LEO #1661 CITY ATTORNEY'S REPRESENTATION OF CITY EMPLOYEE IN
CIVIL SUIT WHEREIN EMPLOYEE WOULD BE RESPONSIBLE FOR
PAYMENT OF ANY AWARD FOR PUNITIVE DAMAGES; CITY
ATTORNEY'S PARTICIPATION IN SETTLEMENT NEGOTIATIONS
You have presented a hypothetical situation concerning
representation of a City employee by the City Attorney. A City
police officer was involved in an incident arising from his
employment and creating the possibility of a civil suit against the
officer for compensatory and punitive damages. The officer has
asked the City Attorney to represent him in the civil matter.
Initially, it appears that the officer was acting within the scope
of his employment at the time of the incident. The City Code
provides that the City Attorney will defend employees and cases
arising from their actions as City employees. Although the City
Code provides for payment of judgments against employees, the City
Code states that the City will not be responsible for payment of
punitive damage awards.
Under the facts you have presented, you have asked the committee to
opine as to the propriety of the City Attorney representing the
employee when the City does not have a duty to pay all or part of
a judgment that may be entered against the employee. Additionally,
if the City Attorney does represent the employee, what role may the
City Attorney take in attempting to settle the case?
The appropriate and controlling disciplinary rules relative to your
inquiry are DRs 4-101, 5-105(A), (B), and (C), and 5-106. DR 4-101
requires an attorney to preserve client confidences and secrets.
DRs 5-105(A) and (B) prohibit an attorney from undertaking or
require withdrawal from employment where the lawyer's independent
professional judgment is likely to be adversely affected by
representing multiple clients with conflicting interests. DR 5-
105(C) permits multiple representation if it is obvious the
attorney can adequately represent each client, and each client
consents to the representation after full disclosure of the
possible effect of the representation on the attorney's exercise of
independent professional judgment on behalf of each client. DR 5-
106(B) states that an attorney shall not allow another who pays for
or employs his services to direct or regulate his professional
judgment on behalf of a client.
The committee observes that the potential conflicts arising out of
your hypothetical situation are similar to those which an insurance
defense attorney occasionally faces when employed by an insurance
carrier to represent its insured. The committee has previously
opined that, although paid by the insurer, the lawyer must
represent the insured with undivided loyalty. Legal Ethics Opinion
No. 598 (Approved by the Virginia Supreme Court, March 8, 1985).
See also, Norman v. Insurance Co. of North America, 218 Va. 718,
727 (1978) (attorney employed to represent insured is bound by the
same high standards which govern all attorneys in their
representation of private clients). Thus, the insured/client may
presume that his attorney has no interest which will interfere with
his devotion to the matter confided to him. The attorney is barred
from disclosing or using confidences and secrets which may create
a policy defense for the insurance company. LEO #598, supra. The
attorney may not settle the case contrary to the directions of the
insured, and if the insured and insurer disagree, and their
differences cannot be reconciled, the attorney must withdraw.
Legal Ethics Opinion No. 616 (November 13, 1984).
In insurance defense cases, some courts have ruled that a conflict
of interest arises when an insurer provides a defense to the
insured while disclaiming coverage for punitive damages. Previews,
Inc. v. California Union Ins. Co., 640 F.2d 1026 (9th Cir. 1981);
Parker v. Agricultural Ins. Co., 109 Misc.2d 678, 440 N.Y.S.2d 964
(1981). In Illinois Municipal League Risk Mgmt. Assoc. v. Siebert,
223 Ill. App. 3d 864, 585 N.E. 2d 1130 (1992), the court recognized
that the conflict can be resolved by full disclosure and consent by
the parties. Therefore, it has been held that when punitive
damages are alleged and the insurance carrier disclaims coverage,
the insured has a right to independent counsel paid for by the
insurer. City of Newark v. Hartford Accident & Indemnity Co., 134
N.J.Super. 537, 342 A.2d 513 (1975); Hartford Accident & Indemnity
Co. v. Village of Hempstead, 48 N.Y.2d 218, 422 N.Y.S.2d 47, 397
N.E.2d 737 (1979).
The committee believes that attorneys employed by municipal
governments are not automatically disqualified from defending both
the municipality and individual employees in the same lawsuit based
upon the employee's conduct in his official capacity. Joint
representation of both the governmental entity and the employee is
permitted, despite some potentially differing interests, provided
there is consent after full and adequate disclosure, and there is
a substantial identity of interests between them in terms of
defending the claims. Petition for Review of Opinion 552, 102 N.J.
194, 507 A.2d 233, 238 (1986) (no realistic possibility for
conflict in joint representation of government and individual
defendant sued strictly in official capacity and government
required to fully indemnify individual defendant); Police Officers
Fed'n v. Minneapolis, 488 N.W.2d 817 (Minn. App. 1992) (assistant
city attorney did not have conflict of interest that disqualified
him from representing both city and officer in federal civil rights
action, where city obligated to pay punitive damages and defenses
were consistent rather than antagonistic).
