Court won't shield Duke CEO from deposition.
Byline: David Donovan
The CEO and COO for Duke Energy will have to sit for depositions as the company wrangles with its insurers over the costs of cleaning up after 2014 Dan River coal ash spill after the North Carolina Business Court declinedagainto adopt a federal doctrine that generally shields high-ranking corporate executives from having to field such questioning.
Duke is suing a gaggle of insurance companies who have denied coverage for the damage caused by its mishandling of the toxic sludge. The company, which pleaded guilty to nine charges of criminal negligence under the Clean Water Act, argues that the insurers are nevertheless on the hook for hundreds of millions of dollars of payouts as a result of the spill.
The insurers sought to compel the depositions of Duke's CEO, Lynn Good, and its COO, Dhiaa Jamil, contending that they had uniquely personal knowledge relevant to the dispute. Duke objected, denying that the pair had any anything new to add to the testimony given by other Duke employees, and arguing that the burden of making its two most senior executives sit for depositions outweighed any benefits.
Many federal courts and state courts have adopted the "apex doctrine," under which a trial court can limit discovery sought from top corporate executives to ensure that the rules of discovery can't be used as a cudgel to create leverage by harassing a company's busiest and most valuable employees.
But North Carolina's courts have never adopted the doctrine, and Business Court Judge Louis Bledsoe declined Duke's invitation to adopt it in this case, concluding that North Carolina's Rules of Civil Procedure already give judges plenty of discretion to limit a request for discovery if the request is unreasonably burdensome.
In this case, Bledsoe wrote, the evidence suggested that both Good and Jamil each had significant involvement in the company's strategy surrounding its handling of coal ash, both before and after the spill, and so testimony from lower-ranking employees were not an adequate substitute for getting the view directly from the C-suite, which may prove to be of far greater value to the defendant insurers.
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