A Primer on 30(b)(6) Depositions

Transcription

1 A Primer on 30(b)(6) Depositions A Defense Perspective David L. Johnson Kyle Young MILLER & MARTIN PLLC Nashville, Tennessee dljohnson@millermartin.com kyoung@millermartin.com

2 At first blush, selecting an individual to serve as a corporate representative in a lawsuit may seem like a mundane task. Selecting the wrong individual, however, can prove disastrous. Defense counsel should not take corporate representative depositions lightly. Counsel should work with clients to carefully choose appropriate representatives and remain knowledgeable of the current legal landscape concerning corporate representative depositions. Federal Rule of Civil Procedure 30(b)(6) The Federal Rules of Civil Procedure allow a party seeking information from a corporate entity to serve a notice of deposition requiring the corporation to designate a person to testify in a deposition on specified topics. See FED. R. CIV. P. 30(b)(6). Under the Federal Rules, a party may subpoena and/or notice the deposition of a corporation through a 30(b)(6) deposition. Rule 30(b)(6) provides: Notice or Subpoena Directed to an Organization. In its notice or subpoena, a party may name as the deponent a public or private corporation, a partnership, an association, a governmental agency, or other entity and must describe with reasonable particularity the matters for examination. The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify. A subpoena must advise a nonparty organization of its duty to make this designation. The persons designated must testify about information known or reasonably available to the organization. This paragraph (6) does not preclude a deposition by any other procedure allowed by these rules. Id. A party will commonly use a 30(b)(6) deposition to gather factual information regarding the underlying claims, discover the corporation s position with respect to matters in dispute, for interpretation of documents and events, and to authenticate relevant documents in the litigation. However, the scope of Rule 30(b)(6) extends well beyond the above Rule. Litigators continue to change the methods by which they employ 30(b)(6) depositions and federal courts continue to issue a number of decisions that alter the 30(b)(6) landscape creating a minefield for corporate parties. What Should be Included in a 30(b)(6) Notice of Deposition and/or Subpoena? Under Rule 30(b)(6), a party to a lawsuit may notice the deposition of a corporation. Within the notice of deposition, the issuing party must describe with reasonable particularity the matters for examination. Id. (emphasis added). Courts regularly enforce the reasonable particularity requirement and hold that a generic notice of deposition is insufficient. See, e.g., Kalis v. Colgate-Palmolive Co., 231 F.3d 1049, 1058 (7th Cir. 2000); Alexander v. Federal Bureau of Investigation, 188 F.R.D. 111, 114 (D. D.C. 1998) (rejecting notice to depose on any matters relevant to this case as not meeting the reasonable particularity requirement); Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633, 638 (D. Minn. 2000) ( [T]he requesting party must take care to designate, with painstaking specificity, the particular subject areas that are intended to be questioned, and that are relevant to the issues in dispute. )

3 After receiving a Rule 30(b)(6) notice, corporate counsel should carefully review the description of the matters of examination to ensure that they are reasonably particular. The serving party is obligated to provide enough information and detail for the corporation to enable the effective preparation of the corporate representative. If the deposition notice fails to reasonably identify the matters of examination, corporate counsel should request that the examining party revise the notice. Alternatively, corporate counsel may serve the issuing party with a response, indentifying all objections, topics for which the corporation has not information, and any limitations on testimony that will be given. Finally, if an agreement cannot be reached between the parties, corporate counsel should act quickly and seek a protective order from the court. Going Beyond the Scope of the Subjects Identified in the Notice Often, during the course of a Rule 30(b)(6) deposition, the questioning party endeavors to exceed the scope of the topics for questioning identified in the Rule 30(b)(6) notice. Federal courts are split regarding whether a party noticing a Rule 30(b)(6) deposition is required to limit its questions to the topics reasonably identified in the notice. See, e.g., Paparelli v. Prudential Ins. Co., 108 F.R.D. 727, (D. Mass.1985); King v. Pratt & Whitney, 161 F.R.D. 475, 476 (S.D. Fla. 1995). In Paparelli, supra, the Massachusetts district court held that if a party opts to employ the procedures of Rule 30(b)(6) to depose the representative of a corporation, that party must confine the examination to the matters stated with reasonable particularity which are contained in the Notice of Deposition. 108 F.R.D. at 730. By contrast, in King, supra, a Florida district court stated as follows: A Rule 30(b)(6) should not be read to confer some special privilege on a corporate deponent responding to this type of notice In sum, this Court concludes that Rule 30(b)(6) cannot be used to limit what is asked of a designated witness at a deposition. Rather, the Rule simply defines a corporation's obligations regarding whom they are obligated to produce for such a deposition and what that witness is obligated to be able to answer. 161 F.R.D. at 476. A growing number of courts have adopted the approach taken by the King court and opted not to limit discovery to those matters contained in the Rule 30(b)(6) notice. See, e.g., Cabot Corp. v. Yamulla Enter., Inc., 194 F.R.D. 499 (M.D. Pa. 2000); Overseas Private Inv. Corp. v. Mandelbaum, 185 F.R.D. 67 (D. D.C. 1999). Regardless of which approach is applicable, corporate counsel should immediately object to any line of questioning that exceeds the scope of the notice, as, otherwise, failure to object may result in the waiver of the objection. In a jurisdiction that limits the discovery to matters contained in the notice, it is not appropriate for corporate counsel to simply instruct the corporate representative not to answer. If the deposition is being conducted in bad faith or in a manner that unreasonably annoys, embarrasses, or oppresses the deponent or party, counsel should follow the guidelines of the Federal Rules of Civil Procedure and suspend the deposition to seek a ruling from the Court on the propriety of the questions posed. See Fed. R. Civ. P. 30(d)(3)(A). In jurisdictions where no limitation applies, it remains prudent for corporate counsel to object to any line of questioning outside of the scope of the notice to ensure that the corporation preserves its right to contend that the deposition response is not binding.

