Khurana v. Wahed Invest, LLC

Background

Harsh Khurana was the chief financial officer of Wahed Invest, LLC and its parent company, Wahed Inc. Khurana alleged that Junaid Wahedna promised him a 1.4% grant of restricted stock, subject to approval by the board of directors. The board later approved a substantially smaller grant, after which Khurana resigned and filed this action.

During discovery, Khurana asked defendants to admit that Wahedna had the “voting power” to approve the issuance of equity to him during the fourth quarter of 2017. Defendants denied the request, explaining that equity decisions were made by the board and that Wahedna was only one of its five members. Defendants’ counsel acknowledged that Wahedna held a majority of the company’s voting stock, but the formal response did not address whether that ownership gave him indirect power to control the board’s decision.

Request for Admission and Interrogatory

The court concluded that Khurana’s request was ambiguous. It was unclear whether “voting power” referred to Wahedna’s direct voting power as a director or his indirect ability, as a majority shareholder, to influence or compel the board’s action. The court agreed that Wahedna’s ability to constitute a quorum and decide matters at a stockholders’ meeting did not necessarily establish that he could compel the board to issue equity.

Under Federal Rule of Civil Procedure 36, a request for admission must be simple and direct. A responding party must admit the matter, specifically deny it, or explain in detail why it cannot truthfully admit or deny it. The court may require an admission or an amended answer when a response does not fairly address the request. Here, however, the court found that the request raised disputed and complex mixed questions of law and fact. Resolving the issue could require additional corporate documents, information about the other directors and their relationship with Wahedna, and analysis under Delaware law.

The court therefore did not require defendants to provide an unqualified admission or amend their answer to the companion interrogatory. It stated that Khurana could examine Wahedna about these matters at his upcoming deposition and could later serve simpler requests limited to individual relevant facts. To the extent Khurana’s October 21, 2020 application sought an order compelling further responses to Request for Admission No. 1 or the companion interrogatory, the application was DENIED.

Deposition Dispute

The parties also disputed whether Khurana’s deposition should occur remotely before the November 25, 2020 deadline or be postponed until an in-person deposition could safely occur during the COVID-19 pandemic. The court ordered that the deposition proceed remotely under its March 17, 2020 order. It noted that the parties had already agreed to conduct Wahedna’s document-heavy deposition remotely and concluded that postponing Khurana’s deposition until an in-person proceeding was considered safe was not appropriate.

The court construed Khurana’s November 12, 2020 application as a request to require defendants to conduct his deposition remotely within the existing schedule. That application was GRANTED. The Clerk of Court was directed to close Docket Nos. 69 and 75.

Classification and Effect

This was a procedural discovery order, not a decision on whether Khurana was entitled to the claimed equity grant. It denied further responses to the request for admission and companion interrogatory and granted remote-deposition relief. The order did not resolve the parties’ underlying dispute about Wahedna’s power or Khurana’s claims.