This article was originally published in the February, 2008 issue of DRI's For the Defense magazine.
It is quite common for a corporation to be a party to a lawsuit. However, a corporation is considered to be a "legal fiction." How, then, can a corporation participate in the processes and procedures involved in the defense of a lawsuit? Ultimately, the defense of a corporation, like any other defense, depends on the testimony of human beings. Isaac v. North Carolina Dept. of Transp., 192 Fed. Appx. 197, 201 (4th Cir. 2006) ("An organization can only act through human beings"). In fact, "[i]t is well-settled that a corporation is a creature of legal fiction which can act only through its officers, directors and other agents." MicroSignal Corp. v. MicroSignal Corp., 147 Fed. Appx. 227, 231 (3d Cir. 2005).
The Federal Rules of Civil Procedure recognize that a corporation may only participate in a lawsuit by relying on the testimony of its designated representatives. See Fed. R. Civ. P. 30(b)(6) (As amended, eff. December 1, 2007). Pursuant to the Federal Rules, a party may subpoena and/or notice the deposition of a corporation through a special procedure commonly referred to as a "30(b)(6) deposition." Rule 30(b)(6) states:
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. Accordingly, Rule 30(b)(6) is intended to codify the manner in which testimony may be obtained from a legal entity in a civil action. This article focuses on the scope and application of Rule 30(b)(6) and a corporation's duties thereunder.
The Substance Of The Notice Of Deposition And/Or Subpoena
Under Rule 30(b)(6), a party to a lawsuit may notice the deposition of a corporation, as opposed to naming an individual agent or employee of the corporation expressly, provided that the party "describe with reasonable particularity the matters for examination." Id. (emphasis added). The "reasonable particularity" requirement will be enforced by the court and a generic notice of deposition is not sufficient. See, e.g., Kalis v. Colgate-Palmolive Co., 231 F.3d 1049, 1058 (7th Cir. 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." Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633, 638 (D. Minn. 2000); see also 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).
Although Rule 30(b)(6) does not expressly limit the subject matter or number of topics that may questioned in the deposition, the discovery protections available to an individual deponent are also available to a corporate representative. See Fed. R. Civ. P. 26(c) (permitting the court to make certain rulings "necessary to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense"). However, unlike the deposition of an individual deponent, a corporation receives early notice of the intended topics of the 30(b)(6) deposition. Consequently, counsel for the corporation should move quickly to resolve any potential discovery dispute with the plaintiff related to the identified topics and, if no agreement can be reached, request a protective order from the court. Counsel's failure to take immediate action following receipt of a potentially objectionable notice of deposition can result in an adverse effect on the corporate client. See, e.g., Landsport Corp. v. Canaramp Corp., 2006 WL 4692567, *2 (M.D. Fla. 2006).
Moreover, although Rule 30(b)(6) contains no express limitations on discovery, courts, on occasion, have found that a deposition notice can be overbroad. For instance, in Reed v. Bennett, 193 F.R.D. 689, 692 (D. Kan. 2000), the court found a notice of deposition to be overbroad when the notice listed topics of inquiry, but expressly stated that the topics of inquiry would include, but would not be limited to, the topics listed in the notice. A party should not be expected to respond to such an overbroad and general request because "[a]n overbroad Rule 30(b)(6) notice subjects the noticed party to an impossible task.... [because] the defendant cannot identify the outer limits of the areas of inquiry noticed." Id.
Upon receipt of a Rule 30(b)(6) notice, defense counsel should thoroughly review the description of the matters of inquiry to ensure that they are reasonably identified. In the event that the notice of deposition fails to identify the matters of inquiry, or in the event that it seeks matters outside of the scope of Rule 26, defense counsel should act, as quickly as possible, to have plaintiff's counsel to revise the notice and, if an agreement cannot be reached, seek a protective order from the court.
