May 29, 2015 Articles

Handling Harmful or Deficient Rule 30(b)(6) Deposition Testimony

To what extent is it binding, and what can you do about it?

By George Denegre and Carey L. Menasco

Anyone who has defended a deposition pursuant to Federal Rule of Civil Procedure 30(b)(6) has worried about harmful or deficient testimony that will come back to haunt the client. Of course, obtaining that harmful testimony is a primary goal of the lawyer sitting on the other side of the table. There is no question that such testimony is “binding on the corporation.” But what precisely does that mean? Does the adversary have a free pass either to exclude contrary evidence or to use the damaging testimony without challenge at trial? It depends. Often the extent to which a court will allow a party to introduce contrary evidence seems to correlate directly with the degree to which a 30(b)(6) witness was adequately prepared and, thus, is intertwined with sanctions. This article addresses the differing approaches taken by courts and suggests possible ways to remedy harmful 30(b)(6) testimony before trial or motion practice. These issues are of particular importance to law firms, accounting firms, and other institutional clients, given the proliferation of Rule 30(b)(6) practice in professional liability cases.

Basic Principles Governing Rule 30(b)(6) Depositions

Federal Rule of Civil Procedure 30(b)(6) allows a party to depose an entity through designated representatives. The general purpose of a Rule 30(b)(6) deposition is to permit the examining party to discover the corporation’s position through a witness designated by the corporation to testify on its behalf. Rosenruist-Gestao E. Servicos LDA v. Virgin Enters., Ltd., 511 F.3d 437, 441 n.2 (4th Cir. 2007). Once noticed, the entity must produce a deponent who is knowledgeable on the subject matters identified in the notice. 7 James Wm. Moore et al., Moore’s Federal Practice § 30.25 (3d ed. 2014) (citing Alexander v. FBI, 186 F.R.D. 137, 141 (D.D.C. 1998)). According to one oft-quoted standard, the corporation “must make a conscientious good-faith endeavor to designate the persons having knowledge of the matters sought by [the interrogator] and to prepare those persons in order that they can answer fully, completely, unevasively, the questions posed by [the interrogator] as to the relevant subject matters.”  Protective Nat’l Ins. Co. of Omaha v. Commonwealth Ins. Co., 137 F.R.D. 267, 278 (D. Neb. 1989) (quoting Mitsui & Co. v. Puerto Rico Water Res. Auth., 93 F.R.D. 62, 67 (D.P.R. 1981)). Many courts hold that this duty extends “not only to facts, but also to subjective beliefs and opinions.” Estate of Scott W. Thompson v. Kawasaki Heavy Indus., 291 F.R.D. 297, 303 (N.D. Iowa 2013) (quoting Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416, 433 (5th Cir. 2006)). The burden is “onerous,” and the corporate representative must be diligently prepared.

To What Extent Is 30(b)(6) Testimony Binding and Why?

There is a general agreement that the Rule 30(b)(6) deposition testimony is binding on the entity. See, e.g.A&E Prods. Grp., L.P. v. Mainetti USA, Inc., No. 01-10820, 2004 U.S. Dist. LEXIS 2904, at *19 (S.D.N.Y. Feb. 25, 2004); Resolution Trust Corp. v. Farmer, No. 92-3310, 1994 U.S. Dist. LEXIS 8755, at *5 (E.D. Pa. June 23, 1994) (“The purpose behind Rule 30(b)(6) is to create testimony that will bind the corporation.”) (citations omitted). But courts are not consistent about what precisely that means.

Some courts hold that “binding” means “really binding,” and they refuse to allow the introduction of contrary evidence at trial. See, e.g.Ierardi v. Lorillard, Inc., No. 90-7049, 1991 U.S. Dist. LEXIS 11887, at *8 (E.D. Pa. Aug. 20, 1991). (“If the designee testifies that [the agency] does not know the answer to [the opposing party’s] questions, [the agency] will not be allowed effectively to change its answer by introducing evidence during trial.”); Great Am. Ins. Co. v. Summit Exterior Works, LLC., No. 3:10-cv-1669, 2012 U.S. Dist. LEXIS 17548, at *16–18 (D. Conn. Feb. 13, 2012); QBE Ins. Corp. v. Jorda Enters., 277 F.R.D. 676, 690 (S.D. Fla. 2012). These courts reason that treating the statements in a Rule 30(b)(6) deposition as admissions is most consistent with the purpose of the rule, which is to “permit[ ] the examining party to discover the corporation’s position via a witness designated by the corporation to testify on its behalf.” Kawasaki, 291 F.R.D. at 303 (quoting Rosenruist-Gestao E. Servicos LDA, 511 F.3d at 440 n.2)).

