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
1 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
2 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
3 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
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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
1 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
2 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
3 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).
4 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).