4 Given the current trend of not limiting 30(b)(6) deposition examination to topics reasonably identified in the notice, corporate counsel should prepare every designated corporate representative for a personal deposition regarding the particular litigation, in addition to preparation of the witness as a corporate representative. Although this may be more expensive, it could avoid the corporation being precluded from taking positions that were not taken by the corporate representative or the corporation being bound to unfavorable positions. Picking a Witness to Act as a Corporate Representative As soon as corporate counsel receives a notice of 30(b)(6) deposition, counsel and the corporate litigant have several duties. First, the corporation must designate a deponent who is knowledgeable on the subject matter identified in the notice (if necessary, a corporation must designate more than one deponent if multiple deponents are necessary to respond to all of the relevant areas of inquiry). U.S. ex rel Fago v. M & T Mort. Corp., 235 F.R.D. 11, (D. D.C. 2006). This may be an officer, a director, a managing agent, a former employee (which brings its own unique headaches), or even a stranger to the corporation hired to serve as a 30(b)(6) witness. Second, corporate counsel must prepare the deponents so that they can testify on matters not only within their personal knowledge, but also on matters reasonably known by the corporation. Id. Third, if the designated corporate representative is unable to respond to the relevant questions, then the corporation must substitute the designated deponent with a person knowledgeable on the line of questioning. Id. Choosing a corporate representative is a complicated and potentially treacherous decision. Often an individual with the most knowledge does not make the best witness. Merely because a person may have the most knowledge of a particular set of facts does not mean a corporation should not elect to designate a more likeable individual to testify on its behalf especially if the deposition is video-taped. Regardless of particular knowledge, some individuals will be better equipped to accurately and persuasively express the corporation s position as it relates to the particular matters contained in the notice. Personality traits that usually accompany a strong 30(b)(6) witness are: patience, commitment to detail, an ability to remember relatively small details and, most importantly, the witness must be articulate. If a corporation elects to name a person with little existing knowledge as its representative, it will likely take longer to prepare the witness, take more work to prepare the witness, and also take more money to prepare the witness. Accordingly, corporate counsel should use their knowledge of the organization and its employees to chose an individual that best balances the corporation s need for the witness to know the underlying facts of the litigation and the need for a corporate salesperson. Preparing a Corporate Representative A Rule 30(b)(6) corporate representative does not give his or her personal opinions. Rather, he or she presents the corporation's position on the topic. U.S. v. Mass. Indus. Finance Agency, 162 F.R.D. 410, 412 (D. Mass.1995); Lapenna v. Upjohn Co., 110 F.R.D. 15, 21 (E.D. Pa. 1986); Toys R Us, Inc. v. N.B.D. Trust Co., No. 88C10349, 1993 WL , at *2 (N.D. Ill. Sept. 29, 1993). The corporate representative s testimony is not limited to mere facts known by the corporation. Instead, the 30(b)(6) testimony must also encompass the corporation s

