United States Securities and Exchange Commission v. Aktiengesellschaft

Background

The Securities and Exchange Commission sought to depose Thorsten Duesterdiek in its case against Volkswagen Aktiengesellschaft and other defendants. The SEC sought information about which Volkswagen employees knew about the defeat device, a device involved in the emissions issues described in the order, and whether employees involved in Volkswagen’s bond offerings knew material facts related to that scheme.

Managing-agent analysis

Under Federal Rule of Civil Procedure 37(d)(1)(A)(i), a corporation can be required to produce an officer, director, or managing agent for a deposition. Courts commonly consider whether the person has general authority to exercise judgment in corporate matters; whether the person can be relied on to testify at the employer’s request; whether higher-ranking employees have authority in the relevant area; and the person’s responsibilities concerning the litigation.

The court found that three of the four factors supported treating Duesterdiek as Volkswagen’s managing agent. He had worked for Volkswagen for more than 25 years and was a department head, supporting the finding that he exercised judgment and discretion in corporate matters. From 2012 to 2016, he headed Volkswagen’s low-emissions-engines and exhaust-aftertreatment department for diesel engines. In 2014, Volkswagen also appointed him to lead a task force responding to early inquiries from United States regulators about high nitrogen-oxide emissions from Volkswagen’s diesel cars. The court found that these positions placed him in a unique position to know about the defeat device and gave him responsibilities related to the litigation.

The fourth factor weighed modestly against the finding because Volkswagen said Duesterdiek had refused to testify, while his lawyer indicated that he might cooperate if compelled. The court concluded that this factor did not outweigh the other three. It also explained that managing-agent status existing when the relevant events occurred does not disappear merely because the person is later reassigned. Duesterdiek’s current position concerned warranty claims for commercial vehicles, but the court held that his earlier managing-agent status remained relevant.

Volkswagen’s arguments

Volkswagen argued that the court should consider only Duesterdiek’s current position, not his 2012-to-2016 position. The court rejected that argument, reasoning that otherwise a corporation could frustrate discovery by moving managers to different positions.

Volkswagen also argued that Duesterdiek’s testimony would be unreasonably cumulative or duplicative and could be obtained from a more convenient, less burdensome, or less expensive source. The court rejected that argument because Duesterdiek plausibly had a unique and comprehensive understanding of the defeat-device scheme. The court further found that his testimony could be relevant to whether employees who prepared the bond-offering documents knew material facts about the scheme, even though Duesterdiek may not have helped prepare those documents.

Finally, Volkswagen argued that Duesterdiek faced criminal charges in Germany related to the emissions scandal and might invoke the Fifth Amendment during the deposition. The court said that concern did not affect whether he was a managing agent or whether Volkswagen had to produce him. The order noted that Volkswagen could later argue in a motion before trial or at trial that adverse inferences should not be drawn from any invocation of the Fifth Amendment. The court did not decide whether Volkswagen could require Duesterdiek to appear under German law.

Disposition

Judge Alex G. Tse ordered that Thorsten Duesterdiek is Volkswagen’s managing agent and that Volkswagen must produce him for a deposition on or before March 3, 2023, unless the court granted permission for a different deadline.