WA Supreme Court Says No Special Treatment Shielding High Ranking Corporate Officers From Depositions

Andrew M. McKenzie, Edmonds Lawyer

Litigation against corporations can often involve large amounts in controversy.  Even when the underlying dispute is a small one, plaintiffs suing corporations may wish to motivate the corporation to settle on more favorable terms by demanding to take the depositions of high ranking corporate officers.  The officer may fear a loss or their valuable time, or the discomfort or potential embarrassment of having to concede or defend against the corporation’s alleged mistakes or misconduct.  The corporate defendant may decide that, practically speaking, it makes more sense to offer more money to the plaintiff to settle and avoid the deposition altogether.  This dynamic highlights conflicting policy concerns regarding whether there should be any restrictions or heightened standards for deposing high ranking corporate officers.  On the one hand, plaintiffs should have ready access to pertinent witnesses to gather evidence to establish claims; but on the other hand, a fair minded person can appreciate that lack of any restrictions can open the door to tactical abuse.

To stem the potential for abuse, many other jurisdictions have adopted what has come to be known as the “apex doctrine.”  Generally speaking, the doctrine requires that a party seeking to depose a high-level officer at the “apex” of a corporate hierarchy must first show that the witness has “unique, non-repetitive, firsthand knowledge of the facts at issue in the case,” and that “other less intrusive means of discovery such as interrogatories and depositions of other employees, have been exhausted without success.”  Until recently, Washington courts had not explicitly weighed in on whether Washington follows the apex doctrine.  But weeks ago in Stratford v. Umpqua Bank, the Washington Supreme Court explicitly rejected it.  In Stratford, plaintiffs sued a bank and its loan officer for negligent hiring, fraud, and other claims.  After conducting written discovery, plaintiffs sought depositions of three high-level bank executives.  The bank moved the trial court for a protective order, arguing that under the apex doctrine, the executives should not have to submit to depositions because they had no personal knowledge of the underlying facts.  The bank also claimed that the demanded depositions were a harassment tool, and implied that the bank would suffer harm from the depositions going forward because the executives need to invest “incredible amounts of time and resources in the continued bank operations” because the bank was undergoing a merger.  The trial court denied the protective order, allowing the depositions to move forward, and the bank asked the Supreme Court to step in.

The Washington Supreme Court in Stratford affirmed the trial court’s denial of the protective order, and rejected the apex doctrine.  The Court acknowledged that while it could be an abusive tactic to demand depositions of high ranking corporate officials, existing court rules already provide a framework for preventing such abuse, without resort to the apex doctrine.  More specifically, under Civil Rule 26(b)(1)(A) grants trial courts discretion to limit discovery that “is obtainable from some other source that is more convenient, less burdensome, or less expensive.”  The problem with the apex doctrine, in the Court’s view, is that it shifts the burden to the party seeking the deposition, to prove personal knowledge of the witness and that information is not available from less intrusive sources.  Civil Rule 26, by contrast, keeps the burden on the party resisting discovery.  The Court categorized the bank’s position as a request to amend the Civil Rules, which the Court was unwilling to do.  Applying CR 26, the Court held that the bank failed to demonstrate that the trial court abused its discretion; the bank did not present specific facts or argument as to how the depositions would be duplicative, burdensome or harassing, nor did it show what prejudice or harm would result if the trial court did not issue the protective order.  Instead, the bank relied on its assertion that the executives had no personal knowledge, and that plaintiffs could obtain the information elsewhere, without naming any particular source.

Corporate litigants need to appreciate the contours of discoverable information in Washington.  Whether you suspect that the deposition of a corporate officer is not necessary or motivated by improper reasons, or whether you feel a corporate litigant is unreasonably resisting discovery, having experienced litigation counsel will help you to evaluate your best options.  The lawyers at Beresford Booth have a wealth of experience with commercial litigation, including taking and defending depositions.  We would be happy to assist you in cases which may involve depositions of corporate litigants.

To Learn More about WA Supreme Court Says No Special Treatment Shielding High Ranking Corporate Officers From Depositions please do not hesitate to contact us at info@beresfordlaw.com or by phone (425) 776-4100 for assistance.

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