made by respondent Addison."; "In his report the referee found that the respondent had a duty to disclose to Winchester the material fact of the Sea Insurance Company policy and that his failure to do so constituted a violation of DR 1-102(A)(1) and (4). The referee also found that the respondent's act of omission in failing to correct Winchester's false impression constituted a violation of DR 7-102(A)(5)."). Slotkin v. Citizens Cas. Co., 614 F.2d 301 (2nd Cir. 1979) (finding a hospital's lawyer liable for fraud because he failed to advise the plaintiff of a $1,000,000 excess insurance policy, but nevertheless represented the hospital in settling with the plaintiff for a much smaller amount; noting that a letter in the lawyer's file mentioned the larger insurance policy). In 1999, the District of New Mexico dealt with what the court found was "sharp practice." A plaintiff's lawyer, who had deliberately picked an effective date of a release knowing the release would not cover an additional claim that his client eventually asserted. The court held that the plaintiff had not acted unethically, but decried the unprofessional conduct. Pendleton v. Cent. N.M. Corr. Facility, 184 F.R.D. 637, 640, 638, 640-41, 641 (D.N.M. 1999) (rejecting defendant's claim for sanctions based on "a material misrepresentation by Plaintiff's attorney as to why he sought the change in the effective date of the release in CIV 96-1472."; finding that defendant's argument procedurally defective; also finding plaintiff's claim for sanctions against defendant procedurally defective; describing the background of the 65829543_8 I-B-83 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) parties' competing claims for sanctions: "Defendant's counsel drafted the settlement documents in the prior action unaware of the CNMCF Warden's August 28, 1997 letter or Plaintiff's retaliation claim. As drafted, the effective date of the release was to be the date Plaintiff executed the document. On September 2, 1997, Plaintiff's counsel (Mr. Mozes) requested that the release be effective only through August 21, the date of the settlement conference. When questioned why, Plaintiff's counsel responded that such was his normal practice. Defendant contends that based on this representation, its counsel agreed to the request. Plaintiff's counsel discussed the change in a September 2, 1997 letter indicating that 'we will release the "State" up through the date of the Settlement Conference, August 21, 1997.'" (emphases added); "Although Rule 11(c)(1)(A) provides that 'if warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney's fees incurred in presenting or opposing the motion [for sanctions]' (emphasis added), the court does not believe that such fees are warranted, even in the face of Defendant's noncompliance with the safe-harbor provisions of Rule 11, because of the sharp practices engaged in by the Plaintiff's counsel."; "As we go through this life we learn, and sometimes the hard way, who we can trust to be candid and who we cannot. It is unfortunate that some attorneys apparently feel no obligation to their fellow attorneys, but then again, as the saying goes, 'it's a short road that doesn't have a bend in it.' The Rules of Professional Conduct and the case law suggest that, even in the context of finalizing a settlement agreement and release, a knowing failure to disclose a non-confidential, material and objective fact upon inquiry by opposing counsel is improper. See 2 N.M. R. Ann. (1998), Rules of Professional Conduct, Preamble, A Lawyer's Responsibilities ('As negotiator, a lawyer seeks a result advantageous to the client but consistent with requirements of honest dealing with others.'); id. § 16-401 ('In the course of representing a client a lawyer shall not knowingly [] make a false statement of material fact or law to a third person.'); id § 16-804(C); ABA/BNA Lawyers' Manual on Professional Conduct, § 71:201 ('An omission of material information that is intended to mislead a third person may constitute a 'false statement.'). The court agrees with Defendant that the failure to disclose a fact may be a misrepresentation in certain circumstances. See Restatement (Second) of Torts § 529 & cmt. A ('A statement containing a half-truth may be as misleading as a statement wholly false.') (1977)."; "What is particularly troubling in this case is that the second retaliation lawsuit arose directly and immediately out of efforts to settle the prior action. Holding back information that if divulged might have led to a quick low-cost resolution of this action without resort to additional litigation is exactly the type of conduct that the public finds abhorrent and that contributes to the low esteem that the bar currently is trying to reverse." (emphasis added); "Practicing law transcends gamesmanship and making a buck. We should be trying to make a difference. The profession is more than a business, and should remain so. As professionals we should, while 65829543_8 I-B-84 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) trying to solve our clients' problems, make every effort to avoid needless litigation. The conduct employed in this case certainly was not calculated to achieve that end." (emphasis added)). Best Answer The best answer to this hypothetical is (C) YOU MAY NOT DISCLOSE THE ABSENCE OF THE PROVISION, UNLESS YOUR CLIENT CONSENTS (MAYBE). B 1/15, 2/15, 4/15, 10/15 65829543_8 I-B-85 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Transactional Adversaries' Substantive Mistakes Hypothetical 9 You are representing the seller in negotiating a complex transaction memorialized in a 50-page draft agreement. One provision indicates that buyer's sole remedy for seller's breach of a covenant not to compete is return of the consideration allocated in the agreement for the covenant not to compete. Near the end of the drafting process, the buyer amends another provision in the agreement so that only one dollar is allocated to consideration for the covenant not to compete -- which essentially renders the covenant meaningless (because seller's breach would at most result in one dollar of damages). When you advise your client of the buyer's mistake, she directs you to keep it secret. What do you do? (A) You must disclose the buyer's mistake. (B) You may disclose the buyer's mistake, but you don't have to. (C) You may not disclose the buyer's mistake, unless your client consents. (C) YOU MAY NOT DISCLOSE THE BUYER'S MISTAKE, UNLESS YOUR CLIENT CONSENTS (PROBABLY) Analysis In some situations, a negotiation/transaction adversary makes a substantive mistake. For instance, the adversary might forget to ask for an indemnity in a situation which would normally call for an indemnity. Or the adversary might make changes in one part of a lengthy contract that has implications in another part of the contract, which the adversary does not realize. These mistakes differ from what might be considered drafting mistakes (sometimes called "scrivener's errors"), such as overlooking a necessary comma, or failing to include a provision that the negotiating parties agree to add to a contract, etc. 65829543_8 I-B-86 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Courts and bars seem to agree that lawyers generally have no duty to transactional adversaries, other than to avoid fraudulent representations or asserting clients' misconduct. In 2015, a Michigan appellate court vigorously rejected plaintiff's argument that she should be entitled to recover from defendant Progressive $28,000 to cover a hospital bill -- which arrived after she had given Progressive a full release in return for a $78,000 settlement on a personal injury claim. The court repeatedly blamed the plaintiff's predicament on her lawyer rather than defendant Progressive or its lawyer. When plaintiff settled the case, she or her lawyer could have demanded that the settlement only include a specific list of PIP benefits incurred to date, rather than all PIP benefits incurred to date. But neither she nor her lawyer made such a demand. Alternatively, because her claims involved continuing medical treatment and numerous related charges over long periods of time, plaintiff and her lawyer could have conditioned any settlement by specifying that if any charges incurred before the date of settlement came to light after the settlement, the settlement could be reopened to address such a charge. But again, neither plaintiff nor her lawyer took this precaution. . . . Having failed to protect her interests, and plaintiff's trial lawyer having failed to protect his client's interests, plaintiff now claims that the settlement should be set aside because Progressive (or its counsel) should have asked plaintiff, before the settlement, if she had considered the $28,000 charge -- even though it is conjecture to allege that Progressive (or its counsel) knew that plaintiff lacked knowledge of this charge. . . . If this claim sounds strange, that's because it is. Why? Because were we to agree with plaintiff's theory -- which she does not articulate legally -- then this case would stand for the unprecedented proposition that an adversary in litigation has a duty to ensure that his opponent considered all relevant factors before making a settlement decision. . . . If plaintiff or her lawyer had any doubt about such an agreement, it was the responsibility of plaintiff's lawyer to demand a different kind of settlement. . . . Yet, plaintiff instead says the lawyer for her adversary (or her adversary itself) should advise her 65829543_8 I-B-87 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) of relevant information before settlement. To shift what is rightly the obligation of plaintiff's attorney to opposing counsel or the defendant would fly in the face of the adversarial nature of litigation, and compromise a lawyer's obligation to zealously represent his client -- and his client alone -- without any conflicts. . . . Progressive paid to buy its peace, not to advise plaintiff and her lawyer on how to settle a case. Were we to accept the proposition advanced by plaintiff, we would undermine the finality of settlements, and, perhaps, place opposing counsel in the untenable and conflicted position of advising two parties: his client on how best to settle a claim, and his opponent on what claims to include in a settlement. This we cannot and will not do. Clark v. Progressive Ins. Co., No. 319454, 2015 Mich. App. LEXIS 458, at *2-20 (Mich. Ct. App. Mar. 5, 2015)1 (emphasis added). 1 Clark v. Progressive Ins. Co., No. 319454, 2015 Mich. App. LEXIS 458, at *2-4, *4-5, *5, *16, *1920, *20 (Mich. Ct. App. Mar. 5, 2015) (analyzing efforts by a car accident plaintiff who settled her personal injury protection claim against defendant Progressive for $78,000 for which she gave Progressive a full release; noting that days after the settlement she received a $28,000 from the hospital at which she was treated, which was in addition to the surgeon's bill; explaining that plaintiff sought to void the settlement agreement because Progressive was aware of the hospital bill but that she was not aware of it at the time she settled with Progressive; reversing the trial court's order voiding the settlement; noting plaintiff's lawyer could have handled the settlement differently, but had failed to protect his client; "When plaintiff settled the case, she or her lawyer could have demanded that the settlement only include a specific list of PIP benefits incurred to date, rather than all PIP benefits incurred to date. But neither she nor her lawyer made such a demand. Alternatively, because her claims involved continuing medical treatment and numerous related charges over long periods of time, plaintiff and her lawyer could have conditioned any settlement by specifying that if any charges incurred before the date of settlement came to light after the settlement, the settlement could be reopened to address such a charge. But again, neither plaintiff nor her lawyer took this precaution. There are many other ways plaintiff or her lawyer could have settled her claim besides a universal settlement that wiped the slate clean of any claims incurred prior to the date of settlement. But they did not do so. Instead, they settled for a complete waiver of claims for $78,000, and Progressive paid this sum to buy its peace and achieve finality in this litigation." (footnote omitted); "Having failed to protect her interests, and plaintiff's trial lawyer having failed to protect his client's interests, plaintiff now claims that the settlement should be set aside because Progressive (or its counsel) should have asked plaintiff, before the settlement, if she had considered the $28,000 charge -- even though it is conjecture to allege that Progressive (or its counsel) knew that plaintiff lacked knowledge of this charge." (footnotes omitted); "If this claim sounds strange, that's because it is. Why? Because were we to agree with plaintiff's theory -- which she does not articulate legally -- then this case would stand for the unprecedented proposition that an adversary in litigation has a duty to ensure that his opponent considered all relevant factors before making a settlement decision. And, were we to credit the theory that opposing counsel had a duty to notify plaintiff of the $28,000 charge, then this case would stand for the novel theory that opposing counsel has a duty to do what is in fact, law, and professional obligation, the duty of plaintiff's lawyer. It is the obligation of plaintiff's attorney to ensure his client knows that a settlement, like the one at issue here, encompasses all claims. If plaintiff or her lawyer had any doubt about such an agreement, it was the responsibility of plaintiff's lawyer to demand a different kind of 65829543_8 I-B-88 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Other courts take the same approach, although perhaps without the vehement language. Lighthouse MGA, L.L.C. v. First Premium Ins. Grp., Inc., 448 F. App'x 512, 516, 517, 518 (5th Cir. 2011) (holding that the general counsel of a party in a transaction did not jointly represent the counterparty, and did not engage in an affirmative misrepresentation about a forum selection clause in the contract; concluding that the lawyer did not have a duty to tell the unrepresented counterpart about the forum selection provision; finding that the lawyer did not have a conflict under Rule 1.7; "Lighthouse's Director of Marketing has affirmed that the general counsel was 'the attorney for First Premium,' and there is no evidence in the record that the general counsel ever undertook to give legal advice to Lighthouse or purported to draft the contract on Lighthouse's behalf. As First Premium notes, even if Lighthouse subjectively believed that First Premium's general counsel was also Lighthouse's attorney, such a belief would not be reasonable." (footnote omitted); finding the lawyer did not violate Rule 4.3 by providing advice to an unrepresented party; "As First Premium notes, no authority supports Lighthouse's contention that First Premium's general counsel provided legal advice to Lighthouse merely by drafting the contract."; concluding that the lawyer did not violate Rule 8.4(c)); "There is no evidence that the general counsel made any false or misleading statements to Lighthouse. To the extent that Lighthouse's argument is based on the general counsel's failure to point out of explain the forum selection clause to Lighthouse, First Premium's general counsel did not have a fiduciary relationship with Lighthouse that would give rise to a duty to convey that information under Louisiana law."). settlement."; "Yet, plaintiff instead says the lawyer for her adversary (or her adversary itself) should advise her of relevant information before settlement. To shift what is rightly the obligation of plaintiff's attorney to opposing counsel or the defendant would fly in the face of the adversarial nature of litigation, and compromise a lawyer's obligation to zealously represent his client -- and his client alone -- without any conflicts."; finding that the settlement did not result from a "mutual mistake," but rather because plaintiff's lawyer had not protected his client; "Here, plaintiff seeks to engage in exactly this sort of obligation shifting: because her trial attorney did not consider that she might face additional (and perhaps unknown) charges for PIP benefits incurred before November 5, 2013 -- i.e., the $28,942 Synergy billing - she argues that Progressive had a duty to inform her of this billing during the settlement negotiation. Of course, Progressive has no such duty. Progressive, as a defendant in litigation, is in an adversarial position with plaintiff, and, as such, has every right to protect its interest and to expect that courts will uphold a settlement freely entered into by the parties. Progressive paid to buy its peace, not to advise plaintiff and her lawyer on how to settle a case. Were we to accept the proposition advanced by plaintiff, we would undermine the finality of settlements, and, perhaps, place opposing counsel in the untenable and conflicted position of advising two parties: his client on how best to settle a claim, and his opponent on what claims to include in a settlement. This we cannot and will not do."). 65829543_8 I-B-89 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Fox v. Pollack, 226 Cal. Rptr. 532 (Cal. Ct. App. 1986) (holding that a lawyer did not have a duty of professional care to an unrepresented counterparty in a real estate transaction). This hypothetical comes from a 2013 California legal ethics opinion. California LEO 2013-189 (2013)2 started with a basic scenario: 2 California LEO 2013-189 (2013) (explaining that a lawyer could not advise an adversary of the adversary's mistake in drafting a transactional document, but had a duty to disclose to the adversary the lawyer's accidental failure to redline a change; providing the facts of the opinion: "Buyer's Attorney prepares an initial draft of the Purchase and Sale Agreement. One section towards the back of the 50page draft agreement contains the terms of an enforceable covenant not to compete, and includes a provision that Buyer's sole and exclusive remedy for a breach by Seller of its covenant not to compete is the return of that portion of the total consideration which has been allocated in the Purchase and Sale Agreement for the covenant not to compete."; presenting two scenarios; explaining that "[u]nder either Scenario A or Scenario B of our Statement of Facts, once Seller's Attorney has informed Seller of the development, Seller's Attorney must abide by the instruction of Seller to not disclose. If, however, failure to make such disclosure constitutes an ethical violation by Seller's Attorney, then Seller's Attorney may have an obligation to withdraw from the representation under such circumstances." (footnote omitted); "Any duty of professionalism, however, is secondary to the duties owed by attorneys to their own clients. There is no general duty to protect the interests of nonclients."; "Attorneys generally owe no duties to opposing counsel nor do they have any obligation to correct the mistakes of opposing counsel. There is no liability for conscious nondisclosure absent a duty of disclosure."; "[A]n attorney may have an obligation to inform opposing counsel of his or her error if and to the extent that failure to do so would constitute fraud, a material misstatement, or engaging in misleading or deceitful conduct."; describing Scenario A: "Buyer's Attorney then prepares a revised version of the Purchase and Sale Agreement which, apparently in response to the comments of Seller's Attorney, provides for an allocation of only $1 as consideration for the covenant not to compete with $4,999,999 allocated to the purchase price for the Company. In reviewing the changes made in the revised version, Seller's Attorney recognizes that the allocation of only $1 as consideration for the covenant not to compete essentially renders the covenant meaningless, because Buyer's sole and exclusive remedy for breach by Seller of the covenant would be the return by Seller of $1 of the total consideration. Seller's Attorney notifies Seller about the apparent error with respect to the consequences of the change made by Buyer's Attorney. Seller instructs Seller's Attorney to not inform Buyer's Attorney of this apparent error. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by parties in that form."; analyzing Scenario A as follows: "In Scenario A of our Statement of Facts, although the Purchase and Sale Agreement contains a covenant not to compete, the apparent error of Buyer's Attorney limits the effectiveness of the covenant because the penalty for breach results in payment by Seller of only $1. However, Seller's Attorney has engaged in no conduct or activity that induced the apparent error. Further, under our Statement of Facts, there had been no agreement on the allocation of the purchase price to the covenant, and the Purchase and Sale Agreement does in fact contain a covenant not to compete the terms of which are consistent with the parties' mutual understanding. Under these circumstances, where Seller's Attorney has not engaged in deceit, active concealment or fraud, we conclude that Seller's Attorney does not have an affirmative duty to disclose the apparent error to Buyer's Attorney."; also explaining Scenario B: "After receiving the initial draft from Buyer's Attorney, Seller's Attorney prepares a revised version of the Purchase and Sale Agreement which provides for an allocation of only $1 as consideration for the covenant not to compete, with the intent of essentially rendering the covenant not to compete meaningless. Although Seller's Attorney had no intention of keeping this change secret from Buyer's Attorney, Seller's Attorney generates a 'redline' of the draft that unintentionally failed to highlight the change, and then tenders the revised version to Buyer's attorney. 65829543_8 I-B-90 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Buyer's Attorney prepares an initial draft of the Purchase and Sale Agreement. One section towards the back of the 50-page draft agreement contains the terms of an enforceable covenant not to compete, and includes a provision that Buyer's sole and exclusive remedy for a breach by Seller of its covenant not to compete is the return of that portion of the total consideration which has been allocated in the Purchase and Sale Agreement for the covenant not to compete. California LEO 2013-189 (2013). Scenario A involves an adversary's substantive mistake. Buyer's Attorney then prepares a revised version of the Purchase and Sale Agreement which, apparently in response to the comments of Seller's Attorney, provides for an allocation of only $1 as consideration for the covenant not to compete with $4,999,999 allocated to the purchase price for the Company. In reviewing the changes made in the revised version, Seller's Attorney recognizes that the allocation of only $1 as consideration for the covenant not to compete essentially renders the covenant meaningless, because Buyer's sole and exclusive remedy for breach by Seller of the covenant would be the return by Seller of $1 of the total consideration. Seller's Attorney notifies Seller about Subsequently, Seller's Attorney discovers the unintended defect in the 'redline' and notifies Seller about the change, including the failure to highlight the change, in the revised version. Seller instructs Seller's Attorney to not inform Buyer's Attorney of the change. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by the parties in that form."; analyzing Scenario B as follows: "Had Seller's Attorney intentionally created a defective 'redline' to surreptitiously conceal the change to the covenant not to compete, his conduct would constitute deceit, active concealment and possibly fraud, in violation of Seller's Attorney's ethical obligations. However, in Scenario B of our Statement of Facts, Seller's Attorney intentionally made the change which essentially renders the covenant not to compete meaningless, but unintentionally provided a defective 'redline' that failed to highlight for Buyer's Attorney that the change had been made. Under these circumstances, and prior to discovery of the unintentional defect, Seller's Attorney has engaged in no such unethical conduct. But once Seller's Attorney realizes his own error, we conclude that the failure to correct that error and advise Buyer's Attorney of the change might be conduct that constitutes deceit, active concealment and/or fraud, with any such determination to be based on the relevant facts and circumstances. If Seller instructs Seller's Attorney to not advise Buyer's Attorney of the change, where failure to do so would be a violation of his ethical obligations, Seller's Attorney may have to consider withdrawing." (footnote omitted); concluding with the following: "Where an attorney has engaged in no conduct or activity that induced an apparent material error by opposing counsel, the attorney has no obligation to alert the opposing counsel of the apparent error. However, where the attorney has made a material change in contract language in such a manner that his conduct constitutes deceit, active concealment or fraud, the failure of the attorney to alert opposing counsel of the change would be a violation of his ethical obligation."). 65829543_8 I-B-91 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) the apparent error with respect to the consequences of the change made by Buyer's Attorney. Seller instructs Seller's Attorney to not inform Buyer's Attorney of this apparent error. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by parties in that form. Id. The legal ethics opinion started its analysis with a general statement: Any duty of professionalism, however, is secondary to the duties owed by attorneys to their own clients. There is no general duty to protect the interests of nonclients. . . . Attorneys generally owe no duties to opposing counsel nor do they have any obligation to correct the mistakes of opposing counsel. There is no liability for conscious nondisclosure absent a duty of disclosure. Id. (emphasis added). On the other hand, an attorney may have an obligation to inform opposing counsel of his or her error if and to the extent that failure to do so would constitute fraud, a material misstatement, or engaging in misleading or deceitful conduct. Id. The legal ethics opinion provided the following analysis of this scenario: In Scenario A of our Statement of Facts, although the Purchase and Sale Agreement contains a covenant not to compete, the apparent error of Buyer's Attorney limits the effectiveness of the covenant because the penalty for breach results in payment by Seller of only $1. However, Seller's Attorney has engaged in no conduct or activity that induced the apparent error. Further, under our Statement of Facts, there had been no agreement on the allocation of the purchase price to the covenant, and the Purchase and Sale Agreement does in fact contain a covenant not to compete the terms of which are consistent with the parties' mutual understanding. Under these circumstances, where Seller's Attorney has not engaged in deceit, active concealment or fraud, we conclude that Seller's Attorney does not have an 65829543_8 I-B-92 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) affirmative duty to disclose the apparent error to Buyer's Attorney. Id. (emphasis added). Scenario B involved what would be considered an adversary's scrivener's error -which raises different issues. The legal ethics opinion recognized that California's confidentiality-centric rules might require withdrawal under certain circumstances, even if they did not require disclosure. Under either Scenario A or Scenario B of our Statement of Facts, once Seller's Attorney has informed Seller of the development, Seller's Attorney must abide by the instruction of Seller to not disclose. If, however, failure to make such disclosure constitutes an ethical violation by Seller's Attorney, then Seller's Attorney may have an obligation to withdraw from the representation under such circumstances. Id. (footnote omitted). Best Answer The best answer to this hypothetical is (C) YOU MAY NOT DISCLOSE THE BUYER'S MISTAKE, UNLESS YOUR CLIENT CONSENTS (PROBABLY). B 1/15, 10/15 65829543_8 I-B-93 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Transactional Adversaries' Scrivener's Errors Hypothetical 10 Since late yesterday afternoon, you have been furiously exchanging draft contracts with a transactional counterparty. You finally reached agreement on the last few provisions, which the adversary's lawyer says she will write up while you head home for an hour or two of sleep. When you returned to the office this morning to check what the other lawyer prepared, you realize that she left out an important term (favorable to her client) to which you had agreed during the final negotiation discussion. (a) What do you do when dealing with your client? (A) You must disclose the adversary's mistake to your client. (B) You may disclose the adversary's mistake to your client, but you don't have to. (C) You may not disclose the adversary's mistake to your client. (B) YOU MAY DISCLOSE THE ADVERSARY'S MISTAKE TO YOUR CLIENT, BUT YOU DON'T HAVE TO (PROBABLY) (b) What do you do when dealing with the adversary's lawyer? (A) You must disclose the adversary's mistake to the adversary's lawyer. (B) You may disclose the adversary's mistake to the adversary's lawyer, but you don't have to. (C) You may not disclose the adversary's mistake to the adversary's lawyer, unless your client consents. (A) YOU MUST DISCLOSE THE ADVERSARY'S MISTAKE TO THE ADVERSARY'S LAWYER Analysis In some situations, lawyers or their clients make what could be called a scrivener's error. These differ from substantive mistakes, such as forgetting to negotiate a provision that would normally be found in a contract, etc. 65829543_8 I-B-94 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) A scrivener's error often involves a typographical mistake, a failure to highlight a change, etc. In today's fast-paced and electronic communication-intensive world, such mistakes can occur easily. Jim Carlton, Fresh Dispute Mars Bay Area Transit Deal, Wall St. J., Nov. 18, 2013 ("An unusual dispute threatens to undo a contract agreement between management and labor leaders of the Bay Area Rapid Transit (BART) system, raising the possibility of another crippling public-transit strike."; "The dispute centers on a provision in the contract that allows workers to take up to six weeks of paid family leave. Management says the provision was never agreed to and was left in as a result of a clerical error. Representatives of the two unions, Amalgamated Transit Union (ATU) Local 1555 and Service Employees International Union (SEIU) Local 1021, say BART negotiators were fully aware of it."; "Labor experts said that, while unusual, it isn't unprecedented for a dispute to arise over the terms of a labor contract after it has been ratified. 'There are a number of cases that arise in arbitration over the allegation that something is in the agreement as a result of a mutual mistake,' said William B. Gould IV, emeritus professor of law at the Stanford Law School and former chairman of the National Labor Relations Board."; "In the BART case, 'there is certainly some kind of screw-up,' Mr. Gould added. 'The question is really going to be, if they are unable to resolve this through discussion and negotiations, was this a mutual mistake?'"). BBC News (Europe), Bank Clerk Falls Asleep On Keyboard And Accidentally Transfers £189 Million To Customer, June 10, 2013 ("A German labour court has ruled that a bank supervisor was unfairly sacked for missing a multimillion-euro error by a colleague who fell asleep during a financial transaction. The clerk was transferring 64.20 euros (£54.60) when he dozed off with his finger on the keyboard, resulting in a transfer of 222,222,222.22 euros (£189Million). His supervisor was fired for allegedly failing to check the transaction. But judges in the state of Hesse said she should have only been reprimanded."). Brad Heath, Small Mistakes Cause Big Problems, USA Today, March 30, 2011 ("If you're reading this in New York, you're probably too drunk to drive. That's because lawmakers accidentally got too tough with a get-tough drunken-driving law, inserting an error that set the standard for 'aggravated driving while intoxicated' below the amount of alcohol that can occur naturally. The one-word mistake makes the new law unenforceable, says Lieutenant Glenn Miner, a New York State Police spokesman. However, drivers with a blood-alcohol content of 0.08% or higher can still be prosecuted under other state laws. In the legislative world, such small errors, while uncommon, can carry expensive consequences. In a few cases around 65829543_8 I-B-95 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) the nation this year, typos and other blunders have redirected millions of tax dollars or threatened to invalidate new laws. In Hawaii, for instance, lawmakers approved a cigarette-tax increase to raise money for medical care and research. Cancer researchers, however, will get only an extra 1.5 cents next year -- instead of the more than $8 million lawmakers intended. That's because legislators failed to specify that they should get 1.5 cents from each cigarette sold, says Linda Smith, an adviser to Governor Linda Lingle."; "New York's mistake came in a bill meant to set tougher penalties and curb plea bargains for drivers well above the legal intoxication standard. Instead of specifying blood alcohol as a percentage, as most drunken-driving laws do, New York set its threshold as 0.18 grams --'so low you can't even measure it,' Miner says."). Anahad O'Connor, New York State Backs Remorseful Buyers at Rushmore Tower, The New York Times, April 9, 2010 ("Call it the multimillion-dollar typo. On Friday, the New York State attorney general's office ruled in favor of a group of buyers who were looking to back out of their multimillion-dollar contracts at The Rushmore, an expensive Manhattan condominium building along the Hudson River. The buyers found an unusual loophole -- a seemingly minor typo in a date in the densely worded 732-page offering plan -- and used it to argue that they deserved their hefty deposits back."; "In this case, the typo got in the way. Instead of stating that buyers had the right to back out if the first closing did not occur before September 1, 2009, the offering plan stated that buyers had the right to back out if the first closing did not occur before September 1, 2008, which was the first day of the budget year, not the last. Ultimately, the first closing took place in February 2009. The sponsors argued that they made a trivial mistake -- a typo that lawyers refer to as a 'scrivener's error' -- that should be overlooked. But the attorney general's office disagreed. It sided with the buyers."). Mizuho Securities Sues Tokyo Stock Exchange Over 41 Billion Yen Trade Fiasco, Kyodo News, Oct. 28, 2006 ("Mizuho Securities Company filed a lawsuit Friday against Tokyo Stock Exchange (TSE) Inc. at the Tokyo District Court for 41.5 billion yen in damages, claiming the bourse caused it huge losses when the TSE computer system failed to process a correction to an erroneous order the brokerage placed last December. The suit brought by Mizuho Securities, a unit of Mizuho Financial Group Inc., marks the first time a brokerage has sued the operator of the Tokyo Stock Exchange over equity trading. Last December, a Mizuho Securities clerk mistakenly entered a sell order for 610,000 shares in staffing company J-Com Company for 1 yen each. The actual order was one share for 610,000 yen. As soon as the brokerage noticed the mistake, it tried to withdraw the sell order but the TSE's computer system took time to process the cancellation order. Sources said earlier this month that Mizuho lost about 40.7 billion yen buying back all the shares from people who bought at the erroneous price and said the 65829543_8 I-B-96 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) brokerage has calculated 40.4 billion yen of that loss was due to a system failure at the TSE."). Grant Robertson, Comma Quirk Irks Rogers Communications, The Globe & Mail, Aug. 6, 2006 ("It could be the most costly piece of punctuation in Canada. A grammatical blunder may force Rogers Communications Inc. to pay an extra $2.13-million to use utility poles in the Maritimes after the placement of a comma in a contract permitted the deal's cancellation. The controversial comma sent lawyers and telecommunications regulators scrambling for their English textbooks in a bitter 18-month dispute that serves as an expensive reminder of the importance of punctuation. Rogers thought it had a five-year deal with Aliant Inc. to string Rogers' cable lines across thousands of utility poles in the Maritimes for an annual fee of $9.60 per pole. But early last year, Rogers was informed that the contract was being cancelled and the rates were going up. Impossible, Rogers thought, since its contract was iron-clad until the spring of 2007 and could potentially be renewed for another five years. Armed with the rules of grammar and punctuation, Aliant disagreed. The construction of a single sentence in the 14-page contract allowed the entire deal to be scrapped with only one-year's notice, the company argued. Language buffs take note -- Page 7 of the contract states: The agreement 'shall continue in force for a period of five years from the date it is made, and thereafter for successive five year terms, unless and until terminated by one year prior notice in writing by either party.'"; "Had it not been there, the right to cancel wouldn't have applied to the first five years of the contract and Rogers would be protected from the higher rates it now faces. 'Based on the rules of punctuation,' the comma in question 'allows for the termination of the [contract] at any time, without cause, upon one-year's written notice,' the regulator said. Rogers was dumbfounded. The company said it never would have signed a contract to use roughly 91,000 utility poles that could be cancelled on such short notice. Its lawyers tried in vain to argue the intent of the deal trumped the significance of a comma. 'This is clearly not what the parties intended,' Rogers said in a letter to the CRTC."). Gladwin Hill, For Want of Hyphen, N.Y. Times, July 27, 1962 ("The omission of a hyphen in some mathematical data caused the $18,500,000 failure of a spacecraft launched toward Venus last Sunday, scientists disclosed today. The spacecraft, Mariner I, veered off course about four minutes after its launching from Cape Canaveral, Florida, and had to be blown up in the air. The error was discovered here this week in analytical conferences of scientists and engineers of the National Aeronautics and Space Administration, the Air Force and the California Institute of Technology Jet Propulsion Laboratory, manager of the project for N.A.S.A. Another launching will be attempted sometime in August. Plans had been suspended pending discovery of what went wrong with the first firing. The hyphen, a 65829543_8 I-B-97 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) spokesman for the laboratory explained, was a symbol that should have been fed into a computer, along with a mass of other coded mathematical instructions. The first phase of the rocket's flight was controlled by radio signals based on this computer's calculations. The rocket started out perfectly on course, it was stated. But the inadvertent omission of the hyphen from the computer's instructions caused the computer to transmit incorrect signals to the spacecraft."). Ethics authorities usually do not deal with such drafting errors, but rather with more substantive mistakes or misunderstanding. (a) In 1986, the ABA explained that a lawyer in this situation did not have to advise a client of the adversary's scrivener's error. Informal ABA LEO 1518 (2/9/86) (analyzing the following situation: "A and B, with the assistance of their lawyers, have negotiated a commercial contract. After deliberation with counsel, A ultimately acquiesced in the final provision insisted upon by B, previously in dispute between the parties and without which B would have refused to come to overall agreement. However, A's lawyer discovered that the final draft of the contract typed in the office of B's lawyer did not contain the provision which had been in dispute. The Committee has been asked to give its opinion as to the ethical duty of A's lawyer in that circumstance." (emphasis added); concluding that the lawyer must advise the adversary of the mistake but need not advise the lawyer's client of the mistake; "The Committee considers this situation to involve merely a scrivener's error, not an intentional change in position by the other party. A meeting of the minds has already occurred. The Committee concludes that the error is appropriate for correction between the lawyers without client consultation. A's lawyer does not have a duty to advise A of the error pursuant to any obligation of communication under Rule 1.4 of the ABA Model Rules of Professional Conduct (1983)." (emphases added); "The client does not have a right to take unfair advantage of the error. The client's right pursuant to Rule 1.2 to expect committed and dedicated representation is not unlimited. Indeed, for A's lawyer to suggest that A has an opportunity to capitalize on the clerical error, unrecognized by A and B's lawyer, might raise a serious question of the violation of the duty of A's lawyer under Rule 1.2(d) not to counsel the client to engage in, or assist the client in, conduct the lawyer knows is fraudulent. In addition, Rule 4.1(b) admonishes the lawyer not knowingly to fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a fraudulent act by a client, and Rule 8.4(c) prohibits the lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation."; providing a further explanation in a footnote; "The delivery of the erroneous document is not a 65829543_8 I-B-98 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) 'material development' of which the client should be informed under EC 9-2 of the Model Code of Professional Responsibility, but the omission of the provision from the document is a 'material fact' which under Rule 4.1(b) of the Model Rules of Professional Conduct must be disclosed to B's lawyer." (emphasis added); also analyzing the impact of ABA Model Rule 1.6, and the opinion's deliberate lack of an analysis if the client wanted to take advantage of the adversary's mistake; "Assuming for purposes of discussion that the error is 'information relating to [the] representation,' under Rule 1.6 disclosure would be 'impliedly authorized in order to carry out the representation.' The Comment to Rule 1.6 points out that a lawyer has implied authority to make 'a disclosure that facilitates a satisfactory conclusion' -- in this case completing the commercial contract already agreed upon and left to the lawyers to memorialize. We do not here reach the issue of the lawyer's duty if the client wishes to expl[oi]t the error."). (b) The next question is whether a lawyer in this situation must advise the adversary of the error. The ABA dealt with this situation in ABA LEO 1518 (2/9/86). As explained above, the ABA concluded that "the omission of the provision from the document is a 'material fact' which . . . must be disclosed to [the other side's] lawyer." Id. The Ethical Guidelines for Settlement Negotiations similarly indicates that lawyers "should identify changes from draft to draft or otherwise bring them explicitly to the other counsel's attention." ABA, Ethical Guidelines for Settlement Negotiations 57 (Aug. 2002). The Guidelines explain that "[i]t would be unprofessional, if not unethical, knowingly to exploit a drafting error or similar error concerning the contents of the settlement agreement." Id. Other authorities agree. See, e.g., Patrick E. Longan, Ethics in Settlement Negotiations: Foreword, 52 Mercer L. Rev. 807, 815 (2001) ("the lawyer has the duty to correct the mistakes" if the lawyer notices typographical or calculation errors in a settlement agreement). 65829543_8 I-B-99 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Predictably, courts have little patience with transactional or litigation adversaries' attempt to exploit a scrivener's error. Cadbury UK Ltd. v. Meenaxi Enterprise, Inc.,, Cancellation No. 92057280, Trademark Trial & Appeal Board,at 3, 4, 9, 10, 11, 13 (USTPO July 21, 2015) (compelling responses to document requests, and rejecting the recipient's delay in responding to the document requests based on requesting party's obviously incorrect designation of the entity from which it sought the document; "As to the merits, this dispute centers on a typographical error. Respondent concedes that it made a typographical error in its document requests, inadvertently referring in the preamble to Petitioner as 'Venture Execution Partners, Inc.,' instead of 'Cadbury UK Limited.'"; "Petitioner argues that the typographical error was a crucial mistake, the result of which is that the document requests were never directed to Petitioner."; "The isolated reference to Venture Execution Partners, Inc., was clearly a typographical error; it did not cause a matter of real confusion or misunderstanding. The motion to compel is the result of Petitioner’s attorney apparently concluding, upon the discovery of a typographical error, that he had found an excuse to become pedantic, unreasonable, and uncooperative. The Board expects each party to every case to use common sense and reason when faced with what the circumstances clearly show to be a typographical error." (emphasis added); "Although the mistake of mentioning a third party in the preamble to Respondent’s First Set of Requests for the Production of Documents and Things suggests that the document requests were modeled from another case in which Respondent or its prior counsel was involved, the refusal of Petitioner to provide any response to the requests is untenable. If Petitioner had any doubt as to the document requests, it should have contacted Respondent for clarification rather than simply refusing to respond."; "The Board expects that when there is an obvious and inadvertent typographical error in any discovery request or other filing -- particularly where, as here, the intended meaning was clear—the parties will not require the Board’s intervention to correct the mistake." (emphasis added); "It also must be stressed that Petitioner’s conduct has not demonstrated the good faith and cooperation that is expected of litigants during discovery. Such conduct has delayed this proceeding, unnecessarily increased the litigation costs of the parties, wasted valuable Board resources, and interfered with Respondent’s ability and, indeed, its right, to take discovery. If Respondent perceives Petitioner as not having complied with the terms of this order, or can establish any further abusive, uncooperative, or harassing behavior from Petitioner, then Respondent’s remedy will lie in a motion for entry of sanctions. Sanctions the Board can order, if warranted, may include judgment against Petitioner."). 65829543_8 I-B-100 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Stare v. Tate, 98 Cal. Rptr. 264, 266, 267 (Cal. Ct. App. 1971) (analyzing a situation in which a husband negotiating a property settlement with his former wife noticed two calculation errors in the agreement; noting that the husband nevertheless signed the settlement without notifying his former wife of the errors; explaining the predictable way in which the issue arose: "The mistake might never have come to light had not Tim desired to have that exquisite last word. A few days after Joan had obtained the divorce he mailed her a copy of the offer which contained the errant computation. On top of the page he wrote with evident satisfaction: 'PLEASE NOTE $100,000.00 MISTAKE IN YOUR FIGURES. . . .' The present action was filed exactly one month later."; pointing to a California statute allowing lawyers to revise written contracts that contain a "mistake of one party, which the other at the time knew or suspected."; revising the property settlement to match the parties' agreement). A lawyer may even face bar discipline for trying to take advantage of an adversary's drafting error. Alan Cooper, Roanoke Lawyer gets reprimand in case with divorce drafting error, Va. Law. Wkly., Nov. 9, 2010 ("Richard L. McGarry represented his sister in her divorce, and in drafting the final order the husband's lawyer made a mistake. The sister owed her ex more than $11,000, but the order switched the parties, and stated the man owed the money. McGarry's position was that the order had been entered and had become final. The judge later corrected the order. The VSB [Virginia State Bar] 8th District Disciplinary Committee issued a public reprimand without terms, citing the disciplinary rule that prohibits taking action that 'would serve merely to harass or maliciously injure another.' . . . The husband's attorney, Stacey Strentz, drafted the final order, but inadvertently said in it that the husband owed the sister the child's support arrearages. The judge entered the order on Oct. 15, 2007. A short time after the order was entered, Strentz discovered the error and asked McGarry to cooperate in presenting a corrected order. He refused and instead contacted the Division of Child Support Enforcement and demanded that the agency take action to collect the arrearages. On Oct. 25, Strentz mailed McGarry notice of a hearing for Nov. 6 to correct a clerk's error as set forth in Virginia Code § 8.01-428.2. The provision is an exception to the general rule that a court order becomes final after 21 days. The matter was not heard that day because the judge was ill. Despite Strentz's effort to correct the order, McGarry wrote the Division of Child Support Enforcement on Nov. 5 that the order was final and could not be modified under Rule 1:1 of the Rules of the Supreme Court of Virginia even if Strentz claimed she had made a mistake. . . . On Nov. 8, McGarry wrote Strentz contending that the error was a 'unilateral mistake' that could not be corrected. He cited cases in support of his position that the findings of fact . . . did not support that conclusion. . . . 65829543_8 I-B-101 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The VSB district committee concluded that McGarry had violated Rule 3.4 of the Rules of Professional Conduct, in taking action that 'would serve merely to harass or maliciously injure another,' and Rule 4.1, in knowingly making a false state[ment] of fact or law. Although McGarry said he believed the committee strayed across the line and considered a legal matter rather than an ethical one, he emphasized that he has no criticism of the committee. 'I don't want anybody to think I'm trying to re-chew this bitter cabbage,' he said." In 2013, a California legal ethics opinion1 dealt with a similar situation, although the lawyer seeking the opinion had made a scrivener's error by not highlighting a 1 California LEO 2013-189 (2013) (explaining that a lawyer could not advise an adversary of the adversary's mistake in drafting a transactional document, but had a duty to disclose to the adversary the lawyer's accidental failure to redline a change; providing the facts of the opinion: "Buyer's Attorney prepares an initial draft of the Purchase and Sale Agreement. One section towards the back of the 50page draft agreement contains the terms of an enforceable covenant not to compete, and includes a provision that Buyer's sole and exclusive remedy for a breach by Seller of its covenant not to compete is the return of that portion of the total consideration which has been allocated in the Purchase and Sale Agreement for the covenant not to compete."; presenting two scenarios; explaining that "[u]nder either Scenario A or Scenario B of our Statement of Facts, once Seller's Attorney has informed Seller of the development, Seller's Attorney must abide by the instruction of Seller to not disclose. If, however, failure to make such disclosure constitutes an ethical violation by Seller's Attorney, then Seller's Attorney may have an obligation to withdraw from the representation under such circumstances." (footnote omitted); "Any duty of professionalism, however, is secondary to the duties owed by attorneys to their own clients. There is no general duty to protect the interests of nonclients."; "Attorneys generally owe no duties to opposing counsel nor do they have any obligation to correct the mistakes of opposing counsel. There is no liability for conscious nondisclosure absent a duty of disclosure."; "[A]n attorney may have an obligation to inform opposing counsel of his or her error if and to the extent that failure to do so would constitute fraud, a material misstatement, or engaging in misleading or deceitful conduct."; describing Scenario A: "Buyer's Attorney then prepares a revised version of the Purchase and Sale Agreement which, apparently in response to the comments of Seller's Attorney, provides for an allocation of only $1 as consideration for the covenant not to compete with $4,999,999 allocated to the purchase price for the Company. In reviewing the changes made in the revised version, Seller's Attorney recognizes that the allocation of only $1 as consideration for the covenant not to compete essentially renders the covenant meaningless, because Buyer's sole and exclusive remedy for breach by Seller of the covenant would be the return by Seller of $1 of the total consideration. Seller's Attorney notifies Seller about the apparent error with respect to the consequences of the change made by Buyer's Attorney. Seller instructs Seller's Attorney to not inform Buyer's Attorney of this apparent error. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by parties in that form."; analyzing Scenario A as follows: "In Scenario A of our Statement of Facts, although the Purchase and Sale Agreement contains a covenant not to compete, the apparent error of Buyer's Attorney limits the effectiveness of the covenant because the penalty for breach results in payment by Seller of only $1. However, Seller's Attorney has engaged in no conduct or activity that induced the apparent error. Further, under our Statement of Facts, there had been no agreement on the allocation of the purchase price to the covenant, and the Purchase and Sale Agreement does in fact contain a covenant not to compete the terms of which are consistent with the parties' mutual understanding. Under these circumstances, where Seller's Attorney has not engaged in deceit, active concealment or fraud, we conclude that Seller's Attorney does not have an affirmative duty to disclose the apparent error to Buyer's Attorney."; also explaining Scenario B: "After receiving the initial draft from Buyer's Attorney, Seller's 65829543_8 I-B-102 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) change that the lawyer intended to point out to the transactional adversary as part of the negotiation process. After receiving the initial draft from Buyer's Attorney, Seller's Attorney prepares a revised version of the Purchase and Sale Agreement which provides for an allocation of only $1 as consideration for the covenant not to compete, with the intent of essentially rendering the covenant not to compete meaningless. Although Seller's Attorney had no intention of keeping this change secret from Buyer's Attorney, Seller's Attorney generates a 'redline' of the draft that unintentionally failed to highlight the change, and then tenders the revised version to Buyer's attorney. Subsequently, Seller's Attorney discovers the unintended defect in the 'redline' and notifies Seller about the change, including the failure to highlight the change, in the revised version. Seller instructs Seller's Attorney to not inform Buyer's Attorney of the change. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by the parties in that form. Attorney prepares a revised version of the Purchase and Sale Agreement which provides for an allocation of only $1 as consideration for the covenant not to compete, with the intent of essentially rendering the covenant not to compete meaningless. Although Seller's Attorney had no intention of keeping this change secret from Buyer's Attorney, Seller's Attorney generates a 'redline' of the draft that unintentionally failed to highlight the change, and then tenders the revised version to Buyer's attorney. Subsequently, Seller's Attorney discovers the unintended defect in the 'redline' and notifies Seller about the change, including the failure to highlight the change, in the revised version. Seller instructs Seller's Attorney to not inform Buyer's Attorney of the change. Seller's Attorney says nothing to Buyer's Attorney and allows the Purchase and Sale Agreement to be entered into by the parties in that form."; analyzing Scenario B as follows: "Had Seller's Attorney intentionally created a defective 'redline' to surreptitiously conceal the change to the covenant not to compete, his conduct would constitute deceit, active concealment and possibly fraud, in violation of Seller's Attorney's ethical obligations. However, in Scenario B of our Statement of Facts, Seller's Attorney intentionally made the change which essentially renders the covenant not to compete meaningless, but unintentionally provided a defective 'redline' that failed to highlight for Buyer's Attorney that the change had been made. Under these circumstances, and prior to discovery of the unintentional defect, Seller's Attorney has engaged in no such unethical conduct. But once Seller's Attorney realizes his own error, we conclude that the failure to correct that error and advise Buyer's Attorney of the change might be conduct that constitutes deceit, active concealment and/or fraud, with any such determination to be based on the relevant facts and circumstances. If Seller instructs Seller's Attorney to not advise Buyer's Attorney of the change, where failure to do so would be a violation of his ethical obligations, Seller's Attorney may have to consider withdrawing." (footnote omitted); concluding with the following: "Where an attorney has engaged in no conduct or activity that induced an apparent material error by opposing counsel, the attorney has no obligation to alert the opposing counsel of the apparent error. However, where the attorney has made a material change in contract language in such a manner that his conduct constitutes deceit, active concealment or fraud, the failure of the attorney to alert opposing counsel of the change would be a violation of his ethical obligation."). 65829543_8 I-B-103 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) California LEO 2013-189 (2013) (emphasis added). The legal ethics opinion started its analysis with a general statement: Any duty of professionalism, however, is secondary to the duties owed by attorneys to their own clients. There is no general duty to protect the interests of nonclients. . . . Attorneys generally owe no duties to opposing counsel nor do they have any obligation to correct the mistakes of opposing counsel. There is no liability for conscious nondisclosure absent a duty of disclosure. Id. On the other hand, an attorney may have an obligation to inform opposing counsel of his or her error if and to the extent that failure to do so would constitute fraud, a material misstatement, or engaging in misleading or deceitful conduct. Id. The legal ethics opinion provided the following analysis of Scenario B: Had Seller's Attorney intentionally created a defective 'redline' to surreptitiously conceal the change to the covenant not to compete, his conduct would constitute deceit, active concealment and possibly fraud, in violation of Seller's Attorney's ethical obligations. However, in Scenario B of our Statement of Facts, Seller's Attorney intentionally made the change which essentially renders the covenant not to compete meaningless, but unintentionally provided a defective 'redline' that failed to highlight for Buyer's Attorney that the change had been made. Under these circumstances, and prior to discovery of the unintentional defect, Seller's Attorney has engaged in no such unethical conduct. But once Seller's Attorney realizes his own error, we conclude that the failure to correct that error and advise Buyer's Attorney of the change might be conduct that constitutes deceit, active concealment and/or fraud, with any such determination to be based on the relevant facts and circumstances. If Seller instructs Seller's Attorney to not advise Buyer's Attorney of the change, where failure to do so would be a violation of his ethical obligations, Seller's Attorney may have to consider withdrawing. . . . Where an attorney has engaged in no conduct or activity that induced 65829543_8 I-B-104 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) an apparent material error by opposing counsel, the attorney has no obligation to alert the opposing counsel of the apparent error. However, where the attorney has made a material change in contract language in such a manner that his conduct constitutes deceit, active concealment or fraud, the failure of the attorney to alert opposing counsel of the change would be a violation of his ethical obligation. Id. (emphases added) (footnote omitted). The legal ethics opinion recognized that California's confidentiality-centric rules might require withdrawal under certain circumstances, even if they did not require disclosure. Under either Scenario A or Scenario B of our Statement of Facts, once Seller's Attorney has informed Seller of the development, Seller's Attorney must abide by the instruction of Seller to not disclose. If, however, failure to make such disclosure constitutes an ethical violation by Seller's Attorney, then Seller's Attorney may have an obligation to withdraw from the representation under such circumstances. Id. (footnote omitted). Not all authorities agree that lawyers must disclose an adversary's mistake of this sort. In 1989 a Maryland legal ethics opinion seemed to take the opposite position -- in an analogous situation. Maryland LEO 89-44 (1989) ("The issue which you raise is basically as follows: what duty of disclosure, if any, does a lawyer have in negotiating a transaction when the other party's counsel has drafted contracts which fail to set forth all of the terms which you believe have been agreed to, and where the omission results in favor of your client?"; "[T]he Committee is of the opinion that you are under no obligation to reveal to the other counsel his omission of a material term in the transaction. Based on the facts set forth in your letter, it does not appear that you or your client have made any false statement of material fact or law to the other side at any time during the negotiations, and, furthermore, the omission in no way is attributable to a fraudulent act committed by you or your client. To the contrary, it appears 65829543_8 I-B-105 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) that the omission was made by the other counsel either negligently or, conceivably, because they do not believe that the terms were part of the transaction. In either case, Rule 5.1(a), based on these facts, does not require you to bring the omission to the other side's attention." (emphasis added)). This situation fell somewhere between a pure scrivener's error (such as those discussed above) and a more substantive error such as failing to negotiate for an indemnity provision that most parties would normally have included in an agreement. Best Answer The best answer to (a) is (B) YOU MAY DISCLOSE THE ADVERSARY'S MISTAKE TO YOUR CLIENT, BUT YOU DON'T HAVE TO (PROBABLY); the best answer to (b) is (A) YOU MUST DISCLOSE THE ADVERSARY'S MISTAKE TO THE ADVERSARY'S LAWYER. B 1/15, 10/15 65829543_8 I-B-106 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Transactional Adversaries' Post-Agreement Mistakes Hypothetical 11 You generally represent plaintiffs in personal injury cases. Months ago, you reached a very complicated settlement arrangement with an insured defendant and its insurance company, which involves the latter making monthly payments to your client over the course of ten years. You told your client what payments to expect from the insurance company. After your client told you the first few checks from the insurance company exceeded what you told the client to expect, you determine that the insurance company apparently has miscalculated the amount it should pay under the complicated settlement agreement. What do you do? (A) You must disclose the miscalculation to the insurance company. (B) You may disclose the miscalculation to the insurance company, but you don't have to. (C) You may not disclose the miscalculation to the insurance company, unless your client consents. (A) YOU MUST DISCLOSE THE MISCALCULATION TO THE INSURANCE COMPANY (PROBABLY) Analysis In some situations, adversaries make mistakes in implementing an agreement rather than during the negotiation process. Despite every parent's admonition to a child to give back any overpayment the child receives from a store clerk, lawyers' duties involve a more complicated analysis -- given lawyers' confidentiality duty. Within just about a year of each other, two well-respected bar associations reached opposite conclusions about lawyers' duties in such a situation. In 2006, the Philadelphia Bar pointed to several likely factors that would require lawyers to disclose overpayments to their clients. 65829543_8 I-B-107 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Philadelphia LEO 2006-2 (4/2006) (analyzing a lawyer's obligation to notify an insurance company that was overpaying the lawyer's client; analyzing the following scenario: "The inquirer represents an individual whose parents (now deceased) were allegedly victims of a fraudulent estate planning and annuities scheme. A lawsuit has been filed against the insurance company, among others. Although the lawsuit has been pending for about one year, the insurance company has been making payments on the annuity and has continued to do so. . . . The payments made and retained thus far by inquirer's client have been sufficient to fully compensate him for all damages sustained plus attorney's fees and costs through the filing of the Complaint. . . . The inquirer has requested an opinion as to whether he has an affirmative obligation to inform counsel for the insurance company that monthly payments continue to be made over and above the compensatory damages claim." (emphasis added); analyzing the applicability of Rules 3.3, 3.4 and 4.1.; "Rule 3.3 requires a lawyer to correct any misstatement of material fact. If the complaint is no longer accurate with respect to the claims, the inquirer may have an obligation to amend pursuant to the Pennsylvania Rules of Civil Procedure. Also, to the extent that representations have been made to the tribunal that are inaccurate, the inquirer is under an obligation to correct these misstatements. This would include discovery as well. If the issue arises at a deposition or in response to discovery requests, the inquirer must ensure that the information regarding payments made and the amounts of those payments is disclosed. Should this issue have already been addressed during discovery, the inquirer also has an affirmative obligation to amend or supplement any such discovery if the responses are no longer accurate."; "Looking at Rule 3.4, in this case, it is the insurance company itself that is the best source for information regarding payments and amounts of payments. Therefore, counsel for the insurance company has access to the best source for this evidence and the inquirer is not obstructing access to evidence regarding payment amounts or the schedule of payments by not making disclosure of the additional payments. The provisions of Rule 4.1 may have a significant impact on the inquirer[']s situation. To the extent that the continued payments have been made in error, the criminal law on conversion, including but not limited to Pa. C.S.A. Title 18 §3924, may be implicated where the inquirer and/or his client know the payments were made by mistake but have nevertheless retained the payments. If the retention of this money paid in error is, in fact, considered criminal, then Rule 4.1(b) is implicated and disclosure to the carrier is necessary to avoid aiding and abetting a criminal or fraudulent act. Under these circumstances, disclosure would be specifically allowed by the exceptions to confidentiality as contained in Rules 1.6 (c)(2) and (c)(3)."; "The Committee advises that Rule 1.15(c) requires the placement of the excess funds in escrow and that distributions from those funds not be made. In fact, to disburse payments made in error to the inquirer's client might be aiding and abetting a criminal act." (emphasis added)). 