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Rule 30(b)(6) Deposition

02/01/2020 3:02 PM | CAI Rocky Mountain Chapter (Administrator)

By Trip Nistico, Burg Simpson Eldredge Hersh Jardine, P.C.

In construction defect lawsuits brought by HOAs, it is not uncommon for the defendants (often the developer and builders of the community) to request to take a deposition of any property management company that has worked with the association. These depositions of companies—as opposed to individuals—are referred to as 30(b)(6) depositions because they are governed by Rule 30(b)(6) of the Colorado Rules of Civil Procedure. 

Because property management companies are unlikely to be a named party in a construction defect lawsuit, non-party property management companies that have received a Rule 30(b)(6) deposition notice often question whether they must comply with such a request. While this is somewhat of an open question under Colorado law, federal courts interpreting Rule 30(b)(6) of the Federal Rules of Civil Procedure—which is identical to the Colorado rule—have held that both parties and nonparties must comply with Rule 30(b)(6). Nonparties, however, will only be required to submit to a 30(b)(6) deposition if they were properly subpoenaed.

A property management company that receives a valid Notice under Rule 30(b)(6) is expected to designate one or more witnesses who can speak to the organization’s “knowledge” on a list of potential deposition topics that will be included in the Notice. In theory, what the organization “knows” is a combination of the information learned by its officers, directors, agents, employees, or others, as well as other knowledge residing in the company’s records. 

It is not unusual, however, that a property management company no longer employs any of the individual property managers that worked with the HOA. But even if the property management company no longer employs any individuals with first-hand knowledge of the deposition topics, the company is expected, if reasonably possible, to “create” a witness or witnesses from information reasonably available to the company. The company may not simply respond that there is no witness available who has personal knowledge concerning the areas of inquiry. Nor may it simply designate a witness that will not be reasonably prepared to provide relevant information on the designated topics.

Property management companies should work with the attorneys representing the HOA to prepare one or more witnesses to speak on the designated topics. These attorneys will be able to determine if the company was properly subpoenaed, who should be designated as deposition witnesses, how best to prepare the witness, and whether a protective order (explained more below) should be sought.

A company that fails to take its Rule 30(b)(6) obligations seriously puts itself at risk. Rule 30(b)(2) allows courts and arbitrators to issue various sanctions against companies that fail to comply with these obligations. Possible sanctions include:

  • Holding the company in contempt of court
  • Requiring the company to pay any reasonable expenses, including attorney’s fees, that the party issuing the 30(b)(6) Notice incurred because of the company’s noncompliance

Who can be designated as a witness in a Rule 30(b)(6) deposition?

Rule 30(b)(6) states that a corporation or other entity may designate any officer, director, managing agent, or any “other person[] consenting to appear and testify on its behalf with respect to the matters reasonably available to the organization.” 

This includes former employees who consent to serve as witnesses—particularly when no current employees have relevant firsthand knowledge of the events in question. However, while a company may designate consenting former employees in these situations, it is not required to do so. “The burden under C.R.C.P. 30(b)(6) is to produce witnesses who are knowledgeable, not to produce an exhaustive list of witnesses to testify as to each and every factual assertion made by an organization.” 

The company is not required to designate a witness with first-hand, personal knowledge of the designated topics. The designated witness just needs to be reasonably prepared. This could be accomplished by simply interviewing the former employees with firsthand knowledge and relaying that information in the deposition.

If there is nobody inside the company that has relevant knowledge of the deposition topics, it may be appropriate to designate somebody outside of the company. Courts have allowed companies to designate outside consultants as 30(b)(6) deposition witnesses. In one case, a federal court allowed an entity to designate one of its litigation attorneys as a Rule 30(b)(6) witness. 

While there is risk in designating an attorney that is directly involved in the litigation as a Rule 30(b)(6) witness—as it is possible that this attorney would later be disqualified from representing any party in the trial—the fact that courts have allowed this shows that a company can designate practically anybody as its 30(b)(6) witness. In fact, it is likely that most courts would allow the same person to be designated as the Rule 30(b)(6) witness for both the HOA and a property management company that managed it, as long as this witness has completed the necessary preparation to answer on behalf of both entities. 

