Written discovery is often insufficient to develop the best record for trial. Informal fact gathering can help tip the balance in your client’s favor. An attorney employing self-help, however, must be careful to stay within ethical and legal boundaries. This article identifies five pitfalls associated with informal discovery, whether conducted by lawyers directly or through private investigators.
FAILING TO PROPERLY INSTRUCT YOUR INVESTIGATOR
A frequent mistake made by attorneys is to fail to clearly instruct the investigator on the ethical and legal rules governing their conduct. Both ABA Model Rule 5-3 and California Rule of Professional Conduct 3-110 require an attorney to adequately supervise non-attorney investigators to ensure compliance with ethical standards for attorneys. The Model Rules go so far as to make the attorney liable for acts of the investigator that violate the Model Rules, if the attorney knows of or ratifies those acts. The rules seek to ensure that an attorney does not circumvent ethical standards by delegating to an investigator. Instructions must include what can or should be done, what is to be avoided, and whether and who the investigator can employ to perform the assigned tasks. Failure to properly instruct an investigator may lead to unethical behavior, which may result sanctions. In the worst cases, sanctions can include prohibiting the use of improperly-obtained evidence at trial, or even terminating sanctions. One of the authors of this article obtained a dismissal of a trade secret misappropriation lawsuit as a sanction when plaintiff’s private investigator trespassed on his client’s property dumpster diving in search of evidence of misappropriation. The private investigator was hired by the client directly. The lawyers were involved, but they failed to take precautions to ensure that the investigator acted lawfully.
To satisfy their ethical obligations, the lawyers in the above example could not simply instruct the investigator to avoid unlawful conduct. Attorney involvement must go beyond that, as illustrated by Stephen Slesinger, Inc. v. Walt Disney Co., 155 Cal. App. 4th 736 (Cal. Ct. App. 2007), in which a Los Angeles court awarded terminating sanctions based on unethical conduct by a private investigator who had been admonished by the plaintiffs to “obey the law.” Plaintiffs claimed royalty payments allegedly due for Winnie the Pooh Merchandise under a licensing agreement with Disney. The Court issued terminating sanctions after plaintiffs’ investigator was found to have stolen more than 6,000 pages of documents from garbage dumpsters located at multiple Disney document production facilities. In affirming the sanction, the appellate court ruled that plaintiffs failed to adequately supervise the investigator’s activities, that circumstantial evidence showed their knowledge or deliberate indifference to his trespasses, and that they were vicariously liable for his work. “In short, Sands’s deliberate misconduct is also the deliberate misconduct of [Stephen Slesinger, Inc.].”Id. at 769.
The perils associated with investigator misconduct can be greater still. California law holds both a company and its attorneys liable for negligent hiring, and vicariously liable for the intentional torts of a private detective agency committed in the course of employment. InNoble v. Sears, Roebuck and Company, a consumer alleged that she suffered personal injuries while shopping at Sears. 33 Cal. App. 3d 654, 663 (Cal. Ct. App. 1973). Defendants hired an investigator to obtain the address of a witness, plaintiff’s friend. The investigator ultimately gained admittance to plaintiff’s hospital room and secured the address “by deception.” Id. at 657. In reversing the trial court’s dismissal of the claims, the appellate court held that the company, its attorneys, the investigator, and the investigator’s employee could all be found liable for the employee’s “unreasonably intrusive investigation” violating the plaintiff’s right to privacy. Id. at 660.
A threshold factor in determining whether the retention of an investigator is negligent is whether the investigator is licensed. Noble, supra, at 664. In California, an employer can confirm an investigator’s license online by consulting the Bureau of Security and Investigative Services, an agency within the Department of Consumer Affairs. Confirmation of a license, however, is not itself sufficient to establish reasonable care in hiring. Attorneys should check references to confirm that a proposed investigator maintains an ethical practice. The California Association of Licensed Investigators may provide further guidance and recommendations for selecting an investigator.
When retaining a private investigator, one should maintain a professional, cordial relationship that emphasizes at all times that the interest to be served is to discover the truth, not to manufacture evidence, or to earn one’s keep by producing positive evidence. One of the authors once impeached an adversary’s forensic investigator with an e-mail communication in which the investigator’s supervisor instructed her, in substance, “to find something, because the client is paying us a lot of money to deliver results.” An attorney should never assume that an investigator will know to avoid such a communication.
Once retained, the attorney must set the parameters of the investigator’s conduct. Attorneys should develop a set of guidelines to review orally with the investigator, and consider developing a written contract that expressly states these expectations of professionalism.
