Subpoena of AOL Senior Executive Under the "Apex Rule" Disallowed Absent Special Knowledge


In Daou v. Huffington, No. 651997/2010 (N.Y. Sup. Ct., N.Y. Cnty. Feb. 14, 2013), the Supreme Court (J. Ramos) granted nonparty Timothy Armstrong’s (“Armstrong”) motion to quash a subpoena served on him by political consultants Peter Daou and James Boyce (collectively “Plaintiffs”). Plaintiffs sought a deposition of Armstrong regarding his knowledge of the valuation of the Huffington Post. In quashing Plaintiffs’ subpoena, and therefore finding that Armstrong did not need to be deposed, the court upheld the basic tenets of the common law apex deposition rule (the “Apex Rule”), which limits a party’s access to deposing nonparty senior executives.

While New York has no statutory provisions articulating the Apex Rule, courts have consistently limited parties’ ability to demand a deposition of a senior executive. See generally Collichio v. City of New York, 181 A.D.2d 528, 529 (1st Dep’t 1992); Arendt v. General Elec. Co., 270 A.D.2d 622, 622-23 (3d Dep’t 2000); Defina v. Brooklyn Union Gas Co., 217 A.D.2d 681, 682 (2d Dep’t 1995); Saieh v. Demetro, 201 A.D.2d 477 (2d Dep’t 1994). In particular, and as noted by the court here, “senior executives cannot be subpoenaed to testify in order to harass a corporation.” However, senior executives are not immune from depositions. Under the Apex Rule, senior executives may be deposed if the party seeking the deposition demonstrates that the executive has unique knowledge that warrants him or her being deposed.

In reaching its decision, the court analyzed whether Armstrong had particular, unique knowledge that would thereby expose him to possible deposition. In his role as CEO for AOL, Armstrong was involved in AOL’s acquisition of the Huffington Post in 2009. In particular, Armstrong signed off on a memorandum concerning the valuation of the Huffington Post (the “Memo”), and he had at least one personal conversation with Arianna Huffington (“Huffington”), the founder of the Huffington Post, regarding the purchase. Plaintiffs argued that this knowledge was sufficiently unique — they desired Armstrong’s knowledge not as a means to harass, but rather to determine the true value of the Huffington Post, information which was needed to quantify Plaintiffs’ damages in the action.

Plaintiffs contended that Armstrong’s unique knowledge of the Huffington Post’s valuation arose out of the Memo and his conversation with Huffington. Armstrong, however, asserted that although he signed the Memo, the primary authors were members of AOL’s corporate development staff, any of whom would therefore be better suited to be deposed. The court agreed, finding that despite the existence of the private conversation between Huffington and Armstrong, the Memo served as the impetus for AOL’s valuation of the Huffington Post, and therefore, the court found that the Memo’s drafters should be the persons sought for deposition. As a result, Armstrong did not possess special or unique knowledge, as is required to trigger a nonparty senior executive deposition under the Apex Rule.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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