North Carolina Business Court Applies the Apex Doctrine

 

North Carolina Business Court Applies the Apex Doctrine

 

In a recent decision, the North Carolina business court applied the “Apex Doctrine” in a discovery dispute.  Joseph Lee Gay v. Peoples Bank, 13 CVS 383, Superior Div., Court of Justice, Lincoln Cty (N.C.), Order dated September 17, 2014,

 

Typically in a lawsuit against a corporation or other business entity, it will designate a representative to, in the course of a deposition, speak on the corporation’s behalf.  The person so designated must have personal knowledge of the matters in dispute in the lawsuit.  It is not at all uncommon for the plaintiff, in addition to taking the deposition of the designated representative, to seek to depose high ranking corporate officials such as the chief executive officer and chief financial officer.  Often these depositions are viewed, at least by the defense, as being abusive as either fishing expeditions, efforts to simply inconvenience the officials and thereby perhaps increase settlement value or as grandstanding by the plaintiff’s counsel who will then crow about forcing the corporate defendant to have produced its CEO and CFO.

 

Under the Apex Doctrine, depositions of senior executives are not permitted absent the plaintiff demonstrating that the individuals in question have or may have particularized knowledge of the dispute.  Hence there will typically be disputes as to whether or not that senior executive is likely to uniquely have that particularized information.

 

In this case over alleged excess overdraft fees charged by the bank, the plaintiffs had already deposed five officers.  The plaintiff sought to depose the current COO, the former president/CEO (now retired), the current CFO and the current chief administrative officer (“CAO”).  The opinion does not recite what proffer the plaintiffs made as to what any of these persons might know that had not already been explored in the prior depositions.  In response to the effort to take these new depositions, the defendant bank argued that:

It will be very disruptive and unduly burdensome in light of the repetitive testimony to be generated to require the three top-level executive who currently work at the bank … to submit to depositions.

The Court gave the plaintiff’s a partial win.  As Wolfe was retired, it could not be argued that his deposition would interrupt the bank’s operations, and the plaintiffs were permitted to take his deposition.  They were as well permitted to take the deposition of the current chief operating officer.  At the same time they were denied permission to at this time take the depositions of the CFO and CAO.