Most courts that follow this reasoning have allowed the introduction of contrary evidence if the party introduces evidence sufficiently explaining the reason for the change; the nature of the required explanation varies significantly. For example, in Kawasaki, the district court held that the deposition testimony of the defendant’s 30(b)(6) witness was binding on the defendant and “that some extraordinary explanation must be required before [the defendant] is allowed to retreat from binding admissions in the testimony of its Rule 30(b)(6) designee.” 291 F.R.D. at 309See also Rainey v. Am. Forest & Paper Ass’nInc., 26 F. Supp. 2d 82, 94 (D.D.C. 1998) (must establish that information was not known or inaccessible); Hyde v. Stanley Tools, 107 F. Supp. 2d 992, 993 (E.D. La. 2000) (inconsistent affidavit may be accepted if accompanied by reasonable explanation).

The majority view is that “[t]he testimony of a Rule 30(b)(6) representative, although admissible against the party that designates the representative, is not a judicial admission absolutely binding on that party.” State Farm Mut. Auto. Ins. Co. v. New Horizont, Inc., 250 F.R.D. 2013, 212 (E.D. Pa. 2008) (quoting 8A Charles Alan Wright et al., Federal Practice and Procedure § 2103 (Supp. 2007)); A.I. Credit Corp. v. Legion Ins. Co., 265 F.3d 630, 637 (7th Cir. 2001); R&B Appliance Parts, Inc. v. Amana Co., 258 F.3d 783, 786 (8th Cir. 2001). It is evidence that, like any other deposition testimony, can be contradicted and used for impeachment purposes. A.I. Credit Corp., 265 F.3d at 637. Under this view, harmful or deficient Rule 30(b)(6) deposition testimony can be used for impeachment, but the opposing party may seek to introduce evidence that contradicts or is inconsistent with the deposition testimony.

Nevertheless, as a practical matter, it is hard to take much comfort from the proposition that courts in some jurisdictions will permit the introduction of evidence that contradicts or is inconsistent with the 30(b)(6) testimony. This should seem intuitive. The 30(b)(6) witness is the voice of the corporation, and his or her face will be shown to the jury on a big video screen. It is not easy to undo the testimony of that chosen representative. See, e.g.Kawasaki, 291 F.R.D. at 309 (rejecting defendant’s argument that video deposition of its 30(b)(6) witness could not be played in plaintiff’s case-in-chief).

Is It Necessary to “Fix” Harmful 30(b)(6) Testimony? How?

As noted, the majority of courts allow a party to introduce evidence that contradicts or is inconsistent with 30(b)(6) testimony. Therefore, depending on how bad the “sound bite” given, it may not be necessary to take affirmative steps to fix that testimony. But it may not be possible to know in advance the court’s view on this issue, and, if the point is important enough, it may be worth trying.

Rule 30(e) permits a deponent to designate changes “in form or substance” to the transcript of his or her deposition. Some parties have tried to correct Rule 30(b)(6) deposition answers under Rule 30(e) by showing substantive changes on the errata sheets that are used to reflect changes to deposition transcripts. See, e.g.Porter v. West Side Rest., LLC, No. 13-1112, 2014 U.S. Dist. LEXIS 57126 (D. Kan. Apr. 24, 2014); Green v. Wing Enters., Inc., No. 1:14-1913, 2015 U.S. Dist. LEXIS 13654 (D. Md. Feb. 5, 2015). This approach is unlikely to be of much help because courts are very resistant to permitting substantive changes to testimony through this method. Id. In addition, the opposing party may still use the original answers provided in the 30(b)(6) deposition and impeach the witness at trial with inconsistencies. See, e.g.In re Weatherford Int’l Secs. Litig., No. 11-cv-1646, 2013 U.S. Dist. LEXIS 120321 (S.D.N.Y. Aug. 23, 2013). That said, this option is worth considering and may be useful under certain conditions.

