The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IOWA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM, et al.,
Plaintiffs,
17 Civ. 6221 (KPF)
-v.-
MERRILL LYNCH, PIERCE, FENNER & ORDER
SMITH INC., et al.,
Defendants.
KATHERINE POLK FAILLA, District Judge:
The Court is in receipt of Plaintiffs’ letter motion to compel the deposition
of James Gorman, dated August 17, 2020 (Dkt. #351), and Defendants’
opposition, dated August 20, 2020 (Dkt. #354). Plaintiffs’ motion to compel is
denied without prejudice. Plaintiffs fail to establish both that Mr. Gorman’s
testimony will be relevant and that his deposition is justified under the apex
doctrine.
Plaintiffs argue that Mr. Gorman was personally involved in a conspiracy
to restrict the “poaching” of prime brokerage customers of major banks. (Dkt.
#351 at 1). But Plaintiffs fail to demonstrate that evidence of this alleged
conspiracy is relevant to the legal or factual issues in this case. Plaintiffs claim
that a “no poaching” conspiracy in the prime brokerage market demonstrates
that there was an “agreement to limit competition in the stock lending market”
(id.), but do not explain how any alleged conspiracy in the prime brokerage
market supports that such a conspiracy also existed in the stock lending
market (see Dkt. #354, Ex. C (Rubin Dep. 28:13-29:3, 30:13-31:24) (explaining
the limited role of the prime brokerage team with respect to stock lending and
the stock lending market)). At best, Plaintiffs’ relevance argument can be
characterized as “if it happened there, it could have happened here.” In re
Elevator Antitrust Litig., 502 F.3d 47, 52 (2d Cir. 2007). (See also Dkt. #123 at
57). Further, as Defendants explain, the evidence that Plaintiffs proffer to
suggest that Mr. Gorman was personally involved in such a conspiracy is more
plausibly interpreted as “an admonition against rumor mongering” (Dkt. #354
at 2), and a recognition that spreading rumors about a competitor’s imminent
financial collapse is an inappropriate sales tactic (see Dkt. 351, Ex. D (“This is
not the kind of behavior a responsible player in the market exhibits. I know in
2008 we were very careful to be respectful of other players in the market[.]”)).
Even if Plaintiffs demonstrated that Mr. Gorman’s testimony would be
relevant, they have failed to establish that it is warranted under the apex
doctrine, pursuant to which doctrine “[c]ourts have recognized an additional
layer of protection for senior corporate executives subject to depositions.” Scott
v. Chipotle Mexican Grill, Inc., 306 F.R.D. 120, 122 (S.D.N.Y. 2015). Mr.
Gorman is Defendant Morgan Stanley’s Chairman and CEO and is responsible
for overseeing more than 60,000 employees. (Dkt. #354, Ex. B (Gorman Decl.
¶¶ 1-2)). Defendants have established that subjecting him to a deposition
would be an imposition justifying the applicability of the apex doctrine. (Id. at
¶ 5)). And Plaintiffs have not shown that Mr. Gorman has unique evidence,
personal knowledge of the claims at issue, or that other witnesses are
incapable of providing testimony about the conduct alleged. Accord Scott, 306
F.R.D. at 122-24. To the contrary, Mr. Gorman has submitted a sworn
declaration stating that he has “no personal knowledge of the specific facts
concerning this litigation.” (Id. at 4). Nor do Plaintiffs argue that Mr.
Gorman has any knowledge about the stock lending conspiracy at issue in this
case; rather, Plaintiffs allege that Mr. Gorman has knowledge about a putative
conspiracy in the prime brokerage market. (Dkt. #351 at 3). As noted above,
the strongest interpretation of Plaintiffs’ relevance argument is insufficient to
demonstrate that Mr. Gorman’s testimony is required. Furthermore, Plaintiffs
have not first sought any discovery from lower-level employees to support their
theory. For example, the documents to which Plaintiffs cite to support their
theory include emails among lower-level employees, which emails (in Plaintiffs’
reading) discuss the implementation of the alleged conspiracy. (See Dkt. #351,
Ex. D, F). But Plaintiffs have not sought to depose any of these lower-level
employees to test their theory. And even taking Plaintiffs’ allegations of a no-
poaching conspiracy as true, because Plaintiffs have not sought any testimony
from other employees about this putative conspiracy, they cannot establish
that Mr. Gorman’s knowledge is unique. For these same reasons, the cases
Plaintiffs cite on the apex doctrine are inapposite, as they all involve situations
in which executives had unique personal knowledge relevant to the actual
claims at issue. Accordingly, the motion is DENIED without prejudice.
SO ORDERED. . _,
Dated: August 27, 2020 Kathe fall. (Zul
New York, New York
KATHERINE POLK FAILLA
United States District Judge