Topics Beyond The Scope Of The Notice
As a Rule 30(b)(6) deposition takes place, it is common for the questioning party to exceed the scope of the topics contained in the Rule 30(b)(6) notice. Jurisdictions are currently divided on 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 U.S. ex rel. Tiesinga v. Dianon Systems, Inc., 240 F.R.D. 40, 42 (D. Conn. 2006); Paparelli v. Prudential Ins. Co., 108 F.R.D. 727, 729–30 (D.Mass.1985); King v. Pratt & Whitney, 161 F.R.D. 475, 476 (S.D. Fla. 1995).
In Paparelli v. Prudential Ins. Co. of America, 108 F.R.D. 727, 730 (D.C. Mass. 1985), the 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." In setting out the reasoning for its ruling, the Paparelli court stated:
First, the purpose of the rule was to afford the party deposing the corporation the ability to obtain information on certain matters in the form of testimony on behalf of the corporation without having to name the individual in the corporation to be deposed. It makes no sense for a party to state in a notice that it wishes to examine a representative of a corporation on certain matters, have the corporation designate the person most knowledgeable with respect to those matters, and then to ask the representative about matters totally different from the ones listed in the notice.
Second, another purpose of the rule was to allow the corporation to designate a person who was prepared to answer questions on certain matters on behalf of the corporation. The rule was designed to avoid the problem which arose when a party noticed a particular officer of the corporation and the corporation had no way of knowing what matters were going to be the subject of the inquiry and whether the particular officer whose deposition had been noticed knew anything about those matters. Obviously, this purpose of the rule would be effectively thwarted if a party could ask a representative of a corporation produced pursuant to a Rule 30(b)(6) deposition notice to testify as to matters which are totally unrelated to the matters listed in the notice and upon which the representative is prepared to testify.
Third, the fact that the notice must list the matters upon which examination is requested "with reasonable particularity" also lends weight to the notion that a limitation on the scope of the deposition to the matters specified in the notice is implied in the rule. If a party were free to ask any questions, even if "relevant" to the lawsuit, which were completely outside the scope of the "matters on which examination is requested", the requirement that the matters be listed "with reasonable particularity" would make no sense. With this in mind, the sentence which reads that "[t]he persons so designated shall testify as to matters known or reasonably available to the organization" can be read in harmony with the rest of the rule if the word "matters" has the same meaning as it does when used earlier in the rule, i.e. "matters upon which examination is requested". As to "matters upon which examination is requested", the representative has the duty to answer questions on behalf of the organization to the extent that the information sought is "known to the organization or reasonably available to it".
Id. at 729–30. However, the current trend followed by courts appears to hold that a Rule 30(b)(6) deposition should not be limited to those matters contained in the notice. In King v. Pratt & Whitney, a Div. of United Technologies Corp., 161 F.R.D. 475, 476 (S.D. Fla. 1995), the United States District Court for the Southern District of Florida examined Paparelli, but declined to follow its holding. Instead, the King court held:
Rule 30(b)(6) should not be read to confer some special privilege on a corporate deponent responding to this type of notice. Clearly, Plaintiff could simply re-notice a deponent under the regular notice provisions and ask him the same questions that were objected to. However, Plaintiff should not be forced to jump through that extra hoop absent some compelling reason. Rather, the Rule is best read as follows:
- Rule 30(b)(6) obligates the responding corporation to
provide a witness who can answer questions regarding the
subject matter listed in the notice.
- If the designated deponent cannot answer those
questions, then the corporation has failed to comply with
its Rule 30(b)(6) obligations and may be subject to
sanctions, etc. The corporation has an affirmative duty to
produce a representative who can answer questions that are
both within the scope of the matters described in the
notice and are "known or reasonably available" to
the corporation. Rule 30(b)(6) delineates this affirmative
- If the examining party asks questions outside the scope
of the matters described in the notice, the general
deposition rules govern (i.e., Fed. R. Civ. P.
