Opinion
No. C04-01026 RMW (HRL), [Re: Docket No. 57].
August 1, 2006
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR ORDER TO INCREASE THE PERMITTED LENGTH OF EACH KPMG WITNESS DEPOSITION
On August 1, 2006, this court heard the "Motion for Order to Increase the Permitted Length of Each KPMG Witness Deposition" filed by plaintiffs Robert Schmidt and Thomas Walsh. Defendant Levi Strauss Co. ("LSCo.") and third-party KPMG each opposed the motion. Upon consideration of the moving and responding papers, as well as the arguments of counsel, the court grants the motion in part and denies the motion in part.
I. BACKGROUND
Plaintiffs were formerly employed in defendant LSCo.'s tax department. Their employment was terminated in December 2002. In this lawsuit, filed under the Sarbanes-Oxley Act (18 U.S.C. § 1541A), plaintiffs claim that they were wrongfully terminated in retaliation for complaining about LSCo.'s alleged tax fraud.
Plaintiffs have noticed the depositions of several KPMG employees whom they say were charged with reviewing, analyzing, auditing and approving LSCo.'s finances during the relevant time frame encompassed by their complaint. Those KPMG witnesses are: (1) Doug Hart, (2) Dean Kamahale, (3) Marty Skrip, (4) Troy Rudd, (5) Jim Sams, (6) David Zaiken and (7) Mike Burke. Plaintiffs assert that the identified KPMG witnesses have information directly relevant to their claims — namely, information about LSCo.'s valuation allowance, deferred tax assets, foreign tax credits and the decision requiring LSCo. to restate income in the amount of $450,000,000. KPMG has agreed to produce its witnesses for deposition, but argues that the statutory seven-hour limit is sufficient for a fair examination of each witness. Defendant LSCo. has indicated that it wants up to 3.5 hours (i.e., half of the seven-hour limit) to examine each KPMG witness, although it acknowledged at oral argument that it may not need a long period of time to depose every witness. Plaintiffs do not oppose LSCo.'s claim for equal time; however, they argue that they need substantially more than 3.5 hours to complete their own examination.
KPMG advises that it does not represent David Zaiken or Mike Burke.
Plaintiffs now move for an order permitting the parties to depose each KPMG witness for four days, with each side to have up to two days of examination for each witness. They contend that four days are needed for a fair examination because the instant litigation entails unusual complexity and involves numerous documents consisting of detailed financial records.
II. DISCUSSION
Fed.R.Civ.P. 30(d)(2) limits a deposition to "one day of seven hours," but provides that "[t]he court must allow additional time consistent with Rule 26(b)(2) if needed for a fair examination of the deponent or if the deponent or another person, or other circumstance, impedes or delays the examination." FED.R.CIV.P. 30(d)(2).
Preliminarily, defendant LSCo. argues that plaintiffs' request for four days of deposition for each of the seven identified KPMG witnesses violates the District Court's May 5, 2006 scheduling order. Here, LSCo. points out that the scheduling order permits plaintiffs to take up to eighteen depositions, only five of which are not subject to the presumptive seven-hour time limitation. ( See May 5, 2006 Case Management Order, Docket No. 51 at p. 2). It adds that, after KPMG repeatedly said that its witnesses would appear for one day of deposition, plaintiffs advised the District Court that they would need only five depositions which would last longer than one day. Further, LSCo. contends that there is not enough time under the current case management schedule for the parties to take up to twenty-eight days of KPMG depositions. It says that plaintiffs (1) have already taken the depositions of five LSCo. employees and former employees, (2) are attempting to schedule five more depositions of LSCo. employees and former employees (including the deposition of defendant Liang, which plaintiffs have indicated will take more than seven hours to complete), and (3) have indicated that they will resume several LSCo. employee depositions which have already been started.
There is nothing in the District Court's scheduling order expressly stating that the limit on multi-day depositions applies only to party-affiliated depositions. In any event, it is not apparent that plaintiffs have exhausted their total eighteen-deposition limit. As discussed more fully below, this court does not find that this order will cause the parties to run afoul of the limits or time schedule set by the District Court.
As a procedural matter, KPMG argues that plaintiffs should have first exhausted their allotted 3.5 hours of deposition before filing the instant motion. Here, it points out that Rudd flew to Northern California and KPMG made him available for a full day of deposition, but that plaintiffs voluntarily terminated the deposition after less than two hours of examination. ( See Huser Decl. ¶ 9, Ex. D (Rudd Depo. at 95:5-25)). Generally, it is preferable for a party to first proceed with the deposition under available limits because only then will it be evident whether additional time really is necessary. See Malec v. Trustees of Boston College, 208 F.R.D. 23, 24 (D. Mass. 2002) (directing the parties to proceed with the deposition, and stating that the court will not intervene unless the parties are unable to stipulate to any additional time that may be needed). At the same time, however, Fed.R.Civ.P. 30 does not require that available time limits be exhausted before a party may move for relief. Here, it is not clear that requiring plaintiffs to proceed with the depositions first will necessarily obviate the instant motion or lead to a more efficient resolution of the dispute. Accordingly, the court declines to deny the motion on this basis.
