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CAUSE NO. 67-246639-10
DEER CREEK ESTATES §
HOMEOWNERS' ASSOCIATION, §
INC. §
§
Plaintiff, §
§
v. §
§
CHESAPEAKE EXPLORATION, LLC §
AND PFM, LLC, §
§
Defendants. § TARRANTCOUNTY,TEXAS
CHESAPEAKE EXPLORATION, L.L.C.'S MOTION FOR PROTECTIVE
ORDER AND TO QUASH THE DEPOSITION OF AUBREY MCCLENDON
TO THE HONORABLE DON COSBY:
Defendant Chesapeake Exploration L.L.C. ("CELLC"), pursuant to Texas Rule of
Civil Procedure 192.6, files this Motion for Protective Order and to Quash the Deposition
of Aubrey McClendon, and would respectfully show the Court as follows:
I.
BACKGROUND
Plaintiff Deer Creek Homeowners' Association, Inc. ("Plaintiff') has asserted
claims against CELLC and PFM, L.L.C. ("PFM") (together, "Defendants") relating to
lease negotiations in 2008 concerning neighborhood properties in southern Tarrant
County, Texas. This lawsuit was filed on or about July 12, 2010; no discovery has been
conducted in this case other than outstanding written disclosures. Before conducting any
other discovery in this case, Plaintiffs counsel requested the deposition of CELLC's
Chief Executive Officer, Aubrey McClendon. A true and correct copy of Plaintiffs
CELLC'S 1\!0TION FOR PROTECTIVE ORDER AND TO
QUASH TIIEDEPOSITION OF AUBREY McCLENDON
1160349_1 Page 1 of 8
..
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counsel's letter is attached hereto as Exhibit A and is hereby incorporated by reference
for all purposes. Thereafter, Plaintiff served CELLC with a deposition notice for Mr.
McClendon's deposition. A true and correct copy of Plaintiffs Notice of Intention to
Take Oral and Video Deposition and Subpoena Duces Tecum is attached hereto as
Exhibit B and is hereby incorporated by reference for all purposes. Mr. McClendon's
deposition constitutes an "apex deposition;" therefore, Mr. McClendon is afforded the
protections of the Texas apex doctrine. CELLC respectfully requests that the Court
quash this deposition and issue a protective order preventing Plaintiff from serving Mr.
McClendon with any other deposition notice without Court approval.
II.
ARGUMENTS & AUTHORITIES
A. The requirements for an apex deposition.
"[D]epositions of persons in the upper level management of corporations
present problems which should reasonably be accommodated in the discovery process." 1
Recognizing these problems, the Texas Supreme Court, in Crown Central Petroleum
Corporation v. Garcia, specifically set forth the requirements for apex depositions.
Under Crown Central, in order to depose a corporate president or other high-ranking
corporate official, a party must demonstrate that the officer in question has "unique or
superior personal knowledge" of facts relevant to the lawsuit. 2 "This requirement is not
satisfied by merely showing that a high-level executive has 'some knowledge' of
1
Crown Cent. Petroleum Corp. v. Garcia,904 S.W.2d 125, 128 (Tex. 1995).
2
!d. at 128.
CELLC'S MOTION FOR PROTECTIVE ORDER AND TO
QUASH THEDEPOSJTJON OF AUBREY McCLENDON
1160349_1 Page 2 of8
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discoverable infonnation."3 If the party seeking the deposition cannot show that the
official has any unique or superior personal knowledge of discoverable infonnation, the
trial court should quash the deposition and direct the party to employ less intrusive
methods of discovery. 4
The party seeking the deposition is then required to make a good-faith effort to
obtain any needed infonnation from other sources. 5 Thereafter, the trial court may pennit
the apex deposition to go forward only if the party seeking it can show "(1) that there is a
reasonable indication that the official's deposition is calculated to lead to the discovery of
admissible evidence, and (2) that the less-intrusive methods of discovery are
unsatisfactory, insufficient, or inadequate."6 Even if these conditions are met, the trial
court "retains discretion to restrict the duration, scope, and location of the deposition." 7
B. Mr. McClendon is a high-level corporate official without unique or superior
personal knowledge of the relevant facts in this lawsuit and should therefore
be afforded the protections of the apex doctrine.
As Chief Executive Officer of CELLC and Chesapeake Energy Corporation
(together, "Chesapeake"), Mr. McClendon works in Chesapeake's corporate headquarters
in Oklahoma City, Oklahoma, developing overall company strategy and initiating general
3
In re Alcatel USA, Inc.,II S.WJd 173, 175 (Tex. 2000) (emphasis added).
4
!d. at 175-76.
7!d.
