It is a principle of law that a corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Nevertheless, corporations have the same capacity to be sued as individuals. And when this occurs, corporations are subject to the same obligations to participate in pre-trial discovery as individuals are, including answering interrogatories, producing documents and sitting for depositions.
Obviously, the deposition of a corporation must be conducted through a natural person who can speak for the corporation. Rule 30(b)(6) of the Federal Rules of Civil Procedure contemplates this specialized form of deposition and provides a mechanism by which a party may subpoena or provide notice of a deposition to a corporation. Kansas law contains a parallel provision in K.S.A. 60-230(b)(6).
Rule 30(b)(6) was created to streamline the discovery process by alleviating the necessity to depose multiple corporate representatives in order to find one with knowledge of relevant facts whose testimony could bind the corporation. What follows is a brief discussion of the obligations imposed by Rule 30(b)(6) as well as some thoughts on the proper avenue for seeking protection from an improper Rule 30(b)(6) deposition notice.
Key Obligations Imposed on the Parties.
Any party to a lawsuit may serve a notice on a corporate party (as well as a corporation that is not a party to the action), seeking to depose “the corporation.” The notice must identify the topics upon which the inquiring party seeks to question the corporation.
The most obvious and significant burdens of the Rule 30(b)(6) mechanism fall on the organization being deposed (the deponent organization). The deponent organization must designate one or more persons knowledgeable in the areas of inquiry identified in the 30(b)(6) notice. The organization (and its attorney) is responsible for the often arduous task of preparing the representatives to answer all questions pertaining to those areas of inquiry. And the stakes are high.
The 30(b)(6) mechanism requires a corporate representative to present the position of the corporation, not his or her own personal opinion. The corporate representative is required to testify as to matters known or reasonably available to the organization, even if not within the individual’s personal knowledge. And such testimony binds the corporation. In fact, there is no distinction between the corporate representative and the corporation. Should the deponent organization fail to properly prepare the representative on a topic included in the notice, this may be treated as a refusal or failure to answer and the corporation may even face sanctions.
But the proper application of Rule 30(b)(6) is not a one-way street—the noticing party must also comply with its obligations. The key requirement of the noticing party is to describe with reasonable particularity the matters for examination. The courts analyze exactly what constitutes “reasonable particularity” on a case-by-case basis, but it is well-established that the phrase “reasonable particularity” equates to “painstaking specificity.”
The particularity requirement is an attempt to counterbalance the onerous burden on the responding party and is necessary for the proper function of Rule 30(b)(6). If the scope of the Rule 30(b)(6) notice is overbroad, it subjects the responding party to a preparation burden that Kansas courts have referred to as “an impossible task.” Thus, it has been said that when the deponent organization “cannot identify the outer limits of the areas of inquiry noticed, compliant designation is not feasible.” For example, if a Rule 30(b)(6) notice indicates that the listed areas of inquiry “include, but are not limited to” the areas enumerated in the notice, it is overbroad.
Objecting To A Rule 30(b)(6) Notice.
When a deponent organization receives a Rule 30(b)(6) notice that it believes is overbroad or otherwise improper in some way, the proper procedure is not to serve written objections on the opposing party. In other words, a deponent organization cannot simply file objections and then state that it will only provide general answers to the topics in accordance with its objections unless given more specific direction by the party seeking the deposition. In fact, written objections are essentially useless. The proper procedure is to move the court for a protective order or move to otherwise limit discovery.
The case of Lykins v. CertainTeed Corp. provides a prime example of the perils of relying on written objections. Lykins v. CertainTeed Corp., 555 Fed. Appx. 791, 796 (10th Cir. 2014). In Lykins, two co-defendant corporations responded to the plaintiff’s Rule 30(b)(6) deposition notices with written objections. One co-defendant produced a corporate representative for deposition but, citing its written objections, instructed the witness not to answer questions on certain topics. The other co-defendant corporation refused to produce a 30(b)(6) witness at all, relying upon its written objections. Neither co-defendant moved for a protective order to limit the scope of the deposition topics.
When the plaintiff filed a motion to compel the co-defendants to fully participate in the depositions, the magistrate judge sanctioned both co-defendants. The magistrate found that instructing the witness not to answer the plaintiff’s questions was impermissible, and that refusing to produce a witness at all constituted an inexcusable failure to appear. The magistrate held that “[t]he only action available to [defendant] . . . was to move for a protective order under Rule 26(c), move to limit the scope of the deposition under Rule 30(d), or move to limit the extent of discovery under Rule 26(b)(1)(C).”
The magistrate’s order was reversed on review by the district court judge. However, the Tenth Circuit Court of Appeals agreed with the analysis of the magistrate judge and remanded the case to the district court with instructions to reinstate the magistrate judge’s award of sanctions.
A party is only entitled to a protective order if it demonstrates that the basis for the protective order falls within one of the categories enumerated in Federal Rule of Civil Procedure 26(c) (or its parallel state court provision, K.S.A. 60-226(c)). Rule 26(c) allows the court to “for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following . . . forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters.”
To establish good cause, the courts generally require the moving party to make a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements. Some common bases for seeking a protective order include claims that the notice contains topics that are irrelevant, overly broad in geographic scope, overly broad in temporal scope, invade the attorney-client or work product privilege, or are cumulative.
A corporate litigant and its counsel must have an appropriate understanding of the unique nature of Rule 30(b)(6) depositions. Both the noticing party and the deponent organization must satisfy the obligations the Rule imposes on them. And the deponent organization must understand in advance of the deposition how to properly respond to topics contained in the Rule 30(b)(6) notice that it views as objectionable under the Rule.
The litigation attorneys at Fleeson Gooing are well-versed in the unique issues that accompany corporate depositions and can assist corporations and others seeking guidance on thise issues.