65829543_8 I-B-108 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In contrast, one year later the Los Angeles Bar reached the opposite conclusion (which was not surprising, given California's very strong confidentiality duty). Los Angeles County LEO 520 (6/18/07) (addressing a plaintiff's lawyer's ethics obligations upon discovering that pursuant to a complicated settlement defendant had overpaid; explaining that plaintiff's lawyer first had an obligation to advise the plaintiff of the erroneous payment, including "the possible risks of keeping the funds paid to Plaintiff in error"; also dealing with the possible duty to advise the defendant of its error; "The scope of this duty of secrecy is broader than the attorney-client privilege. It extends to all information gained in the professional relationship that the client has requested be kept secret or the disclosure of which likely would be detrimental or embarrassing to the client. . . . The rule applies even where the facts are already part of the public records or where there are other sources of information."; "where counsel has obtained information detrimental to the client and the client asks counsel to keep that information confidential, the duty to preserve secrets obligates counsel to abide by his or her client's wishes not to disclose the overpayment."; directing that the lawyer "use every effort to cause the client to disclose the overpayment," but ultimately holding that "the duty to preserve secrets obligates Counsel to abide by his or her client's wishes not to disclose the overpayment" (emphasis added); also concluding that "Counsel is not obligated to continue representing the client," (emphasis added) and therefore may withdraw; "To assist the client in committing a fraud on the adverse party would be a violation of the State Bar Act. Cal. Bus. & Prof. Code §6106; see also Cal. Rules of Prof. Conduct, Rule 3-210. However, the issue of whether the facts presented here constitute fraud by the client is a legal issue and, in keeping with its longstanding policy, the committee declines to address legal issues raised by an inquiry." (emphasis added)). Best Answer The best answer to this hypothetical is (A) YOU MUST DISCLOSE THE MISCALCULATION TO THE INSURANCE COMPANY (PROBABLY). B 1/15, 10/15 65829543_8 I-B-109 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Clients' Silence About Litigation Tactics Hypothetical 12 You have not seen a judge quite as angry as this morning, when he asked you why you had not told the court and the litigants about your plan to declare bankruptcy late yesterday afternoon. The court had set aside three weeks for a trial which was set to start today, but which has now been put off by the bankruptcy filing. The court pointed out that your client's adversary had brought in witnesses from across the country, including very expensive expert witnesses. The court also noted the jury panel's inconvenience. The court bluntly tells you that she is inclined to severely sanction you for what you did -- unless you can convince her that your confidentiality duty prevented you from disclosing your client's bankruptcy plans. What do you do? (A) You must disclose your client's bankruptcy plans to the court. (B) You may disclose your client's bankruptcy plans to the court, but you don't have to. (C) You may not disclose your client's bankruptcy plans to the court, unless your client consents. (C) YOU MAY NOT DISCLOSE YOUR CLIENT'S BANKRUPTCY PLANS TO THE COURT, UNLESS YOUR CLIENT CONSENTS Analysis Predictably, trial courts and even some appellate courts sanction or otherwise criticize lawyers for not having disclosed their client's litigation plans -- if the silence interfered with the court's docket or otherwise burdened the court. Sessner v. Merck Sharp & Dohme Corp., 89 A.3d 191, 191-92, 192-92, 193 (N.J. Super. Ct. App. Div. 2014) (chastising a lawyer for not having advised the court of an earlier settlement; reported in an April 23, 2014, Law 360 article by Joshua Alston under the headline NJ Court Skins Attys for Divulging Merck Deal Months Later; "We were on the eve of filing a comprehensive opinion on the many issues raised in this appeal when, on April 9, 2014, respondent's counsel advised the matter had settled. Upon further inquiry, we learned the parties reached a settlement months ago. 65829543_8 I-B-110 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Despite our discretion to file an opinion when notified at such a late hour, we have decided not to file our opinion on the merits and now write to dismiss the appeal with the emphatic reminder that counsel must advise this court in a far more timely manner of a settlement or serious settlement discussions so that scarce judicial resources are not needlessly wasted."; "In the last Court Term more than 6200 appeals and 8400 motions were filed. Some of the appellants are incarcerated and a favorable result could result in their freedom. In other cases the welfare of children is at stake. For attorneys in a civil case in an appeal with a voluminous record to neglect to notify us of a settlement for four months is unconscionable."; "Because of the enormous amount of time needlessly expended in this matter, we have seriously considered the imposition of sanctions against both counsel pursuant to Rule 2:9-9, but instead have determined that the publication of this decision is sufficient deterrent to repetition. It is within our discretion to issue an opinion when notified of a settlement shortly before an opinion is scheduled to be released, and we have done so many times. We nonetheless dismiss this appeal."). In re Squire, Ch. 7 Case No. 13-62070, 2014 Bankr. LEXIS 1291, at *2-3, *3-4, *4 n.4, *8, *9, *9-10, *13, *15-16, *16 (N.D.N.Y. Mar. 26, 2014) (acknowledging that a lawyer did not have a duty to return a creditor's call before claiming that the creditor had violated the bankruptcy stay in attempting to collect from the debtor, but nevertheless criticizing the lawyer, as reported in an April 11, 2014, article by John Caher in the New York Law Journal under the headline: Lawyer's 'Tactic' in Bankruptcy Cases Draw Judge's Ire; "On January 14, an employee of Berkshire [Bank] telephoned Debtor's counsel, James Selbach, to inquire if the Debtor wanted the ACH [Automated Clearing House] payments to continue and left the specific message on his voicemail with information for a return call. . . . At the hearing, Attorney Selbach acknowledged that he received Berkshire's message on his voicemail but never returned the phone call nor did his office otherwise respond to Berkshire's inquiry as to discontinuance of the ACH payments. Attorney Selbach stated that it is not unusual for debtors to want to continue ACH payments on a loan for various reasons including, for example, when there is a non-filing co-debtor on a loan, the loan is secured, or a loan is to be reaffirmed. Attorney Selbach indicated that it is his practice to instruct clients at the outset of filing bankruptcy to affirmatively communicate with any financial institution if they wish to have ACH payments continue so as not to interrupt the flow of payments." (footnote omitted); "Sixteen days after Berkshire initiated contact with Debtor's counsel, on January 30, 2014, an attempted $199.53 ACH transfer from Debtor's Citizens Bank account to Berkshire failed due to insufficient funds in Debtor's account, for which Debtor was assessed a $35.00 service charge. At 12:55 p.m. that same day, Debtor's counsel filed the subject motion, supported by counsel's boilerplate memorandum of law seen frequently in support of like 65829543_8 I-B-111 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) motions brought by Attorney Selbach in other cases before this court. Among other recitals, the attorney's affirmation in support of the motion states: 'On January 30, 2014 Berkshire took . . . ($199.53) from the Debtor's bank account, . . . causing the account to have a negative balance. This confused the Debtor and obviously caused a great inconvenience. Debtor has suffered actual damages in the form of emotional distress.'" (internal citation and footnotes omitted); "In 2013, Attorney Selbach filed in this District 43 motions alleging violations of the automatic stay or discharge injunction. For the first 3 months of this year, he has filed 22 such motions."; "There was still time for Berkshire to terminate the ACH payments had it received a timely negative response to its January 14 inquiry, or, after having received no response, before the anticipated January 30 deduction."; "While the automatic stay puts a kibosh on postpetition collection activities, it should not be interpreted to eliminate appropriate civil discourse regarding postpetition financial intentions. Debtor cites no authority to support the position that a creditor may not freely inquire of a debtor's counsel regarding a debtor's intention with respect to a particular obligation."; "The free flow of information between a creditor and counsel for a debtor should be encouraged and not discouraged for the system to function properly. Accordingly, Berkshire did not willfully violate the automatic stay simply by calling Debtor's counsel to inquire about the Debtor's intentions regarding the ACH payments."; "Within the time that counsel took to write down his notes and task his paralegal with contacting the client, counsel could have picked up the phone and communicated to Berkshire to terminate the ACH payments. Notwithstanding Berkshire's misguided inquiry, it would, in this court's opinion, have been better practice for counsel to have returned the phone call and nipped in the bud the events which followed. This court emphasizes that counsel did not have an affirmative obligation to do so, nor, by virtue of Berkshire's phone call, did the burden shift to the Debtor to terminate the ACH payments. However, in this court's opinion, when presented with a clear opportunity to intervene and preclude aggravation and potential emotional distress to one's client, good advocacy suggests that counsel intervene. By electing not to return Berkshire's phone call, Mr. Selbach does not negate the creditor's ultimate violation. At the same time, this court will not reward tactics intent upon generating anticipated attorneys' fees."; "[G]iven counsel's frequent refrain that it takes a sanctions motion to get a creditor's attention, there is an irony not lost on the court that when, in the present instance, this creditor reached out to get debtor-counsel's attention, the response came by motion alleging a violation."; "Apart from tailoring the affirmation by specifically referring to the creditor as Berkshire and inserting the specific date that this case was commenced, the numbered paragraphs of the affirmation contain identical language to similar motions filed in this court. The one exception is paragraph 6 which, in its specific recitals, misstates the operative facts."). 65829543_8 I-B-112 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In re Alcorn, 41 P.3d 600, 603, 609 (Ariz. 2002) (assessing a situation in which a plaintiff's lawyer pursuing a malpractice case against a hospital and a doctor faced a difficult situation after the hospital obtained summary judgment; condemning the lawyer's secret arrangement with the doctor that the plaintiff would proceed against the doctor (who agreed not to object to any cross-examination by the plaintiff's lawyer), but under which the plaintiff would voluntarily dismiss his claim against the doctor at the close of the plaintiffs' case; noting that "[t]he purpose of the agreement, as we understand it, was to 'educate' the trial judge as to the Hospital's culpability so he could use this background in deciding whether to reconsider his grant of summary judgment to the Hospital"; noting that the plaintiff's trial against the doctor took ten days over a two- or three-week period; calling the trial a "charade" that was "patently illegitimate"; suspending the lawyer from the practice of law for six months). Gum v. Dudley, 505 S.E.2d 391, 402-03 (W. Va. 1997) (assessing a situation in which a defendant's lawyer did not disclose a secret settlement agreement with another party, and remained silent when a lawyer for another party advised the court that none of the parties had entered into any settlement agreements; "First, Mr. Janelle's silence without doubt invoked a material misrepresentation. The question propounded by the circuit court, during the hearing, was whether or not any of the parties had entered into a settlement agreement. Counsel for the Dudleys responded that no settlement agreement existed between the defendants. Unbeknownst to the Dudleys' counsel, a settlement agreement between defendants Baker and Ayr had occurred. Mr. Janelle was fully aware of the fact, but remained silent. This silence created a misrepresentation. The misrepresentation was axiomatically material, insofar as a hearing was held based upon Mrs. Gum's specific motion to determine if any of the defendants had entered into a settlement agreement. Therefore, Mr. Janelle's silence invoked the material representation that no settlement agreement existed between any of the defendants. Second, the record is clear that the trial court believed as true the misrepresentation by Mr. Janelle. Third, Mr. Janelle intended for his misrepresentation to be acted upon. That is, he wanted the trial court to proceed with the jury trial. Fourth, the trial court acted upon the misrepresentation by proceeding with the trial without any further inquiry into the settlement. Finally, Mr. Janelle's misrepresentation damaged the judicial process."; remanding for imposition of sanctions against the lawyer). Nat'l Airlines, Inc. v. Shea, 292 S.E.2d 308, 310-311 (Va. 1982) (assessing a situation in which a plaintiff's lawyer did not advise the court that the defendant airline's lawyer thought that the case was being held in abeyance; explaining that the plaintiff's lawyer did not respond to the defendant's lawyer expressing this understanding, did not advise the court of the understanding, and instead obtained a default judgment and levied on the airline's property; 65829543_8 I-B-113 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) holding that the plaintiff's lawyer "had a duty to be above-board with the court and fair with opposing counsel"; also noting that the plaintiff's lawyer "failed to call the court's attention to the applicability of the Warsaw Convention, which he knew to be adverse to his clients' position"; setting aside the default judgment "on the ground of fraud upon the court"). On the other hand, some courts have found such tactics acceptable, even if frustrating. Wolters Kluwer Fin. Servs., Inc. v. Scivantage, 564 F.3d 110, 114, 115 (2d Cir.), cert. denied, 130 S. Ct. 625 (2009) (upholding sanctions against a former Dorsey & Whitney lawyer for several inappropriate actions, but also addressing another action taken by the Dorsey lawyer, which the district court had sanctioned: "The district court found that Dorsey's main purpose in filing a Rule 41 voluntary dismissal of the Wolters litigation was to judge-shop in order to conceal from its client 'deficiencies in counsel's advocacy' that had been noted by the district judge in New York. The district court reasoned that this sort of judge-shopping was an improper purpose and was accordingly sanctionable."; reversing this sanction; explaining that plaintiffs may freely dismiss actions under Rule 41; "It follows that Dorsey was entitled to file a valid Rule 41 notice of voluntary dismissal for any reason, and the fact that it did so to flee the jurisdiction or the judge does not make the filing sanctionable. Accordingly, because the district court made no finding that Dorsey acted in bad faith in voluntarily dismissing the case under Rule 41, and because Dorsey was entitled by law to dismiss the case, the district court's sanction against Dorsey for filing the voluntary dismissal must be reversed." (emphasis added)). Saltire Indus., Inc. v. Waller, Lansden, Dortch & Davis, PLLC, 491 F.3d 522, 525, 530 (6th Cir. 2007) ("In its complaint, Saltire alleges that Waller Lansden made a secret agreement with the IDB [co-defendant] to voluntarily dismiss the IDB from the Norman case once the action was remanded back to state court. According to Saltire, Waller Lansden added the IDB as a sham defendant solely to defeat diversity jurisdiction and thus force the case back to state court because '[Waller Lansden] believed the State Court Action to be much more valuable in the State Court -- where it would be tried before an elected local judge -- rather than in the Federal Court, where it would be tried before a judge appointed by the President for a lifetime term.'''; "What Waller Lansden's actions boil down to, in our view, is litigation strategy. Litigation strategy cannot, without more, support an action for fraud." (emphasis added)). 65829543_8 I-B-114 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In 2011, the North Carolina Bar similarly found nothing improper about an aggressive litigation tactic. NC LEO 2011-3 (4/22/11) (finding that an immigration lawyer could file an appeal to essentially buy more time, which might allow his client to be deported rather than convicted of a crime in the United States; "Client A is arrested for driving while impaired. The magistrate sets a secured bond of $2000, schedules the trial for district court and notifies U.S. Immigration and Customs Enforcement (ICE) that Client A may be in the country illegally. Client A is taken to the county jail to wait for trial. At Client A's first appearance, the judge appoints Attorney A to defend him. ICE determines that Client A is an undocumented alien and gives the jail notice that it should be advised when Client A is released. Once Client A's bond is paid, Client A will be held in the jail for an additional 48 hours to give ICE the opportunity to begin proceedings. If ICE does not serve Client A with a notice to appear within this time period, the jail will release him. Client A tells Attorney A that he wants to be deported as soon as possible and does not want a conviction on his record. Attorney A discusses Client A's options with him. If Client A pays the bond, ICE will probably come to the jail, transport him to a federal holding facility and begin removal proceedings within 48 hours of paying the bond. Once Client A is deported, the State might dismiss Client A's DWI charge. Attorney A knows that, should Client A someday choose to re-enter the United States legally, a DWI conviction would be detrimental to an immigration application or an application for a work permit. Attorney A is aware that the existence of an ICE detainer is only an indication that Client A might be removed before the resolution of the case. ICE may choose not to pick Client A up; it may serve him and then release him pending a removal hearing; it may offer him an immigration bond which can be posted so that he can secure his release during immigration proceedings; or he may be eligible for a remedy, such as cancellation of removal, which would allow him to receive permanent residency in the United States."; posing the following question: "May Attorney A enter a notice of appeal knowing that Client A's pending deportation may result in the dismissal of the superior court case?" (emphasis added); analyzing the issue as follows: "Rule 3.1 prohibits a lawyer from advancing frivolous or meritless proceedings or arguments but permits a lawyer in a criminal proceeding that may result in incarceration the leeway to 'so defend the proceeding as to require that every element of the case be established.' Comment [1] to the rule observes that '[t]he advocate has a duty to use legal procedure for the fullest benefit of the client's cause, but also a duty not to abuse legal procedure.' Rule 3.2 requires a lawyer to make reasonable efforts to expedite litigation 'consistent with the interests of the client'. However, comment [1] to this rule adds, '[t]he question is whether a competent lawyer acting in good faith would regard the course of action as having some substantial purpose other than delay.' Filing a notice of appeal 65829543_8 I-B-115 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) for Client A is not, in itself, frivolous or meritless because Client A has a constitutional right to a trial de novo in superior court before a jury. The question is whether the pleading is interposed for an improper purpose which would violate not only Rule 3.1 but also the prohibition on conduct prejudicial to the administration of justice set forth in Rule 8.4(d). Rule 3.3(a)(1) prohibits a lawyer from knowingly making a false statement of material fact to a court. This prohibition applies to statements in pleadings as well as to statements in open court. Rule 3.3, cmt. [3]. Comment [3] to the rule adds that '[t]here are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation.' Although Attorney A believes that Client A may not be available for trial in superior court, a client's presence is not always necessary to resolve a case in superior court. If a trial is necessary, it can be done by written waiver if the court permits. Moreover, by the time the case is reached for trial, the client may, in fact, be available. Lastly, it is unlikely that the State will actually dismiss the charges simply because the defendant has been removed. Therefore, filing a notice of appeal for Client A does not violate the rules." (emphasis added)). This hypothetical comes from a 2008 Virginia Supreme Court decision -reversing a trial court's sanction of a lawyer who did not disclose the client's intent to declare bankruptcy. McNally v. Rey, 659 S.E.2d 279, 281, 283 (Va. 2008) (holding that a lawyer does not have a duty to advise the adversary if the lawyer's client is planning to declare bankruptcy; explaining that defendant declared bankruptcy the evening before a scheduled Virginia Circuit Court trial, and that the Circuit Court had imposed sanctions upon the lawyer; explaining that the client's lawyer had asserted the attorney-client privilege in declining to answer the Circuit Court's questions about the circumstances of the bankruptcy filing; "McNally filed a letter with the circuit court on November 20, 2006, responding to the circuit court's consideration of sanctions against him for the bankruptcy filing. He stated 'it would have been an ethical violation for me to disclose my client's intention to file a bankruptcy (which was clearly a client confidence) unless the client specifically authorized me to do so.' McNally also asked that he be subject to a 'properly file[d]' motion and be given an opportunity to respond: 'I respectfully believe that I am entitled to due process on this issue.'" (emphasis added); noting that the court awarded sanctions against the lawyer after finding that "'the conduct of Mr. McNally in filing pleadings indicating an intent to try the case while in fact knowing that bankruptcy was to be filed was not in good faith and was for an improper purpose including to needlessly increase the cost of litigation to the Plaintiffs. As a result, Plaintiffs incurred unnecessary legal and expert fees and costs in preparing the case for trial. The Court on its own initiative as permitted by law believes the 65829543_8 I-B-116 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) appropriate sanction is that Counsel for Defendant, John [J.] McNally personally pay the legal fees, expert charges, and costs incurred by Plaintiffs from November 8, 2006 until notified of the bankruptcy on the evening of November 14 as well as the cost of the jury.'"; finding that the lower court had abused its discretion in imposing sanctions; "There is simply nothing in the record before this Court that supports this finding. There is no evidence in the record that McNally's act of filing the witness and exhibit list was not well grounded in fact. There is nothing in the record before this Court that supports a finding that the witness and exhibit list was interposed for an improper purpose, such as to harass or cause unnecessary delay, or needless increase in the cost of litigation. . . . Simply stated, the record before this Court is devoid of any evidence that supports the circuit court's award of sanctions. McNally's act of filing the witness and exhibit list, as required by the circuit court's own pretrial order, did not violate Code § 8.01271.1. Additionally, counsel of record in a state court proceeding, who represents a litigant contemplating filing a petition in bankruptcy in a federal bankruptcy court, does not have an obligation to inform opposing counsel or the circuit court that the attorney's client is considering filing a petition in bankruptcy. A litigant's decision to file a petition in bankruptcy while litigation is pending does not constitute a violation of Code § 8.01-271.1 provided such filing is in compliance with the federal Bankruptcy Code, 11 U.S.C. § 101, et seq. To hold otherwise would have a chilling effect upon the rights of litigants and their attorneys when such litigants seek to avail themselves of their statutory rights set forth in the federal Bankruptcy Code. Therefore, we hold that the circuit court abused its discretion by imposing sanctions upon McNally." (emphases added)). Best Answer The best answer to the hypothetical is (C) YOU MAY NOT DISCLOSE YOUR CLIENT'S BANKRUPTCY PLANS TO THE COURT, UNLESS YOUR CLIENT CONSENTS. B 1/15, 10/15 65829543_8 I-B-117 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Litigation Adversaries' Factual Misunderstanding Hypothetical 13 You are defending a young mother against a charge that she murdered her infant daughter because her childcare responsibilities impeded her social life. The prosecution has gathered damaging entries from your client's home computer, but appears to have overlooked some even more incriminating entries -- showing that someone used your client's computer to do a Google search for "fool-proof suffocation methods" on the day that your client's daughter was last seen alive. What do you do? (A) You must disclose the incriminating searches to the prosecution. (B) You may disclose the incriminating searches to the prosecution, but you don't have to. (C) You may not disclose the incriminating searches to the prosecution, unless your client consents. (C) YOU MAY NOT DISCLOSE THE INCRIMINATING SEARCHES TO THE PROSECUTION, UNLESS YOUR CLIENT CONSENTS Analysis The litigation context involves somewhat subtle and often contradictory disclosure issues. On one hand, the intensely adversarial nature of litigation would tend to diminish most lawyers' possible impulse to be charitable to an adversary who has made a mistake. On the other hand, at least in civil litigation, various rules require pretrial disclosures and supplemental discovery responses have largely eliminated lawyers' ability to take advantage of an adversary's mistake. Civil Adversarial Proceedings In the normal adversarial proceeding, lawyers have very little obligation to disclose unfavorable facts. The very nature of the adversarial proceeding requires each 65829543_8 I-B-118 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) side to use available discovery to uncover helpful facts, then present them to the court or the fact finder Some courts apply the majority rule (allowing lawyers to stay silent even in the face of an adversary's misunderstanding) if the adversary does not have a lawyer. Illinois LEO 12-07 (1/2012) ("Attorney does not have an obligation under R.P.C. Rule 3.3 to tell the court that the unrepresented adversary has a defense based on a written agreement that the attorney's client signed with the adversary and which the attorney now believes in good faith is unenforceable." (emphasis added); presenting the factual situation; "Attorneys representing party A in litigation against unrepresented party B is aware that the two parties entered into a written agreement that would constitute a potential defense in favor of B, but the attorney has a good faith belief that the agreement is unenforceable. Client A did not consult with the attorney before entering into the agreement."; "In the situation at hand, the lawyer is aware that the signed agreement between the lawyer's client and the unrepresented party constitutes a potential defense to the lawyer's client's claim; however, the lawyer also has good faith belief that the agreement is unenforceable. Under these circumstances the lawyer need not advise the court of the potential defense. Rule 3.3 (a) (2) provides that a lawyer shall not knowingly fail to disclose legal authority known to the lawyer to be directly adverse to the position of the client or offer evidence that is false. In the case at hand, the attorney has a good faith belief that the contract is unenforceable. This good faith belief supports the conclusion that the lawyer's failure to disclose the existence of the agreement does not contravene Rule 3.3." (emphasis added); "Moreover, sub-section (a)(2) prohibits a lawyer from failing to disclose 'legal authority' which is adverse to his or her client's position. The rule does not require the lawyer to disclose facts which are contrary to the client's position. Such disclosure, of course, would be an onerous burden in litigation, since a lawyer would generally be aware of 'facts' contrary to his or her client's position. Here, the existence of an agreement which might exonerate the adversary is a fact which his [sic] not required to be disclosed by the lawyer. The lawyer, of course, could be in violation of sub-sections (a)(1) or (a)(3) if her [sic] or she makes false statements about the agreement or its existence."). In contrast, lawyers may not point to their confidentiality duty as an excuse for not disclosing misstatements to the court or other deceptive conduct. People v. Petsas, 262 Cal. Rtpr. 467, 468, 469, 472 (Cal. Ct. App. 1989) (reversing the dismissal of an insurance crime charge against a lawyer, 65829543_8 I-B-119 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) whose client was harmed in two separate accidents on the same day; explaining that the lawyer had arranged for a doctor to prepare two separate reports about the client's injury, each of which referred to one of the accidents but not the other; noting that the doctor had earlier indicated that it was impossible to separate the injuries caused by the two separate accidents; further explaining that the lawyer used the two separate reports to settle both cases; "Following the first accident, Banks made an appointment to see Dr. Terry Forward, a chiropractor in Foster City. Banks saw Forward the following day and told her that he had been involved in two automobile accidents, and that he had been injured in both. Neither Banks nor Forward was able to segregate the injuries to a particular accident."; "On February 2, 1984, respondent asked Forward to prepare medical reports covering Bank's injuries. Respondent asked for two reports, with separate cover pages identifying the accidents. In response Forward furnished respondent with two reports. Each report contained cover pages narrating the history of a single accident. . . . Each report then contained identical medical statements of diagnosis, treatment and prognosis. Neither report contained any reference to diagnosis of, treatment for, prognosis concerning, or any history of injuries received by Banks in two separate accidents on the same day. The section of the identical medical statement contained in each report concerning past medical history indicated that Banks had 'none.'" (footnote omitted); "[I]t is true an attorney has an ethical obligation not to disclose information adverse to his client which is obtained in confidence. We agree, however, with the finding implicit in the magistrate's order holding respondent to answer that his acts in this case cannot be so characterized. Here, respondent affirmatively represented that his client's injuries were the result of a single accident when in fact he knew they were not. Further, he submitted claims for all damages resulting from two successive accidents on the same day to the carriers of two separate insureds, concealing from each of them the fact that the damages he thus sought for his client stemmed from the trauma of both accidents. There is a distinct difference between restricting an attorney from divulging information learned in confidence from a client, and proscribing him from knowingly making affirmative false representations regarding a claim or claims of that client." (emphases added; emphasis in original indicated by italics)). Ex Parte Proceedings Interestingly, the ethics rules apply quite differently in ex parte proceedings. In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse. 65829543_8 I-B-120 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ABA Model Rule 3.3(d). A comment to ABA Model Rule 3.3 explains the basis for this important difference. Ordinarily, an advocate has the limited responsibility of presenting one side of the matters that a tribunal should consider in reaching a decision; the conflicting position is expected to be presented by the opposing party. However, in any ex parte proceeding, such as an application for a temporary restraining order, there is no balance of presentation by opposing advocates. The object of an ex parte proceeding is nevertheless to yield a substantially just result. The judge has an affirmative responsibility to accord the absent party just consideration. The lawyer for the represented party has the correlative duty to make disclosures of material facts known to the lawyer and that the lawyer reasonably believes are necessary to an informed decision. ABA Model Rule 3.3 cmt. [14] (emphases added). Thus, lawyers appearing ex parte must advise the court of all material facts -- even harmful facts. This dramatic difference from the situation in an adversarial proceeding highlights the basic nature of the adversarial system. The Restatement takes the same approach. In representing a client in a matter before a tribunal, a lawyer applying for ex parte relief or appearing in another proceeding in which similar special requirements of candor apply must . . . disclose all material and relevant facts known to the lawyer that will enable the tribunal to reach an informed decision. Restatement (Third) of Law Governing Lawyers § 112(2) (2000). A comment mirrors the ABA's explanation. An ex parte proceeding is an exception to the customary methods of bilateral presentation in the adversary system. A potential for abuse is inherent in applying to a tribunal in 65829543_8 I-B-121 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) absence of an adversary. That potential is partially redressed by special obligations on a lawyer presenting a matter ex parte. Subsection (1) prohibits ex parte presentation of evidence the advocate believes is false. Subsection (2) is affirmative, requiring disclosure of all material and relevant facts known to the lawyer that will enable the tribunal to make an informed decision. Relevance is determined by an objective standard. To the extent the rule of this Section requires a lawyer to disclose confidential client information, disclosure is required by law within the meaning of § 62. On the other hand, the rule of this Section does not require the disclosure of privileged evidence. Restatement (Third) of Law Governing Lawyers § 112 cmt. b (2000). The Restatement acknowledges that lawyers in certain types of proceedings have a higher duty of candor. In some special proceedings, public policy requires unusual candor from an advocate. The candor required is determined by the legal requirements applicable to such a proceeding. In some jurisdictions, for example, unusual candor is required in proceedings seeking custody of a child, in applications for the involuntary commitment of a person for mental disability, and in reports by trustees or executors. Similarly, a lawyer representing a class in a class action has duties of care toward the class and may be taking a position that requires an informed decision by the tribunal. In such circumstances (as in an application for a fee to be awarded out of the class recovery), the lawyer must disclose information necessary for the tribunal to make an adequately informed decision. That may be particularly true where the lawyer's position is supported by the opposing party, as following a settlement agreement between the parties. Restatement (Third) of Law Governing Lawyers § 112 cmt. c (2000). Not surprisingly, courts take the same approach. 65829543_8 I-B-122 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In re Mullins, 649 N.E.2d 1024, 1026 (Ind. 1995) (reprimanding a lawyer for not "sufficiently or fully advising [the court in an ex parte proceeding] of all relevant aspects of the pending parallel proceeding" in another court). Time Warner Entm't Co., L.P. v. Does, 876 F. Supp. 407, 415 (E.D.N.Y. 1994) ("In an ex parte proceeding, in which the adversary system lacks its usual safeguards, the duties on the moving party must be correspondingly greater."). In some situations, bars have had to determine if they should treat a proceeding as an adversarial proceeding or as an ex parte proceeding. For instance, in North Carolina LEO 98-1 (1/15/99), a lawyer represented a claimant seeking Social Security disability benefits. The bar explained the setting in which the lawyer would be operating. Social Security hearings before an ALJ are considered nonadversarial because no one represents the Social Security Administration at the hearing. However, prior to the hearing, the Social Security Administration develops a written record which is before the ALJ at the time of the hearing. In addition, the ALJ has the authority to perform an independent investigation of the client's claim. The North Carolina Bar explained that before the hearing, the claimant's treating physician sent the claimant's lawyer a letter indicating that the physician "believes that the claimant is not disabled." Id. Interestingly, the North Carolina Bar apparently assumed that a lawyer would not have to disclose this material fact in an adversarial proceeding (hence the debate about whether the administrative hearing should be treated as an adversarial or as an ex parte proceeding). The North Carolina Bar explained that [a]lthough it is a hallmark of good lawyering for an advocate to disclose adverse evidence and explain to the court why it should not be given weight, generally an advocate is not required to present facts adverse to his or her client. 65829543_8 I-B-123 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Id. The North Carolina Bar concluded that the administrative hearing should be considered as an adversarial proceeding -- which meant that the lawyer did not have to submit the treating physician's adverse letter to the administrative law judge at the hearing. [A] Social Security disability hearing should be distinguished from an ex parte proceeding such as an application for a temporary restraining order in which the judge must rely entirely upon the advocate for one party to present the facts. In a disability hearing, there is a "balance of presentation" because the Social Security Administration has an opportunity to develop the written record that is before the ALJ at the time of hearing. Moreover, the ALJ has the authority to make his or her own investigation of the facts. When there are no "deficiencies of the adversary system," the burden of presenting the case against a finding of disability should not be put on the lawyer for the claimant. Id. This is an interesting result. Although the legal ethics opinion is not crystal-clear, it would seem that a lawyer pursuing disability benefits after receiving a doctor's letter indicating that the client is not disabled risks violating the general prohibition on lawyers advancing frivolous claims. ABA Model Rule 3.1. Even if maintaining silence about the doctor's letter does not run afoul of that ethics provision, it would seem almost inevitable that the lawyer would somehow explicitly or implicitly make deceptive comments to the court while seeking disability benefits for a client that the lawyer now knows is not disabled. Criminal Proceedings In contrast to civil litigation, criminal litigation frequently involves a mismatch of disclosure obligations. Prosecutors usually must disclose exculpatory evidence, while 65829543_8 I-B-124 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) defense lawyers can normally stand silent in the face of prosecutors overlooking incriminating evidence. The highly publicized Casey Anthony case highlighted this issue. Casey Anthony: Did She Do A Google Search For "Fool-Proof Suffocation"?, Associated Press, Nov. 26, 2012 ("The Florida sheriff's office that investigated the disappearance of Casey Anthony's 2-year-old daughter overlooked evidence that someone in their home did a Google search for 'fool-proof' suffocation methods on the day the girl was last seen alive." (emphasis added); "Orange County sheriff's Captain Angelo Nieves said Sunday that the office's computer investigator missed the June 16, 2008, search. The agency's admission was first reported by Orlando television station WKMG. It's not known who performed the search. The station reported it was done on a browser primarily used by the 2-year-old's mother, Casey Anthony, who was acquitted of the girl's murder in 2011."; "Anthony's attorneys argued during trial that Casey Anthony helped her father, George Anthony, cover up the girl's drowning in the family pool."; "WKMG reports that sheriff's investigators pulled 17 vague entries only from the computer's Internet Explorer browser, not the Mozilla Firefox browser commonly used by Casey Anthony. More than 1,200 Firefox entries, including the suffocation search, were overlooked." (emphasis added); "Whoever conducted the Google search looked for the term 'fool-proof suffication,' misspelling 'suffocation,' and then clicked on an article about suicide that discussed taking poison and putting a bag over one's head."; "The browser then recorded activity on the social networking site MySpace, which was used by Casey Anthony but not her father." (emphasis added)). Best Answer The best answer to this hypothetical is (C) YOU MAY NOT DISCLOSE THE INCRIMINATING SEARCHES TO THE PROSECUTION, UNLESS YOUR CLIENT CONSENTS. B 1/15, 10/15 65829543_8 I-B-125 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Clients' or Witnesses' Death Hypothetical 14 You represent the plaintiff in a personal injury case. After several months of intense negotiations, it appears that you are nearing a settlement agreement with the defendant. However, you just learned that your client and his brother (whom the defendant recently deposed, and whom you envisioned as a key trial witness) were killed in a car accident. (a) What do you do about your client's death? (A) You must disclose your client's death to the adversary. (B) You may disclose your client's death to the adversary, but you don't have to. (C) You may not disclose your client's death to the adversary. (A) YOU MUST DISCLOSE YOUR CLIENT'S DEATH TO THE ADVERSARY (b) What do you do about the witness's death? (A) You must disclose your witness's death to the adversary. (B) You may disclose your witness's death to the adversary, but you don't have to. (C) You may not disclose your witness's death to the adversary. (B) YOU MAY DISCLOSE YOUR WITNESS'S DEATH TO THE ADVERSARY, BUT YOU DON'T HAVE TO (PROBABLY) Analysis This hypothetical raises the issue of a litigant's duty to update the adversary on potentially material facts as they develop. (a) The ABA has explicitly indicated that a lawyer engaged in settlement discussions with an adversary must disclose his client's death to opposing counsel. 65829543_8 I-B-126 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In 1995, the ABA noted that a lawyer whose client has died immediately begins acting on behalf of another principal (normally, the executor). The ABA explained that the presence of a new principal amounted to the type of material fact that a lawyer must disclose to the attorney and the court. ABA LEO 397 (9/18/95) ("The Committee agrees with the . . . conclusion that counsel has a duty to disclose the death of her client to opposing counsel and to the court when counsel next communicates with either. The death of a client means that the lawyer, at least for the moment, no longer has a client and, if she does thereafter continue in the matter, it will be on behalf of a different client. We therefore conclude that a failure to disclose that occurrence is tantamount to making a false statement of material fact within the meaning of Rule 4.1(a).6. (As noted above, Comment [1] to Rule 4 states that misrepresentations can "occur by failure to act.") Prior to the death, the lawyer acted on behalf of an unidentified client. When, however, the death occurs, the lawyer ceases to represent that identified client. Accordingly, any subsequent communication to opposing counsel with respect to the matter would be the equivalent of a knowing, affirmative misrepresentation should the lawyer fail to disclose the fact that she no longer represents the previously identified client." (emphasis added)). Most bars take the same approach. Illinois LEO 96-3 (7/96) ("The Committee believes that the ABA's conclusion regarding the lawyer's duty under ABA Model Rule 4.1(a) would be the same under Illinois Rule 4.1(a). In addition, if the lawyer is authorized to continue the prosecution of whatever claim or claims exist on behalf of the decedent's estate, the Committee believes that the death of the claimant is a 'material fact' within the meaning of Illinois Rule 4.1(b) as well. Therefore, disclosure to the adverse party is necessary to avoid assisting a fraudulent act on the part of the lawyer's new client, the executor or administrator of the decedent's estate. Finally, the failure to make such disclosure might well be considered conduct involving "deceit or misrepresentation" within the meaning of Rule 8.4(a)(4). For these reasons, the lawyer must make timely disclosure of the client's death with respect to the pending personal injury matter." (emphasis added)). An older ethics opinion took the opposite approach. Virginia LEO 952 (7/31/87) ("A client authorized an attorney to settle his personal injury case within a range of values. A demand was made and a counteroffer was received from the insurer. Following receipt of the 65829543_8 I-B-127 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) counteroffer, the client died and the administrator of the estate authorized the attorney to accept the last settlement offer which was within the range authorized by the client. It is not improper, given the above, for the attorney not to disclose the death of his client to the insurance company absent a direct inquiry from the insurance company regarding the client's health. The committee opines that in order to avoid an appearance of impropriety, the attorney should disclose the death of his client at the time he accepts the offer of settlement and let the opposing side know that the client authorized the range for settlement prior to his death and that the estate's administrator has also authorized the settlement."). Courts generally agree that lawyers face sanctions or discipline if they keep their client's death secret. Robison v. Orthotic & Prosthetic Lab, Inc., 27 N.E.3d 182, 185, 186, 186-87 (Ill. App. Ct. 2015) (voiding a product liability case settlement, because the plaintiff's lawyer had not advised the defendant that his client had died; "An attorney's employment and his authority are revoked by the death of his client, and an attorney cannot proceed where he does not represent a party to the action. . . . Generally, the attorney-client relationship is terminated by the death of the client, and thereafter, the authority of the attorney to represent the interests of a deceased client must come from the personal representatives of the decedent."; "In this case, the plaintiff, Randy Robison, died on January 20, 2013. Upon Randy Robison's death the product liability action was without a plaintiff, and the Crowder firm's authority to act on behalf of Randy Robison terminated. Under our procedural rules, this cause of action is one that survives the death of a party, and the personal representative of the decedent's estate is permitted to file a motion for substitution. . . . The motion for substitution is to be filed within 90 days after the party's death is suggested of record, and the date of the actual death is not a factor."; "Settlement negotiations commenced in September 2013, and an agreement was ostensibly reached on September 24, 2013. The defendant, however, had no knowledge about the plaintiff's death or the appointment of a personal representative throughout the period of settlement negotiations. Mr. Gilbreth acknowledged that he did not disclose these facts to the defendant until November 15, 2013, weeks after the settlement was reached and months after the plaintiff's death. Mr. Gilbreth also acknowledged that the disclosure of the plaintiff's death would have adversely impacted the settlement value of the case. He stated that he believed that the decision to withhold the information was in his clients' best interest and was in keeping with the rules of professional responsibility. We strongly disagree. We find that the arguments expressed by Mr. Gilbreth are specious and incredible, and we are concerned about his professional judgment in this case. In failing to disclose the fact of the plaintiff's death, 65829543_8 I-B-128 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Mr. Gilbreth intentionally concealed a material fact that would have reduced the overall value of the claim for damages. In addition, and equally troubling, Mr. Gilbreth led the defendant to believe that he had authority to negotiate a settlement of the litigation on behalf of the party plaintiff, when the action was without a plaintiff as the plaintiff had died and a representative had not been submitted. Given Mr. Gilbreth's intentional misrepresentations and material omissions prior to and during the settlement negotiations, we conclude that the settlement agreement is invalid and unenforceable, and that the trial court erred in granting the motion to enforce it. Accordingly, we hereby vacate the order granting the motion to enforce settlement and remand the cause of the circuit court for further proceedings."; "Rule 8.3 requires a lawyer to report unprivileged knowledge of misconduct involving fraud, dishonesty, or deceit, or misrepresentation by another lawyer to the Illinois Attorney Registration and Disciplinary Commission (ARDC). See Ill. R. Prof. Conduct (2010) R. 8.3 (eff. Jan. 1, 2010); In re Himmel, 125 Ill. 2d 531, 539, 533 N.E. 2d 790, 793 (1988)."; "In this case, we believe that the material omissions and misrepresentations made by Mr. Gilbreth, which were detailed earlier in this decision, constitute serious violations of Rule 8.4. We also believe that defense counsel possessed sufficient knowledge to trigger a duty to report Mr. Gilbreth's misconduct to the ARDC, and that the failure to report the misconduct constitutes a potential violation of Rule 8.3. See Himmel, 125 Ill. 2d 540-43, 533 N.E.2d at 793-94. Therefore, we will direct the clerk of this court to transmit a copy of this opinion to the Attorney Registration and Disciplinary Commission for its consideration of the actions of the attorneys in this case."). In re Lyons, 780 N.W.2d 629, 631, 631-32, 632, 633, 634-35 (Minn. 2010) (indefinitely suspending a lawyer, and barring the lawyer from seeking a reinstatement for one year, for (among other things) failing to disclose the death of his client; "Lyons was admitted to practice law in Minnesota on October 28, 1994. At all times relevant to these proceedings, Lyons was engaged in the practice of law at a law firm known as the Consumer Justice Center, P.A., in Vadnais Heights, Minnesota. Lyons has been disciplined on seven previous occasions."; "In 2006, Lyons was retained by a man who had been erroneously reported by Trans Union, LLC, a credit reporting agency, to be dead. In September 2006, a complaint against Trans Union under the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x (2000), was filed in the United States District Court for the District of Montana."; "The client died on October 9. On October 26, 2007, Trans Union sent an email to Lyons offering to settle the claim for $ 19,000. The following day, Lyons accepted the offer by email and requested that opposing counsel '[d]raft the release and order the check made payable to [the Consumer Justice Center] trust account.' Lyons did not inform Trans Union of the client's death. On November 6, Trans Union sent Lyons a settlement agreement and release. The following week, Lyons emailed Frampton, asking whether the client's 65829543_8 I-B-129 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) wife could sign the agreement as 'power of attorney.' Frampton replied that the client's wife could sign the settlement agreement because she was the personal representative of the estate."; "In an email to Trans Union dated January 7, 2008, Lyons noted that he was '[s]till working on [the client] who was hospitalized and I think the release is being signed by his wife or power of attorney.'"; "Upon receiving the signed settlement agreement, Trans Union emailed Lyons asking if the client had passed away. Two days later, Lyons responded, 'Yes -- HOW IRONIC.' The referee found and Lyons does not dispute that this e-mail on January 31, 2008, was Lyons's first disclosure to Trans Union that the client had died. The day following Lyons' disclosure, Trans Union asked, 'When did he die? When did you find out?' Lyons replied, 'Unsure. Recently.' Trans Union responded by asking, 'Did he die before or after we agreed to settle?' Lyons replied, 'We settled before I found out he passed away.' Trans Union again asked, 'Did [the client] die before or after we agreed to settle?' Lyons replied that the client 'died after we agreed to settle.' Trans Union demanded to know, 'On what date did [the client] die? On what date did you find out?' Lyons replied, 'Unsure of exact dates -sorry. I learned about it from local counsel afterwards -- that is why we had to redo the signature block to estate after you sent it to us with only [the client's] name.'"; "Trans Union indicated that it would not be bound by the settlement and, as a result, Frampton filed an action in Montana state court to enforce the settlement agreement."; "Lyons does not challenge the referee's finding that he failed to disclose the client's death to Trans Union before accepting Trans Union's settlement offer. Nor does Lyons challenge the referee's finding that he made a number of misrepresentations to Trans Union regarding when the client died and when he learned of the client's death."). Edison v. Hearing Panel of the Disciplinary Bd. of the N.D. Supreme Court, 724 N.W.2d 579, 580, 581, 583 (N.D. 2006) (reprimanding a defendant's lawyer who did not disclose the death of his client, and relied on the statutes of limitations defense in seeking to dismiss the plaintiff's automobile accident case against his client; concluding that the lawyer had no duty to disclose the client's death, and improperly filed a pleading on behalf of the dead person; "On March 14, 2002, Harrie [respondent lawyer] was retained by the insurance company to defend the lawsuit. On March 18, 2002, Harrie received a file from the insurance company which included a letter from Welch's insurance agent to the insurance company indicating Ellen Welch had died. The file did not indicate when Ellen Welch had died or how Muhammed [opposing party in underlying suit] had served process on her. On March 27, 2002, Harrie served an answer on Muhammed on behalf of 'Defendant Ellen Welch.'"; "On May 23, 2002, Harrie informed Muhammed's attorney that 'Ellen Welch's surviving husband, Patrick [Welch], signed for the certified mail' and 'it appears that service was improper and that the claim against Ellen Welch is barred by the statute of limitations.'"; "The district court 65829543_8 I-B-130 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) subsequently granted summary judgment dismissal of Muhammed's action against Welch, concluding the action was barred by the statute of limitations. In Muhammed v. Welch, 2004 ND 46, P12, 675 N.W.2d 402, we concluded the service of process was insufficient. However, we reversed the summary judgment and remanded for further proceedings to determine whether Welch was equitably estopped from claiming the statute of limitations as a defense."; "The official comment to Rule 4.1 makes clear that an attorney generally does not have an affirmative duty to inform an opposing party of relevant facts, and we reject disciplinary counsel's assertion that Harrie had an affirmative duty to immediately disclose Ellen Welch's death before serving any pleadings in this case. However, Harrie served an answer and amended answer on behalf of Ellen Welch, and at least by the time of the amended answer, Harrie had actual knowledge that Welch had died."). Harris v. Jackson, 192 S.W.3d 297, 306 (Ky. 2006) (holding that a lawyer had acted improperly in failing to disclose a death of one of his clients "until the period to revive the action against Harris's estate had lapsed. Not only did he fail to disclose, he continued to participate in discussions, negotiations, depositions, and other pre-trial activities, even with the court, as if Harris was still alive."). In re Becker, 804 N.Y.S.2d 4, 5 (N.Y. App. Div. 2005) (suspending a New York lawyer for three months for failing to disclose his client's death before settling a slip and fall case against the City; "Respondent's misconduct occurred while handling a personal injury matter for Ruth Kurtz as a result of her 1993 trip and fall on a sidewalk and consequent ankle fracture. Mrs. Kurtz died in 1994 as a result of bone cancer, but respondent did not discover this until 1997 after he received a $55,000 settlement offer from the defendant, the City of New York, and forwarded the proposed settlement to Mrs. Kurtz."; explaining that the lawyer submitted settlement documents to New York City without disclosing that his client had died nearly three years earlier; also noting that the lawyer endorsed the settlement check along with the deceased client's son). In re Hayes, No. 6192974, 2004 Ill. Atty. Reg. Disc. LEXIS 126, at *1-3, *3-4 (Ill. Attorney Disciplinary Comm'n Hearing Bd. Mar. 24, 2004) (censuring a lawyer who did not disclose the death of her client to a workers' compensation board or the adversary's lawyer; "On June 19, 1999, Cook died of causes unrelated to the above claim. Cook's workers' compensation claim abated on his death, pursuant to 820 ILCS 305/8(e)(19), because he left no surviving spouse or dependents. The Respondent learned of Cook's death on or about June 21, 1999. On July 16, 1999, the Respondent telephoned Dollar General's lawyer, William Hardy, for the purpose of settling Cook's workers' compensation case. The Respondent represented to Hardy that she was calling on behalf of Cook, and she did not disclose that Cook 65829543_8 I-B-131 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) was deceased. The Respondent intentionally failed to disclose Cook's death to Hardy because she knew his death would adversely impact the workers' compensation claim. During the telephone conversation on July 16, 1999, the Respondent and Hardy agreed to settle Cook's claim for $8,890.22, which included $5,237 for Cook's 'man as a whole' claim. Also, on July 16, 1999, the Respondent sent Hardy a letter in which she identified Cook as her client and confirmed the terms of the settlement agreement. She did not disclose in the letter that Cook had died. The Respondent knew or should have known that both her statement to Hardy on July 16, 1999, that she was representing Cook and her failure to disclose Cook's death to Hardy were false and/or misleading."; "On May 24, 2001, the Respondent filed a motion in the workers' compensation case (No. WC 56002) to enforce the settlement agreement she had reached with Hardy. The motion was filed on behalf of the estate of Cook. The Respondent knew or should have known that her assertion in the motion that she was representing the estate of Cook was false because attorney Reed had represented the executor of Cook's estate, and the estate had been closed in October 2000. Additionally, the Respondent's claim in the motion that the settlement with Hardy, on behalf of Dollar General, should be enforced was frivolous because Cook's workers' compensation claim, with the exception of medical benefits that had been paid, abated upon Cook's death."). Kingsdorf v. Kingsdorf, 797 A.2d 206 (N.J. Super. Ct. App. Div. 2002) (holding that a lawyer must tell the adversary about the client's death; noting that the lawyer was representing the husband in various matters, including a divorce, and reached a settlement after his client had died; concluding that the failure to disclose the client's death amounted to fraud on the court because the death abated a pending divorce action, terminated the decedent's son's guardianship, and automatically resulted in joint tenancy property passing to the surviving wife; referring the matter to the bar to deal with the lawyer's conduct, but not reaching any conclusions about the lawyer's possible ethics violations; reversing an order enforcing the settlement agreement reached after the client had died but before the lawyer advised the counterparty of the client's death). In re Forrest, 730 A.2d 340, 342 (N.J. 1999) (suspending for six months a lawyer who did not disclose the death of his client to the court, an arbitrator and the adversary's lawyer; "In December 1993, knowing of Mr. Fennimore's death, respondent served unsigned answers to interrogatories . . . on his adversary, Christopher Walls, Esq. Neither the answers nor the cover letter indicated that Mr. Fennimore had died. On June 8, 1994, respondent and Mrs. Fennimore appeared at a mandatory automobile arbitration proceeding . . . . Before to the proceeding, respondent advised Mrs. Fennimore that she should not voluntarily reveal her husband's death in her testimony before the arbitrator. When the arbitrator inquired about Mr. 65829543_8 I-B-132 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Fennimore's absence, respondent replied that he was 'unavailable.' The arbitrator awarded $ 17,500 to Mrs. Fennimore and $ 6000 to Mr. Fennimore. At no time before, during, or after the arbitration proceeding did respondent or Mrs. Fennimore inform the arbitrator that Mr. Fennimore had died."). Ky. Bar Ass'n v. Geisler, 938 S.W.2d578, 578-79, 580 (Ky. 1997) (issuing a public reprimand of a lawyer who did not disclose her client's death to the court or the adversary's lawyer; "McNealy died on January 26, 1995. Shortly thereafter respondent contacted Ford and stated that her client wanted to settle the case and asked him to forward an offer of a settlement. After an exchange of offers and counter-offers, a settlement was reached on February 9, 1995. On February 23, 1995, McNealy's son, Joe, was duly appointed as the administrator of his father's estate. Ford eventually forwarded the settlement documents along with a settlement check to respondent on March 13, 1995. On March 22, 1995, Ford received back the settlement documents which had been executed by Joe. Upon receipt of the signed documents, Ford learned for the first time of McNealy's death. Ford took no further action to bring the court's attention to the settlement documents that were signed by the Administrator, but instead, sent the agreed order of dismissal to the circuit court which was signed and entered by the court. No appeal was taken. Thereafter, Ford filed a bar complaint against respondent on May 5, 1995 due to her failure to advise Ford that her client, McNealy, had passed away during the settlement negotiation period of January 26, 1995 through February 9, 1995."; "[W]e hold that the respondent's failure to disclose her client's death to opposing counsel amounted to an affirmative misrepresentation in violation of our SCR 3.1304.1."; "While the comments to SCR 3.130-4.1 do indicate that there is no duty to disclose 'relevant facts,' those same comments go on to state that: 'A misrepresentation can occur if the lawyer incorporates or affirms a statement of another person that the lawyer knows is false. Misrepresentations can also occur by failure to act.' Consequently, respondent cannot reasonably argue that her failure to reveal this critical piece of information constituted ethical conduct within the framework of SCR 3.130-4.1." Thus, a lawyer must disclose his client's death in the course of settlement negotiations.). Virzi v. Grank Trunk Warehouse & Cold Storage Co., 571 F. Supp. 507, 508, 512, 512-13 (E.D. Mich. 1983) ("On June 2, 1983, plaintiff's attorney prepared and filed a mediation statement for plaintiff with the mediation panel. Three days later, plaintiff died unexpectedly from causes unrelated to the lawsuit. On June 14, 1983, the case was mediated, and the mediation panel placed an evaluation of $35,000 on the case. At the time of the mediation hearing, plaintiff's attorney did not know that his client had died."; "On July 5, 1983, counsel for plaintiff and defendants appeared before this Court at a pretrial conference and, after negotiations, entered into a settlement of the lawsuit for the amount of the mediation award -- $35,000. 65829543_8 I-B-133 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) At no time, from the time plaintiff's attorney learned of the plaintiff's death until the agreement to settle the case for $35,000 at the pretrial conference, did plaintiff's attorney notify defendants' attorney or the Court of the death of the plaintiff."; "There is no question that plaintiff's attorney owed a duty of candor to this Court, and such duty required a disclosure of the fact of the death of a client. Although it presents a more difficult judgment call, this Court is of the opinion that the same duty of candor and fairness required a disclosure to opposing counsel, even though counsel did not ask whether the client was still alive. Although each lawyer has a duty to contend, with zeal, for the rights of his client, he also owes an affirmative duty of candor and frankness to the Court and to opposing counsel when such a major event as the death of the plaintiff has taken place."; "This Court feels that candor and honesty necessarily require disclosure of such a significant fact as the death of one's client. Opposing counsel does not have to deal with his adversary as he would deal in the marketplace. Standards of ethics require greater honesty, greater candor, and greater disclosure, even though it might not be in the interest of the client or his estate. The handling of a lawsuit and its progress is not a game. There is an absolute duty of candor and fairness on the part of counsel to both the Court and opposing counsel. At the same time, counsel has a duty to zealously represent his client's interests. That zealous representation of interest, however, does not justify a withholding of essential information, such as the death of the client, when the settlement of the case is based largely upon the defense attorney's assessment of the impact the plaintiff would make upon a jury, because of his appearance at depositions. Plaintiff's attorney clearly had a duty to disclose the death of his client both to the Court and to opposing counsel prior to negotiating the final agreement. For the foregoing reasons, the settlement will be set aside and the case reinstated in the docket for trial."). (b) It is not as clear that a witness's death is the type of material fact that a lawyer must disclose during settlement negotiations. Depending on the witness's importance, it would be easy to envision a court or bar reaching the same conclusion about a witness's death as it would about the client's own death. In addition, it might be necessary for a lawyer to update discovery responses, lists of possible trial witnesses, etc. 65829543_8 I-B-134 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) On the other hand, a witness's death does not dramatically alter the attorney-client relationship, and therefore would not as clearly fall into the category of material facts that require disclosure as does the client's death. Best Answer The best answer to (a) is (A) YOU MUST DISCLOSE YOUR CLIENT'S DEATH TO THE ADVERSARY; the best answer to (b) is (B) YOU MAY DISCLOSE YOUR WITNESS'S DEATH TO THE ADVERSARY, BUT YOU DON'T HAVE TO (PROBABLY). B 4/15, 10/15 65829543_8 I-B-135 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Litigation Adversaries' Minor Litigation Mistakes Hypothetical 15 As the other side in a trial closes its case, you realize that the adversary's lawyer forgot to move into evidence a fairly important exhibit. You quickly huddle with your cocounsel to see what (if anything) you should do. From your experience, the judge handling the case would almost always allow a party to temporarily reopen its case to admit an exhibit like this. What do you do? (A) You must disclose the mistake to the adversary. (B) You may disclose the mistake to the adversary, but you don't have to. (C) You may not disclose the mistake to the adversary, unless your client consents. (C) YOU MAY NOT DISCLOSE THE MISTAKE TO THE ADVERSARY, UNLESS YOUR CLIENT CONSENTS (PROBABLY) Analysis The 1908 ABA Canons of Professional Ethics included a provision granting lawyers responsibility with what the provision called "incidents of the trial." As to incidental matters pending the trial, not affecting the merits of the cause, or working substantial prejudice to the rights of the client, such as forcing the opposite lawyer to trial when he is under affliction or bereavement; forcing the trial on a particular day to the injury of the opposite lawyer when no harm will result from a trial at a different time; agreeing to an extension of time for signing a bill of exceptions, cross interrogatories and the like, the lawyer must be allowed to judge. In such matters no client has a right to demand that his counsel shall be illiberal, or that he do anything therein repugnant to his own sense of honor and propriety. ABA Canons of Professional Ethics, Canon 24 (emphasis added). 65829543_8 I-B-136 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The 1969 ABA Model Code of Professional Responsibility emphasized clients' power, while acknowledging lawyers' normal role in determining how to advance clients' interests. In certain areas of legal representation not affecting the merits of the cause or substantially prejudicing the rights of a client, a lawyer is entitled to make decisions on his own. But otherwise the authority to make decisions is exclusively that of the client and, if made within the framework of the law, such decisions are binding on his lawyer. As typical examples in civil cases, it is for the client to decide whether he will accept a settlement offer or whether he will waive his right to plead an affirmative defense. A defense lawyer in a criminal case has the duty to advise his client fully on whether a particular plea to a charge appears to be desirable and as to the prospects of success on appeal, but it is for the client to decide what plea should be entered and whether an appeal should be taken. ABA Model Code of Professional Responsibility, EC 7-7 (emphasis added). The 1983 ABA Model Rules of Professional Conduct seem to stress lawyers' ability to make certain decisions. As one rule explains, clients set the ultimate objectives after consulting with a lawyer, but normally defer to the special knowledge and skill of their lawyer with respect to the means to be used to accomplish their objectives, particularly with respect to technical, legal and tactical matters. ABA Model Rule 1.2 cmt. [2]. Thus, lawyers may have authority to exercise professional discretion in determining the means by which a matter should be pursued. ABA Model Rule 1.3 cmt. [1]. The same comment indicates that "[a] lawyer is not bound . . . to press for every advantage that might realized for a client." Id. 65829543_8 I-B-137 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Discovery and trials obviously can generate a spectrum of situations in which a lawyer's adversary might make some mistake, overlook an argument or fact, etc. States generally emphasize lawyers' duties as advocates in such contexts. Virginia LEO 920 (6/11/87) (assessing a situation in which a lawyer representing an employer in appealing the award of unemployment compensation to three company employees saw one of the employees outside the Virginia Employment Commission office while preparing for a hearing on another employee's unemployment benefits; explaining that the employee told the lawyer that he intended to be a witness at his colleague's hearing; noting that the employee preparing for his hearing knew that his colleague was present, but represented himself pro se at the hearing and indicated at the end that he had no other evidence to present; further noting that when the Commission ruled in favor of the company, the losing employee hired a lawyer, who asked for the hearing to be re-opened, arguing that the company's lawyer should have disclosed the availability as a witness of the other employee whom the lawyer saw outside the hearing room; concluding that the lawyer was not obligated to tell the Virginia Employment Commission about the unhelpful witness, and in fact had a duty not to make this disclosure -- because it would have hurt the lawyer's client (the company)). In many situations, lawyers familiar with the pertinent court can predict that the court will grant the adversary's request for relief from a mistake. Perhaps the most common example involves an adversary's minor delay in answering a complaint, which theoretically could result in a default judgment -- but which nearly always results in the court's grant of relief permitting the tardy filing of a response. It is probably fair to say that the less dispositive the adversary's mistake, the more likely a court is to provide such relief. In 1995, a North Carolina legal ethics opinion explained that lawyers could ethically advise the adversary of such a missed answer deadline. North Carolina RPC 212 (7/21/95) (analyzing a lawyer's ability to notify the opposing party's lawyer that 30 days had passed since the filing of the complaint without an answer being filed; ultimately posing the question: 65829543_8 I-B-138 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) "May Attorney A call Attorney X to remind him to file the answer or must Attorney A proceed with obtaining an entry of default against the defendant?"; explaining that the lawyer could notify the other lawyer; "A lawyer may contact an opposing lawyer who failed to file a pleading on time in order to remind the other lawyer of his error and to give the other lawyer a last opportunity to file the pleading. Such conduct is not unethical but rather illustrates the level of professional courtesy and consideration that should be encouraged among the members of the bar. Rule 7.1(a)(1) of the Rules of Professional Conduct provides that a lawyer does not violate the duty to represent a client zealously 'by avoiding offensive tactics or by treating with courtesy and consideration all persons involved in the legal process.' Furthermore, Rule 7.1(b)(1) authorizes a lawyer 'where permissible, [to] exercise his or her professional judgment to waive or assert a right or position of the client.' It is also observed in the Comment to Rule 7.1 that '. . . a lawyer is not required to pursue objectives or employ means simply because a client may wish that the lawyer do so. . . .' Thus, the rule does not require the client's consent prior to notifying the opposing lawyer."; "In many situations, professional courtesy urges notification to the other lawyer of the failure to file a pleading. However, a lawyer is not ethically required to do so. In some situations, for example where opposing counsel is known to procrastinate or delay or the interests of the client will be materially prejudiced by notifying opposing counsel, a lawyer may determine that the appropriate tactic is to proceed with obtaining an entry of default or other appropriate remedy." (emphasis added)). Lawyers might find themselves trying to convince their clients that seeking some material advantage based on an adversary's fairly minor mistake could well frustrate or even anger the court. Such tactics ultimately tend to work to clients' detriment. Lawyers unable to convince their clients not to seek some advantage based on an adversary's minor mistake might well end up in court. Lawyers in that position must remember to submerge their own interest to that of the clients'. As tempting as it would be for the lawyer to essentially tell the court, "I realize that this is stupid, but my client has insisted that I seek default judgment based on a one-day delay in the adversary's response," such a lawyer cannot make such a statement. The lawyer's own personal 65829543_8 I-B-139 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) interest in preserving his or her reputation and standing with the court cannot affect the lawyer's duty to diligently represent the client. Best Answer The best answer to this hypothetical is (C) YOU MAY NOT DISCLOSE THE MISTAKE TO THE ADVERSARY, UNLESS YOUR CLIENT CONSENTS (PROBABLY). B 4/15, 10/15 65829543_8 I-B-140 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Litigation Adversaries' Major Case-Dispositive Mistakes Hypothetical 16 Your client asked you to check with the other side's lawyer (with whom you have a very friendly relationship) to see if the other side intends to appeal a trial victory that you won several weeks ago. When you call the other lawyer to ask about her intent, you learn that the other side intends to appeal -- but quickly realize that the other lawyer has miscalculated the appellate deadline. You do not say anything about it during the call, but reflect upon this issue immediately after hanging up. What do you do? (A) You must disclose the miscalculation to the adversary. (B) You may disclose the miscalculation to the adversary, but you don't have to. (C) You may not disclose the miscalculation to the adversary, unless your client consents. (C) YOU MAY NOT DISCLOSE THE MISCALCULATION TO THE ADVERSARY, UNLESS YOUR CLIENT CONSENTS Analysis Some situations involve the unfortunate conflict between most lawyers' laudable desire to act professionally and their ethics duties to their clients. Interestingly, analyzing lawyers' ethical obligations in such situations might depend on the tribunal's role in the process. Lawyers' Discretion to Notify Adversaries of Their Mistakes Without a Tribunal's Involvement If a tribunal has not yet focused on some case-dispositive claim or affirmative defense, litigators generally have no duty to advise their adversaries of some fatal mistake. Perhaps the most stark example involves the adversary missing a statute of limitations or (in a perhaps even more likely dispositive error) missing an appellate filing 65829543_8 I-B-141 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) deadline. A party missing a statute of limitations might seek relief under some estoppel or other theory, but missing an appellate filing deadline often presents a nearly impossible hurdle to overcome. The ABA Model Rules' analysis of such situations begins with ABA Model Rule 1.2. That Rule emphasizes clients' right to set a representation's ultimate goal, then acknowledges that lawyers have some discretion in determining how to achieve that goal. [A] lawyer shall abide by a client's decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation. ABA Model Rule 1.2(a) (emphasis added). ABA Model Rule 1.2's comments continue this theme -- recognizing but strictly limiting lawyers' discretion. The first comment emphasizes clients' right to define the representation's goal. Paragraph (a) confers upon the client the ultimate authority to determine the purposes to be served by legal representation, within the limits imposed by law and the lawyer's professional obligations. The decisions specified in paragraph (a), such as whether to settle a civil matter, must also be made by the client. See Rule 1.4(a)(1) for the lawyer's duty to communicate with the client about such decisions. With respect to the means by which the client's objectives are to be pursued, the lawyer shall consult with the client as required by Rule 1.4(a)(2) and may take such action as is impliedly authorized to carry out the representation. ABA Model Rule 1.2 cmt. [1]. 