IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ADT HOLDINGS, INC., in its individual )
capacity and as attorney-in-fact for ZONOFF, )
INC., and ADT LLC, )
)
Plaintiffs, )
)

v. ) C.A. No. 2017-0328-JTL
)
MICHAEL HARRIS and BOT HOME )
AUTOMATION, INC., d/b/a RING.COM, )
)
Defendants. )

MEMORANDUM OPINION

Date Submitted: September 6, 2017
Date Decided: September 7, 2017

Steven L. Caponi, K&L GATES LLP, Wilmington, Delaware; Attorneyfor Plaintijj‘fs.
Megan Ward Cascio, Lauren Neal Bennett, MORRIS, NICHOLS, ARSHT & TUNNELL

LLP, Wilmington, Delaware; Mark C. Scarsi, Ashlee N. Lin, Katherine R. Pierucci, J.
Samuel Payne, MILBANK, TWEED, HADLEY & McCLOY LLP, Los Angeles,

California; Attorneysfor Defena’ants.

LASTER, V.C.

Plaintiffs ADT Holdings, Inc. and ADT LLC (together, “ADT”) have filed a motion
in limine seeking a ruling that Would preclude defendant Bot Home Automation, Inc.
(“Ring”) from offering any evidence that “contradicts or seeks to expand the testimony” of
Ring’s designated Rule 30(b)(6) Witness. The motion is denied.

Rule 30(b)(6) states:

A party may in the party’s notice name as the deponent a public or private

corporation or a partnership or association or governmental agency and

designate With reasonable particularity the matters on Which the examination

is requested The organization so named shall designate l or more officers,

directors, or managing agents, or other persons Who consent to testify on its

behalf, and may set forth, for each person designated, the matters on Which

the person Will testify. The person so designated shall testify as to matters
known or reasonably available to the organizationl

When a party notices the deposition of an organization pursuant to this rule, “the
organization has an obligation to ensure, through the testimony of one Witness or multiple
Witnesses, that the party taking the deposition receives complete responses, based on the
organization’s full knowledge and any relevant information readily available to it . . . .”2
“The organization is the deponent . . . , not the Witness or Witnesses the organization

designates to testify on its behalf.”3 The organization testifies through the Rule 30(b)(6)

Witness. As a result, the deposition testimony of the Rule 30(b)(6) Witness “binds” the

 

1 Ct. ch. R. 30(b)(6).
2 Fzrzgemld v. Camor, 1999 WL 252748, at *2 (Del. Ch. Apr. 5, 1999).

3Ia’.

organization, just as the deposition testimony of any other witness is binding on the
witness.4

The concept of binding the organization “has caused some confusion, prompting
litigants to argue . . . that Rule 30(b)(6) testimony is something akin to a judicial
admission_a statement that conclusively establishes a fact and estops an opponent from
controverting the statement with any other evidence.”5 A minority of federal courts have
adopted the judicial admission theory.6 That is the theory that ADT advances here.

The foundational case for the minority position is Raz'ney,7 a decision from the
United States District Court for the District of Columbia. There, in considering a motion
f`or summary judgment, the district court refused to allow the corporate defendant to submit
an affidavit that expanded on issues already addressed in its 30(b)(6) deposition. The
district court concluded that “[u]nless it can prove that the information was not known or

was inaccessible, a corporation cannot later proffer new or different allegations that could

 

4 See, e.g., Keepers, Inc. v. City osz`lfom’, 807 F.3d 24, 34 (2d Cir. 2015) (“[A]n
organization’s deposition testimony is ‘binding’ in the sense that whatever its deponent
says can be used against the organization.”)

5 State Farm Mut. Auto. Ins. Co. v. New Horizons, Inc., 250 F.R.D. 203, 212 (E.D.
Pa. 2008).

6 See, e.g., Estate of T hompson v. Kawasaki Heavy Ina’us., Ltd., 291 F.R.D. 297, 305
(N.D. Iowa 2013); Dorsey v. TGT Consulting, LLC, 888 F. Supp. 2d 670, 686 (D. Md.
2012); Consol. Rail Corp. v. Grand Trunk W. R.R. Co., 853 F. Supp. 2d 666, 670 (E.D.
Mich. 2012).

7 Ral'ney v. Am. Forest & Paper Ass ’n, Inc., 26 F. Supp. 2d 82 (D.D.C. 1998).

have been made at the time of the 30(b)(6) deposition.”8 The court explained that the
designee “is not simply testifying about matters within his or her own personal knowledge,
but rather is ‘speaking for the corporation’ about matters to which the corporation has
reasonable access.”9 The court concluded that preventing the corporation from offering
testimony to contradict its Rule 30(b)(6) testimony served to “prevent a corporate
defendant from thwarting inquiries during discovery, then staging an ambush during a later
phase of the case.”l°

The Rainey decision could be read narrowly as applying a version of the “sham
affidavit” rule to a corporation. Under this rule, a party cannot create an issue of material
fact sufficient to defeat summary judgment by submitting an affidavit that contradicts the
party’s deposition testimony.ll The central purpose of Rule 30(b)(6) is to provide a

mechanism for identifying a witness through whom an incorporeal entity can testify and

hence be subjected to the evidentiary rules applicable to biological persons.12 Using a Rule

 

8 Id. at 94.
9 Ia’. (quoting United States v. Taylor, 166 F.R.D. 356, 361 (M.D.N.C. 1996)).
10 Ia’. at 95.

11 See Cain v. Green Tweed & Co., Inc., 832 A.2d 737, 740-41 (Del. 2003)
(describing sham affidavit doctrine but declining to reach doctrine on facts of case); Nutt
v. A.C. & S. Co., Inc., 517 A.2d 690, 693 (Del. Super. Ct. 1986) (applying sham affidavit
doctrine).

