DoubleLine Capital LP v. Odebrecht Finance, Ltd

Background

Plaintiffs DoubleLine Capital LP, DoubleLine Income Solutions Fund, and DoubleLine Funds Trust sought a protective order under Federal Rule of Civil Procedure 26(c) to prevent defendants Construtora Norberto Odebrecht, S.A., Odebrecht Engenharia E Construcgiéo S.A., and Odebrecht, S.A. — Em Recuperagao Judicial from deposing the three corporate plaintiffs and three DoubleLine employees: Luz Padilla, Su Fei Koo, and Mark Christensen.

The discovery deadline had previously been extended to April 30, 2022, at DoubleLine’s request. After DoubleLine served deposition notices on two defendants, Odebrecht served three corporate deposition notices under Rule 30(b)(6) and individual deposition notices under Rule 30(b)(1). DoubleLine argued that the depositions were unnecessary, disproportionate, and intended to harass it after settlement discussions failed. It also challenged several deposition topics and argued that Padilla, Koo, and Christensen were not officers, directors, or managing agents who could be deposed by notice.

Legal standards

The court explained that discovery generally covers nonprivileged information relevant to a claim or defense and proportional to the needs of the case. A protective order requires good cause, such as a clearly defined, specific, and serious injury. Rule 30(b)(6) requires a corporation to designate witnesses to testify about topics described with reasonable particularity. Rule 30(b)(1) permits a specific corporate officer, director, or managing agent to be deposed by notice. An employee who does not qualify as one of those persons may instead be required to testify through a subpoena under Rule 45.

To determine whether someone is a managing agent, courts consider the person’s authority and discretion, ability to testify at the employer’s request, position relative to other employees, responsibilities concerning the litigation, and expected alignment with the corporation’s interests. At the pre-deposition stage, the party seeking the deposition bears a modest burden and must show at least a close question about the witness’s status.

Analysis

The court found that the six depositions were within the permissible scope of discovery. DoubleLine did not seriously dispute their relevance, and the court rejected the argument that Odebrecht had no need to take depositions because it had earlier accepted the possibility that fact discovery would close without them. The court also rejected the claim that Odebrecht’s timing made the notices abusive. DoubleLine had not shown the specific and serious injury required for a protective order. Each corporate plaintiff therefore had to make a representative available under Rule 30(b)(6).

The court nevertheless limited several topics. For Topic 4, DoubleLine’s witnesses did not have to testify about documents concerning securities of companies other than Odebrecht, including certain companies connected to specified industries or Latin American markets; questioning about the permitted subsections could continue. For Topic 5, the witnesses did not have to prepare to testify because the topic was overbroad and vague. For Topic 6, they did not have to provide detailed testimony about every Odebrecht Notes transaction, although they had to testify generally about the reasons for purchases and sales and the information considered. For Topic 7, questioning was limited to DoubleLine’s investment strategy, goals, guidelines, and criteria concerning Odebrecht Notes, rather than other securities. Topic 9 was similarly limited to DoubleLine’s knowledge and communications concerning investment advice, recommendations, or information about Odebrecht Notes. The witnesses did not have to testify about Topic 11 because it concerned defendants’ policies, practices, and procedures regarding securities not directly at issue. For the remaining topics, the witnesses had to testify as noticed, covering the period from January 1, 2012, to the present.

The court also concluded that the Rule 30(b)(1) notices for Padilla, Koo, and Christensen were effective. All three were longtime and current senior DoubleLine employees, had served as document-review custodians, and appeared to have significant responsibilities related to the litigation. Christensen and Koo were also identified as potential witnesses in DoubleLine’s initial disclosures. The court provisionally concluded that all three were DoubleLine managing agents and therefore had to appear for deposition. Whether their testimony would bind the corporation could be decided at trial.

Disposition

Judge Barbara Moses ordered that the plaintiffs’ letter-motion was GRANTED IN PART and DENIED IN PART. The court limited the specified deposition topics but otherwise allowed the corporate and individual depositions to proceed, and directed the clerk to close the letter-motion at Docket No. 240.