Court Opinion

ID: 4198564
Source: CourtListenerOpinion
Date Created: 2017-08-24 14:04:21.521953+00
Date Added: 2024-06-11T14:39:44.904449
License: Public Domain

EFiled: Aug 24 2017 08:00AM EDT
                                             Transaction ID 61026000
                                             Case No. 2017-0328-JTL
          IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ADT HOLDINGS, INC., in its individual            )
capacity and as attorney-in-fact for ZONOFF,     )
INC., and ADT LLC,                               )
                                                 )
                  Plaintiffs,                    )
           v.                                    ) C.A. No. 2017-0328-JTL
                                                 )
MICHAEL HARRIS and BOT HOME                      )
AUTOMATION, INC., d/b/a RING.COM,                )
                                                 )
                 Defendants.                     )

                                  MEMORANDUM OPINION

                                Date Submitted: August 22, 2017
                                 Date Decided: August 24, 2017

Steven L. Caponi, K&L GATES LLP, Wilmington, Delaware; Attorney for Plaintiffs.

Megan Ward Cascio, Lauren Neal Bennett, MORRIS, NICHOLS, ARSHT & TUNNELL
LLP, Wilmington, Delaware; Mark C. Scarsi, Ashlee N. Lin, Katherine R. Pierucci, J.
Samuel Payne, MILBANK, TWEED, HADLEY & McCLOY LLP, Los Angeles,
California; Attorneys for Defendants.

LASTER, V.C.
       Plaintiffs ADT Holdings, Inc. and ADT LLC (together, “ADT”) noticed a

deposition of defendant Bot Home Automation, Inc. (“Ring”) pursuant to Court of

Chancery Rule 30(b)(6). Ring designated Dr. Michael Balog as its witness for all of the

topics, including Topic 37: “Ring confidential and trade secret information provided to

Zonoff that you contend was received, accessed, or reviewed by [ADT].” Balog appeared

for deposition, agreed that he was Ring’s Rule 30(b)(6) witness for purposes of Topic 37,

and answered questions on that topic.

       ADT has not contended that Balog lacked knowledge, was unprepared, or was

inadequate in any way. Nor has Ring suggested that Balog lacked knowledge, was

unprepared, or was inadequate in any way. Despite the de facto agreement on the

sufficiency of Balog’s knowledge, Ring purported to file an amended response to ADT’s

Rule 30(b)(6) notice that designated Peter Gerstberger as an additional witness on Topic

37. The new response stated: “Subject to its General Objections, Defendant designates

Peter Gerstberger to testify regarding Ring’s confidential and trade secret information

provided to Zonoff, and Defendant designates Michael Balog to testify regarding ADT’s

receipt, access, and/or review of such information.”

       ADT moved to strike Ring’s supplemental designation of Gerstberger as a Rule

30(b)(6) witness. The rule states:

       A party may in the party’s notice name as the deponent a public or private
       corporation or a partnership or association or governmental agency and
       designate with reasonable particularity the matters on which the
       examination is requested. The organization so named shall designate 1 or
       more officers, directors, or managing agents, or other persons who consent
       to testify on its behalf, and may set forth, for each person designated, the

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       matters on which the person will testify. The person so designated shall
       testify as to matters known or reasonably available to the organization.

Ch. Ct. R. 30(b)(6).

       When a party notices the deposition of an organization pursuant to Rule 30(b)(6),

       the organization has an obligation to ensure, through the testimony of one
       witness or multiple witnesses, that the party taking the deposition receives
       complete responses, based on the organization’s full knowledge and any
       relevant information readily available to it, to questions related to all the
       matters set forth with particularity for examination in the [notice], unless
       this Court enters an Order limiting the scope of the deposition’s subject
       matter or the parties agree otherwise.

Fitzgerald v. Cantor, 1999 WL 252748, at *2 (Del. Ch. Apr. 5, 1999). “[T]he deposition

testimony should be based on the organization’s full knowledge and the information

readily available to it and not limited to the witnesses’ personal first-hand knowledge of

the matters at issue.” Id. “The organization is the deponent . . . , not the witness or

witnesses the organization designates to testify on its behalf.” Id.

