September 09, 2014 Articles

The Empty Chair: Party Officers and Amended Rule 45

Are officers and directors of a party corporation required to testify at trial?

By Jason M. Knott

When it was time for the director to testify at trial, however, the company resisted, claiming that it was not obligated to produce him at trial in Virginia because he lived and worked in California. And it was not clear who had the better of the argument; the state subpoena rules were silent on whether a director could be compelled to testify through service of a subpoena on the corporation.

We looked to federal precedent, but the pre-2013 version of Federal Rule of Civil Procedure 45 also provided no definite answer to whether a corporate officer or director may be compelled to testify at trial regardless of his or her geographic location. Because of this lack of clarity, the federal courts had differed when interpreting Rule 45. For example, in 2006, a federal court in Louisiana found that Rule 45 allowed it to compel a Merck officer from New Jersey to testify at trial in New Orleans. See In re Vioxx Prods. Liab. Litig., 438 F. Supp. 2d 664 (E.D. La. 2006). By contrast, in 2010, a federal judge in the District of Columbia ruled that Rule 45 did not permit her to compel a party defendant to testify in the plaintiffs’ case because he had not been served within the 100-mile radius allowed by the rule. Armenian Assembly of Am., Inc. v. Cafesjian, 746 F. Supp. 2d 55 (D.D.C. 2010).

The 2013 amendments to Rule 45 resolved the split in the federal courts, at least as to party officers. Under the new rule, a subpoena may only command a “party officer” to attend trial “within 100 miles of where the person resides, is employed, or regularly transacts business in person” or “within the state where the person resides, is employed, or regularly transacts business in person.” Fed. R. Civ. P. 45(c)(1)(A), (B)(1). However, this is not to say that a dispute could never arise as to party directors—directors are not specifically named in this provision. If courts do not decide that particular directors qualify as “party officers” within the meaning of the rule, those directors should fall under the general provisions of Rule 45, under which they may only be commanded to appear at trial within 100 miles of their home or place of business, or within their state, so long as they would not incur substantial expense. Fed. R. Civ. P. 45(c)(1)(A), (B)(2).

State courts are more varied. Some states have resolved the issue in favor of compelling testimony in all circumstances, adopting rules that require officers, directors, or managing agents to give testimony at trial regardless of their location. See, e.g., Wash. Civ. R. 43(f)(1). Meanwhile, in other states, courts follow prior versions of Rule 45 or seek guidance from federal interpretations of the former rule. In those jurisdictions, courts can take different approaches when confronted with the issue. As one New Jersey court did, they can accept the argument that they have the power to compel nonresident officers or directors to testify pursuant to subpoenas served on their corporation. See, e.g., Media Servs., Inc. v. Sheraton Corp. of Am., 192 A.2d 166, 167 (N.J. Super. Ct. App. Div. 1963). Or they can follow the Armenian Assembly reasoning, deciding that their subpoena powers do not allow them to compel anyone who is outside the express geographic scope of the rule to testify, regardless of the person’s status as a corporate officer or director.

That’s what happened in our case: The Virginia court decided that the subpoena rule did not allow it to compel the director from California to give live testimony. However, the director still spoke at our trial through the numerous emails he sent to the other directors who testified. Thanks in part to these emails, our client was able to secure a substantial verdict for breach of his severance agreement, despite—or perhaps because of—the director’s empty chair.

Keywords: litigation, trial practice, Federal Rules of Civil Procedure, Rule 45, subpoena, trial testimony, director, officer

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