No Apex Doctrine in Georgia but All Factors of Apex Doctrine Should Be Considered

The Supreme Court of Georgia issued a decision on whether or not the Apex Doctrine is adopted in Georgia when a party seeks the deposition of a high-ranking official in a company. The Supreme Court ultimately stated:

a court considering whether factors commonly associated with the apex doctrine should limit or bar a plaintiff from deposing a high-ranking executive need not interpret the factors as a firmly established basis for an order prohibiting an executive's deposition. It is possible for a court to act within its discretion to conclude, based on the facts of the case before it, that a protective order prohibiting the deposition of an executive need not be issued even where the executive is high-ranking, has no unique personal knowledge, and the discoverable information is available through other means. Likewise, the absence of factors commonly associated with the apex doctrine does not mean that a protective order for a high-ranking official's deposition cannot be granted if other factors presented show good cause for such a conclusion.

General Motors, LLC v. Buchanan, S21G1147, 2022 WL 1750716 at *9 (June 1, 2022). Ultimately, the Court's interpretation rests on the language of Rule 26 that the standard for a protective order is "whether the deposition of a particular individual would cause 'annoyance, embarrassment, oppression, or undue burden or expense'". Id. at *8 citing O.C.G.A. § 9-11-26(c).

1. DISCOVERY IN GEORGIA

An understanding of the general scope of discovery in Georgia is important to the decision of the Court in the General Motors case.

The scope of discovery under the Civil Practice Act is broad. See Tenet Healthcare Corp. v. Louisiana Forum Corp., 273 Ga. 206, 210 (2), 538 S.E.2d 441 (2000).

Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party.

O.C.G.A. § 9-11-26(b)(1). Trial courts “should and ordinarily do interpret ‘relevant’ very broadly” so as to “remove the potential for secrecy” and to “reduce the element of surprise at trial.” Bowden v. The Medical Center, Inc., 297 Ga. 285, 291-292 (2) (a), 773 S.E.2d 692 (2015). Moreover, “[i]t is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.” Id. at 290 (2) (a), 773 S.E.2d 692.

2. PROTECTIVE ORDERS

However, trial courts may limit discovery in multiple ways, including for “good cause shown” under O.C.G.A. § 9-11-26 (c). More specifically:

Upon motion by a party or by the person from whom discovery is sought and for good cause shown, the court in which the action is pending or, alternatively, on matters relating to a deposition, the court in a county where the deposition is to be taken may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense[.]

O.C.G.A. § 9-11-26(c). The trial court has “wide discretion in the entering of orders. . . preventing the. . . taking of depositions [under O.C.G.A. § 9-11-26 (c).]” Hampton Island Founders, LLC v. Liberty Capital, LLC, 283 Ga. 289, 296 (4), 658 S.E.2d 619 (2008).

In exercising its discretion under O.C.G.A. § 9-11-26 (c), the court can order, among other things, that discovery not be had, allow it “only on specified terms and conditions, including a designation of the time or place,” change the method of discovery, seal a deposition, restrict disclosure of trade secrets and other sensitive commercial information, or require that the discovery be filed under seal. See O.C.G.A. § 9-11-26 (c)(1) - (8). The movant bears the burden of showing her entitlement to a protective order under this rule. See O.C.G.A. § 9-11-26(c). To meet this burden, the movant must establish good cause for the issuance of a protective order. See O.C.G.A. § 9-11-26(c); Hill, Kertscher & Wharton, LLP v. Moody, 308 Ga. 74, 80 (2), 839 S.E.2d 535 (2020).

3. THE APEX DOCTRINE

The Apex Doctrine "provides courts with a framework for determining whether good cause exists to forbid or limit the deposition of a high-ranking corporate executive who lacks personal, unique knowledge of facts relevant to the litigation." General Motors, LLC, 2022 WL 1750716 at *1.

In the corporate context, the apex doctrine generally is intended to apply only to “high-level” executives. Minter v. Wells Fargo Bank, N.A., 258 F.R.D. 118, 126 (I) (A) (D. Md. 2009). On the proverbial sliding scale, the closer that a proposed witness is to the apex of some particular peak in the corporate mountain range, and the less directly relevant that person is to the evidence proffered in support of his deposition, the more appropriate the protections of the apex doctrine become. Apple Inc. v. Samsung Elec. Co., Ltd., 282 F.R.D. 259, 263 (III) (N.D. Cal. 2012).

The rationale for barring such depositions is that high level executives are vulnerable to numerous, repetitive, harassing, and abusive depositions, and therefore need some measure of protection from the courts. In re Mentor Corp. Obtape Transobturator Sling Prods. Liab. Litig., No. 4:08-MD-2004(CDL), 2009 WL 4730321, *1 (M.D. Ga. Dec. 1, 2009).