65829543_8 I-B-142 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The second comment notes that lawyers have some discretion to select the means by which they can meet the client's goal, but ultimately concluding that lawyers must either defer to their clients' judgment or withdraw from the representation. On occasion, however, a lawyer and a client may disagree about the means to be used to accomplish the client's objectives. Clients normally defer to the special knowledge and skill of their lawyer with respect to the means to be used to accomplish their objectives, particularly with respect to technical, legal and tactical matters. Conversely, lawyers usually defer to the client regarding such questions as the expense to be incurred and concern for third persons who might be adversely affected. Because of the varied nature of the matters about which a lawyer and client might disagree and because the actions in question may implicate the interests of a tribunal or other persons, this Rule does not prescribe how such disagreements are to be resolved. Other law, however, may be applicable and should be consulted by the lawyer. The lawyer should also consult with the client and seek a mutually acceptable resolution of the disagreement. If such efforts are unavailing and the lawyer has a fundamental disagreement with the client, the lawyer may withdraw from the representation. See Rule 1.16(b)(4). Conversely, the client may resolve the disagreement by discharging the lawyer. See Rule 1.16(a)(3). ABA Model Rule 1.2 cmt. [2] (emphases added). ABA Model Rule 1.3 parallels this approach. The rule itself indicates that [a] lawyer shall act with reasonable diligence and promptness in representing a client. ABA Model Rule 1.3. The first comment to that rule emphasizes the duty's strength and breadth. A lawyer should pursue a matter on behalf of a client despite opposition, obstruction or personal inconvenience to the lawyer, and take whatever lawful and ethical measures are required to vindicate a client's cause or endeavor. A lawyer must also act with commitment and dedication to the 65829543_8 I-B-143 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) interests of the client and with zeal in advocacy upon the client's behalf. ABA Model Rule 1.3 cmt. [1] (emphases added). The rest of this comment contains an odd dichotomy. A lawyer is not bound, however, to press for every advantage that might be realized for a client. For example, a lawyer may have authority to exercise professional discretion in determining the means by which a matter should be pursued. . . . The lawyer's duty to act with reasonable diligence does not require the use of offensive tactics or preclude the treating of all persons involved in the legal process with courtesy and respect. Id. The first sentence explains that lawyers do not have to seek every advantage. However, the next sentence indicates only that lawyers "may" have some discretion to determine how to achieve clients' stated goal. That seems inconsistent with ABA Model Rule 1.2 cmt. [2], which explains that lawyers must withdraw if they cannot resolve any "fundamental disagreement" with the client "about the means to be used to accomplish the client's objectives." The sentence after that focuses on lawyers' professionalism rather than substance. Thus, it is unclear why a lawyer is not "bound . . . to press for every advantage that might be realized for a client" -- other than perhaps whatever "advantage" would come from incivility or unprofessional conduct. After all, ABA Model Rule 1.2 demands that lawyers must press for every advantage, and withdraw if they cannot follow the client's direction about whether and how to do that. Two comments later, the ABA Model Rules again acknowledge a very limited amount of lawyer discretion in pursuing their clients' chosen objective. 65829543_8 I-B-144 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Perhaps no professional shortcoming is more widely resented than procrastination. A client's interests often can be adversely affected by the passage of time or the change of conditions; in extreme instances, as when a lawyer overlooks a statute of limitations, the client's legal position may be destroyed. Even when the client's interests are not affected in substance, however, unreasonable delay can cause a client needless anxiety and undermine confidence in the lawyer's trustworthiness. A lawyer's duty to act with reasonable promptness, however, does not preclude the lawyer from agreeing to a reasonable request for a postponement that will not prejudice the lawyer's client. ABA Model Rule 1.3 cmt. [3] (emphasis added). Thus, this comment extends some discretion to lawyers, but limited to scheduling -- and even then only if exercising such discretion "will not prejudice" the client. In contrast to comments that use words like "fundamental" and "unreasonable," that sentence contains no modifier in prohibiting lawyers from taking any steps that will prejudice the client (presumably in any way). ABA Rule 1.3 and its accompanying comments seem to permit lawyers' agreement (without the client's explicit consent) to minor delays in depositions, moving the location of meetings, etc. The Rule does not on its face support lawyers' acts of "professionalism" or "civility" that would prejudice the client -- apparently to any degree. Thus, a lawyer could not point to these provisions in justifying a call to the adversary's lawyer reminding her of some important argument she has overlooked, deadline she is about to miss, etc. To be sure, lawyers might have some power at the beginning of a representation to assume such authority, as long as they can do so while competently, diligently, and loyally representing their client. 65829543_8 I-B-145 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Lawyers establishing an attorney-client relationship can limit the scope of the representation so it "exclude[s] specific means that might otherwise be used to accomplish the client's objective" -- such as "actions . . . that the lawyer regards as repugnant or imprudent." ABA Model Rule 1.2 cmt. [6]. Lawyers can either make their services available only under this condition, or agree with the client to such a limit. ABA Model Rule 1.2(c) cmt. [6]. Thus, presumably lawyers may make their services available only if they retain the discretion to take actions that might prejudice the client but satisfy the lawyer's sense of professionalism. Similarly, lawyers and clients can agree that the lawyer may exercise such discretion. Of course, presumably no bar would permit such an arrangement if the lawyer could materially prejudice the client in using such discretion. Thus, even that recognized possibility would not allow lawyers to alert an adversary of some dispositive mistake -- absent the client's consent at the time, rather than in advance. And the rules indicate what lawyers must do during a representation if they feel uncomfortable in pressing for an advantage on which the client insists. Lawyers may withdraw from representing a client (even if there is "material adverse effect on the interests of the client" (ABA Model Rule 1.16(b)(1))) if "the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement." ABA Model Rule 1.16(b)(1), (4) (emphasis added). All of these ethics rules and comments apply only at the margins -- and do not justify lawyers alerting an adversary who is about to commit a dispositive mistake that benefits the lawyer's client. 65829543_8 I-B-146 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The issue is closer if the court would be likely to preclude the client from taking advantage of the adversary's mistake. For instance, many courts will vacate a default judgment if the adversary fails to answer, as long as the adversary has a legitimate excuse for not doing so. In that situation, a lawyer representing the client who would benefit from the default judgment might decide not to push that point, because it would be unavailable and perhaps even counterproductive -- if it would annoy or anger the judge. But the lawyer presumably must discuss the issue with the client. But a lawyer will not find any justification in the ethics rules for relieving the adversary of a case-dispositive error that a court might not or cannot forgive. Lawyers Obligations and Discretion when Dealing with Tribunals If these types of issues play out in front of a tribunal, the ethics rules' application becomes much more complicated. Lawyers' duty to protect their clients' interest then might conflict with the duty to affirmatively disclose unhelpful law to the tribunal, or to avoid misrepresentations to the tribunal. ABA Model Rule 3.3 indicates that [a] lawyer shall not knowingly . . . fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel. ABA Model Rule 3.3(a)(2) (emphasis added). A comment provides some guidance. Legal argument based on a knowingly false representation of law constitutes dishonesty toward the tribunal. A lawyer is not required to make a disinterested exposition of the law, but must recognize the existence of pertinent legal authorities. Furthermore, as stated in paragraph (a)(2), an 65829543_8 I-B-147 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) advocate has a duty to disclose directly adverse authority in the controlling jurisdiction that has not been disclosed by the opposing party. The underlying concept is that legal argument is a discussion seeking to determine the legal premises properly applicable to the case. ABA Model Rule 3.3 cmt. [4]. This comment seems to focus on an advocate's affirmative false statement of legal principles. It clearly focuses on presentations of the law to the tribunal. The Restatement takes essentially the same approach as the ABA Model Rules. In representing a client in a matter before a tribunal, a lawyer may not knowingly . . . fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position asserted by the client and not disclosed by opposing counsel. Restatement (Third) of Law Governing Lawyers § 111(2) (2000) (emphasis added). The Restatement explicitly indicates that "[l]egal authority" includes case-law precedents as well as statues, ordinances, and administrative regulations. Restatement (Third) of Law Governing Lawyers §111 cmt. d (2000) (emphasis added). This principle focuses on advocates' description of the law to the tribunal. However, it is less clear how the principle applies in other tribunal-related contexts, such as pleadings that do not purport to describe the state of the law. Perhaps most significantly, neither the ABA Model Rules nor the Restatement have attempted to reconcile this disclosure obligation with the universally accepted principle that lawyers may file on their clients' behalf knowingly time-barred claims, as long as the claim still exists. 65829543_8 I-B-148 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The ABA and the Restatement approach recognizes the statute of limitations as an affirmative defense that litigants may or may not assert. Thus, the ABA has indicated that lawyers may file a knowingly time-barred claim, as long as it still exists. ABA LEO 387 (9/26/94) ("We conclude that it is generally not a violation . . . to file a time-barred lawsuit, so long as this does not violate the law of the relevant jurisdiction. The running of the period provided for enforcement of the civil claim creates an affirmative defense which must be asserted by the opposing party . . . . [W]e do not believe it is unethical for a lawyer to file suit to a time-barred claim."). State bars have taken the same approach. New York LEO 475 (10/14/77); Oregon LEO 2005-21 (8/05); North Carolina LEO 2003-13 (1/16/04); Pennsylvania LEO 96-80 (6/24/96). Although several courts have disagreed with this approach, as a matter of ethics it seems clear that lawyers may file knowingly time-barred claims. These legal ethics opinions do not deal with this well-recognized principle's arguable inconsistency with lawyers' ethical obligation to disclose adverse law (including adverse statutory law). Presumably that latter obligation does not apply because the tribunal has not yet become involved in assessing the litigants' legal rights. If the defendant raises a statute of limitations defense, it means that its lawyer already knows about that law. And the plaintiff's lawyer obviously could not deny its existence. If the defendant's lawyer does not realize that the plaintiff's claim might be timebarred, the issue never comes before the tribunal. In other words, plaintiffs' lawyers never have the opportunity to advise the tribunal about the adverse statute of limitations that bars their clients' claims, because the statute of limitations runs before the tribunal deals with that issue. Neither the rules nor common sense would require plaintiffs' 65829543_8 I-B-149 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) lawyers to notify defendants' lawyers of the adverse statute of limitations when filing the complaint. The same process presumably plays out if an adversary is about to miss an appellate filing deadline. If a litigant's lawyer knows that the adversary is about to miss the deadline, the litigant's lawyer presumably does not have a duty to tell the adversary -- let alone tell the tribunal. In contrast, the tribunal's involvement in the process might trigger some disclosure duty under state versions of ABA Model Rule 3.3(a)(2). For instance, the adversary might seek some relief from either the trial court or an appellate court after having missed an appellate filing deadline. In that setting, if the adversary overlooks an applicable statute (such as a law extending the appellate filing deadline for a party in the hospital or serving in the military overseas, etc.) or case law recognizing some other forgiving argument, the litigant's lawyer presumably would have to disclose that to the tribunal. Although it is unclear why the rules don't require litigators to make the same disclosure in the absence of the adversary's request for judicial relief, courts and bars apparently have not required litigators to do so. Legal Ethics Opinions Interestingly, there appear to be no widely-publicized legal ethics opinions dealing with lawyers' duty of confidentiality in such settings. A 1989 Virginia legal ethics opinion indicated that a criminal defense lawyer must remain silent if the prosecutor sets a trial date past the time at which the law permits the 65829543_8 I-B-150 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) prosecution to proceed -- after emphasizing that the criminal defense lawyer had nothing to do with setting his client's trial date. Virginia LEO 1215 (1/31/89) (explaining that a lawyer may not disclose to the court or the prosecutor that the court had granted a continuance at the prosecutor's request and set the lawyer's client's first degree murder trial one day after the expiration of the time during which the prosecution could proceed; noting that the lawyer's client's case was originally set for trial within the permissible time limit, but that the prosecution later sought to rearrange trial dates of various co-defendants, and had arranged for a trial on a day that the lawyer had earlier advised the court he was available; "You were not consulted before the request for the continuance, nor have you consented to the continuance of this case. You allege that the time limitation for the prosecution of this felony will expire on February 8, 1989, one day before the case is set for trial pursuant to § 19.2-243 of the Code of Virginia."; "It is the opinion of the Committee that since you have no legal obligation to reveal the expiration of the limitations period, you may not reveal it to the detriment of your client."). In 2007, the Philadelphia Bar dealt with such a similar situation -- requiring a lawyer to stay silent even in the face of an adversary's misunderstanding that the lawyer could accept service of process. That issue was case-dispositive, because of the statute of limitations' running. Philadelphia LEO 2007-5 (3/2007) (analyzing the following situation: "While the inquirer was in the process of finalizing the inquirer's client's complaint, a complaint was filed by the landlord's counsel, a copy of which was forwarded to the inquirer by facsimile. The inquirer has never agreed to accept service of original process on behalf of the inquirer's client, and in fact, does not have permission to do so." (emphasis added); holding that the lawyer did not have to disclose his lack of authority to accept service of process, despite the impending running of the statute of limitations; "In the inquirer's professional opinion, the statute of limitations on those claims runs in May 2007. Further, in the inquirer's opinion, the filing of the complaint will not toll the statute because of opposing counsel's failure to act to effectuate proper service. The inquirer has thoroughly discussed the situation with the inquirer's client who has declined to give the inquirer authority to accept service of the complaint or authority to advise opposing counsel of the inquirer's lack of authority." (emphasis added); "[T]he choice as to whether to authorize one's lawyer to accept original process is simply a prerogative of the client which involves no criminal or fraudulent act. Further, subject to exceptions not relevant here, 65829543_8 I-B-151 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Rule 1.6 governing confidentiality, prohibits a lawyer from revealing information relating to the representation of a client. As a result, in the absence of permission from the client, the inquirer would commit a violation of Rule 1.6 by notifying opposing of the inquirer's lack of authority to accept service." (emphasis added)). The paucity of ethics guidance on this issue seems odd. One would think that lawyers wishing to act "professionally" would ask ahead of time if they can alert adversaries' lawyers about some case-dispositive mistake. It would be distressing to think that lawyers do not face at least some temptation to help a brother or sister lawyer avoid per se malpractice, loss of employment, or destruction of a reputation. But few if any lawyers ask bars where to draw the line between permissible disclosure and impermissible prejudice to the client. Perhaps the profession does not want to articulate the extent of lawyers' duty to stand silent while the adversary's lawyer takes an action or fails to take an action a result of which that lawyer's "client's legal position may be destroyed" (in the words of ABA Model Rule 1.3 cmt. [3]). Best Answer The best answer to this hypothetical is (C) YOU MAY NOT DISCLOSE THE MISCALCULATION TO THE ADVERSARY, UNLESS YOUR CLIENT CONSENTS. B 4/15, 10/15 65829543_8 I-B-152 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Lawyers' Duty to Correct Their Earlier Misstatements to Courts Hypothetical 17 You have spent years earning a good reputation in your local court, but you worry that a troublesome client's actions might destroy it. In a hearing yesterday, you made several material factual representations to the court based on what your client had earlier told you. After the hearing, he confessed that some of the factual representations were wrong. Although your representations to the court did not constitute evidence, you immediately told your client that you had to correct your misstatements. However, he knew enough about your ethics duties to insist that you maintain the confidentiality of your post-hearing discussion and his confession -- and not correct your earlier representations. What do you do? (A) You must disclose the correct facts to the court. (B) You may disclose the correct facts to the court, but you don't have to. (C) You may not disclose the correct facts to the court, unless your client consents. (A) YOU MUST DISCLOSE THE CORRECT FACTS TO THE COURT Analysis The ABA Model Rules prevent lawyers from knowingly making false statements of fact to the tribunal, or failing to correct material false statements they made to the court thinking them to be true. A lawyer shall not knowingly . . . make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer. ABA Model Rule 3.3(a)(1) (emphasis added). A comment provides some additional explanation. 65829543_8 I-B-153 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) This Rule sets forth the special duties of lawyers as officers of the court to avoid conduct that undermines the integrity of the adjudicative process. A lawyer acting as an advocate in an adjudicative proceeding has an obligation to present the client's case with persuasive force. Performance of that duty while maintaining confidences of the client, however, is qualified by the advocate's duty of candor to the tribunal. Consequently, although a lawyer in an adversary proceeding is not required to present an impartial exposition of the law or to vouch for the evidence submitted in a cause, the lawyer must not allow the tribunal to be misled by false statements of law or fact or evidence that the lawyer knows to be false. ABA Model Rule 3.3 cmt. [2] (emphasis added). Interestingly, before the ABA's Ethics 2000 changes (adopted in February 2002), the prohibition only precluded lawyers' knowingly false statements of "material" facts. Of course, lawyers must also remember the two more general rules prohibiting misstatements or deceptive silence. Under ABA Model Rule 4.1, [i]n the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6. Taking even a broader approach (not limited to acting "in the course of representing a client"), Rule 8.4 indicates that it is "professional misconduct" for a lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation [or] engage in conduct that is prejudicial to the administration of justice. ABA Model Rule 8.4(c), (d). 65829543_8 I-B-154 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Not all states take the same approach. For instance, D.C. Rule 3.3(a)(1) recognizes such a duty only if the correction would not require the lawyer to violate D.C. Rule 1.6. A lawyer shall not knowingly . . . [m]ake a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer, unless correction would require disclosure of information that is prohibited by Rule 1.6. D.C. Rule 3.3(a)(1) (emphasis added). A Comment provides additional guidance on this unique D.C. Rule. If the lawyer comes to know that a statement of material fact or law that the lawyer previously made to the tribunal is false, the lawyer has a duty to correct the statement, unless correction would require a disclosure of information that is prohibited by Rule 1.6. This provision in paragraph (a)(1) differs from ABA Model Rule 3.3(a)(1), which requires a lawyer to disclose information otherwise protected by Rule 1.6 if necessary to correct the lawyer's false statement. If Rule 1.6 permits a lawyer to disclose a client confidence or secret, D.C. Rule 3.3(a)(1) requires the lawyer to disclose that information to the extent reasonably necessary to correct a false statement of material fact or law. Nothing in D.C. Rule 3.3(a)(1) limits any disclosure duty under Rule 4.1(b) when substantive law requires a lawyer to disclose client information to avoid being deemed to have assisted the client's crime or fraud. D.C. Rule 3.3(a)(1) cmt. [2] (emphasis added). Best Answer The best answer to this hypothetical is (A) YOU MUST DISCLOSE THE CORRECT FACTS TO THE COURT. B 1/16 65829543_8 I-B-155 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Courts' Factual Misunderstanding Based on the Absence of Material Facts Hypothetical 18 You know that you cannot knowingly make false statements to courts, but you now face a more subtle issue. You have scheduled a TRO hearing for tomorrow morning -- and you do not know whether the adversary or his lawyer will be there. Your client has told you about several material and very damaging facts that would weaken your effort to obtain a TRO. Your client has asked you not to disclose those facts to the court if the other side fails to raise them. (a) What do you do if the adversary and her lawyer appear at the hearing? (A) You must disclose the adverse material facts to the court if the other side does not. (B) You may disclose the adverse material facts to the court if the other side does not, but you don't have to. (C) You may not disclose the adverse material facts to the court if the other side does not, unless your client consents. (C) YOU MAY NOT DISCLOSE THE ADVERSE MATERIAL FACTS TO THE COURT IF THE OTHER SIDE DOES NOT, UNLESS YOUR CLIENT CONSENTS (b) (A) What do you do if the adversary and her lawyer do not appear at the hearing? (A) You must disclose the adverse material facts to the court. (B) You may disclose the adverse material facts to the court, but you don't have to. (C) You may not disclose the adverse material facts to the court, unless your client consents. YOU MUST DISCLOSE THE ADVERSE MATERIAL FACTS TO THE COURT Analysis Lawyers' obligation or discretion to disclose unfavorable facts to courts depends in most jurisdictions on whether an adversary is present. 65829543_8 I-B-156 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In the normal adversarial proceeding, lawyers have very little obligation to disclose unfavorable facts. The very nature of the adversarial proceeding requires each side to use available discovery to uncover helpful facts, then present them to the court or the fact finder. It is usually inconceivable that a court would require a lawyer to voluntarily alert the other side to facts that might assist its case. Of course, litigants must respond to discovery, unless the court sustains an objection. And most rules require litigants to supplement discovery if they learn of responsive facts. But generally lawyers have no duty to assist their adversaries by voluntarily telling them about harmful facts. Still, some courts have sanctioned lawyers for remaining silent. In re Alcorn, 41 P.3d 600, 603, 609 (Ariz. 2002) (assessing a situation in which a plaintiff's lawyer pursuing a malpractice case against a hospital and a doctor faced a difficult situation after the hospital obtained summary judgment; condemning the lawyer's secret arrangement with the doctor that the plaintiff would proceed against the doctor (who agreed not to object to any cross-examination by the plaintiff's lawyer), but under which the plaintiff would voluntarily dismiss his claim against the doctor at the close of the plaintiffs' case; noting that "[t]he purpose of the agreement, as we understand it, was to 'educate' the trial judge as to the Hospital's culpability so he could use this background in deciding whether to reconsider his grant of summary judgment to the Hospital"; noting that the plaintiff's trial against the doctor took ten days over a two- or three-week period; calling the trial a "charade" that was "patently illegitimate"; suspending the lawyer from the practice of law for six months). Gum v. Dudley, 505 S.E.2d 391, 402-03 (W. Va. 1997) (assessing a situation in which a defendant's lawyer did not disclose a secret settlement agreement with another party, and remained silent when a lawyer for another party advised the court that none of the parties had entered into any settlement agreements; "First, Mr. Janelle's [lawyer] silence without doubt invoked a material misrepresentation. The question propounded by the circuit court, during the hearing, was whether or not any of the parties had entered into a settlement agreement. Counsel for the Dudleys responded that no settlement agreement existed between the defendants. Unbeknownst to the Dudleys' counsel, a settlement agreement between defendants Baker and 65829543_8 I-B-157 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Ayr had occurred. Mr. Janelle was fully aware of the fact, but remained silent. This silence created a misrepresentation. The misrepresentation was axiomatically material, insofar as a hearing was held based upon Mrs. Gum's specific motion to determine if any of the defendants had entered into a settlement agreement. Therefore, Mr. Janelle's silence invoked the material representation that no settlement agreement existed between any of the defendants. Second, the record is clear that the trial court believed as true the misrepresentation by Mr. Janelle. Third, Mr. Janelle intended for his misrepresentation to be acted upon. That is, he wanted the trial court to proceed with the jury trial. Fourth, the trial court acted upon the misrepresentation by proceeding with the trial without any further inquiry into the settlement. Finally, Mr. Janelle's misrepresentation damaged the judicial process."; remanding for imposition of sanctions against the lawyer). Nat'l Airlines, Inc. v. Shea, 292 S.E.2d 308, 310-311 (Va. 1982) (assessing a situation in which a plaintiff's lawyer did not advise the court that the defendant airline's lawyer thought that the case was being held in abeyance; explaining that the plaintiff's lawyer did not respond to the defendant's lawyer expressing this understanding, did not advise the court of the understanding, and instead obtained a default judgment and levied on the airline's property; holding that the plaintiff's lawyer "had a duty to be above-board with the court and fair with opposing counsel"; also noting that the plaintiff's lawyer "failed to call the court's attention to the applicability of the Warsaw Convention, which he knew to be adverse to his clients' position"; setting aside the default judgment "on the ground of fraud upon the court"). It can be difficult to point to any provision in the ethics rules requiring disclosure in many situations like this -- although in some contexts a court could justifiably find some implicit misrepresentation that the lawyer should have corrected. In most situations involving courts sanctioning of lawyers for their silence, the courts rely on their inherent power to oversee proceedings. These courts apparently rely on their role in assuring justice and seeking the truth. Some might think that such judicial actions risk changing the judicial role from a neutral umpire to a more active participant in the adversarial process, but lawyers who ignore this possible judicial reaction do so at their own risk. 65829543_8 I-B-158 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) At least one jurisdiction takes a different approach -- sometimes requiring lawyers to disclose unfavorable facts even in an adversial proceeding. A lawyer shall not knowingly . . . fail to disclose to the tribunal a material fact knowing that the omission is reasonably certain to mislead the tribunal, except that it shall not be a breach of this rule if the disclosure is protected by a recognized privilege or is otherwise prohibited by law. New Jersey Rule 3.3(a)(5) (emphasis added). This apparently unique provision requires lawyers to disclose unfavorable facts if the court might be misled in the absence of knowing those unfavorable facts. Notably, the New Jersey Rule's exception to this disclosure duty is much more limited than one might think at first blush. The Rule allows lawyers to refrain from disclosing material facts protected by "a recognized privilege" (presumably such as the attorney-client privilege or the work product doctrine). However, those evidentiary protections are far more narrow than the ethics confidentiality duty. This means that the New Jersey rule may require lawyers to disclose material facts that deserve only confidentiality protection, but not privilege or work product protection. (b) Interestingly, the ethics rules are dramatically different in ex parte proceedings. In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse. ABA Model Rule 3.3(d). A comment to ABA Model Rule 3.3 explains the basis for this important distinction. 65829543_8 I-B-159 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Ordinarily, an advocate has the limited responsibility of presenting one side of the matters that a tribunal should consider in reaching a decision; the conflicting position is expected to be presented by the opposing party. However, in any ex parte proceeding, such as an application for a temporary restraining order, there is no balance of presentation by opposing advocates. The object of an ex parte proceeding is nevertheless to yield a substantially just result. The judge has an affirmative responsibility to accord the absent party just consideration. The lawyer for the represented party has the correlative duty to make disclosures of material facts known to the lawyer and that the lawyer reasonably believes are necessary to an informed decision. ABA Model Rule 3.3 cmt. [14] (emphases added). Thus, lawyers appearing ex parte must advise the court of all material facts -- even harmful facts. This dramatic difference from the situation in an adversarial proceeding highlights the basic nature of the adversarial system. The Restatement takes the same approach. In representing a client in a matter before a tribunal, a lawyer applying for ex parte relief or appearing in another proceeding in which similar special requirements of candor apply must . . . disclose all material and relevant facts known to the lawyer that will enable the tribunal to reach an informed decision. Restatement (Third) of Law Governing Lawyers § 112(2) (2000). A comment mirrors the ABA's explanation. An ex parte proceeding is an exception to the customary methods of bilateral presentation in the adversary system. A potential for abuse is inherent in applying to a tribunal in absence of an adversary. That potential is partially redressed by special obligations on a lawyer presenting a matter ex parte. Subsection (1) prohibits ex parte presentation of evidence the advocate believes is false. Subsection (2) is affirmative, 65829543_8 I-B-160 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) requiring disclosure of all material and relevant facts known to the lawyer that will enable the tribunal to make an informed decision. Relevance is determined by an objective standard. To the extent the rule of this Section requires a lawyer to disclose confidential client information, disclosure is required by law within the meaning of § 62. On the other hand, the rule of this Section does not require the disclosure of privileged evidence. Restatement (Third) of Law Governing Lawyers § 112 cmt. b (2000). Not surprisingly, court decisions take the same approach. In re Mullins, 649 N.E.2d 1024, 1026 (Ind. 1995) (reprimanding a lawyer for not "sufficiently or fully advising [the court in an ex parte proceeding] of all relevant aspects of the pending parallel proceeding" in another court); Time Warner Entm't Co. v. Does, 876 F. Supp. 407, 415 (E.D.N.Y. 1994) ("In an ex parte proceeding, in which the adversary system lacks its usual safeguards, the duties on the moving party must be correspondingly greater."). In some situations, bars have had to determine if they should treat a proceeding as an adversarial proceeding or as an ex parte proceeding. For instance, in North Carolina LEO 98-1 (1/15/99), a lawyer represented a claimant seeking Social Security disability benefits. The bar explained the setting in which the lawyer would be operating. Social Security hearings before an ALJ are considered nonadversarial because no one represents the Social Security Administration at the hearing. However, prior to the hearing, the Social Security Administration develops a written record which is before the ALJ at the time of the hearing. In addition, the ALJ has the authority to perform an independent investigation of the client's claim. 65829543_8 I-B-161 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The North Carolina Bar explained that before the hearing, the claimant's treating physician sent the claimant's lawyer a letter indicating that the physician "believes that the claimant is not disabled." Id. Interestingly, the North Carolina Bar apparently assumed that a lawyer would not have to disclose this material fact in an adversarial proceeding (hence the debate about whether the administrative hearing should be treated as an adversarial or as an ex parte proceeding). The North Carolina Bar explained that [a]lthough it is a hallmark of good lawyering for an advocate to disclose adverse evidence and explain to the court why it should not be given weight, generally an advocate is not required to present facts adverse to his or her client. Id. The North Carolina Bar concluded that the administrative hearing should be considered as an adversarial proceeding -- which meant that the lawyer did not have to submit the treating physician's adverse letter to the administrative law judge at the hearing. [A] Social Security disability hearing should be distinguished from an ex parte proceeding such as an application for a temporary restraining order in which the judge must rely entirely upon the advocate for one party to present the facts. In a disability hearing, there is a "balance of presentation" because the Social Security Administration has an opportunity to develop the written record that is before the ALJ at the time of hearing. Moreover, the ALJ has the authority to make his or her own investigation of the facts. When there are no "deficiencies of the adversary system," the burden of presenting the case against a finding of disability should not be put on the lawyer for the claimant. Id. This is an interesting result. Although the legal ethics opinion is not crystal-clear, it would seem that a lawyer pursuing disability benefits after receiving a doctor's letter 65829543_8 I-B-162 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) indicating that the client is not disabled risks violating the general prohibition on lawyers advancing frivolous claims. ABA Model Rule 3.1. Even if maintaining silence about the doctor's letter does not run afoul of that ethics provision, it would seem almost inevitable that the lawyer would somehow explicitly or implicitly make deceptive comments to the court while seeking disability benefits for a client that the lawyer now knows is not disabled. Surprisingly, at least one jurisdiction's ethics rules do not contain this exception for ex parte proceedings. D.C. Rule 3.3. BEST ANSWER The best answer to (a) is (C) YOU MAY NOT DISCLOSE THE ADVERSE MATERIAL FACTS TO THE COURT IF THE OTHER SIDE DOES NOT, UNLESS YOUR CLIENT CONSENTS; the best answer to (b) is (A) YOU MUST DISCLOSE THE ADVERSE MATERIAL FACTS TO THE COURT. B 1/16 65829543_8 I-B-163 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Courts' Legal Misunderstanding Based on Litigants' Failure to Cite Relevant Law Hypothetical 19 Through several years of extensive discovery and frequent hearings in state court litigation, you and your colleagues have always been more diligent than your adversary's lawyers. The latest upcoming hearing is no exception. Your adversary's brief fails to cite several unfavorable decisions that one of your brightest new associates has found. One of the unfavorable decisions is from the circuit court where you are litigating, and another even worse decision is from a circuit court in another part of your state. When you advised your client of the bad decisions, she asked you to keep that research confidential -- relying on some of your own statements to her about the breadth of your state's confidentiality duty. (a) What do you do about the unfavorable law from your circuit court? (A) You must disclose the adverse law to the court. (B) You may disclose the adverse law to the court, but you don't have to. (C) You may not disclose the adverse law to the court, unless your client consents. (A) (b) YOU MUST DISCLOSE THE ADVERSE LAW TO THE COURT What do you do about the unfavorable law from the other circuit court? (A) You must disclose the adverse law to the court. (B) You may disclose the adverse law to the court, but you don't have to. (C) You may not disclose the adverse law to the court, unless your client consents. (B) YOU MAY DISCLOSE THE ADVERSE LAW TO THE COURT, BUT YOU DON'T HAVE TO (PROBABLY) 65829543_8 I-B-164 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Analysis (a)-(b) As in so many other areas, determining a lawyer's duty to advise tribunals of adverse authority involves two competing principles: (1) a lawyer's duty to act as a diligent advocate for the client, forcing the adversary's lawyer to find any holes, weaknesses, contrary arguments, or adverse case law that would support the adversary's case; and (2) the institutional integrity of the judicial process, and the desire to avoid courts' adoption of erroneous legal principles. Not surprisingly, this issue has vexed bars and courts trying to balance these principles. Furthermore, their approach has varied over time. This issue involves more than ethics rules violations. Courts have pointed to a variety of sanctions for lawyers who violate the courts' interpretation of their disclosure obligation.1 1 Precision Specialty Metals, Inc. v. United States, 315 F.3d 1346 (Fed. Cir. 2003) (affirming a Rule 11 sanction against a lawyer who violated the disclosure obligation); Tyler v. State, 47 P.3d 1095 (Alaska Ct. App. 2001) (denying a petition for rehearing of a rule fining lawyer for violating the rule); In re Thonert, 733 N.E.2d 932 (Ind. 2000) (issuing a public reprimand against a lawyer who violated a disclosure obligation); United States v. Crumpton, 23 F. Supp. 2d 1218, 1219 (D. Colo. 1998) (finding that a lawyer violated the Colorado ethics rules requiring such disclosure; "I find that it was inappropriate for Crumpton's counsel to file her motion and not mention contrary legal authority that was decided by a Judge of this Court when the existence of such authority was readily available to counsel. Counsel in legal proceedings before this Court are officers of the court and must always be honest, forthright and candid in all of their dealings with the Court. To do otherwise, demeans the court as an institution and undermines the unrelenting goal of this Court to administer justice."); Dilallo ex rel. Dilallo v. Riding Safely, Inc., 687 So. 2d 353, 355 (Fla. Dist. Ct. App. 1997) (reversing summary judgment granted by the trial court in favor of the lawyer who had not disclosed adverse authority, and remanding); Massey v. Prince George's Cnty., 907 F. Supp. 138, 143 (S.D. Md. 1995) (issuing a show cause order against a lawyer who violated the disclosure obligation; "[T]he Court will direct defense counsel to show cause to the Court in writing within thirty (30) days why citation to the Kopf case was omitted from his Motion for Summary Judgment, oral argument, and indeed from any pleading or communication to date."); Dorso Trailer Sales, Inc. v. Am. Body & Trailer, Inc., 464 N.W.2d 551 (Minn. Ct. App. 1990) (vacating a judgment in favor of the lawyer who had violated his disclosure obligation, and remanding), aff'd in part and rev'd in part on other grounds, 482 N.W.2d 771 (Minn. 1992); Jorgenson v. Cnty. of Volusia, 846 F.2d 1350 (11th Cir. 1988) (upholding Rule 11 sanctions). 65829543_8 I-B-165 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ABA Approach The ABA's approach to this issue shows an evolving increase and later reduction in lawyers' disclosure duties to the tribunal. The original 1908 Canons contained a fairly narrow duty of candor to tribunals. In essence, the old Canon simply required lawyers not to lie about case law. The conduct of the lawyer before the Court and with other lawyers should be characterized by candor and fairness. It is not candid or fair for the lawyer knowingly to misquote the contents of a paper, the testimony of a witness, the language or the argument of opposing counsel, or the language of a decision or a textbook; or with knowledge of its invalidity, to cite as authority a decision that has been overruled, or a statute that has been repealed; or in argument to assert as a fact that which has not been proved, or in those jurisdictions where a side has the opening and closing arguments to mislead his opponent by concealing or withholding positions in his opening argument upon which his side then intends to rely. ABA Canons of Professional Ethics Canon 22 (1908) (emphases added). This provision essentially precluded affirmative misrepresentations of law to the tribunal. Twenty-seven years later, the ABA issued ABA LEO 146. Citing the lawyer's role as "officer of the court" and "his duty to aid the court in the due administration of justice," the ABA interpreted Canon 22 as requiring affirmative disclosure of "adverse" court decisions. Is it the duty of a lawyer appearing in a pending case to advise the court of decisions adverse to his client's contentions that are known to him and unknown to his adversary? .... 65829543_8 I-B-166 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) We are of the opinion that this Canon requires the lawyer to disclose such decisions to the court. He may, of course, after doing so, challenge the soundness of the decisions or present reasons which he believes would warrant the court in not following them in the pending case. ABA LEO 146 (7/17/35) (emphasis added). The ABA did not explain the reach of this duty, but certainly did not limit the disclosure obligation to controlling case law or even to controlling jurisdictions. The ABA visited the issue again fourteen years later. In ABA LEO 280, the ABA noted that a lawyer had asked the ABA "to reconsider and clarify the [Ethics] Committee's Opinion 146." The ABA expanded a lawyer's duty of disclosure beyond its earlier discussion. To be sure, the ABA began with a general statement of lawyers' duties to diligently represent their clients. The lawyer, though an officer of the court and charged with the duty of "candor and fairness," is not an umpire, but an advocate. He is under no duty to refrain from making every proper argument in support of any legal point because he is not convinced of its inherent soundness. Nor is he under any obligation to suggest arguments against his position. ABA LEO 280 (6/18/49). However, the ABA then dramatically expanded the somewhat vague disclosure obligation it had first adopted in LEO 146. We would not confine the Opinion [LEO 146] to "controlling authorities," -- i.e., those decisive of the pending case -- but, in accordance with the tests hereafter suggested, would apply it to a decision directly adverse to any proposition of law on which the lawyer expressly relies, which would reasonably be considered important by the judge sitting on the case. Of course, if the court should ask if there are any adverse decisions, the lawyer should make such frank disclosure as the questions seems [sic] to warrant. Close cases can obviously be suggested, particularly in the case of decisions 65829543_8 I-B-167 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) from other states where there is no local case in point . . . . A case of doubt should obviously be resolved in favor of the disclosure, or by a statement disclaiming the discussion of all conflicting decisions. Canon 22 should be interpreted sensibly, to preclude the obvious impropriety at which the Canon is aimed. In a case involving a right angle collision or a vested or contingent remainder, there would seem to be no necessity whatever of citing even all of the relevant decisions in the jurisdiction, much less from other states or by inferior courts. Where the question is a new or novel one, such as the constitutionality or construction of a statute, on which there is a dearth of authority, the lawyer's duty may be broader. The test in every case should be: Is the decision which opposing counsel has overlooked one which the court should clearly consider in deciding the case? Would a reasonable judge properly feel that a lawyer who advanced, as the law, a proposition adverse to the undisclosed decision, was lacking in candor and fairness to him? Might the judge consider himself misled by an implied representation that the lawyer knew of no adverse authority? Id. (emphases added). Thus, the ABA expanded lawyers' disclosure obligation to include any cases (even those from other states) that the court "should clearly consider in deciding the case." The ABA Model Code of Professional Responsibility DR:7-106(B)(1)2 (adopted in 1969) and the later ABA Model Rules of Professional Conduct (adopted in 1983) contain a much more limited disclosure duty. A lawyer shall not knowingly: . . . fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel. 2 ABA Model Code of Prof'l Responsibility DR 7-106(B)(1) (1980) ("In presenting a matter to a tribunal, a lawyer shall disclose: (1) Legal authority in the controlling jurisdiction known to him to be directly adverse to the position of his client and which is not disclosed by opposing counsel." (footnote omitted)). 65829543_8 I-B-168 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) ABA Model Rule 3.3(a)(2) (emphases added). Comment [4] of the Model Rules provides a fuller explanation. Legal argument based on a knowingly false representation of law constitutes dishonesty toward the tribunal. A lawyer is not required to make a disinterested exposition of the law, but must recognize the existence of pertinent legal authorities. Furthermore, as stated in paragraph (a)(2), an advocate has a duty to disclose directly adverse authority in the controlling jurisdiction that has not been disclosed by the opposing party. The underlying concept is that legal argument is a discussion seeking to determine the legal premises properly applicable to the case. ABA Model Rule 3.3 cmt. [4] (emphases added). The 1983 ABA Model Rules apparently presume that legal research and the resulting knowledge of adverse decisions are not subject to lawyers' confidentiality duty. However, that presumption stands on shaky ground. Under ABA Model Rule 1.6(a), lawyers may not "reveal information relating to the representation of a client" unless some exception applies. Legal research clearly uncovers "information relating to the representation of a client." The ABA Model Rules comment describing the broad scope of lawyers' confidentiality duty explains that [t]he confidentiality rule, for example, appies not only to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source. ABA Model Rule 1.6 cmt. [3] (emphasis added). That description seems to cover legal research. However, that Comment's next sentence explains that lawyers may not disclose "such information" -- "except as authorized or required by the Rules of Professional Conduct or other law." Id. (emphasis added). That Comment (as well as common 65829543_8 I-B-169 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) sense) means that lawyers' separate duty to disclose adverse authority trumps any confidentiality duty. The ABA explained some of its evolving approach in a legal ethics opinion decided shortly after the ABA adopted the Model Rules. In ABA Informal Op. 1505, the ABA dealt with a plaintiff's lawyer who had successfully defeated defendant's motion to dismiss a case based on a "recently enacted statute." [D]uring the pendency of the case, an appellate court in another part of the state, not supervisory of the trial court, handed down a decision interpreting the exact statute at issue in the motions to dismiss. The appellate decision, which controls the trial court until its own appellate court passes on the precise question involved, can be interpreted two ways, one of which is directly contrary to the holding of the trial court in denying the motions to dismiss. ABA Informal Op. 1505 (3/5/84) (emphasis added). The plaintiff's lawyer explained that the issue was not then before the court, but "may well be revived because the prior ruling was not a final, appealable order." Id. He asked the ABA whether he had to advise the trial court at that time, or whether he could "await the conclusion of the appeals process in the other case and the revival of the precise issue by the defendants" in his case. Id. The ABA indicated that the plaintiff's lawyer must "promptly" advise the court of the other decision. [T]he recent case is clearly "legal authority in the controlling jurisdiction" and, indeed, is even controlling of the trial court until such time as its own appellate court speaks to the issue. Under one interpretation of the decision, it is clearly "directly adverse to the position of the client." And it involves the "construction of a statute on which there is a dearth of authority." 65829543_8 I-B-170 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) .... While there conceivably might be circumstances in which a lawyer might be justified in not drawing the court's attention to the new authority until a later time in the proceedings, here no delay can be sanctioned. The issue is potentially dispositive of the entire litigation. His duty as an officer of the court to assist in the efficient and fair administration of justice compels plaintiff's lawyer to make the disclosure immediately. Id. (emphasis added). Thus, the ABA noted that ABA Model Rule 3.3(a)(3) required the plaintiff's lawyer to promptly disclose such a decision from the "controlling jurisdiction." Restatement Approach The Restatement takes essentially the same approach as the ABA Model Rules take, but with more explanation. In representing a client in a matter before a tribunal, a lawyer may not knowingly . . . fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position asserted by the client and not disclosed by opposing counsel. Restatement (Third) of Law Governing Lawyers § 111(2) (2000). The Restatement explains what the term "directly adverse" means in this context. A lawyer need not cite all relevant and adverse legal authority; citation of principal or representative "directly adverse" legal authorities suffices. In determining what authority is "directly adverse," a lawyer must follow the jurisprudence of the court before which the legal argument is being made. In most jurisdictions, such legal authority includes all decisions with holdings directly on point, but it does not include dicta. Restatement (Third) of Law Governing Lawyers § 111 cmt. c (2000) (emphasis added). Another comment explains that the duty covers statutes and regulations, as well as case law. 65829543_8 I-B-171 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) "Legal authority" includes case-law precedents as well as statues, ordinances, and administrative regulations. Id. cmt. d. The same comment discusses what the term "controlling jurisdiction" means. Legal authority is within the "controlling jurisdiction" according to the established hierarchy of legal authority in the federal system. In a matter governed by state law, it is the relevant state law as indicated by the established hierarchy of law within that state, taking into account, if applicable, conflict-of-laws rules. Ordinarily, it does not include decisions of courts of coordinate jurisdiction. In a federal district court, for example, a decision of another district court or of the court of appeals from another circuit would not ordinarily be considered authority from the controlling jurisdiction by the sitting tribunal. However, in those jurisdictions in which a decision of a court of coordinate jurisdiction is controlling, such a decision is subject to the rule of the Section. Id. (emphasis added). The Reporter's Note contains even a more specific definition of the decisional law falling under the obligation. Case-law precedent includes an unpublished memorandum opinion, . . . an unpublished report filed by a magistrate, . . . and an adverse federal habeas corpus ruling . . . . The duty to disclose such unpublished materials may be of great practical significance, because they are less likely to be discovered by the tribunal itself. . . . Such a requirement should not apply when the unpublished decision has no force as precedent. Nor should it apply, of course, in jurisdictions prohibiting citation of certain decisions of lower courts. Typical would be the rule found in some states prohibiting citation of intermediate-appellate-court decisions not approved for official publication. Id. Reporter's Note cmt. d (emphases added). A comment also explains the timing of a lawyer's obligation. The duty under Subsection (2) does not arise if opposing counsel has already disclosed the authority to the tribunal. If opposing counsel will have an opportunity to assert the adverse authority, as in a reply memorandum or brief, but 65829543_8 I-B-172 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) fails to do so, Subsection (2) requires the lawyer to draw the tribunal's attention to the omitted authority before the matter is submitted for decision. Id. cmt. c. Unfortunately, the Restatement's two illustrations do not provide much useful guidance. Illustration (1) involves a lawyer arguing to the court that the state law did not give an adversary a cause of action, even though the lawyer knew that a state law did just that. Illustration (2) involves a lawyer representing to a court that the lawyer had cited "all relevant decisions in point" -- despite knowing of another decision adverse to the lawyer's position. Id. illus. 1 & 2. Thus, those two illustrations involve lawyers affirmatively misrepresenting the state of the law when communicating to a tribunal. The illustrations do not explore the much more difficult situation -- involving a lawyer's failure to mention unhelpful case law, but not affirmatively telling the court that there is no contrary decisional law. Finally, a comment describes the various remedies available to courts hearing cases in which a lawyer falls short of this duty. Professional discipline . . . may be imposed for violating the rule of this Section. A lawyer may also be susceptible to procedural sanctions . . . , such as striking the offending brief, revoking the lawyer's right to appear before the tribunal, or vacating a judgment based on misunderstanding of the law. Failure to comply with this Section may constitute evidence relevant to a charge of abuse of process. Id. cmt. e. State Ethics Rules Most states follow the ABA Model Rules approach. 65829543_8 I-B-173 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Only one state appears to have explicitly indicated what the ABA Model Rules and most states presume -- that legal research does not fall within lawyers' confidentiality duty. "Confidential information" does not ordinarily include (i) a lawyer's legal knowledge or legal research or (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates. New York Rule 1.6(a) (emphasis added). Although most states follow the ABA Model Rules approach, some take a different approach. For instance, New York does not require disclosure of "legal authority in the controlling jurisdiction" that is adverse to the client, but instead requires disclosure of an apparently narrower range of adverse authority. A lawyer shall not knowingly . . . fail to disclose to the tribunal controlling legal authority known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel. New York Rule 3.3(a)(2) (emphasis added). Although New York's Comments do not explain the distinction between this approach and the ABA Model Rules' approach, it seems to be different. For instance, law from another state circuit or district might fall within the ABA Model Rules' definition of "legal authority in the controlling jurisdiction" (the state) -- but not the "controlling legal authority." In some states, various circuit courts at the trial or the appellate level take differing approaches to issues such as the required imminence of litigation required to claim work product protection. So in that setting, the ABA Model Rules would require lawyers to disclose a sister court's adverse authority, while the New York formulation would not. 65829543_8 I-B-174 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Another state uses a different formulation that seems to fall somewhere between the New York approach and the ABA Model Rules approach. A lawyer shall not knowingly . . . fail to disclose to the tribunal controlling legal authority in the subject jurisdiction known to the lawyer to be adverse to the position of the client and not disclosed by opposing counsel. Virginia Rule 3.3(a)(3) (emphasis added). As explained above, the ABA Model Rules require the disclosure of case law from the "controlling jurisdiction," not just "controlling" case law. Yet another jurisdiction takes a unique approach which is not obvious on its face. A lawyer shall not knowingly . . . [f]ail to disclose to the tribunal legal authority in the controlling jurisdiction not disclosed by opposing counsel and known to the lawyer to be dispositive of a question at issue and directly adverse to the position of the client. D.C. Rule 3.3(a)(3) (emphasis added). The reference to "legal authority in the controlling jurisdiction" follows the ABA Model Rules formulation, and presumably includes law that does not control in the case -- as does the language of other jurisdictions mentioned above. However, the unique phrase "known to the lawyer to be dispositive of a question at issue" would seem to exclude from lawyers' disclosure duty adverse authority that does not control in the case. In other words, legal authority that does not control in the case but is instead from a sister court (for example) would not be "dispositive of a question at issue" in the case. Case Law Courts analyzing lawyers' obligations to disclose adverse law have provided some guidance on a number of issues. 65829543_8 I-B-175 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Although all courts apparently agree that a lawyer's disclosure duty extends beyond just those cases that control the decision before the court, some courts take a remarkably broad approach. Several federal courts have continued to follow the old ABA approach -- essentially requiring lawyers to disclose to tribunals any adverse decisions that a reasonable lawyer would think the court would want to consider. In Smith v. Scripto-Tokai Corp., 170 F. Supp. 2d 533 (W.D. Pa. 2001), vacated by uncontested joint motion, Case No. 99-1707, 2002 U.S. Dist. LEXIS 11870 (W.D. Pa. June 14, 2002), the court explained the purpose of the disclosure obligation. The Rule serves two purposes. First, courts must rely on counsel to supply the correct legal arguments to prevent erroneous decisions in litigated cases. . . . Second, revealing adverse precedent does not damage the lawyerclient relationship because the law does not "belong" to a client, as privileged factual information does. . . . Counsel remains free to argue that the case is distinguishable or wrongly decided. Id. at 539 (emphasis added). The court then explained the difference between ABA LEO 280 (6/18/49) and the approach taken by the Pennsylvania Bar Association in April 2000. The court rejected the Pennsylvania Bar's approach in favor of the fifty-two-yearold ABA approach. The ABA explained that this Opinion [ABA LEO 280 (6/18/1949)] Opinion was not confined to authorities that were decisive of the pending case (i.e., binding precedent), but also applied to any "decision directly adverse to any proposition of law on which the lawyer expressly relies, which would reasonably be considered important by the judge sitting on the case.". . . We note that the Pennsylvania Bar Association's Pennsylvania Ethics Handbook § 7.3h1 (April 2000 ed.), opines that for a case to be "controlling," the opinion must be written by a court superior to the court hearing the matter, although it otherwise adopts the test set forth in the ABA Formal Opinion. 65829543_8 I-B-176 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Because both the Pennsylvania and ABA standards are premised upon what "would reasonably be considered important by the judge," we briefly explain why we prefer the ABA's interpretation. The reason for disclosing binding precedent is obvious: we are required to apply the law as interpreted by higher courts. Although counsel might legitimately argue that he was not required to disclose persuasive precedent such as Hittle under Pennsylvania's interpretation of Rule 3.3, informing the court of case law that is directly on-point is also highly desirable. ... In sum, the court is aware of the limitations on the duty of disclosure as interpreted by the Pennsylvania Bar Association. However, at least as applied to cases such as the one before the court, it would seem that the ABA position is by far the better reasoned one. Certainly, ABA Formal Opinion 280 comports more closely with this judge's expectation of candor to the tribunal. Id. at 539-40 (emphases added). Thus, the Western District of Pennsylvania's decision required lawyers to disclose far more than the current ABA Model Rules or the Pennsylvania ethics rules (as interpreted the previous year by Pennsylvania lawyers). An earlier federal district court decision implicitly took the same approach -criticizing a lawyer for not disclosing a decision issued by another state's court. In Rural Water System #1 v. City of Sioux Center, 967 F. Supp. 1483 (N.D. Iowa 1997), aff'd in part and rev'd in part on other grounds, 202 F.3d 1035 (8th Cir.), cert. denied, 531 U.S. 820 (2000), the court indicated that a lawyer should have advised the court of a Sixth Circuit case ("Scioto Water") -- but also the lower court decision in that case, and a Colorado Supreme Court Case. It is hardly the issue that the rules of professional conduct require only the disclosure of controlling authority, see, e.g., C.P.R. DR 7-106(B)(1), which the decision of a court of appeals in another circuit certainly is not. In this court's 65829543_8 I-B-177 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) view, the rules of professional conduct establish the "floor" or "minimum" standards for professional conduct, not the "ceiling"; basic notions of professionalism demand something higher. Although the decision of the Sixth Circuit Court of Appeals is obviously not controlling on this federal district court in the Eighth Circuit, RWS # 1's counsel's omission of the Scioto Water decision from RWS # 1's opening briefs smacks of concealment of obviously relevant and strongly persuasive authority simply because it is contrary to RWS # 1's position. RWS # 1's counsel did not hesitate to cite a decision of the Colorado Supreme Court on comparable issues, although that decision is factually distinguishable, probably because that decision appears to support RWS # 1's position. This selective citation of authorities, when so few decisions are dead on point, is not good faith advocacy, or even legitimate "hard ball." At best, it constitutes failure to confront and distinguish or discredit contrary authority, and, at worst, constitutes an attempt to hide from the court and opposing counsel a decision that is adverse to RWS # 1's position simply because it is adverse. ... This court does not believe that it is appropriate to disregard a decision of a federal circuit court of appeals simply because one of the litigants involved in the case in which the decision was rendered disagrees with that decision. Rather, non-controlling decisions should be considered on the strength of their reasoning and analysis, which is the manner in which this court will consider the decisions of the Sixth Circuit Court of Appeals and the U.S. District Court for the Southern District of Ohio in Scioto Water and the Colorado Supreme Court in City of Grand Junction v. Ute Water Conservancy Dist., 900 P.2d 81 (Colo. 1995) (en banc). RWS # 1's counsel should have brought the Scioto Water decision to this court's attention for consideration on that basis. Failure to cite obscure authority that is on point through ignorance is one thing; failure to cite authority that is on point and known to counsel, even if not controlling, is quite another. Id. at 1498 n.2 (emphases added). Thus, the Northern District of Iowa expected the lawyer to point out Colorado case law. 65829543_8 I-B-178 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) The court rejected what it called the lawyer's "rather self-serving assertion" that he did not have to cite one of the cases because a party in that case had filed a petition for certiorari with the United States Supreme Court. Id. The court's opinion also reveals (if one reads between the lines) that the lawyer seems to have been taken aback by the court's question at oral argument about the missing cases. At oral arguments, counsel for RWS # 1 acknowledged that he should have cited the Scioto Water [Scioto Cnty. Reg'l Water Dist. No. 1 Auth. V. Scioto Water, 103 F,3d 38 (6th Cir. 1996)] decision in RWS # 1's opening brief, and explained that his principal reason for not doing so was that he was disappointed and surprised by the result in that case. While the court is sympathetic with counsel's disappointment, such disappointment should not have prevented counsel from citing relevant authority. Counsel was given the opportunity at oral arguments in this case to explain his differences with the Sixth Circuit Court of Appeals and the U.S. District Court for the Southern District of Ohio In Scioto Water, and he ably did so. However, the point remains that counsel could, and this court believes should, have seized the opportunity to argue the defects counsel perceives in these decisions by including those decisions in RWS # 1's opening brief. Id. Despite this criticism, the court seems not to have sanctioned the lawyer -acknowledging that the lawyer's "omission, as a practical matter is slight." Id. Other courts have not been quite as blunt as this, but clearly expect lawyers to disclose decisions that the ABA Model Rules and the Restatement approach would not obligate the lawyers to disclose to the court. See, e.g., State v. Somerlot, 544 S.E.2d 52, 54 n.2 (W. Va. 2000) (explaining that it was "disturbed" that a litigant's lawyer had not included a United States Supreme Court decision in his briefing, without explaining whether the decision was directly adverse to the lawyer's position). 65829543_8 I-B-179 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Best Answer The best answer is (a) is (A) YOU MUST DISCLOSE THE ADVERSE LAW TO THE COURT; (b) is (B) YOU MAY DISCLOSE THE ADVERSE LAW TO THE COURT, BUT YOU DON'T HAVE TO (PROBABLY) B 1/16 65829543_8 I-B-180 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Courts' Factual Misunderstanding Based on Litigation Adversaries' Mistakes Hypothetical 20 You have been worried for weeks about your client's fate in an upcoming hearing. She had already been convicted of one check-kiting crime and the judge has a reputation for toughness on repeat offenders. To your surprise, when the judge asks the prosecutor if your client has any prior convictions, the prosecutor tells the judge that there have been no prior convictions. Your mind starts to race as you consider what you should do. (a) What do you do? (A) You must disclose the prosecutor's mistake to the court. (B) You may disclose the prosecutor's mistake to the court, but you don't have to. (C) You may not disclose the prosecutor's mistake to the court, unless your client consents. (C) YOU MAY NOT DISCLOSE THE PROSECUTOR'S MISTAKE TO THE COURT, UNLESS YOUR CLIENT CONSENTS (PROBABLY) (b) If the prosecutor turns to your client and asks "Right?" may you and your client remain silent? (A) YES (PROBABLY) (c) If the judge asks "Is that right?" may you and your client remain silent? (B) NO (PROBABLY) Analysis Lawyers face a very difficult dilemma when dealing with a court's mistaken reliance on an adversary's innocent misstatement. 