(Various) in re Appraisal v. Anschutz Corp

2020 COA 67

• Court: Colorado Court of Appeals
• Decided: April 9, 2020
• Docket: 19CA1671
• Status: Published

Opinion

The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.

SUMMARY April 9, 2020

2020COA67

No. 19CA1671, (Various) in re Appraisal v. Anschutz Corp — Corporations — Mergers and Sales — Dissenters’ Rights; Courts and Court Procedures — Uniform Interstate Deposition and Discovery Act — Issuance of Subpoena; Civil Procedure — Discovery Scope and Limits

This opinion addresses, for the first time in a published

opinion in Colorado, whether the intent and motives of a controlling

stockholder are relevant in an appraisal proceeding, where

Delaware Code Annotated title 8, section 262(h) (West 2019),

requires a Delaware court to determine the reliability of and weight

to give to the “deal price” in fixing the “fair value” of shares.

Additionally, this opinion considers, for the first time in a

published opinion in Colorado, whether the Colorado Rules of Civil

Procedure allow us the incorporate the so called “apex doctrine” into Colorado law, thus shifting the traditional burden of

persuasion under C.R.C.P. 26(c) to the party seeking a deposition. COLORADO COURT OF APPEALS 2020COA67

Court of Appeals No. 19CA1671 City and County of Denver District Court No. 19CV287 Honorable Christopher J. Baumann, Judge

BlueMountain Credit Alternatives Master Fund L.P., BlueMountain Foinaven Master Fund L.P., BlueMountain Fursan Fund L.P., BlueMountain Guadalupe Peak Fund L.P., BlueMountain Kicking Horse Fund L.P., BlueMountain Logan Opportunities Master Fund L.P., BlueMountain Montenver Master Fund SCA SICA V-SIF, BlueMountain Summit Trading L.P., GKC Strategic Value Master Fund LP, and GKC SV SMA I, LLC: In re Appraisal of Regal Entertainment Group,

Petitioners-Appellants,

v.

Regal Entertainment Group, Anschutz Corporation, and Philip F. Anschutz,

Respondents-Appellees.

ORDER REVERSED AND CASE REMANDED WITH DIRECTIONS

Division A Opinion by CHIEF JUDGE BERNARD Martinez* and Davidson*, JJ., concur

Announced April 9, 2020

Ireland Stapleton Pryor & Pascoe, P.C., Mark E. Lacis, Lidiana Rios, Denver, Colorado, for Petitioners-Appellants

Hogan Lovells US, LLP, Jessica Black Livingston, Denver, Colorado, for Respondents-Appellees

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2019. ¶1 The petitioners in this case are BlueMountain Credit

Alternatives Master Fund L.P., BlueMountain Foinaven Master

Fund L.P., BlueMountain Fursan Fund L.P., BlueMountain

Guadalupe Peak Fund L.P., BlueMountain Kicking Horse Fund L.P.,

BlueMountain Logan Opportunities Master Fund L.P.,

BlueMountain Montenver Master Fund SCA SICA V-SIF,

BlueMountain Summit Trading L.P., GKC Strategic Value Master

Fund LP, and GKC SV SMA I, LLC. We shall call them the “minority

stockholders.”

¶2 The minority stockholders asked the trial court to compel

Philip F. Anschutz, who is the founder and chief executive officer of

the Anschutz Corporation, to comply with a deposition subpoena.

(The Anschutz Corporation is also a party to this appeal.) The court

denied their motion. The minority stockholders appealed. We

reverse the trial court’s order and remand the case to the district

court for further proceedings consistent with this opinion.

I. Background

¶3 Regal Entertainment Group, which, among other things, owns

and manages movie theaters throughout the United States, is a

Delaware corporation. The Anschutz Corporation was Regal’s

1 controlling stockholder. The minority stockholders were

noncontrolling, minority stockholders of Regal.

¶4 In February 2018, a British company called Cineworld Group

plc acquired Regal in a transaction that we shall call “the merger.”

The minority stockholders, contending that they did not receive fair

value for their shares in Regal, dissented from the merger and

sought appraisal of their shares in a statutory proceeding in the

Delaware Court of Chancery.

¶5 To obtain information for the appraisal proceeding, the

minority stockholders served a deposition subpoena on Mr.

