woes for boa - part 2 - motion for order authorizing ex parte interviews

8/6/2019 WOES FOR BOA - PART 2 - MOTION FOR ORDER AUTHORIZING EX PARTE INTERVIEWS

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Thomas C. HorneAttorney General(Firm State Bar No. 14000)

Thomas K. Chenal (State Bar No. 006070)Carolyn R. Matthews (State Bar No. 013953)Assistant Attorneys GeneralOffice of the Attorney General1275 W. Washington StreetPhoenix, AZ 85007-2926Telephone: (602) [email protected]

Attorneys for Plaintiff

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA

IN AND FOR THE COUNTY OF MARICOPA

STATE OF ARIZONA, ex rel. THOMAS C.HORNE, Attorney General,

Plaintiff,

vs.

COUNTRYWIDE FINANCIALCORPORATION, et al.,

Defendants.

Case No.: CV2010-033580

MOTION FOR ORDER AUTHORIZINGPLAINTIFF TO CONDUCT EX PARTE

INTERVIEWS OF DEFENDANTS’FORMER EMPLOYEES

(Assigned to the Honorable J. Kenneth

Mangum)

Plaintiff State of Arizona ex rel. Thomas C. Horne, Attorney General, respectfully

moves this Court for an order authorizing the State to conduct ex parte interviews of

Defendants’ former non-management employees. Defendant Bank of America Corporation is a

company of more than 288,000 employees. See Bank of America 2010 Annual Report at 28,

relevant portions of which are attached hereto as Exhibit “A.” Upon information and belief,during the period relevant to this matter, Defendants have employed thousands of call center

employees (sometimes referred to as customer service representatives) to answer customer

service calls from Arizona borrowers whose loans are serviced by Defendants (“Borrowers”).

The State brings this motion to request an Order authorizing it to conduct ex parte interviews of

Michael K. Jeanes, Clerk of Co*** Electronically Filed ***

Michelle PaigenFiling ID 903533

6/8/2011 6:45:00 PM


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non-management level former Bank of America employees such as call center employees, so

that the State can fully investigate its case as permitted and required by law.

I. The State’s Investigation Will Not Be Complete Unless It Can Conduct Ex Parte

Interviews of Defendants’ Line-Level Former Employees.

The State alleges that Bank of America’s loss mitigation and foreclosure practices (“loss

mitigation”) have resulted in deceptive conduct, including a pattern of misrepresentations to its

Borrowers, in violation of the Arizona Consumer Fraud Act, A.R.S. §§ 44-1521 et seq. See

Complaint ¶¶ 20-25. The liability the State alleges does not result from the conduct of

individual Bank of America employees who are obligated to follow the Bank’s policies and

procedures, but who have no authority to establish policies, to ensure they are properly

implemented, or to allocate the resources necessary to properly execute them. To the contrary,

the State alleges an institutional failure caused by the actions or inaction of the institution itself,

as carried out by its top-level decision makers—officers, directors, and management-level

employees who were responsible for but failed to establish and implement appropriate loss

mitigation policies and procedures, to allocate sufficient resources and oversight to loss

mitigation, to provide appropriate hiring, training, supervision, and compensation of

employees, and to make changes and corrections to policies and provisions when warranted.

See Complaint ¶ 25 (alleging that “Arizona consumers’ experiences reflect a pervasive,

nationwide pattern and practice of conduct”).

One of the State’s two claims, for example, alleges violations of the Consent Judgment

between the State and certain Defendants. (The Consent Judgment is attached to the Complaint

as Exhibit A.) The Consent Judgment requires Bank of America to (among other things)

evaluate Eligible Borrowers for the agreed-upon loan modification options. See Complaint ¶

26 (citing Consent Judgment ¶ III.4.1). The State is not seeking to prove, and does not allege,

that individual employees of the Defendants made isolated mistakes in identifying and timely

evaluating specific consumers who were entitled to be considered for or provided with



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modifications. Instead, the State asserts that Defendants failed at an institutional level to ensure

that they had the capacity and framework for providing eligible Arizona consumers with the

mandated modifications. See Consent Judgment, Complaint Exhibit A §§ 2.2.3, 3.1, at 10-11.

