Stratford v. Umpqua Bank

534 P.3d 1195

Heather STRATFORD and William B. Geibel, Jr., individually and their marital community, Respondents,

v.UMPQUA BANK, an Oregon corporation; and Bryan Jarrett, an individual, Petitioners.

No. 100717-5

Supreme Court of Washington, En Banc.

Argued June 27, 2023

Filed September 14, 2023

Daniel Andrew Brown, Williams Kastner, 601 Union St. Ste. 4100, Seattle, WA, 98101-1368, Jessica Marie Cox, Sebris Busto James, 15375 Se 30th Pl. Ste. 310, Bellevue, WA, 98007-6500, Adam Rosenberg, Keller Rohrback L.L.P., 1201 3rd Ave. Ste. 3200, Seattle, WA, 98101-3052, for Petitioners.

Kevin W. Roberts, Chad Harrison Freebourn, Roberts | Freebourn, PLLC, 1325 W. 1st Ave. Ste. 303, Spokane, WA, 99201-4600, for Respondents.

Daniel Edward Huntington, Richter-Wimberley PS, 422 W Riverside Ave. Ste. 1300, Spokane, WA, 99201-0305, Valerie Davis McOmie, Attorney at Law, 4549 Nw Aspen St., Camas, WA, 98607-8302, for Amicus Curiae on behalf of WA State Association for Justice Foundation.

OWENS, J.

¶1 The parties to a lawsuit have a broad right to discovery, subject to narrow limitations in the Civil Rules. A party may seek a protective order to limit discovery under CR 26(c), which requires the party to show that good cause for the protective order exists. This case requires us to decide whether Washington recognizes the "apex doctrine," which shields certain high-ranking officials from deposition unless the proponent can first show that the witness has personal knowledge of the facts and that less intrusive means of discovery have been unsuccessful.

¶2 Respondents Heather Stratford and William Geibel Jr. (collectively Stratford) sued petitioner Umpqua Bank and its loan officer for negligent hiring and fraud, among other claims. After written discovery, Stratford sought to depose three high-level Umpqua executives. Umpqua moved for a protective order, arguing the executives had no personal knowledge and the apex doctrine shielded them from deposition. The trial court denied the motion. We granted Umpqua's petition for review to decide whether Washington does or should follow the apex doctrine.

¶3 We answer these questions in the negative. The apex doctrine has not been adopted by any court in this state. We decline to adopt the doctrine because it improperly shifts the burden of proof in violation of our discovery rules and it undermines the right of access to courts. Moreover, it is not universally accepted or applied consistently across jurisdictions. Accordingly, we affirm the trial court's denial of Umpqua's protective order and remand for further proceedings.

FACTS

¶4 Bryan Jarrett worked as an insurance agent for several years. Clerk's Papers (CP) at 114. During his employment, Jarrett submitted fictitious insurance applications and attempted to conceal his misconduct. Id. at 114-21. In 2014, the Office of Insurance Commissioner (OIC) investigated Jarrett and revoked his license. Id. at 119-21.

¶5 In 2015, Umpqua hired Jarrett as a home lending retail loan officer. Id. at 129-30, 158-68. As part of the hiring process, Jarrett cleared a criminal background check. Id. at 159-60. Umpqua did not learn about Jarrett's OIC disciplinary record during its preemployment screening and "was not provided with any information from Mr. Jarrett or from any third party that would prohibit him from acting as a loan officer." Id. at 181.

¶6 Unfortunately, Jarrett's conduct as a loan officer resulted in numerous customer complaints. See, e.g. , id. at 132-34, 138-42, 143-44. In February 2016, Umpqua met with Jarrett to take corrective action but did not terminate his employment at that time. Id. at 149-51, 143.

¶7 In late 2016, Stratford met Jarrett at the Umpqua Spokane offices to discuss a construction loan. Id. at 4. Jarrett told Stratford that " ‘his builder,’ Tony Begovich, would be a better option" than her proposed builder. Id. at 55. Jarrett said Begovich worked on other projects with Umpqua and had performed on time, within budget. Id.

¶8 In May 2017, Stratford and Begovich entered into a construction agreement with a quoted budget of $402,268 to be completed in approximately seven months. Id. at 78-87. To fund the project, Stratford obtained a construction loan from Umpqua, executed in July 2017. Id. at 187-99. Shortly thereafter, Begovich began construction. Id. at 202-03. In November 2017, while construction was ongoing, Umpqua fired Jarrett. Id. at 143.

¶9 Begovich did not finish building Stratford's home, which was damaged by exposure to the elements. Id. at 202-03, 60-61. In March 2020, Stratford sued Begovich, his company, and his subcontractors for breach of contract, fraud, and negligence. Id. at 201-05. In November 2020, a trial court awarded Stratford a total of $554,631.17 in damages. Id. at 230-35.

