Litigation
Jun. 22, 2002
Wrong Moves
Column By Robert D. Crockett - Imagine this: attorney Jones defends his corporate client, Acme Industries, against an unfair competition action brought by a competitor over a contract with the federal government to provide parts for jet and helicopter engines. The plaintiff has noticed the deposition of a dozen different test engineers.
By Robert D. Crockett
Imagine this: attorney Jones defends his corporate client, Acme Industries, against an unfair competition action brought by a competitor over a contract with the federal government to provide parts for jet and helicopter engines. The plaintiff has noticed the deposition of a dozen different test engineers.
As Jones prepares engineer Smith for her deposition, the engineer asks Jones about the engineer's need for a lawyer. Jones tells her that he will represent her. During the interview, Smith surprises Jones with a confession to a knowing violation of a federal criminal statute requiring that a licensed engineer certify test results. Smith does not have a license. She says her employer did not know about her omissions.
After Jones discusses this confession with Acme Industries' general counsel, the corporation repeats the tests with a licensed engineer and finds nothing wrong with the results.
The corporation general counsel tells Jones that Smith should not plead the Fifth Amendment. Smith, however, questions Jones' wisdom in discussing this matter with her boss and asks whether she should plead the Fifth Amendment.
As an initial matter, a lawyer who represents a corporate party defendant in a civil proceeding does not, without agreement to the contrary, represent its managing executives. Meehan v. Hopps, 144 Cal.App.2d 284, 293, 301 P.2d 10, 15 (1956) (unsuccessful motion to disqualify corporate counsel). "[C]ounsel's first duty is to the corporation." Skarbrevik v. Cohen, England & Whitfield, 231 Cal.App.3d692, 282 Cal. Rptr. 627, 634 (1991).
Individuals, but not corporations, have a privilege under the Fifth Amendment of the United States Constitution not to testify as to matters that would tend to incriminate them. Avant! Corp. v. Superior Court, 79 Cal.App.4th 876, 884, 94 Cal.Rptr.2d 505, 510 (2000).
The individual witness may rely on the privilege against self-incrimination in civil proceedings. California Evidence Code Section 913(a) prohibits a trier of fact from inferring anything from the exercise of the privilege. It is even improper to restrict defendants from testifying at trial after they have invoked the privilege in discovery. Pacers Inc. v. Superior Court, 162 Cal.App.3d 686, 689 (1984).
A lawyer should not automatically assume that a witness's invocation of the privilege against self-incrimination will have no consequences to that witness or to the employer. See Avant! Corp. v. Superior Court, 79 Cal.App.4th 876, 885 (2000) (citing federal authority, "it is even permissible for the trier of fact to draw adverse inferences from the invocation of the Fifth Amendment in a civil proceeding").
Various competing concerns of the corporation, the employee and the lawyer give rise to a potential for conflict. In the example cited, Jones represented Acme Industries but told Smith before her pre-deposition debriefing that he, Jones, would represent her.
Smith had a legitimate expectation that things told Jones would be held in confidence, but Acme Industries had a right to know about the confession to improprieties.
Acme Industries determined that the engineer's failures did not lead to any consequences and would not likely ever be prosecuted.
It determined that it would be in the corporation's best interest to make a full disclosure. Acme Industries probably wishes that the public not know that its key employees plead the Fifth Amendment.
Jones, on the other hand, probably sees pleading the Fifth as the easy way out. If her error never sees the light of day, she will never be prosecuted.
How may ethical missteps be avoided?
Corporate defense counsel must be sensitive to the prospect in certain cases that criminal misconduct may have occurred.
Corporate defense counsel must state plainly to all corporate witnesses that he or she represents the corporation and not the witness, but that at the deposition the witness will receive representation as an agent for the corporation.
If the witness discloses during pre-deposition briefing the possibility of criminal wrongdoing, the witness must receive independent legal advice upon which to make a decision whether to plead the Fifth Amendment. But the witness does not necessarily need separate counsel during the litigation or at the deposition.
It is appropriate for corporate defense counsel to represent the employee at the deposition as an agent for the corporation, during which the employee may or may not plead the Fifth Amendment, so long as the witness relies on independent advice to make this decision.
If the witness is to rely on corporate counsel to make this decision, corporate defense counsel should have a clear written waiver of conflict between the corporation and the witness, and, in such case, the decision of waiver must be based on a realistic and legitimate opportunity to consult with independent legal counsel about the decision whether or not to enter into the waiver agreement.
(In analogous circumstances, it may not be sufficient for a lawyer, relying solely upon full written disclosure, to represent both spouses in a marital dissolution and property settlement.)
There are some considerations that factor into the ultimate decision to advise the witness whether or not to plead the Fifth Amendment. These considerations demonstrate the gravity of the consequences of an ethical misstep.
The employee's reputation will be jeopardized by the invocation of the privilege. It may not be in the interest of the corporation to have it publicly known that its executives have resorted to the Fifth Amendment plea.
An adversary may, and probably will, regularly refer in motion practice or in releases to the invocation of the Fifth Amendment to tarnish the defendants' reputations despite the prohibitions of Evidence Code Section 913(a). An adversary likely would seek to force an employee to invoke the privilege in front of a jury for the sheer effect of prejudice, leading, if anything, to battles in limine that might be lost.
However, as the example above suggests, most criminal defense attorneys providing independent legal counsel to the witness would find, when in doubt, that the most conservative advice is to plead the Fifth Amendment in civil proceedings.
Conversely, retaining independent legal counsel for a witness may lead to the corporation's loss of control of the litigation (and costs) as the invocation of the Fifth Amendment moves to center stage in the presentation to the jury.
Another consideration is the gravity of the offense. The offense may be of small consequence or offer little risk of criminal prosecution, in which case it may be easy for all concerned not to invoke the plea.
Conversely, the greater the offense to which the witness admits, the more likely it is that the corporation may wish to be involved in the witness's decision to invoke the privilege.
In the case of a serious offense, the corporation may wish to confront and explain the wrong, terminate the witness's employment and accuse her of being a rogue or gamble on a successful in limine motion rather than rely on the plea.
Another practical issue is the identity of the person who confesses to wrongdoing. He or she may be a high-ranking employee or shareholder who, for all intents, is the corporation. He or she may be the person directing the corporate defense strategy, and termination of his or her employment may not be an option.
The issue as to the invocation of the plea against self-incrimination may be a major issue in a civil proceeding. It should not be cluttered by ethical missteps. Because the decision whether or not to invoke the plea presents a tension between one's liberty and the corporation's desire for disclosure, the consequences of a misstep are great. A prudent corporate defense lawyer will take steps to minimize these risks.
Robert D. Crockett is a litigation partner with the firm of Latham & Watkins in Los Angeles.
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