In addition, nothing in Rule 30(b)(6) precludes the company from providing “contrary or clarifying evidence” when a designated witness either does not remember or misstates facts in the deposition. This could include designating additional 30(b)(6) witnesses, providing affidavits and other evidence, and, if necessary, subpoenaing witnesses with relevant information that were unwilling to serve as a 30(b)(6) witness. It is still crucial, however, to make sure each witness is as prepared as possible, as each witness’s testimony—even if later supplemented or corrected—can still be used in litigation.

Note on the “Apex” Doctrine:

Challenges based on who companies designate as 30(b)(6) witnesses are almost always unsuccessful: there is no requirement, for instance, that the entity designate an employee of the company or someone with first-hand knowledge of relevant facts. Sometimes, defendants will seek to depose a CEO or other high-level officer of a company (often referred to as “apex” depositions because these officers are at the apex of the corporate hierarchy) that was not designated as a 30(b)(6) witness—even when these officers have no relevant information to provide. In these situations, courts will sometimes step in to prevent these depositions under the “Apex doctrine.” 

Although officers of a corporation are not immune from being deposed, apex depositions are potentially harassing, particularly where apex officers have little or no relevant information. Courts are therefore likely to grant a protective order under Rule 26 to prohibit depositions of senior officers with little or no relevant information. 

To overcome this doctrine, the party seeking to depose the high-level officer must show that (1) the official has “unique or superior” personal knowledge of relevant information, and (2) that there is no less-intrusive way the party could obtain this information. It is unlikely that a party could establish that a high-level officer of a property management company that did not manage the HOA involved in the construction defect lawsuit has “unique and superior” personal knowledge of relevant information that cannot be obtained by other means. 

What if it is impossible to prepare a witness to testify on the designated topics?

Sometimes, after reviewing all available documents that might contain information relevant to the designated deposition topics, and after interviewing (or attempting to interview) any former employees or others who might have relevant information, the organization is still not able to prepare a witness to that can testify on these topics. When that is the case, the company (through assisting legal counsel) should inform the party that requested the deposition that it will not be able to produce a witness to testify on those topics, and it should do so well before the deposition.

If an agreement cannot be reached with the other party’s attorneys, the attorney advising the company may then seek a protective order. If the company convinces the judge or the arbitrator that it has no reasonable means of preparing a witness to testify on one or more of the designated topics, the judge or arbitrator may grant a protective order, excusing the company from being deposed on these topics and from any related sanctions. 

It is important, however, that a company that finds itself in this situation seeks a protective order before the deposition. Where the parties are unable to agree to narrow the deposition topics, the failure to seek court clarification before the deposition begins could result in the judge or arbitrator finding that the company waived any objections to the scope of the deposition topics. On the other hand, judges have generally been willing to strike topics that were overbroad or not specific enough when they were presented with this issue before the deposition. 

Conclusion

Rule 30(b)(6) depositions can be burdensome for any company. Determining the best response to a 30(b)(6) Notice requires familiarity with the applicable rules and the experience to know how to conduct a proper investigation, who to designate as the witness or witnesses, how to prepare these witnesses, and if any challenges should be brought. 

While these obligations are burdensome, companies risk incurring significant penalties—and even liability—if they ignore these obligations by either failing to produce a witness or producing a witness who is unprepared. Even property management companies that managed the HOA years before the lawsuit began should take these obligations seriously and either work with the HOA’s legal counsel or other legal counsel that is familiar with these matters.

Trip Nistico is an associate with the Construction Defect Group of Burg Simpson Eldredge Hersh Jardine PC. The group represents commercial and residential property owners, homeowner associations and unit owners, and construction professionals and insurers in construction defect, product liability, and insurance coverage disputes.

1. D.R. Horton, Inc. v. D&S Landscaping, LLC, 215 P.3d 1163, 1167 (Colo. App. 2008) (noting that federal decisions interpreting Fed R. Civ. P. 30(b)(6) are highly persuasive in Colorado courts because Colorado decisions interpreting C.R.C.P. 30(b)(6) are sparse and because the federal rule is “identical” to the Colorado rule).

