The Texas Supreme Court Holds Corporate Representative Subject to Deposition Even Without the Company Having Personal Knowledge

On June 18, 2021, the Texas Supreme Court held that a party could depose a corporate representative even if the company lacked personal knowledge of the underlying facts at issue, but the deposition must be narrow in scope. 

Plaintiff Frank Wearden, who was insured by USAA, sued USAA for breach of contract and declaratory judgment after he was involved in a car accident with an uninsured/underinsured motorist. Wearden served a notice of intent to take USAA’s deposition on nine topics, and USAA moved to quash.

In support of its motion, USAA conceded the only facts that it considered to be within its personal knowledge—that Wearden had a policy with USAA that covered the accident and the terms of the policy. It then argued that Wearden could obtain information on the other topics through witnesses with personal knowledge, such that deposing USAA’s representative would only lengthen the litigation and add no value. For example, it argued “no USAA employees have relevant personal knowledge regarding the disputed ‘car wreck’ issues; rather, ‘all anyone at USAA could do is gather information from the people (outside of USAA) who actually have relevant knowledge—the other driver and witnesses to the car wreck, police investigators, medical providers, and expert witnesses’.” In re USAA Gen. Indem. Co., Relator, No. 20-0281, 2021 WL 2483767, at *4 (Tex. June 18, 2021). Alternatively, USAA contended the deposition’s scope must be limited. The trial court denied USAA’s motion to quash, and USAA petitioned for mandamus relief.

The Supreme Court of Texas granted in part and denied in part USAA’s relief. “As an initial matter,” the court noted “the unusual position in which USAA finds itself: arguing that Wearden is not entitled to depose the only party defendant in this suit.” Id. at *5. The court held that, although the corporation lacked personal knowledge of the facts surrounding Wearden’s accident, “USAA’s insistence that a lack of personal knowledge necessarily equates to a lack of relevant knowledge rings hollow”—“[t]he procedural rules governing oral depositions impose no such personal-knowledge prerequisite.” Id. Texas’s discovery rules require that the deponent only possess knowledge of relevant facts, even if that knowledge is obtained second hand.

Although Wearden is entitled to depose USAA, the Court held that the trial court abused its discretion by denying USAA’s motion to quash on certain noticed deposition topics. The Court reasoned that, because of USAA’s coverage concessions and the narrow scope of Wearden’s accident, Wearden was not permitted to depose USAA on topics covering a “general inquiry” into the insurance policy, Wearden’s compliance with the policy, conditions precedent to recovery, and extra-contractual matters. Those topics would “exceed[] the permissible scope” under the rules and “erroneously compel[] discovery of irrelevant information.” Id. at *7, *8.

This case serves as a helpful reminder to companies that their employees can still be subject to deposition if the company lacks personal knowledge of the facts at issue. But companies should carefully examine the topics listed in a deposition notice and determine if any topics exceed the narrow scope permitted under Texas’s discovery rules. Hunton Andrews Kurth will continue to monitor further developments.