5 interpretation of the facts, subjective beliefs and opinions. Lapenna, 110 F.R.D. at 20. Moreover, the corporate representative is charged with the duty of interpreting documents and events on behalf of the corporation. Ierardi v. Lorillard, Inc., Civ. A. No , 1991 WL (E.D. Pa. Aug. 13, 1991). Because of the nature of Rule 30(b)(6), it is possible that a designated corporate representative will not have personal knowledge regarding all of the matters contained in the notice of deposition. If this is the case, the corporation is obligated to prepare the corporate representative so that he or she may give knowledgeable and binding answers for the corporation. Dravo Corp. v. Liberty Mut. Ins. Co., 164 F.R.D. 70, 75 (D. Neb. 1995); see also Buycks-Roberson v. Citibank Federal Sav. Bank, 162 F.R.D. 338, 343 (N.D. Ill. 1995) (the duty to present and prepare a Rule 30(b)(6) designee goes beyond matters personally known to that designee or to matters in which that designee was personally involved.) Consequently, a corporation must ensure that the designated representative is fully prepared for the deposition through discussions with individuals with information of the relevant matters at issue, review of documents, review of deposition transcripts and exhibits, conversations/interviews with knowledgeable employees, and/or any other preparation in which the designated representative may become fully informed on the subject matter of the designated topic. U.S. v. Taylor, 166 F.R.D. 356, 361 (M.D. N.C. 1996). In situations in which there exists a lack of any witnesses with personal knowledge of the matters at issue, a corporation must take efforts to prepare the corporative representative through all reasonably available means, including a review of all relevant documents, discussion with former employees, or other sources. See, e.g., Dravo Corp., 164 F.R.D. at 75. In situations where information simply cannot be obtained by any reasonable source, a corporation may plead lack of memory. United States v. Taylor, 166 F.R.D. at 361. However, even in that situation, if the corporation intends to rely on testimony from third parties, or their documents, the corporate representative still must present an opinion as to why the corporation believes the facts should be so construed. Id. Corporate counsel should also be mindful that whatever information that a corporate representative is asked to review to prepare for the deposition is discoverable. Consequently, the witness should not review any privileged information and/or documents, or documents which the corporation does not wish to highlight during the litigation. Are Corporations Bound to the Testimony of the Designated Representative? Since a Rule 30(b)(6) designated witness is presented for the purpose of speaking for the corporation, testimony of a Rule 30(b)(6) witness is binding on the corporation. See Sabre v. First Dominion Capital, LLC, 2001 WL , at *1 (S.D. N.Y. Dec. 12, 2001) ("A 30(b)(6) witness testifies as a representative of the entity, his answers bind the entity and he is responsible for providing all the relevant information known or reasonably available to the entity."). Although Rule 30(b)(6) testimony is binding, most courts have held that it does not constitute a judicial admission which are binding and may not be controverted by the party at trial or on appeal of the same case. Industrial Hard Chrome, Ltd. v. Hetran, Inc., 92 F. Supp.2d

6 786, 791 (N.D. Ill.2000) ("[Rule 30(b)(6)] testimony is not a judicial admission. The testimony given at a Rule 30(b)(6) deposition is evidence which, like any other deposition testimony, can be contradicted and used for impeachment purposes."); see also Hyde v. Stanley Tools, 107 F. Supp.2d 992, (E.D. La. 2000) ("[While] courts may disregard an affidavit which directly contradicts an earlier 30(b)(6)deposition... [c]ourts have allowed a contradictory or inconsistent affidavit to nonetheless be admitted if it is accompanied by a reasonable explanation."); W.R. Grace & Co. v. Viskase Corp., No. 990 C 5383, 1991 WL , at *2 (N.D. Ill. Oct.15, 1991). May a Witness Change his/her Testimony through an Errata Sheet? Corporate counsel should reserve the right for each witness to review and sign his/her deposition testimony. Although deponents are liberally afforded leave to correct errors in the transcription, courts are divided about the ability of deponents to make substantive changes to their testimony. Under Fed. R. Civ. P. 30(e), a deponent has thirty days to review the transcript or recording and, if there are changes in form or substance, to sign a statement reciting such changes and the reasons given by the deponent for making them.... In Greenway v. Int l Paper Co., 144 F.R.D. 322 (W.D. La. 1992), a Louisiana district court took a narrow approach and found that a deponent may only change transcription errors. According to the court, Rule 30(e) does not: allow one to alter what was said under oath. If that were the case, one could merely answer the questions with no thought at all [sic] then return home and plan artful responses. Depositions differ from interrogatories in that regard. A deposition is not a taken home examination. Id. at 325. Most courts, however, construe Rule 30(e) as allowing substantive changes, provided that the deponent timely provides an explanation for each change. See, e.g., Podell v. Citicorp Diners Club, Inc., 112 F.3d 98, 103 (2d Cir. 1997); Innovative Mktg. & Tech. L.L.C. v. Norm Thompson Outfitters, Inc., 171 F.R.D. 203, 205 (W.D. Tex. 1997). The Seventh Circuit has taken a middle-ground approach, allowing substantive changes provided that they do not contradict the original testimony. Thorn v. Sundstrand Aerospace Corp., 207 F.3d 383, 389 (7 th Cir. 2000). Even if substantive changes are allowed, the original testimony remains admissible and may be used for impeachment. Conclusion In response to a corporate representative deposition notice, corporate counsel s two most important tasks are: selecting the best witness (oftentimes not the person with the most knowledge of the facts) and thoroughly preparing the witness for the deposition. Corporate counsel should take great care in the preparation of each designated representative to ensure that he or she is fully prepared for the issues contained in the notice, as well as any other relevant matters to the cause of action.