Supreme Court Rules Where Defendants May be Deposed

October is expert witness month, but last Thursday the Supreme Court of Nevada published a decision clarifying how to decide the geographic location where a defendant is to be deposed. Consequently, this is a brief detour away from your regularly scheduled programming. Among the most frequently asked questions I received is whether a defendant is to travel to Las Vegas for deposition. Unfortunately, I still do not have an answer.

The Decision

Wynn v. Okada[1] could be an Academy Award winning drama, but right now it is a “mere” shareholder dispute. “Wynn Resorts noticed Okada’s deposition for ten days in Las Vegas even though Okada resides in Hong Kong and owns businesses in Tokyo, Japan. Okada filed a motion for a protective order, requesting that his deposition be taken in Tokyo or, alternatively, Hong Kong, and that it be shortened to three days.” Okada objected, but the district court allowed the deposition to proceed within Wynn’s parameters. Okada petitioned the Supreme Court for a writ, “contending that the district court ignored a common-law presumption that his deposition should take place where he resides and that the district court ignored NRCP 30(d)(1)’s presumption that depositions should be limited to one day.”

As for the deposition’s location, we agree with the district court’s rejection of Okada’s argument regarding the common-law presumption and conclude that the district court was within its discretion in determining that Okada failed to demonstrate good cause for having his deposition moved to a location other than Las Vegas. As for the deposition’s duration, we conclude that the district court properly exercised its discretion in departing from NRCP 30(d)(1)’s presumptive one-day time frame and adopting Wynn Resorts’ ten-day proposal.

Mr. Okada had been deposed once before in a related, but separate case. The deposition occurred in Las Vegas, but did not go well.

By all accounts, Okada’s deposition in the Books and Records case was fraught with difficulties, based in large part on the need to translate each deposition question into Japanese and each of Okada’s answers into English, the presence of a second translator to verify the accuracy of the first translator’s translation, and what Wynn Resorts characterizes as “obstructionist behavior” on the part of Okada’s attorneys.

The second suit was the one at issue. Wynn sued Okada, Okada counterclaimed against Wynn and individual board members, who then filed their own counterclaims against Okada. Wynn noticed Okada’s deposition. Okada argued he was a defendant in this lawsuit and Rule 30 presumes that defendant’s are deposed where they live. He also argued 1 day of seven hours should apply, but offered a three day deposition to account for the case’s complexities and the need for translators.

The Supreme Court refused to overturn the district court’s order requiring Okada to appear in Las Vegas for up to 10 days. However, it stated the “district courts should make specific findings on the record when ruling on motions implicating the issues addressed in this opinion.” The opinion then described the factors Nevada’s district courts are to consider, but only as to parties. The Supreme Court specifically declined to decide “the application of NRCP 30 to a nonparty.”[2]

As to location, NRCP 30 is silent. The Court summarized the general caselaw around the country developed on this topic as 1) usually the deposition occurs where the witness is located but 2) not “when it is the plaintiff who is seeking to avoid being deposed in the forum where he or she has instituted the underlying action, the reason being that the plaintiff picked the forum and should not be heard to complain about the inconvenience of being deposed there” and 3) “a defendant who files a compulsory counterclaim is treated as a defendant, whereas a defendant who files a permissive counterclaim is treated as a plaintiff.”

The Supreme Court chose to depart from this standard and instead made geographic location only a factor, not the factor. Further, the Supreme Court concluded the plaintiff did not have the burden of proof to justify the deposition location. If a defendant objects to the deposition location, it must move for a protective order and has the burden to show “good cause,” as contemplated in NRCP 26(c). The Court then provided non-exhaustive factors that may be considered to determine if good cause is present. Generally, district courts should consider “cost, convenience and litigation efficiency in determining whether a protective order is warranted to change the location of a defendant’s deposition.” Okada then listed five factors that would likely bear on these considerations.

(1) the location of counsel for the parties in the forum district;
(2) the number of corporate representatives a party is seeking to depose;
(3) the likelihood of significant discovery disputes arising, which would necessitate resolution by the forum court;
(4) whether the persons sought to be deposed often engage in travel for business purposes; and
(5) the equities with regard to the nature of the claim and the parties’ relationship.

This framework considers the defendant’s location, but also provides “a broader scope of analysis than a general rule favoring deposing the defendant where he or she resides.”

As to deposition duration, the analysis was much shorter. Although NRCP 30 imposes a presumptive limit of 1 day of 7 hours, the rule also provides an escape valve if more time is needed. Here, even the deponent agreed 1 day of 7 hours would be insufficient and the factors that lead him to that conclusion also supported the district court’s decision to allow potentially 10 days.

What does it mean in practical terms?

Okada rejects a relatively simple test supported by a well developed body of caselaw and replaces it with something far more subjective that seems likely to only spur more litigation. A relatively bright-line test was replaced with gray. Applied to Okada, he traveled to Las Vegas for a deposition before. He gave no indication he was unable, for whatever reason, to travel there again. I suspect he gave no reason because he believed it was Wynn’s burden to demonstrate the deposition should be in Las Vegas as opposed to Tokyo. Instead, the Supreme Court ruled Okada had the burden to show why the deposition should not be where Wynn noticed it.

Where is the defendant to be deposed after Okada? It depends. The only thing that seems certain is that Okada will spur many more emergency motions for protective orders.

[1] 131 Nev. Adv. Op. 83 (2015); As disclosed before, I am one of many lawyers in Las Vegas who occasionally handles matters for various Wynn Las Vegas entities. Sadly, not this case.
[2] Id at n.4.