Other courts have also determined that, in order for the deposition of a high-ranking executive to move forward, that person must have some knowledge of facts that are properly discoverable – that is, facts that are relevant to the litigation. See, e.g., Simms v. Nat. Football League, No. 3:11-CV-0248-M-BK, 2013 WL 9792709, at *3 (N.D. Tex. July 10, 2013). And, as applied by a number of federal district courts, this knowledge must be personal and unique or superior to that of other persons from the organization who might be deposed in the litigation. See, e.g., Thomas v. Intl. Bus. Machines, 48 F.3d 478, 483 (II) (A) (10th Cir. 1995). Further, courts should consider whether the high-ranking executive's “unique or superior knowledge” is available through other means. See Cuyler v. Kroger Co., No.1:14-CV-1287-WBH-AJB, 2014 WL 12547267, *6 (B) (N.D. Ga. Oct. 3, 2014). Exhaustion of less intrusive means of discovery is not necessarily “an absolute requirement; instead, exhaustion of other discovery methods is an important, but not dispositive, consideration for a court to take into account in deciding how to exercise its discretion.” Reilly v. Chipotle Mexican Grill, Inc., No. 15-Civ-23425-COOKE/TORRES, 2016 WL 10644064, *7 (II) (B) (2) (c) (S.D. Fla. Sept. 26, 2016).

When it comes to determining who bears the burden to prove or defeat a protective order under the apex doctrine, federal courts have adopted varying approaches. In some courts, application of the doctrine results in shifting the burden of proof to the party requesting the discovery. See, e.g., Degenhart v. Arthur State Bank, No. CV411-041, 2011 WL 3651312, *1 (S.D. Ga. Aug. 8, 2011) (“As the party seeking to compel the deposition of a high-ranking executive, the deposing party has the burden of showing that the target's deposition is necessary.”). In other federal courts, however, the party seeking relief from discovery bears the burden of establishing that good cause exists for a protective order through application of the apex factors. See, e.g., Dyson, Inc. v. Sharkninja Operating LLC, No. 1:14-cv-0779, 2016 WL 1613489, *1 (II) (A) (N.D. Ill. Apr. 22, 2016). Finally, other federal courts have developed a hybrid, burden-shifting version of the doctrine. See, e.g., Naylor Farms, Inc. v. Anadarko OGC Co., No. 11-cv-01528-REB-KLM, 2011 WL 2535067, at *2 (D. Colo. June 27, 2011) (party seeking to depose an executive “bears an initial burden of making some showing that the executive has ‘unique personal knowledge’ of some relevant issues,” and then “the burden shifts to the executive to demonstrate by evidence that he in fact has no personal knowledge or that there exists one of the other three circumstances under which requiring him to sit for a deposition is inappropriate,” though “the ultimate burden of persuasion lies with the executive invoking the apex doctrine”).

4. THE COURT'S ANALYSIS

The Supreme Court rejected General Motors argument that federal cases interpreting Federal Rule 26 and applying the Apex Doctrine should be applied by Georgia Courts. The Court stated, "the text of Federal Rule 26 shows that the scope of discovery is narrower than that contemplated by O.C.G.A. § 9-11-26 (b). Compare Fed. R. Civ. P. 26 (b) (1) (providing that parties may obtain discovery on matters that are “relevant to any party's claim ... and proportional to the needs of the case, considering [a number of factors, including] whether the burden or expense of the proposed discovery outweighs its likely benefit”) with O.C.G.A. § 9-11-26 (b) (providing that “[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action”). General Motors, LLC, 2022 WL 1750716 at *7. As such, any federal court ruling must comport with Georgia's text of the analogous rule.

Analyzing 9-11-26, "to justify a protective order, one or more of the statutorily enumerated harms must be established through a specific demonstration of fact, as opposed to stereotyped and conclusory statements about, for example, the position in the corporate hierarchy held by the prospective deponent or the size and complexity of the organization." Id. at *7 quoting Caldwell v. Church, 341 Ga. App. 852, 861 (4), 802 S.E.2d 835 (2017). Based on this analysis "[a]dopting the apex doctrine would necessarily restrict the trial court's discretion by placing a thumb on the scale so as to suggest a special rule for high-ranking executives of large companies that exists nowhere in the Civil Practice Act, and would contravene the principle of broadly available discovery under Georgia law." Id.

The Court ultimately saw "no need to employ a special test or framework different than that which generally applies to any claim of good cause made in support of a motion for protective order under O.C.G.A. § 9-11-26 (c)." Id.

