Terra Intern., Inc. v. Mississippi Chemical Corp.

• Decision Date: 25 January 1996
• Docket Number: No. C 95-4088.,C 95-4088.
• Citation: 913 F. Supp. 1306
• Parties: TERRA INTERNATIONAL, INC., a Delaware corporation, Plaintiff, v. MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation, Defendant.
• Court: U.S. District Court — Northern District of West Virginia

913 F. Supp. 1306

TERRA INTERNATIONAL, INC., a Delaware corporation, Plaintiff, v. MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation, Defendant.

No. C 95-4088.

United States District Court, N.D. Iowa, Western Division.

January 25, 1996.

Gregg Williams, local counsel of Heidman, Redmond, Fredregill, Patterson, Schatz & Plaza, L.L.P., Sioux City, Iowa, and George Zelcs and Dean S. Rauchwerger of Clausen Miller, P.C., Chicago, Illinois, and Terrence C. McRea of Zelle & Larson, Dallas, Texas, for Plaintiff Terra International.

Steve Eckley and Randy Duncan, local counsel of Duncan, Green, Brown, Langeness & Eckley, P.C., Des Moines, Iowa, Jay Brumfield, general counsel Jackson, Mississippi, and William L. Smith, of Brunini, Grantham, Grower & Hewes, Jackson, Mississippi, for Defendant MCC.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT'S MOTION FOR DISCOVERY GUIDANCE

                                             TABLE OF CONTENTS
                  I. INTRODUCTION AND BACKGROUND ............................................ 1308
                     A. Procedural Background ............................................... 1308
                     B. Factual Background .................................................. 1310
                 II. LEGAL ANALYSIS ......................................................... 1313
                     A. Governing Ethical Standards ......................................... 1313
                     B. Contact With Former Employees ....................................... 1314
                     C. Contact With Current Employee ....................................... 1316
                        1. "Automatic representation" ....................................... 1316
                        2. Nature or status of employment ................................... 1317
                           a. Total bans .................................................... 1318
                           b. Limited contacts .............................................. 1319
                        3. Analysis here .................................................... 1320
                     D. Guidelines For Ex Parte Contacts .................................... 1323
                III. CONCLUSION ............................................................. 1323
                

BENNETT, District Judge.

This ruling represents another small step in the litigation following the catastrophic explosion of a fertilizer plant in northwest Iowa on December 13, 1994, in which four persons were killed, eighteen were injured, and the fertilizer plant and its owner sustained enormous damage alleged to exceed $200 million. In this litigation, the plaintiff corporation is the operator of the fertilizer plant and the defendant corporation is the inventor, designer, and licensor of the ammonium nitrate neutralizer technology that allegedly precipitated the explosion. The roles of the parties here are reversed in parallel litigation brought by the defendant here in federal court in Mississippi. The present discovery dispute is a microcosm of sorts of the bigger dispute, because each party has again accused the other of wrong-doing based on the same set of circumstances. Following pointed allegations by plaintiff's counsel that counsel for the defendant corporation was violating ethical standards by allegedly contacting or attempting to contact current and former employees of the plaintiff corporation, the defendant corporation accused plaintiff's counsel of impeding proper investigation of the catastrophe. This discovery dispute comes before the court on defendant's motion for discovery guidance, followed by an evidentiary hearing on January 15, 1996.

I. INTRODUCTION AND BACKGROUND

A. Procedural Background

This lawsuit, filed on August 31, 1995, arises from the explosion of plaintiff Terra International's fertilizer plant in Port Neal, Iowa, on December 13, 1994. Also on August 31, 1995, just a few hours after Terra's suit was filed in this district, defendant Mississippi Chemical Corporation (MCC) instituted parallel litigation in the United States District Court for the Southern District of Mississippi, Western Division, in a case captioned Mississippi Chem. Corp. v. Terra Int'l, Inc., No. 5:95CV127 (S.D.Miss.). In a prior ruling in this case, the court granted Terra's application for a temporary restraining order enjoining MCC from seeking an injunction or restraining order in the litigation it had filed in the Mississippi federal court or in any other litigation MCC may file in Mississippi or elsewhere enjoining in any way the present lawsuit between the parties in the United States District Court for the Northern District of Iowa. See Terra Int'l, Inc. v. Mississippi Chem. Corp., 896 F.Supp. 1468 (N.D.Iowa 1995).¹ In that ruling, the court considered in some detail the background to and claims asserted in this litigation, as well as the nature of the claims asserted in the parallel litigation instituted by MCC. Terra Int'l, Inc., 896 F.Supp. at 1467-72. The court will therefore focus here on the procedural and factual background immediately related to MCC's motion for discovery guidance.

