When Nobody Knows the Answers: What to do When a 30 (B)(6) Notice is Served on a Successor Corporation
This article was published in the Trials and Tribulations section of the Trial Tactics Newsletter.
Federal Rule of Civil Procedure 30(b)(6) allows a party to take the deposition of an organization by identifying the topics about which the party seeks information from the corporation. In response, the corporation must produce a witness that can fully answer questions about the properly noticed topics. See. Fed. R. Civ. P. 30(b)(6). Beyond factual inquiries, opposing counsel may seek the company's subjective position on certain topics. See CitiMortgage, Inc. v. Chi. Bancorp, Inc., No. 4:12-CV-00246 CDP, 2013 U.S. Dist. LEXIS 107131 (E.D. Mo. July 31, 2013). This includes the corporation's interpretation of documents and events, and the corporation's position on certain issues in the litigation. See U.S. v. Taylor, 166 FRD 356, 361 (M.D. N.C. 1996).
But, what if the corporation has no employees with knowledge of the topics outlined in the notice? A corporation is not relieved of its duty to designate a corporate witness for the deposition simply because it has no current employees with personal knowledge of the facts. Instead, the corporation is obligated to undertake a thorough investigation of all available resources. Id. This is true even if the corporation has been through a series of mergers and no current employees remain from the original company, or the issues date back several decades and due to the passage of time, memories have been lost or the employees involved have died. This places a significant burden on the successor corporation with no actual knowledge to develop the facts necessary to properly prepare a witness.
A. The Risks of Not Conducting a Thorough Investigation
A company in this situation may be tempted to conduct a quick survey of its employees and documents, and if there is no institutional knowledge, believe it has satisfied its obligations and refuse to answer based on a lack of knowledge. Not only does this not satisfy the duty imposed by Rule 30(b)(6), but it jeopardizes the company's defenses in the litigation. A thorough investigation of the underlying facts is not only necessary to respond to questions at the deposition, but it is critical to allow the corporation to develop its defenses and positions for trial. The 30(b)(6) witness speaks for the company, and his or her statements are binding on the corporation. If the corporation is not prepared to take a position on contested issues, and refuses to do so at the deposition, it will be precluded from later taking a position on that issue at trial. Worse yet, if the corporation takes a position that it later wants to change based on further development of the facts, it may be precluded from presenting evidence or testimony contradicting the position it took at the 30(b)(6) deposition. See W.R. Grace & Co. v. Viskase Corp., No. 90 C 5383, 1991 WL 211647 (N.D. Ill. Oct. 15, 1991); Ierardi v. Lorillard, No. 90-cv-7049, 1991 WL 158911 (E.D. Pa. Aug. 13, 1991).
If after a thorough investigation the company is unable to locate any facts or information to respond to a topic on the 30(b)(6) notice, the corporation should notify opposing counsel. If opposing counsel refuses to withdraw the notice, counsel can present a witness to testify about the efforts undertaken to locate facts and information, and confirm that no information was uncovered. Or, the corporation can move for a protective order to prevent the deposition from proceeding. Either approach requires that counsel present evidence that its investigation was reasonable and thorough. See Kanaji, 2001 LEXIS 8670 at *6 (party seeking to avoid deposition bears the burden of showing that the information sought is not known or reasonably knowable).
B. Reasonably Available Information
Courts have relied heavily on the "reasonably available" language in Rule 30(b)(6) to determine whether an investigation was thorough if the company claims to have no knowledge from which to testify. Courts construe this language broadly to require a corporation to review all available documents, interview former employees and seek information from third parties, if necessary, to develop the relevant facts to respond to the topics. See Taylor, 166 FRD at 361; see also Kanaji v. Phila. Child Guidance Ctr. Of Children's Hosp., No. 00-937, U.S. Dist. 2001 LEXIS 8670 at *5-7 (E.D. Pa. June. 20, 2001). Courts have been unwilling to relieve the corporation's burden, even where the documents were voluminous. See Calzaturficio S.C.A.R.P.A. S.P.A. v. Fabiano Shoe Co., 201 F.R.D. 33, 37 (D. Mass. 2001); and Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633, 639 (D. Minn. 2000).