Anschutz. In doing so, they relied on section 13-90.5-103, C.R.S.

2019, of the Uniform Interstate Depositions and Discovery Act, or

the UIDDA.

¶6 Mr. Anschutz did not comply with the subpoena. So the

minority stockholders filed a motion asking the trial court to order

him to comply with it. They contended that, as the chief executive

of the Anschutz Corporation, Mr. Anschutz was Regal’s controlling

stockholder and, as a result, discovering why Mr. Anschutz sold his

share of Regal was critical and relevant to the appraisal

proceedings. More specifically, they informed the court that they

2 wanted to ask Mr. Anschutz about his motives and personal

considerations for agreeing to the merger.

¶7 The trial court denied the motion, concluding that the

questions the minority stockholders wanted to ask Mr. Anschutz in

a deposition were not “relevant and necessary” to the Delaware

appraisal case.

II. Enforcement of the Deposition Subpoena

A. Standard of Review

¶8 We review a court’s decision to deny a motion to compel

compliance with a subpoena for an abuse of discretion. Gateway

Logistics, Inc. v. Smay, 2013 CO 25, ¶ 13. A court abuses its

discretion if its decision is manifestly unreasonable, arbitrary, or

unfair, or if it misapplies the law. Ferraro v. Frias Drywall, LLC,

2019 COA 123, ¶ 10.

¶9 We will review de novo a trial court’s (1) decisions regarding

choice of law, Mountain States Adjustment v. Cooke, 2016 COA 80,

¶ 13; and (2) interpretation of pertinent statutes, In re Marriage of

Ciesluk, 113 P.3d 135, 141 (Colo. 2005).

3 B. Choice of Law

¶ 10 The UIDDA allows a party to “submit a foreign subpoena to

the district court for the county in which discovery is sought to be

conducted in [Colorado].” § 13-90.5-103(1). An application to the

district court to enforce a subpoena issued under section 13-90.5-

103 must comply with the rules or statutes of Colorado. § 13-90.5-

106, C.R.S. 2019. More specifically, the procedural and evidentiary

laws of Colorado govern this analysis. See § 13-90.5-106 cmt.

(“Evidentiary issues that may arise, such as objections based on

grounds such as relevance or privilege, are best decided in the

discovery state under the laws of the discovery state (including its

conflict of laws principles).”).

¶ 11 But, if Colorado law governs the process that must apply,

what law governs the substantive legal issues that a court may have

to decide? Colorado has adopted the general rule, as set forth in

the restatement (Second) of Conflicts of Law, that the law of the

state with the most “significant relationship” with the occurrence

and the parties governs. AE, Inc. v. Goodyear Tire & Rubber Co.,

168 P.3d 507, 509 (Colo. 2007). Once the state having the most

significant relationship is identified, the law of that state is then

4 applied to resolve the issue. Wood Bros. Homes, Inc. v. Walker

Adjustment Bureau, 198 Colo. 444, 447-48, 601 P.2d 1369, 1372

(1979). “[T]he courts of a state, in cases where the laws of another

state are involved, may and should take notice of the decisions of

the highest courts in the latter jurisdiction upon the law so

involved.” Sullivan v. German Nat’l Bank, 18 Colo. App. 99, 104, 70

P. 162, 164 (1902).

¶ 12 Because Regal was incorporated in Delaware, and the minority

stockholders seek the enforcement of a subpoena for purposes of

obtaining Mr. Anschutz’s testimony in connection with the

appraisal proceedings in a Delaware court, we conclude that we

should apply Delaware law to resolve substantive legal matters. See

Great W. Producers Co-operative v. Great W. Unite Corp., 200 Colo.

180, 182 n.2, 613 P.2d 873, 875 n.2 (1980)(holding that the

substantive law of Delaware applied because defendant corporation

was incorporated under the laws of Delaware).

C. Relevance of Discovery

¶ 13 The Colorado Rules of Civil Procedure govern the scope of

permissible discovery in civil cases. C.R.C.P. 26(b)(1) states that

“parties may obtain discovery regarding any matter, not privileged,

5 that is relevant to the claim or defense of any party and

proportional to the needs of the case . . . . Information within the

scope of discovery need not be admissible in evidence to be

discoverable.”