65829543_8 I-B-181 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) To serve their clients, lawyers may wish to leave the court's mistake uncorrected. However, lawyers would also justifiably worry that judges would think less of them by allowing the judge to make rulings or take other actions based on a mistake. Lawyers must be careful not to let those worries outweigh their duty to diligently serve a current client -- because lawyers must place the current client's interests above the lawyer's own reputational interest or their desire to avoid the judge's doubts about the lawyer's ability to represent future clients. In 1951, Boston lawyer Charles Curtis wrote a law review about lawyers' duty to advocate for their clients. Charles P. Curtis, The Ethics of Advocacy, 4 Stan. L. Rev. 3 (Dec. 1951). Among other things, Curtis explained lawyers had no duty to correct a court's mistaken understanding of the facts. I have said that a lawyer may not lie to the court. But it may be a lawyer's duty not to speak. Let me give you a case from the autobiography of one of the most distinguished and most conscientious lawyers I or any other man has ever know, Samuel Williston. In his autobiography, Life and Law, he tells of one of his early cases. His client was sued in some financial matter. The details of the claim are not important. Willston, of course, at once got his client's letter file and went through it painstakingly, sorting, arranging, and collating it. The letters, we may well believe, told the whole story, as they usually do in such a case. Trial approached, but the plaintiff's lawyers did not either demand to see the correspondence, nor ask for their production. "They did not demand their production and we did not feel bound to disclose them." At the close of the trial, "In the course of his remarks the Chief Justice stated as one reason for his decision a supposed fact which I knew to be unfounded. I had in front of me a letter that showed his error. Though I have no doubt of the propriety of my behavior in keeping silent, I was somewhat uncomfortable at the time." 65829543_8 I-B-182 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Id. at 9-10 (emphases added) (footnote omitted). Curtis acknowledged that in contrast to this situation, lawyers must advise the court about adverse law. In 1953, an ABA legal ethics opinion emphasized lawyers' confidentiality duty. In ABA LEO 287 (6/27/83),1 the ABA dealt with the several scenarios involving a criminal sentencing.2 1 ABA LEO 287 (6/27/53) (analyzing two situations, one of which involved a client's admitted perjury and the other involved a court's error about a client's criminal record; analyzing the following scenario: "A convicted client stands before the judge for the sentence. The custodian of criminal records indicates to the court that the defendant has no record. The court thereupon says to the defendant, 'You have no criminal record, so I will put you on probation.' Defense counsel knows by independent investigation or from his client that his client in fact has a criminal record and that the record clerk's information is incorrect. Is it the duty of defense counsel to disclose to the court the true facts as to his client's criminal record? . . . Suppose, under the above circumstances, that the judge before disposing of the case asks the defendant himself whether he has a criminal record and the defendant answers that he has none. Is it the duty of defense counsel to disclose the court the true facts as to his client's criminal record?"; "Turning to the second inquiry, relative to the convicted client up for sentence, whose lawyer sees the court put him on probation by reason of the court's misinformation as to his criminal record, known to the lawyer: If the client's criminal record was communicated by him to his counsel when seeking professional advice from him, Canon 37 would prevent its disclosure to the court unless the provisions of Canons 22, 29 and 41 require this. If the court asks the defendant whether he has a criminal record and he answers that he has none, this, although perhaps not technical perjury, for the purposes of the present question amounts to the same thing. Despite this, we do not believe the lawyer justified in violating his obligation under Canon 37. He should, in due course, endeavor to persuade the client to tell the court the truth and if he refuses to do so should sever his relations with the client, but should not violate the client's confidence. We yield to none in our insistence on the lawyer's loyalty to the court of which he is an officer. Such loyalty does not, however, consist merely in respect for the judicial office and candor and frankness to the judge. It involves also the steadfast maintenance of the principles which the courts themselves have evolved for the effective administration of justice, one of the most firmly established of which is the preservation undisclosed of the confidences communicated by his clients to the lawyer in his professional capacity. If the fact of the client's criminal record was learned by the lawyer without communication, confidential or otherwise, from his client, or on his behalf, Canon 37 would not be applicable, and the only problem would be as to the conflicting loyalties of the lawyer on the one hand to represent his client with undivided fidelity and not to divulge his secrets (Canon 6), and on the other to treat the court in every case in which he appears as counsel, with the candor and fairness (Canon 22) which the court has the right to expect of him as its officer. In this case we deem the following considerations applicable. If the court asks the lawyer whether the clerk's statement is correct, the lawyer is not bound by fidelity to the client to tell the court what he knows to be an untruth, and should ask the court to excuse him from answering the question, and retire from the case, though this would doubtless put the court on further inquiry as to the truth. Even, however, if the court does not directly ask the lawyer this question, such an inquiry may well be implied from the circumstances, including the lawyer's previous relations with the court. The situation is analogous to that discussed in our Opinion 280 where counsel knows of an essential decision not cited by his opponent and where his silence might reasonably be regarded by the Court as an implied representation by him that he knew of no such authority. If, under all the circumstances, the lawyer believes that the court relies on him as corroborating the correctness of the statement by the clerk or by the client that the client has no criminal record, the lawyer's duty of candor 65829543_8 I-B-183 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) In the first scenario, the court mistakenly believed that the lawyer's client had no previous record, based on a court employee's incorrect statement to the court: [a] convicted client stands before the judge for the sentence. The custodian of criminal records indicates to the court that the defendant has no record. The court thereupon says to the defendant, 'You have no criminal record, so I will put you and fairness to the court requires him, in our opinion, to advise the court not to rely on counsel's personal knowledge as to the facts of the client's record. While doubtless a client who would permit the court, because of misinformation, to be unduly lenient to him would be indignant when his lawyer volunteered to ruin his chance of escaping a jail sentence, such indignation would be unjustified since the client's bad faith had made the lawyer's action necessary. The indignation of the court, however, on learning that the lawyer had deliberately permitted him, where no privileged communication is involved, to rely on what the lawyer knew to be a misapprehension of the true facts, would be something that the lawyer could not appease on the basis of loyalty to the client. No client may demand or expect of his lawyer, in the furtherance of his cause, disloyalty to the law whose minister he is (Canon 32), or 'any manner of fraud or chicane.' (Canon 15). If the lawyer is quite clear that the court does not rely on him as corroborating, by his silence, the statement of the clerk or of his client, the lawyer is not, in our opinion, bound to speak out."; a dissenting opinion stated as follows: "We can not subscribe to the majority opinion. Canon 29 expressly provides: The counsel upon the trial of the cause in which perjury has been committed owe it to the profession and to the public to bring the matter to the knowledge of the prosecuting authorities. No good reason exists for ignoring the plain and unmistakable mandate of this Canon. Canon 29 is based upon sound public policy which singles out perjury because perjury strikes at the roots of our American system of jurispurdence [sic]. Perjured testimony poisons the well-springs and makes a mockery of justice. Canon 29 enjoins lawyers, as officers of the court, to protect the cause of justice and to assist public authorities in stamping out perjury, no matter by whom committed. The sweeping provisions of Canon 29 do not give a lawyer his choice to report only that perjury which is committed by the opposite party, but requires him to report any perjury, including that committed by his own client or witnesses. No exception is made in Canon 29 as to the manner in which the knowledge of perjury is acquired by the lawyer. No longer is a trial supposed to be a 'Game' to be played by unscrupulous laymen with lawyers as mere pawns. Canon 29 seeks to make a trial an organized search for the truth -- charging the lawyers with the duty of seeing that no litigant prevails through perjury."; "In the second set of facts, a convicted client stood before the court for sentence. At this critical juncture the court sought information as to whether the defendant had a criminal record. The clerk informed the court that the defendant had no criminal record. The lawyer knew that his client did have a criminal record. Under these circumstances can a lawyer stand idly by in open court and permit the court to be deceived at a time when the lawyer knows that the court is relying upon an untrue statement? In Opinion 280 it was held that a lawyer could not remain silent when he knows of an essential decision not cited by his opponent, but is required to volunteer such citation no matter whether it affects his client adversely. We think that Canons 29, 41, 15 and 22 require the lawyer to see that his client gives the court the truth about his criminal record or the lawyer must do so himself. Specifically, we think the answer should be in the affirmative to all three questions propounded in the second inquiry. The method by which the lawyer brings the true information to the knowledge of the court is a mere detail. Whether the lawyer asks for a recess to advise privately with his client about disclosing the truth, or whether the lawyer makes the suggestion to his client in open court, is merely a choice of procedure. In our opinion the lawyer's duty under these circumstances is to see that his client reveals the truth to the court about his criminal record, and if the client refuses, the lawyer's duty to do so becomes mandatory under Canons 29 and 41."). 2 ABA LEO 287 also addressed as separate scenario in which a client committed perjury in seeking a divorce. 65829543_8 I-B-184 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) on probation.' Defense counsel knows by independent investigation or from his client that his client in fact has a criminal record and that the record clerk's information is incorrect. Is it the duty of defense counsel to disclose to the court the true facts as to his client's criminal record? ABA LEO 287 (6/27/53) (emphasis added). The majority held that in this first scenario (where the court did not ask anyone to confirm the court's understanding), the lawyer could remain silent. If the lawyer is quite clear that the court does not rely on him as corroborating, by his silence, the statement of the clerk or of his client, the lawyer is not, in our opinion, bound to speak out. Id. The second scenario involved the lawyer's client affirmatively lying to the court in response to the court's direct question to the client about his criminal record. [s]uppose, under the above circumstances, that the judge before disposing of the case asks the defendant himself whether he has a criminal record and the defendant answers that he has none. Is it the duty of defense counsel to disclose the court the true facts as to his client's criminal record? Id. (emphasis added). The majority held that the lawyer could remain silent even in this situation. If the court asks the defendant whether he has a criminal record and he answers that he has none, this, although perhaps not technical perjury, for the purposes of the present question amounts to the same thing. Despite this, we do not believe the lawyer justified in violating his obligation under Canon 37. He should, in due course, endeavor to persuade the client to tell the court the truth and if he refuses to do so should sever his relations with the client, but should not violate the client's confidence. 65829543_8 I-B-185 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Id. (emphasis added).3 The third scenario involved a court directly asking the defendant's lawyer about the defendant's criminal record. Assume further a situation in which the judge following the conviction asks the defendant's lawyer whether his client has a criminal record. The majority offered a more subtle analysis of this third scenario. In this case we deem the following considerations applicable. If the court asks the lawyer whether the clerk's statement is correct, the lawyer is not bound by fidelity to the client to tell the court what he knows to be an untruth, and should ask the court to excuse him from answering the question, and retire from the case, though this would doubtless put the court on further inquiry as to the truth. Even, however, if the court does not directly ask the lawyer this question, such an inquiry may well be implied from the circumstances, including the lawyer's previous relations with the court. The situation is analogous to that discussed in our Opinion 280 where counsel knows of an essential decision not cited by his opponent and where his silence might reasonably be regarded by the Court as an implied representation by him that he knew of no such authority. If, under all the circumstances, the lawyer believes that the court relies on him as corroborating the correctness of the statement by the clerk or by the client that the client has no criminal record, the lawyer's duty of candor and fairness to the court requires him, in our opinion, to advise the court not to rely on counsel's personal knowledge as to the facts of the client's record. While doubtless a client who would permit the court, because of misinformation, to be unduly lenient to him would be indignant when his lawyer volunteered to ruin his chance of escaping a jail sentence, such indignation would be unjustified since the client's bad faith had made the lawyer's action necessary. The indignation of the court, however, on learning that the lawyer had deliberately permitted him, where no privileged communication is 3 In 1987, a ABA legal ethics opinion explained that a lawyer in this situation would have to correct the client's false statement to the court, based on the 1983 ABA Model Rules. ABA LEO 353 (4/20/87). 65829543_8 I-B-186 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) involved, to rely on what the lawyer knew to be a misapprehension of the true facts, would be something that the lawyer could not appease on the basis of loyalty to the client. No client may demand or expect of his lawyer, in the furtherance of his cause, disloyalty to the law whose minister he is (Canon 32), or 'any manner of fraud or chicane.' (Canon 15). Id. (emphases added). Thus, the ABA LEO 287 majority suggested that the lawyer try to dodge the court's question. And the majority also held that the lawyer must affirmatively "advise the court not to rely on counsel's personal knowledge as to the facts of the client's record" -- if the lawyer believes that the court is relying on the lawyer's silence as "corroborating the correctness of the statement by the clerk or by the client that the lawyer has no criminal record." ABA LEO 287 did not provide any guidance to lawyers attempting to determine if the court was relying on their silence in that way. This is unfortunate, because it would seem extremely difficult for lawyers to determine whether courts are relying on their silence as some corroboration of a clerk's misstatement to the court. An ABA LEO 287 a dissenting opinion contended that the lawyer must affirmatively disclose the client's criminal record in all three of the scenarios: (1) when a court employee provided information to the court that the lawyer knew to be inaccurate; (2) when the client affirmatively lied to the court about the lack of criminal record; and (3) when the court either asked the defendant's lawyer whether the defendant had a criminal record, or apparently relied on the lawyer's silence as corroboration that the defendant did not have a criminal record. 65829543_8 I-B-187 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) [A] convicted client stood before the court for sentence. At this critical juncture the court sought information as to whether the defendant had a criminal record. The clerk informed the court that the defendant had no criminal record. The lawyer knew that his client did have a criminal record. Under these circumstances can a lawyer stand idly by in open court and permit the court to be deceived at a time when the lawyer knows that the court is relying upon an untrue statement? In Opinion 280 it was held that a lawyer could not remain silent when he knows of an essential decision not cited by his opponent, but is required to volunteer such citation no matter whether it affects his client adversely. We think that Canons 29, 41, 15 and 22 require the lawyer to see that his client gives the court the truth about his criminal record or the lawyer must do so himself. Specifically, we think the answer should be in the affirmative to all three questions propounded in the second inquiry. The method by which the lawyer brings the true information to the knowledge of the court is a mere detail. Whether the lawyer asks for a recess to advise privately with his client about disclosing the truth, or whether the lawyer makes the suggestion to his client in open court, is merely a choice of procedure. In our opinion the lawyer's duty under these circumstances is to see that his client reveals the truth to the court about his criminal record, and if the client refuses, the lawyer's duty to do so becomes mandatory under Canons 29 and 41 (emphasis added). Id. (emphases added). Over thirty years later, the ABA analyzed the same three scenarios under the 1983 ABA Model Rules. ABA LEO 353 (4/20/87). ABA LEO 353 came to a different conclusion about the second scenario -- in which the lawyer's client explicitly lied in response to the court's question to him about his criminal record. Relying on ABA Model Rule 3.3, ABA LEO 353 explained that [w]hen the lawyer cannot persuade the client to rectify the perjury, [the lawyer must] disclose the client's false statement to the tribunal. 65829543_8 I-B-188 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Id. The other two scenarios involved more subtle issues -- because they did not involve the lawyer's client flatly lying to the court. Instead, they involved the court's misunderstanding based on a court clerk's unintentional misstatement to the court, or the lawyer's failure to directly respond to the court's question to the lawyer about the client's criminal record. Thus, in those scenarios a third party (the court) operated under a misunderstanding through no fault of the client or the lawyer. ABA LEO 353 came to the same conclusion about the first and the third scenarios addressed in the earlier ABA LEO 287. In the first scenario, [t]he judge is told by the custodian of criminal records that the defendant has no criminal record and the lawyer knows this information is incorrect based on his own investigation or from his client's disclosure to him. Id. ABA LEO 353 explained that in ABA LEO 287's conclusion that the lawyer must remain silent in that setting [i]s still valid under the Model Rules, since there has been no client fraud or perjury, and, therefore, the lawyer is prohibited under Rule 1.6, from disclosing information relating to the representation. Id. ABA LEO 353 described the third scenario from the earlier ABA LEO 287 as follows: the judge asks the defendant's lawyer whether his client has a criminal record. 65829543_8 I-B-189 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Id. Interestingly, ABA LEO 353 lumped that scenario in with the first scenario -- finding that the lawyer may not disclose the client's criminal record to the court. In situations (1) and (3) Opinion 287 is still valid under the Model Rules, since there has been no client fraud or perjury, and, therefore, the lawyer is prohibited under Rule 1.6 from disclosing information relating to the representation. Id. In a footnote, ABA LEO 353 provided some guidance to a lawyer put in this awkward position. Although in situation (3), where the court puts a direct question to the lawyer, the lawyer may not reveal the client's confidences, the lawyer, also, must not make any false statements of fact to the court. Formal Opinion 287 advised lawyers facing this dilemma to ask the court to excuse the lawyer from answering the question. The Committee can offer no better guidance under the Model Rules, despite the fact that such a request by the lawyer most likely will put the court on further inquiry, as Opinion 287 recognized. Id. at n5 (emphasis added). In what presumably was a deliberate move, ABA LEO 353 did not address ABA LEO 287's discussion of the lawyer's obligation (as ABA LEO 287 put it) "even . . . if the court does not directly ask the lawyer" about the client's criminal record, but rather if "such an inquiry may well be implied from the circumstances, including the lawyer's previous relations with the court." As explained above, ABA LEO 287 explained that the lawyer must affirmatively "advise the court not to rely on counsel's personal knowledge as to the facts of the client's record" -- if 65829543_8 I-B-190 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) the lawyer believes that the court relies on him as corroborating the correctness of the statement by the clerk or by the client that the client has no criminal record. ABA LEO 287. ABA LEO 353 presumably would come to the same conclusion as the earlier ABA LEO 287. A lawyer in that situation does not have to disclose the client's criminal record, but must affirmatively warn the court not to rely on the lawyer's personal knowledge of the client's criminal record -- not just if the court directly asks the lawyer, but also in a situation where the lawyer hears the court employee providing inaccurate information to the court. The older ABA LEO 287 did not provide any useful guidance to lawyers trying to determine if courts were relying on the lawyer's silence as some collaboration of the court clerk's misstatement to the court. Perhaps ABA LEO 353 did not know what to say about that either, so it simply ignored that part of the earlier opinion. This silence is just as unfortunate as the earlier ABA LEO 287's failure to explain when lawyers must speak up in that setting. At least one state takes a different position in its black letter ethics rules, requiring lawyers to disclose facts to avoid their misunderstanding, unless a "recognized privilege" protects the disclosure. New Jersey Rule 3.3(5) ("A lawyer shall not knowingly . . . fail to disclose to the tribunal a material fact knowing that the omission is reasonably certain to mislead the tribunal, except that it shall not be a breach of this rule if the disclosure is protected by a recognized privilege or is otherwise prohibited by law."). Interestingly, one of the few recent decisions on this issue comes from New Jersey, and seems to contradict the New Jersey Rule. In 2015, a New Jersey court 65829543_8 I-B-191 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) found that a defense lawyer could stand silent rather than inform the court or the prosecutor that his client's license had been suspended for drunk drinking. State v. Kane, Dkt. No. A-5773-13TI, 2015 N.J. Super. Unpub. LEXIS 277, at *22-23 (N.J. Super. Ct. App. Div. Feb. 17, 2015) (holding that a lawyer representing a client in a traffic case based on the client's driving with a suspended license did not have to inform the court or the prosecutor that the client's license had been suspended for drunk driving, and thus rendered the client vulnerable to a much more serious charge; "[W]e reject the State's claim that defense counsel was obligated under R.P.C. 3.3(a)(5) or other ethical rules to spotlight the statute's potential application adverse to his client's interests. The situation here is markedly distinguishable from In re Seelig, 180 N.J. 234, 850 A.2d 477 (2004, in which a defense attorney affirmatively misled a municipal judge about the facts in a vehicular case, i.e., whether the victims had died. As the municipal prosecutor honestly acknowledged here, it was his responsibility to be aware of the Title 2C provision's potential applicability, and to refrain from participating in the entry of a guilty plea to a lesser charge that would have double jeopardy implications for a future prosecution for an indictable offense. The fact that the municipal prosecutor accepted that the original plea was his mistake and decided not to file an application or pursue means to have the plea vacated speaks volumes. There was no 'fraud' or unethical behavior by the defense here."). A chronological review of state ethics opinions shows an evolution toward disclosure in scenarios like this. North Carolina CRP 313 (2/5/82) (assessing the following question: "Client X is charged with driving under the influence on April 27. X is subsequently charged with driving under the influence on May 11. One May 25, X pleads guilty to the April 27 charge of driving under the influence. On June 10, X pleads guilty to the May 11 charge of driving under the influence. At the June 10 hearing the State submits a record check of X's driving history. The conviction on May 25 does not appear on that driving record. At no time does the court ask Attorney A, X's attorney, if there are any other convictions or if the driving record is accurate. Nor does Attorney A in any way insinuate to the court that this is Client X's first offense." (emphasis added); "If the court does not ask Attorney A directly or indirectly about Client X's driving record, is Attorney A under any ethical compulsion to advise the State or the court of the prior conviction not shown on Client X's driving record at the time the State made its check?" (emphasis added); providing the following opinion: "No. Attorney A is obligated to protect the confidences and secrets of his client. DR 4-101. The term "secret" indicates any information gained 65829543_8 I-B-192 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) in the professional relationship the disclosure of which would be detrimental to the client. DR 4-101(A). Certainly, the disclosure of the prior conviction would be detrimental to Client X. Attorney A is not violating any of the prohibitions of DR 7-102 in his failure to volunteer the information that there had been a prior conviction after the date when the State last checked Client X's driving record and which had not yet shown up at the time the State checked the record. The American Bar Association has ruled that an attorney has no duty to correct the court's misinformation when the court is about to impose a sentence based on misinformation about the client's previous criminal record or lack of a previous criminal record if the attorney's information was received from the client. Formal Opinion 287 (June 27, 1953). This opinion was further discussed in Formal Opinion 341 where the American Bar Association indicated that an attorney should protect any information received in connection with his professional relationship with the client. Only if DR 4-102(C) applies or if the information is obtained outside of the attorney-client relationship would disclosure be appropriate. Formal Opinion 341 (September 30, 1975). If Attorney A had learned about X's prior conviction through discussions in the community or simply by reading of it in the newspaper, the information would not be a secret of the client. But, even though it may be known to the community and may be a matter of public record, it remains a secret which Attorney A is obligated to protect if Attorney A's knowledge of it comes through representation of the client either in the proceeding itself or through the client's communication to him." (emphasis added)). Texas LEO 504 (8/1994) ("The judge then asked the prosecutor, 'Does the defendant have any prior convictions?' The prosecutor mistakenly stated to the court that police records reflect that defendant has no prior convictions. Prosecutor turned to the defendant and asked, 'Right?' The defendant and defense counsel make no statement and the court granted probation of defendant's sentence." (emphasis added); "The particular question presented in the Statement of Facts does not involve a lawyer knowingly making a false statement of material fact or law, or a situation where the client has permitted perjury or made a fraudulent statement in which the lawyer's silence may be tantamount to assisting a criminal or fraudulent act. Rather, the situation presents the issue of whether a lawyer may remain silent when neither he nor his client has made a false statement to the tribunal, but the lawyer knows that the court is relying upon mistaken or inaccurate information stated in court to the benefit of his client."; "Since neither lawyer or his client in the Statement of Facts made a false statement to the court, the lawyer has not violated Texas Disciplinary Rule 3.03(a)(1); since the client did not commit fraud or perjury, the lawyer's silence does not constitute assisting a criminal or fraudulent act. The lawyer may remain silent without violating Texas Disciplinary Rule 3.03, and therefore is prohibited under the Texas 65829543_8 I-B-193 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Disciplinary Rule 1.05 from disclosing confidential information about his client's prior convictions." (emphases added)). North Carolina LEO 98-5 (4/16/98) (holding that a criminal defendant's lawyer can remain silent while the prosecutor gives incorrect information to the court about the client's record, but cannot assist the client in petitioning for a limited driving privileges by implicitly relying on the fact that there had been no prior DWIs; posing the question as follows: "Client was charged with driving while impaired (DWI). Attorney A represented him at trial where Client was convicted. At the sentencing hearing, the prosecutor informed the court that Client had no record of prior convictions for DWI. Attorney A and Client were aware, however, that Client was convicted of DWI in federal court but the federal court failed to forward information regarding the conviction to the North Carolina Department of Motor Vehicles for inclusion in Client's driving record. Therefore, when the prosecutor checked the driving record, he found no record of the prior conviction. At the sentencing hearing, Attorney A and Client remained silent when the prosecutor informed the court that Client had no prior convictions for DWI. Neither Attorney A nor Client made any affirmative misrepresentations to the court about Client's driving record. The judge sentenced Client to punishment level three which can only be imposed if the court determines that the defendant has not been convicted of a prior DWI within the previous seven years." (emphases added); "Was it unethical for Attorney A to remain silent when he heard the prosecutor give erroneous information to the court?"; answering as follows: "No, it was not unethical for Attorney A to remain silent. The burden of proof was on the State to show that the defendant's driving record justified a more restrictive sentencing level. A defense lawyer is not required to volunteer adverse facts when the prosecutor fails to bring them forward. The duty of confidentiality to the client is paramount provided the defense lawyer does not affirmatively misrepresent the facts to the court. See Rule 1.6(c) and Rule 3.3(a)(1) of the Revised Rules of Professional Conduct; CPR 313 (lawyer may not volunteer to the court confidential information about a client's prior convictions); and RPC 33 (lawyer may not reveal confidential information about a client's prior criminal record to the court but may not misrepresent the client's criminal record). Although Rule 3.3(a)(2) prohibits a lawyer from failing to disclose a material fact to a tribunal 'when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client,' this rule was not violated because Client's driving record was inaccurate through no fault of Client and Client did not criminally or fraudulently conceal the prior conviction from the prosecutor or the court." (emphases added)). Most lawyers probably would err on the side of correcting courts' mistakes based on an adversary's innocent misstatement. Outside the criminal setting, most lawyers 65829543_8 I-B-194 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) would not face any problems even if they arguably violated their confidentiality duty by taking such corrective action. However, the constitutional issues implicated in criminal cases should give lawyers pause if their instincts lead them in the direction of disclosure. Many lawyers cite their role as "officers of the court" in deciding to speak up and correct the prosecutor's undoubtedly innocent misstatement. But that role does not change the basic nature of lawyers' primary duty to advocate for their clients. In the broad-ranging debate resulting in the ABA's 1983 adoption of the ABA Model Rules, the American Trial Lawyers issued proposed ethics rules that emphasized this advocacy duty. These proposed rules' introduction provided the American Trial Lawyers' stark view of what it means to be an "officer of the court." Recognizing that the American attorney functions in an adversary system, and that such a system expresses fundamental American values, helps us to appreciate the emptiness of some clichés of lawyers' ethics. It is said, for example, that the lawyer is an 'officer of the court,' or an 'officer of the legal system.' Out of context, such phrases are at best meaningless, and at worst misleading. In the context of the adversary system, it is clear that the lawyer for a private party is and should be an officer of a court only in the sense of serving a court as a zealous, partisan advocate of one side of the case before it, and in the sense of having been licensed by a court to play that very role. Am. Lawyer's Code of Conduct, Proposed Revision of the Code of Prof'l Responsibility, Preamble, Comm'n on Prof'l Responsibility, Roscoe Pound-Am. Trial Lawyers Found., Revised Draft (May 1982) (emphasis added). 65829543_8 I-B-195 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Best Answer The best answer to (a) is (C) YOU MAY NOT DISCLOSE THE PROSECUTOR'S MISTAKE TO THE COURT, UNLESS YOUR CLIENT CONSENTS (PROBABLY); the best answer to (b) is (A) PROBABLY YES; the best answer to (c) is (B) PROBABLY NO. B 4/15, 10/15 65829543_8 I-B-196 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Courts' Scrivener's Errors Hypothetical 21 You represented a criminal defendant in a case tried by a judge without a jury. The judge announced from the bench that she found your client guilty of a felony. However, you were pleasantly surprised, and bit perplexed, when you received the court's final order -- because the judge mistakenly marked the "misdemeanor" box on the post-verdict form. What do you do? (A) You must disclose the mistake to the court. (B) You may disclose the mistake to the court, but you don't have to. (C) You may not disclose the mistake to the court, unless your client consents. (A) YOU MUST DISCLOSE THE MISTAKE TO THE COURT (PROBABLY) Analysis Lawyers dealing with courts' scrivener's errors must balance their duty of loyalty to their clients and their duties as officers of the court. Balancing these duties can be very difficult, because lawyers must not forfeit some advantage for a current client because the lawyer is worried about her "image" before the court (which is a personal interest) or the effect it will have on the lawyer's representation of other future clients before that court. One state's old state ethics opinions concluded that lawyers did not have a duty to disclose courts' scrivener's errors that benefit their clients. Virginia LEO 1400 (3/12/91) (explaining that a criminal defense lawyer representing a client found guilty of a felony is under no duty to reveal that the sentencing document later signed by the judge erroneously stated that the defendant was found guilty only of a misdemeanor (assuming that the 65829543_8 I-B-197 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) lawyer did not endorse the document or otherwise participate in drafting it); concluding that the lawyer was ethically obligated not to reveal the error, because the revelation would damage the client.). Virginia LEO 1186 (2/13/89) (assessing a situation in which a court-appointed lawyer represents a criminal defendant, against whom two offenses have been docketed for trial on the same date and time; explaining that the court arraigns only on one charge, and the court does not address the second charge; concluding that even if the client had been in pretrial confinement because of the overlooked second criminal charge, the lawyer had a duty not to reveal the court's failure to address the second charge; acknowledging that determining whether the lawyer must fill out a form (a standard "Time Sheet") that might reveal the court's mistake is a question of law beyond the Bar's jurisdiction, but the lawyer may not "enhance" the time sheet to present a misleading impression; "The Committee would opine that defense counsel is not under any affirmative obligation to reveal that the court has overlooked his client's second criminal charge, even if the client had been in pretrial confinement because of that charge, unless the client requested that he inform the court of the omission. Under DR:7-101(A)(3), it would be unethical for an attorney to reveal information that would prejudice or damage his client."). Virginia LEO 561 (4/10/84) (assessing a situation in which after winning a motion, a lawyer prepared a decree accidentally broader than the court's ruling; concluding that because the lawyer had not intentionally misdrafted the decree, the lawyer may now assert a res judicata defense based on the overbroad decree; warning that the lawyer must concede the circumstances of the drafting should the adversary raise it.). In contrast, another states' older legal ethics opinion took just the opposite approach -- requiring lawyers to advise courts of their factual error. Wisconsin LEO E-84-7 (1984) (explaining that a criminal defense lawyer must tell a court of the clerk's error in indicating charges against a lawyer's client had been dismissed; analyzing the following scenario: "An attorney represents a criminal defendant charged with two misdemeanors. At a court appearance, the district attorney indicates to the court that the state will dismiss one of the charges, but wishes to proceed on the other charge. At that time, the matter is set for a jury trial. A week before trial, the attorney learns from the clerk of court that both cases against the defendant are indicated as dismissed on the court's docket. Does the attorney have an obligation to bring this apparent error to the attention of the district attorney, the court or the court's staff?" (emphasis added); explaining the lawyer's duty to disclose the error; "The attorney does not have an obligation to inform the 65829543_8 I-B-198 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) district attorney of the apparent error on the court's docket. The district attorney has an obligation to represent the state competently and zealously. It is the responsibility of the district attorney in diligently pursuing the obligations of his or her position to discover the discrepancy. . . . However, the attorney has an obligation to inform the court's staff of the apparent error. In State v. Barto, 202 Wis. 329, 331, 232 N.W. 553 (1930), the Wisconsin Supreme Court stated that when a person enters the practice of law, he or she 'thereby assumes certain duties and obligations and is required to conform to certain standards in three principal relations: (1st) in his relation to his client; (2nd) his relation to the courts and fellow practitioners; and (3rd) his relation to the public. . . .' The court further stated that an attorney has a duty of absolute fidelity and loyalty to the cause of his or her client. However, the court added, if a conflict arises between a lawyer's duty to his or her client and the court, his or her duty to the court must prevail. 202 Wis. at 331. An attorney's duty to the court is a result of his or her role as officer of the court. . . . This duty applies in civil and criminal cases. . . . In the present situation, it is most certainly to the client's benefit if the error remains undiscovered. However, in light of the above, the attorney's duty to inform the court of the apparent error must prevail." (emphases added)). The dichotomy between these two approaches has continued. A 2011 North Carolina ethics opinion required disclosure. North Carolina LEO 2011-12 (10/21/11) (analyzing the following scenario: "Lawyer has a client in custody who has numerous cases pending in district court. Lawyer negotiates a plea agreement with the assistant district attorney (ADA) whereby all but two of the charges will be dismissed. Lawyer asks for the client to be brought into the courtroom to enter his plea. At that time, Lawyer is informed that the client has already been taken back to the jail. Lawyer and the ADA agree to continue the case to the next business day. When Lawyer subsequently goes to visit his client in jail, he is told that the client was released because all of his charges were dismissed. Upon investigation, Lawyer confirms that all of the client's charges had been voluntarily dismissed. The dismissals are clearly the result of an error by the clerk of court and do not reflect the plea agreement entered into by Lawyer and the ADA." (emphasis added); explaining that the lawyer had a duty to disclose the clerk's error; "The preamble to the Rules of Professional Conduct provides that as a member of the legal profession, a lawyer is an 'officer of the legal system.' Rule 0.1. Rule 8.4(d) states that it is professional misconduct for a lawyer to 'engage in conduct that is prejudicial to the administration of justice.' Similarly, Comment [2] to Rule 3.3 (Candor Toward the Tribunal) refers to the special duties of lawyers as officers of the court to 'avoid conduct that undermines the integrity of the adjudicative process.' Under Rule 3.3, for example, a lawyer has a duty to disclose a client's false 65829543_8 I-B-199 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) testimony even though it may have grave consequences for the client, where the alternative is that the lawyer cooperate in deceiving the court thereby subverting the truth-finding process which the adversary system is designed to implement. Rule 3.3, Cmt. [11]. Thus, if a conflict arises between a lawyer's duty to his client and his duties as an officer of the court, the lawyer's duty to the court must prevail." (emphasis added); distinguishing the situation from an earlier legal ethics opinion; "This inquiry differs from that addressed in 98 FEO 5, which provides that a defense lawyer does not have a duty to inform the court of an inaccurate driving record presented by the prosecutor. In the situation addressed in 98 FEO 5, both advocates are present in court and each is expected to present evidence and carry his burden of proof. The opinion states that the burden of proof is on the state to show that the defendant's driving record justifies a more restrictive sentencing level and that the defense lawyer is not required to volunteer adverse facts when the prosecutor fails to bring them forward. In the instant inquiry, Lawyer knows that his client's charges were dismissed in error and that 'justice' (in the form of a negotiated plea to which Lawyer and the client agreed) was not carried out. Therefore, Lawyer has an obligation to inform the court or the clerk of court of the apparent error. Accord Wis. Formal Ethics Op. E-84-7 (1984) (defense attorney has obligation to inform the court or the court's staff of clerk of court's error)."). In 2016, the Maryland Bar dealt with this issue -- and reached a different conclusion. Maryland LEO 2016-04 presented a scenario involving a court clerk repeatedly preparing erroneous records involving a criminal defendant -- and a criminal defense lawyer's rebuffed effort to advise the clerk of a mistake which favored the lawyer's client. You advise that you represented a criminal defendant in post-conviction proceedings. The post-conviction court resentenced your client, giving him credit for time he had already served indicating that he should receive credit from date A to date B. To document this, the court issued a Commitment Record in order to specifically inform the Division of Corrections exactly how much additional time the defendant must serve. This Commitment Record was incorrect because it did not give defendant all of the credit for time served that the court had earlier granted him on the record. 65829543_8 I-B-200 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) You then wrote the court asking the judge to correct the Commitment Record. The court did not respond to your letter so you called chambers and were directed to speak with the courtroom clerk. You did so, and the clerk then issued a new Commitment Record. When you received this new Commitment Record it was still incorrect, but this time the error was in your client's favor, which would allow him to be released earlier than the court had intended. You again spoke with the clerk, who insisted that she had carefully reviewed the record and that it was correct. Id. (emphases added). The Maryland Bar's choice of words was interesting. Maryland LEO 2016-04 indicated that the lawyer "again spoke with the clerk" after the lawyer received the erroneous but favorable Commitment Record. Id. Although the legal ethics opinion indicated that after that conversation the clerk "insisted that she had carefully reviewed the record and that it was correct," the factual description did not explicitly indicate that the lawyer told the clerk that she had made a mistake or (especially) that the mistake was in the client's favor. Id. For instance, perhaps the lawyer "spoke with the clerk" in asking the clerk whether she had double-checked the Commitment Record, etc. Id. Maryland Bar's summary of Maryland LEO 26-04 implied that the lawyer explicitly disclosed the clerk's mistake. Whether an attorney has any duty to take steps to correct a sentencing order prepared by the clerk which erroneously states the sentence in his client's favor after the mistake was brought to the attention of the court, referred to, and rejected by, the clerk Id. (emphasis added). 65829543_8 I-B-201 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) Later in the legal ethics opinion, the Maryland Bar also indicated that through the lawyer's conversations with the clerk, "all facts, both supportive of, and adverse to [the] client were discussed." This implies that the lawyer's second conversation with the clerk explained the situation -- which involved facts "adverse" to the lawyer's client. But the description is still somewhat ambigious. Maryland LEO 2016-04 explained the obvious conflict between the lawyer's duty of candor to the tribunal and duty of confidentiality to the client. This matter involves the interplay between a lawyer's duty of Candor Toward the Tribunal, MRPC 3.3, and a lawyer's duty of confidentiality concerning information relating to representation of a client, MRPC 1.6. This topic of the proper application of required disclosures under Rule 1.6 has been the subject of much discussion and controversy over the years and has been seen as especially problematic in the context of criminal defense practice (See Hazard and Hodes, The Law of Lawyering, 3d Edition §9.19). While there is no clearly definitive answer, the Committee believes that when the competing interests are properly weighed, the correct response is that you have done all that you have to do. Id. (emphasis added). The Maryland Bar concluded that the lawyer did not have to take any further steps to correct the clerk's mistake. The court noted that "[n]o false statement was made to the court and so there is nothing to correct" under Maryland Rule 3.3. Id. Likewise "there was no criminal or fraudulent act committed" by the client. Id. Maryland LEO 2016-4 ultimately concluded that no Maryland Rule 1.6 exception applied to require or even permit disclosure of the clerk's mistake. It should come as no surprise that bars have had trouble dealing with lawyers' duties in this context. Many judges would be embarrassed by a scrivener's error, and 65829543_8 I-B-202 Confidentiality: Part III (Non-Clients'Misunderstanding and Mistakes) Hypotheticals and Analyses ABA Master McGuireWoods LLP T. Spahn (4/13/16) would think less of a lawyer who knew of the error but did not help the judge avoid such embarrassment. If the scrivener's error has some substantive impact, judges' frustration or even anger at such lawyers could dramatically affect the lawyer's reputation before the judge and perhaps even more widely. As bars have generally loosened lawyers' confidentiality duty, they are more likely to permit or even require lawyers to disclose such scrivener's errors. And it would be safe to assume that a lawyer having discretion to do so would jump at the chance. Best Answer The best answer to this hypothetical is (A) YOU MUST DISCLOSE THE MISTAKE TO THE COURT (PROBABLY). 65829543_8 I-B-203 B 4/15, 10/15 CONFIDENTIALITY: PART III (NON-CLIENTS’ MISUNDERSTANDING AND MISTAKES) Thomas E. Spahn 3/23/2021 1 HYPOTHETICALS 2 I-C-1 1 Hypothetical 1 You and your law school roommate meet every month or so for lunch to discuss your careers. Yesterday your former roommate said that she was tempted to file a bar complaint against a lawyer on the other side of a case she is handling. That lawyer knew that your former roommate’s box of trial exhibits had been accidentally delivered to the wrong floor in the courthouse. When your former roommate could not find the exhibits, she had to ask the court for a short delay in the trial -- which she had found embarrassing and which she feared had angered the judge who later ruled against her on some evidentiary matters. When she later learned that the adversary’s lawyer knew that the exhibits had been delivered to the wrong floor, she confronted him -- asking why he had not been courteous enough to let her know of the delivery person’s mistake. The other lawyer replied that his knowledge was “information relating to the representation” of his client, and thus protected by Rule 1.6. Your former roommate’s experience prompted a lunch-time discussion between you and her about the intersection of ethics and professionalism. Should the ethics rules prohibit unprofessional behavior? A. YES B. NO Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 3 #141783059 Hypothetical 2 You represent an oil refinery accused by a local newspaper of generating emissions that make local residents ill. None of the residents have filed lawsuits or even contacted your client, but you worry that the articles might stir up local opposition to your client’s operations. You plan to interview residents in several nearby neighborhoods, and ask them whether they have experienced any problems -- but you wonder about any disclosure obligations about your role. What must or may you tell a local resident before beginning a substantive conversation? A. You must disclose to the resident your role in representing the oil refinery. B. You must disclose to the resident your role in representing the oil refinery, but only if you know or reasonably should know that the resident misunderstands your role. C. You may not disclose to the resident your role in representing the oil refinery, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 4 #141783059 I-C-2 2 Hypothetical 3 You represent the father of a young man who committed suicide while incarcerated in the county jail. You contacted a county corrections officer, who knew that you would probably add him to the litigation you plan to file. Although there is some dispute about your conversation with the officer, he later claimed that you told him that he would be covered by the county's insurance policy. The county has claimed that you violated the ethics rules prohibiting lawyers from giving any legal advice to adverse unrepresented persons. If you told the corrections officer that he would be covered by the county’s insurance policy, have you violated an ethics rule? A. B. YES NO Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 5 #141783059 Hypothetical 4 You represent the wife in a divorce case. The husband has not retained a lawyer. You plan to communicate with the husband, and explain to him that you represent his wife. You would also like to send him a property settlement agreement, and ask him to sign it. May you ask an unrepresented person to sign legal documents as long as you describe your role in representing the adversary? A. YES B. NO Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 6 #141783059 I-C-3 3 Hypothetical 5 In your new position as a prosecutor, you have been increasingly dealing with illegal alien defendants. Some of them do not have lawyers, and you wonder whether you can propose plea agreements to unrepresented criminal defendants if their acquiescence to the agreement would render them vulnerable to deportation. What do you do? A. You must disclose to the illegal alien the risks of acquiescing to the plea agreement. B. You may disclose to the illegal alien the risks of acquiescing to the plea agreement, but you don’t have to. C. You may not disclose to the illegal alien the risks of acquiescing to the plea agreement. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 7 #141783059 Hypothetical 6 You represent a worker fired by a local engraving company. Your client claims that the company fired her because she complained about other employees dumping chemicals down a nearby storm sewer. The dumping would violate various criminal laws. You filed a lawsuit against the company for back wages. 1. May you threaten to report the company’s unlawful dumping unless it settles the civil case your client has brought against it? A. YES B. NO 2. May you argue to the adversary that a recent case decided by your state’s supreme court supports your position, although you honestly believe that it does not? A. YES B. NO Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 8 #141783059 I-C-4 4 Hypothetical 6 (continued) 3. Your client (the defendant) has instructed you to accept any settlement demand that is less than $100,000. If the plaintiff’s lawyer asks “will your client give $90,000?,” may you answer “no”? A. YES B. NO Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 9 #141783059 Hypothetical 7 You are trying to settle a complex case involving both automobile liability policies and workers compensation coverage. The lawyer representing your adversary clearly does not understand her client’s right to subrogation in connection with proceeds of an uninsured motorist policy. You conclude that she does not understand the law in this area. What do you do? A. You must disclose the adverse law to your adversary. B. You may disclose the adverse law to your adversary, but you don’t have to. C. You may not disclose the adverse law to your adversary, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 10 #141783059 I-C-5 5 Hypothetical 8 On behalf of your client, you just made a $100,000 offer to buy land from a farmer and his wife (who are represented by an unsophisticated lawyer). You know that the farmer thinks that your client’s offer contains a provision under which your client would assume an existing mortgage -- although the offer does not. What do you do? A. You must disclose the absence of the provision. B. You may disclose the absence of the provision, but you don’t have to. C. You may not disclose the absence of the provision, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 11 #141783059 Hypothetical 9 You are representing the seller in negotiating a complex transaction memorialized in a 50-page draft agreement. One provision indicates that buyer’s sole remedy for seller's breach of a covenant not to compete is return of the consideration allocated in the agreement for the covenant not to compete. Near the end of the drafting process, the buyer amends another provision in the agreement so that only one dollar is allocated to consideration for the covenant not to compete -- which essentially renders the covenant meaningless (because seller’s breach would at most result in one dollar of damages). When you advise your client of the buyer’s mistake, she directs you to keep it secret. What do you do? A. You must disclose the buyer’s mistake. B. You may disclose the buyer’s mistake, but you don’t have to. C. You may not disclose the buyer’s mistake, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 12 #141783059 I-C-6 6 Hypothetical 10 Since late yesterday afternoon, you have been furiously exchanging draft contracts with a transactional counterparty. You finally reached agreement on the last few provisions, which the adversary’s lawyer says she will write up while you head home for an hour or two of sleep. When you returned to the office this morning to check what the other lawyer prepared, you realize that she left out an important term (favorable to her client) to which you had agreed during the final negotiation discussion. 1. 2. What do you do when dealing with your client? A. You must disclose the adversary’s mistake to your client. B. You may disclose the adversary’s mistake to your client, but you don't have to. C. You may not disclose the adversary’s mistake to your client. What do you do when dealing with the adversary’s lawyer? A. You must disclose the adversary’s mistake to the adversary’s lawyer. B. You may disclose the adversary’s mistake to the adversary’s lawyer, but you don’t have to. C. You may not disclose the adversary’s mistake to the adversary’s lawyer, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 13 #141783059 Hypothetical 11 You generally represent plaintiffs in personal injury cases. Months ago, you reached a very complicated settlement arrangement with an insured defendant and its insurance company, which involves the latter making monthly payments to your client over the course of ten years. You told your client what payments to expect from the insurance company. After your client told you the first few checks from the insurance company exceeded what you told the client to expect, you determine that the insurance company apparently has miscalculated the amount it should pay under the complicated settlement agreement. What do you do? A. You must disclose the miscalculation to the insurance company. B. You may disclose the miscalculation to the insurance company, but you don’t have to. C. You may not disclose the miscalculation to the insurance company, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 14 #141783059 I-C-7 7 Hypothetical 12 You have not seen a judge quite as angry as this morning, when he asked you why you had not told the court and the litigants about your plan to declare bankruptcy late yesterday afternoon. The court had set aside three weeks for a trial which was set to start today, but which has now been put off by the bankruptcy filing. The court pointed out that your client’s adversary had brought in witnesses from across the country, including very expensive expert witnesses. The court also noted the jury panel’s inconvenience. The court bluntly tells you that she is inclined to severely sanction you for what you did -- unless you can convince her that your confidentiality duty prevented you from disclosing your client’s bankruptcy plans. What do you do? A. You must disclose your client’s bankruptcy plans to the court. B. You may disclose your client’s bankruptcy plans to the court, but you don’t have to. C. You may not disclose your client’s bankruptcy plans to the court, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 15 #141783059 Hypothetical 13 You are defending a young mother against a charge that she murdered her infant daughter because her childcare responsibilities impeded her social life. The prosecution has gathered damaging entries from your client’s home computer, but appears to have overlooked some even more incriminating entries -- showing that someone used your client’s computer to do a Google search for “fool-proof suffocation methods” on the day that your client’s daughter was last seen alive. What do you do? A. You must disclose the incriminating searches to the prosecution. B. You may disclose the incriminating searches to the prosecution, but you don’t have to. C. You may not disclose the incriminating searches to the prosecution, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 16 #141783059 I-C-8 8 Hypothetical 14 You represent the plaintiff in a personal injury case. After several months of intense negotiations, it appears that you are nearing a settlement agreement with the defendant. However, you just learned that your client and his brother (whom the defendant recently deposed, and whom you envisioned as a key trial witness) were killed in a car accident. 1. What do you do about your client’s death? A. You must disclose your client’s death to the adversary. B. You may disclose your client’s death to the adversary, but you don’t have to. C. You may not disclose your client’s death to the adversary. 2. What do you do about the witness’s death? A. You must disclose your witness’s death to the adversary. B. You may disclose your witness’s death to the adversary, but you don’t have to. C. You may not disclose your witness’s death to the adversary. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 17 #141783059 Hypothetical 15 As the other side in a trial closes its case, you realize that the adversary’s lawyer forgot to move into evidence a fairly important exhibit. You quickly huddle with your co-counsel to see what (if anything) you should do. From your experience, the judge handling the case would almost always allow a party to temporarily reopen its case to admit an exhibit like this. What do you do? A. You must disclose the mistake to the adversary. B. You may disclose the mistake to the adversary, but you don’t have to. C. You may not disclose the mistake to the adversary, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 18 #141783059 I-C-9 9 Hypothetical 16 Your client asked you to check with the other side's lawyer (with whom you have a very friendly relationship) to see if the other side intends to appeal a trial victory that you won several weeks ago. When you call the other lawyer to ask about her intent, you learn that the other side intends to appeal -- but quickly realize that the other lawyer has miscalculated the appellate deadline. You do not say anything about it during the call, but reflect upon this issue immediately after hanging up. What do you do? A. You must disclose the miscalculation to the adversary. B. You may disclose the miscalculation to the adversary, but you don’t have to. C. You may not disclose the miscalculation to the adversary, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 19 #141783059 Hypothetical 17 You have spent years earning a good reputation in your local court, but you worry that a troublesome client's actions might destroy it. In a hearing yesterday, you made several material factual representations to the court based on what your client had earlier told you. After the hearing, he confessed that some of the factual representations were wrong. Although your representations to the court did not constitute evidence, you immediately told your client that you had to correct your misstatements. However, he knew enough about your ethics duties to insist that you maintain the confidentiality of your post-hearing discussion and his confession -- and not correct your earlier representations. What do you do? A. You must disclose the correct facts to the court. B. You may disclose the correct facts to the court, but you don’t have to. C. You may not disclose the correct facts to the court, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 20 #141783059 I-C-10 10 Hypothetical 18 You know that you cannot knowingly make false statements to courts, but you now face a more subtle issue. You have scheduled a TRO hearing for tomorrow morning -- and you do not know whether the adversary or his lawyer will be there. Your client has told you about several material and very damaging facts that would weaken your effort to obtain a TRO. Your client has asked you not to disclose those facts to the court if the other side fails to raise them. 1. What do you do if the adversary and her lawyer appear at the hearing? A. B. C. You must disclose the adverse material facts to the court if the other side does not. You may disclose the adverse material facts to the court if the other side does not, but you don’t have to. You may not disclose the adverse material facts to the court if the other side does not, unless your client consents. 2. What do you do if the adversary and her lawyer do not appear at the hearing? A. B. C. You must disclose the adverse material facts to the court. You may disclose the adverse material facts to the court, but you don’t have to. You may not disclose the adverse material facts to the court, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 21 #141783059 Hypothetical 19 Through several years of extensive discovery and frequent hearings in state court litigation, you and your colleagues have always been more diligent than your adversary’s lawyers. The latest upcoming hearing is no exception. Your adversary’s brief fails to cite several unfavorable decisions that one of your brightest new associates has found. One of the unfavorable decisions is from the circuit court where you are litigating, and another even worse decision is from a circuit court in another part of your state. When you advised your client of the bad decisions, she asked you to keep that research confidential -- relying on some of your own statements to her about the breadth of your state’s confidentiality duty. 1. 2. What do you do about the unfavorable law from your circuit court? A. You must disclose the adverse law to the court. B. You may disclose the adverse law to the court, but you don’t have to. C. You may not disclose the adverse law to the court, unless your client consents. What do you do about the unfavorable law from the other circuit court? A. You must disclose the adverse law to the court. B. You may disclose the adverse law to the court, but you don’t have to. C. You may not disclose the adverse law to the court, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 22 #141783059 I-C-11 11 Hypothetical 20 You have been worried for weeks about your client’s fate in an upcoming hearing. She had already been convicted of one check-kiting crime and the judge has a reputation for toughness on repeat offenders. To your surprise, when the judge asks the prosecutor if your client has any prior convictions, the prosecutor tells the judge that there have been no prior convictions. Your mind starts to race as you consider what you should do. 1. 2. 3. What do you do? A. You must disclose the prosecutor’s mistake to the court. B. You may disclose the prosecutor’s mistake to the court, but you don’t have to. C. You may not disclose the prosecutor’s mistake to the court, unless your client consents. If the prosecutor turns to your client and asks “Right?” may you and your client remain silent? A. YES B. NO If the judge asks “Is that right?” may you and your client remain silent? A. YES B. NO Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 23 #141783059 Hypothetical 21 You represented a criminal defendant in a case tried by a judge without a jury. The judge announced from the bench that she found your client guilty of a felony. However, you were pleasantly surprised, and bit perplexed, when you received the court’s final order -- because the judge mistakenly marked the “misdemeanor” box on the post-verdict form. What do you do? A. You must disclose the mistake to the court. B. You may disclose the mistake to the court, but you don’t have to. C. You may not disclose the mistake to the court, unless your client consents. Confidentiality: Part III (Non-clients’ Misunderstanding and Mistakes) McGuireWoods LLP, Copyright 2021 3/23/2021 24 #141783059 I-C-12 12 Questions or Comments? www.mcguirewoods.com 25 McGuireWoods is setting – and raising – the standard for what clients expect from law firms. - BTI CONSULTING 1,100 lawyers | 21 offices | www.mcguirewoods.com I-C-13 13 30th Annual Employment Law Update A Review of the Year’s Most Critical Employment Law Cases May 2020 through April 2021 Speakers Edward Lee Isler, Esq. ISLER DARE, P.C. Tysons Corner - Vienna, Virginia Thomas E. Strelka, Esq. STRELKA EMPLOYMENT LAW Roanoke, Virginia Materials Coordinator Lindsey A. Strachan ISLER DARE, P.C. Contributing Authors Tim Coffield, Esq. COFFIELD PLC Charlottesville, Virginia Sharon Kerk Reyes, Esq. KAUFMAN & CANOLES Norfolk, Virginia J. Clay Rollins, Esq. OGLETREE, DEAKINS Richmond, Virginia Lindsay K. Eubanks, Esq. SANDS ANDERSON Richmond, Virginia Courtney M Malveaux, Esq. JACKSON LEWIS Richmond, Virginia Tom Shumaker, Esq. ERNEST LAW GROUP Virginia Beach, Virginia Ronald N. Regnery, Esq. OFFICE OF THE ATTY GEN. Richmond, Virginia Whitney Nelson, Esq. ISLER DARE Richmond, Virginia Micah E. Ticatch, Esq. ISLER DARE Tysons Corner, Virginia Philip C. Krone, Esq. COOK CRAIG & FRANCUZENKO Fairfax, Virginia Noah Oberlander, Esq. REED SMITH Richmond, Virginia Amanda M. Weaver, Esq. WILLIAMS MULLEN Richmond, VA TABLE OF CONTENTS Page I. TITLE VII OF THE CIVIL RIGHTS ACT OF 1964/ SECTION 1981 ................... 1 II. AGE DISCRIMINATION IN EMPLOYMENT ACT (ADEA) .............................. 12 III. AMERICANS WITH DISABILITIES ACT (ADA); REHAB ACT ....................... 14 IV. EQUAL PAY ACT ....................................................................................................... 23 V. FAMILY AND MEDICAL LEAVE ACT (FMLA) .................................................. 24 VI. FAIR LABOR STANDARDS ACT (FLSA) .............................................................. 26 VII. ARBITRATION AND CLASS ACTIONS ................................................................ 34 VIII. UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT (USERRA) ........................................................................................................... 35 IX. FALSE CLAIMS ACT (FCA) / VIRGINIA FRAUD AGAINST TAXPAYERS ACT (VFATA) / WHISTLEBLOWERS ................................................................... 37 X. EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA) .................... 41 XI. LABOR UNIONS, PUBLIC EMPLOYERS, CONST./SECTION 1983 ................. 43 XII. NON-COMPETE/RESTRICTIVE COVENANT CASES ....................................... 44 XIII. DUTY OF LOYALTY ................................................................................................. 45 XIV. STATUTORY BUSINESS CONSPIRACY ............................................................... 46 XV. AT-WILL EMPL. / WRONGFUL DISCHARGE / TORTIOUS INTER. ............. 47 XVI. NEGLIGENT SUPERVISION/ HIRING / RETENTION ....................................... 51 XVII. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS ............................. 53 XVIII. DEFAMATION ............................................................................................................ 54 XIX. WORKERS’ COMPENSATION ............................................................................... 57 XX. ATTORNEYS’ FEES AND COSTS ........................................................................... 58 XXI. OSHA............................................................................................................................. 57 XXII. MISCELLANEOUS ..................................................................................................... 