Who You Gonna Call? Not Former Executives

When investigating class actions, there is often some information known only to the executives of that allegedly misbehaving corporation. Obtaining those executives’ stories, or better yet their testimony, can be a high prize for plaintiff-side lawyers.

However, lawyers cannot contact current executives of a represented corporation. That is a breach of our professional responsibilities.

A recent case suggests that, at least in Québec, this prohibition might extend to former executives. This article summarizes Holcman c Lightspeed Commerce Inc, 2023 QCCS 1681 and implications for class action lawyers in Québec. It then considers case law in Alberta and British Columbia. Finally, it uses all of the above to assess what rule applies in Ontario.

(1) The Decision in Holcman

In Holcman, the plaintiff sued Lightspeed for securities misrepresentation. Ajamian, Lightspeed’s Executive Vice-President of Marketing, was “involved in Lightspeed’s response”. However, she then left the company. After she left, an investigator retained by the plaintiff’s lawyer sent her a LinkedIn message asking if she would act as a witness.

Notwithstanding that she was no longer an employee, the Superior Court of Québec (“QCCS”) held that Ajamian was still a “representative” of Lightspeed, such that she was represented by the corporation’s lawyer and could not be contacted. The lawyers for the plaintiff breached that rule, so the QCCS ordered them to produce a list of every former employee that they had contacted. The QCCS also suggested that, if Ajamian had responded, the plaintiff would have been required to disclose to the defendant everything she had said.

In light of Holcman, lawyers in Québec should avoid contacting current or former executives of defendant corporations. Plaintiff-side lawyers should also be wary of former executives who offer to act as whistleblowers: accepting their help could open you up to broader disclosure.

It is unclear whether this rule changes after authorization. If not, this might become confusing where the executive is a member of the class, e.g. in an employment law class action. In that case, are they represented by both the lawyers for the plaintiff and the lawyers for the defendant?

(2) What is the Rule in Alberta?

The relevant rule in Alberta is rule 7.2-11 of the Code of Conduct, which forbids lawyers from contacting an officer or employee:

(a) who has the authority to bind the organization;
(b) who supervises, directs or regularly consults with the organization’s lawyer; or
(c) whose own interests are directly at stake in the representation.

These rules were interpreted in Cooking Lake Enterprises Inc v Samson First Nation, 2000 ABQB 32. The plaintiff sued the Samson Cree Nation for unpaid invoices and moved for summary judgement. In addition to opposing summary judgement, the Samson Cree Nation argued that the affidavit of a former member of the elected band council obtained by the plaintiff should be struck for violating these rules, especially since they related to events that occurred while the affiant was an elected member of the band council. The Alberta Court of Queen’s Bench (“ABQB”) refused, holding that the use of the present tense in the rules were dispositive:

The test clearly asks “is” he involved in decision making, not “was” he involved.

The court relied on a slippery slope argument:

If the argument is accepted that the prohibition in the Code is meant to refer to former directors, officers etc., where would the line be drawn? Would the restriction cover former directors who were employed by the corporation one year ago? ten years ago? If the Code were interpreted in this way, it would in effect, circumvent the rule that there is no property in a witness.

On its face, Cooking Lake appears to establish that there is no prohibition on contacting former executives in Alberta. However, a subsequent case might make this more complicated. In Murphy Canada Exploration Company v Novagas Canada Ltd, 2009 ABQB 585, the ABQB suggested that some former executives could choose to be represented by corporate counsel, in which case they would be off-limits. Thus, before interviewing a former executive in Alberta, it is safest to ask them whether they have retained a lawyer, and if so, whether that lawyer also represents the corporation on the same matter.

(3) What is the Rule in British Columbia?

The relevant rule in British Columbia is rule 7.2-8 of the Code of Professional Conduct for British Columbia. It is essentially identical to the provision in Alberta, suggesting that the holdings in the cases above may also apply in British Columbia.

However, there are three complications in British Columbia.