As another example, the State asserts that Defendants have failed to meet their Consent

Judgment commitment to make decisions on Borrowers’ loan modification requests within 60

days on average. See Complaint ¶¶ 30-33. The Bank’s ability to comply with this time frame

depends entirely on whether the Bank has devoted sufficient resources to hire the staff and

deploy the technology and other systems to process loss mitigation requests in a timely manner.

Thus, this claim does not depend upon the acts or omissions of individual employees who may

have delayed actions on individual consumer modifications.

The State also alleges violations of the Consumer Fraud Act, in that Defendants made

misrepresentations to Borrowers about its loss mitigation and foreclosure activities. See

Complaint ¶¶ 79-195. For instance, the State has evidence that Defendants promised that

consumers who met the conditions of their trial modifications would be converted

automatically and without delay into permanent modifications. See Complaint ¶¶ 93-97.

Defendants made these representations on its website, in letters, and in other public statements

that were made by and that must have been approved by senior managers. Call center

employees merely relayed these representations when, on information and belief, they relied on

scripts and other directives from senior managers regarding what they should tell consumers

who called to determine the status of their permanent modifications or to complain when they

did not come through. The deceptive nature of these representations is evidenced by Bank of America’s self-described “aged inventory” of trial modifications that waited for more than three

months for conversion, which approached 32,000 during the relevant time. See Complaint ¶ 97

(noting that this number was four times larger than Bank of America’s nearest competitor at the

time). This is and can only be the result of failures of management—not line employees.



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Although the State believes that it will be able to prove that the choices made by

Defendants’ management caused Defendants to violate the law, the State also will depend on

the testimony of line-level Bank of America employees who struggled with limited resources,

inadequate systems, and insufficient training and supervision, relied on scripts provided by their

supervisors, and otherwise attempted to comply with the policies and procedures that

Defendants put in place. These employees are mere witnesses. They can speak about their

interactions with consumers, the realities of Defendants’ day-to-day operations, and their

understanding of and any problems in executing Defendants’ directives. Accordingly, it is

important for the State to be able to talk with Defendants’ former call center employees, who

are more likely than current employees to feel that they can speak candidly and freely. For

reasons laid out below, the State has reason to believe that it will not be able to conduct a full

and fair investigation if Defendants’ counsel is present during these interviews.

In addition, the State expects that some former employee interviews will be preliminary

or information-gathering only. Former employees may be able to provide information about

documents and potential witnesses that could better prepare the State’s counsel for employee

depositions to follow. See, for example, the letter attached hereto as Exhibit “B” from an

anonymous current employee, which provides information about Defendants’ loss mitigation

procedures and supervision and training of employees. In addition, the sheer number of

potential witnesses in this case presents logistical hurdles that can be substantially eased if the

State is not required to arrange every single witness interview around the schedules of counsel

for Defendants.As laid out below, the State believes that Arizona law permits it to conduct ex parte

interviews with former employees. Furthermore, the State has good cause to seek such

interviews in this case. In recent correspondence, Defendants asserted that there is no basis for

the State’s concern that Defendants will interfere with the State’s discovery of Defendants’

former employees if the State cannot conduct its interviews outside the presence of Defendants’



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attorneys. To the contrary, the State does have a legitimate basis for concern. The Arizona

Attorney General has learned that Bank of America recently significantly interfered in the

investigation of Bank of America conducted by the United States Department of Housing and

Urban Development, Office of Inspector General (“HUD-OIG”), one of the federal agencies

with oversight authority over Bank of America. See Declaration of William W. Nixon,

attached hereto as Exhibit “C” (“Nixon Declaration”). As the agency responsible for loans

made through the Federal Housing Agency (“FHA”) (and with the ability to bar banks from

making FHA loans), HUD-OIG should have had significant leverage to ensure Defendants’

cooperation.

