The responsibility of a chief executive officer and the rest of the C-suite is to direct the work of a business unit at the highest level. Because of this, a C-suite executive is rarely familiar with the specific issues within an organization. Requiring leaders to acquire specific knowledge results in the leader getting unnecessarily bogged down in the minutiae of the business, rather than relying on the collaboration of the corporate hierarchy to move the business forward.
Although executives often lack conclusive knowledge, litigants attempting to defend themselves against a company employ a common tactic: attempting to remove the company’s senior officials. The aim is either to capitalize on the manager’s lack of knowledge of the corporate actions at issue in the case or to create an incentive to protect the company from such statements.
However, the Georgia Supreme Court’s recent decision in General Motors, LLC v. Buchanan ushered in a new season — the C-Suite’s imposition season. Buchanan regrettably implicated the death of the driver of a Chevrolet Trailblazer and plaintiffs alleged a defective “steering wheel angle sensor” caused the accident. In the Discovery Proceedings, plaintiffs sought the deposition of the CEO of General Motors. General Motors applied for a protective order against the deposition on the grounds that its CEO did not have direct information about the steering wheel angle sensor of the vehicle in question; the design of the steering wheel angle sensor; or related research, marketing or manufacturing details.
Knowing that executives are often unfamiliar with the intimate details at the heart of a particular case, many federal courts have adopted the apex doctrine. Although courts apply different burdens of analysis, the general principle of the Apex Doctrine is to weed out executive branch statements that provide no probative value in the case.
The Buchanan court rejected the protection order. It found that the Apex Doctrine does not apply because Georgia’s discovery rules are broader than the federal ones. The Georgia Court of Appeals affirmed this because General Motors had failed to show that lack of clear knowledge of the relevant facts was a good reason to defend against the deposit.
The Georgia Supreme Court ruled that the party seeking protection against the imposition bears the burden of proving good cause. It also concluded that it is largely left to the trial court to determine whether there is good cause for protection against deposition and that “[h]Senior corporate executives are not immune to detection and do not automatically receive special treatment that prevents them from being removed simply because of the positions they hold or the size of the organizations they lead.”
In doing so, the court concluded and further emphasized that ignorance of the details of the litigation is not sufficient to protect the executive from a notice of deposition, saying: “It is possible for a court to exercise its discretion to arrive at the.” To conclude, based on the facts of his antecedent case, that a protective order prohibiting the removal of an officer need not be issued even if the officer is senior, does not have unique personal knowledge and the discoverable information is otherwise available The court effectively concluded that a senior executive’s lack of knowledge could in and of itself be compelling.
Buchanan raises several interesting questions for Georgia businesses. How many executives who are unaware of the facts at issue can be removed before the harassment occurs? If there is no special treatment for executives, are they treated the same as all employees of the other company? If so, does Buchanan open the door to affidavits from employees without material knowledge of the facts at issue? These questions can be asked in court.
Parties contemplating litigation against companies of all sizes in Georgia are now more likely to seek escrows against executives, and companies must prepare to combat the escalating number of escrows. Georgia corporations and their attorneys are tasked with solving a new conundrum: educating executives on the intricate details of certain lawsuits, to avoid the potential downside of an executive who doesn’t understand the most complicated issues of a case, or to keep the executive at a distance and risk forced deposition, potentially resulting in false testimony that can be exploited by litigants.
These issues need to be analyzed before filing is sought and probably even before the case is filed. For example, it would probably take a lot of time to educate anyone from scratch about the intricate details of the 2007 Chevrolet Trailblazer steering wheel angle sensor design, research, marketing, manufacturing, etc.
This has tremendous consequences for a company, as juries typically give significant weight to testimonies – and misstatements – made by executives, assuming they need to know everything about the company.