The New York Court of Appeals recently issued a decision in Muriel Siebert & Co., Inc. v. Intuit, Inc., 8 N.Y.3d 506 (2007), affirming that defense counsel should not have been disqualified for their ex parte contact with plaintiff’s former management employee and litigation team member. The court considered the degree of prejudice resulting from the attorneys’ actions, rather than strictly applying the remedy of attorney disqualification for an alleged ethics violation.

The case arose when brokerage firm Muriel Siebert & Co., Inc. (“Siebert”) sued financial software manufacturer Intuit, Inc. (“Intuit”), alleging that Intuit had failed to promote Siebert’s business interests. The contract at issue had been negotiated by Siebert’s then executive vice-president and chief operating officer, Nicholas Dermigny, who helped draft the complaint and responses to interrogatories, was privy to discussions about Siebert’s litigation strategy, and was engaged in privileged and confidential communications with Siebert’s counsel.  

Dermigny took a leave of absence to negotiate his separation and eventual termination from Siebert and refused Siebert’s counsel’s request to represent him at his deposition. When Siebert told Intuit’s counsel that Siebert could not produce Dermigny, Intuit’s counsel subpoenaed him. Intuit’s counsel learned a few weeks before the rescheduled deposition that Dermigny had been terminated and contacted him without Siebert’s knowledge to schedule a pre-deposition interview. 

At the beginning of the three-hour interview, Intuit’s counsel warned Dermigny to be careful not to disclose any privileged information, including any legal strategies or communications with Siebert’s counsel. Dermigny was supposed to advise Intuit’s counsel if a question could potentially lead to the disclosure of such information, and then decline to answer the question.  Siebert’s counsel later learned of the interview, and moved to disqualify Intuit’s attorneys from the case and enjoin them from using any information provided by Dermigny. 

The trial court granted the motion to disqualify defendant’s counsel from the case, making clear that it was not basing its determination on DR 7-104(a)(1) of  the Code of Professional Responsibility, which governs communications with represented persons, as those restrictions do not apply to former employees, pursuant to Niesig v. Team I, 76 N.Y.2d 363, 369 (1990).  The court instead based its ruling on the “appearance of impropriety” flowing from the strong possibility that privileged information was disclosed by Dermigny to Intuit’s counsel during the interview. 

The Appellate Division reversed the order and the Court of Appeals affirmed that reversal. The Court of Appeals held that “so long as measures are taken to steer clear of privileged or confidential information,” adversary counsel may conduct ex parte interviews of an opposing party’s former employee. In sum, the court found no basis for disqualification where Intuit’s counsel admonished the witness not to disclose any privileged information, and where there was no evidence that any information that had been disclosed to Intuit by Dermigny, in particular, a Siebert document listing dates and events, was privileged. 

This article was prepared by Eve Stocker of United States Department of Labor, Washington, D.C.