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United States ex rel Hendow v. University of Phoenix


August 24, 2009


The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge


Defendant moves for an order disqualifying Plaintiffs' lawyers based on the contention that Plaintiffs' lawyers had unethical ex parte communications with some of Defendant's employees. Defendant also seeks an order excluding evidence Plaintiffs' lawyers obtained during the referenced communications. Plaintiffs oppose the motion.


Eastern District of California Local Rule 83-180(e) prescribes in pertinent part that "the Rules of Professional Conduct of the State Bar of California and decisions of any Court applicable thereto . . ." govern the "standards of professional conduct in this Court." E.D. Cal. 83-180(e). Rule 2-100(B)(2) of the Rules of Professional Conduct of the State Bar of California prohibits ex parte communications with a represented party who is "an employee of [a] corporation . . . if the subject of the communication is any act or omission of [the employee] in connection with the matter which may be binding upon or imputed to the organization for purposes of civil or criminal liability" (emphasis added). However,

[R]ule 2-100 does not bar contact with all corporate employees. For example, it is possible in any given case that a corporate officer or director covered by rule 2-100 may not be privy to information protected by the attorney-client privilege, while a lower level employee who is not shielded from contact under rule 2-100 may be in possession of substantial privileged information. However, this does not enable corporate counsel to automatically assert the privilege as to every corporate employee and on that basis enjoin opposing counsel from any and all contact with employees not covered by rule 2-100.

La Jolla Cove Motel and Hotel Apartments, Inc. v. Superior Court 121 Cal.App.4th 773, 787 (Cal. Ct. App. 2004) citing Triple A Machine Shop, Inc. v. State of California, 213 Cal.App.3d 131, 143 (Cal. Ct. App. 1989) (emphasis added).

Defendant's opening brief lists 16 lower level employees with whom Defendant argues Plaintiffs' counsel communicated in violation of Rule 2-100(B)(2). Defendant only discusses five of the 16 listed employees in this brief: Steve Brodale, Thomas Corbett, Charlotte Gould, Nicolas Huff, and David King. (Def's Mot. 5-7, 9, 11-12.) Defendant's evidence concerning Plaintiffs' counsel's alleged improper communication with Nicolas Huff and David King simply consists of Defendant's summary of Plaintiffs' discovery privilege log, in which Plaintiffs lists the dates when the alleged communications took place. This summary is insufficient to show a violation of Rule 2-100(B)(2).

Defendant also argues Plaintiffs' lawyers violated Rule 2-100(B)(2) when they had ex parte communications with Charlotte Gould ("Gould"). Defendant relies on its summarized version of Plaintiffs' discovery privilege log as support for this argument, Gould's deposition testimony given on December 9, 2008, and a declaration from Matthew Mitchell, Vice President of Human Resources Legal Services for the Apollo Group, Inc. (Defendant's parent company). The following Gould deposition testimony is at issue: "there was one memo that I had read through that I had sent to [Plaintiffs' counsel] Nancy Krop in December of '04, I believe it was, just to refresh my memory. It's been several years since I worked at the San Jose campus." (Dep. of Charlotte Gould 16:18-22.) Gould further testified that the memo to Nancy Krop "outlin[ed] the events of my employment . . . when I was in the San Jose campus." (Dep. of Gould 17:2-3.)

Plaintiffs counter with Gould's subsequent declaration in which Gould declares that when she was deposed on December 9, 2008, she "did not have [her] records" and that the attorney who in fact contacted her in 2004 was an attorney for the Defendant, not Plaintiffs' counsel. (Decl. of Gould ¶¶ 5-7.) Gould declares that her "first contact with Ms. Krop was in July 2005." (Decl. of Gould ¶ 6.)

Defendant argues in its reply brief that "[g]iven the timing and circumstances surrounding Ms. Gould's declaration, and Relators' counsel's interest in having Ms. Gould change her testimony, Ms. Gould's declaration is simply not credible and this Court should disregard it." (Def.'s Reply 13:17-20) This record, however, does not show a violation of Rule 2-100(B)(2).