Following an exchange of letters in which counsel for Terra accused MCC of improperly contacting current and former employees of Terra ex parte, and MCC accused Terra of interfering with its legitimate efforts to contact former employees, MCC filed its motion for discovery guidance on December 28, 1995. In its motion, amplified by an accompanying brief, MCC seeks authority from the court to pursue ex parte contacts with all former employees, and all current employees of Terra except those who are (1) corporate parties whose acts or omissions in the matter are binding on the corporation; (2) parties who may impute liability to the corporation; or (3) employees who act at the instruction or advice of corporate counsel, citing Niesig v. Team I, 76 N.Y.2d 363, 559 N.Y.S.2d 493, 558 N.E.2d 1030, 1036 (1990). Terra responded to the motion for discovery guidance on January 4, 1996, and filed an amended response later that same day, but has not specifically moved for a protective order of any kind. In its response, Terra asserts that ex parte contacts with current and former employees are either improper or should not be allowed to proceed without limitations. Terra also requested that MCC be required to turn over any materials gathered in the course of ex parte contacts with its employees.

The court held a telephonic status conference with the parties concerning their discovery dispute on Saturday, January 6, 1996, and scheduled an evidentiary hearing on the matter for January 15, 1996.² At that hearing, plaintiff Terra International was represented by local counsel Gregg Williams of Heidman, Redmond, Fredregill, Patterson, Schatz & Plaza, L.L.P., in Sioux City, Iowa, and by counsel George Zelcs and Dean S. Rauchwerger of Clausen Miller, P.C., in Chicago, Illinois, and Terrence C. McRea of Zelle & Larson, in Dallas, Texas. Defendant MCC was represented by its local counsel, Steve Eckley and Randy Duncan of Duncan, Green, Brown, Langeness & Eckley, P.C., in Des Moines, Iowa, and by its general counsel Jay Brumfield, of Jackson, Mississippi, and by attorney William L. Smith, of Brunini, Grantham, Grower & Hewes in Jackson, Mississippi. The court appreciates the parties', counsels', and witnesses' accommodation of the court's packed calendar by appearing for a hearing on a federal holiday.

Principally at issue is MCC's desire to contact ex parte eighteen current employees of Terra who have settled their personal injury claims against MCC. At the January 15, 1996, hearing, Terra stated that it would allow without limitation ex parte contacts with six of those employees after those employees received settlement checks from MCC,³ but that it continued to assert that ex parte contacts with any other current or former employees were inappropriate. Specifically, Terra seeks to preclude ex parte contacts with twelve current employees who have settled their claims against MCC, all of whom were working at the Port Neal plant at the time of the explosion. The parties agreed at the hearing that no further efforts would be made to make ex parte or other contacts with Don Romig, the person at the focus of the contacts that precipitated this discovery dispute, until Mr. Romig is formally deposed. The parties also agreed to drop their complaints against each other concerning past contacts or impediments to contacts with Mr. Romig or other employees.

At the January 15, 1996, hearing, the parties presented several exhibits and the testimony of two witnesses pertinent to the discovery issue presently before the court. MCC presented the testimony of James E. Mazour, a private investigator it had employed to investigate matters pertaining to this lawsuit. Terra presented the testimony of Larry Chapman, the Production Superintendent for Terra's Port Neal plant. The parties requested, and the court granted, leave to file supplemental briefs on the discovery dispute after the hearing. Those briefs were received on January 22, 1996. This matter is therefore submitted in its entirety.

B. Factual Background

The following factual background is based upon the evidence of record, including exhibits submitted with the discovery motion, the response to that motion, and during the January 15, 1996, hearing, as well as the testimony of the witnesses heard at the hearing.

Other litigation against MCC besides this lawsuit by Terra was commenced as a result of the explosion of the Port Neal plant. However, MCC has reached a settlement agreement resolving the wrongful death and personal injury actions brought against it by Terra employees and their families. Final approval of that settlement by the Iowa Industrial Commissioner pursuant to Iowa Code §§ 85.22(3) and (4) is still pending, but the parties anticipate that final payment of settlement monies will be made on or about February 1, 1996. All of the current Terra employees MCC has indicated a desire to contact ex parte, and all of the people Terra seeks to shield from such contacts, are settling plaintiffs in the Terra...