III. Undercover Activities
The use of undercover operatives, which is widely accepted in criminal investigations by government agencies, is also common in civil cases. For example, members of the American Society of Composers, Authors and Publishers (ASCAP) use undercover operatives to gather evidence for copyright infringement actions. ASCAP operatives visit bars and restaurants to find music being played in violation of copyright protections. An investment firm employed the president of the National Organization of Women to ask female employees, some of whom were plaintiffs in a class action against the firm, to share their complaints and suggestions for improving the firm without disclosing her role. Employment and housing applicants who think they were denied opportunities because of illegal discrimination use disguised "discrimination testers" to investigate offending entities. Public interest groups and the media have agents take jobs in industries and then secretly record their activities in efforts to expose inhumane, unsafe, or unlawful practices. Defendants in personal injury and workers' compensation cases employ investigators to detect fraud and malingering by plaintiffs. Employers use undercover investigators to ferret out employee drug use and theft. Lawyers who are seeking to protect their clients' trademarks dispatch investigators posing as customers to distributors' showrooms and warehouses to gather evidence of substitute goods being "palmed off" or "passed off."
In addition to employing undercover investigators, lawyers themselves may conceal or misrepresent their identities to gather information for use in litigation. For example, a lawyer might pose as a customer when calling a company to investigate its sales practices. Lawyers might also direct their secretaries, legal assistants, or associates to do the same thing.
A. Using Undercover Investigators in Civil Litigation
Midwest Motor Sports v. Artic Cat Sales, Inc.139 illustrates the risks that accompany lawyers' employment of undercover investigators. This case arose out of a dispute between a snowmobile manufacturer, Arctic Cat, and two Arctic Cat dealers, Elliott and A-Tech. Elliott sued Arctic Cat for violating South Dakota franchise law in terminating Elliott's franchise and establishing A-Tech as a new franchisee in the same city. Arctic Cat's attorneys, Roger Damgaard and Timothy Shattuck, retained a private investigator, Timothy Mohr, to visit Elliott's showroom to determine what products Elliott's sales force was promoting, what products were on display in order to determine what brands of snowmobiles were selling best, and whether Elliott was suffering financially from the loss of the Arctic Cat franchise. Mohr wore a hidden recording device to memorialize his conversations with Elliott personnel.140
Damgaard and Shattuck did not give Mohr a script of what to ask during his showroom visits, but they did indicate subjects that they wanted him to address. Mohr asked them whether he could legally record conversations with represented parties; they assured him that his conduct was legal, but did not discuss with him its ethical implications.141
Mohr twice visited the Elliott showroom posing as a customer and recorded his conversations with an Elliott salesman. Mohr also visited the A-Tech showroom, where he visited with A-Tech's president, Jon Becker, and recorded that conversation. Again, Mohr knew of the lawsuit between Arctic Cat, Elliott, and A-Tech, and he further knew that Elliott and A-Tech were represented by counsel. He did not, however, reveal to Elliott or A-Tech why he was visiting their showrooms, or that he was wearing a recording device.142 At the same time, Arctic Cat's attorneys served Elliott and A-Tech with requests to inspect, photograph, and videotape their dealerships pursuant to Federal Rule of Civil Procedure 34.
Elliott and A-Tech sought sanctions against Arctic Cat for Mohr's clandestine activities. As a sanction, the district court excluded Mohr's audio recordings and any evidence gleaned from those recordings. Arctic Cat appealed.