¶ 14 The concept of relevance for discovery purposes is different

than the concept of relevance of evidence at trial. DA Mountain

Rentals, LLC v. The Lodge at Lionshead Phase III Condo. Ass’n, 2016

COA 141, ¶ 57. “[D]iscovery rules should be construed liberally to

effectuate the full extent of their truth-seeking purpose” and “[i]n

close cases, the balance must be struck in favor of allowing

discovery.” Antero Res. Corp. v. Strudley, 2015 CO 26, ¶ 32

(quoting Direct Sales Tire Co. v. Dist. Court, 686 P.2d 1316, 1321

(Colo. 1984)).

D. Delaware Appraisal Proceedings

¶ 15 Under Delaware law, the statutory appraisal proceeding was

created as a remedy for minority stockholders who view the sale

price of a corporation as inadequate to seek “an independent

judicial determination of the fair value of their shares.” Dell, Inc. v.

Magnetar Glob. Event Driven Master Fund Ltd, 177 A.3d 1, 19 (Del.

2017) (citation omitted). There is one issue in such an appraisal

6 trial: “the value of the dissenting stockholder’s stock.” Id. (citation

omitted).

¶ 16 The Delaware Court of Chancery’s task is to “determine the

fair value of the shares.” Del. Code Ann. tit. 8, § 262(h) (West

2019). To do so, the court “shall take into account all relevant

factors.” Id. The examination requires consideration of “all factors

and elements which reasonably might enter into the fixing of value.”

Tri-Cont’l Corp. v. Battye, 74 A.2d 71, 72 (Del. 1950).

1. Factors in Determining Fair Value

¶ 17 Factors which a Delaware court must consider in determining

fair value include market value, asset value, dividends, earning

prospects, the nature of the enterprise, and any other facts that

were known or that could be ascertained as of the date of merger

and that throw any light on the future prospects of the merged

corporation. Id. (holding that these factors are not only pertinent to

an inquiry as to the value of the dissenting stockholders’ interest

but must be considered by the agency fixing the value).

Additionally, “the deal price as a market indicator of fair value in

appraisal cases conforms to [the Delaware court’s] use of

market-tested prices.” Verition Partners Master Fund Ltd. v. Aruba

7 Networks, Inc., 210 A.3d 128, 135 n.41 (Del. 2019); see also Dell,

177 A.3d at 19 (holding that relevant factors in determining fair

value include the deal price).

¶ 18 The court may not adopt an “either-or” approach at the outset,

thereby relying exclusively on selected factors or accepting

uncritically the valuation of one party. See In re Appraisal of

Metromedia Int’l Grp., Inc., 971 A.2d 893, 899-900 (Del. Ch. 2009),

reargument granted, 2009 WL 1299116 (Del. Ch. 2009). It is the

court’s duty to determine the core issue of fair value on the

appraisal date. Id.; see also Gonsalves v. Straight Arrow

Publishers, Inc., 701 A.2d 357, 361 (Del. 1997)(noting the court’s

responsibility to “independently determine the value of the shares

that are the subject of the appraisal action”). After an analysis of

all relevant factors, the court may then determine “that a single

valuation metric is the most reliable evidence of fair value and that

giving weight to another factor will do nothing but distort that best

estimate.” DFC Glob. Corp. v. Muirfield Value Partners, L.P., 172

A.3d 346, 388 (Del. 2017).

8 2. Reliability and Weight of the “Deal Price”

¶ 19 As the minority stockholders correctly note, Delaware courts

must consider all relevant factors, including the deal price, to

decide whether a corporate sale was for fair value. See Aruba

Networks, 210 A.3d at 135 n.41; Dell, 177 A.3d at 19. After an

analysis of all relevant factors, the court may then determine the

reliability of, and weight to attribute to, each factor, including the

reliability and weight to be given to the deal price. See DFC Glob.,

172 A.3d at 388.

¶ 20 In recent appraisal decisions that have examined the reliability

of a sale process, the Delaware Supreme Court has cited certain

“objective indicia” suggesting that “the deal price was a fair price.”

