Securities And Exchange Commission v. Prakash

Background

The Securities and Exchange Commission alleges that View, Inc. made false or misleading statements by failing to include accruals for certain warranty liabilities in its public filings. The SEC sued Vidul Prakash, View’s former chief financial officer, over his role in approving those filings.

View retained Effectus Group, LLC, an accounting firm, for advice on accounting matters, including the warranty-liability issue. Amar Shah, then a director at Effectus, worked on several accounting projects. Shah stated in a declaration that he did not perform substantive work on the warranty-liability issue and had no relevant knowledge. He nevertheless acknowledged that Prakash had included him on correspondence and meeting invitations concerning that issue. Prakash served Shah with document and deposition subpoenas. Shah produced documents, but the parties did not agree on a deposition date, so Shah moved to quash the subpoena or obtain a protective order.

Legal standard

Under Federal Rule of Civil Procedure 45, a court must quash or modify a subpoena that subjects a person to undue burden. Under Rule 26, the court may issue a protective order for good cause to prevent annoyance, embarrassment, oppression, or undue burden or expense. The court must also limit discovery that is unreasonably cumulative or can be obtained from another source that is more convenient, less burdensome, or less expensive. A person seeking to prevent a deposition bears a heavy burden, and completely prohibiting a deposition generally requires extraordinary circumstances.

Discussion

The court rejected Shah’s four arguments for preventing the deposition:

- Relevance: Effectus advised View about the warranty-liability issue, including through discussions with Prakash. The court held that Effectus’s related accounting work fell within the broad scope of discovery permitted by Rule 26. - Lack of knowledge: The court held that a claimed lack of knowledge, by itself, is not enough to prevent a deposition. Documents showed that Shah had at least some connection to the warranty-liability work, including emails and a call concerning that issue. Prakash was therefore entitled to question Shah about the extent of his knowledge. - Cumulative discovery: The court ruled that a deposition is not unreasonably cumulative merely because the witness has already produced documents. A deposition may clarify and provide context for those documents. - Another possible witness: Shah suggested that Prakash depose Uday Devasper instead. The court held that Shah had not shown that deposing Devasper would be more convenient, less burdensome, or less expensive than deposing Shah.

The court also rejected Shah’s request to make Prakash pay the cost of Shah’s attendance. The cost-shifting rule Shah cited applies to document subpoenas, not deposition subpoenas. The court further found no basis to sanction Prakash under Rule 45 because Prakash could properly depose Shah despite Shah’s claimed lack of knowledge and the deposition did not impose an undue burden.

Sealing decisions

The court ordered the Clerk to unseal Docket Entries 61-2, 61-4, 61-6, 61-7, and 61-8. For Docket Entry 61-3, View was ordered to publicly file a redacted copy by March 19, 2025, removing estimates concerning replacement insulated glass units and the warranty reserve. Docket Entries 61-5, 61-9, and 61-10 were to remain sealed because the court did not rely on them in the order.

Disposition

The court DENIED the motion to quash or for a protective order. It also declined to shift fees or sanction Prakash under Rule 45, and ordered the specified documents unsealed as described above.