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District Court Denies Motion to Compel and for Sanctions Where CFO Could Not Be Compelled to Testify on Broad Deposition Topics Including Royalties, Affirmative Defenses, Infringement Contentions and Invalidity Contentions

Plaintiff Stoneeagle Services, Inc. (“Stoneeagle”) filed a motion seeking sanctions against Defendant Premier Healthcare Exchange, Inc. (“PHX”) for failing to provide a prepared corporate representative to testify pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure. In response to the motion, PHX did not dispute that its corporate representative was unable to respond to all of the questions posed to him during the deposition, but instead asserted that the notice of deposition contained forty-five deposition topics covering broad topics and, therefore, lacked specificity.

The district court first analyzed the requirement of Rule 30(b)(6), noting that the corporation’s obligation under Rule 30(b)(6) “does not mean that the witness can never answer that the corporation lacks knowledge of a certain fact.” New World Network Ltd. v. M/V Norwegian Sea, 2007 WL 1068124 (S.D. Fla. 2007) (“if a witness is not prepared to answer a slew of questions that are glaringly irrelevant to the claims or defenses in a case, a requesting party who seeks to compel or sanction a deponent for not knowing such answers will not be successful before the Court, and indeed may himself be sanctioned under Rule 37 if the Court finds that the questions were so improper and the party’s position substantial unjustified”).

Stoneeagle asserted that the corporate representative (“Hemmer”) was unprepared to testify regarding many of the topics in the notice, including a topic about “royalties, licensing fees, fees, rebates, and commissions paid by or received from PHX relating to the alleged infringing product.” The district court disagreed. “As Defendant PHX states, a 30(b)(6) deposition is not intended to be ‘a memory contest,’ and the notice of deposition topic concerned a broad range of financial categories. See QNE Ins. Corp. v. Jorda Enterprises, Inc., 277 F.R.D. 676 (S.D. Fla. 2012). Even as CFO, Hemmer should not be expected to memorize figures concerning a range of issues.”

Turning to topics that pertain to affirmative defense, non-infringement and invalidity contentions, the district court also found that Hemmer should not be required to testify on those broad topics as well. “Plaintiff maintains that Hemmer was unprepared to testify about topics two and 18-25 that concern affirmative defenses and PHX’s non-infringement and invalidity contentions. In this complex patent infringement action, Hemmer, who is not a lawyer, should not be expected to ‘present orally a fully reliable and sufficiently complete account of all the bases for the contentions made and positions taken by the corporate party.’ See generally Methode Electronics, Inc. v. Finisar Corp., 205 F.R.D. 552 (N.D. Cal. 2001) quoting McCormick-Morgan, Inc. v. Teledyne Industries, Inc., 134 F.R.D. 275 (N.D. Cal. 1991) (limiting 30(b)(6) deposition testimony and noting “factual contentions underpinning a patent infringement claim would be more accurately and fairly derived through contention interrogatories”); In re Independent Service Organizations Antitrust Litigation, 168 F.R.D. 651 (D. Kan. 1996) (finding 30(b)(6) deposition notice requesting testimony about facts supporting denials and affirmative defenses).”

Finally, Stoneeagle argued that Hemmer was not prepared to respond to questions concerning agreements, contracts, communications, and the relationship between PHX and PPS relating to the alleged infringing products. The district court also rejected this argument. “Defendant PHX objected to this topic as irrelevant, and I agree that it is not unreasonable that the corporate representative was unfamiliar with an indemnification agreement relating to the litigation. Such agreement did not pertain to the underlying use of the allegedly infringing product. Sixth, Plaintiff indicates that Hemmer was unprepared regarding topic 31 pertaining to agreements, contracts, communications, and/or the relationship between PHX and StoreFinancial Services relating to the alleged infringing product. Hemmer testified he knew that StoreFinancial is a data processor providing services through the UMB bank relationship with PayPlus. Again, Hemmer’s response represents the corporate knowledge of PHX, and is an acceptable response since PHX has no corporate knowledge about this system. answer and counterclaim.”

Stoneeagle Services, Inc. v. Pay-Plus Solutions, Inc., Case No. 8:13-CV-2240-T-33MAP
The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or