Fulco v. Continental Cablevision, Inc.

• Decision Date: 14 January 1992
• Docket Number: Civ. A. No. 89-1342-S.
• Citation: 789 F. Supp. 45
• Parties: Salvatore N. FULCO, et al., Plaintiffs, v. CONTINENTAL CABLEVISION, INC., American Cablesystems Corporation, Shearson Lehman Hutton, Inc., Malarkey-Taylor Associates, Inc., et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

789 F. Supp. 45

Salvatore N. FULCO, et al., Plaintiffs, v. CONTINENTAL CABLEVISION, INC., American Cablesystems Corporation, Shearson Lehman Hutton, Inc., Malarkey-Taylor Associates, Inc., et al., Defendants.

Civ. A. No. 89-1342-S.

United States District Court, D. Massachusetts.

January 14, 1992.

Thomas V. Urmy, Jr., Edward F. Haber, Shapiro, Grace & Haber, Boston, Mass., Sheldon L. Albert, Barrack, Rodos & Bacine, Philadelphia, Pa., Richard Dannenberg, Lowey, Dannenberg, Bemporad & Selinger, New York City, Joseph Smick, Parker Coulter Daley & White, Boston, Mass., for plaintiffs.

Martin E. Karlinsky, Camhy Karunsky & Stein, New York City, Thomas J. Dougherty, Lori Weiner Lander, Skadden, Arps, Slate, Meager & Flom, Boston, Mass., Barry Ostrager, Simpson, Thacher & Bartlett, New York City, Richard Lavin, James S. Dittmar, Widett Slater Goldman, Adrienne M. Markham, Gouston & Storrs, Boston, Mass., for defendants.

MEMORANDUM AND ORDER ON DEFENDANT SHEARSON'S MOTION FOR AN ORDER ALLOWING SHEARSON TO COMMUNICATE WITH CLASS MEMBER-BROKERS

SKINNER, District Judge.

In my order of April 9, 1991, I allowed all the limited partners who are current or former Shearson Lehman Hutton, Inc., ("Shearson") employees to join the class. Defendant Shearson now moves for an order allowing it to communicate with and interview those absent class members who are current Shearson employees. Shearson seeks permission to engage in such communications only with each such individual's express consent to such an interview, and only on the subject of that individual's actions, if any, with respect to the solicitation of limited partners in the class that plaintiffs have alleged was fraudulently conducted.

Massachusetts' Supreme Judicial Court Rule 3:07, DR 7-104, and the same professional responsibility provision of New York's Code, provide:

(A) During the course of his representation of a client a lawyer shall not:

(1) Communicate or cause another to communicate on the subject of the representation with a party he knows to be represented by a lawyer in that matter unless he has the prior consent of the lawyer representing such other party or is authorized by law to do so.

The issues presented by defendant Shearson's motion are whether Disciplinary Rule 7-104 applies to Shearson's counsel once the class has been certified, and if so, whether this court should nonetheless authorize ex parte communications by Shearson's counsel with these particular class members.

While this is apparently a case of first impression in the first circuit, I agree with courts which have held that "once the court enters an order certifying a class, an attorney-client relationship arises between all members of the class and class counsel." Bower v. Bunker Hill Company, 689 F.Supp. 1032, 1033 (E.D.Wash.1985). See also Resnick v. American Dental Ass'n, 95 F.R.D. 372, 377 (N.D.Ill.1982). After the class has been certified, defendants' counsel must treat the unnamed class members as "represented by" the class counsel for purposes of DR 7-104. Resnick, 95 F.R.D. at 376-77. See also Bower, 689 F.Supp. at 1033; Impervious Paint Industries, Inc. v. Ashland Oil, 508 F.Supp. 720, 723 (W.D.Ky.1981). But see H. Newberg, Newberg on Class Actions § 15.15 (2d ed. 1986) (hereinafter "Newberg") (Application of DR 7-104 to defendant's counsel before the close of the opt-out period, rather than after, may be "more difficult" because "the putative class may contain members who will reject the class action remedy" during the opt-out period.) (emphasis omitted).

The question remains whether this court should nonetheless allow defendant Shearson's counsel to undertake ex parte interviews of absent class members who are also Shearson employees, under the conditions set forth above. Shearson argues that unless the court allows the proposed communications, Shearson will be unable to defend against the fraudulent solicitation alleged in paragraph 64 of the plaintiffs' amended complaint. The clear implication of Shearson's request is that Shearson did not conduct discovery of the Shearson employees at issue before the October 31, 1990 discovery cutoff for this litigation.

Shearson asserts that it had no reason to conduct discovery into the alleged fraudulent solicitation, before early August 1990, when plaintiffs sought to expand the scope of the certified class to include limited partners who were also Shearson brokers. Shearson also asserts that only when plaintiffs attempted to include the limited partner-brokers in the class, did a need for Shearson to canvas their brokers arise. While at least three months for discovery remained after Shearson learned of plaintiffs' motion to expand the class, Shearson argues it was not free to discuss the litigation ex parte with the Shearson employees while the motion for re-certification was pending, citing Tedesco v. Mishkin, 629 F.Supp. 1474 (S.D.N.Y.1986) and Kleiner v. First Nat'l Bank, 102 F.R.D. 754, 769-70 (N.D.Ga.1983).

I find defendant Shearson's arguments unpersuasive. Defendant Shearson has been on notice of the possible fraudulent solicitation by the limited partner-brokers from the time they received a copy of the plaintiffs' amended complaint. See Plaintiffs' amended complaint, paragraph 64. Thus, the issue of possible...