63 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR I. TITLE VII OF THE CIVIL RIGHTS ACT OF 1964/ SECTION 1981 U.S. Supreme Court [1] Bostock v. Clayton Cty., 140 S. Ct. 1731 (Jun. 15, 2020) (Gorsuch). The Court granted review of a compendium of cases where an employer alleged fired a long-time employee for being homosexual or transgender: (i) Clayton County, Georgia, fired Gerald Bostock for conduct “unbecoming” a county employee shortly after he began participating in a gay recreational softball league, (ii) Altitude Express fired Donald Zarda days after he mentioned being gay, and (iii) R.G. & G.R. Harris Funeral Homes fired Aimee Stephens, who worked there for five years as a male, after she informed her employer that she planned to “live and work fulltime as a woman.” Each employee sued under Title VII alleging sex discrimination. The Eleventh Circuit dismissed Bostock’s claims and the Second and Sixth Circuits allowed Zarda and Stephens claims to proceed. At issue was whether the protections of Title VII extended to individuals who identified as gay or transgender. In a landmark decision, the Court held by a 6-3 vote that an employer who fires an individual merely for being gay or transgender violates Title VII’s prohibition against discrimination based on “sex.” Judge Gorsuch, writing for the majority, summarize the court’s ruling succinctly Today, we must decide whether an employer can fire someone simply for being homosexual or transgender. The answer is clear. An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids. The Majority found that an employer violates Title VII when it intentionally fires an individual employee based in part on sex, and it makes no difference if other factors besides the plaintiff’s sex contributed to the decision or that the employer treated women as a group the same when compared to men as a group. A statutory violation occurs if an employer intentionally relies in part on an individual employee’s sex when deciding to discharge the employee. Because discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender also violates Title VII. The Court refused to look at the legislative history in 1964 because it determined that no ambiguity exists about how Title VII’s terms apply to the facts and a new application is not foreclosed when clearly commanded by the plain text of existing law. Likewise, the examining policy arguments is unwarranted where the plain text was clear. II-1 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Fourth Circuit [2] Sorto v. Autozone, Inc., 821 F. App’x 188, 2020 U.S. App Lexis 22735 (4th Cir. Jul. 21, 2020) (Niemeyer,* Wynn, Floyd). Shortly after beginning a position as a sales associate in October 2011, the AutoZone where he worked was robbed while Sorto was working. The store manager accused Sorto of being a conspirator. Some months later, the store manager blamed Sorto when items were misplaced in the store stating, “I know how all you Latinos are.” Six months later, another manager remarked that Sorto “stinks and smells like sheep” sparking a pattern of sheep-related mockery where managers called him names like “sheep” and “Luis Sheep,” used a sheep hand puppet to call him over, and changed his nametag to read “Luis Sheep.” Other employees also posted pictures of sheep on the company board also called him sheep-related names. Employees also called him “Hello Kitty.” In August 2015, Sorto was transferred to a store in Maryland and sustained a wrist injury in a workplace accident. Sorto’s managers were displeased when Sorto requested medical leave to receive treatment for the injury and declined to assign him to light duty, although Sorto's doctors recommended that he avoid heavy lifting. Additionally, Sorto other employees began making verbal insults such as a new employee calling him “gay,” “princess,” “Hello Kitty,” and “a Mexican” due to Sorto’s shoulder-length hair. Other employees yelled to him, “Orale” (The Court noted that while Sorto did not explain the meaning of “Orale” in briefing, according to Wikipedia it is a common Spanish interjection in Mexican Spanish slang as an exclamation expressing approval or encouragement.) When Sorto reported these various comments to the assistant manager and HR, AutoZone took no action. Sorto informed his managers that he would be absent from work on April 27, 2016 to file an EEOC charge and was terminated the following week. Sorto filed suit under § 1981 and Maryland state law alleging race discrimination, a hostile work environment and harassment, and retaliation as well as failure to accommodate and disability retaliation under Maryland law and FMLA interference. AutoZone filed a motion to dismiss all claims except for his race discrimination and retaliation claims. In response, Sorto – who was represented by counsel and not merely appearing pro se – filed an amended complaint but failed to comply with the Local Rules requiring a party file simultaneously a red-line showing the stricken material. While days later Sorto filed another amended complaint and a document purporting to be the red-line, it did not accurately identify stricken and new material. Further, the substance of the allegations was unchanged. The court scheduled a hearing and instructed Sorto file a corrected red-line prior to the hearing, which he had still failed to do. Sorto filed another red-line copy but it again failed to correctly identify new material or material stricken. The district court granted AutoZone’s motion as to harassment finding that many of the allegations in the complaint fell outside the statute of limitations period for harassment and did not allege harassment based on race. The district court also noted that the complaint failed to comply with the short and plain statement requirement of Federal Rule of Civil Procedure 8 as it included legal arguments responding to the motion to dismiss and contained references to Title VII (despite only bringing claims under § 1981). While the district court denied AutoZone’s motion as to the II-2 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR remaining counts, it struck the entire complaint because Sorto failed to comply with the pleading requirements and directed him to file another amended complaint with specific instructions on how to shorten the complaint and remove the legal errors. The Court also relieved Sorto of the obligation to file a red-line. Sorto’s second amended complaint was substantially similar to the first amended complaint and did not remove the allegations related to his hostile work environment claim that the court had dismissed on the merits nor did it delete the citations to Title VII. The district court dismissed the complaint with prejudice as a sanction for “complete indifference and defiance of the court's order.” The district court’s frustration with Sorto’s counsel was more than evident in its ruling (as quoted by the Fourth Circuit): [T]he court's rules govern the proceedings before it and what I'm terribly concerned about is [counsel] is unable to accept that basic concept that Rule 8 calls for a short and plain statement of the case. He's not done that. He's persisted in filing complaints that read like a dime-store novel, are dripping with sarcasm towards opposing counsel. And I'm not confident we'll ever get forward at all in this case as long as [counsel] is at the helm of the Plaintiff's case. And I'm deeply troubled by his behavior, deeply troubled by his attitude toward the court and deeply troubled by his attitude towards discovery issues in this case.... I'm going to grant the motion to dismiss with prejudice of the complaint in this case. I regret that that step is necessary. But I just see complete indifference and defiance of the court's order. I've laid out what needs to be done to comply and what I've gotten is further noncompliance. Sorto appealed challenging the dismissal of the harassment claim as well as dismissal of the entire complaint as a sanction. On appeal, the Court concluded that the harassment allegations were insufficient as a matter of law even if timely. The isolated references to Sorto as a Latino, implying that he was untrustworthy, Mexican, had long hair, were made over 4 years apart and in two different workplace locations and could not meet the high bar for harassment. The Court noted that the remaining terms (e.g., sheep, Hello Kitty, gay, and princess) could not be attributed to race as they are not commonly associated with people of Hispanic origin and did not relate to race, even if offensive. The Court also rejected arguments that the sheep-related comments were motivated by racial animus because they compared people to animals. The Court distinguished instances where the term monkey to address an African-American person was akin to using the “n-word” because unlike the long history of disparagingly comparing African-Americans to primates, Sorto failed to point to authority that Latinos are/have been associated with sheep. Therefore, the Court affirmed the district court’s dismissal of the hostile work environment claims. With regard to the district judges dismissal of the remainder of Sorto’s claims for failure to comply with pleading rules, the fourth circuit noted: “As described above, Sorto repeatedly ignored the dictates of the Local Rules and the district court's express instructions for amending his complaint, instead filing a series of substantially similar, flawed pleadings.” Thus, while the Court of Appeals II-3 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR acknowledged that dismissal with prejudice was an extreme remedy, the Court determined that it was warranted given the circumstances and procedural history. [3] Bazemore v. Best Buy, 957 F.3d 195 (4th Cir. Apr. 21, 2020) (Agee, Richardson, Quattlebaum*). In February 2017, Bazemore, an African-American woman, was working as a wireless sales consultant. Bazemore alleged that another sales representative (White) made a racist and sexually charged joke to a small group of coworkers, including Bazemore. When eating mixed nuts, the coworker identified a Brazil nut and asked the group “Hey, do you know what these were called back in the day?” The coworker asked “Do you promise not to call HR on me?” and then looked at Bazemore (the only African-American woman in the group) and said “N[***r] T[*]ts!” While the coworker laughed, everyone else “was frozen for a few seconds” in disbelief and Bazemore broke the silence saying “Okay” and then walked away. Bazemore reported the incident to HR. Three days later, HR notified Bazemore that it was handling the matter and two weeks later informed her that the matter was resolved and the case closed. Bazemore perceived no sign at work that anything had changed. Bazemore filed an EEOC Charge alleging harassment based on sex/race. The Company asserted that it had promptly investigated the incident and issued the coworker a final written warning. After receiving a rightto-sue letter, Bazemore filed suit alleging race and gender discrimination and harassment under Title VII. The Company filed a motion to dismiss attaching a coaching/corrective action form for the co-worker showing that as a result of her remark to Bazemore she had been issued a final warning, the last corrective action before termination. The district court granted the motion to dismiss but indicated it did not rely on the coaching document, instead relying only on Bazemore’s factual allegations. On appeal, the Court affirmed the district court’s granting of the employer’s motion to dismiss. The Court noted that merely alleging unwelcome conduct based on an employee's race or sex that is severe or pervasive enough to create a hostile work environment is not on its own enough to hold an employer liable. Rather, an employee must allege sufficient facts to plausibly satisfy the imputability requirement. As the circumstances at issue involved a coworker, not a supervisor, Bazemore was required to allege facts to show that the Company knew, or should have known, about the harassment and failed to take action reasonably calculated to stop it. Here, it was undisputed that HR contacted Bazemore three days after she reported the incident and that within two weeks the coworker had received a written warning. Further, Bazemore did not allege that the coworker, or anyone else at the Company, harassed her again. The Court noted that while it was apparent that Bazemore believed the Company’s response was inadequate, Title VII does not prescribe specific actions for an employer to take in response to racial or sexual harassment, or require that the harasser be fired. Rather, it is enough for an employer to take action “reasonably calculated” to stop the harassment. [4] Bing v. Brivo Sys., LLC, 959 F.3d 605 (4th Cir. May 19, 2020) (Agee and Quattlebaum*) (Traxler dissenting). Bing, an African-American male, was hired by the Company but fired shortly after starting orientation on his first day of employment. During the application process, Bing disclosed his II-4 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR prior criminal history and passed the background check. Within an hour of starting orientation, Charles Wheeler, a white male not involved in Bing’s hiring, confronted Bing over a Baltimore Sun article that he had found after running a Google search which reported Bing's tangential involvement in a shooting for which he faced no charges. Wheeler berated Bing about the incident, declared that he was not fit for employment with the Company, terminated him on the spot, and escorted Bing out of the building. After receiving an EEOC right to sue letter, Bing filed suit pro se alleging unlawful termination and harassment/discrimination in violation of Title VII. The Company filed a motion to dismiss and the district court granted the motion ordering the Clerk to close the case but without indicating if dismissal was with or without prejudice. As an initial matter, Judge Traxler, writing for the Court, determined in an extensive analysis that the district court’s order was an appealable final order even though the order did not indicate if it was dismissal with or without prejudice. Overall, the district court's opinion held that the circumstances surrounding Bing's hiring and subsequent firing did not expose the Company to legal liability and therefore was a final, legal determination that the Company’s conduct was not actionable. Next, Judge Quattlebaum writing for the Court (with Traxler dissenting) affirmed the district court’s dismissal. First, the Court noted that Bing specifically alleged a nonracial reason for the termination and that while such a decision may have been hasty and unfair, there were no facts to support it being racially motivated. Next, the Court noted that Bing’s other allegations regarding racial motivation were speculative as he alleged he could “find nothing other than [his] (possibly unexpected) physical appearance as an African-American male, to explain [the Company’s] actions” and "question[s] whether or not [the Company] can provide historical documentation to replicate [his] hiring experience, or at the very least, demonstrate that they have a common hiring practice of conducting ancillary 'Google searches' of employees' names on the first day of employment with the company." Further, Bing did not allege that Google searches were only conducted on African-American employees that Wheeler searched for additional information about Bing in contrast to white employees or that Wheeler or anyone else said or did anything suggesting the search was racially motivated. Even liberally construing a pro se complaint, Bing’s allegations fail not because of unsophisticated language or failure to adhere to formalities, but rather his alleged facts do no support his claims. Judge Traxler dissented on grounds that the allegations were sufficient, particularly when liberally construed as a pro se complaint. [5] Ward v. AutoZoners, LLC, 958 F.3d 254 (4th Cir. May 11, 2020) (Agee, Floyd,* and Quattlebaum). AutoZone hired Ward as a part-time employee at one of its stores in NC. AutoZone also hired Christina Atkinson who worked alongside Ward and began groping Ward and engaging in sexually explicit language at work. Atkinson joked to Ward and Smith (a commercial sales manager who directly managed Ward and Atkinson) that she had performed oral sex on her husband for three hours the previous evening. Atkinson made numerous other actions such as dragging her fingers across Ward's buttocks, twisting Ward’s nipples, grabbing Ward's crotch, and making other advances. Despite Ward's repeated requests, Atkinson did not stop. II-5 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR While AutoZone had a policy prohibiting sexual harassment, handbooks describing the policy were not available at the store, AutoZone did not provide any in-person training on the policy (instead merely requiring employees to log in to a computer and verify that they had read the policy). A store manager, Wayne Tarkington, testified that while it was his job to ensure employees received the policy, it was not his job to ensure they read it and that he suspected most people did not read it. Indeed, he admitted that he would illicitly log in to AutoZone's digital verification program and verify on behalf of other employees that they had read the policy. When Ward first reported Atkinson's behavior to his manager Smith, Smith failed to respond and even replied at one time, “Well, maybe if you'll give her what she wants, she'll leave you alone.” Ward then turned to Tarkington, who confronted Atkinson and admonished her to stop but also admonished Ward to “knock it off,” although no one had accused Ward of any misconduct. Tarkington also informed a district manager, Kenneth Geer, about the conduct but Geer did nothing. Ultimately, Atkinson continued her advances. About five months later, Lawrence McCall replaced Tarkington as the store manager. After Ward reported Atkinson’s conduct to McCall, and despite assurances the behavior would be addressed and Atkinson sent home for misconduct, Ward saw Atkinson’s car in the store’s parking lot the next day. Ward then drove away and drafted a resignation letter and submitted it the next day. When Ward met with Greer to discuss possibly returning to work, Geer told Ward it was Ward’s fault because he was “a man” and should have been able to prevent Atkinson’s behavior. Ward filed suit alleging a hostile work environment and retaliation in violation of Title VII and Intention Infliction of Emotional Distress (IIED) under state law. A jury rejected his retaliation claim but returned a verdict in favor of Ward on his sexual harassment claim awarding $100,000 in compensatory damages and $600,000 in punitive damages, and on his IIED claim awarding $150,000 in compensatory damages and $60,000 in punitive damages. The district court reduced the punitive damages award to $200,000, so that the total Title VII damages would fall within the mandatory $300,000 limit. The parties cross-appealed on a variety of issues. Regarding AutoZone’s challenge of punitive damages on Ward’s claims, the Court reversed the verdict. First, the Court noted that while Ward had pursued vicarious liability on a managerialcapacity theory based on the conduct of Smith, Geer, or Tarkington, the evidence only supported such a finding as to Geer or Tarkington. Nonetheless, the Court concluded that there was insufficient evidence to find that these two managerial employees engaged in intentionally discriminatory practice with malice or reckless indifference to Ward’s rights. Yet Ward failed to present evidence that Geer or Tarkington engaged in intentional discrimination and rather only presented evidence that Atkinson engaged in discrimination. While certainly the jury could conclude that the managers could have done more in the circumstances (which would support compensatory damages) the evidence is at best reckless/negligent behavior short of what is required for punitive damages. The Court also reversed the punitive damages award for the IIED claim under state law. Next, the Court determined that the compensatory damages for Title VII and IIED were not duplicative. The standards for awarding such damages under both laws differ and the jury’s award under each represents the particular injuries under those varying standards. Finally, the court discounted various arguments by AutoZone as to error with the jury instructions and other evidentiary errors and ultimately found no reversible error on those grounds. II-6 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR [6] Johnson v. United Parcel Service, Inc., 839 F. App’x 781 (4th Cir. Jan. 5, 2021) (per curiam). The Court used strong language in upholding a summary judgment award to UPS, calling the Johnson’s Title VII claims “conjecture.” Johnson claimed that she was retaliated against because of her religious beliefs and that she was subjected to religious hostility when UPS allegedly punished her for refusing to work on the Sabbath by overloading her truck. The Court rejected her claim, noting that she failed to identify who unsafely packed her truck. The Court said it could only “simply speculate” whether this unknown individual unsafely packed her truck because of Johnson’s religious beliefs. Additionally, UPS had allowed Johnson to not work Fridays (when her Sabbath began) between October and April and adjusted her schedule during the other months so that she finished her work on Fridays before sundown. [7] Lemon v. Myers Bigel, P.A., 985 F.3d 392 (4th Cir. 2021) (Wilkinson,* Niemeyer, Diaz). Lemon was an equity partner at a law firm practicing patent law and applied for short-term leave. The firm determined that Lemon did not qualify for the leave and denied the request. Lemon filed suit alleging race and gender discrimination under Title VII and race discrimination under Section 1981. The district court dismissed both claims under FRCP 12(b)(6) and Lemon appealed. The Court affirmed the district court on the basis that Lemon was a partner and equal owner of the firm, not an employee, and thus was not within the scope of Title VII's coverage. Like every other full partner at the firm, Lemon owned 5,000 shares and commanded one vote in all matters coming before the Board of Directors, the body with primary decision-making authority over all matters substantially affecting the firm. No one owned a greater share of the firm, or had greater voting power, than Lemon. No one had more of a right to run for election to the Management Committee, a panel of five partners whose authority derived from Board delegation. Neither did anyone at the firm have a superior claim on any of the Board's officer roles. Lemon served on the Management Committee in 2011 and served as Vice President and Secretary of the firm in 2016. Like all other partners, Lemon’s annual compensation was tied to the performance of the firm and her contribution to it. EDVA/WDVA [8] McCoy v. University of Virginia Medical Center, 2020 WL 4451054 (W.D. Va. Aug. 3, 2020) (Moon). McCoy worked as a nurse at UVA Medical Center and claimed that she was sexually harassed by two other nurses. She complained to UVA and later claimed that because of the stress, she was unable to return to work, and took FMLA leave for an acute stress reaction. UVA denied her request for pay while on FMLA leave, and McCoy filed suit, claiming, among other things, that UVA retaliated against her in violation of Title VII when it refused to pay her while on FMLA leave. The Court determined that because McCoy did not plead any facts showing the UVA had a regular practice of approving pay while on FMLA leave, denial of discretionary pay could not, II-7 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR alone, constitute an adverse action to support her retaliation claim. Accordingly, the Court granted UVA’s motion to dismiss McCoy’s Title VII retaliation claim. [9] Martinez v. Constellis, LLC, 2020 WL 4589194 (E.D. Va. Aug. 10, 2020) (Lauck) Martinez was fired by his employer, Constellis, after he was in an accident while driving on the job. Martinez was at fault in the accident and was going over the speed limit at the time of the accident. Martinez, who identified as “of Spanish descent”, filed suit against Constellis claiming that he was discriminated against him on the basis of his race and national origin in violation of Title VII. Martinez was initially proceeding pro se, but after filing suit, retained counsel and his counsel filed an Amended Complaint. Constellis filed a Motion to Dismiss arguing, among other points, that Martinez failed to show that Constellis treated non-Spanish employees more favorably. The Court agreed, noting that Martinez was not required to point to a specific comparator in order to establish a Title VII discrimination claim, but because he did, he had to plead enough facts to plausibly show that Constellis treated the comparators more favorably. The Amended Complaint did not include any facts alleging that the comparators were also at fault in their accident or held positions similar to Martinez. Due to this pleading failure, the Court sustained the Motion to Dismiss. Notably, the Court dismissed the Amended Complaint with prejudice because Martinez had already had the chance to amend his Complaint. [10] Rev. Columbia Nnorom v. Virginia Union University, 2020 WL 5652439 (E.D. Va. Sept. 23, 2020) (Gibney). Nnorom sued Virginia Union University (“VUU”) alleging retaliation for filing an EEOC charge in violation of Title VII. Nnorom had previously worked as a VUU adjust professor, and filed an EEOC charge after VUU declined to renew his contract when it expired. He failed, however, to timely file suit before the 90-day window closed. Instead, he filed a second EEOC charge claiming that VUU banned him from campus in retaliation for filing his initial charge. After he received a right to sue letter on this second charge, he filed suit. The Court granted VUU’s Motion to Dismiss. First, the Court noted that Nnorom’s argument that VUU banned him from the campus was unsupported by the email he cited. The email from VUU made clear that it did not ban him from campus; instead, it reiterated VUU’s decision not to renew Nnorom’s contract. The Court criticized Nnorom’s attempt to circumvent the statute of limitations by contacting VUU and asking VUU to rehire him after he missed the deadline to file suit on his first EEOC charge. The Court strictly enforced the statute of limitations, stating that he could not “reopen that window” otherwise, “he could extend the statute of limitations indefinitely” simply by contacting his former employer repeatedly. [11] Sarco v. 5 Star Financial, LLC, 2020 WL 5507534 (W.D. Va. Sept. 11, 2020) (Urbanski). Sarco claimed that he was subjected to a hostile work environment on the basis of his gender nonconformity and sexual orientation in violation of Title VII, and provided various examples of the conduct he suffered. Those instances included, among other things, being told that he did not II-8 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR care about the military because of his sexuality; having his boyfriend denied an interview; and, being told that Chick-fil-A was served “because of what the company stands for.” The Court granted 5 Star’s Motion to Dismiss Sarco’s hostile work environment claim because Sarco did “not plead bigoted statements sufficiently severe or frequent” nor claim to receive physical threats, experience an impact on his ability to do his job, or suffer an injury to his psychological well-being. The Court did allow general discrimination claims to proceed under Bostock on theories of gender stereotype nonconformity discrimination and sexual orientation discrimination. [12] Webster v. Chesterfield Cty Sch. Bd, 2020 WL 6064352 (E.D. Va. Oct. 14, 2020) (Hudson) Webster worked as an Instructional Assistant in Special Education at an elementary school in Chesterfield County. Webster brought suit alleging a hostile work environment after one of her assigned students (a young man suffering from an intellectual disability) repeatedly touched her genitals and groped her. Webster also identified other incidents in addition to this touching and groping, including a minor student lifting her dress, and touching and groping Webster after Webster placed herself between the student and an outlet in order to prevent the student from electrocuting himself. Webster complained and the School Board’s investigation found Webster’s allegations to be “founded.” The School Board assigned this student to a separate bus, changed Webster’s schedule to prevent her from walking alone with the student to general education classes, and monitored the classroom so that Webster was not alone with the student. However, the School Board still required Webster to interact with the student. The School Board filed a Motion to Dismiss arguing that Webster could not prove that the student’s behavior was “based on her sex” (the second element of a hostile work environment claim). Webster claimed that she need not demonstrate that the intellectually disabled student was capable of knowing and understanding the sexual nature of the conduct, only that there was, in fact, sexual contact. The Court agreed with Webster and denied the Motion to Dismiss, but called the case a “close call.” The Court noted that School Board presented no persuasive authority that courts have required a plaintiff to plead that an intellectually disabled child’s actions were knowing and intentional. Because Webster had pled numerous incidents of sexual contact and alleged that it altered her work environment, her complaint was sufficient to survive the School’s Board motion to dismiss. [13] Jones v. Sun Pharm. Indus., Inc., 2020 WL 181470 (E.D. Va. May 14, 2020) (Lauck). Jones was a District Sales Manager and alleged that the Company’s Head of Commercial Operations showed a clear preference for male sales managers, would fail to respond to her emails while responding to male sales managers, and made comments to and acknowledged only male managers in meetings. Jones alleged that other managers approached her and commented that it was obvious that the Head of Commercial Operations “hated” her and that her supervisor concurred that the Head of Commercial Operations treated her differently than male sales managers. Jones also alleged that senior executive management fostered a culture that disregarded II-9 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR the contributions of female sales representatives and managers and that at the time of her termination she was the only woman sales manager on her six person leadership team. In January 2018, the Company terminated Jones's employment after it was discovered that she had submitted duplicative expenses for reimbursement. Jones field a Charge alleging that other male sales representatives had received excessive reimbursements for cell phone usage but they were not terminated. Further, Jones alleged that the Company replaced her with a less qualified male. After receiving a right to sue letter from the EEOC, Jones filed suit for gender discrimination and a hostile work environment in violation of Title VII. The Company filed a partial motion to dismiss under Rule 12(b)(1) on the grounds that Jones’ hostile work environment was time-barred and under Rule 12(b)(6) on the basis that such claim, even if timely, lacked a sufficient basis to state a claim. The Court denied the motion to dismiss under Rule 12(b)(1) noting that Jones's termination took place within the 300 day timeframe and concluded that it related to the same alleged unlawful employment practice. Therefore, even though the actions contributing to the hostile work environment claim were outside the relevant time period, the claim was timely under the continuing violation doctrine. Nonetheless, the Court dismissed the hostile work environment claim under Rule 12(b)(6) concluding that Jones failed to allege that the workplace was sufficiently severe or pervasive to support her claim. The Court noted that Title VII does not create a general civility code and the alleged behavior does not rise to a level of severe and pervasive. Callous behavior by a supervisor is insufficient and there was no physically threatening behavior or unreasonable interference with work performance. [14] Whitaker v. City of Hopewell, 2020 WL 7246593, 2020 U.S. Dist. LEXIS 231941 (E.D. Va. Dec. 9, 2020) (Gibney, J.). Whitaker, a fifty-eight-year-old black male, worked as the Director of Finance for the City from 2012 through 2016, where he oversaw an annual comprehensive financial audit. Whitaker never completed the audit on time (for example, the 2013 audit was two months late, the 2014 audit almost seven months late, and the 2015 audit was not completed at the time of his termination on December 16, 2016). Whitaker asserts that the delays were due to understaffing and high turnover in his department, his inability to fire the Accounting Manager, and delays in receiving information from other departments. On August 18, 2016, Whitaker emailed the City Manager and Assistant City Manager Charles Dane to report the misuse of government funds by another City employee. On November 9, 2016, Whitaker notified City Council of the misuse of government funds. Then, on December 15, 2016, Whitaker emailed City Council, saying: I am so disgusted in the overall level of immaturity of management, the lack of professionalism, the lack of support from executive staff, and the level of EEOC violations that I have been subjected to on a daily basis for the past three years of my employment with the City of Hopewell. The day after Whitaker emailed City Council, the City fired him. Whitaker filed suit asserting race discrimination and retaliation under Section 1981 and also a First Amendment retaliation claim under Section 1983. In part, Whitaker alleged that the City fired him because of his race II-10 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR and in retaliation for reporting EEOC violations and the misuse of government funds. The City asserted that it rightfully fired Whitaker for four reasons: (1) his failure to timely complete an annual financial audit that he oversaw as the City's Finance Director; (2) his unprofessional interactions with his staff and City Council; (3) his failure to report serious matters to the City Manager, Mark Haley; and (4) his chronic tardiness and absenteeism. The district court granted summary judgment in favor of the City finding that the City provided legitimate, nondiscriminatory reasons for his termination and Whitaker pointed to no evidence to that the City fabricated such as a pretext. Notably, when assessing Whitaker’s retaliation claim, the district court rejected Whitaker's argument about temporal proximity even though he was fired the day after his December 15, 2016 email to City Council. The Court reasoned that because the City has offered convincing, nonretaliatory reasons for terminating Whitaker, temporal proximity alone could not allow Whitaker to survive summary judgment. [15] Guirkin v. CMH Physician Servs., LLC, 2020 WL 6829769, 2020 U.S. Dist. LEXIS 217998 (E.D. Va. Nov. 20, 2020) (Lauck, J.). CMH Physician Services, LLC hired Dr. Guirkin as the Vice President of Medical Affairs/Chief Medical Officer and executed a Physician Employment Agreement that provided a term of employment from March 10, 2019 through June 30, 2020. Around April 24, 2019, CMH terminated Guirkin's employment. Dr. Guirkin filed suit alleging that CMH discriminated against him on the basis of sexual orientation in violation of Title VII and that it breached his hiring agreement in violation of Virginia law. CMH filed a motion to dismiss both claims. The district court determined that Dr. Guirkin had sufficiently pled a claim under Title VII. First, the district court noted that as a gay man, Dr. Guirkin was part of a “protected class.” (Citing Bostock v. Clayton County, Georgia, 140 S. Ct. 1731, 1737 (2020)). Next, the district court noted that Dr. Guirkin alleged he was qualified for the type of employment for which he was hired, evidenced by the executed Physician Employment Agreement and the decision by the Hiring Committee to retain him as Vice President. Third, the district court noted that CMH took an adverse employment action against Dr. Guirkin by terminating his employment before his contract term expired. While CMH's maintained it fired Dr. Guirkin for cause, the court noted that this was irrelevant in the analysis as it nonetheless was an adverse employment action. Finally, even though Dr. Guirkin did not allege any comparator, the district court determined that there were sufficient facts alleged based on the totality of the circumstances sufficient to overcome the need to demonstrate a similarly situated comparator. Dr. Guirkin alleged that the Hiring Committee was unaware of his sexual orientation at the time of his hiring but learned of his sexual orientation in the weeks following when he openly referenced and introduced co-workers to his male husband. Dr. Guirkin alleged that once his colleagues became aware of his sexual orientation, he was subject to bias and to discriminatory comments. After CMH opened an investigation against Dr. Guirkin for an undisclosed complaint, he learned at an April 2019 meeting that a female colleague, to whom Guirkin had "mentioned his husband and sexual orientation" and who then accepted his invitation for "dinner and/or drinks with . . . Guirkin and his husband," was the source of the complaint. At the meeting, the CEO Burnette and an HR Representative purportedly asked Guirkin "pointed and irrelevant" questions about his sexual orientation and spouse. CMH II-11 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR terminated Dr. Guirkin's employment the next day. The close temporal proximity between the veiled remarks and the scrutiny of Dr. Guirkin's sexual orientation on the one hand, and Guirkin's firing on the other, was enough to generate an inference of discriminatory intent sufficient to withstand a motion to dismiss in the absence of a heterosexual male comparator. Therefore, the Court denied CMH’s motion to dismiss the Title VII claim. [The Court also denied the motion to dismiss the breach of contract claim.] II. AGE DISCRIMINATION IN EMPLOYMENT ACT (ADEA) U.S. Supreme Court [16] Our Lady of Guadalupe Sch. v. Morrissey-Berru, 140 S. Ct. 2049, 207 L.Ed.2d 870 (Jul. 8, 2020) (Alito). Two elementary school teachers at Roman Catholic schools in Los Angeles were employed under nearly identical agreements that set forth the schools’ mission to develop and promote a Catholic School faith community, imposed commitments regarding religious instruction, worship, and personal modeling of the faith, and explained that the teachers’ performance would be reviewed on those bases. Each teacher was required to comply with the respective school’s faculty handbook, taught religion in the classroom, worshipped with students, prayed with students, and had performance measured on religious criteria. After being terminated, one of the teachers sued the school under the ADEA for failing to renew her contract purportedly so it could replace her with a younger teacher. The other teacher sued after termination alleging that the school had discharged her because she had requested a leave of absence to obtain breast cancer treatment. Both schools obtained summary judgment invoking the “ministerial exception” under HosannaTabor Evangelical Lutheran Church and School v. EEOC, 565 U.S. 171 (2012) but the Ninth Circuit reversed both decisions. The Supreme Court reversed and remanded, holding that the “ministerial exception” in HosannaTabor applied and foreclosed both employment-discrimination claims. The Court reasoned that independence of religious institutions in matters of “faith and doctrine” is closely linked to independence in “matters of church government.” Therefore, courts are bound to stay out of employment disputes involving those holding certain important positions with churches and other religious institutions. A variety of factors may be important in determining whether a particular position falls within the ministerial exception. Here, the teachers fit within the exception recognized in Hosanna-Tabor as both performed vital religious duties, such as educating students in the Catholic faith and guiding their students to live their lives in accordance with that faith. While their titles did not include the term “minister” and they had less formal religious training than the individual at issue in Hosanna-Tabor, their core responsibilities were essentially the same and their schools expressly saw them as playing a vital role in carrying out the church’s mission. II-12 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Fourth Circuit [17] Cole v. Family Dollar Stores of Md., Inc., 2020 US App Lexis 13454 (4th Cir. Apr. 27, 2020) (Wilkinson, Thacker, Rushing*). In 2012, Cole was a 48-year-old customer service representative who suffered from a psychiatric condition. Weeks after hiring, Cole received approval from an unnamed manager to take medical leave for hospitalization related to her condition. When Cole returned to work, a 27-year-old replaced Cole's former manager and made repeated remarks about Cole's age, saying that she wanted to “get rid of old employees” to hire younger people and telling Cole that she was not “too old to stock” or “too old to sweep.” Under Company policy, employees who do not show up for their shift and do not contact their manager or provide any notice of their absence incur a no call/no show absence and an employee could be fired for a single attendance policy violation. In January 2013, Cole contacted HR and complained that Thompson was giving more hours to younger employees than to Cole. The following week, Cole was scheduled to work on January 16, 18, and 19. Cole attended work on January 16 but missed her shifts on January 18 and 19 without providing notice or contacting Thompson, incurring two no call/no show absences. Thompson considered these absences to be job abandonment and requested the district manager’s approval to terminate Cole's employment. After the district manager spoke with HR and the regional vice president, the district manager approved Thompson's request and terminated Cole. Cole filed suit alleging age discrimination and retaliation under the ADEA as well as failure to accommodate her under the ADA. The district court granted summary judgment in favor of the employer. The Court affirmed summary judgment. The Court concluded that even if Cole could establish a prima facie case of discrimination and retaliation, ultimately she could not show that the Company’s legitimate reasons for terminating her (two consecutive no call/no show absences) was pretextual. The Court determined that Cole only identified employees with single unexcused absences rather than employees with no call/no show absences like Cole. This distinction was important because the Company considered two consecutive no call/no show absences to be “job abandonment” not merely an unexcused absence. Further, the court held it was undisputed that the final schedule was posted next to the kiosk where Cole worked, so she must have seen the schedule during her shift on January 16. Regarding retaliation, the Court determined that even though Cole was terminated 13 days after complaining of discrimination, any such temporal proximity could not meet the burden at the pretext stage – particularly in light of the intervening event that Cole incurred two consecutive no call/no show absences, which the Company says was the basis for her termination. Further, the Court noted that even if Thompson's comments qualify as direct evidence of age discrimination, the Company provided an intervening legitimate reason for her termination that prevents any butfor causation. Finally, the Court affirmed summary judgment on Cole’s ADA accommodation claim because Cole failed to identify evidence that the Company denied her requested accommodation or later penalized her for her hospitalization absences. II-13 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR EDVA/WDVA [18] Granet v. Presidio, Inc., No. 3:19-cv-821, 2020 WL 614700 (E.D. Va. Oct. 20, 2020) (Gibney). Plaintiff was hired to work as an account manager for Presidio in May 2018, at the age of 54. Plaintiff’s tenure was full of unfortunate blunders, including telling a client that his doctor had “over-served” him on sleep medication, sending the same client Presidio’s proprietary internal pricing information, and making inappropriate comments to a colleague at a professional dinner. Further, his job performance fell far below Presidio’s reasonable expectations. Plaintiff paid many visits to the neighboring business, Morton Consulting, in an apparent attempt to pursue a potential client. As it turns out, Plaintiff was romantically interested in one of Morton Consulting’s employees – a 2018 college graduate. Plaintiff sent her the following on LinkedIn: “I love chatting with you and I like you. Maybe we could grab dinner sometime or do you think I might be too young for you?? :)”. Morton Consulting’s HR manager notified the president of Morton Consulting who in turn notified Presidio’s VP of Sales, Mr. Michie. Mr. Michie, also in his 50’s, called Plaintiff into his office and said, “why are you asking a woman much younger than yourself out to dinner? You're as old as me and you asked her out to dinner! You have no right to do that I'm so pissed off right now.” Mr. Michie further told Plaintiff that he was probably going to lose his job. Two days later, Plaintiff was terminated and he was replaced by a 30 year old. Plaintiff sued Presidio for age discrimination. The district court denied Presidio’s motion for summary judgment. The court found that Plaintiff could establish an age discrimination claim with direct evidence. In relying on the Fifth Circuit’s test for determining whether derogatory comments are direct evidence of age discrimination, see Jackson v. Cal-Western Packaging Corp., 602 F.3d 374 (5th Cir. 2010), the court found that Mr. Michie’s comment to Plaintiff satisfied the test because: (1) it related to Plaintiff; (2) it happened just two days before Plaintiff’s forced resignation; (3) Mr. Michie, who ultimately hired and fired Plaintiff, made the comment; and (4) the comment related to Plaintiff’s LinkedIn proposition. While the court recognized that Mr. Michie's decision to force Plaintiff’s resignation could—and very well may—have arisen from Plaintiff’s unprofessional and inappropriate conduct in the workplace and substandard performance, it denied Presidio’s motion for summary judgment because a jury could find that Plaintiff had shown, by a preponderance, that but for his age, he would have remained employed at Presidio. III. AMERICANS WITH DISABILITIES ACT (ADA); REHABILITATION ACT Fourth Circuit [19] Johnson v. Old Dominion Univ., 814 F. App’x 733, 2020 US App Lexis 15424 (4th Cir. May 14, 2020) (per curiam) Johnson, a former IT Specialist at ODU, filed numerous grievances and document requests while employed at ODU, alleging, among other things, racial discrimination by his supervisor. Citing Johnson's frequent use of the grievance process, repetitive document requests, and impaired communication skills, ODU required Johnson to undergo a Fitness for Duty evaluation. After II-14 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Johnson repeatedly failed to attend the required evaluation, ODU terminated his employment. Johnson filed suit alleging that the fitness for duty evaluation violated the ADA and that his termination was retaliation for his grievances and document requests in violation of Title VII. The district court granted summary judgment in favor of ODU. The Fourth Circuit agreed with the district court’s determination that communication was an essential function of Johnson's job and that the employer reasonably believed, based on objective evidence, that Johnson's ability to communicate effectively was impaired. Specifically, Johnson’s behavior required others to act as an intermediary between Johnson and other faculty members, Johnson refused to communicate with certain faculty members, and ODU faculty and staff were concerned about Johnson's adversarial and irrational behavior. Further, the fitness for duty evaluation referral form itself indicated it was referring Johnson because of the number of grievances and document requests he had filed. Therefore, the Court determined that the fitness for duty evaluation was warranted under the ADA. Next, the Court agreed with the district court’s determination that requiring the fitness for duty evaluation was supported by legitimate, nonretaliatory reasons and Johnson failed to point to any evidence of pretext. [20] Elledge v. Lowe's Home Centers, LLC, 979 F.3d 1004 (4th Cir. November 18, 2020) (Wilkinson). Elledge worked for Lowe's in the position of Market Director of Stores (MDS), which involved overseeing a dozen stores, typically visiting two stores per day and working between 50-60 hours per week, including considerable walking and driving. In December 2014, he underwent serious knee surgery. When he returned from leave, he was medically restricted from walking more than four hours per day or working more than eight hours per day. Lowe's agreed to temporarily accommodate these restrictions, and extended this temporary accommodation at least once. Lowe's also offered plaintiff the use of a motorized scooter, which he declined. Instead, Plaintiff opted to sometimes disregard his restrictions, and also created his own informal accommodation of having associates who accompanied him on store visits drive him, so that he could stretch his knee. After extending Elledge’s initial light duty period, Lowe’s learned that his restrictions would likely be permanent. Lowe’s then determined that Elledge could not remain in his position. Lowe’s offered to assist Elledge with applying for any vacancy in which he had an interest or, in the alternative, transferring to a less physically demanding manager-level role (at lower pay). Elledge declined a lower paying role, but applied for two other director-level positions. His applications were considered and rejected under Lowe's’ best-qualified hiring policies. The Court upheld summary judgment in favor of Lowe’s on Elledge’s ADA claims, affirming that he was not a “qualified individual with a disability” capable of performing his essential duties as an MDS. In so holding, the Court emphasized an employer’s discretion to determine which job functions are essential to a particular position, as well as to determine which accommodation(s) may be appropriate. Because the job description and testimony from managers and other employees confirmed that significant walking and driving, and long working hours, were confirmed to be required for the position, the Court concluded that they were essential functions II-15 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR of the position, which Elledge could not perform. Further, Elledge had been offered the reasonable accommodation of using a motorized scooter. Though it was his prerogative to decline this offered accommodation, he was not entitled to his preferred alternative. Therefore, “between the fixity of Elledge's mobility-related restrictions and his refusal to accept the motorized scooter accommodation, Lowe's determination that he could no longer remain in the highly demanding MDS position was reasonable.” Finally, the Court confirmed that Lowe’s had complied with its duties regarding potential reassignment. The Court held that Lowe’s had appropriately applied its best-qualified hiring system to select the best candidate for the two director positions, each of whom had more compelling experience related to the products managed in each role. Further, members of upper management had spent considerable time assisting Elledge in his application for these positions, ensuring he was not disadvantaged because of his disability. Finally, Lowe’s had alternatively offered Elledge transfer to a lower-paying, but less demanding, management position. In light of these various attempts to accommodate Elledge, and under the specific facts before the Court, the Court held that Lowe’s had complied with its requirements under the ADA. [21] Laird v. Fairfax Cty., Virginia, 978 F.3d 887 (4th Cir. Oct. 23, 2020) (Richardson). Laird, who has Multiple Sclerosis, worked for Fairfax County a Contract Specialist I in the Department of Procurement & Material Management. She was initially granted the accommodation of working remotely whenever needed. Ultimately, the department determined it was not able to adequately supervise or plan her role around unpredictable remote work, and offered a set schedule of working remotely two days per week. Laird filed a Charge of Discrimination with the EEOC alleging disability discrimination. As part of the settlement of the EEOC charge, the County and Plaintiff agreed to a lateral transfer within the County to the Fairfax County Police Department to the position of Buyer I, where she [would] maintain her pay grade, position within the salary band, and opportunity for future promotion.” The County then created a position within the Police Department, with the same pay grade as her previous job and eventually with the title Buyer I. Plaintiff alleged that the duties of the job were “boring” and “thinkless,” and that she had reduced opportunity for promotion. Plaintiff claimed discrimination and retaliation under the ADA. The Court upheld summary judgment for the County, holding that the lateral transfer was not an “adverse action” as required to make either a disparate treatment or retaliation claim under the ADA where the county agreed to provide, and employee agreed to accept, lateral transfer as reasonable accommodation. Specifically, the Court held that if an employee voluntarily requests a transfer, and the employer agrees to it, there is no actionable adverse action under the ADA. It further reasoned that a transfer cannot be “because of a disability,” and thus will not violate the ADA, if it occurred as the result of an employee's own request. [22] Thompson v. City of Charlotte, 827 F. App'x 277 (4th Cir. Sept. 17, 2020) (per curiam). A former City of Charlotte employee filed disability discrimination and retaliation claims under the ADA and wrongful discharge claims under state law. While employed, Plaintiff contacted the II-16 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR city’s EAP hotline to discuss serious concerns regarding his own mental state. Though these conversations are typically confidential, due to the nature of the concerns he raised (including that “he did not know what he was capable of” and might “throw [a coworker] in the [wood] chipper”), the EAP counselor notified the city of his threats. Plaintiff was placed on medical leave, and based on his fitness for duty documentation submitted in conjunction with his request to return to work, the city determined that he posed a direct threat and terminated his employment. Following a jury verdict in favor of the city on plaintiff’s disability discrimination and wrongful discharge claims, and in favor of the Plaintiff on his retaliation claim, the city requested and was granted judgment as a matter of law on Plaintiff’s retaliation claim. On appeal, the Fourth Circuit affirmed judgment in favor of the city on the retaliation claim, on the basis that Plaintiff never engaged in any protected activity under the ADA. Specifically, Plaintiff’s act of contacting the city's EAP was insufficient to establish that he had opposed an act or practice made unlawful by the ADA, or participated in any manner in any investigation, proceeding, or hearing under the ADA, and therefore city's termination of employee's employment was not retaliation for protected activity under the ADA. [23] Holmes v. Gen. Dynamics Mission Sys., Inc., 835 F. App'x 688, 692 (4th Cir. Dec. 9, 2020) (per curiam). Holmes worked as a shelter fabricator for General Dynamics, a role that involved the use of various heavy machinery. Though the company had historically not enforced its steel-toed shoe policy, after an employee injury and a negative workplace safety audit, it determined that it must begin enforcing the requirement. Holmes submitted a doctor’s note stating she was unable to comply with the requirement due to diabetes and other impairments related to her feet, and she was placed on unpaid leave. After attempting to work with Holmes for nearly two years to determine a solution, including offering to pay for custom shoes (which offer was rejected by Holmes), General Dynamics determined that she could not safely perform her job duties and ultimately terminated her employment. The Fourth Circuit agreed with the District Court that Holmes was not a qualified individual with a disability entitled to the protections of the ADA. In so holding, the Court expressly affirmed the EEOC’s position that a safety requirement need not be a part of the essential functions of a position for an employer to enforce it. Rather, as long as the requirement is valid, any employee who is categorically unable to comply is not a “qualified individual” under the ADA. Holmes did not refute the validity of the steel toed shoe requirement. Further, the Court dismissed as irrelevant the fact that she had previously performed the role for decades without wearing steel toed shoes, reasoning: “Just because an employee has performed her job for an extended period of time without injury does not mean that the employee has performed her job safely or that she could continue to perform her job without risking injury to herself or others.” [24] Miller v. Md. Dep't of Nat. Res., 2020 WL 3127788 (4th Cir. Jun. 12, 2020) (per curiam). Miller was a former recruit at the Maryland Department of Natural Resources Police Academy who was terminated after he sustained a neck injury with herniated discs that occurred during II-17 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR training and requested accommodations. In May 2016, Miller informed his supervisors of the injury and requested accommodations and his supervisors indicated they would work with him. Prior to his injury, Miller had received a satisfactory 90-day evaluation but due to his injury, he was placed on restricted upper body training for 30 days at the Police Academy. Another supervisor, Lieutenant Marconi, suspected Miller of abusing prescription drugs in order to stay operational through his injury and began ordering Miller out of uniform, sending him for work ability exams, cancelling his appointment with a neck specialist, and ordering him not to take his prescription medication during training. Further, Lieutenant Marconi forced Miller’s class to participate in a "Hell Week" because several cadets had been caught with tobacco products, in violation of the Police Academy manual, and Miller was required to complete extra-difficult exercises. He was unable to keep up with the strenuous training and fell several times and his request to access his prescription medication in August 2016 went unanswered. Later, Miller was caught accessing an unauthorized website during an exam claiming that he did not see the instructions written on the board or otherwise know about the rule. Miller admitted he used Google, which was unauthorized, to answer some of the exam questions and these answers were marked wrong. Lieutenant Marconi placed Miller on disciplinary probation for three weeks for "cheating and integrity issues" and while a disciplinary review board was supposed to convene to decide Miller’s punishment, it never convened. Then, Miller was placed on full medical restriction and would be referred to the state physician for another work ability exam and was forbidden from participating in any physical training. While Miller completed his disciplinary probation for the alleged cheating, he was nonetheless ordered to remain out of uniform. On September 2, 2016, Miller informed his supervisor that he may need surgery for his herniated discs and four days later was notified he was being terminated effective September 20. Miller filed an EEOC Charge and received a right to sue letter in May 2017. He timely filed suit alleging claims under the ADA, Rehabilitation Act, and Maryland state law for failure to accommodate, hostile work environment, unlawful termination based on actual disability and/or perceived disability, and retaliation. Miller conceded that he could not state claims under the ADA or his hostile work environment claims. The employer filed a motion to dismiss and/or for summary judgment as to Miller’s remaining claims. Despite Miller’s request for leave to amend, the district court granted the motion to dismiss without leave to amend. As an initial matter, the Court determined that Miller’s conclusory allegations about his disability were insufficient to show that his major life activities were substantially limited. Nonetheless, the Court determined that Miller had sufficiently alleged information to support his claims that he was regarded as being disabled under the ADA by his employer. Further, the Court determined the district court had abused its discretion by denying Miller leave to amend and noted that such leave should be “freely granted” here as Miller may be able to plead additional facts to support his failure to accommodate and unlawful terminations claims on an actual disability. As to the retaliation claim, the Court noted that even though Miller did not include allegations as to who decided to terminate him, at the pleading stage Miller was not required to show knowledge on the part of a decision-maker as part of the prima facie case. Further, the Court disagreed with the district court’s finding that the temporal proximity was insufficient and instead noted that II-18 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Miller’s termination just one day short of four weeks after his last accommodation request was sufficient at the pleading stage. EDVA/WDVA [25] Lanir v. Yorktown Sys. Grp., Inc., 2021 WL 1062112 (E.D. Va. Mar. 19, 2021) (Ellis). Plaintiff Lanir worked as a Hebrew language instructor for Defendant Yorktown Systems Group, Inc., a government contractor, to teach Hebrew at the Department of State's Foreign Service Institute (“FSI”). Lanir’s at-will employment was tied to a specific teaching assignment with a term ending on February 15, 2019. Throughout 2018, several FSI students complained about Lanir’s teaching performance, and his FSI supervisor also complained that she had to spend an inordinate amount of time instructing Lanir on his assignments. Lanir, who has Asperger’s Syndrome, requested various accommodations in December 2018, including that he receive specific, written instructions and that his supervisor be willing to answer his questions “no matter how mundane” and be trained on how to interact with autistic people. Thereafter, Lanir was placed on a performance improvement plan. When his teaching assignment with FSI ended on February 15, 2019, Defendant terminated his employment due to lack of work. Lanir filed suit under the ADA for failure to accommodate, retaliation based on being placed on a PIP, and discrimination and retaliation based on his termination of employment. The Court denied Defendant’s motion for summary judgment on Lanir’s failure to accommodate claim and his claim that the PIP was retaliatory. These claims survived, because significant questions of fact remained as to whether Defendant had met its obligations to engage in the interactive process with Lanir and whether the PIP would have dissuaded a reasonable person from engaging in protected conduct. However, the Court granted Defendant’s motion for summary judgment on Lanir’s claims related to his termination of employment. The Court reasoned that Defendant proffered a legitimate nondiscriminatory reason for Lanir’s termination due to the end of his assignment with FSI. The Court rejected Lanir’s argument that this reason was pretextual because another employee had been allowed to continue teaching for FSI past February 15, 2019 until July 2020, reasoning that it was clear from the record that FSI had declined to continue Lanir’s assignment. In so ruling, the Court noted that Defendant had affirmatively attempted to continue Lanir’s assignment past its termination date, but it was FSI that had declined. Thus, the Defendant’s proffered reason for termination—lack of work with the client—was accurate and was not pretext for discrimination. [26] McCormack v. Blue Ridge Behav. Healthcare, 2021 WL 804199 (W.D. Va. Mar. 3, 2021) (Conrad). McCormack worked for Blue Ridge as a case manager for adults with severe mental illnesses. Over the course of her employment, McCormack suffered from various medical impairments that caused her to require time away from work, including migraine headaches, uterine fibroids, and a bacterial infection, and for which she was granted paid time off and/or FMLA intermittent leave. II-19 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR McCormack also missed work during this period for non-medical reasons, such as more than a week to attend a wedding, leave to move, leave to go snowboarding, and other unplanned personal leave. McCormack was subjected to counseling and discipline related to her attendance during this time, applied for and was not selected for at least one promotion, and she presented evidence that she was no longer allowed to utilize Blue Ridge’s “flex time” policies after she began taking leave. McCormack ultimately resigned, stating that she felt it was clear that if she continued to take medical leave she would be fired. McCormack sued Blue Ridge under the FMLA and ADA. The district court granted Blue Ridge’s motion for summary judgment on all of McCormack’s claims, including her claims for ADA discrimination and retaliation. The Court rejected her argument that she was constructively discharged, concluding that the only adverse action she experienced for the purpose of an ADA discrimination claim was her failure to be selected for a clinician position to which she applied. However, Blue Ridge had a legitimate non-discriminatory reason for not selecting her (these positions were modified due to regulatory changes and McCormack did not meet the modified requirements). In dismissing McCormack’s ADA retaliation claim, the Court appeared to agree with Blue Ridge that McCormack had not proved she engaged in any protected activity under the ADA. McCormack did not contend that she ever complained of disability discrimination or requested an ADA accommodation, other than requesting FMLA leave. The court suggested, without holding, that McCormack’s request for FMLA leave alone did not constitute a request for accommodation under the ADA, citing prior decisions from inside and outside the Fourth Circuit reaching the same conclusion. Ultimately, the Court reasoned that it did not matter whether she engaged in protected activity, because she did not suffer any adverse action by Blue Ridge. [27] Sowers v. Bassett Furniture Indus., Inc., 2021 WL 276169 (W.D. Va. Jan. 27, 2021) (Cullen). Sowers worked for Bassett as a Team Lead in one of its plants. After undergoing foot surgery in August 2017, Sowers went on FMLA leave. While on leave, he was asked to attending a training meeting and was unable to do so due to pain levels, after which he contends he was treated more poorly by Bassett. In November, he was cleared to work return to seated work, but because of a purported “100% healed policy” that the Company had adopted, as well as there being no open positions meeting the restrictions, he stayed on leave and was approved for additional FMLA and short term disability through January 2018. He was then cleared to return to work 4 hours per day, so long as he could take a 10 minute break every 2 hours, but was denied his request to return to work. Later, when his physician indicated he could begin gradually increasing his workday back to 8 hours, without a need for breaks, he was allowed to return to work. After returning to work, Sowers contends he was questioned whether he was capable of performing his duties, was demoted after taking time off to attend his son’s college orientation, and was suspended for a week after missing time for a medical emergency. After these incidents, Sowers filed an EEOC charge and eventually resigned. Sowers filed suit for retaliation, failure to accommodate, and interference under the ADA, in addition to FMLA claims. The Court granted summary judgment on Sowers’ retaliation claim, II-20 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR holding that the only protected activities by Sowers under the ADA were his request for accommodation and his EEOC charge. Rejecting his arguments that he was constructively discharged, and concluding that alleged unfair criticism did not amount to an adverse action for the purpose of a retaliation claim, the court further held that the only adverse action he suffered was his demotion. He did not file his EEOC charge until after demotion, so it could not have caused his demotion. Because his demotion occurred 6 months after his request for accommodation, the court also declined to infer that his demotion was caused by his request. However, the Court denied summary judgment on Sowers’ failure to accommodate and ADA interference claims, allowing these claims to proceed to trial. Regarding his failure to accommodate claim, the Court found that Sowers had presented enough evidence for a reasonable factfinder to conclude that his request to return to work with an accommodation of taking a 10 minute break every two hours was reasonable, since Bassett employees normally took breaks every 2.5 hours, and that Bassett had refused to provide that accommodation. The Court also allowed Sowers’ ADA interference claim to proceed. The Court noted that this cause of action is “rare,” and that it is “broader” than ADA retaliation claims in that it protects any individual who is subject to coercion, threats, intimidation, or interference with respect to ADA rights after engaging in protected activity. Because the “interference” provision is broader, it will reach even those instances when conduct does not meet the “materially adverse” standard required for retaliation. The Court cited EEOC guidance providing examples of such coercive conduct, such as “issuing a policy or requirement that purports to limit an employee's rights to invoke ADA protections (e.g., a fixed leave policy that states ‘no exceptions will be made for any reason’)”. Reasoning that Sowers had presented evidence of an unspoken “100% healed” policy that he testified had previously been in the handbook, the Court concluded that such a policy could reasonably interfere with an individual's rights under the ADA by effectively coercing them not to make a request for an accommodation because any such request would be denied. Thus, Bassett’s motion for summary judgment was denied as to this claim. [28] Jain v. The Cty. Bd. of Arlington Cty., 2020 WL 5793426 (E.D. Va. Sept. 28, 2020). Defendant hired Dr. Jain to serve as the department chief of the newly created Decision Support Division. Dr. Jain began his employment on a one-year probationary period with the possibility of becoming a permanent employee at the end of the one-year term. Eight months into his probationary period, Dr. Jain disclosed his cardiac and neuro sarcoidosis to his immediate supervisor. After a year of employment, and following a 360º evaluation that included both positive and negative feedback from various staff in the department regarding Dr. Jain’s leadership and communication, as well as a presentation that raised similar concerns, Plaintiff's immediate supervisor decided to extend Plaintiff's probationary period. Dr. Jain was also provided executive coaching during this extended probation period. Following a second major presentation, after which his supervisor noted lack of energy and enthusiasm, his supervisor determined that Dr. Jain would not become a permanent employee. This decision was communicated to Dr. Jain; however his probation was extended to allow him time to find another job. In October 2017, when Dr. Jain had failed to resign after an additional ten months on probation, Defendant terminated his employment. Dr. Jain filed a lawsuit alleging that Defendant wrongfully terminated his employment and subjected him to a hostile work environment under the ADA. II-21 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR The Court granted Defendant’s motion for summary judgment on Dr. Jain’s wrongful termination claim, because it agreed with Defendant that Dr. Jain did not perform his job at a level that met Defendant's expectations and did not present facts supporting a reasonable inference of discrimination. Reiterating that the courts do not sit as “super-personnel departments,” and that the relevant inquiry is not whether the employer’s appraisal is correct, but whether the employer reasonably believes the employee is not meeting its expectations, the Court deferred to Defendant’s determination of its expectations for the role. The Court emphasized the fact that during his probationary period, Dr. Jain had received negative feedback from multiple co-workers, none of whom had knowledge of his disability, but that Defendant had nevertheless extended his probation and offered him coaching rather than firing him. The Court also found that plaintiff’s proffered evidence to support an inference of discrimination, in the form of comments regarding his lack of energy and weak leadership presence, were not compelling. The Court noted that not only did Plaintiff’s supervisor decide to extend Dr. Jain’s probationary period and provide him coaching after making these comments, but that there was no evidence that these comments had anything to do with his disability. Indeed, Plaintiff did not experience low energy levels as a result of his disability, and never reported low energy levels to his supervisor. Thus, Dr. Jain had not met his prima facie burden to show discriminatory discharge. The Court also held that Dr. Jain had not shown he suffered any severe and pervasive harassment based on his supervisors comments and other conduct, and the Defendant's conduct was neither subjectively nor objectively offensive. The Court concluded that these comments were not threatening and did not affect Plaintiff’s work performance, and that in fact, it was part of his supervisor’s job duties to provide performance feedback. Thus, Defendant’s motion for summary judgment was granted as to the hostile work environment claim. [29] Butler v. Spotsylvania Cty. Gov't, 2020 WL 190870 (E.D. Va. May 21, 2020) (Novak). Butler was an appraiser in the Spotsylvania County Commissioner of Revenue’s Office and charged with collecting and verifying data on residential properties. To assist Butler with his job duties, from 2005 to 2015, the County provided him with a 2002 GMC Sierra and in January 2015, the County replaced the GMC with a 2015 Jeep Compass. Beginning in 2016, Butler noticed an odor inside the vehicle and it became more pungent over time. Butler emailed County Commissioner of Revenue Williams about the odor. Service technicians were not able to identify any odor but still replaced the air filter. When the odor returned, Butler again contacted Williams and when a technician could not identify any odor, Williams suggested he switch vehicles but did not follow through with this suggestion. Butler again complained about the odor and invited Williams to personally inspect the vehicle. In a meeting with the Director of HR, Butler complained that Williams had denied him a promotion and threatened to terminate his employment in retaliation for his complaints about the odor inside the vehicle. Butler also