Federal Rule of Civil Procedure 26(e)(2) imposes a duty on a party to amend certain types of discovery responses. While deposition testimony is not included in the list of discovery devices encompassed by the rule, some courts have extended it to correcting 30(b)(6) testimony. Diamond Triumph Auto Glass, Inc. v. Safelite Glass Corp., 441 F. Supp. 2d 695, 723 n.17 (M.D. Pa. 2006). This is a reasonable position because Rule 30(b)(6) depositions are intended to define the entity’s positions, unlike depositions of individuals. Thus, another possible solution would be to package the documents or information that establish the correct answer and serve them on opposing counsel as part of a supplemental discovery response. Counsel should take care to identify the specific testimony that is being supplemented and corrected.

While it would be unorthodox in a case in which a witness was generally prepared, it may be worth offering additional corporate testimony on the subjects that were inadequately dealt with the first time. But opposing counsel probably will not be open to having the witness’s “sound bites” undone. And this suggestion raises issues of costs and legal expense as well as the exposure of having additional 30(b)(6) testimony.  

While these suggestions may not fully solve the problem of harmful testimony, they may give the party some credibility with the court when the time comes to decide how the testimony is going to be treated. Many of the rulings in this area are fact driven, and the court may well be influenced by counsel’s efforts to set the record straight immediately—especially if the witness was generally prepared to testify.

To What Extent Can the Other Side Use 30(b)(6) Testimony?

So what should the party who obtains favorable testimony do? If the testimony opens the door for a motion for summary judgment, then the most obvious path is to use it in support of the motion and rely on the cases cited above for the proposition that the harmful testimony cannot be contradicted. See, e.g.Hyde, 107 F. Supp. 2d at 993 (corporation could not defeat summary judgment with affidavit that contradicted the deposition testimony of its corporate representative); Rainey, 26 F. Supp. 2d at 95 (“[T]he Kurtz affidavit’s quantitative assertion works a substantial revision of defendant’s legal and factual positions. This eleventh hour alteration is inconsistent with Rule 30(b)(6).”). Similarly, if the matter is moving to trial, the receiving party should consider filing a motion in limine to exclude any evidence that contradicts the Rule 30(b)(6) testimony. See, e.g.Reilly v. Natwest Mkts. Grp. Inc., 181 F.3d 253, 269 (2d Cir. 1999) (affirming order precluding five witnesses from testifying); Ierardi, 1991 U.S. Dist. LEXIS 11887, at *8 (holding that party cannot introduce evidence during the trial contradicting previous statements by Rule 30(b)(6) designee)Rockett v. Stifel, Nicolaus & Co., Inc., No. 7:12-cv-144, 2014 U.S. Dist. LEXIS 153989 (M.D. Ga. Oct. 30, 2014) (reserving ruling until time of trial).

In response, the opposing party should underscore the majority view that 30(b)(6) testimony is not an admission and offer contradictory or inconsistent evidence. It should also offer a reasonable explanation as to why the testimony was not offered earlier, such as that the correct information was not available at the time of the deposition, or otherwise place the harmful testimony in a favorable context. Hyde, 107 F. Supp. 2d at 993. On the latter point, the opposing party should emphasize the preparedness of the witness and perhaps point to the volume of information covered at the deposition. Absolute perfection is not required, and the court may be more forgiving of a memory lapse or “slip-up” in the context of a productive deposition. Id. (honest mistake may suffice).

Issues Related to the Unprepared Witness

The discussion above assumes that a prepared witness gave harmful testimony. What happens when a corporate entity presents a 30(b)(6) witness who is unprepared or unable to answer the questions posed? Cases in this area often involve sanctions that exclude or restrict the use of evidence contradicting testimony given by an unprepared 30(b)(6) witness. But they do not necessarily give a free pass to the party receiving the deficient testimony.

Producing an unprepared witness is tantamount to a failure to appear for the deposition. United States v. Taylor, 166 F.R.D. 356, 363 (M.D.N.C. 1996). In circumstances where a 30(b)(6) witness was unable to answer questions on noticed topics, the designating party must substitute an appropriate deponent when it becomes apparent that the previous deponent is unable to respond to certain relevant areas of inquiry. 7 James Wm. Moore et al., Moore’s Federal Practice § 30.25 (3d ed. 2014). If the party does not provide another witness voluntarily, a court will likely compel it to do so, if requested to do so, and will often award sanctions. State Farm, 250 F.R.D. at 215–16.