¶10 In May 2021, Stratford sued Jarrett and Umpqua for multiple causes of action, including negligent misrepresentation, fraud, and negligent hiring.¹ CP at 1-12, 12-20. Umpqua answered and asserted affirmative defenses. Id. at 21-30. The parties engaged in extensive and contentious written discovery for months until filing cross motions for summary judgment. See, e.g. , CP at 811-15, 774, 819-60, 863-78, 902-13; CP at 31-168, 158-237.

¶11 In January 2022, Stratford issued subpoenas to three Umpqua executives: (1) Cort O'Haver, the president and chief executive officer (CEO) of Umpqua Holdings Corporation, (2) Sheri Burns, the chief people officer at Umpqua, and (3) Kevin Skinner, the head of Umpqua's home lending division. Id. at 499. The parties discussed the purpose of the depositions and were ultimately unable to agree about whether they were necessary. Id. at 499-500.

¶12 Umpqua moved for a protective order. Id. at 601-14, 499-501. It argued deposing its senior executives ("apex" officers) was unnecessary and appeared to be merely a harassment tool. Id. at 502. It asserted the executives "were not involved in [Stratford's] loan, they did not supervise Jarrett, they did not hire Jarrett, nor did any of them have any involvement with Jarrett's termination from the Bank." Id. at 503. Of the three proposed deponents, only Skinner was "vaguely aware of who Jarrett is" due to this litigation. Id. Umpqua emphasized that "none of these three APEX officers have any personal knowledge relevant to [the] claims," yet Stratford sought "to depose them before taking testimony from any other witness with actual knowledge of the underlying facts alleged." Id.

¶13 In support of its motion, Umpqua submitted a declaration from Skinner. Id. at 495-98. Skinner was not involved with Jarrett's hiring or termination because he became executive vice president for home lending in January 2020. Id. at 496. Skinner stated that he and the other deponents needed to invest "incredible amounts of time and resources in the continued bank operations" because the bank was undergoing a merger. Id. at 497.

¶14 Before filing a response to the protective order, Stratford offered to "withdraw the O’[H]aver notice and proceed only with the depositions of Skinner and Burns" if Umpqua agreed to withdraw its motion for a protective order. Id. at 647. Umpqua apparently did not respond.

¶15 The next day, Stratford filed her response, arguing that Washington has not adopted the apex doctrine and urging the court to deny the protective order because Umpqua failed show good cause under CR 26(c). Id. at 614-27. She specifically criticized Umpqua for failing to describe any harm or prejudice that would result from the depositions. Id. at 621.

¶16 The trial court held a discovery hearing. Stratford argued she wanted to depose O'Haver, via Zoom, because the CEO is responsible for complying with fiduciary duties and disclosures in highly regulated, publicly traded companies. Verbatim Tr. of Proc. (Feb. 11, 2022) (VTP) at 10. Counsel wanted to ask O'Haver about bankwide calls related to hiring policies and other issues that are "relevant for the jury to hear certainly." Id. at 11.

¶17 Umpqua responded that it is "premature" to go directly to the CEO and pointed out that Stratford's offer to take O'Haver off the deposition list is "a clear admission" that his deposition is unnecessary. Id. at 12. Umpqua then argued that neither Burns nor Skinner had personal knowledge of Jarrett; Umpqua conceded that they may be relevant later but maintained it wanted "to streamline and not burden these folks." Id. at 17.

¶18 The trial court denied Umpqua's protective order. CP at 653-54. In an oral ruling, the court reasoned:

Washington law has some pretty ... easy discovery rules, pretty wide discovery. And considering the claims that the plaintiff's making ... how [Stratford's counsel] decides who he thinks is relevant to prove his case is up to him. He doesn't have to ask for a [corporate deposition under CR 30(b)(6) ] if he doesn't want to. And if he believes that these witnesses ... have valid information ... on ... policies and procedures, hiring, offering.

VTP at 17-18. The court continued,

[T]he burden is on the defendant or the moving party to show why this basically would not be necessary or relevant, and ... basically unduly burdensome. He's offering to do a Zoom deposition, and work around their schedules, and it's not unreasonably duplicative, and it could be important to his case.

....

[A]t this point [Stratford's counsel] met his burden to show that these would be important and could lead to discoverable or admissible evidence to prove his case.

Id. at 18-19.

¶19 Umpqua moved for an emergency stay of the depositions and sought direct review. We granted the stay and review. The Washington State Association for Justice Foundation filed an amicus curiae brief in support of Stratford.

ISSUE

¶20 Should Washington adopt the apex doctrine?

ANALYSIS

¶21 We granted review to consider whether the apex doctrine is consistent with our discovery rules. This is a question of law that we review de novo. Sunnyside Valley Irrig. Dist. v. Dickie , 149 Wash.2d 873, 880, 73 P.3d 369 (2003).

I. WASHINGTON DOES NOT RECOGNIZE...