26(b)(1)), so that relevant questions may be asked and no
special protection is conferred on a deponent by virtue of
the fact that the deposition was noticed under
- However, if the deponent does not know the answer to
questions outside the scope of the matters described in the
notice, then that is the examining party's
This interpretation does not render the "describe with reasonable particularity" language "superfluous"; rather, it imposes an obligation on a corporation to provide someone who can indeed answer the particular questions presaged by the notice. Rule 30(b)(6) does not limit what can be asked at deposition.
Since there is no specific limitation of what can be asked at deposition, the general deposition standards govern. The reason for adopting Rule 30(b)(6) was not to provide greater notice or protections to corporate deponents, but rather to have the right person present at deposition. The Rule is not one of limitation but rather of specification within the broad parameters of the discovery rules. This is made clear by both the Advisory Committee's statement that 30(b)(6) "should be viewed as an added facility for discovery..." and the Rule's final sentence: "This subdivision (b)(6) does not preclude taking a deposition by any other procedure authorized in these rules." Fed. R. Civ. P. 30(b)(6) advisory committee's note. This Court sees no harm in allowing all relevant questions to be asked at a Rule 30(b)(6) deposition or any incentive for an examining party to somehow abuse this process.
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.
King, 161 F.R.D. at 476. The holding of King has been adopted by the majority of jurisdictions in the United States. See, e.g., Detoy v. City and Cty. of S.F., 196 F.R.D. 362, 367 (N.D. Cal. 2000); Cabot Corp. v. Yamulla Enters., 194 F.R.D. 499 (M.D. Pa. 2000).
Corporations want to limit discovery to those issues contained in the notice of deposition. Corporations argue that advanced notice of the deposition topics allows counsel for the corporation to prepare the designated representative to testify on the matters contained in the notice on behalf of the corporation. Thus, if the party seeking the discovery is permitted to exceed the scope of the notice, the corporate representative then becomes subject to a nearly infinite number of topics. As a result, corporations have argued that a court's failure to enforce the limitation subjects the corporation to ambush because there is no reasonable way to prepare a witness without some understanding of the line of questioning. However, according to the District Court for Nevada:
Several factors ameliorate these concerns. First, "if the deponent does not know the answer to questions outside the scope of the matters described in the notice, then that is the examining party's problem."... Second, counsel "may note on the record that answers to questions beyond the scope of the Rule 30(b)(6) designation are not intended as the answers of the designating party and do not bind the designating party."... "Prior to trial, counsel may request from the trial judge jury instructions that such answers were merely the answers or opinions of individual fact witnesses, not admissions of the party."
U.S. E.E.O.C. v. Caesars Entertainment, Inc., 237 F.R.D. 428, *433 (D. Nev. 2006) (citations omitted). Consequently, courts have been reluctant to limit discovery to those matters contained in the Rule 30(b)(6) notice. The general trend appears to follow the approach adopted by King and all matters, within the scope of Rule 26, will be subject to questioning.
Regardless of the jurisdictional rule on the scope limitation of Rule 30(b)(6), it is imperative that defense counsel immediately object to any line of questioning that exceeds the scope of the notice. Failure to object may result in the waiver of the objection. U.S. ex rel. Tiesinga, 240 F.R.D. at 42. In a jurisdiction that limits the discovery to matters contained in the notice, it is not appropriate for defense counsel to simply instruct his or her client not to answer. Instead, 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." Id. at 42–43. In jurisdictions where no limitation applies, defense counsel should still object to any line of questioning outside of the scope of the notice to ensure that he or she maintains the right to contend that the deposition response is not binding on the corporation.
Furthermore, in light of the current trend favoring non-limitation of the Rule 30(b)(6) discovery, corporate counsel must take extra steps to make certain that the individual being deposed is sufficiently prepared for the deposition. Unfortunately, this likely means that counsel should prepare every designated corporate representative for an individual/personal deposition regarding the particular subject matter, in addition to preparation of the witness as a corporate representative.