PRETEXTING OR MAKING FALSE STATEMENTS
One ethical pitfall that occurs with some frequency is pretexting, which is the use of false pretenses as a method of discovery. Pretexting generally involves the use of information about an individual, such as a social security number, to impersonate the individual and mislead information providers into giving out additional information that would generally only be available to the authorized individual. Attorneys, and private investigators, when gathering facts, must avoid making false or misleading statements representing that they are authorized to obtain personal information when in fact they are not.
Until recently, a number of statutes covered pretexting activities only with respect to certain records. For example, the Gramm-Leach-Bliley Act of 1999, 15 U.S.C. § 1681q, prohibited the use of pretexting to acquire personal financial information from financial customers or institutions. The Fair Credit Reporting Act, 15 U.S.C. § 1681q, enacted in 1968, barred individuals from obtaining consumer information under false pretenses from a consumer reporting agency. Enacted in 1914, the Federal Trade Commission Act, 15 U.S.C. § 45, prohibited unfair or deceptive acts or practices affecting commerce, which covered many aspects of pretexting but did not give the FTC authority to seek civil penalties in certain cases.
No law specifically banned the use of pretexting to obtain telephone records until Congress enacted the Telephone Records and Privacy Protection Act (TRPPA) of 2006, 18 U.S.C. § 1039, making it a crime to knowingly and falsely obtain “confidential phone records information,” punishable by a fine and up to ten years’ imprisonment. Congress’s findings supporting the TRPPA describe pretexting as fraud on a material fact that persuades someone to disclose information: pretexting occurs when “a data broker or other person represents that they are an authorized consumer and convinces an agent of the telephone company to release the data.” Telephone Records and Privacy Protection Act of 2006, Pub. L. No. 109-476, § 2, 120 Stat. 3568 (codified at 18 U.S.C. § 1039). Even greater penalties may be assessed under state law against the use of fraudulent statements to obtain consumer and employee telephone records information, as is the case with California Penal Code § 638, enacted several months before the TRPPA. Section 638 subjects any person who attempts to procure telephone calling records through fraud or deceit to a penalty of a $10,000 fine and up to one year of jail time.
Rules of professional conduct regarding pretexting provide some guidance, but also leave a considerable grey area that cautions restraint. Ethics rules do not define wrongful pretexting in terms of what specific activity is acceptable. A case from New Jersey illustrates what are likely the outer limits of what a court is willing to define as an ethical misrepresentation in the context of gathering facts in aid of litigation. In Apple Corps Ltd. v. International Collectors Society, Yoko Ono’s counsel hired investigators to investigate whether a postage stamp company was violating the terms of a settlement agreement with John Lennon’s estate concerning stamps bearing the rock star’s image. 15 F. Supp. 2d 456 (D.N.J. 1998). The investigators posed as consumers and placed orders by phone with the stamp company for products not authorized under the settlement agreement. The stamp company sold the products to the investigators, which was the critical piece of evidence showing the stamp company’s violation of the settlement agreement. After the plaintiffs sought a contempt order and injunction, the stamp company motioned for ethical sanctions against plaintiff’s counsel, claiming their behavior was deceitful. The Apple Corps court held that the phone calls did not violate ABA, New York or New Jersey ethics rules prohibiting fraud and deceitful conduct, although the investigators did not identify their purpose in calling. The court held that rules prohibiting deception are not violated where lawyers and their investigators “act as members of the general public to engage in ordinary business transactions with low-level employees of a represented corporation” to detect violations of the law. Id. at 474-75. To what extent the conduct approved in Apple can be generalized to all cases is open for debate. Arguably, undercover investigative acts that verge on pretexting, such as those undertaken by the Apple Corps attorneys, appear to be accepted only in those narrow areas where courts or ethics boards have expressed some approval, as in the contexts of housing discrimination and trademark disputes, where the potential violations would otherwise not easily be detected or proven.
In contrast to Apple Corps, the Oregon Supreme Court held that an attorney’s false representations to investigate a potential claim did violate Oregon’s misconduct rule prohibiting “fraud, deceit or misrepresentation.” In re Gatti, 330 Ore. 517 (Or. 2000). Gatti, a lawyer, sought to investigate whether Comprehensive Medical Review (CMR), a company that conducts claims reviews for State Farm Insurance Company, employed unqualified reviewers and used an improper cost-cutting formula to determine whether to grant medical coverage for chiropractic services. Gatti, posing as a chiropractor, called a reviewer who worked for CMR to ask questions about his qualifications. Then Gatti called a CMR executive and falsely stated that he himself had performed medical examinations, was interested in working as a CMR claim reviewer, and had been referred to CMR by both State Farm and the chiropractor-reviewer Gatti had called. The court held that the Oregon Bar could prosecute Gatti based on a disciplinary rule prohibiting knowingly misrepresenting one’s identity with the intent that it be acted upon, in circumstances where disclosing one’s real identity would have influenced the recipients’ conduct. Id. at 527-28. In response to the In re Gatti decision, which met with a critical response from the state bar, Oregon adopted a new professional rule, now Rule 8.4(b), permitting attorneys to supervise lawful covert activity in the investigation of violations of law or rights, where the supervising lawyer in good faith believes there is a reasonable possibility of unlawful activity.