The general objective of the HUD-OIG investigation was to determine whether Bank of

America complied with applicable foreclosure procedures when processing foreclosures on

FHA-insured loans. Nixon Declaration ¶ 10. Among other things, the HUD-OIG auditors

attempted to review Bank of America’s foreclosure policies and procedures and to interview

staff to determine how the bank operates to comply with requirements. Id. William Nixon, the

Assistant Regional Inspector General for Audit, who managed the Bank of America

Foreclosure Review, reports that the review “was significantly hindered by Bank of America’s

reluctance to allow us to interview employees,” among other things. Id. ¶¶ 1, 9, 11. Further,

“[w]hen interviews were permitted, the presence or involvement of the bank’s attorneys limited

the effectiveness of those interviews. On a number of occasions, the bank’s attorneys refused

to allow employees to answer questions.” Id.

If the bank hindered an investigation by its federal regulator, there is every reason tobelieve it would similarly hinder the State’s investigation in this case. Accordingly, the State

has good cause to believe that Defendants will interfere in its interviews if they are not

conducted ex parte, and, further, that Defendants would contact potential interviewees to

influence them in some way if their identities are disclosed to Defendants before the interviews

take place. Because this interference could not be fully remedied by follow-up interviews, and



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because, as laid out below, Arizona law permits ex parte interviews, the State seeks the Court’s

permission to conduct such interviews.

II. With a Limited Exception, Arizona Law Permits Attorneys to Conduct Ex Parte

Interviews of Former Employees of an Opposing Party.

Under Arizona law, the general rule is that an attorney may conduct ex parte interviews

of former employees of an opposing party. Lang v. Superior Court , 170 Ariz. 602, 607, 826

P.2d 1228, 1233 (App. 1992) (“We believe the better approach is to permit ex parte contacts

with former employees.”). To reach this conclusion , the Arizona Court of Appeals interpreted

and applied Arizona Ethical Rule 4.2, which states:

In representing a client, a lawyer shall not communicate 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 or is

authorized by law to do so.

The purpose of Rule 4.2 is to “(1) prevent unprincipled attorneys from exploiting the disparity

in legal skills between attorneys and lay people, (2) preserve the integrity of the attorney-client

relationship, (3) help to prevent the inadvertent disclosure of privileged information, and (4)

facilitate settlement.” Lang, 170 Ariz. at 604, 826 P.2d at 1230.

The State is filing this motion rather than simply interviewing former employees without

court authority because Lang establishes an exception to the general rule that is not easily

applied to the facts of this case. The court held that ER 4.2 “does not bar counsel from having

ex parte contacts with a former employee of an opposing party . . . unless the acts or omissions

of the former employee gave rise to the underlying litigation or the former employee has an

ongoing relationship with the former employer in connection with the litigation.” 170 Ariz. at

607, 826 P.2d at 1233 (emphasis in original). Although the court seems to have intended this

language to describe a narrow exception, Defendants have interpreted the exception so broadly

that it would, at least in this case, entirely swallow the rule.



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Lang was a consumer fraud and misrepresentation case brought by an automobile

purchaser against the automobile dealership that sold her a car. Id. at 603, 826 P.2d at 1229.

To support her response to the dealership’s motion for partial summary judgment, Lang

submitted affidavits from the dealership’s former finance director/general sales manager and

the former controller. Id. at 603-04, 826 P.2d at 1229-30. In a special action proceeding, the

court of appeals overturned the trial court’s order striking the affidavits. The court noted that

there was no Arizona case law on the issue of ex parte contacts with former employees and that

Arizona’s ethics committee had been unable to reach a definitive conclusion on the issue. Id. at

604, 826 P.2d at 1230. The court observed that the majority of courts considering the issue had

held that Rule 4.2 covers only current employees and agreed with the reasoning of the

American Bar Association Committee on Ethics, which concluded that Rule 4.2 does not

prohibit ex parte contacts with unrepresented former employees. Id. at 606-07, 826 P.2d at

1232-33 (citing ABA Formal Op. 91-359 (March 22, 1991)). Noting that neither the text of the

rule nor its comments give any indication the rule was intended to cover former employees, the

court said: “There is no reason to expand the scope of the ban once the employment

relationship ends.” Id. at 607, 826 P.2d at 1233. It is worth noting that, after Lang was

decided, the ABA expressly stated that Rule 4.2 does not apply to former employees. See ABA

Model Rules of Prof’l Conduct R. 4.2, cmt. 7 (2006) (“Consent of the organization’s lawyer is

not required for communication with a former constituent.”), attached hereto as Exhibit “D.”