As for the burden applied in Georgia, the Court rejected General Motor's interpretation, which "effectively builds in a presumption of good cause in favor of protection from discovery once apex doctrine factors are established. And, as noted above, the text of O.C.G.A. § 9-11-26 (c) places the burden on the party seeking protection from discovery to establish good cause. GM's formulation would impermissibly shift that burden to the party seeking discovery." Id. at *8.

In making determinations for or against a protective order, "courts must balance the interests of the parties in securing permissible discovery with the clear directive of O.C.G.A. § 9-11-26 (c) to protect against 'annoyance, embarrassment, oppression, or undue burden or expense,' as this determination is directed to be made in the interest of “justice,” which must include consideration of all concerned parties. Id. at *9 (internal citations omitted).

COA Muddies the Waters on Good Faith Basis of Offer of Settlement

An offer of settlement for $3,000.00 on a $40,000.00 claim was found to not be made in good faith despite the defendant in the case arguing that plaintiff lacked standing and had suffered no damages. The Coastal Bank v. Rawlins, A22A0286, 2022 WL 1074090 (Ga. Ct. App. April 11, 2022). In Rawlins, a beneficiary of an estate sued another beneficiary and a bank for writing and honoring $40,000.00 worth of checks written from the deceased person's account. Id. at *2.

The Court of Appeals had an opportunity to walk through the analysis of when an offer of settlement was made in good faith, ultimately affirming the trial court’s decision as a result of Coastal’s counsel admitting its payment on certain checks was improper, Coastal’s counsel demanding repayment of the full amount sought after being sued, Coastal asserting a cross-claim against the writer of the checks for the total amount of the checks plus seven percent interest and attorney fees, the offer of settlement would require not only to dismiss claims against Coastal but other third parties as well (effectively ending the suit entirely), and the court had recently concluded that it had the authority to order the estate administrator to assign the estate’s claims to the beneficiary that was the plaintiff, thereby removing any standing argument that Coastal had.

This opinion blurs the line on what is a good faith offer as Coastal’s standing argument ultimately became meritorious despite not being so at the time the offer of judgment was made. While a trial judge could find that this made the offer more reasonable and based in good faith, the Court of Appeals decided otherwise. This case only makes it more difficult to determine what a good faith offer of settlement is.

The Law:

The offer of settlement statute provides: If a defendant makes an offer of settlement which is rejected by the plaintiff, the defendant shall be entitled to recover reasonable attorney's fees and expenses of litigation incurred by the defendant or on the defendant's behalf from the date of the rejection of the offer of settlement through the entry of judgment if the final judgment is one of no liability or the final judgment obtained by the plaintiff is less than 75 percent of such offer of settlement. OCGA § 9-11-68 (b) (1). “The clear purpose of OCGA § 9-11-68 is to encourage litigants in tort cases to make and accept good faith settlement proposals in order to avoid unnecessary litigation, thereby advancing this State's strong public policy of encouraging negotiations and settlements.” Coastal Bank v. Rawlins, 347 Ga. App. 847, 850, 821 S.E.2d 89 (2018) (Rawlins II).

Once a prevailing party establishes that OCGA § 9-11-68 applies, the trial court “shall order the payment of attorney's fees and expenses of litigation.” OCGA § 9-11-68 (d) (1); Anglin v. Smith, 358 Ga. App. 38, 39, 853 S.E.2d 142 (2020). “Such an award may be disallowed only where the trial court finds the settlement offer was not made in good faith.” Anglin, 358 Ga. App. at 40, 853 S.E.2d 142; see OCGA § 9-11-68 (d) (2).

The reasonableness of an offer to settle under OCGA § 9-11-68 “is a factual determination, based on the trial court's assessment of the case, the parties, the lawyers, and all of the other factors that go into such a determination, which the trial court has gathered during the progress of the case.” Great West Cas. Co. v. Bloomfield, 313 Ga. App. 180, 183 (2), 721 S.E.2d 173 (2011).

Determining whether an offer was made in good faith rests on whether the offeror has a reasonable foundation on which to base the offer[,] and ... so long as the offeror has a basis in known or reasonably believed fact to conclude that the offer is justifiable, the good faith requirement has been satisfied. Whether the offeror has a reasonable basis to support the offer is determined solely by the offeror's own subjective motivations and beliefs. Rawlins II, 347 Ga. App. at 850-851 (1), 821 S.E.2d 89. Relevant evidence on the question of good faith includes: (i) whether the offer bore a reasonable relationship to the amount of damages; (ii) whether the offer was premised on a realistic assessment of liability; and (iii) whether the offeror lacked intent to settle the claim. See Richardson, 339 Ga. App. at 460, 793 S.E.2d 640; accord Rawlins II, 347 Ga. App. at 851 (1), 821 S.E.2d 89; Hillman v. Bord, 347 Ga. App. 651, 655-656 (2), 820 S.E.2d 482 (2018) (physical precedent only).