complained that Williams had promoted two of his colleagues who lacked the requisite qualifications. The HR Director dismissed these complaints as “ankle-biting.” Butler began experiencing an irritated throat, stomach problems and headaches after driving the vehicle. While Butler attempted to remedy these health problems by cleaning the vehicle himself, changing II-22 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR work shirts after driving and drinking more water, limiting his time in the vehicle, he continued experiencing the symptoms and emailed Williams about his health problems. Three days later, Williams terminated Butler’s employment. After receiving a right to sue letter from the EEOC, Butler filed suit against Williams and the County under the ADA and Title VII. The County filed a motion to dismiss on the basis that it was not Butler’s employer under the ADA and Title VII as Williams exerted full and unfettered control over Butler’s employment as an elected officer with a constitutionally distinct role from the County. The Court noted that both the ADA and Title VII have similar definitions of employer. Under both statutes, the Court recognized that two parties can be considered joint employers and therefore both be liable under Title VII if they share or co-determine those matters governing the essential terms and conditions of employment, which includes evaluating nine non-dispositive factors. See Butler v. Drive Auto. Indus., 793 F.3d 404, 408 (4th Cir. 2015). Ultimately, the Court noted that the County was not a joint employer as the Code of Virginia specifically empowered Williams as the exclusive authority to control the relationship. First, the County lacked any statutory authority to hire or fire Butler. Next, the day to day supervision of Butler was under the purview of Williams. In fact, if the County attempted to control Plaintiff's employment, it would violate state law and the prerogatives of the office that Williams holds. Next, the Court noted that while it was true the County had furnished the workspaces and vehicles for Butler’s work, the County had no more control over Butler’s job performance than a landlord would possess over the employees of its tenants. Finally, the Court noted that Butler did not raise the remaining factors except that the County had possession and responsibility over his employment records yet by statute, the County could exert no control over his employment. Based on these factors, the Court dismissed the County as an employer. IV. EQUAL PAY ACT Fourth Circuit [30] Evans v. Int’l Paper Co., 936 F.3d 183 (4th Cir. Aug. 27, 2019) (Niemeyer, Keenan, Quattlebaum). Evans brought several claims against International Paper Company (IPC) in the United States District Court for the District of South Carolina for gender and race discrimination, including a claim under the Equal Pay Act. Following discovery, IPC moved for summary judgment on Evans’ claims. The District Court granted summary judgment, and Evans appealed. The Fourth Circuit affirmed the grant of summary judgment. In support of her EPA claim, Evans identified seven male comparators and adduced evidence that they received higher salaries than she did. She failed, however, to produce evidence that the comparators performed jobs of the same “effort, skill, and responsibility” as Evans’ job. As a result, the Court held that she failed to create a genuine issue of material fact. II-23 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR V. FAMILY AND MEDICAL LEAVE ACT (FMLA) EDVA/WDVA [31] McCormack v. Blue Ridge Behav. Healthcare, 2021 WL 804199 (W.D. Va. Mar. 3, 2021) (Conrad). McCormack worked for Blue Ridge as a case manager for adults with severe mental illnesses. Over the course of her employment, McCormack suffered from various medical impairments that caused her to require time away from work, including migraine headaches, uterine fibroids, and a bacterial infection, and for which she was granted paid time off and/or FMLA intermittent leave. McCormack also missed work during this period for non-medical reasons, such as more than a week to attend a wedding, leave to move, leave to go snowboarding, and other unplanned personal leave. McCormack was subjected to counseling and discipline related to her attendance during this time, applied for and was not selected for at least one promotion, and she presented evidence that she was no longer allowed to utilize Blue Ridge’s “flex time” policies after she began taking leave. McCormack ultimately resigned, stating that she felt it was clear that if she continued to take medical leave she would be fired. McCormack sued Blue Ridge for, inter alia, retaliation in violation of the FMLA and interference with FMLA rights. The district court granted Blue Ridge’s motion for summary judgment on all of McCormack’s claims. Plaintiff argued that she engaged in protected activity by taking FMLA leave (this was undisputed by Blue Ridge) and that she suffered two types of adverse employment actions in retaliation: constructive discharge and denial of multiple promotions. Plaintiff offered the following in support of her constructive discharge claim: (1) she lost flextime privileges and was told by her supervisor that the difference in treatment resulted from being on FMLA leave; (2) her caseload increased; (3) she was required to clock in and out of work from the office; (4) her performance evaluation for 2019 cited attendance concerns; (5) she received a disciplinary warning after leaving a conference early without permission; (6) she was denied the opportunity to attend a training session; and (7) she was not selected for promotions. Noting an employee must reach a high standard in order to establish constructive discharge, the court found that this evidence did not rise to the required level of intolerability. With respect to her failure to promote claim, Blue Ridge had a legitimate, non-discriminatory reason for not selecting Plaintiff for the positions she applied for, and under the McDonnell Douglas burden shifting framework, the court found that Plaintiff failed to establish pretext. In rejecting Plaintiff’s interference claim, the court found that Blue Ridge did not prevent her from taking FMLA leave, and Plaintiff did not present any evidence of lost compensation or any other monetary loss as a result of the interference. Because of the absence of any evidence of prejudice arising from the alleged interference, her claim necessarily failed. II-24 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR [32] Sowers v. Bassett Furniture Indus., Inc., 2021 WL 276169 (W.D. Va. Jan. 27, 2021) (Cullen). Sowers worked for Bassett as a Team Lead in one of its plants. After undergoing foot surgery in August 2017, Sowers went on FMLA leave. While on leave, he was asked to attending a training meeting and was unable to do so due to pain levels, after which he contends he was treated more poorly by Bassett. In November, he was cleared to work return to seated work, but because of a purported “100% healed policy” that the Company had adopted, as well as there being no open positions meeting the restrictions, he stayed on leave and was approved for additional FMLA and short term disability through January 2018. He was then cleared to return to work 4 hours per day, so long as he could take a 10 minute break every 2 hours, but was denied his request to return to work. Later, when his physician indicated he could begin gradually increasing his workday back to 8 hours, without a need for breaks, he was allowed to return to work. After returning to work, Sowers contends he was questioned whether he was capable of performing his duties, was demoted after taking time off to attend his son’s college orientation, and was suspended for a week after missing time for a medical emergency. After these incidents, Sowers filed an EEOC charge and eventually resigned. Plaintiff sued for, inter alia, discrimination and retaliation in violation of the FMLA and interference with FMLA rights. The district court granted Bassett’s motion for summary judgment on both of Plaintiff’s FMLA claims. The court found that although Plaintiff’s evidence established that he (1) took FMLA leave to which he was entitled (a protected activity); (2) was later demoted; and (3) the supervisor who demoted him had said that he was “angry” that Plaintiff did not attend a meeting during his leave, appearing to establish a prima facie case of retaliation, the long interval between Plaintiff’s leave and his demotion undermines his FMLA claim. However, even assuming Plaintiff established the prima facie case, Plaintiff was unable to establish pretext. Bassett contended that Plaintiff’s poor attitude and performance were the reasons for his demotion, and the undisputed evidence in the record supported this, however Plaintiff offered no evidence to rebut Bassett’s proffered reasons. With respect to Plaintiff’s FMLA interference claim, the court found that Plaintiff failed to show that after his return to work in January 2018, he was entitled to FMLA benefits. Accordingly, any claim for interference must fail as he had not shown an entitlement to which he was denied. [33] King v. Inova Health Care Servs., 2020 WL 2108728 (E.D. Va. May 01, 2020) (Ellis). In 2014, Inova hired King as a registered nurse in the Trauma Intensive Care Unit (TICU) at Inova Fairfax Hospital. (King continues to be employed as a registered nurse in the TICU today.) From May 2017 until May 2018, Yates-Williams served as an Interim Clinical Director of the TICU. In November 2017, King confirmed to Yates-Williams that she was pregnant. On March 1, 2018 King formally applied for FMLA leave through Cigna. At that same time, Yates-Williams notified King that she had been removed from the TICU schedule per HR policy after she had failed to have an annual TB test (Yates-Williams did not know at that time of King’s formal request for FMLA leave). When Yates-Williams learned that King had an exemption note from her physician for the TB test, Yates-Williams returned King to the schedule. II-25 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Also, when Yates-Williams removed King from the schedule in March 2018, Yates-Williams was unaware that King had made complaints about her to management. Later in March 2018, YatesWilliams learned that King was known to take “safety naps” during where she would sleep on her shift. Yates-Williams investigated and confirmed from several coworkers that this occurred and also reviewed video footage. Associate Chief Nursing Officer Vassallo reviewed the findings and made the final decision to issue a final written warning to King for sleeping in excess of her authorized breaks, consistent with what Vassallo understood to be Inova's typical practice. At the time Vassallo made the decision to issue King the final written warning, Vassallo herself was also pregnant and scheduled to begin FMLA leave within a couple of weeks, and she was unaware that King had complained about Yates-Williams or Inova. Six days after King was placed on administrative leave, she was informed that she would not be terminated and was reinstated with pay for every shift that she had missed. Inova voluntarily rescinded the Final Written Warning and removed it from her personnel file. King filed suit alleging retaliation under Title VII and the FMLA when Inova investigated her and took disciplinary action. The Court granted summary judgment on both claims. First, the Court concluded that King lacked standing to bring her FMLA claims because there was no injury-in-fact that could be redressed in light of Inova’s prompt and effective corrective action. As to King’s Title VII retaliation claims, King had standing for such claims as Title VII provides a broader range of remedies and Inova’s corrective actions did not eliminate all such remedies. Title VII does not protect a plaintiff's rights to assert her beliefs regarding her FMLA rights, request FMLA leave, or complain about disparate treatment based on her request for FMLA leave and King’s actions related to her FMLA leave likely did not constitute protected activity (despite essentially being conceded by the parties). Nonetheless, King could not show that any relevant decisionmakers knew of any such protected activity at the time any adverse employment action. While King’s initial suspension without pay and removal from the trauma blue responder role constitute materially adverse actions, King cannot show that Vassallo and Yates-Williams knew of King’s purported Title VII protected activity at the time of the actions. Specifically, the record indicated that Yates-Williams did not know of King’s complaints to HR personnel until she was served with a subpoena in connection with this very lawsuit. The record also reflected that Vassallo was not aware of King’s complaints regarding Yates-Williams or Inova when Vassallo made the decision to issue the final written warning. VI. FAIR LABOR STANDARDS ACT (FLSA) Fourth Circuit [34] CentraArchy Rest. Mgmt. Co. v. Angelo, 2020 WL 1487699 (4th Cir. Mar. 25, 2020) (per curiam). Several employees filed arbitration demands to challenge the legality of CentraArchy’s use of a tip pool at one of its restaurants. In response, CentraArchy brought an action seeking declaratory and injunctive relief, and employees filed counterclaims under the Fair Labor Standards Act and the South Carolina Wage Payment Act. The United States District Court for the District of South Carolina granted CentraArchy’s motions for judgment on the pleadings and partial summary II-26 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR judgment, finding that the doctrines of claim preclusion and issue preclusion barred the employees’ counterclaims because the substance of the claims had been fully litigated in an arbitration proceeding in which some of the employees previously participated. The employees appealed. The doctrines of claim preclusion and issue preclusion prevent parties from litigating matters they have had “a full and fair opportunity to litigate” in order to “protect against the expense and vexation attending multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by minimizing the possibility of inconsistent decisions.” Importantly, however, a person who was not a party to a suit generally has not had “a full and fair opportunity” to litigate the claims and issues in that suit. The Fourth Circuit found that the district court erred in failing to consider whether CentraArchy met its burden of establishing claim preclusion under Taylor v. Sturgell, 553 U.S. 880, 128 S.Ct. 2161 (2008). In Taylor, the Supreme Court identified only six situations in which a nonparty will be bound by a prior judgment ⎯ (1) where the nonparty agrees to be bound by a judgment in a prior action; (2) where there is a pre-existing substantive legal relationship between the nonparty and a party in the action; (3) when the nonparty was adequately represented in the action by a party with the same interests; (4) where the nonparty assumed control over the litigation in which that judgment was rendered; (5) where the nonparty serves as a proxy for the party bound by a prior judgment; and (6) where a special statutory scheme expressly forecloses successive litigation by nonlitigants, provided that scheme is otherwise consistent with due process. CentraArchy argued that the employees had adequate representation by a party with the same interests in the prior arbitration. The Fourth Circuit noted, however, that “representative suits with preclusive effect on nonparties include properly conducted class actions and suits brought by trustees, guardians, and other fiduciaries, which [wa]s not the case here.” The Court also pointed out the irony of the fact that CentraArchy had insisted on having the employees removed from the previous litigation based on the argument that their situations were too diverse to allow them to remain parties. The Court found that the arguments advanced by CentraArchy were the type of “diffuse balancing approach to nonparty preclusion that the Supreme Court rejected in Taylor when it refused to recognize a virtual representation exception.” For that reason, the Fourth Circuit vacated the judgment of the district court and remanded the matter for further proceedings. [35] Ramnarine v. Rainbow Child Dev. Ctr., Inc., 783 F. App’x 291 (4th Cir. Nov. 6, 2019) (per curiam). Ramnarine appealed the district court’s grant of summary judgment as to her claims under the antiretaliation provision of the Fair Labor Standards Act. Finding no reversible error, the Fourth Circuit affirmed the ruling of the District Court for the District of Maryland. The Fourth Circuit pointed out that “Ramnarine hedged as to whether she could teach for the entirety of the upcoming school year and concluded that Ramnarine had not established that her protected activity caused her termination or that Defendants’ proffered reason was pretextual.” II-27 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Fourth Circuit [36] Tom v. Hospitality Ventures LLC, 980 F.3d 1027 (4th Cir. Nov. 24, 2020) (Quattlebaum*, Agee, Kleeh). Several employees of a restaurant challenged its use of a tip pool. A restaurant may satisfy its obligations under the FLSA if its servers, despite being paid lower hourly wages, also receive compensation through tips or gratuities. “Unfortunately, the FLSA provides only limited guidance” regarding such circumstances. Here, the plaintiffs, who were servers, argued that the automatic gratuities the restaurant charged (20% on parties of 6 or more) were “tips” - and thus could not be pooled to pay other staff members who did not, unlike the servers, “customarily and regularly receive tips” (see 29 U.S.C. § 203(m)(2)(A)). The restaurant “argue[d] that the automatic gratuities are commissions, which can be used to satisfy its FLSA obligations pursuant to [the exemption provided for under 29 C.F.R. § 207(j) (“the 7(j) exemption”).” The District Court for the Eastern District of North Carolina granted summary judgment for the employer, which then was affirmed in part and reversed in part. The Fourth Circuit affirmed that the automatic gratuities were not tips, as the restaurant charged every group of six or more customers the automatic gratuity. To the extent that any exceptions were made, it was undisputed that they were not made by the customer – but by the restaurant. These exceptions did not convert these amounts to “tips” because the decision to pay such a gratuity, and/or the amount thereof, was not “determined solely by the customer” (as required to constitute a tip per 29 C.F.R. § 531.52). The Fourth Circuit, however, did agree with several of the servers’ arguments that the District Court “erred in the application of the 7(j) exemption.” For example, the Fourth Circuit agreed with the servers’ assertion that the District Court had improperly held that this exemption satisfied both the restaurant’s minimum wage and overtime obligations (it applied only to the employer’s overtime obligations). The Fourth Circuit also agreed with the servers that the District Court erred in finding that the restaurant had properly determined their “regular rate of pay.” The appellate court found that the District Court had improperly imported the “regular rate of pay” language used in 29 C.F.R. § 531.60 into its analysis of “compensation” under the 7(j) exemption – noting that “regular rate of pay” and “compensation” are “distinct issues.” The Court further noted that 29 C.F.R. § 779.415(a) states that “all” compensation, “in whatever form or by whatever method should be included” – which the Fourth Circuit found also included tips. As a result, it remanded the case to the District Court “to consider whether the automatic gratuities qualify as commissions under the 7(j) exemption … and, if so, to what extent they satisfy [the restaurant’s] overtime obligations.” The Fourth Circuit also reinstated a state law retaliation claim [per the North Carolina Wage and Hour Act (“NCWHA”)], which the District Court had dismissed without prejudice. II-28 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR [37] Emmons v. City of Chesapeake, 982 F.3d 245 (4th Cir. Dec. 4, 2020) (Wilkinson*, Motz, Agee). The City of Chesapeake (“City”) classified the Battalion Chiefs (“BCs”) working in its Fire Department as exempt pursuant to the FLSA’s executive exemption. The BCs asserted that their positions as first responders were not covered by this exemption and thus were entitled to receive overtime. Even if that were not the case, they argued that their job duties were such that they did not fall within the scope of the executive exemption. The USDC for the Eastern District of Virginia disagreed, granting summary judgment in favor of the City. The BCs appealed, but the Fourth Circuit affirmed. Regarding the first point, the First Responder Regulation (29 CFR § 541.3(b)) excludes certain classes of workers from the FLSA’s various exemptions to overtime. Included in the definition of “First Responders” were: “police officers, detectives, … fire fighters, … rescue workers … and similar employees, regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires of any type, rescuing fire, crime or accident victims, … or other similar work.” The Fourth Circuit, however, noted that “these classes must be approached with caution” and that simply looking at job titles was not enough. “Section 541.3(b) presupposes … that the primary duty of each enumerated group is not to “manage the enterprise” but rather to engage in particular sorts of hands-on activity, such as – in the case of fire fighters – extinguishing fires and rescuing fire and accident victims. An individual whose work does not meet this criterion, though they might be called a “fire fighter” in some other, colloquial sense, cannot be deemed one under § 541.3(b).” Turning then to analyze the “primary duties” of the BCs, the Fourth Circuit found that they were more managerial than “hands on”; in other words, they were not “frontline” firefighters – and thus they did not qualify for the First Responder Regulation. The appellate court further held that the BCs had been properly classified as exempt under the FLSA’s executive exemption. The BCs performed staffing duties on a daily basis, which “required them to use their discretion” to “ensure that vital pieces of emergency responsive equipment, like … fire engines, are appropriately matched to groups of firefighters that have the numbers, skill and experience to operate them.” The BCs also had managerial duties – requiring them to “monitor, evaluate, and guide the performance of their [subordinates] both generally and on the basis of their response to specific emergencies. They watch over the development of fresh recruits and, whether dealing with the recruits or captains, enforce CFD discipline.” In light of the foregoing, the Fourth Circuit upheld the BCs classification as exempt employees under the FLSA’s executive exemption and the District Court’s entry of summary judgment on behalf of the City. EDVA/WDVA [38] Alley v. Quality Eco Technologies, LLC, 2021 WL 1196188 (E.D. Va. Mar. 29, 2021) (Lauck). Plaintiffs, who worked as “installers” for Quality Eco Technologies, LLC (“QET”), alleged that QET misclassified them as independent contractors and paid the installers only in commission, II-29 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR violating the FLSA’s minimum wage and overtime requirements for employees. Additionally, because QET terminated two of the installers’ employment contracts after learning of the present lawsuit, the installers also alleged FLSA retaliation. QET, in turn, counterclaimed against the installers under six state law theories for various alleged wrongdoing and misconduct engaged in by the installers while acting on behalf of QET. QET moved to dismiss the installers’ claims, and the installers moved to dismiss QET’s counterclaim. In granting QET’s motion to dismiss, in part, the Court agreed that QET engaged the installers as employees as opposed to independent contractors because, under the Silk test, the installers economically depended on their work with QET, retained little control over their jobs and duties, invested little in QET, and rendered services integral to QET. However, the court held the installers’ minimum wage and overtime claims failed to plausibly allege facts to state a claim for relief under the FLSA. Specifically, the installers failed to plausibly allege their approximate wages by estimating the length of their average workweeks, their average rate of pay, or the amount of overtime they claim they are owed. The Court, however, denied QET’s motion to dismiss regarding the installers’ retaliation claim, finding that all three elements of an FLSA retaliation claim were sufficiently alleged by the installers who cited to a text message from QET’s owner, which read, “Yes, I did remove you after your lawsuit. What’s there to pretend about?” The Court then granted the installers’ motion to dismiss QET’s counterclaim, finding that under the Painter test for compulsory versus permissive counterclaims, the state law claims (for breach of contract, implied indemnity, negligence, breach of fiduciary duty, conversion, defamation) were only permissive counterclaims that did not sufficiently relate to the installers’ FLSA claims, and the Court therefore lacked subject matter jurisdiction over the counterclaim. [39] Esedebe v. Circle 2, 2021 U.S. Dist. LEXIS 12565 (E.D. Va. Jan. 22, 2021) (Hudson). Plaintiffs, exotic dancers (“Entertainer Plaintiffs) and managers (“Manager Plaintiffs”), alleged that, while working for Defendants, they were not properly compensated under the FLSA. Certain of the defendant entities moved to dismiss, claiming that Plaintiffs lacked standing to sue them as they were not their employers. Plaintiffs countered that all the Defendants were their joint employers. The District Court analyzed this issue per Hall v. DirectTV, 846 F.3d 757 (4th Cir. 2017) and found that the Plaintiffs had alleged sufficient facts in the amended complaint that the defendants were their joint employers (and thus had established standing). The District Court further held that the Entertainer Plaintiffs had alleged sufficient facts to establish that they had not been properly compensated by Defendants under the FLSA (for example, the Plaintiffs alleged that their time sheets had been frequently altered to prevent them from being compensated in excess of 40 hours per workweek). Finally, the District Court also permitted conditional class status, per Section 216 (b) of the FLSA, as, despite Defendants’ objections, the Court found that Plaintiffs sufficiently similarly-situated as to each subclass her; specifically: (1) “Entertainers” and (2) “Managers.” II-30 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR [40] Macias v. Monterrey Concrete LLC, 2020 U.S. Dist. LEXIS 173171 (E.D. Va. Sept. 21, 2020). Plaintiffs, Mexican nationals who came to the United States on H-2A and H-2B visas to work for the Defendant, Monterrey Concrete, claim that once they arrived, they were required to work overtime for which they were not compensated and paid below minimum wage (in violation of the FLSA). Plaintiffs also asserted additional claims under other federal and state laws (such as the Trafficking Victims Protection Act, 18 U.S.C. § 1589 et seq.)). Defendants moved to dismiss Plaintiffs’ overtime claims, arguing that they had provided no factual support for their assertions. “In response, plaintiffs argued that, under Fourth Circuit precedent, namely, Hall v. DirectTV, 846 F.3d 757 (4th Cir. 2017), they were not required to identify specific weeks or pay periods in which they worked uncompensated overtime hours.” The District Court agreed, finding plaintiffs had pled sufficient facts to demonstrate the plausibility of these claims. For example, while the court noted that “Plaintiffs do not provide exact details about the amount of time they worked each day a week…that appears to be because the time worked each week was not consistent and was allegedly determined by what [their supervisor] deemed fit.” As for Plaintiffs’ minimum wage claims, the District Court noted that, to state a plausible claim for unpaid wages for regular time (as opposed to overtime) under the FLSA, Plaintiffs must allege enough facts for the court to infer that her weekly hourly wage rate fell below the Federal minimum wage of $7.75 per hour.” At oral argument on the Defendants’ motion to dismiss, counsel for the Plaintiffs apparently acknowledged that “standing alone, the total weekly compensations” alleged in the Complaint did not result in an hourly breakdown of less than the minimum wage. Counsel further argued, however, that the Plaintiffs had been required to pay for “tools, supplies, meals, rent, and utilizes (sic) that they should not have” - and that those amounts “should be deducted from…the final wage…” Not having plead such in the complaint, however, the court granted the Defendants’ motion to dismiss on this claim, but gave plaintiffs leave to amend their complaint. [41] Cortez-Melton v. Capital One Fin. Corp., 2021 U.S. Dist. LEXIS 36678 (E.D. Va. Feb 26, 2021) (Lauck). Several former employees (“Former Employees”) of Capital One brought claims against the company for failing to pay them overtime in violation of the FLSA. Capital One, in turn, filed counterclaims against the Former Employees for violating their severance agreements – which stated, among other things, that they would not participate in collective actions. The plaintiffs challenged the validity of such waivers which the District Court had found to be valid in a similar matter. The plaintiffs than amended their complaint to bring their FLSA claims as individuals, rather than collectively. They also then moved to dismiss the counterclaim, arguing that it was moot. The District Court dismissed two (2) of the three (3) bases on which the counterclaim was brought (unjust enrichment and specific performance) had denied it as to the breach at contract claim. Specifically, the District Court found that the amended complaint did not render the counterclaim moot, as it relied “on the independent legal consequence of the Former Employees’ decision to join in a collective action though their initial complaints. Put another way, Capital One’s II-31 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR counterclaims do not rely on the factual allegations in Former Employees’ superseded complaints but on the fact that these complaints were filed. As a result, the counterclaims do not rely on the factual allegations in the Former Employees’ initial complaints and are not mooted by the filing of amended complaints.” [42] Zamora v. Enterprise RAC of Md., 2020 U.S. Dist. LEXIS 242307 (E.D. Va. Dec. 7, 2020) (Brinkema). Plaintiff, by counsel, filed a complaint alleging that Enterprise Rent-a-Car violated the FLSA “by miscalculating the amount of overtime that was due on plaintiff’s bonus compensation.” Counsel for Enterprise sent a letter to plaintiff’s counsel explaining how Enterprise had calculated bonuses and how the “catch-up” overtime calculation was done to show that there was no additional overtime due and owing to the plaintiff. Rather than dismissing the case at that point, plaintiff’s counsel filed an Amended Complaint making the same allegations and attaching all of the Plaintiff’s pay stubs (which had been sent to him by counsel for Enterprise). Enterprise filed a motion to dismiss under Rule 12(b)(6) arguing that the Amended Complaint itself, along with the pay stubs that had been attached, established that there was no basis for the FLSA claim. At a hearing on the motion, the court questioned plaintiff’s counsel about his overtime theory and directed the parties to submit a supplemental briefing based upon the same paystub. Following the supplemental briefing, the court granted Enterprise’s motion, concluding that Enterprise had demonstrated that it had properly calculated the plaintiff’s additional overtime based upon productivity bonuses paid to plaintiff. The court also agreed to allow Enterprise to petition for its attorneys’ fees under 28 U.S.C. § 1927 on the grounds that the plaintiff’s counsel had vexatiously multiplied proceedings unnecessarily. After briefing on the attorneys’ fees issue, the court awarded Enterprise the amount of $26,250 in attorney fees against counsel for plaintiff. The case is now on appeal [43] Wilburn v. Topgolf Int’l, Inc., 2020 U.S. Dist Lexis 88179 (E.D. Va. May 19, 2020) (O’Grady). In 2015, Wilburn was hired as a corporate Event Sales Manager (ESM) at Topgolf in Loudoun County, Virginia. ESMs were tasked with conducting sales for corporate or large-scale client events at the facility and would assist clients with choosing from Topgolf's menu of available options as well as coordinating the event. ESM’s were classified as exempt under the FLSA being paid a combination of salary and commission. ESMs worked approximately 40 to 45 hours per week. Wilburn found that to complete her tasks she had to work more than 45 hours per week, including weekends, although the work was largely seasonal. Wilburn booked three separate events with over 900 invitees and budgets over $130,000. In February 2018, the ESM position was replaced with a Sales Account Manager position classified as non-exempt and eligible for overtime pay. Wilburn filed suit alleging willful misclassification of her ESM position in violation of the FLSA. Topgolf moved for partial summary judgment claiming Wilburn was exempt under the Highly Compensated Employee exemption for the entire period, alternatively under the Retail or Service Establishment exemption for one year, that it did not act willfully, and that Wilburn’s recover should be limited because she knew that her workweek fluctuated. Wilburn sought II-32 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR judgment in her favor on the fluctuating workweek defense as a sanction for Topgolf’s failure to preserve certain evidence. The Court concluded that the highly compensated employee exemption did not apply. While Wilburn received total annual compensation of at least $100,000 and that her primary duty included office or non-manual work, she did not customarily and regularly perform at least one exempt duty. While Wilburn conducted banquet event order meetings with various staff members in the place of her supervisor, these duties were occasional and not "customarily and regularly" conducted. Next, Wilburn’s work was not the running of a business but rather the mere day-today carrying out of the business's affairs. Essentially, Wilburn’s work as a salesperson for an employer in the business of selling entertainment is akin to that of a factory worker in the critical respect that both bring the employer's product to the market. Additionally, the Court concluded that the fact that Wilburn dealt with corporate clients and large sums of money did not impact the analysis. The Court also determined that Wilburn did not exercise of discretion and independent judgment on matters of significance. Wilburn was constrained by the Topgolf procedures by recommending menu items and was merely using skill in applying the procedures and standards set by Topgolf itself. Wilburn's decisions regarding when to suggest site tours and how to contact past and prospective customers also did not relate to matters of significance. Finally, the Court indicted that while the size and monetary value of the events may make them matters of significance, Topgolf did not identify what decisions Wilburn independently made or her customary and regular exercise of any authority to do so. Next, the Court granted summary judgment in favor of Topgolf finding that the retail or service establishment exemption applied to the first year of the recovery period. Further, the record showed that during that period Wilburn’s commissions exceeded 50% of her actual gross earnings. The Court also denied summary judgment as to whether the misclassification was willful. The Court noted that while Topgolf reclassified and renamed the positions as non-exempt there was a dispute of fact as to whether any substantive job duties changed. Lastly, the Court rejected Wilburn’s request for judgment on the fluctuating workweek defense as a sanction for Topgolf's failure to preserve personal records kept by a supervisor. The Court noted that at most Wilburn had shown that Topgolf had a duty to issue a personal document preservation notice, and failed to do so, but negligence cannot support spoliation. Nonetheless, the Court rejected summary judgment on Topgolf’s fluctuating workweek defense. First, the Court noted that the parties originally understood the ESM position to require 40-45 hours and five days weekly and Wilburn had a reasonable basis to believe her salary was intended to cover up to 45 hours of work per week. Next, Topgolf did not identify reasons Wilburn knew or should have known by April of 2016 that her salary was not intended to cover only 45 hours of work per week except the mere fact that she worked more and was not paid more. Finally, Topgolf could not show a clear mutual understanding of a fluctuating workweek arrangement because the record clearly showed Topgolf believed the employee to be exempt from overtime compensation. II-33 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR VII. ARBITRATION AND CLASS ACTIONS Fourth Circuit [44] Ashford v. PriceWaterhouseCoopers LLP, 2020 U.S. App. LEXIS 10590 (4th Cir. Apr. 3, 2020). Ashford’s 2015 employment agreement with PwC contained a perfunctory broad arbitration provision unique only in that it contained a carve out for Title VII claims applicable “unless and until federal law no longer prohibits the Firm from mandating arbitration of such claims.” PWC included the exclusion because the ‘Franken Amendment’ to the 2010 Defense Appropriations Act barred defense contractors from mandating arbitration of Title VII claims. Ashford, a female associate, was repeatedly passed over for promotion and sued in South Carolina State Court alleging violations of Title VII and § 1981. The case was removed and her § 1981 claims were dismissed to arbitration. Her Title VII claims, however, were not. PwC contended argued for reversal premised upon the fact that when the agreement’s arbitration provision was drafted PwC was subject to the ‘Franken Amendment,’ but by the time Ashford joined, it no longer performed the defense contracting work covered by the Amendment. The 4th Circuit reversed. Relying heavily upon the presumption of arbitrability, the 4th circuit viewed it as a reasonable reading of the contract to mandate arbitration of Ashford’s Title VII claims, the express waiver contained therein, notwithstanding. The Court found it to be of no moment that Ashford could not have had any knowledge that PwC no longer performed defense contracting work covered by the Franken Amendment reasoning (without explanation) that this “relates to the substance of the agreement, not the contract formation process or the lack of meaningful choice.” EDVA/WDVA [45] Hutchens v. Capital One Servs., LLC, 2020 Us Dist Lexis 100563 (E.D. Va. Jun. 08, 2020) (Lauck). A former Project Manager /Program Manager/ IT Delivery Lead for Capital One brought an age discrimination claim under the ADEA and asserted that it failed to comply with the statutory requirements of the OWBPA when it terminated her employment. Separately, a former Corporate Insurance Specialist at Capital One brought unpaid overtime claims under the FLSA. While both former employees brought separate actions, each sought declaratory judgment to proceed in a collective action against Capital One. Both former employees executed severance agreements with identical language waiving their right to bring a collective or class action. Capital One moved for judgment on the pleadings to enforce the collective action waiver contained in each agreement. The Court granted the motion for judgment and denied Plaintiffs’ claims seeking declaratory judgment on the collective action waiver but allowed the Plaintiffs’ individual claims to continue. The Court determined that text of the FLSA does not evince an intent to create a non-waivable right to a class action. The Court noted that the FLSA’s collective action procedure used permissive language and provided procedures for waiving overtime and other claims. The Court II-34 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR also surveyed various other courts that had applied a similar interpretation. The Court similarly concluded that neither the text of the ADEA, nor the amendments of the OWBPA, created a nonwaivable right to a class action. Additionally, the Court rejected Plaintiffs’ arguments that they would be unable to effectively vindicate their federal rights under each respective statute without a collective action mechanism. VIII. UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT (USERRA) Fourth Circuit [46] Harwood v. Am. Airlines, Inc., 963 F.3d 408 (4th Cir. Jul. 2020) (Niemeyer*, Wynn, and Floyd). When Harwood was nearing completion of a tour of duty with the U.S. Air Force Reserve, he sought to return to his former employment as a pilot for American Airlines. While initially the airline confirmed he would be reemployed in September 2015, Harwood was unable to secure the required medical clearance from the FAA after disclosing to the airline that during his tour of duty he had been diagnosed with atrial fibrillation. The airline indicated it could not rehire him but would explore other paths and offered Harwood an alternative position in October 2015 that he refused. After several months, Harwood accepted the alternative position and was reemployed in January 2016. The day after he returned, Harwood obtained a waiver from the FAA entitling him to serve as a pilot and the airline reassigned him to a pilot position. Harwood filed suit under USERRA to recover damages he incurred from September 2015 to January 2016 due to the airline's failure to reemploy him promptly. Harwood also claimed that during the rehiring process the airline discriminated against him on the basis of his uniformed service. The district court dismissed Harwood’s discrimination claim but granted judgment that the airline failed to rehire him promptly and awarded $50,000 in damages but denied other relief, including any finding that the airline acted willfully. In a cross-appeal, the Court affirmed all issues of liability but vacated the damage award remanding for recalculation of damages. Regarding liability of Harwood’s discrimination claim, the Court noted that USERRA was enacted to broadly protect the rights of veterans and members of the uniformed services and therefore should be broadly construed. In particular, § 4311 broadly prohibits discrimination in the hiring, rehiring, and retaining of servicemembers and the plain text is more broad than the district court’s reading that it protects veterans from discrimination only after they have been reemployed. The Court noted that a plaintiff must prove that discrimination on the basis of service was a motivating factor in an employment action to recover under § 4311 yet by contrast, §§ 4312 and 4313 provide relief regardless of intent, but only if a servicemember has met other criteria. The Court nonetheless affirmed the decision of the district court because Harwood’s factual allegations of discriminatory intent were far too attenuated to make them relevant to the airline's conduct in 2015 and lacked sufficient factual content to support a reasonable inference that his military service was a motivating factor in any of the airline's conduct about which he complained. II-35 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Regarding liability for failing to reemploy Harwood promptly, the Court noted that under the statutory scheme created by §§ 4312 and 4313, eligible returning servicemembers must be promptly reemployed an in an appropriate position for which they are qualified. While Harwood was not qualified at the time his tour ended, he was eligible for other positions that met the requirements of § 4313, as the airline itself acknowledged when it offered him reemployment in just such a position on October 22. Further, the airline learned of Harwood's medical condition on August 20, and it provided no reason why it could not have identified an appropriate position for Harwood by September 1. Yet it did not offer him reemployment in an appropriate position until October 22, 2015, over two months after it learned that he would likely need to be rehired in a non-pilot position. Therefore, the district court correctly determined that the airline did not reemploy Harwood promptly. The Court also affirmed the district court’s finding that the airline did not act willfully, that injunctive relief was not appropriate, bur ordered the district court to recalculate damages presumptively imposing backpay damages against the airlines for the period from September 1 to October 22 and denying damages for the period from October 22 to January 25, unless the offered position was shown not an equivalent position (including a setoff for service income Harwood received). [47] Padilla-Ruiz v. Commc’n Tech., Inc., 355 F. Supp. 3d 441 (E.D. Va. Jan. 9, 2019) (Beach Smith), aff’d, 793 F. App’x 200 (4th Cir. Feb. 12, 2020) (per curiam). Plaintiff was employed from 2002-2008 by Communication Technologies (COMTek), a federal contractor, and was staffed as an Assistant Professor of Military Science for the ROTC programs at the University of Puerto-Rico. Plaintiff was supervised both by the school’s Professor of Military Science, a US Army officer, and employees of COMTek, who worked at branch offices in the continental U.S. and supervised COMTek employees working at many different universities. Plaintiff was also a member of the US Army Reserve, and often encountered difficulty scheduling his Army Reserve training because of his ROTC teaching duties. In 2006 and 2008, Plaintiff’s ROTC supervisors told Plaintiff to reschedule or skip certain Army Reserve training weekends that conflicted with ROTC program work, which caused Plaintiff to miss out on a promotion in the Army Reserve. In May 2008, plaintiff emailed his COMTek supervisor about his ROTC supervisors’ attitude toward his Army Reserve training, but shortly thereafter Plaintiff’s COMTek supervisor was replaced with a new supervisor, who was not aware of Plaintiff’s scheduling difficulties or that he was passed over for an Army Reserve promotion. Six weeks later, Plaintiff’s ROTC supervisor initiated an investigation into two alleged acts of misconduct by Plaintiff (lying about his Army Reserve schedule to switch his ROTC work schedule, and falsely reporting time worked). An ROTC instructor at Plaintiff’s University conducted the investigation and recommended that Plaintiff be terminated for misconduct. Plaintiff’s COMTek Supervisor, upon receiving this recommendation, similarly recommended that Plaintiff be terminated “per the request of the Army,” and COMTek terminated Plaintiff’s employment in August 2008. Plaintiff sued alleging, among other complaints, violation of USERRA. The District Court overruled the Magistrate’s Report and Recommendation, finding that there was no evidence from which a reasonable jury could conclude that Plaintiff’s termination was motived by “antimilitary II-36 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR animus,” under either a vicarious liability theory (COMTek did not possessed sufficient control over Plaintiff’s ROTC supervisors) or a direct liability theory (there was no evidence that Plaintiff’s new COMTek supervisor had anti-military bias). The District Judge granted the Defendants’ motion for summary judgment on Plaintiff’s USERRA claim, which the Fourth Circuit later affirmed. IX. FALSE CLAIMS ACT (FCA) / VIRGINIA FRAUD AGAINST TAXPAYERS ACT (VFATA) / WHISTLEBLOWERS Fourth Circuit [48] Skibo on behalf of United States v. Greer Lab'ys, Inc., 2021 WL 72124 (4th Cir. Jan. 8, 2021) (per curiam). This case held that employees who expressed concern about compliance with Food and Drug Administration regulations, but did not identify any misleading “half truths” by the employer about its products in requesting payment, did not engage in protected activity under the False Claims Act. Greer Labs manufactured allergenic extracts, which physicians injected into allergic patients to increase their tolerance. A group of former employees sued Greer, asserting claims under the FCA for (1) selling unlicensed “custom mixes” of allergenic extracts and (2) for retaliating against employees for engaging in protected activity. At issue in the qui tam action was Greer’s use of “custom mixes.” Custom mixes were mixes of individual allergen extracts for general use by a physician rather than those that are made pursuant to a specific patient prescription. While Greer had FDA licenses for its allergen extracts, Greer did not seek separate licenses for each of its custom mixes because it believed that the custom mixes fell under its general FDA license. The employees contended that because the custom mixes were not licensed by the FDA or prepared for individual patients via physician prescriptions, Greer violated the FCA. Specifically, the employees argued that Greer effectively caused its customers — i.e., physicians administering these custom mixes to their patients — to submit false claims to the government for reimbursement of the custom mixes, contending those claims were false because government payors (including Medicare and Medicaid) will not provide such reimbursement for unlicensed drugs. The employees argued that Greer’s use of the mark “Rx” on the custom mix labels showed that Greer “knowingly” violated the FCA by mischaracterizing the mixes. The Court rejected this argument, as the “Rx” label truthfully indicated the product was not available over the counter. Therefore, the Court granted Greer’s motion for summary judgment on the FCA claim, finding the employees failed to create a genuine issue of material fact that Greer acted with the requisite scienter. The Court also granted summary judgment to Greer on the retaliation claim, finding that the employees failed to engage in a protected activity. While the employees presented evidence that II-37 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR they were concerned about compliance with the Federal Drug Administration regulations with respect to the custom mixes, they failed to provide any evidence that they “engaged in efforts to stop” a False Claims Act violation. The discussion centered around the Supreme Court’s holding in Universal Health Services, Inc. v. United States, 136 S. Ct. 1989, 195 L.Ed.2d 348 (2016), that “[w]hen ... a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant's representations misleading with respect to the goods or services provided.” Id. at 1999. However, the test for when these circumstances can serve as a claim for FCA liability is as follows: “[F]irst, the claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, the defendant's failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading halftruths.” The Fourth Circuit concluded that while Universal Health Services could be read to support the proposition that it was enough for the employees to demonstrate that they flagged Greer’s omissions relating to custom mixes, the employees’ reliance on Universal Health Services nonetheless failed because the employees did not actually point to evidence that they identified any “half-truths” of Greer. Consequently, the district court was correct in holding that, at most, the employees’ testimony established that they raised concerns about regulatory compliance — part of their job description — but that did not constitute “protected activity” under the FCA. [49] United States v. Mallory, 988 F.3d 730 (4th Cir. Feb. 22, 2021) (Motz*, Wynn, and Floyd). This case involved qui tam actions against a laboratory blood testing company and its owners and affiliates. The relators alleged violations of the False Claims Act (FCA), based on schemes to pay physicians kickbacks for referrals and to encourage physicians to order medically unnecessary tests for which companies sought reimbursement from federal health care programs. The Government intervened. After a 12-day jury trial, the jury found that Defendants had indeed violated the FCA and assessed actual damages of more than $16 million. The district court denied Defendants’ post-trial motions for judgment as a matter of law and for a new trial. After trebling the actual damages and adding civil penalties, as required by the FCA, the district court entered judgment against all three Defendants for $111,109,655.30 and against two individuals for an additional $3,039,006.56. The Fourth Circuit affirmed the district court in all respects. The case centered around the federal Anti-Kickback statute, a violation of which automatically constitutes a false claim under the False Claims Act. Defendants entered into an exclusive contract with each other to sell the manufacturing Defendant’s blood tests. In addition to a base fee, the manufacturing Defendant agreed to pay the marketing Defendant a percentage of its revenue based on the number of blood tests that physicians ordered. Defendants received payments from Medicare and TRICARE. At trial, the Government contended that the volume-based commissions paid by Defendants to their sales contractors violated the Anti-Kickback Statute because these II-38 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR commissions constituted “remuneration” intended to induce sales representatives to sell as many tests as possible. On appeal, Defendants primarily argued that the Government failed to prove that they “knowingly and willfully” violated the Anti-Kickback Statute, see 42 U.S.C. § 1320a-7b(b)(1), and so they could not have “knowingly” run afoul of the FCA. The Court rejected this argument, holding that (1) commissions to salespeople could constitute kickbacks under the Anti-Kickback statute and (2) that a reasonable jury could have concluded that the lab’s owner and the men who led its sales operation willfully paid commissions to sales contractors. EDVA/WDVA [50] Whitaker v. City of Hopewell, Virginia, No. 3:19-CV-923, 2020 WL 7246593 (E.D. Va. Dec. 9, 2020) (Gibney). This case applied a but-for causation standard to a retaliation claim under the Virginia Fraud Against Taxpayers Act (VFATA) and granted the employer’s motion for summary judgment based on the employee’s failure to produce sufficient evidence on that element. Whitaker worked for the City as its Director of Finance. Among other claims, he contended that the City fired him for reporting the misuse of government funds, in violation of the VFATA. Whitaker contended he engaged in activity protected by the VFATA by sending emails on August 18 and November 9, 2016 to the City Manager and City Council regarding misuse of government funds by another City employee. On December 15, he emailed City Council about issues with management and EEOC violations, but did not reference misuse of funds. On December 16, 2016, the City fired him. The City contended it fired Whitaker for late filing of a financial audit, chronic tardiness and absenteeism, and unprofessional behavior. The Court granted the City’s motion for summary judgment, finding that Whitaker had not pointed to any evidence to show that the City fabricated those reasons as a pretext to fire him in retaliation for protected activity under the VFATA. The Court cited the Fourth Circuit for the elements of a prima facie VFATA retaliation claim: (1) protected activity; (2) employer knew about the activity; and (3) employer retaliated in response. The Court also cited the Fourth Circuit for applying a butfor causation standard to VFATA retaliation claims. The Court assumed, for summary judgment purposes, that Whitaker’s August 18 email to the City Manager constituted a protected activity under the VFATA. Whitaker produced evidence that the decisionmaker City Manager knew of the email. The Court granted the City’s motion, however, on the grounds that Whitaker cited no evidence to establish that the City would not have fired him but for his reports about the misuse of funds. II-39 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR [51] United States v. Ndutime Youth & Fam. Services, Inc., 2020 WL 5507217 (E.D. Va. Sept. 11, 2020) (Lauck). The case denied motions to dismiss claims under False Claims Act (FCA) and Virginia Fraud Against Taxpayers Act (VFATA), arising from the Defendants’ billing practices for mental health services, and alleged retaliation against employees for objecting to those practices. The Government and relators Fortunatè and Hockaday asserted claims under the FCA, VFATA, and various state law theories of liability, alleging that Defendants presented fraudulent claims to the Government and retaliated against employees who expressed reservations about Defendants’ billing practices. Specifically, the Government alleged that from 2013 to 2017 Defendants submitted or caused to be submitted false and fraudulent claims to the Virginia Department of Medical Assistance Services (DMAS). The Government asserted that during this time, “Defendants knowingly billed DMAS for approximately one thousand six hundred and ninety-nine (1,699) claims for services for which they did not provide and/or did not support with legitimate documentation.” The Government asserted “[t]hese fraudulent claims represent approximately thirty percent (30%) of NDUTIME's paid medical crisis services claims during that time period.” Defendant NDUTIME was a Virginia Medicaid provider. NDUTIME billed DMAS for “Community Mental Health Rehabilitative Services.” As a Community Mental Health Rehabilitative Services Provider, NDUTIME: (1) conducted service specific provider intakes; and provided (2) crisis intervention services; (3) crisis stabilization services; and, (4) therapeutic day treatment services. To obtain payments from DMAS and Virginia Medicaid, NDUTIME was required to “document services through daily progress notes and times spent in the delivery of services[,]” and comply with other billing, documentation, and licensure requirements. The Government alleged that Defendants “obtained health care benefit payments to which they were not entitled by way of three primary schemes: (1) billing for [crisis intervention and crisis stabilization services] not provided or supported by required documentation; (2) billing for [crisis intervention] services provided by unlicensed counselors; and (3) billing for [crisis intervention, crisis stabilization services, and therapeutic day treatment services] provided subsequent to a [service specific provider intake] that were fraudulently completed or not completed at all.” The Court denied the motion to dismiss the Government’s FCA and VFATA claims, finding that the Government alleged all elements of the FCA and VFATA with particularity, and generally alleged scienter in a manner sufficient to withstand the motion to dismiss. In particular, with respect to the scienter element, the Government alleged that Defendants acted with deliberate ignorance or reckless disregard of their continued fraudulent conduct, after (1) a January 2015 regulatory change regarding licensure requirements; (2) a prior audit that identified missing documentation; and (3) multiple internal complaints from employees about overbilling or inconsistent documentation for claims. The Government also alleged that Defendants had actual knowledge of legal requirements, including important regulatory changes and specific instances of fraudulent conduct that violated those regulations. II-40 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR With respect to the materiality element, the facts alleged illustrated that Defendants’ conduct materially contributed to the Government's decision to reimburse the fraudulent claims. The Court cited United States v. Triple Canopy, Inc., 857 F.3d 174, 178 (4th Cir. 2017) (when discussing the implied false certification theory, explaining that “a material falsehood was one that was capable of influencing the Government's decision to pay”); and Universal Health Services, Inc. v. United States, 136 S. Ct. 1989, 2003 (2016) (“when evaluating materiality under the False Claims Act, the Government's decision to expressly identify a provision as a condition of payment is relevant, but not automatically dispositive”) (also addressing implied false certification theory). The Court also denied the motion to dismiss the relator-plaintiff Fortunatè’s retaliation claims, finding that their allegations satisfied the three prongs of retaliation claims under the FCA and VFATA. Notably, Fortunatè alleged that she engaged in protected activity when she “raised her concerns about fraudulent billing to NDUTIME in an effort to stop a potential FCA or VFATA violation.” The Court agreed, holding that under the Fourth Circuit’s opinion in Carlson v. DynCorp International LLC, 657 F. App'x 168, 172 (4th Cir. 2016), the “efforts to stop” category of protected activity applies to an employee's activities “motivated by an objectively reasonable belief that the employee's employer is violating, or soon will violate, the FCA.” The Court also found sufficient allegations of causation based on temporal proximity, observing that Fortunatè alleged that NDUTIME “terminated her employment and withheld pay, both adverse employment actions, shortly after she raised her concerns about fraudulent billing practices.” Finally, the Court also denied the motion to dismiss relator-plaintiff Hockaday’s retaliation claims against NDUTIME, finding that he engaged in protected activity by emailing Dr. Gipson that he “could no longer condone NDUTIME's overbilling of clients and assigning counselors to treat and bill for multiple clients in a single day.” Further, the Court found that Hockaday sufficiently alleged an adverse employment action by asserting that “NDUTIME diminished [his] job duties and threatened [him] with termination for refusing to participate in Defendants' fraud.” The Court observed that these events “would have dissuaded a reasonable worker from engaging in FCA protected activity.” X. EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA) U.S. Supreme Court [52] Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (Jun. 1, 2020) (Kavanaugh). The plaintiffs were two retirees who participated in U.S. Bank’s defined-benefit retirement plan. The suit was brought under ERISA against the defendant to recover for alleged breaches of the duties of loyalty and care via mismanagement of fund. The alleged mismanagement happened from 2007-2010 and cost $750 million. At no time did the plaintiffs receive less than the guaranteed funds from their retirement plan. The Court, in an opinion by Justice Kavanaugh, held that the plaintiffs lacked Article III standing to sue because they did not suffer an injury. In deciding the case, the Court reaffirmed that though financial trust law informs and guides ERISA, it is not bound by it. Further, the Court differentiated defined-benefits plans, such as the one at issue, from defined-contribution plans in II-41 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR that the former are “more in the nature… of contract” law than trust law and therefore do not possess the same duties. Lastly, the Court dismissed the plaintiffs’ argument that suits must be allowed in order to protect against fiduciary misconduct. The Court stated that employers and shareholders have sufficient interests in promoting fiduciary loyalty for defined-benefits plans because they are on the hook for any deficiencies in the payments. [53] Intel Corp. Inv. Policy Comm. v. Sulyma, 140 S. Ct. 768 (Feb. 26, 2020) (Alito). ERISA Section 413(1) provides a 6-year limitations period for fiduciary breach claims. But this is limited in Section 413(2) to 3 years when plan participants have “actual knowledge” of the breach. The scope of Section 413(2)’s “actual knowledge” will be determined by the Court in this case. Sulyma, a former Intel employee, alleged that plan fiduciaries breached their duty of prudence and caused plan losses when they increased their plan’s investment allocation in hedge funds and private equity. He filed more than three years after Intel disclosed the allocation to investment alternatives on a plan participant website, which he viewed. However, he testified that he was not actually aware of these investments three years prior to filing suit. The district court granted Intel’s motion to dismiss on limitations grounds, finding “actual knowledge” because Sulyma had access to the website information. The Ninth Circuit reversed, holding that “actual knowledge” requires that the plaintiff be “actually aware of the facts constituting the breach, not merely that those facts were available to plaintiff.” The Supreme Court granted certiorari due to conflict with a 6th Circuit decision holding that “actual knowledge” did not require that participants actually read the disclosures. In a unanimous decision authored by Justice Alito, the Court held that the three year “actual knowledge” limitation period is not necessarily invoked when a person has access to information of which he is not aware. “But if a plaintiff is not aware of a fact he does not have “actual knowledge” of that fact however close at hand the fact may be… As presently written, therefore, §1113(2) requires more than evidence of disclosure alone. That all relevant information was disclosed to the plaintiff is no doubt relevant in judging whether he gained knowledge of that information…. To meet §1132’s “actual knowledge” requirement, however, the plaintiff must in fact have become aware of that information.” In doing so, the Court accepted the textual, plain meaning, rather than the contextual arguments offered by the plan. The decision of the 9th Circuit was affirmed. [54] Ret. Plans Comm. of IBM v. Jander, 140 S. Ct. 592 (Jan. 14, 2020) (per curiam). In Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014), the Court held that “[t]o state a claim for breach of the duty of prudence” imposed on plan fiduciaries by ERISA “on the basis of inside information, a plaintiff must plausibly allege an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.” The question presented in the case concerned what it took to plausibly allege an alternative action that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it and further asked whether Dudenhoeffer’s “‘more harm than good’ pleading II-42 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR standard can be satisfied by generalized allegations that the harm of an inevitable disclosure of an alleged fraud generally increases over time. Yet as the parties in briefing focused on other issues that the Second Circuit had not addressed, the Court vacated the judgment below and remanded the case for further consideration by the lower court. Fourth Circuit [55] Quatrone v. Gannett Co., Inc., No. 970 F.3d 465 (4th Cir. Aug. 11, 2020) (Wynn*, Floyd). Plaintiffs alleged that Gannett Co. Inc. caused its 401(k) plan to lose roughly $135 million by keeping investments in its former parent company’s stock. In 2015, Gannett Co. Inc., a publicly traded company, changed its name to TENGA, Inc. and spun-off its publishing business into a new, publicly traded, independent company, Gannett Co., Inc. “Old” Gannett/Tenga had sponsored a participant-directed 401(k) plan, with employer matching contributions made in employer stock. When “New” Gannett was formed, the 401(k) plan was transferred to New Gannett, at which point the Old Gannett/Tenga stock was frozen and participants’ investment options were concentrated, or limited, to Old Gannett/Tenga common stock. The plaintiffs alleged that under ERISA, Gannett breached its fiduciary duties by not reducing the plan’s significant holdings in Tenga common stock after the company’s spinoff. In vacating and remanding the District Court decision from Judge Trenga, which dismissed the plaintiffs’ claims for breach of fiduciary duty, the split Fourth Circuit panel held that an ERISA plaintiff need only “plausibly allege that a fiduciary breached [a duty], causing a loss to the employee benefit plan.” Because the plaintiffs set out facts describing how defendants failed to monitor a fund, which led to a failure to recognize and remedy a defect, which then led to a loss to the plan, the Fourth Circuit vacated the District Court’s dismissal. The decision sets up a circuit split with the Fifth Circuit’s opinion in Schweitzer v. Inv. Comm. of the Phillips 66 Sav. Plan, 960 F.3d 190 (5th Cir. 2020), and on October 30, 2020, Gannett filed a petition for writ of certiorari with the Supreme Court partially on the grounds that the decision conflicts with the Fifth Circuit’s opinion in Schweitzer. EDVA/WDVA XI. LABOR UNIONS, PUBLIC EMPLOYERS, CONSTITUTION/SECTION 1983 Fourth Circuit [56] Carey v. Throwe, 957 F.3d 468 (4th Cir. Apr. 30, 2020) (Wilkinson,* Keenan, Alston). Plaintiff Carey, an employee of the Maryland Department of Natural Resources, was terminated following his anonymous posting of a supervisor’s Facebook page on a local blog. Plaintiff filed a 1983 claim against the state arguing, in part, that his free speech rights were infringed. The District Court held that the posts highlighted merely “personal dispute” amongst coworkers and not a matter of public concern, meaning his speech was not protected and his termination did not create liability. The 4th Circuit affirmed. II-43 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Carey posted two separate times on the local blog before being discovered as the poster. The first was in December of 2017 and the second was in January of 2018. The December post showed a co-worker’s Facebook page and highlighted his “boorish” conduct. The court held that this post was not discussing a matter of the public concern because there was no connection to “public wellbeing”. There was no substantive allegation that the coworker who was highlighted was not doing their job or incapable of doing their job. “The January post has similar problems,” said the court. Id. at 476. The second post highlighted Carey’s coworker with “scantily-clad” women with the implication of moral misdeeds. The court held that this is not conduct that rises to the level of public concern and affirmed the lower court’s ruling to dismiss the matter for failure to state a claim. EDVA/WDVA [57] Flanagan v. Pittsylvania Cnty., 2020 U.S. Dist. LEXIS 92320 (W.D. Va. May 27, 2020) (Conrad). A former director of a local Department of Social Services (DSS) agency sued the county and county officials after suffering through an online smear campaign orchestrated over social media. A county board member and others frequently posted on Facebook that the plaintiff had engaged in workplace misconduct and malfeasance. Additional posts mocked the plaintiff with insulting language and insults. Some posts were consistently characterized as “Sherry’s Shenanigans” and described alleged misdeeds of the plaintiff. Ultimately, the Board member alleged to have conspired to create and stoke the media campaign appointed new members to the local DSS board that summarily fired the director. The plaintiff sued pursuant to claims of defamation and, pursuant to 42 U.S.C. § 1983, claims of freedom of speech retaliation and due process liberty interest violations. The court dismissed the claims against the County, finding that the local DSS board was a separate entity. However, the court permitted the claims to proceed against the Board member in his official capacity because he was also a member of the DSS Board. This is a nudge away from the third prong of a prima facie case of a liberty interest case as held in the Fourth Circuit’s ruling in Sciolino v. City of Newport News, 480 F.3d 642, 646 (4th Cir. 2007). Sciolino held that the stigmatizing statements made about the employee must be made in conjunction with termination. In this matter, the online statements had been posted for numerous months but persisted up to and after the plaintiff’s termination. The court’s ruling embraced the concept of a due process liberty interest violation through the lens of cyberbullying. XII. NON-COMPETE/RESTRICTIVE COVENANT CASES EDVA/WDVA [58] Jacob Alley, et al. v. Quality Eco Technologies, LLC, 2021 WL 1196188 (E.D. Va. Mar. 29, 2021) (Lauck). Non-compete agreements arose in this Fair Labor Standards Act collective action case. The district court applied the six-factor test set forth United States v. Silk, 331 U.S. 704 (1947), abrogated in part by 503 U.S. 318 (1992), to determine whether plaintiffs were independent contractors or II-44 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR covered employees. In its discussion of the first factor – the degree of control that the putative employer has over the manner in which the work is performed – the district court noted the most persuasive allegation was the fact that, despite being classified as independent contractors, the plaintiffs were required to sign non-compete agreements. [59] Adesa, Inc. v. Lewis, 2021 WL 201283 (W.D. Va. Jan 20, 2021). In this case, the court, applying Tennessee law, determined that the plaintiff had not made a sufficient showing to justify the imposition of a preliminary injunction. Although arising under Tennessee law, the court made an interesting observation about the consideration given in exchange for a noncompete. While the court noted that Tennessee (like Virginia) finds continued employment to be sufficient consideration for the execution of a noncompetition agreement, in this particular instance, Lewis, the defendant, had worked for the plaintiff for six years before being asked to sign a noncompete in January 2020. He was then furloughed three months later as a result of the pandemic. The court raised questions as to whether there was adequate consideration. From a Virginia law perspective, the most significant aspect of the case was the willingness of the court to apply Tennessee law, and noting that Virginia