Federal Court Holds That In-House Counsel Is Able To Serve As Class Representative

A District of Connecticut court recently held that in-house counsel may serve as a class representative in a Title VII gender class action against her employer without violating ethics rules. Schaefer v. General Electric Co., Case No. 3:07-CV-0858, 2008 U.S. Dist. LEXIS 5552 (D. Conn. Jan. 22, 2008). The plaintiff did not rely on confidential information in bringing the claims, and, in any event, was permitted to use confidential information to vindicate her own rights.

Plaintiff Lorene F. Schaefer, Esq., at the time of filing suit, was a current employee of General Electric Co. (“GE”), serving as Business General Counsel for GE’s transportation business. After being passed over for promotion, Ms. Schaefer sued GE individually and on behalf of a class of more than 1000 women, alleging that GE had engaged in systemic, company-wide discrimination against female executive level employees and attorneys. GE moved to strike the class action allegations, claiming that ethical considerations precluded Ms. Schaefer from serving as a class representative.

GE first argued that the Model Rules of Professional Conduct (“Model Rule”) Rule 1.6 foreclosed Ms. Schaefer from serving as a class representative. Model Rule 1.6 provides, in relevant part, that absent certain circumstances, a lawyer may not reveal information relating to the representation of a client without the client’s informed consent. Model Rule 1.6(a) (2007).

The Court first found that Ms. Schaefer’s claims did not rest on confidential information. The Complaint specifically stated that the allegations were based on publicly available information, on information and belief, and on personal knowledge and experiences. The personal knowledge was not obtained in the course of her job duties, but through informal conversations and networking lunches were she was not functioning in a legal capacity. Further, the disparate treatment claim would be proved through statistical evidence, which is not confidential information. The Court was unconvinced that serving as a class representative would necessarily require disclosure of confidential information, since a class representative serves to protect the interests of the class, not to litigate and vindicate the rights of the class. Therefore, given the strict standard on a motion to strike and absent compelling evidence to the contrary, the Court declined to strike class claims on the basis that Ms. Schaefer had violated client confidentiality.

Even if Ms. Schaefer had disclosed confidential information, however, the Court found that under the exceptions listed in Model Rule 1.6(b), such disclosure arguably was permissible. Under Model Rule 1.6(b)(5), a lawyer may reveal confidential information to the extent necessary to establish a claim or defense on behalf of herself in a controversy against her client. As the court stated, “[a] lawyer’s duties of confidentiality and loyalty are therefore not absolute or impermeable.” The Court found that Model Rule 1.6(b)(5) was not limited to individual actions brought by a lawyer against the client, but also encompassed class actions were the lawyer was seeking to serve as class representative in an action against the client.

The Court also found that Ms. Schaefer would not violate Model Rules 1.7 and 1.9 by serving as class representative. The Court easily dismissed the defendant’s argument under Model Rule 1.7, which outlines conflicts of interest, since the rule, on its face, only applies when an attorney who is representing one client seeks to represent another client in a matter adverse to the first client. The Court found that Model Rule 1.7 does not apply to an attorney asserting her own rights against a client.

Likewise, Model Rule 1.9, which outlines the duties to former clients, also did not apply since Ms. Schaefer was not seeking to represent another party, but herself. The Court found that even if Ms. Schaefer generally was bound by Model Rule 1.9, however, it did not apply in this situation since Ms. Schaefer was not “switching sides” – she was not seeking to join an action in which she had formally defended her employer. Compare to Hull v. Celanese Corp., 513 F.2d 568 (2d Cir. 1975) (attorney who had represented her employer in an action could not join the action as a plaintiff).

As the Schaefer court noted, it is not the first court to uphold the right of in-house counsel to serve as class representatives or participate as class members in a case against their employer. See, e.g., Cutner v. Atlantic Richfield Co., Civ. No. 77-806, 1979 U.S. Dist. LEXIS 13176 (E.D. Pa. Apr. 9, 1979) (in-house attorney allowed to serve as class representative); Jurgens v. Norton, Civ. No. CA-3-76-1183, 1978 U.S. Dist. LEXIS 17628, (N.D. Tex. May 22, 1987, aff’dJurgens v. EEOC, 903 F.2d 386 (5th Cir. 1990) (certifying class of attorneys and non-attorneys in discrimination suit).

Ethics Corner is a regular contribution by the Section’s Ethics and Professional Responsibility Committee.

Justin M. Swartz is a partner at Outten & Golden LLP , www.outtengolden.com, and Co-Chair of its Class Action Practice Group. He has represented employees in class action discrimination and wage/hour cases, as well as individual discrimination cases and other employment matters, since 1998. He is the Plaintiff Co-Chair of the ABA LEL Ethics and Professional Responsibility Committee, and an active member of the Equal Employment Opportunity Committee. He serves on the Committee on Civil Rights of the New York City Bar Association and the Executive Board of the National Employment Lawyers Association New York Chapter, and is Co-Chair of the NELA Fair Labor Standards Act Committee.

Cara E. Greene is an associate at Outten & Golden LLP, www.outtengolden.com, where she represents employees in litigation and negotiation in all areas of employment law, including disability, pregnancy, and family responsibilities discrimination; class actions; and executive and professional contracts and compensation. She is a member of the ABA LEL Ethics and Professional Responsibility Committee and is Plaintiff’s Co-Chair of the Ethics sub-committee of the Employee Rights and Responsibilities Committee.