Warning, warning: long post ahead with a whole bunch of confusing citations to California discovery statutes. But this one is pretty important for non-California corporations ensnared in litigation in the golden state. So please bear with us, even if the post sometimes reads like a tax code analysis.
All you in-house counsel and defense counsel, consider this scenario: Say your company is headquartered in Michigan. A plaintiff sues your company in California Superior Court. His lawyers then notice the depositions of your president, vice president, chief engineer and assistant design engineer, locating them conveniently in the attorney’s offices in . . . . Los Angeles. Well, conveniently for him anyway, but not so much for the witnesses, since they all live in Michigan. Can the trial court order those corporate employees to get on the airplane from Michigan and go to Los Angeles for deposition?
Until last week, the answer was “yes” under Glass v. Superior Court (1988) 204 Cal.App.3d 1048. But last week, in Toyota Motor Corporation v. Superior Court (July 27, 2011) ___Cal.App.4 ___, (Second Div., B225393) (and see the modification order here) the answer became “hold on there, not so fast. Maybe not.”
Here's what happened: The trial court had compelled a group of Toyota employees to come to California for their depositions from Japan. The Court of Appeal quashed the order, using the following logic:
Code of Civil Procedure section 1989 says “[a] witness . . . is not obliged to attend as a witness before any court, judge, justice or any other officer, unless the witness is a resident within the state at the time of service.” Section 1878 defines a “witness” as “a person whose declaration under oath is received as evidence for any purpose, whether such declaration be made on oral examination, or by deposition or affidavit.” And under section 2025.230, depositions must be taken in front of officers -- court reporters. So section 1989 applies to depositions.
We also have section 2025.250(a), providing that:
Unless the court orders otherwise under Section 2025.260, the deposition of a natural person, whether or not a party to the action, shall be taken at a place that is, at the option of the party giving notice of the deposition, either within 75 miles of the deponent's residence, or within the county where the action is pending and within 150 miles of the deponent's residence.
And section 2025.260 allows the trial court to make exceptions to 2025.250 after going through a balancing analysis. But, said the court of appeal, the statute doesn’t allow exceptions to section 1989, so maybe the deposition can be more than 150 miles from the deponent’s residence, but you still can’t make him fly here from Japan. Or, presumably, Michigan.
This means we have conflicting rulings on this subject. As regular readers know, when there are conflicting decisions from two courts of appeal on a question of law, every court in the State is free to follow either of them. Auto Equity Sales, Inc. v. Superior Court Of Santa Clara County (1962) 57 Cal.2d 450.
This all begs two interesting questions. First, will this ruling be taken to the State Supremes, and will they agree to hear it? A conflict in Court of Appeal decisions is one of the main reasons the State Supremes accept review. We’ll be watching and will let you know.
But just as important is this question: Does the caseapply when the deponent is a corporation? California’s version of FRCP 30(b)(6) is Code of Civil Procedure section 2025.230:
If the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.
Section 2025.250(b) states the following concerning the place of deposition of a corporation:
The deposition of an organization that is a party to the action shall be taken at a place that is, at the option of the party giving notice of the deposition, either within 75 miles of the organization's principal executive or business office in California, or within the county where the action is pending and within 150 miles of that office.
If the organization has not designated a principal executive or business office, then section 2025.250(d) allows its deposition to be taken either within the county where the deposition is pending or within 75 miles of any of its executive or business offices.
Until now, most attorneys have assumed that if the organization is giving the deposition, it has to produce its testifying representatives in California. But does Toyota Motor Corporation also apply to the deposition of organizations? Do the requirements of section 1989 require that the deposition of a corporation be taken in its home state? In its Order Modifying Opinion, the Court of Appeals writes:
We express no opinion, however, as to whether our analysis or the conclusions we have reached in this opinion would or should extend or apply to a court order made pursuant to section 2025.230 which provides for the circumstance where “[] the deponent named is not a natural person . . . .
Now that’s a pretty curious thing for the Court to say, since section 2025.230 doesn’t provide for any court order, and neither do sections 2025.250(b) and (d). In other words, a court can go through a balancing test under 2025.260 to decide if an individual deponent has to appear for a deposition farther from his residence than section 2025.250(a) would otherwise require, so long as he is a California resident as required by section 1989. But when it comes to corporate depositions, there are no exceptions to sections 2025.250(b) and (c).
Cal Biz Lit thinks section 1989 should apply to the deposition of corporations, just as it applies to the deposition of individuals. Here’s why:
- We now know that section 1989 means that no witness can be compelled by a California court to appear for deposition unless the witness is a resident of this state.
- Section 1878 defines a witness as, among other things, a “person” who gives testimony in a deposition;
- A corporation is a person under Santa Clara County v. Southern Pacific R. Co. (1886) 118 U. S. 394.
- Where is the corporation a resident? Well, under federal diversity jurisprudence, it is a resident of the state where its corporate nerve center is located and the state where it is incorporated. Hertz v. Friend (2010) 130 S.Ct. 1181. This may or may not apply, but a corporation is certainly not a resident of every state where it does business; logically, a corporation resides where its executive offices, headquarters, etc. are located.
- The fact that California courts may have personal jurisdiction over a corporation does not mean that the corporation is a resident of California, anymore than the State’s jurisdiction over a non-resident individual makes that individual a State resident.
- Therefore, under Toyota Motor Corporation v. Superior Court, it should not be possible to compel a foreign corporation to appear for its deposition in California any more than it is possible to compel its management employees to appear here.
Of course, somebody will likely have to take this to at least the Court of Appeal, and possibly the State Supreme Court, in order to prove CBL is right. Any companies out there interested?
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