News & Events

Use “the Pause” to Ensure Your Corporate Deponent is Properly Prepared, Not Vulnerable to Sanctions

Over the past several weeks the COVID-19 pandemic has brought much litigation to a grinding halt.  While frustrating and disruptive to litigants and courts alike, the current “pause” may be an ideal time to revisit whether your organization is prepared for its next “30(b)(6)” deposition.  A recent decision from the Western District of Virginia provides an excellent reminder of what is expected of corporate deponents, and of the consequences they may face when they are not properly prepared.  See Henderson v. General Revenue Corp., et al., 7:17-cv-00292, ECF No. 179 (W.D. Va. Feb. 28, 2020) (adopting report and recommendation at ECF No. 174).

Just like a natural person, a business or other organization can be deposed.  Federal Rule of Civil Procedure 30(b)(6) enables a party to notice the deposition of a public or private organization, regardless of whether that organization is a party to a lawsuit (most states have some equivalent procedure).  Notice must be given of the topics on which discovery is sought “with reasonable particularity.”  Fed. R. Civ. P. 30(b)(6).

The task then falls on the organization to designate the person (or persons) who will represent the organization during the deposition.  If an organization designates more than one representative, it can further designate which person will testify on a given topic.  Nevertheless, the representative “must testify about information known or reasonably available to the organization.”  This is no easy task.

While “no individual can know every possible aspect of an organization’s operations,” and a corporate designee “is not expected to be a corporate encyclopedia,” the ”designee must be reasonably and adequately prepared to answer questions about the relevant deposition topics.”  Runnels v. Norcold, Inc., No. 1:16-CV-713, 2017 WL 3026915, at *1 (E.D. Va. Mar. 30, 2017) (citing In re Vitamins Antitrust Litig., 216 F.R.D. 168, 173 (D.D.C. 2003)).  “[A] good-faith effort” must be made “to designate people with knowledge of the matter sought by the opposing party and to adequately prepare its representatives so that they may give complete, knowledgeable, and non[-]evasive answers in deposition.”  Spicer v. Universal Forest Prod., E. Div., Inc., No. 7:07CV462, 2008 WL 4455854, at *3 (W.D. Va. Oct. 1, 2008).

“Producing an unprepared witness is tantamount to a failure to appear,” thereby authorizing sanctions under Federal Rule of Civil Procedure 37(d).  See United States v. Taylor, 166 F.R.D. 356, 363 (M.D.N.C.), aff’d, 166 F.R.D. 367 (M.D.N.C. 1996).  These sanctions include the court establishing certain facts in favor of the prevailing party; striking certain claims, defenses, or pleadings; dismissing an action completely; or entering default judgment against the unprepared party.  See Fed. R. Civ. P. 37(b)(2)(A)(i)-(vi) and (d)(3).  In addition, the court must require the party failing to act, the attorney advising that party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure unless the failure was substantially justified, or other circumstances make an award of expenses unjust.  See Fed. R. Civ. P. 37(d)(3).  The imposition of any sanctions is reviewed under an abuse of discretion standard if appealed.

In Henderson, the court found that the defendant in question “did not properly prepare its corporate designee for his deposition” because “[al]though clearly possessed a wealth of general knowledge about” the company, “he was unable to respond to a number of listed topics, including documents specifically listed in the 30(b)(6) notice.”  ECF No. 174 at 5.  There, the plaintiff brought claims under the Fair Debt Collection Practices Act, 15 U.S.C § 1692, et seq., alleging that the defendants’ attempts to collect plaintiff’s student loan debts were in violation of the Act.  The plaintiff noticed a 30(b)(6) deposition of one of the defendants listing 25 topics, and the defendant subsequently designated one of the company’s vice presidents to represent it during the July 19, 2019 deposition.

Discussing the defendant’s failure to properly prepare, the court noted that its designee could not answer questions regarding the plaintiff’s account or whether the defendant performed any calculations as to the principal, interest or fees that the plaintiff owed, even though these topics were at the core of the litigation.  The court further noted that the designee had spent less than a day preparing for the deposition, and he waited until the day before the deposition before beginning to prepare.

By way of sanctions, the court reopened the deposition and ordered the defendant to pay reasonable expenses associated with the second deposition, including the plaintiff’s attorney’s fees.  The court also ordered that the deposition occurs in the city where the plaintiff’s attorneys were located if requested.  The court, however, denied the plaintiff’s request to strike the defendant’s motion for summary judgment.

It will only be a matter of time before conventional depositions resume or corporate depositions are ordered to proceed “virtually” (more on that to follow).  Briefly revisiting your preparation now may save time, money and headache down the road.