When can top executives in large corporations and other organizations avoid testifying in litigation involving the organization? Under a recent ruling by Federal Judge William Conley of Madison, the answer turns, in part, on the organization’s ability to show that the executive lacks unique knowledge of the pertinent facts sought or established through his or her testimony. The decision provides important guidance for in-house counsel to consider when a notice of deposition for a key executive is received and offers insights on an issue that has received little attention from our appellate courts.
While depositions of high-ranking corporate executives are occasionally necessary, no in-house lawyer wants to have to tell the boss that he or she is being deposed. Worse than the deposition itself is the possibility that a plaintiff-side lawyer is trying to gain leverage by noticing a deposition even where an executive is only tangentially connected to a case. This situation, and the understandable desire of defense attorneys to avoid it, has given rise to the so-called “apex” doctrine, an unsettled point of law in the Seventh Circuit that was recently confronted by Judge William Conley in Epic Systems Corp. v. Tata Consultancy Services, Ltd., No. 14CV748 (W.D. Wis. Jan. 22, 2016).
The facts of the case are these: Epic alleged that U.S. employees of the Indian conglomerate Tata improperly accessed Epic’s computer network and downloaded thousands of proprietary files in order to bolster Tata’s competing health care software business. Epic sought to compel the deposition of Natarajan Chandrasekaran, Tata’s Mumbai-based CEO. Epic alleged that Chandrasekaran was aware of the alleged trade secret theft, had personally recommended that Tata hire one of the employees involved in the alleged theft, and was involved in the marketing of Tata’s competing software in the United States.
Tata opposed the deposition, and argued that Chandrasekaran was a busy executive whose involvement in the facts of the case was so limited that his deposition would be unreasonably burdensome and that the information sought was readily available from other sources. Tata also filed a declaration from Chandrasekaran in which he asserted he had no memory of discussing the marketing strategy for the competing software, and that he further had no memory of being involved in Tata’s internal investigation of the allegation that Tata employees improperly accessed Epic’s network.
Epic countered that Chandrasekaran did have personal knowledge relevant to the action and that Tata’s attempt to shield him from deposition under the so-called “apex” doctrine was improper because the doctrine has not been adopted in the Seventh Circuit; and that in any event, Chandrasekaran’s personal knowledge would preclude application of the doctrine.
Judge Conley allowed Epic to take Chandrasekaran’s deposition, but narrowly limited its scope and duration. Judge Conley noted that Chandrasekaran’s declaration did not specifically disclaim personal knowledge of the alleged theft, his role in the hiring of employees involved in the alleged theft, nor of his involvement in the marketing of the Tata software at issue in the case. He, therefore, ordered that Chandrasekaran be made available for deposition on those three topics for one hour each.
Although Judge Conley made no direct mention of the parties’ arguments regarding application of the “apex” doctrine, his opinion is consistent with it. The doctrine holds that, due to “tremendous potential for abuse or harassment” in depositions of corporate executives, the party seeking the deposition must demonstrate that the executive has “unique first-hand, non-repetitive knowledge of the facts at issue in the case” and that the party seeking the deposition has “exhausted other less intrusive discovery methods.” Apple Inc. v. Samsung Elecs. Co., 282 F.R.D. 259, 263 (N.D. Cal. 2012). As Epic noted in its briefing on the issue, not all federal circuits recognize the doctrine. See, e.g., Serrano v. Cintas Corp., 699 F.3d 884, 902 (6th Cir. 2012) (reversing a lower court decision relying on the doctrine, and explicitly rejecting it in favor of basic Rule 26(c) analysis). Further, the doctrine is limited by its terms to executives at fairly large organizations, as smaller firms will have a hard time satisfying a court that the executive has no first-hand knowledge of a dispute.
Judge Conley’s opinion noted that, based on the gaps in Chandrasekaran’s declaration, he did have potentially unique knowledge relevant to the case. Additionally, the Seventh Circuit decision to which Judge Conley cited, Patterson v. Avery Dennison Corp., recognized how burdensome the deposition of a high-ranking executive can be for large corporation, even if it did not explicitly recognize the “apex” doctrine by name. 281 F.3d 676, 681 (7th Cir. 2002). As to the burden, Judge Conley apparently placed it on Tata, the party seeking to preclude the deposition. Tata’s failure to present a declaration adequately disclaiming personal knowledge persuaded Judge Conley to allow a limited scope deposition of Chandrasekaran.
While the Epic Systems case does not conclusively resolve the position of the Seventh Circuit on the “apex” doctrine, it does provide some takeaways for in-house counsel when a notice of deposition for a key executive is received:
- Try and identify all the topics on which the opposing attorney wishes to depose the executive, either from the notice of deposition or in a subsequent meet-and-confer
- With those topics in mind, try to identify all employees who could provide the same (or better) information, but whose deposition would be less intrusive or burdensome for the corporation
- Pay careful attention to the limits of the executive’s knowledge, and then ensure that those limits are affirmatively stated in any declarations
- Carefully document the burden posed by the deposition, and ensure that the burden is clearly stated in any court filing