In Aetna Casualty & Surety Company v. United States, et al., 570
F.2d 1197 (1978), the Fourth Circuit Court of Appeals found that it
was appropriate for a deputy assistant attorney general to
represent the interest of the United States and four federally-
employed air traffic controllers who were named defendants in a
suit arising from a plane crash. Acknowledging it was conceivable
that the controllers would try to shift full blame to the United
States and vice versa, the court nonetheless emphasized the need to
look at "practical considerations" to evaluate whether an actual
conflict of interests will likely arise. The court accepted the
statement of government counsel that there was no dispute among the
controllers with respect to their duties and responsibilities or
the details of the crash. Moreover, even assuming the existence of
a conflict, the controllers had, after consultation with their
union counsel, consented to the representation by the deputy
assistant attorney general. The court's analysis of DR 5-105(C) in
this context is instructive:
...it is 'obvious' that the government
can adequately represent the interest of
the air traffic controllers. Indeed, it
appears to us that such representation
is highly desirable since these
defendants will have the benefit not
only of government counsel but also the
reservoir of the government's expertise
in this highly involved and technical
litigation, and will be spared the
burden upon their time and resources
incident to the employment of
independent counsel.
570 F.2d 1202.
The committee adopts the reasoning of the Aetna case insofar as the
question of the government attorney's representation of employees
sued for actions arising during the course of their employment
should be decided on a case-by-case basis with an analysis of the
practical considerations involved in the representation. The
committee is of the view that the question of multiple
representation is best resolved by the local government attorney
depending on the circumstances of each case. As at least one court
has observed, a per se prohibition on multiple representation would
impose a significant burden on local governments and employees who
must obtain independent counsel. Petition for Review of Opinion
552, supra.
Your preliminary fact analysis indicates that the actions of the
officer were not egregious to the extent that they would take him
outside the scope of his employment. Therefore, it appears that
the officer's potential exposure to punitive damages is relatively
small when compared to his and the City's potential exposure to
compensatory damages. If the insured police officer's interest and
risk in the litigation is small when compared with the City's,
representation by the City Attorney may be appropriate. Parker v.
Agricultural Insurance Co., 440 N.Y.S.2d 964 (1981). The reasoning
of the Parker court, like that of the Fourth Circuit in the Aetna
case, supra, recognizes the practical considerations which must
bear on the question of multiple representation:
Indisputedly, the great bulk of litigation
involving insureds, wherein punitive damages
may be routinely tacked onto the ad damnum
clause, may be predictably, regularly and
properly defended and controlled by the
insurer.
440 N.Y.S.2d 968.
The committee is of the opinion that the practical considerations
in your case may adequately resolve the potential conflict of
interest created by the lack of coverage for punitive damages.
See, Aetna Casualty and Surety Company, supra; Richmond Hilton
Associates v. The City of Richmond, 690 F.2d 1086 (4th Cir. 1982);
and Tessier v. Plastic Surgery Specialists, Inc., 731 F.Supp. 724,
729 (E.D. Va. 1990). From the information you provided us, it
appears that the City and its police officer agree upon the facts
which give rise to the potential litigation and that the defenses
are consistent rather than antagonistic. In addition, you have
explained that the officer has sought representation by the City
Attorney. However, before representation by the City Attorney is
permissible, the City Attorney should advise the police officer in
writing that the suit may seek punitive damages which are in excess
of the City's available coverage and that the officer has a right
to seek independent counsel at the City's expense to defend the
punitive damages claim. See, State Farm v. Floyd, 235 Va. 136
(1988), and DR 5-105(C).
Given our conclusion that representation may be appropriate in
certain cases, you have asked what role the City Attorney may take
in attempting to settle the case. The City Attorney would, of
course, have an obligation to convey settlement offers to the
police officer which may significantly affect settlement or
resolution of the case. DR 6-101(D); State Farm Mutual Auto
Insurance v. Floyd, supra. The role of the City Attorney in
pursuing settlement is comparable to that of insurance defense
counsel, whose goal is to achieve a speedy and successful
resolution of the case for both the insurer and its insured.
Therefore, if the officer and the City have differences about a
settlement proposal and those differences cannot be reconciled,
then the City Attorney would be required to withdraw from
representation. LEO 616. In addition, the City Attorney would be
required to withdraw from representation if discovery reveals the
appropriateness of antagonistic defenses or that the officer acted
contrary to City policy or outside the scope of his employment.
[DRs 4-101, 5-105, 5-106, 6-101; Norman v. Insurance Co. of North
America, 218 Va. 718, 727 (1978); Previews, Inc. v. California
Union Ins. Co., 640 F.2d 1026 (9th Cir. 1981); Parker v.
Agricultural Ins. Co., 109 Misc.2d 678, 440 N.Y.S.2d 964 (1981);
Illinois Municipal League Risk Mgmt. Assoc. v. Siebert, 223 Ill.
App. 3d 864, 585 N.E. 2d 1130 (1992); City of Newark v. Hartford
Accident & Indemnity Co., 134 N.J.Super. 537, 342 A.2d 513 (1975);
Hartford Accident & Indemnity Co. v. Village of Hempstead, 48
N.Y.2d 218, 422 N.Y.S.2d 47, 397 N.E.2d 737 (1979); Petition for
Review of Opinion 552, 102 N.J. 194, 507 A.2d 233, 238 (1986);
Police Officers Fed'n v. Minneapolis, 488 N.W.2d 817 (Minn. App.
1992); Aetna Casualty & Surety Company v. United States, et al.,
570 F.2d 1197 (1978); Parker v. Agricultural Insurance Co., 440
N.Y.S.2d 964 (1981); Aetna Casualty and Surety Company, supra;
Richmond Hilton Associates v. The City of Richmond, 690 F.2d 1086
(4th Cir. 1982); and Tessier v. Plastic Surgery Specialists, Inc.,
731 F.Supp. 724, 729 (E.D. Va. 1990); State Farm v. Floyd, 235 Va.
136 (1988)]
Committee Opinion
February 28, 1996
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