In creating the exception, the Lang court stated that Rule 4.2 does intend to prohibit ex

parte contacts with employees and former employees when their acts or omissions “gave rise tothe underlying litigation.” Lang, 170 Ariz. at 607, 826 P.2d at 1233. The court’s illustration

depicts a narrow exception:

For example, if an employee hired to drive a truck is involved in an accident

that occurs in the course and scope of employment, the fact that the employee

leaves his or her employment should not determine the propriety of ex parte

communications. Clearly, the employee’s acts or omissions in connection with



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any litigation that arises out of the accident can be imputed to the former

employer for purposes of civil liability.

Id. As applied to this case, if the deceptive conduct alleged was attributable to the independent

acts of a few specific employees, then the State would agree that Lang would preclude the State

from interviewing those employees ex parte about their acts that give rise to Defendants’

liability. But that is not the State’s case here. The State’s allegations of liability are not based

on the acts of particular employees or particular events, but rather on company-wide policies

carried out over several years by thousands of non-management employees. See Complaint.

Further, the State is not asking for ex parte interviews of current employees or of former

management employees, whose acts and omissions are directly at issue in this case. Rather, the

State wishes to interview only former non-management employees, who were mere witnesses

to conduct that may give rise to Defendants’ liability. The State wants to interview these

individuals about what they saw and heard about Defendants’ companywide policies, about

how Defendants’ policies worked in practice, and about Defendants’ failure to ensure

compliance with the law and the Consent Judgment. See Complaint. The State is asking for

nothing more than the opportunity to fully investigate its case by interviewing the only

available witnesses to Defendants’ implementation of their policies and procedures.

Defendants argue that the State cannot interview any of their thousands of former

customer service representatives, on the theory that their acts and omissions “may be imputed

to the organization,” or may have given “rise to the underlying litigation.” Joint Pretrial

Statement at 16. However, neither the fact that former employees “may have information

which is damaging” to Defendants, nor Defendants’ “desire to protect the organization from

liability-creating statements justifies a blanket ban on ex parte communications.” Lang, 170

Ariz. at 607, 826 P.2d at 1233. Arizona ethics opinions following Lang reinforce this view.

See Ariz. Ethics Op. 00-05 (stating that “[c]ontacts with a former employee are not prohibited

merely because that person may have information which is harmful to the opposing party”);



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Ariz. Ethics Op. 95-07 (noting facts that testimony of former employee may be detrimental to

former employer and that former employee may have witnessed an unlawful act of former

employer do not determine propriety of contact).

The ban Defendants seek would not further the purposes of Rule 4.2, but rather would

operate as an unnecessary restriction upon informal discovery that can more efficiently advance

the cause of discovering the facts. Id. This is especially true in this case involving huge

corporations, where a blanket rule banning informal interviews with former employees would

not protect the attorney-client relationship or attorney-client communications—since former

non-management employees would have no access to privileged information that could be

improperly obtained. Rather, such a rule would effectively preclude all informal discovery

from these important witnesses to Defendants’ implementation of their relevant policies and

procedures.

The State’s request is consistent with the majority of courts that have interpreted Rule

4.2 as well as with ABA Formal Opinion 91-359. See, e.g., Clark v. Beverly Health & Rehab.

Servs., 797 N.E.2d 905, 906 (Mass. 2003) (lawyer’s contact with a nurse formerly employed at

Defendant nursing home who was on duty the night that patient died was proper, even though

nurse was “directly involved” in the subject matter of the litigation); Smith v. Kalamazoo

Ophthalmology, 322 F. Supp. 2d 883, 885 (W.D. Mich. 2004) (interview in civil rights case of

former personnel manager with extensive knowledge directly related to litigation was proper);

Fleetboston Robertson Stephens, Inc. v. Innovex, Inc., 172 F. Supp. 2d 1190, 1195 (D. Minn.