Dell, 177 A.3d at 28; accord DFC Glob., 172 A.3d at 376. But the

presence of objective indicia does not establish a presumption in

favor of the deal price, and the Delaware Supreme Court has

rejected requests for the adoption of a presumption that the deal

price reflects fair value if certain preconditions are met. Dell, 177

A.3d at 21. Rather, the indicia are merely a starting point for the

analysis of whether the deal price was fair. But “[t]he fact that a

transaction price was forged in the crucible of objective market

9 reality . . . is viewed as strong evidence that the price is fair.” Van

de Walle v. Unimation, Inc., No. Civ. A. 7046, 1991 WL 29303, at *17

(Del. Ch. Mar. 7, 1991)(unpublished opinion).

¶ 21 When deciding what weight to give a deal price and whether it

was reliable, see DFC Glob., 172 A.3d at 388, Delaware courts have

considered

 whether a merger was an arm’s-length transaction with a

third party, see id. at 349 (citing the fact that “the company

was purchased by a third party in an arm’s length sale” as a

factor supporting fairness of the deal price);

 the absence of explicit or implicit collusion, whether among

bidders or between the seller and a particular bidder, see

M.P.M. Enters., Inc. v. Gilbert, 731 A.2d 790, 797 (Del.

1999)(“A merger price resulting from arms-length

negotiations where there are no claims of collusion is a very

strong indication of fair value.”);

 the possibility that management will favor a particular

bidder for self-interested reasons, which is a common risk

in corporate sale processes, see Huff Fund Inv. P’ship v.

CKx, Inc., No. CV 6844-VCG, 2013 WL 5878807, at *13

10 (Del. Ch. Nov. 1, 2013)(unpublished opinion)(giving

exclusive weight to a sales process where “[t]he record and

the trial testimony support a conclusion that the process by

which [the company] was marketed to potential buyers was

thorough, effective, and free from any spectre of self-interest

or disloyalty”), aff’d, No. 348,2014, 2015 WL 631586 (Del.

2015)(unpublished table decision);

 whether the transaction involves a controlling stockholder,

see Dell, 177 A.3d at 25, 30 (holding that a “market is more

likely efficient . . . if it has many stockholders [and] no

controlling stockholder” and that “this was not a buyout led

by a controlling stockholder” as a factor supporting fairness

of the deal price);

 the existence of meaningful competition among multiple

bidders during the pre-signing phase, see Aruba Networks,

210 A.3d at 136 (holding that where there was an open

chance for buyers to bid, the level of competition was

enough to support the reliability of the deal price); and

 whether there were improper motives behind the negotiation

of the transaction, see Cinerama, Inc. v. Technicolor, Inc.,

11 663 A.2d 1156, 1172 (Del. 1995)(affirming the lower court’s

finding that the evidence did not support an “improper

motive” on the part of the board in negotiating a good

transaction for the stockholders); In re Dollar Thrifty

S’holder Litig., 14 A.3d 573, 577 (Del. Ch. 2010)(crediting

the record that showed the board “had no conflict of interest

that gave them a motive to do other than the right thing” in

their approach to value maximization).

¶ 22 In considering these factors in the determination of the

reliability of the deal price, it is worth noting that Delaware law

presumes that investors act to maximize the value of their own

investments. Unitrin, Inc. v. Am. Gen. Corp., 651 A.2d 1361, 1380-

81 (Del. 1995). “When a large stockholder supports a sales process

and receives the same per-share consideration as every other

stockholder, that is ordinarily evidence of fairness, not of the

opposite . . . .” Iroquois Master Fund Ltd. v. Answers Corp., 105

A.3d 989, 2014 WL 7010777, at *1 n.1 (Del. 2014) (unpublished

table decision).

¶ 23 However, Delaware law also recognizes that, in some

scenarios, circumstances may cause the interests of investors who

12 hold common stock to diverge. For example, desire for liquidity has

been recognized as a benefit that “may lead directors to breach their

fiduciary duties” and stockholder directors may be found to have

breached their duty of loyalty if a “desire to gain liquidity . . .

caused them to manipulate the sales process” and subordinate the

best interests of the corporation and the stockholders as a whole.

In re Answers Corp. S’holder Litig., No. Civ. A. 6170-VCN, 2012 WL

1253072, at *7 (Del. Ch. 2012)(unpublished opinion)(quoting N.J.