Designation Of The Corporate Representative
Following receipt of the notice of deposition, and assuming that the notice is compliant with Rule 30(b)(6), several duties are triggered on the part of the responding entity:
First, the responding entity must designate a deponent who is knowledgeable on the subject matter identified as the area of inquiry.... Second, the responding entity must designate more than one deponent if multiple deponents are necessary to respond to all of the relevant areas of inquiry.... Third, the responding entity must prepare the deponent so that he or she can testify on matters not only within his or her personal knowledge, but also on matters reasonably known by the responding entity.... Fourth, if it becomes apparent during the deposition that the designated deponent is unable to respond to the relevant areas of inquiry, then the responding entity has the duty to substitute the designated deponent with a knowledgeable deponent.
U.S. ex rel Fago v. M & T Mort. Corp., 235 F.R.D. 11, 22–23 (D. D.C. 2006). The "ultimate purpose" of the corporation's duties set forth above is to "prevent serial depositions of various witnesses without knowledge within an organization and eliminate 'bandying,'" which is the name given to the practice in which people are deposed in turn but each disclaims knowledge of facts that are clearly known to persons in the organization and thereby to the organization itself. Alexander v. F.B.I., 186 F.R.D. 137, 141 (D. D.C. 1998).
The ability to designate its own witness(es) can also work in favor of the corporation. There can be no dispute that some individuals make stronger witnesses than others. Although a particular corporate representative may have knowledge of particular facts, a corporation may elect to designate a more "personable" individual to testify on its behalf. Moreover, it is likely that some individuals will be more successful in expressing the corporation's position as it relates to the particular matters contained in the notice. It should be noted, however, that the examining party does have the ability to designate particular individuals to speak on behalf of the corporation, provided, however, such individuals are shown to be directors, officers, and/or managing agents. See In re Honda American Motor Co., Inc. Dealership Relations Litigation, 168 F.R.D. 535, 540 (D. Md. 1996); see also Founding Church of Scientology of Washington, D.C. v. Webster, 802 F.2d 1448, 1451 (D.C. Cir. 1986) (Advisory Committee Note makes clear that new procedure does not supplant but "'supplements existing practice whereby the examining party designates the corporate official to be deposed'").
In preparing for the Rule 30(b)(6) deposition, it is important to understand the purpose of the rule. The testimony elicited at the Rule 30(b)(6) deposition represents the knowledge of the corporation, not of the individual deponents. The designated witness is "speaking for the corporation," and this testimony must be distinguished from that of a "mere corporate employee" whose deposition is not considered that of the corporation and whose presence must be obtained by subpoena. 8A Wright, Miller & Marcus §2103, at 36–37.
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. Massachusetts 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 Company, No. 88C10349, 1993 WL 543027, 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 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. 90-7049, 1991 WL 158911 (E.D. Pa. Aug. 13, 1991).
The corporate representative, in essence, represents the corporation just as an individual represents him- or herself at a deposition. This prevents a corporation from failing to take an affirmative position on a matter and then, at trial, deceitfully selecting the most convenient answers from a number of witnesses as the "corporate position." See Lapenna, 110 F.R.D. at 25.
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. In that instance, 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, 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).
Moreover, a corporation's duty to present a Rule 30(b)(6) representative is not relieved by a lack of any witnesses with personal knowledge of the matters at issue. See, e.g., Dravo Corp., 164 F.R.D. at 75; U.S. v. Massachusetts Indus. Finance Agency, 162 F.R.D. at 412. In such instances, 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. Ierardi, 1991 WL 158911 at *2. In instances where information simply cannot be obtained by any reasonable source, a corporation, like an individual deponent, may plead lack of memory. U.S. v. Taylor, 166 F.R.D. at 361. However, even in that instance, 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. Likewise, "[t]he attorney for the corporation is not at liberty to manufacture the corporation's contentions. Rather, the corporation may designate a person to speak on its behalf and it is this position which the attorney must advocate." Id.
