Binding Effect of 30(b)(6) Deposition Testimony — Admission vs. Judicial Admission — Impact on Summary Judgment vs. at Trial

State Farm’s 30(b)(6) witness in State Farm Mut. Auto. Ins. Co. v. New Horizon, Inc., 2008 U.S. Dist. LEXIS 37571 (E.D. Pa. May 7, 2008), Mr. Bowles, did nothing to prepare for his testimony other than meet with counsel. Accordingly, when questioned about the basis of certain claims asserted by State Farm — one of the purposes of the deposition — “could not state ‘any facts that support’ State Farm's claims, other than those learned through ‘discussions with counsel.’ ... Bowles was [then] instructed not to answer when asked about the information learned through these discussions with counsel.” The defendants moved for summary judgment on the ground that State Farm was bound by these answers and could not present any facts supporting the challenged claims. Judge Eduardo C. Robreno held that the 30(b)(6) testimony was an admissible admission but that it was not a binding judicial admission that precluded the introduction of inconsistent evidence on summary judgment or perhaps even at trial:

Binding Admission. “In prior decisions, judges of this Court have elaborated on this concept by stating that ‘[t]he purpose behind Rule 30(b)(6) is to create testimony that will bind the corporation.’ Resolution Tr. Corp. v. Farmer, No. 92-3310, 1994 WL 317458, at *1 (E.D. Pa. June 24, 1994); Ierardi v. Lorillard, Inc. , No. 90-7049, 1991 WL 158911, at *2 (E.D. Pa. Aug. 13, 1991) (‘Admissions made by the [Rule 30(b)(6)] deponent will be binding on his principal.’). However, the use of the word ‘binding’ in the opinions has caused some confusion, prompting litigants to argue, as Defendants do here, that Rule 30(b)(6) testimony is something akin to a judicial admission--a statement that conclusively establishes a fact and estops an opponent from controverting the statement with any other evidence. This is not quite the case.”

Not Unassailable Judicial Admissions. “Although the Third Circuit has yet to address the issue, the better rule is that ‘the testimony of a Rule 30(b)(6) representative, although admissible against the party that designates the representative, is not a judicial admission absolutely binding on that party.’ 8A Charles Alan Wright et al., Federal Practice and Procedure § 2103 (Supp. 2007); A.I. Credit Corp. v. Legion Ins. Co., 265 F.3d 630, 637 (7th Cir. 2001) (‘[T]estimony given at a Rule 30(b)(6) deposition is evidence which, like any other deposition testimony, can be contradicted and used for impeachment purposes’ (quotation omitted)); R&B Appliance Parts, Inc. v. Amana Co., 258 F.3d 783, 786 (8th Cir. 2001); Diamond Triumph Auto Glass, Inc. v. Safelite Glass Corp., 441 F. Supp. 2d 695, 723 n.17 (M.D. Pa. 2006); Indus. Hard Chrome, Ltd. v. Hetran, Inc., 92 F. Supp. 2d 786, 791 (N.D. Ill. 2000); A&E Prods. Group, L.P. v. Mainetti USA Inc., No. 01-10820, 2004 WL 345841, at *7 (S.D.N.Y. Feb. 25, 2004); Media Servs. Group, Inc. v. Lesso, Inc., 45 F. Supp. 2d 1237, 1254 (D. Kan. 1999); W.R. Grace & Co. v. Viskase Corp., No. 90-5383, 1991 WL 211647, at *2 (N.D. Ill. Oct. 15, 1991).”

Direct Contradiction Barred on Summary Judgment on Analogy to Rule Barring Affidavit that Conflicts with Deposition. “This does not mean, however, that the party may retract prior testimony with impunity. In some cases ‘where the non-movant in a motion for summary judgment submits an affidavit which directly contradicts an earlier [Rule 30(b)(6)] deposition and the movant relied upon and based its motion on the prior deposition, courts [have] disregard[ed] the later affidavit.’ Hyde v. Stanley Tools, 107 F. Supp. 2d 992, 993 (E.D. La. 2000); see, e.g., Rainey v. Am. Forest & Paper Ass'n, Inc., 26 F. Supp. 2d 82, 95 (D.D.C. 1998) (‘[T]he Kurtz affidavit's quantitative assertion works a substantial revision of defendant's legal and factual positions. This eleventh hour alteration is inconsistent with Rule 30(b)(6), and is precluded by it.’); Caraustar Indus., Inc. v. N. Ga. Converting, Inc. , No. 04-187, 2006 WL 3751453, at *7 (W.D.N.C. Dec. 19, 2006); Ierardi, 1991 WL 158911, at *3; see also Joseph v. Hess Oil, 867 F.2d 179, 183 (3d Cir. 1989) (non-30(b)(6) context) (‘In cases where a party has filed an affidavit which contradicts earlier deposition testimony, summary judgment has been granted where the court found that the contradictory affidavit was filed in order to defeat the summary judgment motion.’). Yet, where the affidavit ‘is accompanied by a reasonable explanation’ of why it was not offered earlier, courts have ‘allowed a contradictory or inconsistent affidavit to nonetheless be admitted’ to supplement the earlier-submitted Rule 30(b)(6) testimony. Hyde, 107 F. Supp. 2d at 993.”