Carpenters Pension Fund v. Infogroup, Inc., No. Civ. A. 5334-VCN,

2011 WL 4825888, at *9 (Del. Ch. Sept. 30, 2011)(denying a motion

to dismiss where the plaintiff alleged that the director, who was also

a large stockholder, sacrificed value in a sale because he needed

liquidity to satisfy personal debts and fund a new venture)).

Additionally, “certain institutional investors may be happy to take a

sizeable merger-generated gain on a stock for quarterly reporting

purposes, or to offset other losses, even if that gain is not

representative of what the company should have yielded in a

genuinely competitive sales process.” Glob. GT LP v. Golden

Telecom, Inc., 993 A.2d 497, 509 (Del. Ch.), aff’d, 11 A.3d 214 (Del.

2010).

13 E. Analysis

¶ 24 C.R.C.P. 26(b)(1) states that “parties may obtain discovery

regarding any matter, not privileged, that is relevant to the claim or

defense of any party and proportional to the needs of the case . . . .

Information within the scope of discovery need not be admissible in

evidence to be discoverable.”

¶ 25 The scope of our evaluation is limited to whether the evidence

sought by the minority stockholders is relevant to their claim, and

would allow the Delaware court to evaluate the reliability of the deal

price. See C.R.C.P 26(b)(1). Given Colorado’s liberal stance on

discovery, and that Mr. Anschutz’s motive, intent, and personal

considerations for divesting his Regal shares would allow a

Delaware court to evaluate the reliability of, and weight to attribute

to, the deal price, we hold, for the following reasons, that Mr.

Anschutz’s testimony is relevant and discoverable. See id.

¶ 26 The minority stockholders allege that the deal price in this

case is an unreliable indicator of fair value and that the Delaware

court should not give it weight in the appraisal case. They state

this is so because Mr. Anschutz may have accepted “less than fair

value in order to accomplish other objectives.” They contend that, if

14 evidence showed that he was willing to take less money for his

Regal shares “so that he could obtain a sale transaction that would

accomplish personal liquidity, tax, estate planning or other

objectives,” then a Delaware court might conclude that the deal

price is not a reliable indicator of fair value.

¶ 27 As noted above, when evaluating the reliability of the deal

price, Delaware courts have considered whether the merger was an

arm’s-length transaction, whether there was collusion, whether the

transaction involved a controlling stockholder, and whether there

was improper motive in the negotiation of the transaction. See DFC

Glob., 172 A.3d at 349; Dell, 177 A.3d at 25, 30; M.P.M. Enters.,

731 A.2d at 797; Cinerama, 663 A.2d at 1172. Mr. Anschutz’s

testimony could shed light on whether he had any improper motive

in negotiating a fair transaction on the minority stockholders’

behalf, whether he had a conflict of interest in his approach to

value maximization on their behalf, or whether the merger was an

arm’s-length transaction. See Cinerama, 663 A.2d at 1172 (holding

that the evidence did not support an “improper motive” in the

negotiation of a good transaction for the stockholders); Dollar

Thrifty, 14 A.3d at 577 (holding that the evidence showed that the

15 board did not have a conflict of interest that gave them a motive to

avoid achieving value maximization for the stockholders). The

testimony that the minority stockholders seek could persuade a

Delaware court to give less weight to the deal price and more weight

to other factors in the determination of the fair value of the Regal

shares. In other words, the minority stockholders have

demonstrated that Mr. Anschutz has knowledge of facts that are

relevant to the resolution of this case.

III. Apex Doctrine

¶ 28 Mr. Anschutz contends that, even if his testimony is relevant

to the appraisal proceedings, we should affirm the trial court’s order

because the minority stockholders’ “subpoena violated the apex

doctrine.” At its most general, the apex doctrine shields high-level

corporate officers from depositions. Zimmerman v. Al Jazeera Am.,

LLC, 329 F.R.D. 1, 6 (D.D.C. 2018). The doctrine is rooted in Fed.

R. Civ. P. 26(c)(1), which provides that a court may, upon motion of

a party or person from whom discovery is sought and “for good

cause, issue an order to protect a party or person from annoyance,

embarrassment, oppression, or undue burden or expense.” We

disagree with Mr. Anschutz’s contention.

16 A. Standard of Review, Preservation, and General Legal Principles

¶ 29 Although the trial court did not rule on the applicability of the

apex doctrine, the issue was properly preserved for appellate review

because Mr. Anschutz raised its applicability in pleadings that he

had filed. The court therefore had an opportunity to rule on it.