The differences in conduct engaged in by Yoko Ono’s attorneys and Gatti are important. One conclusion to be drawn is that an investigator’s failure to identify her true objectives is acceptable if she is acting as a member of the general public, doing something that members of the public typically can do in relation to a particular transaction. In such a situation, the investigator is not lying to the investigation target, nor is she tricking the target into acting differently or giving out information that would not otherwise be given in such a situation. However, where an investigator lies about his identity or poses as someone else in order to mislead the target into disclosing information that would otherwise be withheld, then such activity is treated as violative of the rules of professional conduct. Model Rules of Professional Conduct 4.1, 4.4(a), and 8.4(c) give detail to the ethical standards against deceit. In Gatti, as part of his investigation of potential violations, the attorney went further than merely inquiring about the prerequisites to become a CMR reviewer. He lied to his targets, falsely identifying himself as a licensed chiropractor, to gain confidences that, likely, would not have otherwise been revealed to him. This affirmative step, coupled with its material effect on whether information would otherwise have been given, is what separates Gatti’s investigation from that of Yoko Ono.
Prudent counsel will err on the side of avoiding misrepresentations, and will instruct an investigator to conduct themselves accordingly.
USING AN INVESTIGATOR TO COMMUNICATE WITH A REPRESENTED WITNESS
Another pitfall in using a private investigator is the possibility that she will communicate with someone already represented by counsel in connection with the matter at issue. Ethical rules prohibit an attorney from communicating about the subject of the representation with a witness the attorney knows to be represented by another lawyer, without the consent of the witness’s counsel. The same rules apply to private investigators. The ABA states the rule this way: “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 is herself forbidden to do.” ABA Comm. on Ethics and Prof’l Responsibility, Informal Op. 95-396 (1995). Comment 4 to Model Rule 4.2 also states: “A lawyer may not make a communication prohibited by this Rule through the acts of another.” Likewise, California Rule of Professional Conduct 2-100(a) prohibits a member from communicating “directly or indirectly” with a party known to be represented in the matter. The consequences of violating this rule include both professional and evidentiary sanctions.
That is not to say that all inadvertent or unwitting contacts with a represented party will result in sanction. Many courts would find no violation if the investigating attorney does not actually know that the witness is represented in the matter at the time of the communication. InJorgensen v. Taco Bell Corp., the trial court declined to find unethical conduct in connection a pre-litigation investigation in which plaintiff’s investigator interviewed Taco Bell employees before the plaintiff had filed a complaint. The Court held that it was not possible for the attorney to know that Taco Bell was represented in the as-yet-unfiled matter. 50 Cal. App. 4th 1398 (Cal. Ct. App. 1996). The court did not require the attorney to contact Taco Bell’s in-house counsel to determine whether Taco Bell was actually represented in the matter before making contact. This rule will not be the same for every jurisdiction. Some jurisdictions that follow the ABA Model Rules will impute knowledge of a witness’s representation to an attorney under certain circumstances. See, e.g., Featherstone v. Schaerrer, 34 P.3d 194 (Utah 2001). Therefore, counsel considering such contacts must be careful to research the rules of the applicable jurisdiction.
This rule against ex parte communications extends to any person or witness represented by counsel in a matter to which the conversation relates, including potential parties. With respect to represented organizations and companies, the Model Rules distinguish between communications with a company that is represented, its low level employees, and its former employees. The Model Rules do not require the consent of the organization’s counsel for communications with former employees. The attorney or investigator, however, must be careful to avoid eliciting the substance of privileged communications. Prior consent of corporate counsel in many instances is not required for communications with low-level employees, since the Rule only prohibits communication with an employee who “supervises, directs or regularly consults with the organization’s lawyer concerning the matter or has authority to obligate the organization with respect to the matter or whose act or omission in connection with the matter may be imputed to the organization for purposes of civil or criminal liability.” Model Rules of Prof’l Conduct R. 4.2 cmt. 7. Many states have adopted rules and standards similar to the ABA Model Rules on organizational employees. See, e.g., Cal. Rules of Prof’l Conduct R. 2-100(b)(2). In 2002, the ABA narrowed the scope of the ex parte communications rule with respect to organizational employees. The prior standard prohibited communication with any person “whose statement may constitute an admission on behalf of the organization,” which some courts had interpreted broadly to bar ex parte communications with any witness who could bind the organization in a legal, evidentiary sense.See Am. Bar Ass’n Annotated Model Rules of Prof’l Conduct R. 4.2 (5th ed. 2003). Even when communications with a current low-level employee are not barred by the ex parte rule, however, an attorney or investigator must be mindful of interactions with other rules, such as Model Rule 4.4, which prohibits the use of discovery methods that violate the legal rights of the organization, such as attorney-client privilege.