2. See, e.g., Price Waterhouse LLP v. First Am. Corp., 182 F.R.D. 56, 61 (S.D.N.Y. 1998).

3. See, e.g., Estate of Esther Klieman v. Palestinian Auth., 293 F.R.D. 235, 245 (D.D.C. 2013). For the rules governing subpoenas in Colorado, see C.R.C.P. 45, which is similar—but not identical—to the federal rules governing subpoenas discussed in Klieman.

4. See Martin D. Beier, Organizational Avatars: Preparing CRCP 30(b)(6) Deposition Witnesses, 43 Colo. Law. 39, 39 (Dec. 2014).

5. Id.

6. See id.

7. D.R. Horton, 215 P.3d at 1168.

8. See id. at 1167.

9. Or, if the HOA is the party seeking to depose the property management company, the company may prefer to work with the attorneys representing the developer. This may be the case where the property management company primarily worked with the HOA prior to turnover or where the developer has claimed that the property management company was its agent.

10. While arbitrators do not have the authority to issue contempt citations (see C.R.S. § 13-22-217(4)), it is possible that this matter could be referred to a judge who has such authority.

11. See C.R.C.P. 37(b)(2)(A)–(E) for the complete list of possible sanctions.

12. C.R.C.P. 30(b)(6) (emphasis added).

13. See D.R. Horton, 215 P.3d at 1168.

14. Camp Bird Colo., Inc. v. Bd. of County Comm’rs of Ouray, 215 P.3d 1277, 1290–91 (Colo. App. 2009).

15. See, e.g., Reed v. Bennett, 193 F.R.D. 689, 692 (D. Kan. 2000).

16. ACE USA v. Union Pac. R.R. Co., Inc., 2011 U.S. Dist. LEXIS 80793, at *9 (D. Kan. July 25, 2011).

17. See D.R. Horton, 215 P.3d at 1169.

18 Cartier v. Bertone Group, Inc., 404 F. Supp. 2d 573. 574 (S.D.N.Y. 2005), injunction granted, 2005 U.S. Dist. LEXIS 35053 (S.D.N.Y. Dec. 20, 2005).

19. See New Jersey Spring Corp., 2010 U.S. Dist. LEXIS 14890, at *14 (D. Kan. Feb. 19, 2010).

20. Camp Bird, 215 P.3d at 1291.

21. See Great Am. Ins. Co. of N.Y. v. Vegas Constr. Co., 251 F.R.D. 534, 542 (D. Nev. 2008).

22. See D.R. Horton, 215 P.3d at 1170.

23. See id. at 1169.

24. See id. at 1170.

25. See Reed v. Bennett, 193 F.R.D. at 692.

26. See, e.g., Jones Co. Homes, LLC v. Laborers Int’l Union of N. Am., 2010 U.S. Dist. LEXIS 136911, at *6 (E.D. Mich. Dec. 28, 2010).

27. 1 Discovery in Construction Litigation P 7.01 (2019).

28 See id., n. 1.4 (citing cases and other authority and providing additional information about this doctrine).

29. See, e.g., Jones Co. Homes, 2010 U.S. Dist. LEXIS 136911, at *6.

30. See Calzaturficio S.C.A.R.P.A., s.p.a. v. Fabiano Shoe Co., 201 F.R.D. 33, 38 (D. Mass. 2001).

31. Dongguk Univ. v. Yale Univ., 270 F.R.D. 70, 74 (D. Conn. 2010); C.R.C.P. 26(c).

32. See D.R. Horton, 215 P.3d at 1169–70.

33. See Int’l Brotherhood of Teamsters, Airline Div. v. Frontier Airlines, Inc., 2013 WL 627149, at *6 (D. Colo. Feb. 19, 2013).

34. See, e.g., Stransky v. HealthOne of Denver, Inc., 2013 WL 140632, at *2–3 (D. Colo. Jan. 11, 2013).

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