Impact at Trial. “The testimony of Bowles (on behalf of State Farm) might nonetheless be damaging to State Farm's position at trial. See United States v. Taylor, 166 F.R.D. 356, 362 (M.D.N.C. 1996) (‘[I]f a party states it has no knowledge or position as to a set of alleged facts or area of inquiry at a Rule 30(b)(6) deposition, it cannot argue for a contrary position at trial without introducing evidence explaining the reasons for the change.’); Ierardi, 1991 WL 158911, at *3 (‘If the designee testifies that H&V does not know the answer to plaintiffs' questions, H&V will not be allowed effectively to change its answer by introducing evidence at trial. The very purpose of discovery is to avoid trial by ambush’ (quotations omitted)). For example, if State Farm seeks to contradict its Rule 30(b)(6) testimony at trial with new evidence, and it offers no valid explanation why the earlier testimony should be amended, the Court may preclude State Farm from presenting such new evidence, or permit the new evidence and allow State Farm's explanation to be submitted to the jury along with the earlier testimony. See Fed. R. Evid. 403 (providing for exclusion of evidence if ‘its probative value is substantially outweighed by the danger of unfair prejudice . . . or by considerations of undue delay’).

Improper to Object to Facts Learned by 30(b)(6) Witness from Counsel in Preparation for Deposition. “State Farm argues that counsel properly instructed Bowles not to disclose any facts learned from discussions with counsel in preparation for the Rule 30(b)(6) deposition because such facts constitute attorney work product and are thus protected from disclosure. State Farm is incorrect:

[T]he courts have consistently held that the work product concept furnishes no shield against discovery, by interrogatories or by deposition, of the facts that the adverse party's lawyer has learned, or the person from whom he has learned such facts, or the existence or nonexistence of documents, even though the documents themselves may not be subject to discovery.

8 Wright et al., supra, § 2023; In re Linerboard Antitrust Litig., 237 F.R.D. 373, 384 (E.D. Pa. 2006) (‘[T]here is simply nothing wrong with asking for facts from a deponent even though those facts may have been communicated to the deponent by the deponent's counsel' (quoting Protective Nat'l Ins. Co. v. Commonwealth Ins. Co., 137 F.R.D. 267, 280 (D. Neb. 1989))).”

Duty to Prepare 30(b)(6) Witness. “[A] corollary to the corporation's duty to designate a Rule 30(b)(6) witness is that the corporation must ‘prepare its designee to be able to give binding answers on its behalf . . . [and] perform a reasonable inquiry for information’ that is noticed and reasonably available to it. [Citation and quotation omitted]. Therefore, if a Rule 30(b)(6) witness is asked a question concerning a subject that was not noticed for deposition or that seeks information not reasonably available to the corporation, the witness need not answer the question. Moreover, certain questions may seek details so minute that a witness could not reasonably be expected to answer them. See, e.g., United States ex. rel. Faqo v. M&T Mortgage Corp., 235 F.R.D. 11, 25 (D.D.C. 2006) ("Without a photographic memory, [the witness] could not reasonably be expected to testify as to the loan numbers . . . for sixty-three different loans."). However, if a Rule 30(b)(6) witness is asked a question concerning a subject that was noticed with particularity, is seeking information that is reasonably available to the corporation, and is not unreasonably obscure, and the witness is unprepared to answer the question, the purpose of the deposition is completely undermined. See Constellation NewEnergy, Inc. v. Powerweb, Inc., No. 02-2733, 2004 WL 1784373, at *5 (E.D. Pa. Aug. 10, 2004) (‘In reality if a Rule 30(b)(6) witness is unable to give useful information he is no more present for the deposition than would be a deponent who physically appears for the deposition but sleeps through it.’).

This is an extremely useful opinion. The only thing that strikes me as a bit unclear is the difference in the standard for receipt of conflicting evidence at summary judgment vs. at trial. Once the data have been received on summary judgment, the “ambush” issue would seem to have been resolved — not that this alone necessarily justifies admitting the evidence at trial. There should be some repercussions for putting up bogus 30(b)(6) witnesses, and merely awarding attorneys' fees for wasted effort — even if they did make the adversary whole (which never happens) — are not a sufficiently meaningful sanction.

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