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The Philadelphia law firm Morgan, Lewis & Bockius has more at stake in a current age discrimination suit than just winning for its client. It is also trying to ward off the allegation that as an adviser to a bank on layoffs in 1995, it helped to deceive the employees who were losing their jobs. The law firm was working for CoreStates Financial Corp., which was firing workers from vice presidents to security guards. In return for severance benefits, employees were asked to sign releases forgoing the right to sue the bank “for any reason.” About 190 sued anyway, claiming age discrimination, and they also claim that the bank didn’t secure age-claim releases as required by statute. The bank replies that, despite the sweeping language of the waiver, it was not trying to shield itself from age bias suits. The sticky issues for Morgan Lewis are whether the releases were deceptive and whether the plaintiffs can breach the attorney-client privilege to prove that the deceit was intentional. Morgan Lewis, the seventh-largest law firm in the country with more than 1,100 attorneys, according to The National Law Journal‘s 2000 survey of the nation’s largest law firms, now represents First Union Corp. in federal court in Philadelphia. (First Union acquired CoreStates after the 1995 terminations.) The plaintiffs claim damages well in excess of $100 million, says plaintiffs’ counsel, Carol A. Mager of Philadelphia’s Mager & White. Kaminski v. First Union Corp., No. 98-CV-1623. STATUTE OF LIMITATIONS Because the employees didn’t sue until 1998, beyond the statute of limitations, they are trying to prove that the waiver was misleading — and that it was designed to mislead. To obtain documentary evidence, plaintiffs’ counsel have invoked a legal argument more commonly used in criminal fraud cases, the so-called crime-fraud exception to the attorney-client privilege. “I’ve never heard of the [crime-fraud exception] in exactly this context,” said Charles Wolfram, professor emeritus at Cornell Law School who specializes in legal ethics, noting that even if there is a finding of discrimination, that is not a crime. The plaintiffs, however, have succeeded in convincing the trial court that the exception should be applied to documents and other information relating to communications between Morgan Lewis and CoreStates’ in-house counsel and executives and also between in-counsel and the executives. Judge James McGirr Kelly of the U.S. District Court for the Eastern District of Pennsylvania wrote in a July 10 order that “a reasonable factfinder” could believe that CoreStates had drafted the release “with the intent to deceive terminated employees into believing they must waive” their rights under the Age Discrimination in Employment Act (ADEA) to receive enhanced benefits. The order to turn over the documents has been stayed while Morgan Lewis, on behalf of First Union, appeals to the 3rd U.S. Circuit Court of Appeals. “First Union believes that its predecessor CoreStates Bank, N.A., and outside counsel Morgan Lewis acted lawfully in all respects,” First Union spokeswoman Barbara Nate said in a statement. She said that “we are certain no crime or fraud occurred in this matter.” Morgan Lewis’ lead lawyer on the case, Steven R. Wall, said the defense acknowledges that there may have been some “inattentive” or sloppy drafting when the release was written in 1995, but there is clearly no evidence that anyone on the defense side tried to mislead employees intentionally. “Twenty-twenty hindsight is always useful but dangerous,” Wall said. “First Union has taken the position that the release could have been written in a way that was more clear, but that does not mean there was fraud. Our position is that this case is not about draftsmanship, but about fraud, and there was no fraud.” In addition, he said, it is clear from the evidence that CoreState’s in-house counsel, not Morgan Lewis attorneys, wrote the release. Wall explained that Morgan Lewis had a long-standing relationship with CoreStates. The law firm’s current chairman, Francis M. Milone, a member of the firm’s labor and employment practice, provided employment advice to the bank. Wall said Milone was lead outside counsel when, soon after the terminations, some former CoreStates’ employees filed age discrimination charges with the Equal Employment Opportunity Commission. Those cases were resolved, Wall said. He said that because of the attorney-client privilege, he could not discuss whether Milone provided any advice concerning the drafting of the release. The release says that the employee understands “that by signing this Release and Waiver of Claims I am giving up my right to sue the Company for any reason whatsoever.” TOO LONG A WAIT The