IN RE PFA INSURANCE MARKETING LITIGATION

Background

Defendant Premier Financial Alliance, Inc. (PFA) asked the district court for relief from a nondispositive pretrial order issued by Magistrate Judge Kim. That order found that Jack Wu was a “managing agent” under Federal Rule of Civil Procedure 30(b)(1), allowing the plaintiffs to require PFA to produce him for a deposition by serving a deposition notice.

Judge Kim initially denied the plaintiffs’ request without prejudice because they had not met their evidentiary burden. After the plaintiffs renewed their request with additional information, Judge Kim found that Wu acted as a managing agent for PFA. PFA challenged that renewed ruling under Federal Rule of Civil Procedure 72 and the district’s local rules.

Legal standard

A district court must defer to a magistrate judge’s nondispositive pretrial order unless it is clearly erroneous or contrary to law. For factual findings, clear error exists only when the reviewing court has a firm conviction that a mistake was made. The district court may not simply substitute its judgment for the magistrate judge’s judgment.

Courts assess managing-agent status pragmatically, based on the facts of the particular case. Relevant considerations include the person’s authority and discretion in corporate matters, whether the person can be expected to testify for the company, whether someone with greater authority has the relevant information, and the person’s responsibilities concerning the issues in the case. At the discovery stage, doubts are resolved in favor of allowing the deposition.

Court’s analysis

The district court agreed that the plaintiffs initially had not met their burden. But on reconsideration, the plaintiffs submitted deposition testimony from PFA’s chief executive, David Carroll, stating that Wu was a “liaison” and “mouthpiece” for PFA and that Wu “does what PFA does.” The court found this evidence supported the conclusion that Wu could be identified with PFA’s interests. The court also stated that Wu’s status as an independent contractor, rather than an employee, did not by itself prevent him from being a managing agent.

The plaintiffs also presented evidence that Wu was responsible for training and that Carroll was not present for all training. In addition, the plaintiffs argued that their case concerned PFA’s alleged use of deceptive, unfair, and unlawful methods to recruit members and its alleged operation as a pyramid scheme in violation of California’s Endless Chain Law. The record indicated that Wu was on PFA’s “Seal Team,” and the court noted that other witnesses had limited knowledge of a related presentation.

PFA had not addressed two of the managing-agent factors in its motion for relief. The district court therefore deferred to and adopted Judge Kim’s findings, including the finding that the factor concerning Wu’s likely identification with PFA’s interests favored allowing the deposition.

Disposition

The court concluded that Judge Kim’s pretrial order was not clearly erroneous and denied PFA’s motion for relief from the nondispositive pretrial order. The court also ordered PFA to produce Wu for deposition and terminated Docket Number 224.