Grant Bros. Ranch, LLC v. Antero Res. Piceance Corp., 2016 COA

178, ¶ 11 (“All that is needed to preserve an issue for appeal is for

the issue to be brought to the district court's attention so that the

court has an opportunity to rule on it.”).

¶ 30 When interpreting the Colorado Rules, we rely on various

interpretive aids, including the Federal Rules and federal precedent

interpreting Federal Rules. Garcia v. Schneider Energy Servs., Inc.,

2012 CO 62, ¶ 7; see also Garrigan v. Bowen, 243 P.3d 231, 235

(Colo. 2010)(“Because the Colorado Rules of Civil Procedure are

patterned on the federal rules, we may also look to the federal rules

and decisions for guidance.”).

¶ 31 Colorado has an analogous rule to Fed. R. Civ. P. 26(c)(1).

Like the federal rule, the Colorado rule permits a trial court to issue

a protective order upon a showing of good cause. See C.R.C.P.

26(c)(“[F]or good cause shown, the court may make any order which

17 justice requires to protect a party or person from annoyance,

embarrassment, oppression, or undue burden or expense.”). But

the parties have not cited, and we have not found, any published

Colorado appellate case that has generally applied the apex

doctrine, or, more specifically, decided whether a trial court may

anchor a finding of good cause to issue a protective order primarily

on an individual’s status as a “high ranking and important

executive.” So we must now decide whether we should apply

special discovery rules unique to high-ranking executives to this

case. For the reasons we discuss below, we conclude that we

should not do so. Rather, we determine that the existing discovery

rules, including the protective order provisions of C.R.C.P. 26(c),

provide Mr. Anschutz with sufficient protection from any

inappropriate or improper discovery requests.

B. Application of the Apex Doctrine

¶ 32 Some federal courts developed the apex doctrine because they

decided that “depositions of high-level officers severely burdens

those officers and the entities they represent, and that adversaries

might use this severe burden to their unfair advantage.” United

States ex rel. Galmines v. Novartis Pharm. Corp., No. Civ. 06-3213,

18 2015 WL 4973626, at *1 (E.D. Pa. Aug. 20, 2015); see also EchoStar

Satellite, LLC v. Splash Media Partners, L.P., No. 07-cv-02611-PAB-

BNB, 2009 WL 1328226, at *2 (D. Colo. May 11, 2009)(“[H]igh

ranking and important executives ‘can be easily subjected to

unwarranted harassment and abuse’ and ‘have a right to be

protected, and the courts have a duty to recognize [their]

vulnerability.”)(citation omitted).

¶ 33 The doctrine provides that, before a party may depose a

high-level corporate executive, such party must show that (1) the

deponent has unique, first-hand, nonrepetitive knowledge of the

facts at issue in the case; and (2) other, less burdensome avenues

for obtaining the information sought have been exhausted. In re

Google Litig., No. C 08-03172 RMW PSG, 2011 WL 4985279, at *2

(N.D. Cal. Oct. 19, 2011); Liberty Mut. Ins. Co. v. Superior Court, 13

Cal. Rptr. 2d 363, 365 (Cal. Ct. App. 1992); Alberto v. Toyota Motor

Corp., 796 N.W.2d 490, 495 (Mich. Ct. App. 2010).

¶ 34 An essential component of the doctrine is that the burden of

proof is shifted to the party seeking the corporate executive’s

deposition. See, e.g., Sun Capital Partners, Inc. v. Twin City Fire Ins.

Co., 310 F.R.D. 523, 527 (S.D. Fla. 2015)(“The party seeking the

19 deposition of the high-ranking official has the burden to show that

the deposition is necessary.”); Tierra Blanca Ranch High Country

Youth Program v. Gonzales, 329 F.R.D. 694, 699 (D.N.M.

2019)(quashing subpoenas where the plaintiffs did not show that

the executive possessed “‘unique personal knowledge’ of facts

relevant to any material issue”). “The ‘apex’ doctrine exists in

tension with the otherwise broad allowance for discovery of party

witnesses under the federal rules.” Apple Inc. v. Samsung Elec. Co.,

Ltd, 282 F.R.D. 259, 263 (N.D. Cal. 2012).