One of the issues on appeal was Arctic Cat's counsel's alleged violation of Rule 4.2 and, more particularly, whether Mohr spoke with anyone at Elliott or A-Tech who played a role sufficient to personify either entity. Of course, Mohr had spoken with A-Tech's president, Becker. Damgaard and Shattuck attempted to deflect responsibility to Mohr, asserting that they directed him to speak only to low-level sales people for the purpose of becoming familiar with Arctic Cat products, but the Eighth Circuit would have none of it:
[L]awyers cannot escape responsibility for the wrongdoing they supervise by asserting that it was their agents, not themselves, who committed the wrong. Although Arctic Cat's attorneys did not converse with Becker themselves, the Rules also prohibit contact performed by an investigator acting as counsel's agent. . . . "Since a lawyer is barred under Rule 4.2 from communicating with a represented party about the subject matter of the representation, she may not circumvent the Rule by sending an investigator to do on her behalf that which she herself is forbidden to do." . . . In other words, an attorney is responsible for the misconduct of his nonlawyer employee or associate if the lawyer orders or ratifies the conduct. . . . Accordingly, we conclude that Arctic Cat's attorneys are ethically responsible for Mohr's conduct in communicating with Becker as if they had made the contact themselves.143
The Midwest Motor Sports court also was troubled by Mohr's conversations with Elliott's low-level salesman, "Bill," who told him that Elliott had made a business decision to drop the Artic Cat line—a potentially damaging party admission. Because Elliott's counsel clearly would have advised Bill against making such a statement to Mohr, the court had "no doubt" that Rule 4.2 applied to Mohr's conversation with Bill.144
Although the Rule 4.2 violations alone justified the trial court's sanctions, the sanctions were further justified by the "false and misleading pretenses" under which Mohr visited Elliott and A-Tech.145 This justification stood even though South Dakota law permitted one party to a conversation to record that conversation without the other party's consent or knowledge. In brushing aside the South Dakota law on this point, the court observed that "conduct that is legal may not be ethical."146
The court reasoned that nonconsensual recordings should be prohibited where they are accompanied by other indicia of unethical behavior.147 The Rule 4.2 violations tipped the scales against Arctic Cat. Furthermore, the "duty to refrain from conduct that involves deceit or misrepresentation should preclude any attorney from participating in the type of surreptitious conduct that occurred here."148 Arctic Cat employed Mohr in a ruse to gain an advantage at trial, a tactic falling squarely within the Rule 8.4(c) prohibition on "conduct involving dishonesty, fraud, deceit or misrepresentation."149 The court also rejected Arctic Cat's defense that it employed Mohr only after traditional means of discovery had failed. If Arctic Cat was frustrated by Elliott's or A-Tech's failure to cooperate in discovery, its remedy was a motion to compel discovery, not self-help.150
In the end, the Eighth Circuit affirmed the district court's order excluding Mohr's tapes and any derivative evidence. The Midwest Motor Sports court declined to impose monetary sanctions against Arctic Cat or its lawyers, principally reasoning that because South Dakota law concerning the challenged conduct was not then fully developed, the district court's imposition of solely evidentiary sanctions was appropriate and adequate.151
Midwest Motor Sports certainly is not an aberration. In In re Ositis,152 for example, the Oregon Supreme Court publicly reprimanded a lawyer who directed a private investigator to pose as a journalist to interview a party to a potential dispute.153 In In re Crossen154 and In re Curry,155 the Massachusetts Supreme Judicial Court disbarred two veteran lawyers who had private investigators pose as corporate executives and conduct fake employment interviews with a former judicial clerk in an effort to obtain information for use against a trial judge who had ruled against their clients.
The lawyer whose conduct was challenged in Bratcher v. Kentucky Bar Ass'n,156 Pamela Bratcher, represented Dennis Babbs in a wrongful termination case against his former employer, R.C. Components, Inc. After litigation was under way, Bratcher learned of a company called Document Reference Check (DRC), which was in the business of determining the type of references given by former employers. Bratcher hired DRC to learn what R.C. Components would say about Babbs. A DRC employee called R.C. Components' owner, identified herself as a prospective employer of Babbs, and requested information about him.157 DRC transcribed the telephone conversation and gave it to Bratcher.
Bratcher sent a copy of the transcript to R.C. Components' defense counsel, who moved to disqualify her from Babbs's representation and to suppress the transcript. The trial court granted the defendant's motion. In doing so, the trial court found that Bratcher had violated Kentucky Rules of Professional Conduct 4.2 and 8.3(a), the latter of which is analogous to Model Rule 8.4(a) and prohibits lawyers from violating rules of professional conduct through the acts of another.158 Bratcher's disqualification was affirmed on appeal.159
The Kentucky Bar Association instituted disciplinary proceedings against Bratcher. She admitted to violating Kentucky Rules 4.2 and 8.3(a). The Kentucky Supreme Court publicly reprimanded her for the violations.160
Lawyers may land themselves in trouble when they direct non-lawyer staff members in investigative roles, as Penda Corp. v. STK, LLC161 illustrates. There, Penda Corporation filed two consolidated actions...
