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September 1, 2022

Federal Court Sanctions Party Where Corporate Representative Answered "I Don't Know" over 100 Times During 30(b)(6) Deposition

In In Re FirstEnergy Corp. Securities Litigation, the United States District Court for the Southern District of Ohio entered an order on August 19, 2022, sanctioning a party for presenting an inadequately prepared corporate representative who provided insufficient testimony at a 30(b)(6) deposition. 

In this securities class action, two former employees, Charles E. Jones and Michael Dowling, noticed FirstEnergy’s 30(b)(6) deposition seeking testimony on 15 topics. FirstEnergy objected to the deposition notice topics but ultimately agreed to present Tracy Ashton, an assistant controller, as its corporate designee on 12 topics that were further narrowed by agreement of the parties. Feeling that Ashton’s deposition testimony was insufficient, Jones and Dowling filed a motion to compel FirstEnergy to appear for a second 30(b)(6) deposition and sought attorney’s fees and costs. 

In support of their motion, Jones and Dowling argued that Ashton was inadequately prepared, citing the fact that Ashton answered that she did not know or was not prepared to answer questions over 100 times throughout the deposition. They also argued that she merely recited passages from a key document at issue, a deferred prosecution agreement, without explanation or interpretation. In opposition, FirstEnergy argued that Ashton was adequately prepared because she met with counsel over a half dozen times, reviewed over 70 documents, and reviewed an 84-page single-spaced testifying aid on dozens of topics. 

The court held that Ashton’s preparation and testimony fell short of the obligations of Rule 30(b)(6) and therefore ordered a second 30(b)(6) deposition of FirstEnergy. Although the court noted that “absolute perfection” is not required of a 30(b)(6) designee, it held that a “designee must be able to testify fully, competently, and candidly to all matters reasonably known by the corporation.” The court found it “particularly unreasonable” that FirstEnergy’s designee, a controller who is uniquely qualified to interpret financial records, was unable to offer testimony on these records. The court also ordered that FirstEnergy pay Jones’s and Dowling’s reasonable costs and expenses associated with attending the second deposition and their reasonable attorney’s fees in preparing the instant motion.

This case serves as a reminder that a Rule 30(b)(6) corporate designee cannot merely rely on a lack of personal knowledge when answering questions on behalf of a corporation. It is the duty of the client, working with their lawyer, to adequately prepare and learn sufficient information to be able to adequately answer questions on the noticed topics at a Rule 30(b)(6) deposition. 

If you have any questions regarding the content of this alert, please contact Ben Carroll, partner, at bcarroll@barclaydamon.com; Matthew Larkin, Torts & Products Liability Defense Practice Area chair, at mlarkin@barclaydamon.com; or another member of the firm’s Torts & Products Liability Defense Practice Area.
 

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