¶ 35 But the apex doctrine does not rule the roost in all federal

courts. Some of them have rejected the doctrine altogether, while

others have tried to harmonize the doctrine’s principles with Fed. R.

Civ. P. 26. See, e.g., Novartis Pharm., 2015 WL 4973626, at *2

(holding that “[t]he apex doctrine does not represent an exception to

the rule that a party seeking to quash a subpoena bears the ‘heavy

burden’ of demonstrating that the subpoena represents an undue

burden,” but, rather, the doctrine should be used as a tool for

guiding the court's analysis in determining whether to limit

discovery); Scott v. Chipotle Mexican Grill, Inc., 306 F.R.D. 120, 122

(S.D.N.Y. 2015)(stating that, even in apex doctrine scenarios, the

20 plaintiff bears no burden to show that the deponent has special

knowledge); Van Den Eng v. Coleman Co., No. 05-MC-109-WEB-

DWB, 2005 WL 3776352, at *2 (D. Kan. Oct. 21, 2005)(holding that

high-level executives “are treated under the same standards as any

other protective order, while taking into consideration special

factors that may apply to such officials”).

¶ 36 And, in federal courts that have adopted some version of the

doctrine, the courts are split on which party bears the ultimate

burden of persuasion when a high-level executive invokes the apex

doctrine. Tierra Blanca, 329 F.R.D. at 697. As a result, a hybrid,

burden-shifting version of the doctrine has developed, requiring an

initial showing of unique personal knowledge by the party seeking

discovery, but then placing “the ultimate burden of persuasion” on

the executive to demonstrate that he or she in fact has no unique

personal knowledge. Naylor Farms, Inc. v. Anadarko OGC Co., No.

11-CV-01528-REB-KLM, 2011 WL 2535067, at *2 (D. Colo. June

27, 2011)(citing EchoStar, 2009 WL 1328226, at *2).

¶ 37 Our decision is informed by a trend. As we have just

observed, federal courts do not uniformly follow the apex doctrine.

And a growing number of state courts, including those whose rules

21 of civil procedure, like ours, are modeled on the federal rules, have

rejected it. See Netscout Sys., Inc. v. Gartner, Inc., No. (FS1)

TCV146022988S, 2016 WL 5339454, at *6 (Conn. Super. Ct. Aug.

22, 2016)(unpublished opinion)(holding that the apex doctrine was

incompatible with Connecticut law to the extent that it shifted the

burden of showing good cause); Citigroup Inc. v. Holtsberg, 915 So.

2d 1265, 1269 (Fla. Dist. Ct. App. 2005)(declining to apply the apex

doctrine where Florida’s discovery rules did not contain a

requirement that the party seeking deposition must first show that

the high-level executive has unique or superior knowledge); State ex

rel. Ford Motor Co. v. Messina, 71 S.W.3d 602, 607 (Mo.

2002)(declining to adopt the apex doctrine and holding that the

deposition of high-level executives should proceed in accordance

with the Missouri rules governing discovery); Thomson v. Zillow,

Inc., 32 N.Y.S.3d 455, 459 (N.Y. Sup. Ct. 2016)(declining to extend

discovery rules for executives where respondents had shown that

they seek information which was material and necessary to their

defense); Bradshaw v. Maiden, No. 14 CVS 14445, 2017 WL

1238823, at *5 (N.C. Super. Ct. Mar. 31, 2017)(unpublished

opinion)(declining to apply the apex doctrine, and restricting the

22 deposition of an executive under the North Carolina Rules of Civil

Procedure); Crest Infiniti, II, LP v. Swinton, 174 P.3d 996, 1004

(Okla. 2007)(declining to adopt the apex doctrine where it shifted

the burden to the party seeking discovery, because, in Oklahoma,

“the burden of showing ‘good cause’ is statutorily placed on the

party objecting to discovery”). This trend signals to us that the apex

doctrine’s influence has reached its zenith and has begun to

decline.

¶ 38 In addition to the doctrine’s waning influence, which

undercuts Mr. Anschutz’s request to apply it to this case, we

conclude that it is inconsistent with Colorado law.