Interplay Between Privileges And Rule 30(b)(6)
Generally, a corporate party may not rely on privilege in an effort to avoid providing Rule 30(b)(6) testimony. In Willing v. Community Ass'n Underwriters of America, Inc., 2007 WL 505682, *1 (W.D. Wash. 2007), the Western District of Washington dealt with an insurance coverage dispute in which the plaintiffs, condominium developers, alleged that the defendant had a duty to defend and indemnify them in an underlying construction defect and property damage lawsuit. The plaintiffs forwarded their claims to the defendant and requested coverage under their policy with the defendant. The defendant asserted that, immediately upon receipt of the plaintiffs' claims, it forwarded the claims to its defense counsel. At that time, defense counsel authored the letter denying coverage to the plaintiffs. As a result, the plaintiffs filed their suit against the defendants and requested Rule 30(b)(6) depositions of the defendants. In the depositions notices, which contained eight topics, the plaintiffs requested that the corporation designate corporate representatives with knowledge regarding, inter alia, the basis for the denials of the claims.
Defense counsel objected to the deposition notices and "informed plaintiffs' counsel that all the 30(b)(6) witnesses 'would be able to say at deposition was that they had received the claim, recognized coverage problems and sent the matter to counsel, and that thereafter all communications were privileged.'" Id. at *2. As a result, the defendants ultimately sought a protective order stating that the attorney client privilege protected the information sought by the plaintiffs. The Willing court held that:
Plaintiffs will not ask, and [defendant] will not be required to disclose its counsel's advice or communications with her. Instead, plaintiffs are entitled to ask [defendant] to explain the reasons for its business decision, a decision that it, not its counsel, made pursuant to its statutory obligation and its policy. Defendants cannot avoid their duty by forwarding the claim to outside counsel.
Plaintiffs are also entitled to inquire about the assertions set forth in the denial letter. For example, the denial letter states, "It is doubtful that these allegations are of 'property damage' within the coverage of the policy, such as to implicate the duty to defend." Plaintiffs are entitled to know what facts [defendant] believes underlie that assertion and the assertion that plaintiffs acted "intentionally." Although defendants argue that the letter was based on the advice of counsel, defendants cannot use the denial letter to assert their defenses but refuse to answer questions about those defenses. Moreover, although defendants argue that responding to the questions listed in the notice would require them to disclose their counsel's legal analysis, they have already disclosed that analysis through the denial letter counsel drafted. If [defendant] is unable or unwilling to provide a witness who can answer plaintiffs' questions regarding its business decision to deny the claim, it may be precluded from offering certain evidence later.
Id. at *3. Accordingly, pursuant to Willing, a party simply cannot rely on advise of counsel as a manner of avoiding its obligations under Rule 30(b)(6).
Likewise, in Protective Nat'l Ins. Co. v. Commonwealth Ins. Co., 137 F.R.D. 267, 272–77 (D. Neb. 1989), the United States District Court for Nebraska held that a 30(b)(6) representative must provide the factual basis for its allegations or defenses and established four guidelines for conducting such a deposition:
First,... [the deponent] has an obligation to be prepared as a Rule 30(b)(6) spokesperson. Second, [the deponent], to the extent that she is able, must recite the facts upon which [defendant] relied to support the allegations of its answer and counterclaim which are not purely legal, even though those facts may have been provided to her or her employer by [defendant's] lawyers. Third, [plaintiff] is directed, when formulating questions to [the deponent], to avoid asking questions of [the deponent] which are intended to elicit [defendant's] counsel's advice, [defendant's] counsel's view as to the significance or lack thereof of particular facts, or any other matter that reveals [defendant's] counsel's mental impressions concerning this case.... Finally, [the deponent] is specifically obligated to produce at the deposition such documents coming within the Rule 30(b)(6) notice and request to produce which are not privileged. In this regard, [the deponent] is obligated, as is her employer, [defendant], to comply with the Rule 30(b)(6) notice to produce, notwithstanding [defendant's] counsel's belief that it may (or may not) have already complied with similar discovery requests.