       The obligation to designate one or more witnesses in response to a Rule 30(b)(6)

notice belongs to the organization. “The most logical approach is [for the organization] to

produce as a witness the person or persons within the organization that are the most

knowledgeable.” Id. “[I]f different persons within the organization have the most

knowledge of different matters . . . , the organization may produce each person as a

witness and limit the matters on which they will testify to those matters on which they are

the most knowledgeable.” Id. “Even these persons who are considered the most

knowledgeable about a particular matter, however, must ensure, before testifying, that his

or her knowledge . . . encompasses what the organization knows or can reasonably

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determine through relevant information readily available to the organization.” Id. The

organization alternatively can designate a witness “who may not be the most

knowledgeable” and then “prepare the witness or witnesses to testify on the

[organization’s] behalf in response to questions on each matter.” Id. at *3. An

organization falls short and fails to comply with its obligations if “at the time of the

deposition, the person or persons it designates as witnesses are unaware of the

organization’s full knowledge of a matter set forth [in the notice] and, therefore, are

unable to provide full and complete answers on behalf of the organization.” Id. See

generally 8A Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal

Practice and Procedure § 2103 (3d ed. 2010) (explaining that Rule 30(b)(6) imposes “an

implicit obligation to prepare the witness” in order to ensure he can testify

comprehensively as to the entire organization’s knowledge).

       These principles make clear that in response to a Rule 30(b)(6) notice, the

organization bears the responsibility to designate a person or persons to testify on the

organization’s behalf. The organization has to do this upfront, before the deposition takes

place. It cannot make a provisional designation, wait and see how the deposition goes,

and then make supplemental designations. Just as a biological person could not ask for a

supplemental deposition if dissatisfied with his testimony, an artificial person cannot

either. If an organization could designate supplemental witnesses at will, after the

designated witnesses have testified, then the organization easily could employ a strategy

of attrition in which follow-on witnesses could fix adverse testimony given by the

original witness. This in turn would enable organizations to undercut the effective use of

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deposition testimony for impeachment in a way that a biological person never could. See

Ch. Ct. R. 32(a)(1) (“Any deposition may be used by any party for the purpose of

contradicting or impeaching the testimony of deponent as a witness.”).

      This case differs from a situation in which the party that noticed the Rule 30(b)(6)

deposition contends that the witness was inadequate. In that scenario, the party noticing

the deposition has options. The party can demand that the organization produce an

adequate witness, either by educating the previously proffered witness or by naming a

supplemental witness.1 In that scenario, the organization can accede to the demand and

provide an adequate witness. Applied to these facts, if ADT asserted that Balog was an

inadequate witness and insisted on a further deposition, then Ring could have designated

Gerstberger as a supplemental witness.

      A party that takes a Rule 30(b)(6) deposition and believes the witness was

inadequate is not required to ask for an adequate witness. The party may prefer to force

the organization to live with the testimony of its inadequate witness and use the

deposition transcript for impeachment. If a party wishes to follow that route, then a court

      1
         See, e.g., Calzaturficio S.C.A.R.P.A. s.p.a. v. Fabiano Shoe Co., Inc., 201 F.R.D.
33, 41 (D. Mass. 2001) (holding that insufficiently prepared Rule 30(b)(6) designees
warranted requiring corporation to re-designate witnesses, prepare them, and submit them
for further depositions); Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633, 639 (D.
Mass. 2000) (ordering further deposition of “unprepared and unresponsive” Rule 30(b)(6)
witness).

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will respect that decision.2 Of course, by doing so, the party takes the risk that the trier of

fact will not find the impeachment persuasive.

       The choice to seek an adequate Rule 30(b)(6) witness thus lies with the party

noticing the deposition, not with the organization. Put differently, a court will not reward

the organization’s failure to comply with its obligations under Rule 30(b)(6) by

permitting the organization to designate a supplemental witness unilaterally and thereby

gain a second bite at the apple.

       If Ring believed that both Gerstberger and Balog were necessary witnesses to

convey Ring’s knowledge regarding Topic 37, then Ring had a duty to designate both

witnesses at the outset, before Balog’s deposition. Ring could not wait until that

deposition was over, evaluate Balog’s testimony, then amend its designation to add

Gerstberger as an additional designee. The motion to strike is therefore granted.

       2
         See Gutierrez v. AT&T Broadband, LLC, 382 F.3d 725, 733 (7th Cir. 2004)
(deferring to a party’s “tactical decision not to insist that the defendants produce better
witnesses.”). A party also may seek any of the other discovery sanctions contemplated by
Rule 37. See, e.g., Resolution Tr. Corp. v. S. Union Co., Inc., 985 F.2d 196 (5th Cir.
1993) (affirming sanction of costs and fees where 30(b)(6) witnesses “possessed no
knowledge relevant to the subject matters identified” in the notice); Inmuno Vital, Inc. v.
Telemundo Gp., Inc., 203 F.R.D. 561 (S.D. Fla. 2001) (striking defendant’s Rule 30(b)(6)
witness as sanction for untimely production).

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