• Plaintiffs Can Communicate with Defendant’s Employees in California False Claims Action, Court Rules
  • March 28, 2013 | Author: Mark S. Askanas
  • Law Firm: Jackson Lewis P.C. - San Francisco Office
  • California’s Rules of Professional Conduct generally prohibit an attorney, directly or indirectly, from communicating with a represented party, including the party’s employees. However, this rule did not apply to prohibit communications between two qui tam plaintiffs and the defendant-employer’s current employees, the California Court of Appeal has held in a case under the California False Claims Act (FCA). San Francisco United Sch. Dist. ex. rel. Contreras v. First Student, Inc., No. A134405 (Cal. Ct. App. Feb. 19, 2013). Vacating the injunction granted by the trial court, the Court also ruled that the injunction violated the state law’s prohibition against employer interference with employee communications and raised First Amendment concerns.

    In common law, a writ of qui tam is a writ whereby a private individual who assists a government prosecution can receive all or part of any penalty imposed.

    Manuel Contreras and William Padilla, on behalf of the San Francisco Unified School District, filed a qui tam action under the California FCA against First Student, Inc. (“FSI”). The plaintiffs alleged that FSI failed to maintain and repair the company’s buses as required by its contract. During the lawsuit, Contreras, Padilla, and their counsel contacted current FSI mechanics to obtain information to support their claims. After FSI learned of these communications, FSI sought an injunction barring Contreras, Padilla and their counsel from contacting FSI employees. The trial court granted the injunction, which, among other things, prohibited Contreras and Padilla from discussing the case. The plaintiffs appealed.

    Applicable Law
    Rule 2-100

    Rule 2-100 of the Rules of Professional Conduct prohibits attorneys from communicating, directly or indirectly, about a lawsuit with a represented party, without the consent of that party’s attorney. A party includes any employee “if the subject of the communication is any act or omission of such person in connection with the matter which may be binding upon or imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization.”

    California False Claims Act

    The California FCA establishes a cause of action for false payments submitted to the State of California and provides specific remedies to any employee who is “discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against. . .because of lawful acts done by the employee. . .in furtherance of a false claims action.” Cal. Gov’t Code § 12653(a).

    At the time the trial court issued the injunction, the FCA prohibited employers from making or enforcing any rule or policy preventing an employee from “acting in furtherance of a false claims action, including investigating, initiating, testifying, or assisting in an action filed or to be filed under Section 12652 [FCA].” Cal. Gov’t Code § 12653(a) (repealed by Stats. 2012, ch. 647, § 4.)

    First Amendment

    “Absent a ‘protected competing interest’ on a level equivalent to the constitutional guarantee of free speech, orders limiting speech are not appropriate sanctions.” Maggi v. Superior Court, 119 Cal. App. 4th 1218, 1226 (Cal. Ct. App. 2004).

    Court Strikes Down Injunction
    Contreras and Padilla argued that the injunction violated Rule 2-100, the policies underlying the FCA, and that it infringed on their free speech rights. The appellate court agreed on all points. Addressing Rule 2-100, the Court explained that the rule would apply to the FSI mechanics’ communications because the mechanics could make admissions damaging to FSI, if the plaintiffs’ attorneys directed or orchestrated those communications. However, there was no evidence that the plaintiffs’ counsel directed or orchestrated any of the communications with the FSI mechanics. Therefore, Rule 2-100 did not support the injunction.

    Turning to the FCA, the Court found that, at the time of the communications, the Act explicitly prohibited employer interference with employee communications in a FCA action. Therefore, FSI could not interfere with its employees’ ability to speak to, or otherwise cooperate with, the plaintiffs or their counsel. Further, the Court observed, “[T]he policies inherent in the False Claims Act would be seriously undermined if the individual plaintiffs could not approach employees who might have knowledge of fraudulent conduct by the employer.”

    Finally, determining the injunction raised significant “free speech concerns,” the Court ruled that Rule 2-100 “must not be construed in a manner that will unduly interfere with the right of parties to communicate with one another absent compelling evidence of abuse.” As the Court did not find such evidence in this case, it vacated the injunction.

    * * *

    Qui tam plaintiffs who have filed actions under the California False Claims Act likely will use this case to support ex parte communications with a party’s employees. However, the provision of the Act on which the Court relied to support its analysis has been repealed. It remains to be seen whether California courts will look to the FCA’s anti-retaliation provision to support a similar policy analysis favoring ex parte communications between employees and qui tam plaintiffs.