2001) (plaintiff's counsel contacted defendants’ former CEO to discuss matters relevant to thelitigation); see also infra. p. 13. Although these cases are not controlling, they do provide

persuasive support for a narrow construction of the Lang exception to the general rule.

It is crucial that the State be permitted to interview former employees without the

presence of Defendants’ counsel, so that these witnesses can speak freely and without

interference and the State can carry out its investigation and discover the truth. It is also crucial



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that the State be permitted to delay identifying any former employee it contacts unless and until

it has conducted an interview of the employee, to prevent Defendants from attempting to

influence any interview before it is conducted. The State will of course fully comply with its

disclosure obligations. Following any interview, the State will provide the name of the former

employee interviewed. If the State wishes to use any former employee as a witness, it will so

notify Defendants, and the State will also timely disclose any evidence that any former

employee might provide to the State.

III. The State Also Seeks the Court’s Guidance About Interviews Previously Conducted

By Outside Counsel for the State of Nevada.

As argued herein, the State believes its attorneys should be permitted under ER 4.2 to

conduct ex parte interviews of former Bank of America non-managerial employees. In the

event the Court disagrees, however, then the State requests that the Court resolve the following,

related issue that Bank of America raised in its Joint Pretrial Statement.

A. Factual Background.

The State’s outside counsel in this matter, Cohen Milstein Sellers & Toll (“Cohen

Milstein”), also represents the Nevada Attorney General’s Office in similar litigation that is

currently pending in the United States District Court for the District of Nevada. Solely in

connection with its representation of the State of Nevada, Cohen Milstein interviewed a number

of Defendants’ former Nevada call center representatives and one current call center

representative who reached out to counsel.

In the Joint Pretrial Memorandum, Defendants alleged that Cohen Milstein’s conduct in

interviewing these individuals on behalf of the Nevada Attorney General violated Arizona

Ethical Rule 4.2. Joint Pretrial Memorandum § VII(B). Without any basis whatsoever,

Defendants further accuse the State of Arizona of directing the interviews “under the guise of

the Nevada Attorney General,” presumably as a means to avoid Arizona ethical rules. Id .

These are serious and inflammatory allegations, and they are wholly unsupported by fact or



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law. The State respectfully requests that this Court rule that counsel’s conduct was permitted

under Nevada ethical rules, that Nevada ethical rules apply to interviews conducted on behalf

of the State of Nevada, and that those interviews were therefore entirely proper under Arizona

ethical rules. The State requests this ruling now to put to rest Defendants’ potentially chilling

and damaging allegations.

B. Nevada’s Ethical Rules Apply to Cohen Milstein’s Interviews.

If, as the State has laid out, Arizona ethical rules permit ex parte interviews with

Defendants’ former employees, then counsel’s interviews were permissible under the rules of

both jurisdictions. Even if this Court finds that Arizona does not permit such contact, counsel’s

interviews were proper under the rules of the jurisdiction in which they were carried out and

therefore, under Arizona rules, were proper in Arizona as well.

Arizona Ethical Rule 8.5 applies conflict of law provisions to determine which

jurisdiction’s ethical rules apply. ER 8.5 states, in relevant part:

(b) Choice of Law. In any exercise of the disciplinary authority of this

jurisdiction, the rules of professional conduct to be applied shall be as follows:

(1) for conduct in connection with a matter pending before a tribunal,

the rules of the jurisdiction in which the tribunal sits, unless the rules of the

tribunal provide otherwise.

Ariz. R. Sup. Ct. 42, ER 8.5. Under this rule, Nevada’s ethical rules apply to govern the

conduct of lawyers in connection with matters pending before Nevada tribunals. Therefore,

Nevada ethical rules govern the conduct of Cohen Milstein in connection with the litigation

pending before the Nevada District Court.

