Laatz v. Zazzle, Inc.

Background

Nicky Laatz moved for relief under Federal Rule of Civil Procedure 72 and the Northern District of California’s Local Civil Rule 72-2 from a nondispositive pretrial order entered by Magistrate Judge Virginia K. DeMarchi. The earlier order denied Laatz’s request to require Jeff Beaver to testify at a deposition. Beaver was identified as Zazzle’s Chief Strategy Officer.

Before issuing the earlier order, Judge DeMarchi required the parties to submit emails involving or referring to Beaver and excerpts from a deposition transcript. Judge DeMarchi concluded that Beaver did not have unique firsthand knowledge bearing on any issue relevant to a claim or defense. Laatz then sought review by the district judge. Zazzle, Inc. and Mohamed Alkhatib opposed the motion.

Legal standard

A district judge may modify or set aside a magistrate judge’s nondispositive pretrial order if it is clearly erroneous or contrary to law. “Clearly erroneous” means that the court is left with a firm conviction that a mistake was made. The district judge may not simply substitute the district judge’s judgment for the magistrate judge’s judgment.

The court explained that depositions of high-level corporate witnesses, sometimes called apex depositions, are evaluated by considering whether the witness has unique, firsthand, non-repetitive knowledge of the facts and whether the party seeking the deposition has exhausted less intrusive discovery methods. A deposition generally should be allowed when a corporate officer may have firsthand knowledge of relevant facts.

Court’s analysis

The court rejected Laatz’s argument that Judge DeMarchi’s order was contrary to law. It held that Judge DeMarchi had identified and applied the correct legal standard, including the test used for apex depositions.

The court nevertheless found clear error in Judge DeMarchi’s factual conclusion that Beaver lacked unique firsthand knowledge relevant to the case. The court determined that Beaver might have firsthand knowledge about whether he knew the contractual terms or acted recklessly by failing to educate himself about those terms before Zazzle purchased the license. Beaver was among a limited group of Zazzle employees who received a link to the Blooming Elegant Offering Page, which included a link to a license frequently asked questions page explaining the license terms.

The court also noted that no deponent had addressed Beaver’s awareness of the contract terms as of the date of Judge DeMarchi’s order. It stated that Mohamed Alkhatib’s testimony about a conversation with Beaver was not admissible evidence and that Beaver’s own later declaration did not show whether the earlier order was erroneous.

Ruling

Judge Beth Labson Freeman granted Laatz’s Motion for Relief from Nondispositive Pretrial Order of Magistrate Judge. The court ordered that Beaver be made available for a limited deposition of no more than one hour, addressing only: (1) whether Beaver reviewed the license terms and why or why not; and (2) whether Beaver knew that Zazzle’s intended use of the fonts might violate the license terms. The court ordered that the deposition take place by September 19, 2024, or on a later date agreed to by the parties. The court stated that this deposition deadline did not change the separate deadline for the close of fact discovery.