There a probably few things in legal practice as annoying as getting a Notice of Deposition for your client's in-house counsel.
Are you willing to pursue a Motion for a Protective Order to prevent the deposition? The Defendant in a case before the Business Court tried that, but its Motion was denied in an Order and Opinion last week from Chief Judge Gale, in Edison v. Acuity Healthcare, 2016 NCBC 82.
The proposed deponent is general counsel and vice president of compliance and risk management for Defendant Acuity The Defendant, in moving for a Protective Order, said that her deposition would be pointless because it "would be nothing more than a series of objections and instructions to [her] not to answer." Op. ¶10.
The Shelton Rule
The Defendant premised this Motion on something called the "Shelton rule." That "rule," if indeed it is a "rule," came from the federal appellate court decision in Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir. 1986). The rule provides some protection to an attorney who is to be subjected to a deposition. The Shelton Court held that a party asking to take the deposition of opposing counsel had to show that:
(1) no other means exist to obtain the information than to depose opposing counsel; (2) the information sought is relevant and nonprivileged; and (3) the information is crucial to the preparation of the case.
No North Carolina appellate court (federal or state) has adopted the Shelton approach, although it has been followed by two federal district courts in North Carolina. Op. ¶13. (citing CTB, Inc. v. Hog Slat, Inc., No. 7:14-CV-157-D, 2016 U.S. Dist. LEXIS 39024, at *16–19 (E.D.N.C. Mar. 23, 2016); N.F.A. Corp. v. Riverview Narrow Fabrics, Inc., 117 F.R.D. 83, 85–86 (M.D.N.C. 1987)). It was also followed by former Business Court Judge Murphy (in Blue Ridge Pediatric & Adolescent Med., Inc. v. First Colony Healthcare, LLC, 2012 NCBC 45). I wrote about that decision when it was decided four years ago.
Does The Shelton Rule Apply To In-House Counsel?
The Plaintiff argued that the restrictive Shelton rule should not be applied to in-house counsel. Some Courts have so ruled (cited in Op. ¶15). Judge Gale rejected that position, stating that he discerned "no policy reasons that should prevent the Shelton rule from extending to in-house counsel" depending on the objective of the deposition. He might take a different position "when a deposition targets only litigation strategies rather than necessary, factual information." Op. ¶16.
The proposed in-house counsel deponent had been identified by another corporate employee, in a Rule 30(b)(6) deposition, as "the person who could best speak to certain clinical care standards and to consistency among Acuity's hospitals." Op. ¶18.
Given her knowledge of facts relevant to the litigation, coupled with the lack of any "evidence . . . showing that she has been substantially involved with overseeing the litigation in this matter," (Op. ¶17), Judge Gale denied the Motion for a Protective Order.
The denial of the Motion doesn't mean that the Court left the Plaintiff to run roughshod over any matters known to the witness that would be protected by the attorney-client privilege. Judge Gale said that the Defendant could "assert the attorney–client privilege on a question-by-question or subject-by-subject basis, as appropriate, during the deposition." Op. ¶18.
Has The Business Court Adopted The Shelton Rule?
At no point in his Opinion did Judge Gale say that the Court had adopted the Shelton rule. But the last time that the Business Court discussed the application of the Shelton decision (in the Blue Ridge opinion cited above), it applied the rule and quashed the deposition of an attorney who was active in the litigation (he had signed the Complaint). The party requesting the deposition said that it wanted to ask the lawyer about “advice, communications, and receipt of documents [that are] the basis” of Plaintiffs’ suit. Judge Murphy said that "[s]uch knowledge is precisely the type of information Shelton attempts to protect from disclosure by litigation counsel in a deposition." Op. ¶62 (emphasis added).
The circumstances before Judge Gale last week in the Acuity case were quite different. The lawyer had knowledge of relevant facts. Remember that "the attorney-client privilege does not protect against the disclosure of facts." Judge Jolly of the Business Court said that in an unpublished Order back in 2013.
So, if the in-house lawyer of your client has knowledge of the circumstances involved in the lawsuit, her status as a lawyer is unlikely to be sufficient standing alone to protect her from being deposed.