This rule applies even where, as here, the lawyers also practice in Arizona. In Arizona

Ethics Opinion No. 90-19 (Dec. 28, 1990), the Arizona Supreme Court Judicial Ethics

Advisory Committee (the “Committee”) relied on ER 8.5 to hold that a lawyer whose conduct

was permitted by the ethical rules of the Navajo Nation Bar Association would not be subject to

disciplinary action under the Arizona rules. The Committee concluded that the rules of the



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jurisdiction in which the attorney was practicing at the time should govern the attorney’s

conduct in the jurisdiction. Id. at 5. Both the sovereign powers of the jurisdiction and the

reasonable expectations of attorneys practicing within that jurisdiction demand this choice. Id.;

see also Ariz. Ethics Op. No. 99-13 (Dec. 1999) (tribal rules permitted paralegal to represent

clients in tribal court and therefore paralegal was not engaged in unauthorized practice of law

under Arizona ethical rules); Comm. on Ethics of the Md. State Bar Ass’n, Op. 86-28 (Oct. 7,

1985), at 3-4 (“Where a Maryland attorney is acting in a foreign jurisdiction in accordance with

that jurisdiction’s Code of Professional Responsibility, . . . his conduct is ethical per se.”);

Comm. on Prof’l and Judicial Ethics of the State Bar of Mich., Informal Op. CI-709 (Dec. 29,

1981), at 3 (no violation of Michigan ethics rules where conduct was permitted under

California rules). Thus, the Nevada ethics rules govern Cohen Milstein’s conduct while

representing the State of Nevada in its judicial proceeding pending in Nevada.

C. Nevada’s Ethical Rules Permit Attorneys to Interview Ex Parte Former

Employees of an Opposing Party.

In Nevada, a lawyer may interview former employees and non-management current

employees of a party ex parte. In Rebel Communications, LLC v. Virgin Valley Water District ,

2011 WL 677308, *7-8 (D. Nev. Feb. 15, 2011), the district court held that the Nevada

Supreme Court would find that Nevada law would allow ex parte communications with an

opposing party’s former employees. In reaching this conclusion, the court relied upon the

Nevada Supreme Court decision in Palmer v. Pioneer Inn Associates, 59 P.3d 1237 (Nev.

2002).

In Palmer, the state supreme court analyzed application of Nevada’s Rule 4.21

to an

employee of a corporation or other organization and held that an attorney is prohibited from

1Effective May 1, 2006, former Nevada Supreme Court Rule 182 became Rule 4.2 of the

Nevada Rules of Professional Conduct. The text of the rule is substantially the same as Arizona

ER 4.2 and states: “In representing a client, a lawyer shall not communicate about the subject of

the representation with a person the lawyer knows to be represented by another lawyer in the



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contacting an organization’s current employee only if the employee has managing authority

sufficient to give the employee the right to speak for and bind the corporation.2

In choosing

this managing-speaking agent test over the party-admission test, the court said:

It is not the purpose of the rule to protect a corporate party from the revelation

of prejudicial facts. Rather, the rule’s function is to preclude the interviewing

of those corporate employees who have the authority to bind the corporation.

. . . [E]mployees should be considered “parties” for the purposes of the

disciplinary rule if, under applicable [state] law, they have managing authority

sufficient to give them the right to speak for, and bind, the corporation.

Id. at 1248 (quoting Wright by Wright v. Group Health Hospital, 691 P.2d 564, 569 (Wash.

1984)). The call center employees interviewed by Cohen Milstein have no management

authority to bind Bank of America. Therefore, Cohen Milstein’s interviews of these employees

were proper under Nevada law.

Because, under Palmer , interviews of Defendants’ non-management current employees

are permitted by Nevada’s ethical rules, interviews of non-management former employees are

allowed as well. Palmer’s analysis shows the path that Nevada courts would follow in

evaluating communications with former employees.

matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or

a court order.”

