EDVA District Judge Reverses Magistrate Order Requiring a Foreign Defendant to Travel to Virginia for Deposition
In a recent trade secret case, Judge Ellis addressed an issue that often comes up in intellectual property litigation but is rarely litigated: Do out of state defendants have to come to Virginia for a deposition?
The last case that addressed this issue in Virginia was Armsey v. Medshares Mgmt., 184 F.R.D. 569 (W.D. Va. 1998), which is not only more than twelve years old, it is a magistrate’s decision, and so its precedential value was uncertain.
In Judge Ellis’ decision, In re: Outsidewall Tire Litigation, 2010 U.S. Dist. LEXIS 44019 (E.D. Va. May 4, 2010) (found here), the defendants, which were based in Dubai, allegedly conspired with a former employee of the plaintiff to steal plaintiff’s tire designs. The plaintiff sought to take the depositions of the defendants in Virginia by noticing Rule 30(a)(1) depositions of the defendants’ managing agents and a Rule 30(b)(6) deposition of three related corporate defendants. Notably, while the corporate defendants had been served, they had not filed counterclaims. If they had, they likely would have been subject to deposition in Virginia under E.D. Va. Local Rule 30(A).
Applying Armsey, Magistrate Judge Davis held that the witnesses had to travel to Virginia for a deposition because the witnesses frequently traveled for business (though not to Virginia) and because of the time difference between Virginia and Dubai.
Judge Ellis reversed, holding that courts have generally recognized that there is a presumption that depositions of a corporate defendant, whether under Rule 30(a)(1) or Rule 30(b)(6), should be taken at the corporation’s principal place of business. The presumption can be overcome only under special circumstances, such as:
- When the deponent regularly conducts business in the place where the deposition is sought.
- When the governing law of the defendant’s principal place of business would prevent the deposition or frustrate the deposing party’s legitimate discovery-related objectives.
- Where the foreign deponents had previously disregarded deposition orders.
Judge Ellis found that Armsey properly applied the presumption, but he overruled the magistrate judge’s order because:
- While the witnesses traveled frequently, they did not frequently come to the forum district.
- There was no showing that Dubai law would hinder the deposition, and the defendants agreed to conduct the deposition under the Federal Rules
- There was no evidence that disputes requiring judicial intervention were likely
Interestingly, Judge Ellis went on to state that it was appropriate for the defendants to pay the travel costs and attorneys’ fees for travel time for two of the plaintiff’s attorneys to travel to Dubai. Conversely, if the deposition had taken place in Virginia, the judge stated, the deponents travel costs would be borne by plaintiffs. While not stating a hard a fast rule, Judge Ellis’ comments about the shifting of costs could well be relevant to future cases.
Finally, the plaintiff claimed that holding the depositions in Virginia would facilitate service of process on one of the witnesses, who was named as a defendant individually. Judge Ellis rejected this argument, emphatically stating that “[f]acilitating service of process on managing agents of foreign corporations is not a legitimate reason to compel deponents to appear in Virginia.”