plaintiffs, all over 40, claim that they relied on this language in not suing under the ADEA until March 1998. The defense claims that, among other things, the case should be dismissed because the plaintiffs failed to file a claim with the EEOC within 300 days of being laid off. Under the Older Workers Benefit Protection Act, an employer laying off employees over 40 must provide them with age-specific information about who else is being laid off and who is not, and the employee must be given 45 days to decide whether to sign the waiver. CoreStates did not provide the information or give the 45 days, but First Union claims that it didn’t have to. Despite the broad language in the release, First Union claims it didn’t intend for the employees being laid off in March 1995 to waive their claims under the ADEA. Wall said the release clearly did not include a waiver of the age claims because it waived claims under specific statutes — such as the Americans With Disabilities Act and Title VII of the Civil Rights Act of 1964 — without mentioning the Age Discrimination in Employment Act. “In this case, CoreStates decided not to seek a waiver of age discrimination suits,” he said. Employment experts said it was within the rights of CoreStates not to seek a waiver of a specific kind of discrimination claim. Since providing all the data under the Older Workers Benefit Protection Act is time-consuming and costly, employers sometimes do not seek a waiver of age claims, the experts said. “This law does not require that employees be told that they have a right to sue for age discrimination. It does just the opposite,” said Garry Mathiason of San Francisco’s Littler Mendelson. “It says if you want to waive a claim under the ADEA, you must comply with several requirements.” The plaintiffs agree, but say that is not what happened in this case. They claim that CoreStates used an intentionally misleading release that would lead the workers to think they were in fact waiving their right to sue under all laws. “They made a decision not to comply, and when you make a decision not to comply, you can’t issue a release that says it’s a waiver of any and all claims,” says plaintiffs’ counsel Mager. In deposing four attorneys who had worked in-house for CoreStates, the plaintiffs claim to have begun uncovering evidence of an intent to mislead. In their brief seeking to pierce the attorney-client privilege, the plaintiffs referred to the deposition of Madeline Flanagan, an in-house lawyer at CoreStates in 1995 who advised the bank on human resources issues. After stating that she did not believe the release waived claims under the age discrimination act, she was asked about the general waiver. “Do you see that?” asked plaintiffs’ counsel Stephen G. Console, of the Console Law Offices in Philadelphia, referring to the waiver. “Yes,” responded Flanagan. “Do you agree that that is a false statement?” Console asked. “Yes,” Flanagan responded. And while she acknowledged personally speaking with Milone several times about the release, First Union’s attorney — Morgan Lewis’ James N. Boudreau — citing the attorney-client privilege, prevented her from answering when asked what Milone said. It was unclear if Flanagan’s discussion with Milone took place before or after the release was drafted. The plaintiffs cited this as evidence that the defense is selectively relying on the privilege to conceal incriminating information. But the defense claims that there is nothing wrong with citing the attorney-client privilege because, as all lawyers know, it is designed to protect communications between attorney and client. And they say there is no evidence of any wrongdoing — obviating the need for the crime-fraud exception. Wall wonders how the plaintiffs can claim that the release is intentionally misleading when the document states that all those who sign it acknowledge having been advised in writing beforehand that they should consult with an attorney. And Wall said about 30 former CoreStates employees who signed the waiver did in fact file age discrimination charges with the EEOC against CoreStates before the 300-day statutory period expired, and all those cases were resolved. Employment counsel expressed concern about the CoreStates case. “I am troubled by it,” said Condon McGlothlen, an employment specialist at Chicago’s Seyfarth Shaw. “Based on what I’ve seen … I don’t think there’s any indication of intentional fraud that would warrant piercing the attorney-client privilege.” Meanwhile, Wall said he is no more concerned about this case than any other the firm might be involved in. “They still have to prove their allegations before there is any concern, and we are convinced they can’t prove their allegations,” he said.

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