Midwest Motor Sports, Inc. v. Arctic Cat Sales, Inc.
347 F.3d 693, (8th Cir. 2003)
Midwest and another dealer
were suing Arctic Cat for wrongfully terminating their snowmobile
franchises.
During discovery, Arctic Cat's
attorney hired a private investigator to secretly record conversations
with the dealerships' employees.
Arctic Cat was trying to get
the dealerships' employees to admit that they thought other brands of
snowmobiles were better.
During Trial, the Trial Judge
sanctioned Arctic Cat for unethically recording parties represented by
opposing counsel.
Sanctions included excluding
the recordings from evidence.
The two sides settled out of
court, but reserved the question as to whether additional sanctions should
be imposed.
The Appellate Court affirmed
the Trial Court's decision to exclude the evidence but not impose monetary
sanctions.
The Appellate Court found
that Arctic Cat's attorneys violated Rule 4.2.
Rule 4.2 prohibits an attorney from communicating
"about the subject of the representation with a party the lawyer
knows to be represented by another lawyer in the matter, unless the
lawyer has the consent of the other lawyer to do so.
Arctic Cat unsuccessfully
argued that the dealerships' employees weren't technically represented by
the dealership's counsel, and so there was no violation. However, The
Appellate court found that employees are represented by a company's
counsel if:
They have managerial
responsibilities,
Their acts or omissions can
be imputed to the organization, or
Their statements constitute
admissions by the company.
Arctic Cat unsuccessfully
argued that they only told the private investigator to talk to 'low
level' people that wouldn't be covered by Rule 4.2. However, the Appellate Court found that
attorneys cannot escape responsibility for wrongdoing by those they
supervise and employ.
The Appellate Court also
found that Arctic Cat's attorneys had violated Rule 8.4(c).
Rule 8.4(c) prohibits "conduct involving
dishonesty, fraud, deceit, or misrepresentation."
Arctic Cat wasn't prohibited
from contacting anyone from the
dealerships, only certain people. They were also not prohibited from
contacting ex-employees.