2 The court analyzed the competing considerations at play in determining how to apply the

no-contact rule in the case of organizations. On the one hand, the court stated, the primary

purpose of the rule is to protect the attorney-client relationship from intrusion by opposingcounsel and to protect against disclosure of privileged information. Palmer , 59 P.3d at 1240 &

n.8, 1242. On the other hand, the court weighed the also important policies of “permitting more

equitable and affordable access to information pertinent to a legal dispute; promoting the court

system’s efficiency by allowing investigation before litigation and informal information-

gathering during litigation; permitting a plaintiff’s attorney sufficient opportunity to adequately

investigate a claim before filing a complaint in accordance with Rule 11; and enhancing the

court’s truth-finding role by permitting contact with potential witnesses in a manner that allows

them to speak freely.” Id . at 1242. In this case, the customer service representatives contacted

by Cohen Milstein would have no access to Defendants’ lawyers or to privileged information.



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Although Palmer did not address whether Rule 4.2 applies to former employees,

Comment 7 to ABA Model Rule 4.2 does so explicitly: “Consent of the organization’s lawyer

is not required for communications with a former constituent.” This is consistent with the

majority rule in the United States. See Rebel Communications, supra, 2011 WL 677308 at *7;

Rotunda & Dzienkowski, Legal Ethics, The Lawyer’s Deskbook on Professional Responsibility,

§ 4.2-6 at 898 (2010) (“Neither Rule 4.2 nor its Comments require a lawyer representing a

client in a matter adverse to a corporation to seek permission of that corporation’s attorney

before interviewing former employees of the corporate party about the subject of the

representation.”) (emphasis in original); 2 Hazard, Hodes and Jarvis, The Law of Lawyering, §

38.7 n.2 (2011 supp.) (“A few decisions have held that all former employees are governed by

the no contact rule. . . . Such decisions are clearly wrong, however, given the text of Rule 4.2

and the underlying policies of the rule discussed in its Comments.”) (citation omitted).

Nevada law clearly permits counsel’s communications with Defendants’ former and

current non-management employees. It is indisputable that customer service employees, whose

duties were to answer customer service calls, lack the authority to bind any of the Defendants.

Under both Palmer and Rebel Communications, counsel’s contacts with current and former

non-management employees were permitted under Nevada law.

Because Cohen Milstein’s interviews of former employees concerned its representation

of Nevada in a Nevada proceeding, there was nothing improper about them. Moreover, as

stated repeatedly to Defendants, those interviews took place without the knowledge of, consent

of, or participation of the Arizona Attorney General’s Office. Defendants’ bald assertion thatthe Arizona Attorney General’s Office or its outside counsel manipulated the Nevada Attorney

General’s Office into conducting these interviews for it is insulting and completely without

foundation or good faith basis.



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IV. Conclusion

The State respectfully requests that this Court rule that: (1) Arizona Ethical Rule 4.2 and

Lang permit the State to conduct ex parte interviews of Defendants’ former employees who are

merely fact witnesses and were not responsible for Defendants’ institutional policies; and (2)

the State may refrain from disclosing the identities of such witnesses until after the interviews

have been conducted. As a result, the interviews of Defendants’ non-management employees

by the State’s outside counsel were proper under Arizona Ethical Rule 4.2. Even if the Court

finds that Arizona Ethical Rule 4.2 does not permit such ex parte interviews, the State asks that

the Court find that the interviews conducted were proper under Nevada law and therefore were

not improper under Arizona’s ethical rules.

RESPECTFULLY SUBMITTED this 8th day of June, 2011.

Thomas C. HorneAttorney General

B /s/ Carol n R. MatthewsThomas K. ChenalCarolyn R. MatthewsAssistant Attorneys GeneralAttorne s for Plaintiff

ORIGINAL filed electronically usingAZTurboCourt this 8th day of June, 2011.

COPY of the foregoing mailedthis 8th day of June, 2011 to:

Don Bivens

Robert Henry

Snell & Wilmer L.L.P.

400 East Van Buren Street

Phoenix, AZ 85004-2202

and



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Matthew W. Close

O’Melveny & Myers LLP

400 South Hope Street

Los Angeles, CA 92551

and

Brian D. Boyle

O’Melveny & Myers LLP

1625 Eye Street, NW

Washington, DC 20006

Attorneys for Defendants

/s/ Catherine Jacobs#1950649.3

woes for boa - part 2 - motion for order authorizing ex parte interviews

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