As to the substance of plaintiffs' motion, both KPMG and LSCo. contend that plaintiffs have failed to show good cause why four days of deposition are needed as to any particular witness. This court agrees with respect to Doug Hart, Dean Kamahale, Marty Skrip, and Mike Burke. As to these witnesses, plaintiffs rely primarily upon generalizations and a bare assertion that these individuals "also participated in providing LSCo. with a favorable analysis and a clean audit." (Reply at 3:4-5). However, plaintiffs have not demonstrated that the role these individuals allegedly played in the events at issue were so substantial that they should fairly submit to more than one day of deposition.
Similarly, plaintiffs have not shown good cause for four days of deposition with respect to Jim Sams. Here, plaintiffs assert that Sams, who resides in London, England, "gave a rubber stamp of approval to LSCo.'s tax and accounting treatment and essentially blessed the manner in which LSCo. treated its financial statements and how it reserved against risk." (Reply 3:1-3). While they complain that it will be unfair to travel to London for only 3.5 hours of deposition, they also have made no showing that Sams' alleged role in the transactions in question requires more than one day of deposition.
KPMG contends that because Sams lives in London, plaintiffs must, in any event, proceed with his deposition through letters rogatory pursuant to Fed.R.Civ.P. 28(b).
As for Troy Rudd and David Zaiken, the parties dispute the importance of these witnesses. LSCo. asserts that Rudd and Zaiken were involved in reviewing LSCo.'s financial statements for only a few weeks during one fiscal quarter of 2002. KPMG contends that Rudd's prior deposition testimony suggests that he was removed from the LSCo. audit after less than two months because he knew plaintiffs before KPMG was engaged by LSCo. (Huser Decl., ¶¶ 4-5, Ex. A (Rudd Depo. at 30:6-12); Ex. B (Rudd Depo. at 39:14-17, 40:8-11, 27:12-17)).
Plaintiffs contend that Rudd and Zaiken are particularly important, asserting that they "were assigned as the primary KPMG auditors of LSCo. in 2002, at the very time in which plaintiffs Thomas Walsh and Robert Schmidt were communicating their concerns to LSCo.'s senior financial officers regarding LSCo.'s tax and accounting practices and procedures." (Kay Decl., ¶ 4). Additionally, plaintiffs' counsel attests that Rudd and Zaiken authored a number of emails and that Zaiken also authored a memo summarizing the status of their audit as well as their concerns (i.e., concerns which purportedly were similar to those raised by plaintiffs). ( Id., ¶¶ 5-9).
Kay's declaration, submitted in support of plaintiffs' reply brief, refers to a number of KPMG documents which apparently were to have been attached as exhibits. However, the referenced exhibits were not filed with the court. Accordingly, the court is left to rely upon plaintiffs' characterization of the referenced documents.
This court finds that plaintiffs have not shown good cause to depose Messrs. Rudd and Zaiken for four days. Indeed, plaintiffs state that they "prefer," but will likely not need, to have each witness appear for four days of examination. Nevertheless, this court is persuaded that more than 3.5 hours will be reasonably necessary for a fair examination of these witnesses. In view of the complexity of issues presented, the alleged role of Rudd and Zaiken in connection with the alleged events in question, and the involvement of multiple parties with a need to depose these individuals, each side will be permitted to depose each witness for an additional 3.5 hours (i.e., each side will have one day of seven hours in which to complete their respective examinations). The time plaintiffs spent examining Rudd during his previous deposition session on January 26, 2006 shall count against their seven-hour limit.
Although it is true that plaintiffs voluntarily (and perhaps, prematurely) terminated Rudd's prior deposition session, KPMG has not convincingly demonstrated that they should now be barred from deposing him altogether. Nevertheless, the parties are admonished to conduct their examination of these third parties as expeditiously as possible. Nothing in this order will preclude a party or witness from seeking appropriate relief if a deposition is conducted in bad faith or in such a manner as to unreasonably annoy, embarrass or oppress the deponent.
KPMG argues that plaintiffs' prior examination of Rudd was not as efficient as it could have been insofar as some time was spent examining Rudd about irrelevant matters. Indeed, it appears that some time — albeit only a minute or so — was spent examining Rudd about personal family matters with no apparent relevance to the litigation. (Huser Decl., ¶ 10, Ex. E (Rudd Depo. at 10:1-22)).
III. ORDER
Based on the foregoing, IT IS ORDERED THAT plaintiffs' "Motion for Order to Increase the Permitted Length of Each KPMG Witness Deposition" is GRANTED IN PART AND DENIED IN PART as follows:1. The motion as to Troy Rudd and David Zaiken is GRANTED IN PART. Each side will be permitted to depose each witness for one day of seven hours. The time plaintiffs spent examining Rudd during his January 26, 2006 deposition session shall count against their seven-hour limit.
2. The motion is DENIED as to Doug Hart, Dean Kamahale, Marty Skrip, Mike Burke and Jim Sams.