Midwest Motor Sports, Inc. v. Arctic Cat Sales, Inc.
347 F.3d 693, (8thCir. 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.