¶ 39 As we explained, the doctrine presumes that “apex” executives

should not be deposed unless the party requesting the deposition

can establish reasons why the doctrine should not bar the

deposition. But, much like the cases in our sister states that we

cited above, Colorado law flips the script because it presumes that

such executives should be deposed unless they can show good

cause why the deposition should not be held. See C.R.C.P. 26(c).

¶ 40 The scope of discovery is broad under the Colorado Rules of

Civil Procedure. Williams v. Dist. Court, 866 P.2d 908, 911 (Colo.

23 1993). “[A]ll relevant, non-privileged information should be

discoverable unless it would cause annoyance, embarrassment,

oppression, or undue burden or expense.” Hadley v. Moffat Cty.

Sch. Dist. RE-1, 681 P.2d 938, 945 (Colo. 1984). “Discovery rules

should be accorded a broad and liberal interpretation in order to

effect their purpose of adequately informing the litigants of the facts

giving rise to a claim or defense.” Id. And, as Justice White

recognized in the plurality opinion in Branzburg v. Hayes, 408 U.S.

665, 690 n.29 (1972)(quoting 8 J. Wigmore, Evidence § 2192

(McNaughton rev. 1961)), “everyone is obligated to testify when

properly summoned,” and “derogations” to this “positive general

rule” are “obstacle[s] to the administration of justice.”

¶ 41 None of our civil discovery rules, including C.R.C.P. 26, refer

to the apex doctrine. Mr. Anschutz’s request that we apply it to this

case is therefore, at its core, an invitation that we amend the Rules

of Civil Procedure. And that we cannot do because the supreme

court’s power to adopt and to amend such rules is exclusive. See

Colo. Const. art VI, § 21 (“The supreme court shall . . . make and

promulgate rules governing practice and procedure in civil . . .

24 cases.”); Gold Star Sausage Co. v. Kempf, 653 P.2d 397, 400 (Colo.

1982)(same).

¶ 42 But our conclusion does not leave Mr. Anschutz without a

remedy. Our supreme court has recognized that the “broad

discovery permitted by C.R.C.P. 26(b)(1) may lead to discovery

abuses,” Williams, 866 P.2d at 912, including, conceivably, the sort

of abuses that the apex doctrine is designed to prevent. But there

are ways to protect against such abuses. “C.R.C.P. 26(c) allows the

trial court to issue protective orders as justice requires ‘to protect a

party . . . from annoyance, embarrassment, oppression, or undue

burden or expense.’” Id. The party seeking protection from

discovery bears the burden to establish good cause to obtain relief.

See C.R.C.P. 26(c); Williams, 866 P.2d at 912.

¶ 43 So, in this case, if Mr. Anschutz can establish such good

cause, the trial court could issue a protective order. In this regard,

Mr. Anschutz could, for example, ask the trial court to consider “the

possibility of harassment and the potential disruption of business”

that his deposition might cause. Gen. Star Indem. Co. v. Platinum

Indem. Ltd., 210 F.R.D. 80, 83 (S.D.N.Y. 2002).

25 ¶ 44 In reaching the conclusion that we will not apply the apex

doctrine to this case, we note the following:

 The minority stockholders have alleged that Mr. Anschutz’s

testimony is relevant to the question of whether he was

willing to take less money for his Regal shares “so that he

could obtain a sale transaction that would accomplish

personal liquidity, tax, estate planning or other objectives.”

Indeed, he may be the best possible witness to testify about

his intent.

 Mr. Anschutz does not deny that he had knowledge of the

unique and relevant facts. See Naylor Farms, 2011 WL

2535067, at *4 (holding that a declaration sworn under

penalty of perjury where executive unequivocally disavows

any unique personal knowledge is competent evidence that

may be considered by the court); EchoStar, 2009 WL

1328226, at *3 (holding that executive had satisfied his

burden and was entitled to a protective order precluding his

deposition where he provided an affidavit establishing that

he had “no personal knowledge of the circumstances

surrounding” the agreement in dispute).

26 ¶ 45 We therefore reverse the trial court order denying the minority

stockholders’ motion to compel Mr. Anschutz to testify at a

deposition. We remand the case to the trial court to grant the

minority stockholders’ motion to compel him to testify at a

deposition unless, after an evidentiary hearing, the court

determines that it should issue a protective order under C.R.C.P.

26(c).

JUSTICE MARTINEZ and JUDGE DAVIDSON concur.