Failure to provide a prepared substitute witness, especially after a request by the other party, can result in the award of draconian sanctions. For example, in Jo Ann Howard & Associates, PC v. Cassity, No. 4:09-cv-1252, 2014 U.S. Dist. LEXIS 163793, at *10 (E.D. Mo. Nov. 14, 2014), the district court noted the “severity of the witness’[s] unpreparedness” where the witness could not answer even general questions about the topics listed in the deposition notice and claimed to not be speaking on behalf of the party. The district court assessed heavy sanctions against the defendant, prohibiting it from introducing evidence on the topics the witness could not answer and instructing the jury to assume any testimony the witness would have provided would have been adverse to the defendant. 

If the party does not offer a substitute witness, one strategy would be to use the lack of responsive answers at trial or to support a motion for summary judgment. But several courts have taken issue with this strategy. In Gutierrez v. AT&T Broadband, LLC, 382 F.3d 725, 733 (7th Cir. 2004), the Seventh Circuit criticized the plaintiff’s strategic choice to wait to raise the issue until after the close of discovery:

[A]lthough we in no way condone the defendants’ choice to provide . . . a largely unresponsive witness, as their Rule 30(b)(6) deposition representative, we also note that the plaintiffs made a tactical decision not to insist that the defendants produce better witnesses after [the witness] proved inadequate. Such a request very likely would have been viewed favorably had it been made prior to the close of discovery, with possible sanctions levied against the defendants for failing to provide an appropriate deponent in the first instance. Yet, the plaintiffs raised their dissatisfaction with [the witness] after the close of discovery, in the midst of summary-judgment briefing, and with prior knowledge that better witnesses . . . existed. The district judge was not required to belatedly punish the defendants by striking [the better witness’s] affidavit or reopening discovery in such circumstances.

Other courts have reached similar conclusions in various other contexts. See, e.g.United States ex rel. Roach Concrete, Inc. v. Veteran Pac. JV, No. 10-C-826, 2013 U.S. Dist. LEXIS 57334 (E.D. Wis. Apr. 22, 2013); Ozburn-Hessey Logistics, LLC v. 721 Logistics, LLC, 40 F. Supp. 3d 437 (E.D. Pa. 2014); Diamond Triumph, 441 F. Supp. 2d at 723 n.18.

The court in Aldridge v. Lake County Sheriff’s Office, No. 11-C-3041, 2012 U.S. Dist. LEXIS 102514 (N.D. Ill. July 24, 2012), took the opposite approach. In that case, the plaintiff sought to exclude testimony at trial based on the 30(b)(6) witness’s inability to address designated topics at his deposition. After finding that the 30(b)(6) testimony was grossly deficient, the court observed that neither party moved to extend the discovery deadline to allow the defense to produce another, more prepared, witness on any of the topics. But, far from finding a lack of diligence on the part of the plaintiff, the court still punished the defendant. The court limited the defendant to the answers it gave at the 30(b)(6) deposition: “Regardless of whether defendant failed to prepare its witness, or whether there was a genuine lack of knowledge, defendant will not be able to take a position at trial on those issues where one of its Rule 30(b)(6) designees did not provide testimony.” In the court’s words, “defendant [was] stuck with the record it [had] created.”  

Based on the rationale of Gutierrez and other similar cases, the best practice when tendered an unprepared witness is to demand a substitute witness and, if that request is denied, move to compel. After taking these steps, the party receiving deficient testimony should be well positioned to use the nonresponsive testimony to its advantage during motion practice or at trial.

Conclusion
The holding in any particular case often turns on how diligently the witness prepared for the deposition. The most serious sanctions or restrictions often flow from a lack of diligence on the part of the party producing the representative. Because there is no way for a party to know in advance what rules the court will apply to a request to exclude testimony, the best advice is to prepare—and then prepare some more.

Keywords: litigation, professional services liability, Federal Rules of Civil Procedure, 30(b)(6), corporate deposition, corporate representative


George Denegre and Carey L. Menasco are shareholders of Liskow & Lewis, PLC, in New Orleans, Louisiana.


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