Protective Nat'l Ins. Co. v. Commonwealth Ins. Co., 137 F.R.D. at 283 (citation omit ted); see also Ferry v. BJ's Wholesale Club, 2007 WL 75375 (W.D. N.C. 2007) (stating, in dicta, that the "'interest of justice' would... likely favor disclosure" of privileged documents reviewed by a Rule 30(b)(6) representative to prepare for the deposition when his only knowledge of a particular issue is derived from a review of a particular document).
As a result of the foregoing decisions, it is important for a corporation to be aware that it cannot exercise claims of privilege to avoid its obligations to provide testimony on its position in the suit. While mental impressions, advice, and/or views of a lawyer remain protected through privilege, a corporation must provide the facts upon which it relied to support its position in a case, even if those facts were provided by the corporation's lawyer.
Commonly, the knowledge of a corporation is maintained more thoroughly by a former employee of the corporation. In such instances, the corporation must take action to inform and educate the 30(b)(6) representative regarding the actions taken by the former employee. See, e.g., United States v. Massachusetts Indus. Fin. Agency, 162 F.R.D. 410, 412 (D. Mass. 1995) (rejecting corporation's arguments that it was not required under Rule 30(b)(6) to educate its witness about actions taken by former employees of the corporation).
Another option available to the corporation is to designate a former employee as the corporation's 30(b)(6) representative. See, e.g., Magnivision, Inc. v. Bonneau Co., 2003 WL 23320550, *3 (C.D. Cal. 2003); Ierardi, 1991 WL 158911 at *2. Two caveats exist when a corporation designates a former employee as its 30(b)(6) representative. First, "it cannot be supposed that... former employees would identify their interests with those of their former employers to such an extent that admissions by them should be held to bind the employer." Proseus v. Anchor Line, Ltd., 26 F.R.D. 165, 167 (S.D.N.Y.1960). Second, an argument could be made that the corporation has waived its attorney-client and/or work product privilege by designating the former employee as the corporate representative. See, e.g., Magnivision, Inc., 2003 WL 23320550, at *3; but see Miramar Const. Co. v. Home Depot, Inc., 167 F. Supp. 2d 182, 183 (D. Puerto Rico 2001) (finding that attorney client privilege protects communications between counsel and former employee of corporation who was designated as corporate representative.).
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 then binding on the party that designated the witness. See Sabre v. First Dominion Capital, LLC, 2001 WL 1590544, at *1, 2001 U.S. Dist. LEXIS 20637, at *2 (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."). This general rule is appropriate because the Rule 30(b)(6) deposition is one of the few facets in which the questioning party may obtain the position of the corporate party.
However, while Rule 30(b)(6) testimony is binding, most authorities hold that it does not constitute a judicial admission that ultimately decides issues and cannot be contradicted or used for impeachment purposes. Industrial Hard Chrome, Ltd. v. Hetran, Inc., 92 F. Supp. 2d 786, 791 (N.D. Ill.2000) ("[Rule 30(b)(6)] testimony is not a judicial admission that ultimately decides an issue. 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, 992–93 (E.D. La. 2000) ("[While] court may disregard 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.").
For instance, in W.R. Grace & Co. v. Viskase Corp., 1991 WL 211647, *2 (N.D. Ill. 1991), the defendant requested that the court exclude testimony of a corporate officer at trial that contradicted a corporate representative's prior testimony in a Rule 30(b)(6) deposition. The W.R. Grace & Co. court permitted the testimony of the corporate officer at trial and held:
It is true that a corporation is "bound" by its Rule 30(b)(6) testimony, in the same sense that any individual deposed under Rule 30(b)(1) would be "bound" by his or her testimony. All this means is that the witness has committed to a position at a particular point in time. It does not mean that the witness has made a judicial admission that formally and finally decides an issue. Deposition testimony is simply evidence, nothing more. Evidence may be explained or contradicted. Judicial admissions, on the other hand, may not be contradicted.... [The defendant] ignores the differences between evidentiary testimony and judicial admissions.