generally honors contractual choice of law provisions. XIII. DUTY OF LOYALTY EDVA/WDVA [60] Anderson v. Fluor Intercontinental, Inc., No. 1:19-CV-0289, 2021 WL 837335, at *17 (E.D. Va. Jan. 4, 2021) (Alexandria Division) (O’Grady). This case involves a complex dispute between a Retired United States Army Brigadier General, Steve Anderson, and his former employers, Fluor Corporation, Inc., Fluor Intercontinental, Inc., Fluor Federal Services, Inc., and Fluor Federal Global Projects, Inc. implicating conflict of interest issues from other business ventures. The employers brought suit against Anderson to recover for breach of the duty of loyalty and violations of the Virginia Uniform Trade Secret Act. The District Court noted that although courts are hesitant to assign the label of VUTSA trade secret to proprietary information at the pleadings stage for fear of depriving parties the opportunity to conduct fact-finding on the issue, there were courts that have held that competitor pricing data constitutes a trade secret under the Virginia Uniform Trade Secret Act even at the pleading stage. However, this case was at the summary judgment stage, and the District Court did not hesitate to hold that any of the plaintiff’s duty of loyalty claims premised on the disclosure of pricing information was preempted by the VUTSA and only the duty of loyalty claims premised on theories distinct from the disclosure of pricing data would survive. II-45 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Virginia Circuit Court [61] Geneva Enterprises v. Bavely, No. CL-2018-1812 (Fairfax Cir. Ct. Feb. 17, 2021) (Oblon). Geneva Enterprises, the entity behind the Rosenthal Automotive Organization, delegated its dayto-operations of its fifteen sales and services locations to its president, Don Bavely. Geneva claimed that Bavely “surreptitiously usurped Mr. Rosenthal’s authority on multiple issues of corporate control, repeatedly made strategic decisions and investments for his personal benefit to the detriment of Mr. Rosenthal, his family, Geneva, and duplicitously schemed to seize control of the business upon Mr. Rosenthal’s passing.” In the relevant counts, Geneva asserted claims for Fraud, Conversion, and Unjust Enrichment for “Unearned Salaries, Bonuses, Ownership Interests, and Distributions,” as well as a claim “for Money Had and Received.” Gevena alleged that Bavely violated policies contained in its employee handbook, including, among other things, “unethical or questionable practices for personal gain,” “engaging in activities that conflict with the company’s best interests,” and “otherwise participating in a situation that create a conflict of interest.” Geneva asserted that it was entitled to reimbursement for all compensation paid to Bavely after the time it would have terminated Bavely had he not concealed the violations. Sound too good to be true? Judge Oblon for the Fairfax County Circuit Court thought so, stating this “would be an employer’s fantasy” and “[a]s with most fantasies, however, this one is not real.” On demurrer, the Circuit Court held that employers may not generally claw back employee pretermination compensation for concealed wrongful acts. The Circuit Court referenced the Virginia Supreme Court’s holding that Virginia law disfavors forfeitures. See Hunter v. Hunter, 298 Va. 414, 424 (2020). While forfeitures are disfavored, the Circuit Court noted that contracts drive employment law in Virginia and a contract can expressly provide for forfeiture. However, a contractual right was not the basis for the claims, rather, Geneva argued it could recover in equity on the principle that an “agent is entitled to no compensation for conduct which is disobedient or which is a breach of his duty of loyalty.” See Restatement (Second) of Agency § 469 (1958). Geneva had only made a blanket assertion that all Bavely’s alleged wrongdoings should result in the forfeiture of over a decade of compensation and the Circuit Court held that without tying specific payments to specific bad acts an employer could not claw back the compensation. XIV. STATUTORY BUSINESS CONSPIRACY EDVA/WDVA [62] Johnson, et al. v. Bella Gravida, et al., No. CL-2019-17643 (July 20, 2020) (Fairfax Cir. Ct.) (Mann). This is a case involving members of a limited liability clothing company, Bella Gravida. The plaintiffs purchased membership interests in Bella Gravida. When the clothing company failed, the plaintiffs, in their individual capacities, brought tort and contract claims against Bella Gravida II-46 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR and the other LLC members in their individual capacities. The plaintiffs claimed injury as members of the LLC through tort but did not attempt to enforce a right against the LLC or other members. In response to defendants’ demurrer, the plaintiffs asserted that the intracorporate immunity doctrine did not bar the conspiracy claim because of the personal stake exception recognized in Buffalo Wings Factory, Inc. v. Mohd, 622 F. Supp. 2d 325, 335-336 (E.D. Va. 2007). The Circuit Court noted that there was no controlling Virginia state court authority recognizing the personal stake exception and declined to create an exception. Ultimately, the Circuit Court held that plaintiffs lacked standing to bring a statutory business conspiracy claim under Va. Code § 13.1-1020, “a member of a limited liability, solely by reason of being a member, is not a proper party to a proceeding by or against a limited liability company” unless it is to enforce a member’s right or the rights of the LLC. The Circuit Court noted that plaintiffs were not trying to enforce rights in the LLC and as members of the LLC they must bring their tort claims against other members of the LLC as a derivative suit under Va. Code § 13.11028(B) on behalf of the LLC. XV. AT-WILL EMPLOYMENT/ WRONGFUL DISCHARGE/ TORTIOUS INTERFERENCE Fourth Circuit [63] Hulkenberg v. Healthshare, No. 20-1521, 2021 WL 1235799 (4th Cir. Apr. 2, 2021) (per curiam) (unpublished). This case held that employees who claimed they were terminated for exercising their fiduciary duties or for furthering policies enacted under statutes that did not protect employees failed to state a wrongful discharge claim under Bowman v. State Bank of Keysville, 229 Va. 534 (1985) and its progeny. The six plaintiffs worked for a health care sharing ministry. They alleged they were wrongfully discharged under Virginia law. The Fourth Circuit’s brief opinion began with a review of the three categories in which an employee may demonstrate that his termination violates public policy under Bowman: (1) where an employer violates “a policy enabling the exercise of an employee's statutorily created right,” (2) “when the public policy violated by the employer was explicitly expressed in the statute and the employee was clearly a member of that class of persons directly entitled to the protection enunciated by the public policy,” and (3) “where the discharge was based on the employee's refusal to engage in a criminal act.” The plaintiffs sought refuge under each category, without success. Under the first exception, the plaintiffs contended that they were terminated for exercising their fiduciary duties. The Court rejected this argument, observing that the Supreme Court of Virginia has not recognized such a claim and at least one Virginia trial court had rejected such as claim. The Court also observed that in applying Maryland law, which was similar to Virginia law on the point, the Court had previously II-47 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR we rejected an attempt by an employee to bring a wrongful termination claim based on the interference with his exercise of fiduciary duties. See Milton v. IIT Rsch. Inst., 138 F.3d 519, 52223 (4th Cir. 1998). The Court therefore concluded that allowing a former employee to bring a Bowman claim based on interference with the employee's fiduciary duties would unduly expand what the Supreme Court of Virginia has cautioned is a narrow exception to the employment atwill rule. Under the second Bowman exception, the plaintiffs argued that they were terminated for attempting to further the policy enacted in two statutes regulating health care sharing ministries (“HCSMs”) in Virginia, Va. Code Ann. §§ 38.2-6300 & 38.2-6301. However, the statutes do not refer to employees. The Court therefore concluded that, even assuming the statutes announce a public policy of requiring HCSMs to abide by certain regulatory requirements, the class of people protected are individuals purchasing such policies in Virginia. The plaintiff employees failed to plausibly allege that they were such individuals. Finally, with respect to the third exception, the plaintiffs alleged that their employer committed several criminal violations in its business practices. However, the plaintiffs failed to challenge the trial court’s conclusion that this Bowman theory failed because the plaintiffs were not residents of Virginia and therefore did not plausibly allege that they were subject to criminal prosecution in Virginia. The Court therefore affirmed the trial court’s grant of the employer’s motion to dismiss. EDVA/WDVA [64] Wells v. Enter. Leasing Co. of Norfolk/Richmond, LLC, No. 2:20-CV-305, 2020 WL 6779470 (E.D. Va. Nov. 12, 2020) (Jackson). This case held that an employee’s termination for refusing to provide his employer with information about a family member’s COVID-19 test results did not give rise to a wrongful discharge claim under Bowman v. State Bank of Keysville, 229 Va. 534 (1985) and its progeny. Wells worked for Enterprise. An HR manager, Mann, told Wells she’d received an anonymous tip that Wells had been exposed to a family member who tested positive for COVID-19. Wells advised Mann that he planned to see a doctor the following week. Mann asked Wells to keep Enterprise informed about his medical results and the medical test results for his family member. The family member was not an employee at Enterprise. Wells refused to provide Enterprise with the family member’s test results or information regarding the family member's medical status. Enterprise fired Wells, advising him that “his refusal to get tested and refusal to provide Enterprise with medical tests results and medical information related to his family member was ‘gross insubordination’ and that his insubordination was the grounds for the termination of his employment.” Wells sued for wrongful discharge in violation of public policy, citing provisions of HIPAA that make it a federal crime for covered entities (health plans, health clearing houses, or healthcare II-48 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR providers) to disclose individually identifiable health information to another person. Enterprise removed to federal court and moved to dismiss under Fed. R. Civ. P. 12(b)(6). In essence, Wells claimed that he was terminated for refusing to make a disclosure that would have subjected him to criminal liability under HIPAA. The Court rejected that argument, finding that Wells was not a “covered entity” under HIPAA and therefore he could not be held directly liable under the statute for disclosing information about his family member’s COVID-19 test results. Alternatively, Wells asserted that he could have been indirectly held criminally liable for “aiding and abetting” Enterprise’s efforts to obtain from his family member’s healthcare provider information protected by HIPAA. The Court rejected this argument for three reasons: (1) Enterprise did not ask Well’s to disclose his family members’ test results without their consent; (2) Enterprise was not a “covered entity” and therefore Wells could not be held criminally liable for helping it obtain the test results, and (3) Wells did not plead or provide any evidence supporting that he was “asked or directed by his employer to commit a crime” with respect to HIPAA. The Court further held that Wells failed to state a claim under any of the three exceptions to atwill employment under Bowman v. State Bank of Keysville, 229 Va. 534 (1985) and its progeny. With respect to the first and second exceptions, he did not identify any Commonwealth statute stating or implying a public policy implicated by his termination. And with respect to the third exception, because Wells’ claim centered around an alleged violation of the federal HIPAA, Wells failed to show that could have been prosecuted under Virginia criminal law had he engaged in the conduct demanded by his employer. Because Wells failed to state a plausible claim for wrongful termination claim under any of the three Bowman exceptions, the Court granted Enterprise's motion to dismiss. [65] Morris v. Taylor Commc'ns Secure & Customer Sols., Inc., No. 7:20CV00604, 2021 WL 124695 (W.D. Va. Jan. 13, 2021) (Conrad). In this case, the Court held that an employee could not assert a wrongful discharge claim under Bowman based on a violation of the pre-July 1, 2020 Virginia Wage Payment Act. Morris worked for Taylor pursuant to a yearly Sales Compensation Plan. The Plan provided for an annual commission payment, called a Bonus, and that Taylor had the right to modify the Plan. The Plan further provided that (1) if an employee was terminated, the employee “will not earn any more bonuses” and (2) the employee “must be employed by [Taylor] at the time the Bonus is paid in order to earn the Bonus.” Under the terms of the 2019 Plan, Morris earned a $15,000 Bonus. In February 2020, Taylor informed Morris the 2019 Bonus payments were “suspended pending the completion of an audit of the relevant calculations and source data.” In April 2020, Taylor terminated Morris without ever paying him the Bonus. Morris brought a wrongful discharge claim under the second Bowman exception pursuant to the Virginia Wage Payment Act, Va. Code § 40.1-29. The second Bowman exception allows for an exception to at-will employment doctrine when “the public policy violated by the employer was explicitly expressed in the statute and the employee was clearly a member of that class of persons directly entitled to the protection enunciated by the public policy.” II-49 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Specifically, Morris asserted that Taylor terminated him to avoid paying him commissions and bonuses it owed Morris and thus “in violation of the public policy underlying” the Virginia Wage Payment Act. The Court noted that the VWPA “prohibits an employer from withholding any part of an employee's wages, except for taxes, without the employee's permission.” The Court cited cases from the Eastern District and Western Districts of Virginia, as well as the District of Columbia, concluding that the pre-July 2020 VWPA conferred “no right on employees to receive pay” and therefore that terminating an employee to avoid paying wages “did not violate a policy [in the VWPA] enabling the exercise of an employee's statutorily created right as is necessary to establish a Bowman claim” under the second Bowman exception. Against that backdrop, the Court concluded that Morris's Bowman claim failed as a matter of law. Specifically, the court agreed with prior cases that the pre-July 2020 VWPA neither “protect[s] an employee's exercise of [his] right to receive wages” nor “set[s] forth an explicit public policy necessary to prosecute a Bowman claim” pursuant to the second Bowman exception. [66] Navient Sols., LLC v. Law Offices of Jeffrey Lohman, 2020 WL 1644566 (E.D. Va. Apr. 2, 2020) (Brinkema). Navient filed suit against individual attorney defendants and GST, alleging that Defendants operated a marketing scheme to collect payments from student loan borrowers. GST purchased accounts receivable from some of the individual attorney defendants who represented student loan borrowers through contracts called factoring agreements. The factoring agreements provided in part that payments the debtors owed to the attorney would become the property of GST. When Navient initially learned of Defendants’ conduct prior to filing suit, Navient contacted loan borrowers and attempted to dissuade them from hiring or working with the attorney defendants, calling them “scammers.” GST filed counterclaims against Navient alleging tortious interference, civil RICO violations and statutory business conspiracy. Specifically, GST alleged that as a result of Navient’s efforts to discourage debtors from working with attorney defendants, many of the debtors fired the attorney defendants, filed bar complaints against them or chose not to retain them in the first place, which substantially reduced the accounts receivable GST had acquired through the factoring agreements. The Court dismissed GST’s tortious interference claim because GST did not plead and facts to show that its factoring agreements were ever breached. Further, GST had not shown Navient intentionally interfered with the factoring agreements by encouraging debtors to terminate relationships with the attorney defendants or not retaining the attorney defendants at all. While GST had alleged Navient damaged the business, reputation and law practices of the attorney defendants, a subsequent reduction in the value of GST’s accounts receivables from the factoring agreements did not constitute “intentional interference” to cause any breach of the factoring agreements. II-50 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR XVI. NEGLIGENT SUPERVISION/ HIRING / RETENTION Virginia Supreme Court [67] Doe v. Baker, Record No. 200386 (Va. S. Ct. April 29, 2021) Jonathan Eugene King was the former pastor of a Waynesboro congregation of the Church of God. Prior to being hired at that congregation in 1995, he served as a pastor in Marion, Virginia where he had inappropriate conduct with young girls leading to his discharge from that congregation. While pastor in Waynesboro, King was subject to numerous complaints of sexual misconduct and predatory behavior towards women and young girls in 1997, 2001, 2002, and several complaints in 2005. Complaints including offering to pay a woman $500 for pictures of herself in various states of undress, trying to kiss women, and giving a woman a “sexual instrument” and instructing her to use it and return it to him. In 2011, King retired, but the Complaint alleged that he continued maintain a close relationship and serve as spiritual leader to the congregation. On July 8, 2016, five years after his retirement, 13-year old Jane Doe was visiting King at his house with her mother. While Doe’s mother was in the kitchen speaking to King’s wife, without consent Mr. King rubbed Jane Doe’s stomach, then rubbed her genitals outside her clothes and kissed Doe on the mouth. Doe brought an action against the Church, including claims of Negligent Hiring or Retention, which were dismissed on demurrer. One of Doe’s theories was that the Church was liable for negligent hiring and retention even though he was retired, presumably under the theory that if King had not been hired and retained from 1995 to 2011, the battery would not have occurred in 2016. Although at least three states have permitted such a theory under their state law, the Virginia Supreme Court joined the majority position in holding that liability for negligent hiring or retention cannot attach to any harm committed after the employment relationship had ended. Thus, to the extent King was fully retired at the time of the sexual battery, the Church could not be held liable. However, because the complaint left open the possibility that King was still an employee post-retirement, the Court held that further evidentiary development was necessary to resolve that issue. The Court also held that because the Complaint did not plead that Waynesboro was aware of King’s conduct in Marion, there was no claim for negligent hiring in 1995. However, to the extent Doe was alleging a negligent re-hiring post-retirement in 2011, there could be a valid claim against the Church for that hiring because the Church was on notice from all the complaints that it had received prior to his retirement. II-51 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR EDVA/WDVA [68] McKeown v. Rahim, 446 F. Supp. 3d 69, 85-86 (W.D. Va. 2020) While driving on I-81, Bradley and Katherine McKeown were rear-ended by a tractor-trailer causing an accident which led to the death of Ms. McKeown. Among other claims, the estate brought a claims against James Hardie Building Products, Inc. (“Hardie”) for its alleged negligent hiring of the driver and trucking company. The Court held that the Plaintiff’s Second Amended Complaint did not state a negiglent hiring claim because it failed to allege any facts that Hardie should have known the driver or the trucking company were incompetent at the time of hire. However, Plaintiff’s proposed amended complaint added the allegation that the trucking company “had a history of safety violations and the FMCSA issued only conditional authority to transport load.” The Court held that this additional allegation made it plausible that a reasonable person in Hardie’s position would have performed an in-depth investigation and ultimately refused to hire the trucking company. [69] Warner v. Centra Health Inc., 2020 WL 7018688 (W.D. Va. 2020) Jonathan Warner suffers from “frequent but intermittent, intense bouts of psychosis, paranoia, and depression induced by bipolar schizoaffective disorder.” In January 2016, Jonathan began experiencing an psychiatric emergency and was admitted to the Psychiatric Emergency Center (“PEC”) at Lynchburg General Hospital. While at the PEC, Mr. Warner was engaged in a conversation with a security guard, Wesley Gillespie, who was equipped with a .40 caliber Glock semiautomatic pistol, a TASER x26, and pepper spray. At some point, Mr. Gillespie made a “sudden hand gesture” which “finally snapped” Mr. Warner and “caused him to be unable to control his action and/or distinguish right from wrong. Voices in his head were telling him to kill himself to save his family.” Mr. Warner first attempted to take Mr. Gillespie’s Glock, but failed to do so. He then grabbed the TASER and discharged it into the wall. Another hospital employee attempted to tackle Mr. Warner but failed to do so, and Mr. Warner chased him into an adjoining room, and struck the employee with the TASER. Mr. Warner then ran back to the main room of the PEC towards the exit. As he was approaching the exit, Mr. Gillespie shot Mr. Warner four times. The final shot paralyzed Mr. Warner from the waist down. Among other claims, Mr. Warner asserted claims against the hospital for negligent hiring of Mr. Gillespie and negligent training and supervision. The Court dismissed both claims. With regard to the hiring claim, the Court found there were no allegations in the complaint suggesting that Mr. Gillespie had any problematic propensity to unlawful seizure or excessive force at the time of his hire. With regard to the training/supervision claim, the court held that under Chesapeake & Potomac Tel. Co of Va. v. Dowdy, 235 Va. 55 (1988), there is no common law claim for negligent supervision or training under Virginia law. II-52 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR XVII. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS EDVA/WDVA [70] Williams v. AM Lapomarda, 2020 U.S. Dist. LEXIS 118503 (E.D. Va. July 6, 2020) (Novak). The plaintiff, an African American woman who strictly adheres to the Islamic faith, including the traditional dress code, entered a 7-11 store wearing a niqab, as well as dark sunglasses to cover her eyes. The store manager demanded that plaintiff uncover her face to receive service and stated he would only serve plaintiff if she removed her sunglasses. However, even after plaintiff complied with the manager’s request, the manager still refused to serve her. Subsequently, the manager called law enforcement to have plaintiff removed from the store. The plaintiff left of her own volition, but later filed suit claiming intentional infliction of emotional distress and a violation of Title II of the Civil Rights Act. The defendant filed a motion to dismiss pursuant to Rule 12(b)(6). The court opined that the Fourth Circuit has explicitly stated that the federal pleading rules trump Virginia's heightened pleading standards for IIED claims in federal cases governed by state law. Hatfill v. New York Times Co., 416 F.3d 320, 337 (4th Cir. 2005); see also Daniczek, 156 F. Supp. 3d at 758 (explaining the Fourth Circuit’s ruling); Williams, 997 F. Supp. 2d at 414 (“Plaintiffs’ IIED claim must meet the pleading standard found in the Federal Rules, rather than the heightened standard required by Virginia state courts.”); White v. Ocean Duchess Inc., 2007 U.S. Dist. LEXIS 96301, 2007 WL 4874709, at *5 (E.D. Va. Nov. 7, 2007), report and recommendation adopted, 2008 U.S. Dist. LEXIS 7088, 2008 WL 318299 (E.D. Va. Jan. 31, 2008) (“In federal court, plaintiffs do not have to plead emotional distress with the particularity required in Virginia Courts.”). Unlike in the Virginia state courts, “substantive claims for intentional infliction of emotional distress under Virginia law need not be pled in federal court with the degree of specificity required by Virginia courts.” Faulkner v. Dillon, 92 F. Supp. 3d 493, 501 (W.D. Va. 2015). Therefore, although a plaintiff in state court must plead “all facts necessary to establish a cause of action in order to withstand challenge on demurrer,” Almy, 639 S.E.2d at 187, plaintiffs in federal court need only allege sufficient facts to “allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,” Faulkner, 92 F. Supp. 3d at 50001. The court found that the plaintiff had properly pled a count of IIED under these circumstances. EDVA/WDVA [71] Eckstein v. Sonoco Prod. Co., 2020 WL 7212579 (W.D. Va. Dec. 7, 2020) (Urbanski). Eckstein brought various claims against his former employer Sonoco Products Company, including tort claims. The tort claims arose out of a workplace incident between Eckstein and a co-worker, Jeff Tedder, in which Tedder instigated an altercation and then hit Eckstein in the ear, causing him injury. The Court granted Sonoco’s motion to dismiss Eckstein’s various tort claims, including his IIED claim, on the basis that his tort claims were precluded by the Virginia Workers’ Compensation Act. II-53 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR The Court reasoned that the altercation with Tedder arose out of an employment-related disagreement over a safety inspection, and that there was no evidence that the assault was motivated by any personal feelings or impulses against Eckstein outside of work. The Court therefore distinguished the attack by Tedder from other injuries held not to “arise out of employment” for the purposes of the Workers Comp Act, such as a plaintiff who was allowed to proceed with an IIED claim against her employer because the injury arose out of a campaign to inflict humiliation that was personal, focused on her weight and gender, and not tied to her employment. Here, Eckstein did not suffer a targeted personal attack to his appearance or character, nor did the assault arise out of a personal dispute between himself and Tedder, and thus the injury was held to fall within the scope of the Workers Comp Act. [72] McCoy v. Univ. of Virginia Med. Ctr., 2021 WL 472930 (W.D. Va. Feb. 9, 2021) (Moon). McCoy, a female, worked as a nurse at UVA Medical Center for four years before bringing sexual harassment complaints against two male co-workers related to alleged sexually charged comments. After investigating her complaints, the Medical Center issued discipline or counseling against the two alleged harassers, and informed McCoy that it would attempt to keep them separated from her as much as possible. McCoy never returned to work after being informed of the outcome of the investigation, first requesting FMLA leave and then voluntarily resigning. McCoy then filed various claims against the Medical Center and the individual accused harassers, including claims for intentional infliction of emotional distress against all three defendants. The Court granted the Medical Center’s motion for summary judgment on all the IIED claims. The Court reasoned that statements like “[y]ou are so beautiful; damn you are just fine so hot,” “I don't care if your [sic] married or not if you change your mind let me know,” and even two comments about “get[ting] hard,” while inappropriate and unprofessional, were not “so outrageous in character, and so extreme in degree,” as to be considered “utterly intolerable in civilized” society and thus did not meet the high threshold for IIED claims under Virginia law. XVIII. DEFAMATION Virginia Supreme Court [73] Viers v. Baker, 841 S.E.2d 857 (Va. May 14, 2020) (Mims). This suit established that a commonwealth’s attorney can be sued for defamation because the complained-of statements – his explanation of why he fired a long-time employee shortly after he took office – are not covered by absolute quasi-judicial immunity. Baker, the appellee in this case, was elected to succeed Newberry as the commonwealth’s attorney for Dickenson County. Viers had been an administrative assistant in the office for 29 years. Viers alleged that shortly after the November 2015 election, she saw Baker at the post office and inquired about job security in light of rumors about personnel changes. Baker said that “they were only rumors and that she would keep her job.” Viers alleged that in January 2016, Baker called her into his office, said the office was dirty, and fired her, even though cleaning the office was not among Viers’ duties. Later that evening, Baker met with Newberry and said he was unable to access the II-54 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR office computer. Newberry explained that he had removed his password from the computer and told Baker how to create a new one. Viers and her husband were both active Democrats, and Baker had been the Democratic nominee in the election. News of Viers’ discharge spread among party members and others in the community. A few days after Viers was fired, Baker addressed the Dickenson County Democratic Committee. Viers alleged that Baker told those at the meeting “that he fired Viers because his office computer had been wiped clean and he could not use it.” He knew that the statement was false because he knew that the computer had actually been merely temporarily inaccessible, and the true reason was that Newberry had “removed” the password. “He made the false statement intending that those present would believe that Viers had been responsible and that it was the reason that he fired her. Baker’s false statement was not related to any possible pending or forthcoming criminal investigation. Baker made similar statements to others, including the county administrator, whom he told that he had fired Viers because she had tampered with his office computer.” Viers sued Baker. Her second amended complaint alleged intentional infliction of emotional distress and defamation. Baker demurred to both counts. The Court ruled that the statements made by Baker were not subject to immunity and the defamation claim could advance. The Court did strike an IIED claim because the conduct alleged did not rise to the level necessary under Virginia law to sustain the claim. [74] Bryant-Shannon v. Hampton Rds. Cmty. Action Program, Inc., 2021 WL 1307139, 2021 Va. LEXIS 34 (Va. S. Ct. Apr. 8, 2021). The Plaintiff worked for 31 years at against the Hampton Roads Community Action Program, Inc. About six months after an Interim Executive Director was hired, plaintiff was fired from her job. She brought claims for defamation arising out of (i) a disciplinary memo that had been put in her personnel file and (ii) testimony that had been given at the Virginia Employment Commission relating to her petition for unemployment benefits. With regard to the former, the plaintiff alleged that the following statements in the disciplinary memo were defamatory: [Y]ou are not allowed to take sick leave without giving notice to your immediate supervisor prior to the start of the work day or contact with your supervisor about you taking off of work for sick leave. You were on vacation and on September 10, 2015, I was told by the administrative assistant at approximately 2 pm that you were taking sick leave because you were not feeling well. On September 11, 2015 you came in the office after 9 am and you did not communicate with your immediate supervisor, who is the interim executive director that you would be off for more than half of the day. I was not aware that you were on vacation for the entire week. The Supreme Court held that “[t]his statement, without more, does not rise to the necessary level of defamatory “sting.” The statement does not “tend so to harm the reputation of [Shannon] as to lower [her] in the estimation of the community or to deter third persons from associating or dealing II-55 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR with [her].” The court also held that the remaining statements in the disciplinary memo regarding her use of the email system and treatment of other employees’ use of leave also did not contain the necessary defamatory sting. With regard to the plaintiff’s contention that statements made in the VEC proceeding had been defamatory, the Supreme Court reviewed the relevant section of the Virginia Code which states, among other things, that no information or determination or decision rendered by the VEC “shall be used in any judicial or administrative proceeding” not arising under title 60.2. In finding that the Virginia code “grants absolute privilege to statements made during VEC proceedings,” the Supreme Court also noted: The broad nature of the statute encourages employees and employers to be candid in their statements to the VEC. Issues such as fitness and integrity in the workplace come before the VEC. Statements made about such issues could give rise to claims of defamation. Without this statute, employees and employers would experience a chilling effect on the presentation of evidence before the VEC. On that basis, Supreme Court affirmed the dismissal by the Circuit Court of the plaintiffs defamation claims. [75] Nunes v. WP Co., 2020 U.S. Dist. LEXIS 90058 (E.D. Va. May 21, 2020) (Payne). Plaintiff Devin G. Nunes represents California’s 22nd Congressional District in the U.S. House of Representatives. This action arises out of an article that The Washington Post published on Feb. 20, 2020. Nunes asserted two counts: (1) defamation per se and (2) common law conspiracy. His action arises out of an article that the Post published on February 20, 2020, entitled senior intelligence official told lawmakers that Russia wants to see Trump reelected. The article reported that a “senior U.S. intelligence official told lawmakers last week that Russia wants to see President Trump reelected” and that, “[a]fter learning of that analysis . . ., Trump grew angry at his acting director of national intelligence, Joseph Maguire . . . .” The article also stated that “[t]he official, Shelby Pierson, said several times during the briefing that Russia had ‘developed a preference’ for Trump” and that “one person familiar with the matter” had stated that “Trump learned about Pierson’s remarks from Rep. Devin Nunes . . . .”) Nunes asserted two counts in the Complaint. Count I alleges that the Post and Harris's “false statements constitute defamation per se” and that the “statements accuse and impute to [Nunes] criminal misconduct, and an unfitness to perform the duties of an office or employment for profit, or the want of integrity in the discharge of the duties of such office or employment.” Before the court was the Post’s motion to transfer to a federal court in Washington D.C. The first step in the transfer analysis looks to whether the action could have originally been brought in the District of Columbia. Both subject matter and personal jurisdiction exist over the Post in the District of Columbia. The District of Columbia is also a proper venue for this action. In the second step of the § 1404(a) transfer analysis, a court must weigh “(1) the weight accorded to plaintiff’s choice of venue; (2) witness convenience and access; (3) convenience of the parties; and (4) the interest of justice.” Following these factors, the court granted the motion to transfer. II-56 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR XIX. WORKERS’ COMPENSATION EDVA/WDVA [76] Farmer v. Cook, 2021 WL 463373 (W.D. Va. Jan. 27, 2021) (Cullen). Plaintiff, an employee of EBI, LLC, was injured when he (and the forklift he was driving) fell off the back of a tracker trailer operated by an employee of Williams Transportation, a company that was independently contracted with by EBI. The injury occurred at an EBI warehouse while loading EBI products and materials onto the tractor trailer. Plaintiff filed suit in Danville Circuit Court alleging a single count of negligence against the Williams Transportation employee, but the defendant removed the case on diversity grounds to the Western District. The Court then granted the defendant’s motion for summary judgment, concluding that the defendant—by performing services for EBI at the time of the alleged injury, which were indispensable to EBI’s day-to-day business, and which would normally be conducted by EBI employees—was a statutory employee of EBI under the Virginia Workers’ Compensation Act. Because the Virginia Workers’ Compensation Act precludes an employee from bringing suit for negligence against his employer or co-employee for injuries sustained in the course of his or her employment, the Court concluded that the plaintiff’s negligence claim was barred by the Virginia Workers’ Compensation Act. [77] Eckstein v. Sonoco Products Company, 2020 WL 7212579 (W.D. Va. Dec. 7, 2020) (Urbanski). Plaintiff filed a multi-count complaint against his former employer, Sonoco, an international packaging producer, alleging, in part, tort claims arising out of a physical alteration between the plaintiff and another employee (intentional and negligent infliction of emotional distress, and negligent hiring and retention). The Court granted the employer’s motion to dismiss the tort claims, with prejudice, after concluding that the tort claims were barred by the Virginia Workers’ Compensation Act. Even though the plaintiff alleged intentional infliction of emotion distress as a result of an intentional assault, the Virginia Workers’ Compensation Act’s provision of an exclusive remedy for any injury that (1) occurs by accident, (2) arises out of the employment, and (3) occurs in the course of employment, covers injuries caused by intentional or willful assaults by a coworker. [78] Landon v. United States, 816 F. App’x 853 (E.D. Va. Aug. 20, 2020) (Novak). Plaintiff was injured while completing his delivery and pick up of mail from the Sandston, Virginia post office, and brought suit against the United States Postal Service under the Federal Tort Claims Act. In affirming the magistrate judge’s dismissal, the District Court concluded that because the Virginia Workers’ Compensation Act’s exclusivity provision would bar a negligence claim against a private employer in similar circumstances, the plaintiff’s FTCA claim similarly could not proceed. II-57 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR XX. ATTORNEYS’ FEES AND COSTS EDVA/WDVA [79] Eastern District Am. Majestic Constr., LLC v. Junior, 2020 U.S. Dist. LEXIS 77999 (E.D. Va. May 4, 2020) (Brinkema). Although the defendants prevailed at summary judgment by demonstrating the Lanham Act claims were time-barred, attorneys’ fees were denied because the plaintiff’s claims were not frivolous or objectively unreasonable, its litigation approach was not so unreasonable as to render it exceptional and the lawsuit was not brought in bad faith. EDVA/WDVA [80] Zamora v. Enterprise RAC of Md., 2020 WL 7488200, 2020 U.S. Dist. LEXIS 242307 (E.D. Va. Dec. 7, 2020) (Brinkema). Plaintiff, by counsel, filed a complaint alleging that the defendant-employer violated the FLSA “by miscalculating the amount of overtime that was due on plaintiff’s bonus compensation.” Counsel for enterprise Rent-A-Car, sent a letter to plaintiff’s counsel explaining how Enterprise had calculated bonuses and how the “catch-up” overtime calculation was done to show that there was no additional overtime due and owing to the plaintiff. Rather than dismissing the case, plaintiff’s counsel filed an Amended Complaint making the same allegations and attaching all of the Plaintiff’s pay stubs (which had been sent to him by counsel for Enterprise). Enterprise filed a motion to dismiss under Rule 12(b)(6) arguing that the Amended Complaint itself, along with the pay stubs that had been attached, established that there was no basis for the FLSA claim. At a hearing on the motion, the court questioned plaintiff’s counsel about his overtime theory and directed the parties to submit a supplemental briefing based upon the same paystub. Following the supplemental briefing, the court granted Enterprise’s motion, concluding that Enterprise had demonstrated that it had properly calculated the plaintiff’s additional overtime based upon productivity bonuses paid to plaintiff. The court also agreed to allow Enterprise to petition for its attorneys’ fees under 28 U.S.C. § 1927 on the grounds that the plaintiff’s counsel had vexatiously multiplied proceedings unnecessarily. After briefing on the attorneys’ fees issue, the court awarded Enterprise the amount of $26,250 in attorney fees against counsel for plaintiff. The case is now on appeal XXI. OCCUPATIONAL SAFETY AND HEALTH [81] Emergency Temporary Standard for Infectious Disease Prevention of the SARS-CoV-2 Virus that Causes COVID-19. On July 15, 2020, the Virginia Safety and Health Codes Board promulgated a first-in-the-nation Emergency Temporary Standard (ETS) to address COVID-19 in workplaces, which became effective July 27, 2020. 16 VAC 25-220. II-58 VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR ANNUAL UPDATE OF EMPLOYMENT CASES The ETS mandated, and in some instances exceeded, guidance issued by the U.S. Centers for Disease Control and Prevention (CDC) and OSHA. As with other standards enforced by Virginia Occupational Safety and Health (VOSH), the ETS covered most private employers in Virginia, as well as all state and local employees. Three other “State Plan” states (Michigan, Oregon and California) also enacted ETSs in 2020. In addition to CDC and OSHA guidelines, the ETS included provisions that required employers to: • Provide telework and staggered shifts when feasible; • Provide both handwashing stations and hand sanitizer when feasible; • Assess risk levels of employees and suppliers before entry; • Notify the Virginia Department of Health of positive COVID-19 tests; • Notify VOSH of three or more positive COVID-19 tests within a two-week period; • Assess hazard levels of all job tasks; • Provide COVID-19 training of all employees within 30 days (except for low-hazard places of employment); • Prepare infectious disease preparedness and response plans within 60 days; • Post or present agency-prepared COVID-19 information to all employees; and • Maintain air handling systems in accordance with manufacturers’ instructions and American National Standards Institute (ANSI) and American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standards. The ETS included antidiscrimination (whistleblower) protection for employees who raise reasonable concerns about infection control to print, online, social, or other media. It also required building and facility owners to report positive COVID-19 tests to employer tenants. The ETS also implemented provisions that echo CDC and OSHA guidance, including requirements to: • Place requirements on workplaces based on hazard levels (i.e., “very high,” “high,” “medium,” and “low”); • Screen employees prior to entry to work; • Establish requirements for employees with COVID-19 positive tests and symptoms before returning to work; • Require social distancing or, when social distancing is not possible, respiratory protection; and • Clean and disinfect commonly used areas and equipment. The ETS imposed additional requirements on “Medium,” “High” and “Very High” hazard employers, including employee training and Infectious Disease Preparedness and Response Plans (with an exemption for “Medium” hazard employees with fewer than ten employees). II-59 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Permanent Standard for Infectious Disease Prevention of the SARS-CoV-2 Virus that Causes COVID-19. Six months after promulgating the ETS, the Safety and Health Codes Board promulgated a Permanent Standard that superseded the ETS, effective January 27, 2021. Id. The Permanent Standard duplicated most of the substantive provisions that are in the Emergency Temporary Standard, with several notable changes: • Requirements unrelated to occupational safety and health, such as contingency planning for business operations in the event of an outbreak and flexible sick leave policies, have been removed. • No enforcement actions will be brought against healthcare providers and other employers that are making good faith efforts to secure Personal Protective Equipment (PPE) that is in short supply. • It cannot be used to enforce Governor Northam’s Executive Orders. This takes on particular significance in light of Governor Northam’s most recent Order expanding face covering requirements, particularly in indoor settings. It is unclear whether the Order applies to low-hazard workplaces with physically distanced employees. • It scales back the requirement to report every single positive COVID-19 case to the Virginia Department of Health to “outbreaks” of two or more cases. • It eliminates test-based return-to-work requirement, leaving employers with a time-based requirement only. • It makes the time-based return-to-work requirement consistent with CDC guidance that reduced the requirement from 10 days with three symptom-free days to 10 days with only one symptom-free day. • It provides alternative controls to the requirement for employers to comply with respiratory standards when multiple employees travel in work vehicles together, in light of shortages of N-95 and other filtering facepiece respirators. Contrary to common misconceptions, the Permanent Standard does not: • Prohibit employees from coming to work after close contact with an individual who has tested positive for COVID-19, leaving the issue to Department of Health enforcement of Governor’s Executive Orders; • Incorporate continually evolving CDC or OSHA guidance; • Provide “safe harbor” protections for employers that protect employees by following CDC guidance; or II-60 ANNUAL UPDATE OF EMPLOYMENT CASES • VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Automatically terminate upon expiration of the Governor’s State of Emergency. Virginia Circuit Courts [82] Ray Davenport, Commissioner of Labor and Industry v. James River Air Conditioning Company, 2020 Va. Cir LEXIS 189 (Chesterfield Cir. Ct.) (Robbins). On March 30, 2017, Virginia Occupational Safety and Health (VOSH) investigated an incident in which the Defendant performed renovation services to replace an HVAC system at a manufacturing and warehouse building. The Defendant cut a hole in the roof and covered the hole with particle board. An employee of a subcontractor of the Defendant attempted to walk across the board. The board broke and the worker feel approximately 28 feet to the building’s interior floor, suffered severe trauma and ultimately died due to his injuries. On September 18, 2017, the Plaintiff issued a Notice of Citation and Penalty and civil penalties in the amount of $225,995, alleging three serious and two willful violations of VOSH standards, which incorporated by reference the Occupational Safety and Health Administration’s (OSHA) Construction Industry Regulations and Standards, 29 CFR 1926. The Defendant contested the Citation, and the Commissioner filed a Complaint and then a First Amended Complaint to affirm the Citation. The Defendant filed a Demurrer and Plea In Bar questioning the applicability of the standard, and included an affidavit of its Human Resources Director in support of the Demurrer. The Court declined to consider the affidavit or other evidence outside the allegations in the Complaint and denied the Demurrer. On the other hand, the Court sustained the Plea In Bar because it determined that Plaintiff cited the wrong standard, as the Defendant’s work in renovating and replacing an HVA unit did not fit the definition of “construction work” in the standard at 16 VAC 25 60 130 (“Construction does not include maintenance, alteration, or repair of mechanical devices, machinery, or equipment…”) (emphasis added). [83] Ray Davenport, Commissioner of Labor and Industry v. United Parcel Service, Inc., Case No. CL19-2046 (Roanoke Cir. Ct. July 13, 2020) (Carson). On October 15, 2015, Virginia Occupational Safety and Health (VOSH) inspected the petitioner’s facility in Roanoke on behalf of the Commissioner of the Virginia Department of Labor and Industry. Based on VOSH’s findings, the Commissioner issued a Notice of Citation and Penalty, alleging the Petitioner failed to meet a VOSH standard requiring First Aid trained personnel when not in near proximity to an infirmary clinic or hospital. The petitioner promptly noticed its contest of the Citation on April 14, 2016. After delaying 39 months without any communications with the Petitioner or any other appreciable efforts, the Commissioner filed a Complaint to enforce the Citation on September 23, 2019. The Petitioner filed a Special Plea and Motion to Dismiss, alleging it suffered inherent and actual prejudice due to the Commissioner’s delay, specifically that it lost witnesses and that remaining witnesses had vague and conflicting memories of the incident giving rise to the Citation, whereas II-61 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR the Commissioner invoked the common-law informer’s privilege in refusing to disclose potential witnesses during discovery. The Commissioner countered, citing limited agency resources and stating that during the 39-month period, he was attempting to jointly address additional cases contested by the Petitioner or addressing and enforcing identical citations issued to another employer in order to establish precedent for the instant case. The Commissioner defended his use of the “informer’s privilege” as a means to protect witnesses and their statements to an agency from potential discrimination at the hands of the Petitioner, whether they were currently employed by the Petitioner or not. The Court determined that the Petitioner did not suffer inherent prejudice, as the Petitioner had not conducted a timely investigation during the intervening 39 months, and because the Petitioner provided no evidence suggesting it suffered hard because of the Commissioner’s publication of the facts underlying the Citation. The Court found that the Petitioner did provide credible evidence that it suffered actual prejudice due to the Commissioner’s delay, which cannot be excused because of agency resourcing concerns. Finding that the “informer’s privilege” is not absolute, the Court also fund that the Petitioner’s need to fully investigate the underlying facts outweighed the Commissioner’s entitlement to the privilege. Thus, the Court sustained the motion and dismissed the Commissioner’s Complaint. [84] Virginia Manufacturers Association, et al. v. Northam, et al., (Richmond Cir. Ct. March 4, 2021) (Marchant). Plaintiffs, a trade association and several employers (which include an entertainment venue, a Member of the Virginia General Assembly, and a church) filed an Appeal Pursuant to the Virginia Administrative Process Act and Complaint for Declaratory and Injunctive Relief on September 15, 2020. The action sought to enjoin Virginia’s Emergency Temporary Standard for Infectious Disease Prevention related to COVID-19 (ETS), which the Virginia Safety and Health Codes Board adopted on July 15, 2020. It also sought to enjoin several Executive Orders issued by Governor Ralph Northam to curtail public gatherings, require face coverings, and restrict occupancy in places of public accommodation, such as restaurants and retail stores. The Defendants included the Governor of Virginia, the Commissioners of the Virginia Department of Health and of the Virginia Department of Labor and Industry and the Virginia Safety and Health Codes Board. The 63-page action was based largely on the following grounds: • Failure to follow procedures prescribed in the Virginia Administrative Process Act (VAPA), Va. Code §§ 2.2-4000 et seq.; • Action beyond the authority afforded in the Code of Virginia for circumstances relating to quarantines and orders of isolation; II-62 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR • Restrictions on rights of association and assembly; • Undue interference by the Governor in an independent agency; • Failure to establish that an emergency standard was necessary to address a grave danger, particularly with respect to “low hazard” employers; • Unconstitutionally vague language in identifying individuals suspected of COVID-19 infection; • Leave policy provisions exceeding statutory authority; and • Infeasibility of employers’ ability to follow the Standard. Defendants moved to strike on all grounds and, then filed a second motion to strike amended Complaints and to strike on the basis of mootness after the Emergency Temporary Standard was superseded by a subsequent Permanent Standard promulgated on January 27, 2021. After two rounds of hearings, the Court granted the Defendants’ motion to dismiss, finding that: • VAPA did not apply to Emergency Executive Orders or to the ETS; • The Safety and Health Codes Board complied with Va. Code § 40.1-22(6)(a), which enabled the Board to enact the ETS and the Permanent Standard; • The Plaintiffs failed to establish a substantial burden on their exercise of religion; • Curtailment of the Plaintiffs’ freedom of assembly had a “real or substantial relation” to a public health crisis and did not rise to the level of “a plain, palpable invasion of rights secured by the fundamental law”; and • Claims relating to the ETS are moot. As of the date of this draft (March 8, 2021), no known actions have been filed with respect to the Permanent Standard. XXII. MISCELLANEOUS U.S. Supreme Court [85] Dep't of Homeland Sec. v. Regents of the Univ. of Cal., 140 S. Ct. 1891 (Jun. 18, 2020) (Roberts). In 2012, the Department of Homeland Security (DHS) issued a memorandum announcing an immigration relief program known as Deferred Action for Childhood Arrivals (DACA), which allows certain unauthorized aliens who arrived in the United States as children to apply for a twoII-63 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR year forbearance of removal. Those granted such relief become eligible for work authorization and various federal benefits. Some 700,000 aliens have availed themselves of this opportunity. Two years later, DHS expanded DACA eligibility and created a related program known as Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA). If implemented, that program would have made 4.3 million parents of U. S. citizens or lawful permanent residents eligible for the same forbearance from removal, work eligibility, and other benefits as DACA recipients. Texas, joined by 25 other States, secured a nationwide preliminary injunction barring implementation of both the DACA expansion and DAPA. The Fifth Circuit upheld the injunction, concluding that the program violated the Immigration and Nationality Act (INA), which carefully defines eligibility for benefits. This Court affirmed by an equally divided vote, and the litigation then continued in the District Court. In June 2017, following a change in Presidential administrations, DHS rescinded the DAPA Memorandum, citing, among other reasons, the ongoing suit by Texas and new policy priorities. That September, the Attorney General advised Acting Secretary of Homeland Security Elaine C. Duke that DACA shared DAPA’s legal flaws and should also be rescinded. The next day, Duke acted on that advice. Taking into consideration the Fifth Circuit and Supreme Court rulings and the Attorney General’s letter, Duke decided to terminate the program. She explained that DHS would no longer accept new applications, but that existing DACA recipients whose benefits were set to expire within six months could apply for a two-year renewal. For all other DACA recipients, previously issued grants of relief would expire on their own terms, with no prospect for renewal. Several groups of plaintiffs challenged Duke’s decision to rescind DACA, claiming that it was arbitrary and capricious in violation of the Administrative Procedure Act (APA) and infringed the equal protection guarantee of the Fifth Amendment’s Due Process Clause. District Courts in California (Regents, No. 18-587), New York (Batalla Vidal, No. 18-589), and the District of Columbia (NAACP, No. 18-588) all ruled for the plaintiffs. Each court rejected the Government’s arguments that the claims were unreviewable under the APA and that the INA deprived the courts of jurisdiction The Government appealed the various District Court decisions to the Second, Ninth, and D. C. Circuits, respectively. While those appeals were pending, the Government filed three petitions for certiorari before judgment. Following the Ninth Circuit affirmance in Regents, the Court granted certiorari. The Court ruled that DHS’s decision to end DACA did not properly follow the Administrative Procedure Act (APA). The majority opinion (5-4 decision, with Justice Roberts siding with the liberal members of the Court) held that DHS failed to provide required analysis of all relevant factors associated with ending the program, thus making the agency's decision arbitrary and capricious under the APA. The court remanded the issue back to DHS, which can reattempt to end the program by providing a more thorough explanation for its decision. II-64 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR Fourth Circuit [86] Fessler v. IBM Corp., 959 F.3d 146 (4th Cir. May 14, 2020) (Gregory,* King, Quattlebaum). Fessler joined IBM in October 2008 and started working as an inside sales information specialist where he was paid a base salary and commissions. Fessler was not paid his expected commission on three separate occasions. First, Fessler was paid $50,000 rather than the expected earned commission of $258,200 and told that he was credited with only a fraction of the revenue due to his contribution to the deal. Second, Fessler was paid about $30,000, rather than the expected earned commission of $100,000 and told that this was because the account was part of a special new program with a different commission structure. Third, Fessler was not paid any commissions on a $5,200,000 deal with the government and told he would not be compensated for this account because it was removed from his responsibility even though he was responsible for all federal government accounts. Each commission plan contained several disclaimers that were in large part similar to each other with language reserving a right to modify or cancel the plan, including, but not limited to, changes to sales performance objectives, assigned territories or account opportunities, applicable incentive payment rates or similar earnings opportunities, or to modify or cancel the Plan, for any individual or group of individuals. Along with the commission plans, IBM also provided Fessler with PowerPoint presentations describing the terms of the compensation plan and including information that was not in the plans. The PowerPoint presentations noted, no less than six times, that Fessler's payments and earnings opportunities were uncapped. Fessler filed suit for the unpaid commissions bringing claims for breach of oral and/or implied contract, quantum meruit, unjust enrichment, fraudulent misrepresentation, negligent misrepresentation, and punitive damages. IBM moved to dismiss the claims on the basis that the commission plans foreclosed each claim. The district court granted the motion to dismiss. The Court concluded that Fessler adequately stated claims for fraud, constructive fraud, unjust enrichment, quantum meruit, and punitive damages and remanded for further proceedings. The Court determined that the district court incorrectly dismissed the fraud claims because Fessler had sufficiently alleged reasonable reliance given that he relied on the PowerPoint presentations that repeatedly informed him that his commissions would be uncapped and had worked with IBM since 2008 with no knowledge of IBM ever capping a commission before he encountered the situation in 2016. Further, the disclaimers in the commission plans did not automatically make reliance unreasonable as a contractual disclaimer of reliance is not a prophylactic against a claim of fraud. Next, the Court determined Fessler had adequately stated claims for both quantum meruit and unjust enrichment. The Court noted that while often these claims are conflated, the concepts are in fact distinct. Quantum meruit is established where service is performed by one, at the instance and request of another, and nothing is said between the parties as to compensation for such service and therefore measure of recovery for quantum meruit is the reasonable value of the services provided. Unjust enrichment, conversely, does not require a request for services, and the measure of recovery is limited to the benefit realized and retained by the defendant. II-65 ANNUAL UPDATE OF EMPLOYMENT CASES VIRGINIA CLE 30TH ANNUAL EMPLOYMENT LAW SEMINAR The Court concluded that Fessler’s a lack of promise to pay uncapped commissions would not bar Fessler's claim for unjust enrichment. Fessler reasonably expected to receive, and IBM reasonably expected to pay him, additional commissions, despite never agreeing to a contract and including the disclaimer language, particularly in light of the fact that Fessler had worked for IBM since 2008 and received uncapped commissions. Next, the Court noted that Fessler adequately alleged a claim for quantum meruit as IBM did not dispute that Fessler conducted work on its behalf and even if there was no meeting of the minds with regard to exact payment the value of his work was a lot more than the compensation he received. Finally, the Court determined that punitive damages were derivative of the fraud claims and permissible. II-66 III-1 III-2 III-3 III-4 III-5 III-6 III-7 III-8 III-9 III-10 III-11 III-12 III-13 III-14 III-15 III-16 Presented By: Joshua Erlich Tevis Marshall Ogletree Deakins Erlich Law Office [email protected] [email protected] THE BASICS III-17 The Fair Labor Standards Act of 1938 (FLSA) regulates two primary areas of employment law: Minimum Wage – currently $7.25/hr. Overtime ‐ One and one‐half times the regular rate of pay for hours worked in excess of 40 hours per workweek. Non‐Exempt Must pay overtime. Exempt No overtime. Salary Basis Requirement ‐ $35,568 ($684/week) Duties Requirement ‐ Executive Administrative Professional Computer Employees Outside Sales Highly Compensated ($107,432) https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fs17a_overview.pdf III-18 What are the penalties for violating the FLSA? Injunctive relief Back pay Attorneys’ fees Court fees Corporate officers / supervisors ‐ $10k for each willful violation AND prison sentence after second conviction “Our employees are all paid on a salary basis, therefore, they are not entitled to overtime.” False! Employees who are paid on a salaried basis are not automatically exempt from overtime. To be exempt, employees must: Meet the salary threshold ($35,568/yr.) Pass the job duties test and fall within an exemption III-19 “We don’t have to pay for overtime unless it was approved in advance.” False! The FLSA makes no distinction between “approved” and “unapproved” overtime. “We pay overtime, but we average our employees’ hours over two weeks.” Overtime is due for any hours over 40 in a single workweek A regularly recurring period of 168 hours Seven consecutive 24‐hour periods III-20 “The seminar that our employees attended Saturday was ‘off‐the‐clock’, so we don’t need to pay overtime.” Employers must pay for any “hours worked” Broad definition Time spent training, waiting, donning and doffing, traveling, etc. Declining Trend in FLSA Lawsuits Year 2000 ‐ 1,935 lawsuits filed Year 2015 ‐ 8,954 lawsuits filed Year 2020 ‐ 6,780 lawsuits filed DOL estimates that more than 70% of employers are not in compliance with the FLSA III-21 New Worker Misclassification Law Changes to the Virginia Wage Payment Act Overtime in Virginia VA Code § 40.1‐28.7:7 – Private Cause of Action for Misclassification. What It Does: An individual who has not been properly classified as an employee may bring a civil action for damages if employer had knowledge of misclassification. Presumption of employer‐employee relationship, unless employer proves independent contractor status. Mandates the use of IRS Guidelines for evaluating independent contractor status. III-22 IRS Guidelines: BEHAVIORAL CONTROL – A worker is an employee when the business has the right to direct and control the work performed by the worker, even if that right is not exercised. FINANCIAL CONTROL – Does the business have a right to direct or control the financial and business aspects of the worker’s job? RELATIONSHIP – The type of relationship depends upon how the worker and business perceive their interaction with one another – e.g., written contracts / benefits/ permanency https://www.irs.gov/newsroom/understanding-employee-vs-contractordesignation Damages wages, salary, employment benefits, expenses incurred by the employee that would otherwise have been covered by insurance, other compensation lost, attorneys’ fees. Opens the door for potential class actions. III-23 No reported opinions yet…..but they’re on the way! VA Code § 40.1‐29 – Private Cause of Action for Failure to Pay Wages. What It Does: An individual who has not been properly paid wages can sue for violations. Prior to the 2020 revisions, an employee had two possible remedies for a failure to pay wages: a breach of contract suit or filing a wage claim with Virginia’s Dept. of Labor and Industry. Creates joint Contractor‐Subcontractor liability for wages. Allows for collective actions. III-24 VA Code § 40.1‐29 – Private Cause of Action for Failure to Pay Wages. What It Does (cont.): Allows for liquidated damages equal to the amount of unpaid wages, reasonable attorneys’ fees, and costs. For a “knowing” violation, employee can be awarded triple the amount of unpaid wages. Allows for collective actions. Three‐year statute of limitations. Adds civil penalty of up to $1,000 for each knowing failure to pay wages in administrative enforcement (not available in private suits). VA Code § 40.1‐29.2 – Private Cause of Action for Failure to Pay Overtime Wages. What It Does: Virginia Overtime Wage Act (“VOWA”) – First Virginia overtime law. Prior to this, the FLSA was the only method to pursue unpaid overtime wages. Uses FLSA definitions to define employee, employer, regular rate, and workweek. Refers to FLSA exemptions to determine eligibility for overtime. Waives sovereign immunity. Uses Virginia Wage Payment Act remedies, including reasonable attorneys’ fees, costs, and triple damages for knowing violations. III-25 Courts have ruled there is no Bowman claim for wrongful discharge arising from the Virginia Wage Payment Act. There are no reported decisions since the VWPA was amended in 2020, but there is nothing to indicate the amendments would change this issue. Neither the VWPA or VOWA have anti‐retaliation provisions built into the law. Virginia’s Fraud and Abuse Whistleblower Protection Act, Va. Code § 40.1‐27.3(A) provides a remedy for retaliation. Says an employer shall not “discharge, discipline, threaten, discriminate against, or penalize an employee, or take other retaliatory action” if an employee makes a good faith report of a violation of state or federal law or regulation. III-26 One year statute of limitations. Court may order: Injunctive relief barring any continued violation; Reinstatement; Damages in the form of lost wages, benefits, other renumeration, interest, reasonable attorneys’ fees, and costs. III-27 Employers must pay nonexempt employees for all hours “suffered or permitted” to work. Employers have the burden of preventing work that they do not want performed. Employers must enforce rules that prohibit work. Employers must pay for hours worked based on “actual or constructive knowledge” of employee work hours. DOL issued Field Assistance Bulletin (FAB) No. 2020-5 on August 24, 2020. https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fab_202 0_5.pdf III-28 Key Takeaways Employers must prevent unwanted work…but employer’s duty to monitor is not unlimited. Employers must exercise “reasonable diligence” to ensure employees are paid for all time worked. Key Takeaways Employer may establish a system that requires employees to accurately record and report all time worked. Employers cannot “implicitly or overtly discourage or impede accurate reporting.” If employee fails to report, “employer is generally not required to investigate further to uncover unreported hours.” III-29 Joshua Erlich Tevis Marshall Erlich Law Office Ogletree Deakins [email protected] 703-791-9087 [email protected] 804-663-2333 III-30 4/23/2021 What the Biden Administration Holds in Store for Employment Law Virginia CLE Annual Employment Law Update May 4, 2021 Kristina H. Vaquera John M. Bredehoft Jackson Lewis P.C. | Norfolk Kaufman & Canoles, P.C. | Norfolk [email protected] [email protected] (757) 648-1448 (757) 624-3225 Jackson Lewis P.C. © 2021 Jackson Lewis P.C. Agenda • Department of Labor • Equal Employment Opportunity Commission • President Biden’s Executive Orders • Federal Bench & Supreme Court • National Labor Relations Board • Arbitration • COVID/Vaccines We reserve the right to take topic‐based side trips, digressions, and detours! Jackson Lewis P.C. IV-1 1 4/23/2021 Department of Labor (DOL) Jackson Lewis P.C. U.S. Department of Labor • Marty Walsh confirmed as Secretary of Labor on March 22, 2021 • At the time of his appointment, Walsh was serving his second term as the Mayor of Boston • Prior to his election as Mayor, he had served as Laborers’ Local 223 President Secretary of Labor Marty Walsh Jackson Lewis P.C. 4 IV-2 2 4/23/2021 U.S. Department of Labor What to expect administratively: • Backing of the $15 minimum wage • Revision of salary levels for Salary Basis Test (as in Obama last months) • Potential revival of DOL agents pursuing liquidated damages in settlement agreements • Attempt to back-out of the DOL’s previous narrowing of the joint employer rule during the Trump administration • Postponement of the current independent contractor test; and • Research into arbitration agreements to target industries and employers who frequently require workers to give up their right to sue 5 Jackson Lewis P.C. U.S. Department of Labor What to expect: • OSHA regs on COVID-19? • American Federation of Teachers v. OSHA, No. 20-73203 (9th Cir. filed 10/29/20): demand for a new Emergency Temporary Standard (ETS) from OSHA. • 9th Circuit appeal stayed when OSHA says to Court, in February, that it “intends to prioritize a rule” • Executive Order 13999 (1/21/21): • Issue revised Guidance in two weeks • Implement ETS, if needed, by March 15, 2021 • Review enforcement and coordinate with states and other federal agencies • March 12: “National Emphasis Program” (high risk enforcement), new Enforcement Plan (and 1/29 Guidance) – but no ETS yet. 6 Jackson Lewis P.C. IV-3 3 4/23/2021 U.S. Department of Labor January 29, 2021 OSHA Guidance: • “Protecting Workers: Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace” • www.osha.gov/coronavirus/safework • Utterly bland and largely repeats uncontroversial CDC Guidance • • • • Clean and disinfect Provide guidance on screening and testing Record and report deaths if required for “work-related” injuries (Form 300 logs) Isolate sick workers 7 Jackson Lewis P.C. Department of Labor: What to expect (and it’s already here): • COBRA modifications • • • • • New forms as of May 31, 2021 New subsidies for employees New tax credits to employers, who pay for the subsidies New notification requirements and mandatory notice forms Retroactive: employers must reach out to employees who declined COBRA and offer it to them again, notifying them of the subsidies • DOL guidance, assistance, and model notices: www.dol.gov/agencies/ebsa/laws-andregulations/laws/cobra/premium-subsidy John Bredehoft when asked any detailed question about COBRA 8 Jackson Lewis P.C. IV-4 4 4/23/2021 A digression VACCINATIONS: MANDATORY OR NOT? • Yes, you can require them • Asking employees if they have been vaccinated is not a medical test (but keep the records confidential). • Asking for proof is okay – but warn employees also not to give you irrelevant additional medical information • Follow-up questions – “Why not?” – may elicit information about disability. Okay to ask so long as it is “job-related and consistent with business necessity.” • EEOC says you must honor legitimate religious objections (and the problem with questions about sincerity) • EEOC says you must consider an ADA “disability” that prevents or counsels against vaccination 9 Jackson Lewis P.C. Digression on vaccines: More on vaccinations: • You can still exclude the unvaccinated from the workplace if no “reasonable accommodation,” or if unvaccinated employee’s presence is a “direct threat.” But exclude does not necessarily mean “fire.” • “Direct threat” is high standard. • “Reasonable accommodation” means a different thing for religion than it does for disability. • Religion: does it cause more than a de minimis risk or cost? • ADA: Is there a reasonable accommodation that would allow the employee to perform the “essential functions” of the position anyway, without “undue hardship” (high standard)? • Reconciling risk, objections, evidence, and duty to accommodate may not result in any clear-cut answers Jackson Lewis P.C. 10 IV-5 5 4/23/2021 Digression on vaccines: Litigation against mandatory vaccination: • LeGarretta v. Macias, Case No. 2:21-CV-00179 (D.N.M. Filed 2/28/21): government officials at the County Detention Center cannot force employees to get the vaccine, because Emergency Use Authorization Statute requires “The Secretary” to advise patients of the option to refuse administration of the vaccine. • TRO denied • PI denied • But watch out for state-level legislation: a “no discharge solely because of refusal” law died in committee in Maryland, and a “no discriminate, harass, fail to hire, or discharge because of refusal” law is pending in committee in Pennsylvania. Jackson Lewis P.C. 11 Now, Back to: Department of Labor (But before we stop talking about vaccinations, remember that President Biden announced a program on April 21, 2021, to subsidize paid time off for workers (of employers with fewer than 500 employees) to get the shot and to deal with any side effects.) 