During discovery, an examining party has the power to compel the deposition of a corporate defendant’s “managing agents.” If the plaintiff’s lawyer designates an individual to testify who is not an officer, director, or managing agent of the corporate defendant, the lawyer must resort to Federal Rule of Civil Procedure 45, which governs subpoenas issued to third parties. For that reason, there is often a lot of disagreement among litigants regarding whether a particular individual qualifies as a managing agent of the corporation. Another common point of contention is whether foreign managing agents must come to Virginia for their depositions.
In DuPont v. Kolon Industries, a trade secrets case involving alleged misappropriation of confidential commercial information relating to Kevlar, Judge Payne of the Eastern District of Virginia (Richmond Division) utilized a four-factor test to determine whether employees could be classified as “managing agents,” adopting a test laid out in a 1996 Maryland case. Judge Payne wrote that courts faced with the issue should consider:
- the discretionary authority that the corporation vests in the employee;
- the employee’s dependability in following the employer’s directions;
- whether the employee is more likely to identify with the corporation or the adverse party in the litigation; and
- whether the employee had a certain amount of supervisory authority in areas relevant to the litigation.
Applying these factors to each of the eight Kolon employees whose depositions DuPont sought, the Court determined that at least five were managing agents and ordered Kolon to produce them for deposition in Virginia. Most of these employees were long-time employees of Kolon, which demonstrated to the Court that they had discretionary authority, that they followed Kolon’s directions, supervised several employees or an entire department, and that they identified with Kolon rather than DuPont.
The Court noted that there are exceptions to the general rule that a defendant’s deposition is to be taken where the defendant resides or maintains a principal place of business. Consideration of the following factors might lead a court to compel the deposition in Virginia, even for foreign defendants:
- location of counsel for the parties in the forum district;
- the number of corporate representatives a party is seeking to depose;
- the likelihood of significant discovery disputes arising which would necessitate resolution by the forum court;
- whether the persons sought to be deposed often engage in travel for business purposes; and
- the equities with regard to the nature of the claim and the parties’ relationship.
Ultimately, Judge Payne determined that the third factor was the most significant factor in choosing Virginia over Korea due to the gamesmanship and conflict that had characterized the discovery process to date. The Court ordered the depositions to take place in Virginia so the Court could be on hand to resolve the anticipated disputes.