First and foremost, the rule may not apply if the executive is only being contacted as a witness. In Macmillan Bloedel Ltd v Freeman & Co, 1992 CanLII 1038 (BC SC), the Supreme Court of British Columbia (“BCSC”) held that there is a distinction between contacting an executive in their capacity as an opposing party versus contacting them in their capacity as a potential witness. The latter is not prohibited, as long as counsel discloses their interest.

Second, the rule may not apply if the lawyer does not know that the executive is represented. Rule 7.2-7, commentary [2] states that the prohibition “only where the lawyer knows that the person is represented in the matter to be discussed”. The test requires “actual knowledge”, but an inference of actual knowledge can be drawn from a “substantial reason” to suspect they are represented.

Third, the rule may not apply if the executive has retained an independent lawyer. In XY, Inc v IND Lifetech Inc, 2008 BCSC 991, the plaintiff sued a corporation in one action and a former executive in a separate action relating to the same misconduct. The executive retained an independent lawyer for the second action. The lawyer for the plaintiff contacted the executive’s independent lawyer and obtained information that was helpful against the corporation, without informing the corporation. The BCSC held that this did not breach the lawyer’s duties. This could be interpreted in one of three ways: (1) former executives are not off-limits; (2) this executive was acting as a witness, which is not off-limits; or (3) this executive retained an independent lawyer, which means he cannot be represented by the corporation, so the prohibition does not apply. Option (3) would be consistent with Murphy. Collectively, those cases may suggest that what matters is whether the executive chooses to be represented by the corporation or by someone else.

(4) What is the Rule in Ontario?

The relevant rule in Ontario is rule 7.2-8 of Ontario’s Rules of Professional Conduct, which forbids lawyers from contacting a person:

(a) who is a director or officer, or another person who is authorized to act on behalf of the corporation or organization;
(b) who is likely involved in decision-making for the corporation or organization or who provides advice in relation to the particular matter;
(c) whose act or omission may be binding on or imputed to the corporation or organization for the purposes of its liability; or
(d) who supervises, directs or regularly consults with the legal practitioner and who makes decisions based on the legal practitioner's advice.

Note that (b) and (d) are similar to the language used in Alberta and British Columbia in that they involve actions in the present tense. The court picked up on that and endorsed Cooking Lake in Bowman v Rainy River (Town), 2007 CanLII 10403 (Ont Sup Ct). The plaintiff sued her former employer, the Town of Rainy River, for wrongful dismissal. Rainy River brought a motion to prohibit the plaintiff from using information she obtained from communications with two of its former mayors. The Ontario Superior Court of Justice refused, and leave to appeal to the Divisional Court was refused. The court cited Cooking Lake for the proposition that the use of the present tense was determinative. Since the former mayors were just that – former – the plaintiff’s lawyers were not prohibited from contacting them under the Rules of Professional Conduct.

It is unclear whether Bowman applies to rule 7.2-8(c), i.e. when a former executive’s actions in the past could be imputed to the corporation in the present. Rule 7.2-8.2, commentary [2] and [3] suggest that (c) is narrowly interpreted. They explain that the prohibition does not apply to persons whose statements might be “admissions”. It only applies if the person has “authority to commit the corporation … to a position with regard to the subject matter of the representation” (our emphasis). A former executive is unlikely to meet this test.

Additionally, as in British Columbia, rule 7.2-8.2, commentary [8] limits the prohibition to cases of “actual knowledge” of the representation.

Finally, the rules in Murphy, Macmillan Bloedel, and/or XY may apply in Ontario. These do not appear to have been tested.

Conclusion

If you are considering reaching out to a former decision-making executive of an opposing party, you should carefully consider whether the person might be deemed to be represented by the opposing party’s counsel. The answer is not always clear. Best practice is to inform opposing counsel and offer them an opportunity to object before making the call.

Finally, note that this article only addresses communications with executives. It is unclear whether any of this applies to non-decision-making employees.