12 Jackson Lewis P.C. IV-6 6 4/23/2021 DOL Withdrew Three Trump-Era Opinion Letters “WHD is withdrawing opinion letters FLSA 2021-4, FLSA2021-8, and FLSA 2021-9. These letters were issued prematurely because they are based on rules that have not gone into effect. This withdrawal is an official ruling of the Wage and Hour Division for purposes of the Portal-to-Portal Act, 29 U.S.C. § 259, and these letters may not be relied upon as statements of agency policy as of the date of withdrawal, January 26, 2021.” 13 Jackson Lewis P.C. DOL Withdrew FLSA2021-4 – Tip Credit Trump-Era DOL Concluded: “we cannot conclude based on the information you have provided that your hosts and hostesses are tipped employees who may participate in a traditional tip pool with employees for whom you take the tip credit. However, they will be able to participate in a nontraditional tip pool comprised of tipped and nontipped employees, so long as: (1) the pool does not include any managers or supervisors and (2) you do not take a tip credit and you pay the full minimum wage to both the tipped employees who contribute to the pool and the nontipped employees who receive tips from the pool” Jackson Lewis P.C. 14 IV-7 7 4/23/2021 DOL Withdrew FLSA2021-8 – Independent Contractors Trump-Era DOL Concluded: “We conclude based on the facts you furnished that the distributors are independent contractors. Both of the core factors, control and opportunity for profit or loss, point to independent contractor status, and the non-core factors do not indicate a reason to disagree with that conclusion.” Jackson Lewis P.C. 15 DOL Withdrew FLSA2021-9 – I/C Safety Measures Trump-Era DOL Concluded: “we conclude that the safety measures described in the first request do not affect the analysis of the control factor, and that the owner-operator truck drivers described in the second request are likely independent contractors” Jackson Lewis P.C. 16 IV-8 8 4/23/2021 U.S. Department of Labor – Wage & Hour Division Joint Employer • U.S. DOL had finalized a new rule in 2020: 1. hires or fires the employee; 2. supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; 3. determines the employee’s rate and method of payment; and 4. maintains the employee’s employment records • In September 2020, U.S. District Court for the Southern District of New York vacated part of test for Joint Employer Status Rule • On March 11, 2021, DOL issued a Notice of Proposed Rulemaking to withdraw the Joint Employer Final Rule under the FLSA Jackson Lewis P.C. 17 U.S. Department of Labor – Wage & Hour Division Independent Contractors • Trump administration – two factor test: (1) nature and degree of control over work; (2) worker’s opportunity for profit/loss • On March 11, 2021, DOL issued a Notice of Proposed Rulemaking to withdraw the Independent Contractor rule • Biden favors the “ABC test” (1) The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (2) The worker performs work that is outside the usual course of the hiring entity’s business; and (3) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. (if an individual’s work relies on a single employer, this prong is generally not met) Jackson Lewis P.C. 18 IV-9 9 4/23/2021 U.S. Department of Labor – Wage & Hour Division ENFORCEMENT STATISTICS 8,211 2011 2012 Jackson Lewis P.C. 2013 2014 2015 2016 2017 2018 2019 8,495 11,018 9,566 11,018 10,823 10,687 10,884 10,722 10,642 10,496 11,238 11,042 12,403 12,108 12,532 Overtime 10,071 2010 12,462 12,450 10,529 8,788 9,716 8,972 2009 11,990 Minimum Wage 2020 19 U.S. Department of Labor – OFCCP • On January 20, 2021, Jenny R. Yang was appointed the Director of the OFCCP • During President Obama’s Administration, she served as the Chair, Vice-Chair, and Commissioner of the EEOC • Prior to joining the EEOC, she was a Partner at a plaintiff-side firm and served as a Senior Trial Attorney in the Employment Litigation Section of the Civil Rights Division at the U.S. Department of Justice Director of OFCCP Jenny Yang Jackson Lewis P.C. 20 IV-10 10 4/23/2021 U.S. Department of Labor – OFCCP Jackson Lewis P.C. 21 Equal Employment Opportunity Commission Jackson Lewis P.C. IV-11 11 4/23/2021 Equal Employment Opportunity Commission • The composition of the Commission has not changed, but the two Democrats have replaced Trump-appointed Republicans as Chair and Vice Chair • The Commission is comprised of five presidentially-appointed members, including the Chair, Vice Chair, and three Commissioners: • Charlotte A. Burrows, Chair • Jocelyn Samuels, Vice Chair • Janet Dhillon, Commissioner • Keith E. Sonderling, Commissioner • Andrea R. Lucas, Commissioner Jackson Lewis P.C. Chair of the EEOC Charlotte Burrows 23 Equal Employment Opportunity Commission • President Biden fired General Counsel Sharon Fast Gustafson on March 5, 2021 • Gustafson’s term was not set to expire until 2023 • President Biden has not filled the vacancy • Part of religion discussion; Ms. Gustafson was associated with the January 2021 pre-Inauguration Guidance on religion issues, which many believed was too protective or religion Jackson Lewis P.C. Previous General Counsel Sharon Gustafson 24 IV-12 12 4/23/2021 EEO-1 Data Collection Be mindful of changes to this year’s requirements resulting from the pandemic. • REMEMBER: EEO-1 Reports are required from private firms with 100 or more employees and from federal contractors with 50 or more employees • Due to the COVID-19 pandemic, collection of 2019 EEO-1 data was postponed • On March 29, 2021, the EEOC announced that the period for EEO-1 Component 1 Data Collection for 2019 and 2020 data will open on Monday, April 26th, 2021 • The deadline for submitting 2019 and 2020 data is Monday, July 19th, 2021 25 Jackson Lewis P.C. Equal Employment Opportunity Commission: • Expect religious issues to play a significant role // interplay between SCOTUS and EEOC • Tandon v. Newsom, 593 U.S. ___, No. 20A151 (April 9, 2021) granting application for stay pending disposition of appeal other California COVID rules (5-4? “The Chief Justice would deny the application.”) • Trump EEOC amended the EEOC Compliance Manual (“Guidance”) on religion on January 15, 2021. • Vote to adopt was 3-2, on party lines. Jackson Lewis P.C. 26 IV-13 13 4/23/2021 Equal Employment Opportunity Commission: • New Guidance has been criticized as being overly protective of religion: • Because the definition of religion is broad and protects beliefs, observances, and practices with which the employer may be unfamiliar, the employer should ordinarily assume that an employee’s request for religious accommodation is based on a sincerely held religious belief. • As the Supreme Court stated in Our Lady of Guadalupe School v. Morrissey-Berru (140 S. Ct. 2049, 2061 (2020)), the ministerial exception applies to employees who perform “vital religious duties” at the core of the mission of the religious institution. • To establish undue hardship, the employer must demonstrate that the accommodation would require the employer “to bear more than a de minimis cost.” However, “‘[u]ndue hardship is something greater than hardship.’” Factors to be considered include “the identifiable cost in relation to the size and operating costs of the employer, and the number of individuals who will in fact need a particular accommodation.” Generally, the payment of administrative costs necessary for an accommodation, such as costs associated with rearranging schedules and recording substitutions for payroll purposes, or infrequent or temporary payment of premium wages (e.g., overtime rates) while a more permanent accommodation is sought, will not constitute more than a de minimis cost…. 27 Jackson Lewis P.C. Equal Employment Opportunity Commission: • Supreme Court has signaled intention to address religious discrimination issues. • See, e.g., Small v. Memphis Light, Gas & Water, No. 18-1388, 593 U.S. ___ (April 5, 2021) (Gorsuch and Alito dissenting from denial of certiorari in case involving employee who, after promotion, had conflict between Sunday services and new Sunday work responsibilities; advocating elimination of the di minimis test for burden as to religious accommodation and reversal of Trans World Airlines, Inc. v. Hardison, 432 U.S. 63 (1977)). • South Bay United Pentecostal Church v. Newsom, No. 20A136, 593 U.S. ___ (February 5, 2021) (five separate opinions amongst the eight participating Justices as to the proper standard to consider claim of church against enforcement of California anti-COVID regulations on meetings, singing) (Supreme Court granted injunction against regulations, pending appeal). Jackson Lewis P.C. 28 IV-14 14 4/23/2021 Equal Employment Opportunity Commission: • The religious issue is tied up with LGBTQ legislation: the “Equality Act,” which would expressly add statutory protection for sexual orientation/gender identity • Would include not only employment but public accommodation, housing, credit • Why do we need this in light of Bostock v. Clayton County, 590 U.S. __,140 S. Ct. 1731 (2020)? (6-3 decision) • District Court in R.G. and G.R. Harris Funeral Homes v. EEOC, one of the cases decided with Bostock, held that gender identity discrimination was unlawful, but protected by Religious Freedom Restoration Act. No cert. granted on that question. • Equality Act: RFRA” shall not provide a claim concerning, or a defense to a claim under, a covered title, or provide a basis for challenging the application or enforcement of a covered title.” Jackson Lewis P.C. 29 Equal Employment Opportunity Commission During Fiscal Year 2020, the EEOC: • Charges: • Received 67,448 charges • Resolved 70,804 charges • Increased its merit factor resolution rate to 17.4% from 15.6% the prior year • Litigation • Resolved 165 merits lawsuits • Filed 93 lawsuits alleging discrimination • Recovered over $106 million through litigation (largest recovery in last 16 years) • Successful outcome in 95.8% of all district court resolutions Jackson Lewis P.C. 30 IV-15 15 4/23/2021 FY 2020 Enforcement and Litigation Data NUMBER OF CHARGES FILED 21,398 RACE SEX AGE Jackson Lewis P.C. NATIONAL ORIGIN COLOR 2,404 RELIGION 440 DISABILITY 980 RETALIATION 3,562 6,377 14,183 22,064 24,324 37,632 Number of Charges Filed EQUAL PAY ACT GENETIC INFORMATION 31 FY 2020 Enforcement and Litigation Data PERCENT OF ALL CHARGES FILED 31.70% RACE SEX Jackson Lewis P.C. AGE NATIONAL ORIGIN COLOR 3.60% RELIGION 0.70% DISABILITY 1.50% RETALIATION 5.30% 9.50% 21.00% 32.70% 36.10% 55.80% Percent of all Charges Filed EQUAL PAY ACT GENETIC INFORMATION 32 IV-16 16 4/23/2021 EEOC Formal Opinion Letters • In December 2020, the EEOC announced a new process for requesting Formal Opinion Letters • No Opinion Letters have yet to be issued under the Biden Administration • Recent Opinion Letters under Trump-EEOC • Jan. 14, 2021: Older Worker Benefit Protection Act • Jan. 7, 2021: Individual Coverage Health Reimbursement Arrangements (ICHRA) under the ADEA • Sept. 3, 2021: Interpretation of Section 707 (9/3/20) • April 9, 2020: Federal Work Opportunity Tax Credit Form 8850 Jackson Lewis P.C. 33 EEOC – New Priorities Sexual Orientation Discrimination U.S. Supreme Court 2020 ruling (Bostock) – Title VII extends protection to gay, lesbian, transgender employees “As the Court explained, ‘discrimination based on homosexuality or transgender status necessarily entails discrimination based on sex; the first cannot happen without the second.’ For example, if an employer fires an employee because she is a woman who is married to a woman, but would not do the same to a man married to a woman, the employer is taking an action because of the employee’s sex because the action would not have taken place but for the employee being a woman. Similarly, if an employer fires an employee because that person was identified as male at birth, but uses feminine pronouns and identifies as a female, the employer is taking action against the individual because of sex since the action would not have been taken but for the fact the employee was originally identified as male.” - EEOC Website Jackson Lewis P.C. 34 IV-17 17 4/23/2021 EEOC – New Priorities Sexual Orientation Discrimination U.S. Supreme Court 2020 ruling (Bostock) – Title VII extends protection to gay, lesbian, transgender employees “As the Court explained, ‘discrimination based on homosexuality or transgender status necessarily entails discrimination based on sex; the first cannot happen without the second.’ For example, if an employer fires an employee because she is a woman who is married to a woman, but would not do the same to a man married to a woman, the employer is taking an action because of the employee’s sex because the action would not have taken place but for the employee being a woman. Similarly, if an employer fires an employee because that person was identified as male at birth, but uses feminine pronouns and identifies as a female, the employer is taking action against the individual because of sex since the action would not have been taken but for the fact the employee was originally identified as male.” - EEOC Website Jackson Lewis P.C. 35 EEOC – New Priorities Asian Americans and Pacific Islanders “the U.S. Equal Employment Opportunity Commission condemns in the strongest possible terms the recent violence, harassment, and acts of bias against AAPI persons; expresses our heartfelt sympathy to and solidarity with victims and their families; and reaffirms our commitment to combat racism, xenophobia, harassment, and all other forms of discrimination against AAPI persons and communities and to ensure equal opportunity, inclusion, and dignity for all throughout the nation’s workplaces.” - Resolution of the U.S. Equal Employment Opportunity Commission Condemning Violence, Harassment, and Bias Against Asian Americans and Pacific Islanders in the United States Jackson Lewis P.C. 36 IV-18 18 4/23/2021 EEOC – New Priorities (continued) Equal Pay • Restoration of “Component 2” pay data reporting requirements from Obama administration Jackson Lewis P.C. 37 EEOC – New Priorities Pregnancy Fairness Act • Imposes requirement that employers offer “reasonable accommodations” to pregnant workers, in the same manner in which “reasonable accommodations” are offered to disabled employees 38 Jackson Lewis P.C. IV-19 19 4/23/2021 President Biden’s Executive Orders (E.O.) Jackson Lewis P.C. Executive Orders • President Biden’s early Executive Orders have a strong focus on promoting equity and combatting discrimination and harassment: • Executive Order 13985 - Advancing Racial Equity and Support for Underserved Communities Through the Federal Government; revoked Executive Order 13950 – banning “divisive” diversity training; Executive Order 13958 – Abolish the “1776 Commission” • Executive Order 13988 - Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation • Executive Order 14021 - Guaranteeing an Educational Environment Free From Discrimination on the Basis of Sex, Including Sexual Orientation or Gender Identity • Executive Order 14020 - Establishment of the White House Gender Policy Council Jackson Lewis P.C. 40 IV-20 20 4/23/2021 Executive Order 13985 Advancing Racial Equity and Support for Underserved Communities Through the Federal Government In relevant part, revokes Executive Order 13950 (Combating Race and Sex Stereotyping), which prohibited government contractors from using any workplace training that teaches its employees any form of race or sex stereotyping or any form of race or sex scapegoating, including the concepts that a) one race or sex is inherently superior to another race or sex; b) an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously; c) an individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex; d) members of one race or sex cannot and should not attempt to treat others without respect to race or sex; e) an individual's moral character is necessarily determined by his or her race or sex; f) an individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex; g) any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; or h) meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race. The term “race or sex stereotyping” means ascribing character traits, values, moral and ethical codes, privileges, status, or beliefs to a race or sex, or to an individual because of his or her race or sex, and the term “race or sex scapegoating” means assigning fault, blame, or bias to a race or sex, or to members of a race or sex because of their race or sex. 41 Jackson Lewis P.C. Executive Order 13988 Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation • Expands prohibited forms of sex discrimination under Title VII of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972 and to include discrimination on the basis of gender identity and sexual orientation • Directs all federal agencies to review and revise all existing orders, regulations, guidance documents, policies, programs, or other agency actions administered under any statute or regulation that prohibits sex discrimination for inconsistency with the Executive Order by April 30, 2021 42 Jackson Lewis P.C. IV-21 21 4/23/2021 Executive Order 14020 Establishment of the White House Gender Policy Council • The Council shall coordinate Federal Government efforts to advance gender equity and equality, including policies and programs to: i. combat systemic biases and discrimination, including sexual harassment, and to support women's human rights; ii. increase economic security and opportunity by addressing the structural barriers to women's participation in the labor force and by decreasing wage and wealth gaps; iii. address the caregiving needs of American families and support the care-workers they depend upon; iv. support gender equity and combat gender stereotypes in education, including promoting participation in science, technology, engineering, and math (STEM) fields; v. promote gender equity in leadership; vi. increase access to comprehensive health care, address health disparities, and promote sexual and reproductive health and rights; vii. empower girls; viii. prevent and respond to all forms of gender-based violence; ix. address responses to the effects of the coronavirus disease 2019 (COVID-19) on women and girls, especially those related to health, gender-based violence, educational access and attainment, and economic status; x. advance gender equality globally through diplomacy, development, trade, and defense; xi. implement United States Government commitments to women's involvement in peace and security efforts; and xii. recognize the needs and contributions of women and girls in humanitarian crises and in development assistance. Jackson Lewis P.C. 43 Executive Order 14021 Guaranteeing an Educational Environment Free From Discrimination on the Basis of Sex, Including Sexual Orientation or Gender Identity • Within 100 days, the Secretary of Education must review all existing regulations, orders, guidance documents, policies, and any other similar agency actions that are or may be inconsistent with the policy of the Executive Order and provide the findings of this review to the Director of the Office of Management and Budget. Including: • Review the “Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance” rule • Review existing guidance and issue new guidance as needed on the implementation of the “Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance” rule for consistency with governing law, including Title IX • Consider suspending, revising, or rescinding—or publishing for notice and comment proposed rules suspending, revising, or rescinding—those agency actions that are inconsistent with the policy of the Executive Order and issue requests for information 44 Jackson Lewis P.C. IV-22 22 4/23/2021 Executive Order 14021 (cont.) Guaranteeing an Educational Environment Free From Discrimination on the Basis of Sex, Including Sexual Orientation or Gender Identity • The Secretary of Education must also consider taking additional enforcement actions, including: • to enforce the policy of the Executive Order as well as legal prohibitions on sex discrimination in the form of sexual harassment which encompasses sexual violence, • to account for intersecting forms of prohibited discrimination that can affect the availability of resources and support for students who have experienced sex discrimination, including discrimination on the basis of race, disability, and national origin; • to account for the significant rates at which students who identify as lesbian, gay, bisexual, transgender, and queer (LGBTQ+) are subject to sexual harassment, which encompasses sexual violence; • to ensure that educational institutions are providing appropriate support for students who have experienced sex discrimination; and • to ensure that their school procedures are fair and equitable for all Jackson Lewis P.C. 45 Executive Orders • President Biden’s early Executive Orders reaffirmed public bargaining for federal employees, strengthening Affordable Care Act, and focused on addressing the Coronavirus pandemic in the workplace: • Executive Order 14003 – Protecting the Federal Workforce • Executive Order 14009 - Strengthening Medicaid and the Affordable Care Act • Executive Order 13991 – Protecting the Federal Workforce and Requiring Mask-Wearing • Executive Order 13999 – Protecting Worker Health and Safety 46 Jackson Lewis P.C. IV-23 23 4/23/2021 Executive Order 14003 Protecting the Federal Workforce • Revokes Executive Order 13836 (Developing Efficient, Effective, and CostReducing Approaches to Federal Sector Collective Bargaining) • Revokes Executive Order 13837 (Ensuring Transparency, Accountability, and Efficiency in Taxpayer-Funded Union Time Use) • Revokes Executive Order 13839 (Promoting Accountability and Streamlining Removal Procedures Consistent with Merit System Principles) • Requires the head of each agency to elect to negotiate over the subjects set forth in 5 U.S.C. 7106(b)(1) and shall instruct subordinate officials to do the same. • Requires the Director of OPM to provide a report with recommendations to promote a $15/hour minimum wage for Federal employees Jackson Lewis P.C. 47 Executive Order 14009 Strengthening Medicaid and the Affordable Care Act • Revokes Executive Order 13765 (Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal) • Revokes Executive Order 13813 (Promoting Healthcare Choice and Competition Across the United States) 48 Jackson Lewis P.C. IV-24 24 4/23/2021 Executive Order 13991 Protecting the Federal Workforce and Requiring Mask-Wearing • Directs the heads of executive departments and agencies to require (1) onduty or on-site Federal employees, (2) on-site Federal contractors, and (3) all persons in Federal buildings or on Federal lands, to: • Wear facemasks • Practice social distancing • Adhere to other CDC guidance related to the COVID-19 pandemic Jackson Lewis P.C. 49 Executive Order 13999 Protecting Worker Health and Safety • Directs the Secretary of Labor to issue COVID workplace guidance, evaluate current OSHA enforcement efforts, and to launch a national program focused on OSHA enforcement related to violations of standards related to COVID-19. • Within one week of the order, the Labor Department issued its new guidance, which can be found at https://www.osha.gov/coronavirus/safework. • The guidance provides several recommended steps for employers, including requiring facemasks, conducting hazard assessments, and implementing physical distancing where practicable. Jackson Lewis P.C. 50 IV-25 25 4/23/2021 Federal Judicial Branch Jackson Lewis P.C. Appointing Judges Under Biden People are approaching this with a sense of urgency. And they understand. They saw what the Trump administration did for four years. - Senior White House Counsel Paige Herwig, who is leading the new administration’s efforts to appoint judges Jackson Lewis P.C. 52 IV-26 26 4/23/2021 Appointing Judges Under Biden • President Trump appointees make up 28% of active judiciary • But many Democratic-appointed judges waited until Biden’s presidency to retire • Justice Breyer may retire during Biden admin • Merrick Garland’s seat recently vacated • Currently, there are more than 60 openings for District Court Judges 53 Jackson Lewis P.C. Supreme Court Expansion • This is, after all, what almost did in FDR • Justice Breyer, April 2021: “think long and hard” about this • President Biden, April 2021: “I’m not a fan” Jackson Lewis P.C. 54 IV-27 27 4/23/2021 National Labor Relations Board (NLRB) Jackson Lewis P.C. National Labor Relations Board (NLRB) The NLRB will likely move to a democratic majority in 2021 The Board currently consists of five members: • John Ring (R) (term ends Dec. 16, 2022); • William Emanuel (R) (term ends Aug. 27, 2021); • Marvin Kaplan (R) (term ends Aug. 27, 2025); • Lauren McFerran (D) (term ends Dec. 16, 2024); Lauren McFerran • Vacancy Jackson Lewis P.C. 56 IV-28 28 4/23/2021 NLRB General Counsel • General Counsel Peter Robb’s four-year term was set to expire in November 2021 • President Biden requested Robb step down from his position • President Biden fired Robb and his deputy Alice Stock one day into his presidency Previous General Counsel Peter Robb Jackson Lewis P.C. 57 NLRB General Counsel • On January 25, 2021, President Biden appointed Peter Sung Ohr, former Chicago Regional Director, as acting General Counsel • Ohr appointed Iva Y. Choe as his deputy general counsel Jackson Lewis P.C. Acting General Counsel Peter Sung Ohr 58 IV-29 29 4/23/2021 NLRB General Counsel • On February 17, 2021, President Biden nominated Jennifer Abruzzo • Currently, Abruzzo is a lawyer for the CWA and previously, she was a Deputy General Counsel and Acting General Counsel at the NLRB General Counsel Nominee Jennifer Abruzzo 59 Jackson Lewis P.C. NLRB General Counsel 10 General Counsel Memos Withdrawn Memo Number Memo Subject Memo Date GC 18-04 Guidance on Handbook Rules Post-Boeing June 6, 2018 GC 18-06 Responding to Motions to Intervene by Decertification Petitioners and Employees Aug. 1, 2018 GC 19-01 General Counsel’s Instructions Regarding Section 8(b)(1)(A) Duty of Fair Representation Charges Oct. 24, 2018 GC 19-03 Deferral under Dubo Manufacturing Company Dec. 28, 2018 GC 19-04 Unions’ Duty to Properly Notify Employees of Their General Motors/Beck Rights and to Accept Dues Checkoff Revocations after Contract Expiration Feb. 22, 2019 Jackson Lewis P.C. 60 IV-30 30 4/23/2021 NLRB General Counsel 10 General Counsel Memos Withdrawn Memo Number Memo Subject Memo Date GC 19-05 General Counsel’s Clarification Regarding Section 8(b)(1)(A) Duty of Fair Representation Charges Mar. 26, 2019 GC 19-06 Beck Case Handling and Chargeability Issues in Light of United Nurses & Allied Professionals (Kent Hospital) Apr. 29, 2019 GC 20-08 Changes to Investigative Practices June 17, 2020 GC 20-09 Guidance Memorandum on Make Whole Remedies in Duty of Fair Representation Cases June 26, 2020 GC 20-13 Guidance Memorandum on Employer Assistance in Union Organizing Sept. 4, 2020 61 Jackson Lewis P.C. NLRB – Unfair Labor Practice Charges Jackson Lewis P.C. 18552 2016 18871 2015 19280 2014 21326 2013 20199 2012 20415 21629 2011 21629 2010 Charges 22177 23523 UPL CHARGES FILED 2017 2018 2019 62 IV-31 31 4/23/2021 What Can We Expect? • Bargaining unit determinations – a return to the extremely difficult Specialty Healthcare micro-unit bargaining unit determination standard. • Revision of Trump Board representation case rulemaking – a return to the burdensome rules that existed prior to the Trump Board’s rulemaking – rules that, among other things, limited employers’ ability to challenge unions’ unit requests and communicate important information about unions to its employees. Expect a return to “quickie elections” • Rules and Policies – a return to the standard under which many seemingly innocuous workplace rules were found to violate the NLRA because they could be “reasonably construed” by an employee to prohibit the exercise of NLRA rights. • Ban on right to work laws? 63 Jackson Lewis P.C. HR 482: “Protecting the Right to Organize” (PRO) Act • • • • Passed the House early in March Senate passage depends on razor-thin margin but may be unlikely Would make it easier to win unionization elections A new Unfair Labor Practice: requiring attendance at meetings not needed for the performance of employee’s job (i.e., anti-union campaign meetings) • A new Unfair Labor Practice: telling a worker he is not protected by the PRO act when he is! • A new Unfair Labor Practice: to enter into or attempt to enforce any arbitration agreement, or class action waiver (except a collectively-bargained agreement); such agreements are void Jackson Lewis P.C. 64 IV-32 32 4/23/2021 What Can we Expect? (cont.) • Joint employer test – a return, through rulemaking, to the unfriendly BrowningFerris test governing determination of joint-employer status which made it easier for unions to prove that two or more companies were the employer of one of the company’s employees. • Contract Coverage defense to unilateral changes – the elimination of two defenses the Trump Board provided to employers when it is alleged an employer unlawfully unilaterally changed terms and conditions of employment – the “contract coverage” and “past practice” defenses. • Duty to bargain over discipline – a return to the requirement where when employees are newly represented by a union, but a first collective bargaining agreement has not been negotiated, an employer is obligated to collectively bargain with the union regarding discretionary “serious discipline” (such as suspension, demotion, or discharge) it intended to impose. Jackson Lewis P.C. 65 What Can We Expect? (cont.) • Independent contractor status – a return to the more employee-friendly traditional common-law test for determining whether an individual is an employee or an independent contractor under the NLRA. • Use of employer email for personal reasons – a return to a requirement that employers allow employees who have access to their email systems for work-related purposes be allowed to use that email for personal reasons, on non-work time. • Confidentiality of workplace investigations – a return to an approach under which an employer’s blanket approach to maintaining confidentiality with respect to an internal investigation is illegal. Instead, the employer will have the burden to take a case-by-case approach – “to first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up.” 66 Jackson Lewis P.C. IV-33 33 4/23/2021 What Can We Expect? (cont.) • Employee abusive conduct during Section 7 activity – a return to an employeefriendly standard permitting employees significant leeway to use profanity and engage in abusive conduct in connection with Section 7 activity without losing the protection of the Act. • Dues deductions after CBA expiration – a return to a requirement that an employer deduct union dues from employee paychecks even after the expiration of a collective bargaining agreement containing a dues check-off provision on which the deductions were based. • Protected concerted activity – a broadening of what constitutes protected concerted activity. • Access to private property – a return to standards under which a property owner may not limit the circumstances under which it may exclude the off-duty employees of its on-site contractors (or licensees) from accessing its private property to engage in Section 7 activity • Weingarten protection in non-union workplaces Jackson Lewis P.C. 67 Forced Arbitration Injustice Repeal Act (HR 1423) • “Forced Arbitration Injustice Repeal Act” (S. 505, in Judiciary Committee) (“FAIR Act”) • • • • • • Had bipartisan report and passed house in 2019 Chamber of Congress and other business groups strongly oppose it Pre-dispute arbitration agreements are unenforceable Pre-dispute agreements to forego a class action are unenforceable Court, not arbitrator, decides Applies to antitrust, civil rights disputes (discrimination cases), consumer disputes, and all other employee disputes (wages, etc.) 68 Jackson Lewis P.C. IV-34 34 4/23/2021 And a word about non-compete agreements: • Administration has indicated desire sharply to limit, or ban, non-compete agreements • Administration believes Federal Trade Commission has independent authority to ban these agreements • DC ban (on business “operating” in DC or any person acting on behalf of employer in DC) (effective March? September? October?) • MD and VA bans on low-wage workers Jackson Lewis P.C. 69 Thank you. Jackson Lewis P.C. IV-35 35 VIRGINIA’S NEW EMPLOYMENT LAWS Presented by: Craig Curwood, Butler Curwood King Tower, Woods Rogers, PC Charlottesville | Lynchburg | Richmond | Roanoke V-1 2019 EMPLOYMENT LEGISLATION RECAP V-2 PERSONNEL RECORDS Effective July 1, 2019 Requires certain employment records be provided to EE within 30 days of receipt of a written request • Must provide: • Dates of employment • Job description and job title • Wages or salary • Any injuries sustained by EE • Failure to comply may result in court order • If court finds ER “willfully refused to comply,” may award damages V-3 NONDISCLOSURE AGREEMENTS (NDAs) Effective 7-1-2019 Forbids ERs from requiring EEs or applicants to agree to NDAs that conceal details of claims of sexual assault as a condition of employment • Pre-existing NDAs covered by this law are void and unenforceable V-4 PAYSTUBS Effective January 1, 2020 ERs required to provide paystubs on each regular payday • Must include • ER’s name & address • Hours worked • Rate of pay • Gross wages • Amount & purpose of all deductions • Public & agricultural ER exceptions V-5 2020 AND 2021 EMPLOYMENT LAWS: NEW EMPLOYEE PROTECTIONS V-6 VIRGINIA OVERTIME LAW V-7 VIRGINIA OVERTIME LAW MAIN FEATURES: 1. No “diminishing halftime” calculation (see Desmond v. PNGI, 4th Cir. 2011) for non-exempt workers paid on salary basis, i.e. it requires calculating regular rate based on 1/40 of weekly salary as opposed to dividing weekly salary by the total number of hours worked in the week 2. Includes sovereign immunity waiver by the Commonwealth, constitutional officers, and political subdivisions; 3. Does not include 28 of the 30 FLSA section 13(b) exemptions; 4. Sets the statute of limitations at 3 years (no requirement to prove willful for 3 yr SOL) 5. Damages track Va. Wage Payment Act, i.e. “shall award” liquidated damages, interest, reasonable attorneys fees and costs, increased to triple damages if “knowing” violation V-8 WAGE & HOUR LAW Code 40.1-29 Wage Payment Act • OT amendment incorporates the Wage Payment Damages • Private right of action • Three year look-back for liability regardless of willfulness • Liquidated damages regardless of good faith • Triple damages for “knowing” violation • Interest in addition to liquidated/treble damages • Permits collective action V-9 VIRGINIA HUMAN RIGHTS ACT V-10 CLASSES NOW PROTECTED BY VA LAW • National origin • Age • Religion • Disability • Sex (including pregnancy, • Genetic information childbirth, and related medical • Race & Color (including hair and traits associated conditions, including lactation) with race) • Sexual orientation & gender identity • Marital status Several cities in Virginia have their own laws protecting additional characteristics or extending protection to more EEs. (e.g. Charlottesville) V-11 WHAT VA EMPLOYERS ARE INCLUDED? Most protected classes: • ERs with 15+ EEs Unlawful discharge based on a protected class: • ERs with 5+ EEs Age discrimination: • ERs with 6 – 19 Ees for discharge cases • Ers with 6+ employees for non-discharge discrimination V-12 VIRGINIA VALUES ACT Effective July 1, 2020 • Expands Virginia Human Rights Act • Creates protections for LGBT residents • Public accommodations • Housing • Credit applications • Employment VA first southern state to enact such protections V-13 Photo credit: Human Rights Campaign EFFECT OF NEW LAWS ON LITIGATION • Before: Most discrimination claims heard in federal courts • Now: State courts will begin hearing more workplace discrimination suits • Obtaining summary judgment in VA courts nearly impossible • Going to trial increases costs for defending discrimination suits • No meaningful body of state law precedent on these issues • Debate: Does repeal of VHRA’s language abrogating Lockhart v. Commonwealth Educ. Sys. Corp. mean that we are back to 1994 (i.e., can an EE base a Bowman claim on the VHRA now?) V-14 LITIGATION TIMING AND COSTS Law changes how cases against ERs may be brought in state courts When Plaintiff Can File Suit Cap on Damages Old Law After being terminated 12 months of back pay + 25% attorney’s fees V-15 New Law Before or after termination None PREGNANCY DISCRIMINATION Effective July 1, 2020 Amends Virginia Human Rights Act to prohibit discrimination in employment on the basis of pregnancy, childbirth, or related medical conditions, including lactation • Requires ERs to engage in interactive process to determine if reasonable accommodation is possible • ERs specifically prohibited from requiring EE to take leave if another reasonable accommodation can be provided V-16 HAIR DISCRIMINATION Effective July 1, 2020 Bans discrimination on the basis of physical traits associated with race • Includes “hair texture, hair type, and protective hairstyles such as braids, locks and twists” • Bans of hairstyles historically associated with race re-enforce discriminatory stereotype that Black hair is unprofessional, unkempt, or disruptive V-17 Creating a Respectful and Open World for Natural Hair MILITARY STATUS DISCRIMINATION Effective July 1, 2021 Adds “Military Status” to protected classes, defined as status as: (i) a member of the uniformed forces, as defined in 10 U.S.C. § 101(a)(5), of the United States or a reserve component thereof named under 10 U.S.C. § 10101 (ii) a veteran as defined in 38 U.S.C. § 101(2), or (iii) a dependent as defined in 50 U.S.C. § 3911(4). V-18 DISABILITY ADDED TO VHRA VHRA has also been amended to add the protected class of disability • Adds specific language on accommodation and undue hardship • Factors to consider to determine undue hardship: a. Hardship on the conduct of the employer's business, considering the nature of the employer's operation, including composition and structure of the employer's workforce; b. Size of the facility where employment occurs; V-19 DISABILITY DISCRIMINATION (CONT.) c. The nature and cost of the accommodations needed, taking into account alternative sources of funding or technical assistance included under [other Va. law]; d. The possibility that the same accommodations may be used by other prospective employees; and e. Safety and health considerations of the person with a disability, other employees, and the public. “Qualified” definition now tracks ADA essential functions language V-20 DISABILITY Requires employers to engage in timely, good faith interactive process over accommodation requests: • ER may not retaliate against EE who has requested or used a reasonable accommodation • ER may not require EE to take leave if another reasonable accommodation can be provided • This creates a hierarchy in which leave (and presumably transfer to another position) follow all other possible reasonable accommodations V-21 MINIMUM WAGE V-22 MINIMUM WAGE INCREASES $9.50 - May 1, 2021 $11.00 - January 1, 2022 $12.00 - January 1, 2023 $13.50 - January 1, 2025 $15.00 - January 1, 2026 V-23 VIRGINIA MINIMUM WAGE CLAIMS Different Remedies than OT/Wage Theft • 40.1-28.12 Remedies for Min. Wage Violations: • Unpaid minimum wages • Interest at 8% from date wages due • MAY award attorneys’ fees V-24 PAID SICK LEAVE FOR HOME HEALTHCARE WORKERS V-25 PAID SICK LEAVE ERs who employ a “home health worker” must provid paid sick leave • Worker must average 20 hours per week (or 90 per month) and provide services to patients enrolled in Medicaid • Accrue 1 hour per 30 hours worked • 40 hours per year of leave • No retaliation V-26 WHISTLEBLOWER RETALIATION PROTECTION V-27 WHISTLEBLOWER RETALIATION PROTECTION Effective July 1, 2020 PROTECTED NOT PROTECTED • Good faith report of suspected • Disclosing ER data protected by law or violations of federal/state law legal privilege • Refusal to engage in criminal acts • Knowingly making false statements; • Refusal to follow an order that violates reckless disregard for the truth federal/state law • Disclosures that violate privacy protections of individuals • Requested by govt. or law enforcement to participate or testify in an investigation, hearing, or inquiry V-28 WHISTLEBLOWER RETALIATION PENALTIES • Immediate right to file suit • Suit must be filed w/in 1 yr. • EE not obligated to exhaust administrative remedies • Penalties may include • Lost wages, lost benefits plus interest • Reinstatement • Reasonable attorney’s fees • No cap on compensatory damages V-29 WAGE TRANSPARENCY V-30 WAGE TRANSPARENCY Effective July 1, 2020 ER may not discharge or retaliate against EE if they: • inquire about, discuss or disclose information about their own or any other employee’s wages, or • file a complaint with the Department of Labor alleging a violation of this law V-31 WAGE TRANSPARENCY Does not apply to: • employees who have access to the compensation information of other employees or applicants … as part of their essential job functions who disclose the pay of other employees or applicants to individuals who do not otherwise have access to compensation information [absent a legal duty to disclose] V-32 MARIJUANA V-33 MARIJUANA Effective July 1, 2021 • Adults 21 and over can possess and cultivate small amounts • Ers may still prohibit the presence of cannabis on their premises and may discharge Ees who are impaired at work V-34 LOW WAGE NON-COMPETES V-35 NON-COMPETE CONTRACTS Effective July 1, 2020 • Low-wage EEs can sue ERs seeking to enforce a non-compete • “Low-wage” ≈ $60k (changes periodically) • Determined by guidelines from VA Worker’s Comp. Comm. • Covered: Interns, students, apprentices, etc. • Excluded: EEs whose earnings come wholly or mostly from sales commissions, incentives, or bonuses • Consider instead: NDA that protects trade secrets • Can NOT prohibit disclosure of sexual harassment in workplace V-36 INDEPENDENT CONTRACTORS V-37 EMPLOYEE OR INDEPENDENT CONTRACTOR? New law adopts IRS guidance: 1. Do you control or have the right to control the work & how it’s done? 2. Do you control business aspects of the job (e.g. how they are paid, whether expenses are reimbursed, who provides the tools for the job)? 3. Do you have a written contract? 4. Do you pay the person benefits? 5. Is the relationship continuing? 6. Is the work performed a key aspect of your business? The more trappings of an employment relationship, the less likely the person is a contractor. V-38 COLLECTIVE BARGAINING V-39 COLLECTIVE BARGAINING Effective May 1, 2021 Allows local-level public sector EEs to engage in collective bargaining • Local govts. may vote to allow or not allow collective bargaining • Vote required w/in 120 days of receiving notice from majority of EEs • No state agency created to oversee • VA localities will play the role of labor board and ER • “Right to work” laws kept in place V-40 Craig Curwood [email protected] (804) 648-4848 King Tower [email protected] (540) 983-7541 woodsrogers.com (800) 552-4529 Charlottesville Lynchburg Richmond Roanoke V-41 DISABILITY AND LEAVE - HOT TOPICS IN A POST-PANDEMIC WORLD I. INTRODUCTION The Americans with Disabilities Act, 42 U.S.C. §12101 et. seq. (“ADA”), is one of America’s most comprehensive pieces of civil rights legislation that prohibits discrimination and guarantees that people with disabilities have the same opportunities as everyone else to participate in the mainstream of American life, including, inter alia, the right to enjoy employment opportunities. Coupled with the unpaid protected leave rights articulated in the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq. (“FMLA”), and the recent advent of additional state-specific paid leave rights for certain types of protected leave situation, employers and employees are often in situations where the law encourages – if not requires – collaborative and interactive discussions about sensitive and personal matters. When the COVID-19 pandemic hit in March 2020, the world turned upside down in so many unforeseen and tragic regards. Working from home became the “norm” for individuals who were fortunate enough to be able to do so and working in person became fraught with a risk profile that neither employers nor employees considered previously. As the world “returns to a new normal” this session of today’s CLE will focus on several topics that employment law practitioners will, no doubt, face on a regular basis. More specifically, this presentation discusses several recent impactful decisions and identifies observable trends in Title I ADA case law, with a focus on those trends impacted by the COVID-19 pandemic. A. Federal Private Sector Disability Law - ADA. In 1990, Congress passed the Americans With Disabilities Act of 1990, as amended, 42 U.S.C. 12101, et seq. (“ADA”) “to remedy widespread discrimination against disabled individuals.” PGA Tour, Inc., v. Martin, 532 U.S. 661, 675 (2001) (citing, among others, to § 12101(a)(3): “Discrimination against individuals with disabilities persists in such critical areas as employment, housing, public accommodations, education, transportation, communication, recreation, institutionalization, health services, voting, and access to public services”). “To effectuate its sweeping purpose, the ADA forbids discrimination against disabled individuals in major areas of public life, among them employment (Title I of the Act), public services (Title II), and public accommodations (Title III).” Id. The focus here, of course, is on Title I, which proscribes discrimination on the basis of disability in employment. Title I of the ADA requires covered employers (generally, those with 15 or more employees) to rethink the way jobs are performed and the way workplaces operate to address the issues posed by the growing numbers of individuals with disabilities in the economy. H. Rep. No. 485, 1-1st Cong., 2d Sess., pt. 3 at 31 (1990) (“persons with disabilities should not be excluded from job opportunities unless they are actually unable to do the job.”); see also 29 C.F.R. 1630, App. At 399 (under the ADA, employers are required to accommodate qualified individuals with disabilities by adjusting the work environment or the way a job customarily is done.) Congress attempted to address these issues through the ADA by prohibiting discrimination against the disabled, provided they are “qualified.” Part of that prohibition includes the affirmative requirement for the provision of reasonable accommodations to qualified individuals with a disability, provided the reasonable accommodation does not create an undue burden on the covered employer. VI-1 The questions that arise in this context revolve around what the particular job actually entails, whether there is something about the job or the employer’s processes that can be changed, done or provided to allow a disabled person to perform the job, who makes the suggestions for those things and how much discussion there has to be about these issues. B. Virginia Disability Laws. 1. Virginia Human Rights Act. Virginia’s regular 2020 legislative session enacted many new laws protecting employee rights. One such law was the Virginia Values Act, which expanded the scope of the Virginia Human Rights Act (“VHRA”). Under the law, an employer may not discriminate against an individual on the basis of “race, color, religion, national origin, sex, pregnancy, childbirth or related medical conditions, age, marital status, sexual orientation, gender identity, disability, or status as a veteran.” The law notably requires accommodations for pregnant employees. The new law, effective July 1, 2020, creates a private cause of action prohibiting broader discrimination related to these conditions and requires accommodations akin to the process under the ADA. The law expands many key facets of the Virginia Human Rights Act, including employer coverage. Prior to the amendments, the VHRA covered only small employers with 6-14 employees. As amended by the Virginia Values Act, the VHRA now covers all private employers with 15 or more employees (for unlawful discharge claims, the VHRA applies to employers with more than 5 employees). The VHRA functions similar to the ADA. Like the familiar ADA, the law provides that employers need not make accommodations that would impose an undue hardship on the employer’s business. Three factors determine whether an accommodation would cause an undue hardship: (1) the nature of the employer’s operation, including composition and structure of the employer’s workforce; (2) the size of the facility; and (3) the nature and cost of the accommodations requested. Like the ADA, employers must engage in an interactive process to determine if an accommodation is reasonable and, if it is not, to discuss alternative accommodations. Also like the ADA, the VHRA prohibits employers from taking adverse action against an employee who requests or uses a reasonable accommodation. “Adverse action” includes refusing to reinstate an employee to the employee’s previous position or an equivalent position with equal pay, seniority and other benefits when the need for the accommodation ends. Employees may sue in state court for discrimination or failure to accommodate. The statute of limitations is two years from the violation or, if the employee filed a complaint with an appropriate state agency or commission within that time frame, 90 days from the final disposition of such complaint. Damages may include compensatory damages, back pay, other equitable relief, reasonable attorneys’ fees, costs and injunctive relief. VI-2 2. Virginians with Disabilities Act. In addition, the Virginians with Disabilities Act (VDA), Va. Code Ann. § 51.5-40 et seq., protects employees from disability discrimination. The VDA prohibits an employer from discriminating against an otherwise qualified person with a disability with respect to its employment or promotion practices solely because that person has a disability. The VDA applies to all employers, except those who are covered by the Federal Rehabilitation Act of 1973. Like the ADA, under the VDA, an employer is required to make reasonable accommodations for known physical or mental impairments of an otherwise qualified person with a disability if such accommodations are necessary to assist the person in performing a particular job. As with the ADA, the VDA does not require an employer to make an accommodation if the employer can show that such an accommodation would impose an undue burden on the employer. II. VACCINATION ISSUES AND CONSIDERATIONS A. Can an employer request employees to receive vaccinations? In general, employers may require employees to receive vaccinations. As described below, two exceptions apply: (1) disability accommodations, and (2) religious accommodations. Notwithstanding the foregoing, the EEOC recommends that employers consider simply encouraging employees to get a vaccine rather than mandating it.1 Disability Accommodations. Under the ADA, an employee may be entitled to an exemption from a mandatory vaccination requirement based on a disability that prevents the employee from taking the vaccine. Exempting the employee from a vaccine would be a reasonable accommodation barring undue hardship. Religious Accommodations. Under Title VII, once an employer receives notice that an employee’s sincerely held religious belief, practice, or observance prevents him from taking the vaccine, the employer must provide a reasonable accommodation unless it would pose an undue hardship as defined by Title VII (“more than de minimis cost” to the operation of the employer’s business, which is a lower standard than under the ADA). Determining whether a religious belief is “sincerely held” is a fact-based inquiry that warrants the involvement of employment counsel to help navigate any particular situation. If an employer is going to offer an accommodation, it is important the accommodation be one reached through the interactive process. In many cases dealing with flu vaccines, wearing a mask is the accommodation offered. Employers may feel that an employee who refuses to be vaccinated should be moved out of customer-facing roles, or roles in which they interact with other employees. Without the interactive process, these “accommodations” can be viewed as discriminatory. For example, the EEOC in other contexts has held that moving employees from the “sales floor” to the “stockroom” is discriminatory. In the context of employee and public safety, however, isolating 1 EEOC Pandemic Preparedness in the Workplace and the ADA (Updated in response to COVID-19 Pandemic, March 21, 2020), https://www.eeoc.gov/laws/guidance/pandemic-preparedness-workplace-and-americans-disabilities-act VI-3 employees might be viewed differently. Reaching an accommodation through the interactive process is imperative. Distinguishing “Anti-Vaxxers” From Disability and Religious Accommodation Requests. We anticipate seeing a rise in “anti-vaxxers,” individuals who refuse to take the vaccine based on ideological or medical beliefs, not any legitimate disability or religious belief. The law would likely not protect individuals who refuse a vaccine on the ground that the vaccine “may do more harm than good”. See, e.g., Fallon v. Mercy Catholic Med. Ctr., 877 F.3d 487, 498 (3rd Cir. 2017) (upholding termination of hospital employee who refused flu vaccine). It is likely, however, that such anti-vaxxers will base their objections in language related to a disability or a religion (as the plaintiff in Fallon did). Employers should tread carefully to avoid the possibility of a lawsuit. As a best practice, employers should implement policies and use forms that an employee and/or the employee’s healthcare provider must use to request an accommodation. How employers treat anti-vaxxers could give rise to separate issues involving disparate treatment. An employer who fires one person for refusing to vaccinate on ideological grounds should treat similarly situated employees the same way. Otherwise, differences based on protected characteristics could give rise to a charge of discrimination. There are notably several bills pending in a handful of states that would limit the ability of employers to take “adverse action” against any employee who refuses to take a COVID-19 vaccine. The extent to which any such later legislation, if passed, will also include potential vaccination disclosure protections is unclear. Employers will want to monitor the status and progress of bills like these in the states where it operates. See e.g., MN COVID Mandatory Immunization Bill, NY COVID Mandatory Immunization Bill, SC COVID Mandatory Immunization Bill,WA COVID Mandatory Immunization Bill. B. If reporting of an employee’s COVID-19 vaccination status is allowed, what can an employer require with respect to proof of vaccination? An employer can require employees to provide proof of vaccination under federal law and can likely do so under most state law as well, provided the medical documentation is limited to a record of the COVID-19 vaccination alone. An employee can do this, for example, by providing the employer with a copy of an employee’s CDC or other COVID-19 vaccination record card or printout. In light of the ADA’s “disability-related inquiry” and “medical information” confidentiality protections, we recommend that employers be very explicit with employees about what kind of vaccination “proof” it is seeking (e.g., advise employees to provide a copy or screenshot of their CDC or other COVID-19 vaccination record card or printout). However, an employer should not, for example, ask for or accept a printout of an employee’s complete immunization record (unless otherwise required per medical compliance regulations related to, for example, onsite plant medical personnel). Likewise, an employer should not request or accept other medical records that list medical conditions, treatments or prescriptions as part of vaccination VI-4 “proof.” If an employee voluntarily submits added or excess documentation, the record should be declined, and the employee instructed to provide a record focused on the COVID-19 vaccination alone. It should also be noted that, at present, OSHA’s new January 2021 emergency guidance and other publications (a) do not require COVID-19 vaccinations for employees in non-healthcare workplace settings, and (b) do not prohibit employers from requesting information about, tracking, and obtaining proof of vaccination status from employees. See OSHA Jan. 29, 2021 COVID-19 Guidance. With respect to tracking of an employee’s vaccination status itself, such data is considered “medical information,” subject to ADA (and most state law) confidentiality requirements. The ADA requires all medical information about a particular employee be stored separately from an employee’s personnel file, thereby limiting access. An employer may store all medical information related to COVID-19 vaccinations in existing medical files, and there is no legal requirement to create a new COVID-particular medical file for each employee. As a suggested best practice, medical information should be stored in a separate, locked cabinet so unauthorized persons do not intentionally or unintentionally obtain access. The same is true with respect to electronic files and databases used to organize and store medically-related personnel data (e.g., such data should have internal user access limits). All verbal discussions and written communications (e.g., e-mails) about a particular employee’s vaccination status should be considered confidential medical information as well. Thus, those communications should only occur (a) with individuals who have a business-need-to-know (i.e., likely the same personnel who would normally have access to general medical information regarding the employee), and (b) outside of earshot of unauthorized persons. Under the ADA, allowed exceptions for disclosure include the following: Supervisors and managers may be informed regarding necessary restrictions on the work or duties of the employee and necessary accommodations; and First aid and safety personnel may be informed, when appropriate, if the disability or medical condition might require emergency treatment. See 29 C.F.R. §1630.14(b). VI-5 C. Can employers relax mask requirements for vaccinated employees? The answer to this question has become murkier since January 2021, given the CDC’s relaxed its March 2021 guidance regarding mask requirements for fully vaccinated individuals in small private settings (e.g., at home with family). However, at present, we suggest the best answer remains “No,” as allowing vaccinated workers to not wear a mask at work continues to be inconsistent with the majority of current CDC guidance. This is because CDC and other health care authorities have taken the position for now that being vaccinated does not eliminate the risk that an employee may still have enough viral load to spread the virus to others if the vaccinated employee later contracts COVID-19. That guidance, in turn, arguably impacts the asserted standard of care with respect to an employer’s OSHA “general duties clause” obligations and state tort liability exposure. Further, OSHA’s COVID-19 guidance issued at the end of January 2021 and CDC guidance issued in midMarch 2021 continues to require mask use in public group settings and at work, even with respect to vaccinated individuals. A CDC FAQ issued in mid-March 2021 states: “Until more is known, fully vaccinated people should continue to wear masks and stay 6 feet apart from other people in other settings, like when they are in public or visiting with unvaccinated people from multiple households.” In addition, CDC’s “FAQs About COVID-19 Vaccination in the Workplace: For Employers” recommends mask use for unvaccinated and vaccinated workers, regardless of group or meeting size. D. Can an employer require employees be identified in some way as to whether they are vaccinated or not? Still most likely “No” – in light of ADA confidentiality requirements, ADA and Title VII harassment protections, and the CDC’s current position regarding the risk of COVID-19 spread to others in the workplace despite vaccination. Generally, whether an employer requires vaccinated individuals to be identified in some way while at work is a business decision that an employer may choose to make based on relative legal and practical risk. Agency guidance issued in February and March 2021 to date has not changed this analysis. Ultimately, this is a business decision that an employer may choose to make based on relative legal and practical risk and the desire to encourage increased voluntary vaccinations. While we believe employers can require employees to report their vaccination status to the employer (and track such information) under federal law and likely under most state law as well, with limits regarding follow-up questions and required protections related to medical information confidentiality, there is still no direct EEOC or other agency guidance on the issue of whether employers can publically identify non-vaccinated employees at work. Without such guidance, there remains a risk that the EEOC would take the position that requiring the outward identification to coworkers of an employee’s vaccination status at work (e.g., via a badge or sticker worn on the plant VI-6 floor) is a form of unauthorized employer disclosure of an employee’s confidential “medical information” – albeit in the negative for the question at issue (i.e., “He is not vaccinated”). Nonetheless, an employer may encourage or allow vaccinated individuals to identify themselves at work voluntarily. Although the EEOC and plaintiffs may later argue that the disclosure of this information was coerced, indirectly or directly, and therefore, a “constructive” involuntary employer disclosure of ADA protected confidential “medical information,” this is likely a limited risk worth assuming. Encouraging or allowing employees voluntarily to wear an “I got vaccinated” badge or sticker at work does not violate the ADA’s medical information confidentiality requirements – as it is the employee’s personal disclosure made to others (and not a disclosure made by the employer). See, e.g., EEOC ADA Enforcement Guidance. III. ACCOMODATIONS A. Remote working Prior to the pandemic, telework work was the exception not the norm. While some employers had embraced telework, the majority of employees did not regularly work remotely. In April 2020, the high point of telework during the pandemic, up to 69% of the American workforce was working remotely at least some of the time, with over 50% working remotely full time.2 While that number has decreased as the pandemic has continued, there continues to be a significant portion of the workforce that continues to work remotely full time, plus a portion of the workforce that works remotely part time. Workers who continue to be able to work remotely during the pandemic report wanting to be able to continue working remotely.3 As the pandemic wanes and jurisdictions lift restrictions, employers will get to decide whether their employees can continue to work remotely. Given that a significant number of workers prefer working remotely, however, it is likely that employers will receive more requests for the disability accommodation of telework. The ADA prohibits discrimination against a qualified individual with a disability in the terms, conditions, and privileges of employment, because of the individual’s disability. 42 U.S.C. § 12112(a). Discrimination includes “not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability,” unless the employer can demonstrate that the accommodation would represent an “undue hardship on the operation of the business” of the employer. 42 U.S.C. § 12112(b)(5)(A). Courts considering whether telework qualifies as a reasonable accommodation under the under the ADA conduct a fact-intensive inquiry, primarily focusing on whether the employee can perform the essential functions of the job while teleworking. Previously, teleworking was largely disfavored by courts, with some holding that being physically present at work is necessary to accomplish the essential function of most jobs. The ubiquity of remote work during the COVID-19 pandemic— particularly by white collar workers, lawyers, and judges—may weaken this reasoning and make courts more likely to consider telework a reasonable accommodation. 2 Megan Brenan, COVID-19 and Remote Work: An Update (Oct. 13, 2020), available at https://news.gallup.com/poll/321800/covid-remote-work-update.aspx 3 Id. VI-7 1. Reasonableness of Telework Accommodations Pre-Pandemic Prior to 2020, teleworking was generally disfavored by courts as a reasonable accommodation under the ADA. Several federal courts applied a “general rule” that “an employee who does not come to work cannot perform any of his job functions, essential or otherwise.” E.E.O.C. v. Ford Motor Co., 782 F.3d 753, 761 (6th Cir. 2015) (en banc) (citing Samper v. Providence St. Vincent Med. Ctr., 675 F.3d 1233, 1237–38 (9th Cir. 2012); Mason v. Avaya Commc'ns, Inc., 357 F.3d 1114, 1122–24 (10th Cir. 2004); EEOC v. Yellow Freight Sys., Inc., 253 F.3d 943, 948 (7th Cir. 2001) (en banc); Tyndall v. Nat'l Educ. Ctrs., 31 F.3d 209, 213 (4th Cir. 1994)). In a widely-cited decision out of the Sixth Circuit, EEOC v. Ford Motor Co., 782 F.3d 753 (6th 2015) (en banc), the court held that telework was not a reasonable accommodation for the plaintiff because her job required teamwork, in-person meetings, and availability for face-to-face interactions. The court went even further, stating that “most jobs require the kind of teamwork, personal interaction, and supervision that simply cannot be had in a home office situation.” Id. at 761 (quoting Rauen v. U.S. Tobacco Mfg. L.P., 319 F.3d 891, 896 (7th Cir. 2003)). It concluded that “[r]egular, in-person attendance” was “an essential function—and a prerequisite to essential functions—of most jobs, especially the interactive ones.” Id. at 762–63. Following Ford Motor, many employers argued that telework was per se unreasonable, and a number of courts agreed. See, e.g., Credeur v. Louisiana Through Off. of Att'y Gen., 860 F.3d 785, 793 (5th Cir. 2017) “[T]here is general consensus among courts, including ours, that regular work-site attendance is an essential function of most jobs.”); Vitti v. Macy's Inc., 758 F. App'x 153, 157 (2d Cir. 2018) (referring to “the essential duty of regularly showing up to work”). Former EEOC guidance generally aligned with these decisions, stating that an employer may refuse a telework request when, among other things, the job requires “face-to-face interaction and coordination of work with other employees,” “in-person interaction with outside colleagues, clients, or customers,” and “immediate access to documents or other information located only in the workplace.”4 However, some courts cut against the grain and found telework to be a reasonable accommodation in certain circumstances. For example, in Mosby-Meachem v. Memphis Light, Gas & Water Division, the plaintiff, an in-house attorney for Memphis Light, Gas & Water Division, experienced pregnancy complications that constituted a disability under the ADA. 883 F.3d 595, 599 (6th Cir. 2018). Her doctor placed her on 10 weeks of bed rest, and the plaintiff requested telework as an accommodation from her employer. Id. Her employer denied the request on the grounds that physical attendance in the office was an essential function of her job. Id. at 601. The plaintiff asserted claims under the ADA, for her employer’s failure to accommodate her disability. Id. At trial, a jury returned a verdict in the plaintiff’s favor, and the defendant appealed. Id. The defendant-employer argued that it was entitled to judgment as a matter of law because the jury did not have sufficient evidence to conclude that the plaintiff could have performed the essential functions of her position while teleworking. See id. at 601–02. 4 See EEOC Fact Sheet, Work At Home/Telework as a Reasonable Accommodation (Feb. 3, 2003), available at http://www.eeoc.gov/facts/telework.html. VI-8 The Sixth Circuit affirmed the verdict. Id. at 603. Rejecting the employer’s argument that telework was “per se unreasonable,” the court found sufficient evidence in the record for a reasonable jury to conclude that physical attendance was not an essential function of the plaintiff’s job. See id. Though the defendant presented evidence to the contrary, the plaintiff presented sufficient evidence to support a finding that she could perform all the essential functions of her job remotely for ten weeks. See id. at 604. This evidence included testimony from colleagues and outside counsel; evidence that the functions of her job description requiring in-person attendance were not essential to her job; and evidence that she had, years previously, teleworked for two weeks while recovering from surgery, and appears to have performed her work adequately during that time. See id. at 604–05. The court reasoned that this history distinguished the plaintiff here from the plaintiff in Ford Motor, who had an extensive history of poor performance when she was not physically present at work. See id. at 605. 2. Reasonableness of Telework Accommodations Post-Pandemic Updated EEOC guidance, originally published six months after COVID-19 spurred many businesses to transition to a remote work model, reiterates the importance of considering the factual circumstances surrounding each telework request.5 Without overturning case law, the frameworks established by Ford Motor and Mosby-Meachem may allow plaintiffs post-pandemic to more easily demonstrate that telework is a reasonable accommodation. Courts approach telework accommodation cases by conducting a fact-intensive inquiry, and the remote work revolution of 2020 may lead courts to understand facts differently than they did prior to COVID-19. For example, central to the court’s reasoning in Ford Motor was the observation that “many interactive functions simply cannot be performed off site.” Ford Motor Co., 782 F.3d at 762. The prevalence of remote work over the past thirteen months largely dispels this belief. Up to 69% of the American workforce has worked remotely at some point since March 2020.6 At the same time, the majority of employers have indicated that worker productivity has either remained consistent or increased since employees began working remotely.7 While many courts have previously held that in-person work is essential for jobs that involve teamwork, in-person meetings, and availability for face-to-face interactions, see, e.g., Rauen v. U.S. Tobacco Mfg. L.P., 319 F.3d 891, 896 (7th Cir. 2003), employees today are able to successfully perform these same jobs remotely. Further, in MosbyMeachem, the court found that telework was a reasonable accommodation in part because the plaintiff had previously performed the job at home successfully. See 883 F.3d at 605. Employees who have successfully worked from home during the pandemic will be able to point to this as evidence that telework is a reasonable accommodation. 5 See What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws, EEOC (Dec. 16, 2020), available at https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-adarehabilitation-act-and-other-eeo-laws. 6 See Megan Brenan, COVID-19 and Remote Work: An Update, GALLUP (Oct. 13, 2020), available at https://news.gallup.com/poll/321800/covid-remote-work-update.aspx. 7 See Roy Mauer, Study Finds Productivity Not Deterred by Shift to Remote Work, SOCIETY FOR HUMAN RESOURCE MANAGEMENT (Sept 16, 2020), available at https://www.shrm.org/hr-today/news/hr-news/pages/studyproductivity-shift-remote-work-covid-coronavirus.aspx. VI-9 3. Employer preferences After most employees physically return to work, some employers will likely continue to resist telework as a reasonable accommodation. Some employers may place more emphasis on face-to-face interactions, arguing that conducting business over a virtual platform was appropriate when in-person interactions were infeasible, but inappropriate when the majority of employees, outside colleagues, clients, and customers are conducting business in person. Employers could also revise job descriptions to emphasize in-person requirements, as courts afford substantial deference to such descriptions in determining a job’s essential functions. See, e.g., 29 C.F.R. § Pt. 1630(n), App. at 395 (“[T]he inquiry into essential functions is not intended to second guess an employer’s business judgment with regard to production standards.”); 42 U.S.C. § 12111(8) (essential functions generally are those that the employer's “judgment” and “written [job] description” deem essential); 29 C.F.R. § 1630.2(n)(3)(ii) (“Evidence of whether a particular function is essential includes . . . [w]ritten job descriptions ...”). Despite this deference, courts may nonetheless side with an employee over an employer if it finds that the employee can adequately perform all essential functions of his or her job remotely. For example, in Peeples v. Clinical Support Opti