12 See 8A Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Fea’eral
Practice and Procea’ure § 2103 (3d ed. 2010) (“Obviously it is not literally possible to take
the deposition of a corporation; instead, when a corporation is involved, the information
sought must be obtained from a natural person who can speak for the corporation.”)

30(b)(6) witness as the vehicle for applying the sham affidavit doctrine to a corporation
would achieve this purpose. 1 prefer to construe Rainey that way, but others have read the
decision for the broader proposition that a corporation is bound by the testimony of its Rule
30(b)(6) witness such that its counsel cannot introduce other evidence at trial that
contradicts the testimony of its Rule 30(b)(6) witness.13

The majority view among the federal courts rejects the broad reading of Rainey and
treats a Rule 30(b)(6) witness like any other witness: “Rule 30(b)(6) testimony is not
‘binding’ in the sense that it precludes the deponent from correcting, explaining, or
supplementing its statements.”14 Like any other witness, a Rule 30(b)(6) witness “is free to
testify differently from the way he or she testified in a deposition, albeit at the risk of having

his or her credibility impeached by the introduction of the deposition.”15 A lawyer

 

13 See, e.g., Wilson v. Lakner, 228 F.R.D. 524, 530 (D. Md. 2005) (citing Rainey for
proposition “depending on the nature and extent of the obfuscation, the testimony given by
the non-responsive [Rule 30(b)(6)] deponent (e.g. ‘I don’t know’) may be deemed ‘binding
on the corporation’ so as to prohibit it from offering contrary evidence at trial”).

14 Keepers, 807 F.3d at 34-35; accord, e.g., A.I. Crea’it Corp. v. Legion Ins. C0., 265
F.3d 630, 637 (7th Cir. 2001); R & B Appliance Parts, Inc. v. Amana Co., L.P., 258 F.3d
783, 786-87 (8th Cir. 2001), Ozburn-Hessey Logistics, LLC v. 721 Logistics, LLC, 40 F.
Supp. 3d 437, 451 (E.D. Pa. 2014); Cont’l Cas. Co. v. First Fin. Empl. Leasing, Inc., 716
F. Supp. 2d 1176, 1190-91 (M.D. Fla. 2010); see Indus. Hard Chrome, Lta’. v. Heiran, Inc.,
92 F. Supp. 2d 786, 791 (N.D. Ill. 2000) (denying motion in limine “to exclude evidence
which contradicts testimony given during defendants’ Rule 30(b)(6) deposition”); see also
Wright, Miller & Marcus, supra note 12 (“Of course, the testimony of the representative
designated to speak for the corporation are admissible against it. But as with any other
party statement, they are not ‘binding’ in the sense that the corporation party is forbidden
to call the same or another witness to offer different testimony at trial.” (footnote omitted)).

15 R & B Appliance Parts, 258 F.3d at 786; accom', e.g., Keepers, 807 F.3d at 35
(“Of course, a party whose testimony ‘evolves’ risks its credibility, but that does not mean

representing the corporation who designated the Rule 30(b)(6) witness may offer
contradictory testimony or evidence, even if it has the effect of impeaching the testimony
of the Rule 30(b)(6) witness. This approach is consistent with Delaware Rule of Evidence
607 and it federal analog, which recognize that “[t]he credibility of a witness may be
attacked by any party, including the party calling him.”16

The majority view fulfills the policy underlying Rule 30(b)(6). To reiterate, the
purpose of the rule is to afford comparable treatment to biological and non-biological
persons. Permitting a corporation to offer evidence at trial that may contradict its prior
testimony places the non-biological person on the same footing as the biological person.
There are often sound policy reasons for treating biological and non-biological persons
differently.17 But for purposes of a party’s ability to introduce evidence at trial that

contradicts its prior testimony, it seems to me that the better approach is to treat biological

and non-biological persons similarly.

 

it has violated the F ederal Rules of Civil Procedure.”); Linclquist v. Cily of Pasadena, 656
F. Supp. 2d 662, 698 (S.D. Tex. 2009) (“Testimony given in a Rule 30(b)(6) deposition is
evidence, which, like other deposition testimony, can be contradicted and used for
impeachment purposes.”).

16 D.R.E. 607.

17 See, e.g., In re Dole Foocl Co., Inc. S’holder Lilig., 110 A.3d 1257 (Del. Ch. 2015)
(holding that corporation cannot serve as expert witness). See generally Leo E. Strine, Jr.,
Corporaie Power Ratchet.' The Courts’ Role in Erocling “We The People’s" Abilily to
Constrain our Corporate Creations, 51 Harv. C.R.-C.L. L. Rev. 423 (2016).

1 will apply the majority rule in this case. Consequently, Ring may introduce
testimony and other evidence that contradicts or is otherwise inconsistent with the
deposition testimony of its Rule 30(b)(6) witness. ADT will be able to rely on the
deposition testimony of Ring’s Rule 30(b)(6) witness and use that testimony for
impeachment As factfinder, I will have to weigh the evidence and make credibility

determinations For present purposes, it follows that the motion in limine is denied.