Id. at *2 (citation omitted); but see Ierardi, 1991 WL 158911 at *2 (holding that party cannot introduce evidence during trial contradicting previous statements by Rule 30(b)(6) designee); Taylor, 166 F.R.D. at 362 (finding that a statement by a Rule 30(b)(6) designee is not a judicial admission, but can be binding on the corporation as admission against interest under Fed. R. Evid. 804(b)(3)).
The purpose behind allowing a corporation the opportunity to alter or amend its prior testimony is the same purpose behind allowing an individual to alter or amend his or her testimony. Simply put, whether from fatigue, misunderstanding, or a simple mistake, it is possible that testimony provided at a deposition may be incorrect. To bind a corporation to that incorrect information would work to the disfavor of corporations by disallowing a general right provided to all litigants to a case. For this reason, testimony of a corporate representative should have same weight and effect on the corporation as that of an individual deponent has on him- or herself.
Sanctions For Failure To Provide A Prepared Witness
Finally, a party that fails to provide a knowledgeable and prepared corporate representative can be subject to sanctions under the Federal Rules of Civil Procedure. As stated above, a corporation's obligations to prepare a corporate representative can be burdensome and time-consuming. However, such an obligation "is necessary in order to make the deposition a meaningful one and to prevent the 'sandbagging' of an opponent by conducting a half-hearted inquiry before the deposition but a thorough and vigorous one before the trial. This would totally defeat the purpose of the discovery process." U.S. v. Taylor, 166 F.R.D. 356, 362 (M.D. N.C. 1996).
The Fifth Circuit has held that "[w]hen a corporation or association designates a person to testify on its behalf, the corporation appears vicariously through that agent. If that agent is not knowledgeable about relevant facts, and the principal has failed to designate an available, knowledgeable, and readily identifiable witness, then the appearance is, for all practical purposes, no appearance at all." Resolution Trust Corp. v. Southern Union Co., Inc., 985 F.2d 196, 197 (5th Cir. 1993). In Resolution Trust Corp., the plaintiff corporation possessed documents that clearly identified a particular witness as having personal knowledge of the subject matter contained in the Rule 30(b)(6) notice. However, the plaintiff corporation did not furnish those documents or designate the proper witness until after it had designated tow other corporate representatives with limited knowledge. As a result, the trial court found that the defendant's counsel, in essence, traveled from Washington, D.C., to Dallas for a useless deposition. Based upon this finding, the Fifth Circuit affirmed the district court's award of fees and costs as a sanction under Rule 37(d) of the Federal Rules of Civil Procedure.
Moreover, a corporation can be sanctioned for its previous failure to comply with its Rule 30(b)(6) obligations in prior, unrelated litigation. In Paul Revere Life Ins. Co. v. Jafari, 206 F.R.D. 126, 128 (D. Md. 2002), the court noted that the corporate parent of the plaintiff, Paul Revere Life Ins. Co., was UnumProvident Corporation. The court further noted that "[a]t least one Court has taken a UnumProvident company to task for its perceived 'corporate business plan' for dealing with litigation that, the Court opined, operated in derogation of that Court's local rules as well as the Federal Rules of Civil Procedure." Paul Revere Life Ins. Co., 206 F.R.D. at 128 (citing Frederick v. Unum Life Ins. Co., 180 F.R.D. 384 (D. Mont. 1998)). As a result, while considering prior discovery violations, the court sanctioned the plaintiff corporation for its failure to provide a knowledgeable and prepared corporate representative.
As the information set forth above shows, Rule 30(b)(6) provides the general framework by which testimony may be obtained from a corporation. However, the scope of the rule exceeds the language contained therein. Upon receipt of a notice of deposition for a corporation, it is important that defense counsel recognize the topics and issues that are subject to questioning. Defense 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. Failure to prepare the corporation's designated representative fully could result in adverse testimony binding the corporation in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.