Niesig v. Team I, 76 N.Y.2d 363 (1990)

For the purposes of Disciplinary Rule 7-104(A)(1), a ‘party’ includes corporate employees whose acts or omissions in the matter under inquiry are binding on the corporation (alter egos), imputed to the corporation for liability purposes, or those implementing the advice of counsel; all other employees may be interviewed informally.

Summary

Plaintiff, injured at a construction site, sought to privately interview employees of the general contractor (J.M. Frederick) and the property owner (Team I). These employees were witnesses to the accident. The defendants opposed, arguing Disciplinary Rule 7-104(A)(1) barred such contact without their consent. The New York Court of Appeals held that not all corporate employees are considered ‘parties’ under the rule. The Court rejected a blanket ban on communication with all employees and the narrow ‘control group’ test, instead defining ‘party’ to include those whose actions bind or are imputed to the corporation, or those implementing legal advice. Other employees can be interviewed informally, balancing fairness to the corporation with the need for open access to information.

Facts

Plaintiff was injured in a fall at a construction site while employed by DeTrae Enterprises, Inc. J.M. Frederick was the general contractor, and Team I owned the property. Plaintiff sued Frederick and Team I, who then filed a third-party action against DeTrae. Plaintiff sought permission to conduct ex parte interviews with DeTrae employees who witnessed the accident, arguing they were not managerial or controlling employees.

Procedural History

The Supreme Court denied plaintiff’s request. The Appellate Division modified the ruling, limiting the ban to DeTrae’s current employees. The Appellate Division reasoned that current employees were presumptively within the scope of representation of DeTrae’s attorneys, citing Upjohn Co. v. United States. Plaintiff appealed to the New York Court of Appeals.

Issue(s)

Whether employees of a corporate party are considered ‘parties’ under Disciplinary Rule 7-104(A)(1), which prohibits a lawyer from communicating directly with a party known to have counsel, and if so, which employees are included in that definition?

Holding

Yes, in part. The Court of Appeals modified the Appellate Division order to allow the interviews. The court held that the definition of “party” under DR 7-104(A)(1) includes corporate employees whose acts or omissions in the matter under inquiry are binding on the corporation, are imputed to the corporation for liability, or are responsible for implementing the advice of counsel because these employees are closely identified with the corporation’s interests. All other employees may be interviewed informally.

Court’s Reasoning

The Court reasoned that disciplinary rules should be applied with regard for the interests of non-lawyers involved in litigation. DR 7-104(A)(1) embodies principles of fairness, preventing lawyers from taking advantage of represented parties. While the rule applies to corporations, defining ‘party’ is difficult. The Court rejected a blanket rule barring contact with all employees because it would foreclose vital informal access to facts. The Court also rejected the ‘control group’ test as too narrow, as other employees can also bind the corporation. The Court adopted a test defining ‘party’ to include employees whose acts or omissions are binding on or imputed to the corporation, or those implementing legal advice. This test balances competing interests by protecting the corporation from unfair advantage while permitting access to relevant information. The court stated, “The potential unfair advantage of extracting concessions and admissions from those who will bind the corporation is negated when employees with ‘speaking authority’ for the corporation, and employees who are so closely identified with the interests of the corporate party as to be indistinguishable from it, are deemed ‘parties’ for purposes of DR 7-104 (A) (1).” The court emphasized that attorneys should make their identity and interest known and comport themselves ethically during such interviews. This approach is rooted in evidence and agency law and is consistent with the majority of jurisdictions. The court emphasized that the rule only applies to current employees, not former employees.