Courts run into trouble time after time when they try to dress the artificial person known as a corporation in clothes cut for individuals. The latest to deal with the problem was the Washington state Supreme Court, which had to rule on whether to allow the lawyer for a plaintiff in a suit to interview employes of the defendant corporation.
The ethical rule at the heart of the controversy forbids an attorney from communicating privately with a party to a suit when the attorney knows that that party has engaged a lawyer of its own. The plaintiff's attorney must give the interview subject the chance to have his lawyer present. The idea is that the plaintiff's lawyer might take advantage of the person he was interviewing by asking unfair questions or bullying, but that having a counsel for the other side present restores the power balance. The problem comes in deciding who the rule applies to when the defendant is a corporation.
Some legal experts argue that it is unethical to have private interviews with any employes in such circumstances, but such an attitude is the minority view. Others argue that some sort of sliding scale should apply, depending on the subject of the suit. Under this interpretation, a design engineer could not be interviewed without his or her own lawyers present if the suit alleges that a faultily designed product caused an accident. A private interview with the same engineer would be legitimate, however, if the person merely happened to witness a spill of soapy water that caused a plant visitor to slip and break some bones.
The American Bar Association's new model rules for how lawyers should act include a less circumstantial solution. The ABA separates employes into those who have the power to "bind the corporation" -- in other words, to enter a legal agreement on its behalf -- and those who do not. Basically, only officers, directors and perhaps a handful of others can speak for the business. This is essentially the approach chosen by the Washington high court in Wright v. Group Health Hospital.
Under that rule, the justices explained, no former employes can be considered off-limits, regardless of the position they once held in the corporation. But more significantly, the ABA rule opens the way for the plaintiff's lawyer to get at midlevel professionals who may be responsible for the actions -- or omissions -- that are at the heart of the damage suit. That's all right, the decision says, because the purpose of the rule is not to keep the plaintiff from learning facts that might help the case but merely to protect the corporation from being taken advantage of. If the person being interviewed alone has no power to strike a deal for the company, there is no way the corporation can be taken advantage of, according to this reasoning.
In other cases, courts ruled that:
* It's a federal crime to steal services paid for by the Treasury. Jurists have long debated whether the federal law making it illegal for a person to "convert to his own use" anything "of value of the United States" bars only conventional larceny or also allows prosecution of people who use, say, information stored in a government computer, or the labor of servicemen. The U.S. appellate court controlling the nine western states ruled in 1959 that the statute does not cover the theft of services, but other circuit court rulings since then have approved such prosecutions. Now, the U.S. Court of Appeals in Chicago has given the green light to prosecute a university researcher charged with using an assistant paid for by an Environmental Protection Agency contract to work on a job for a private client. But the dissenter in the 2-to-1 ruling called the decision a return to the concepts of slavery.
(U.S. v. Croft, Dec. 14)
* Rapid technological change can rob a company of tax deductions. The U.S. Claims Court split the difference in a dispute between an Ohio utility and the Internal Revenue Service over how to treat the costs of training employes to run new plants. The company wanted to deduct the costs as normal operating expenses; the IRS argued that the costs had to be added to the capital costs of the plants and could be written off only through long-term depreciation. But the court ruled that the key issue is the kind of generating plant involved. The court allowed the utility to deduct the costs of getting employes ready to run a new coal-fired plant, but ruled that the company was getting into a new and different business when it started up a nuclear generating facility. Therefore, it said, training costs for the nuclear venture had to be capitalized.
(Cleveland Elec. Illuminating v. U.S., Jan. 9)
* A city cannot ban all evening door-to-door solicitation. Although the U.S. Supreme Court consistently has stated that to put some restrictions on when and where people may express their views does not violate the First Amendment, the West Virginia Supreme Court said that banning all after-dark canvassing goes too far. The decision specifically rejected a ruling earlier last year from the U.S. Court of Appeals in Philadelphia that approved an after-5:00 p.m. ban. If a city council really wants to protect residents from being disturbed at night, the state justices explained, it need only require that those taking their views door to door respect "do not disturb" and "no soliciting" signs.
(W. Va. Citizens Action v. Daley, Dec. 21)