One challenge that often arises is the most efficient and effective way to conduct the investigation and impart that information to the testifying witness. Corporations will sometimes rely on their counsel to gather and assimilate the information necessary to educate the corporate witness. This is particularly true where corporations have no current employees with knowledge, and the investigation requires interviews of former employees, third parties, and the review of historical documents. In that situation, the attorney is gathering the information for the corporation and developing the corporation's position on certain topics. The attorney must then impart that information to the corporate witness, and prepare the witness to give the corporation's position on the issues. Under those circumstances, counsel are advised to consider the potential waiver of the attorney-client privilege and work product protection in deciding how to educate the corporate witness.
C. The Risk of Waiver of Attorney-Client Privilege or Work Product Protection
At the 30(b)(6) deposition, opposing counsel will inquire into the basis for the positions taken or the source of the facts relied upon by the witness. Counsel may explore the process undertaken to educate the witness, and where the witness acquired the information to respond to the questions posed, including the documents reviewed and the persons interviewed. This line of inquiry naturally puts an attorney's work product and privileged communications at risk. The very identity of the witnesses interviewed and the documents selected for review and education of the witness may reveal work product to opposing counsel.
The case law is unclear whether the sharing of this information with a company witness will constitute a waiver of work product protection or the attorney-client privilege. Due to the risk of waiver, the ABA's Attorney-Client Privilege and Work Product Doctrine handbook recommends that counsel take care not to disclose any work product to a witness. See p. 1114. Some district courts have held that when the deponent is a 30(b)(6) witness, "there is a greater need to know what materials were reviewed by the designee witness in preparation for the deposition since the substance of their testimony may be based upon sources beyond personal knowledge." See Nutramax Lab, Inc. v. Twin Lab, Inc., 183 F.R.D. 458, 469 (D. Md. 1998); see also Ferry v. BJ's Wholesale Club, 2007 U.S. Dist. LEXIS 1808 (W.D. N.C. January 8, 2007) (suggesting that the interest of justice would favor disclosure when a 30(b)(6) deponent's only knowledge is derived from review of a certain document). Courts generally find that opposing counsel is entitled to explore the basis for the positions of the company, and test it through cross-examination. See Taylor, 166 FRD at 362.
D. Strategies for Educating a 30(b)(6) Witness
Although it makes sense for counsel to conduct the interviews of former employees and third parties rather than the designated witness, this approach requires that counsel take steps to protect their work product and privileged communications when imparting that knowledge to the witness. If former employees or third party witnesses have been deposed, the witness should review the deposition transcripts rather than written summaries prepared by counsel.
If the investigation requires interviews of former employees or third parties, where possible, the corporate witness should attend the interviews of former employees or third party witnesses along with counsel to avoid the necessity of communicating the information through counsel to educate the witness. If that is not feasible, counsel must figure out how to get that information to the witness without risking waiver of the privileged portions of the communications. Where possible the information should be imparted verbally rather than in writing. If there are too many interviews, or too much information to effectively educate the witness without providing written summaries, consider providing summaries from which all work product has been deleted. This prevents the witness from having to memorize all of the information imparted verbally, which may lead to a more relaxed witness and less mistakes during the deposition. Counsel should always operate under the assumption that any written summaries may be produced to opposing counsel when deciding whether to give the witness anything in writing.
When providing the witness documents to review, consider providing the entire set of documents to the witness, but verbally highlighting those of importance to the litigation to avoid identifying them for opposing counsel. Counsel should always be vigilant to protect work product or privileged information when educating a witness for the 30(b)(6) deposition.
Use of Rule 30(b)(6) depositions can be a powerful tool for opposing counsel to force a successor corporation to gather historical facts and synthesize that information in a single deposition, or risk being precluded from mounting a defense based upon information gathered later in the discovery process. For a successor corporation, a thorough investigation is the best offense. It enables the company to uncover evidence that it can use to present its defenses, and comply with its obligations to produce a knowledgeable witness. Counsel must always take care to guard its work product in the process.