Defendant also argues it has "reason to believe" Steve Brodale ("Brodale") was contacted by Plaintiffs' counsel in violation of Rule 2-100(B)(2), and that Plaintiffs' counsel said they would not call this witness at trial "if the University would refrain from further pursuing the issue of [the] improper contacts." (Def's Mot. 8:28-9:3; Ex. K to Def's Mot., Letter from Robert Nelson, March 11, 2009.) Defendant indicates that Plaintiffs' counsel's offer not to call Brodale at trial reveals Plaintiffs' counsel concedes they had unethical communications with Brodale. Further, Defendant submits a letter from Robert Nelson, one of Plaintiffs' lawyers, in which Robert Nelson states the subject of the communication with Brodale concerned Brodale's attempt to have Plaintiffs' counsel represent him. (Decl. of Robert Nelson in support of Pl.'s Opp'n ¶ 3; Ex. A to Pl.'s Opp'n.) Defendant's opening brief does not provide any evidence contradicting Plaintiffs' position that this was the extent of the communication between Plaintiffs' counsel and Brodale. Thus, again, Defendant fails to show a violation of Rule 2-100(B)(2).

Lastly, Defendant argues Plaintiffs' counsel violated the ex parte rule by communicating with Thomas Corbett ("Corbett"). Plaintiffs and Defendant both rely on Corbett's deposition testimony, in which Corbett testified he communicated with Plaintiffs' counsel while on "leave status" and that the subject matter of this contact concerned Plaintiffs' counsel's instruction to Corbett that Corbett contact Plaintiffs' counsel after Corbett officially ceased being employed by Defendant. (Dep. of Corbett at 33:25-34:23.) Plaintiffs also provide a declaration from Nancy Krop, one of their attorneys, in which she declares that "substantive discussions [concerning UOP's practice of unlawfully paying commissions, bonuses, and other incentive payments to enrollment counselors based upon the number of students . . . enrolled] did not occur [with Corbett] until after Mr. Corbett had become a former employee." (Decl. of Nancy G. Krop in support of Pl.'s Opp'n ¶ 14.) Defendant also argues in its reply that Plaintiffs "revised" their privilege log to show Nancy Krop "as the sender of all communications to Mr. Corbett" and "to add two letters involving Mr. Corbett," which "pre-date the e-mails on the earlier version of the privilege log," and which show that one letter was sent "from Mr. Corbett to Ms. Krop." (Def.'s Reply 15: 1-8.) This evidence does not show a violation of Rule 2-100(B)(2).

Defendant filed a lengthy reply brief to Plaintiffs' opposition brief which contained new authority and more facts concerning Plaintiffs' counsel's alleged ex parte communications. However, "[i]t is improper for a moving party to introduce new facts . . . in the reply brief than those presented in the moving papers" when those facts could have been presented in the opening brief. Jones v. Baltimore Life Ins. Co., No. Civ. S-06-1501 LKK/KJM, 2007 WL 1713250, at *9 (E.D. Cal. June 12, 2007). "It cannot seriously be disputed that a movant is obligated to file with a motion the evidentiary materials necessary to justify the relief it seeks." Spring Industries, Inc. v. American Motorists Ins. Co., 137 F.R.D. 238, 239 (N.D. Tex. 1991). The reply brief is not intended to be the brief that shows for the first time the movant's evidentiary support for the relief sought in the movant's opening brief. Where a movant injects evidence in a reply brief that should have been included in the opening brief, the movant could fail to "affor[d] the non-movant an opportunity for further response." Id. at 240; c.f. Carmen v. San Francisco Unified School Dist., 237 F.3d 1026, 1031 (9th Cir. 2001) (discussing in a different context the situation where a party could deny another party "a fair opportunity to address the matter in [a brief]," and indicating that when a party receives notice and an opportunity to be heard on the critical evidence, it might sometimes show the inadequacy of the evidence, and that a party should not engage in conduct tantamount to forcing "the court [to] hol[d] oral argument" so that another party has an opportunity to address new evidence.) Under such circumstances, the court has discretion to "decline to consider" the new evidence. Spring Industries, Inc., 137 F.R.D. at 240. Since Defendant's opening brief failed to provide Plaintiffs with a fair opportunity to address the factual information contained in Defendant's reply brief, that evidence is not considered.


Therefore, Defendant's motion to disqualify Plaintiffs' counsel and to exclude the evidence and witness testimony is denied.

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