Before interviewing or communicating with a third party or potential witness, consider whether the contact falls within the ethical rules. Has a complaint been filed? Do you know whether the third party is represented? How does your jurisdiction define knowledge of representation, and whether a particular witness is represented by corporate counsel? Is the witness a low-level employee of an adverse party? If so, did they engage in any acts or omissions which might be imputed to their employer for liability purposes? These rules apply regardless whether the “ex parte” contact is initiated by an attorney, investigator or other person supervised by the attorney or investigator.
FAILING TO PRESERVE ATTORNEY-CLIENT PRIVILEGE
Another pitfall in using a private investigator is the potential loss of the attorney-client privilege or work product protection. Under both federal and California law, attorney work product and attorney-client privilege are granted to a private investigator as the agent or representative of attorney. United States v. Nobles, 422 U.S. 225 (U.S. 1975); Rodriguez v. McDonnell Douglas Corp., 87 Cal. App. 3d 626 (Cal. Ct. App. 1978).
To avoid waiver of any privileges, it is important that an investigator undertake the same precautions as an attorney. In Roberts v. Americable International, Inc., the plaintiff asserted work product and attorney client privilege with respect to tape recordings of conversations between plaintiff and the individual defendant manager made secretly by the plaintiff for use in an employment discrimination case. 883 F. Supp. 499 (E.D. Cal. 1995). Plaintiff asserted attorney-client privilege and work product protection. The court denied the privilege assertion because none of the recorded communications was for the purpose of seeking legal advice. The court ruled the materials were not attorney work product because the recordings did not reveal the mental processes of the attorney or investigator— neither of whom were parties to the taped conversation. In the same vein, the court in Laxalt v. McClatchy required two investigators retained by defendants in connection with a libel action to respond to the plaintiff’s deposition questions seeking to discover facts including the identity of witnesses and documents pertinent to the case and other information obtained during their employment with defendants. 116 F.R.D. 438 (D. Nev. 1987). The court drew a line, however, at requiring investigators to point out which witnesses they had interviewed, and to state which documents they had been shown by defendants, since this type of information was likely to reveal the type of mental impression and trial strategy that the work product doctrine protects.
Secret recordings pose a number of problems including waiver. While the ABA no longer considers it to be an ethical violation to secretly record another party, such recordings may violate other applicable regulations. ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 01-422 (2001). Where secret recording violates state law, as in California under Penal Code section 632, or under professional rules relating to fraud and deceit, work product protection does not apply. Even when the recordings are lawful, attorneys should keep in mind the evidentiary issues they raise, including the quality of the recording and authentication.
Even when a privilege applies to an investigator’s work, it may be waived under the same rules and exceptions applicable to attorneys. By listing a private investigator as a witness, a party is deemed to waive the work product privilege with respect to matters covered in the investigator’s testimony. Nobles, 422 U.S. at 225. In jurisdictions with a crime-fraud exception, the attorney-client privilege will not extend to work performed by an investigator in aid of a fraud or crime. See, e.g., In re Fulton County Grand Jury Proceedings, 244 Ga. App. 380 (Ga. Ct. App. 2000). Voluntary disclosure to others and failure to timely assert work product protection or attorney-client privilege are other common sources of waiver.
DISQUALIFYING YOURSELF AS A WITNESS
Both Model Rule 3.7 and California Rule 5-210 prohibit an attorney from acting as a witness on a contested issue in a case the attorney is a likely witness, but do not disqualify other members of the attorney’s firm. Courts typically weigh the prejudice to the opposing side against the hardship of retaining new counsel to the client employing the attorney-witness. Most jurisdictions permit disqualification only with respect of performing the role of advocate at trial, and not with respect to pretrial activities or preparation outside the courtroom. California’s attorney-witness rule is more limited and only applies where the attorney’s testimony will be delivered in front of a jury. Another consideration is the party calling the attorney-witness: some courts, including in California, hold that the advocate-witness rule disqualifies an attorney only where she is a necessary witness for her own client, and many courts find no disqualification where opposing counsel merely announces an intention to call the attorney as witness without showing additional necessity. California allows the attorney-witness prohibition to be waived by the client. Even where a jurisdiction allows waiver, however, a prudent attorney should be cautious about asking juries to assess the attorney’s own credibility.