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Magistrate Judges Weigh Showing Necessary for “Apex” Depositions

By John W. Joyce, Litigation News Associate Editor – July 20, 2010

Two recent orders from federal magistrate judges illustrate the uncertainty litigators face when trying to compel or defend against “apex” depositions of high-level corporate decision makers. Public statements and declaration testimony are key considerations for determining whether a potential deponent has “unique personal knowledge” sufficient to justify such a deposition.

Diverging Results
In a case pending in the U.S. District Court for the Eastern District of Tennessee, a federal magistrate judge compelled [PDF] the CEO of the Tennessee Valley Authority to appear for deposition in litigation regarding the failure of a power plant’s ash waste dike after concluding that he possessed “unique personal knowledge.” In re Tennessee Valley Authority.

The magistrate judge ordered the deposition even though the CEO submitted a declaration stating that his “knowledge of TVA operations is gathered, in large part, from subordinates.”

According to the decision, however, the CEO had also given testimony to a congressional committee acknowledging that he was “on the scene” of the disaster “just hours after the breach occurred.” Although the magistrate judge compelled the deposition based upon these facts, he also warned plaintiffs to be “mindful” of the “temporal and positional limitations” of the CEO’s knowledge.

In another case, a federal magistrate judge in the Northern District of California decided to shield the CEO of an insurance company from a similar “apex” deposition. Doble v. Mega Life & Health Insurance Co., 2010 U.S. Dist. LEXIS 56190 (N.D. Cal. May 18, 2010). Quoting extensively from the CEO’s declaration, the magistrate judge determined that the CEO had no “unique personal knowledge” of the dispute or the settlement at issue.

Even though the CEO “signed off” on the settlement agreement, the court determined that the CEO’s acts were “high-level management” or “ceremonial,” not “hands-on action” showing “unique personal knowledge.” For similar reasons, the court rejected the plaintiffs’ arguments that such knowledge was shown by the CEO’s emails to staff trying to motivate them to settle the claim and even his receipt of an email directly from a plaintiff representative.

The magistrate judge determined that the CEO’s public statements about the settlement “were part of his job as the public face of the company, and did not represent any personal participation by him in the process of negotiating the settlement.”

Impact of CEO Public Statements
While the court in Doble discounted the making of public statements as just part of the CEO’s job as the “public face” of a company, the court in In re TVA cited the public statement as evidence of his “unique personal knowledge.”

When making public statements on matters likely to lead to litigation, “the CEO should emphasize that he or she is firmly in charge of the company’s management team and that the team is addressing the issue,” says Ian H. Fisher, Chicago, cochair of the ABA Section of Litigation’s Pretrial Practice and Discovery Committee. However, “the CEO need not claim to have any knowledge that would not already be in possession of others in the company,” he says.

As the In re TVA case shows, CEO public statements are also important to litigators seeking to take a CEO deposition. “When building the case for CEO depositions, all public and private statements are important,” says Lawrence J. Centola, III, New Orleans, a member of the Section of Litigation.

“For example, in medical device cases, there may be a letter from a CEO assuring the doctor that the device is safe, and though not necessarily based on unique personal knowledge, signing the letter makes the CEO fair game for deposition about the product’s safety,” Centola says.

Practical Considerations
When trying to avoid the deposition of a CEO, “it is important to show that the CEO is not asleep at the helm,” says D. Larry Kristinik, III, Columbia, SC, vicechair of the Section’s Committee on Corporate Counsel. At the same time, the CEO’s declaration “must make clear that other corporate officers or managers have been delegated the primary responsibility for the subject matters at issue,” he says.

Litigators should also keep in mind that courts will expect them to work out practical issues with opposing counsel. “Cooperate with opposing counsel, for example, to identify lower level management responsible for the information you agree is discoverable or propose a corporate representative deposition,” says Kristinik.

That said, counsel should choose the corporate representative carefully because “the defendant’s failure to produce an adequate Rule 30(b)(6) representative provides a strong argument in favor of a CEO deposition,” says Centola.

Keywords: Litigation, apex depositions, corporate litigation


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