A trial court may not, however, base a ruling exclusively on these objective factors “but is instead required to consider the offeror's explanation and then determine whether, despite consideration of the objective factors[,] the offeror had a subjectively reasonable belief on which to base its offer.” Rawlins II, 347 Ga. App. at 851 (1), 821 S.E.2d 89. The party against whom attorney fees are sought bears the burden of proving the absence of good faith. Hillman, 347 Ga. App. at 655 (2), 820 S.E.2d 482; see Richardson, 339 Ga. App. at 461-462, 793 S.E.2d 640.

The Analysis:

The Court of appeals focused on the fact that at the time the offer of settlement was made, the only ruling on the standing issue presented by Coastal was contrary to its position. Rawlins, 2022 WL 1074090 at *4. The Court of Appeals acknowledged that this was ultimately a meritorious argument for Coastal because they won on appeal but gave this little to no credence stating, “[t]he parties have not cited, and research has not revealed, any authority supporting Coastal's implicit assertion that the probate court lacked the authority to order Metz to assign the estate claims to the Rawlinses.” Id. Likewise, the Court found that despite Coastal being liable for $0.00 in damages, a number far less than the $3,000.00 it offered in the offer of settlement, it was well below the amounts the writer of bad checks paid to settle the matter (the full amount). Id. at *5.

Ultimately, the Court places so much emphasis on the hypothetical that the estate administrator could have assigned claims to the plaintiff, however, they didn’t. This means that Coastal had a defense of lack of standing, asserted it, lost on summary judgment, made an offer of judgment based on their belief that the defense of lack of standing still existed, which was denied, ultimately they prevailed on the defense on appeal, but lost on the offer of settlement recoupment of fees and expenses. This outcome does not seem like it is within the public policy of the statute and has flawed reasoning. The mere potential of a thing to happen should not destroy an offer of settlement if courts actually want them to be a mechanism of reducing litigation. Lastly, litigants now need to weigh the pros and cons of asserting certain defenses, cross-claims,, counterclaims, and making offers of settlements. Again, this seems counterintuitive to the policy of the statute.

Court of Appeals Offers Guidance on Ratification of Independent Contractor's Wrongful Acts

In Georgia, an employer is not responsible for the torts of its independent contractor. Whitaker Farms v. Fitzgerald Fruit Farms, 347 Ga. App. 381, 385 (1), 819 S.E.2d 666 (2018); Lopez v. El Palmar Taxi, 297 Ga. App. 121, 123 (2), 676 S.E.2d 460 (2009). In fact, the General Assembly of Georgia has codified this maxim of law:

“An employer generally is not responsible for torts committed by his employee when the employee exercises an independent business and in it is not subject to the immediate direction and control of the employer.”

O.C.G.A. § 51-2-4.

When a contract of employment clearly denominates the other party as an independent contractor, that relationship is presumed to be true unless the evidence shows that the employer assumed “the right to control the time, manner and method of executing the work.” Lopez, 297 Ga. App. at 123 (2), 676 S.E.2d 460. Therefore, when deciding whether someone is an independent contractor or an employee, you must look to the language of the contract and the manner and method of the duties and work.

The Georgia Court of Appeals recently discussed when ratification applies as an exception to the rule thereby causing employer responsibility for torts of independent contractors. In an action for negligence and other tort claims, including negligent credentialing, plaintiff brought claims individually and as the administrator of the estate of his deceased wife against an entity that provided anesthesiologists and CRNAs to a medical provider pursuant to a Professional Services Agreement. Miller v. Polk et al., A22A0325, 2022 WL 1282662 at *1-*2 (April 29, 2022). The plaintiff argued that a CRNA should be treated as an employee because they ratified her wrongful acts by continuing to employ her and allowing her to provide medical treatment after learning that she had violated her probation and engaged in "demonstrable negligence" in the care of another patient prior. Id. at *4.

The Court of Appeals offered insight into the theory of ratification of an independent contractor's wrongful conduct by stating the principal must ratify the tort of the agent after the commission of the tort. Id. Only then is the liability of the principal the same as if he had commanded the wrong, provided the ratification is had with full knowledge on the part of the principal of the manner in which the tort was committed. Medley v. Boomershine Pontiac-GMC Truck, 214 Ga. App. 795, 797 (4), 449 S.E.2d 128 (1994). The plaintiff only alleged facts about acts that occurred prior to the tort and therefore ratification did not occur. Further, the Court of Appeals stated that there was no violation of a duty imposed by an express contract upon the employer because the plaintiff was not in the Professional Services Agreement. Id.