CELLC'S MOTION FOR PROTECTIVE ORDER AND TO
QUASH THEDEPOSITION OF AUBREY McCLENDON
1160349_1 Page 3 of8
..
policies to
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be implemented by the numerous
•
employees ofChesapeake. 8 Mr. McClendon
does not normally participate in the day-to-day negotiation, execution, or administration
of leases, nor does Mr. McClendon normally participate in the numerous daily land
transactions in which CELLC and its affiliates are parties. Mr. McClendon's generalized
knowledge does not approach the "unique or superior personal knowledge" required by
Crown Centra/. 9
Based on a review of the pleadings in this suit, Mr. McClendon has a general
understanding of the above-styled lawsuit and the claims set forth by Plaintiff; however,
he does not have any unique knowledge of the underlying facts, transactions, or
occurrences in dispute in this case.I 0 Specifically, Mr. McClendon does not have any
personal knowledge of the lease negotiations or representations made in these
negotiations by any of the parties in this lawsuit. In addition, Mr. McClendon did not
have any contact/communication with Plaintiff or its representative during the
negotiations at issue. Mr. McClendon was only a recipient of a very limited number of
emails that mentioned Plaintiff. These emails do not set out with any specific detail the
substance of or address the lease negotiations at issue in this lawsuit. II As held by the
8
Mr. McClendon was unavailable prior to the filingof this Motion to sign an affidavit to support the factual
statements contained herein. CELLC will, in the very near future, file an affidavit of Mr. McClendon to support this
Motion.
9
See also In re Daisy Mfg. Co., Inc.,976 S.W.2d 327, 329 (Tex. App.-Corpus Christi 1998, orig. proceeding)
(holding that a corporate official's generalized opinion of the safety of company products did not endow the
corporate official with unique or superior knowledge of the product).
10
See also AMR Corp. v.Enlow, 926 S.W.2d 640, 644 (Tex. App.-Fort Worth 1996, orig. proceeding) (stating,
"obvious recognition that the highest-ranking corporate officer of any corporation has the ultimate responsibility for
all corporate decisions ... falls far short of the [Crown Central] standard").
IIJd.
CELLC'S MOTION FOR PROTECTIVE ORDER AND TO
QUASH THEDEPOSITION OF AUBREY McCLENDON
1160349_1 Page4of8
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Texas Supreme Court "evidence that an apex official received information requires
something more to establish that an apex has umque or superior knowledge of
discoverable information." 12
In short, Mr. McClendon (1) works and resides in Oklahoma; (2) lacks personal
knowledge of the transactions or occurrences which are involved in this lawsuit; and (3)
is the Chief Executive Officer of Chesapeake. Based on these circumstances and the
timing of this request, CELLC submits Plaintiffs deposition request is burdensome and
made for the sole purpose of harassment. For these reasons, CELLC respectfully
requests that the Court grant this Motion.
C. Plaintiff's failure to utilize less intrusive methods of discovery.
Because Mr. McClendon does not have unique knowledge with regard to the facts
underlying this lawsuit, Plaintiff is required, under Crown Central, to seek discovery
through less intrusive methods. 13 So far in these proceedings, Plaintiff has not conducted
any other depositions, engaged in any other forms of discovery, and has completely failed
to meet its burden under Crown Central.
Given Mr. McClendon's lack of unique personal knowledge of the facts and
circumstances of this lawsuit, caselaw requires Plaintiffto begin the discovery process by
utilizing other, less-intrusive methods of discovery. Plaintiffs counsel has failed to
provide any explanation as to why Mr. McClendon's deposition will lead to the discovery
12
In re Alcatel USA., II S.W.3d at I75-76.
13
Crown Cent., 904 S.W.2d at I28; see also In re Alcatel USA, II S.W.3d at I76 (stating, "absent a showing that an
executive has ... superior personal knowledge, a court has no discretion to allow an apex deposition unless the party
seeking the deposition establishes that it has attempted to obtain the information through less intrusive means").
CELLC'S MOTION FOR PROTECTIVE ORDER AND TO
QUASH TIIEDEPOSITION OF AUBREY McCLENDON
1160349_1 Page5of8
of admissible evidence,
•or why the less intrusive methods
•
of other discovery would be
unsatisfactory, insufficient, or inadequate. 14 Accordingly, CELLC requests that the Court
grant this Motion.
D. Motion to Quash.
Pursuant to Texas Rule of Civil Procedure 199 .4, CELLC objects to and hereby
moves to quash Plaintiffs Deposition Notice on the ground that the deponent, Mr.
McClendon, is not available on September 14, 2010. In addition, CELLC objects to the
location of the deposition, which is currently noticed in Arlington, Texas. Opposing
counsel has offered to travel to Oklahoma City, Oklahoma, to take Mr. McClendon's
deposition. CELLC believes Plaintiffs counsel will honor this agreement as to the
location of the deposition. If the Court orders Mr. McClendon's deposition to go
forward, CELLC will provide dates for the deposition to take place in October or
November 2010 in Oklahoma City, Oklahoma, at Chesapeake's headquarters.
This Motion is being filed by the third business day after service of Plaintiffs
Deposition Notice. Therefore, the deposition of Mr. McClendon is hereby stayed until
this Motion can be heard.
III.
PRAYER
CELLC respectfully requests that the Court (i) grant this Motion; (ii) quash the
deposition of Mr. McClendon; (iii) order that no deposition notices of Mr. McClendon be
14
In re Alcatel,II S.W.3d at 176; Crown Cent., 904 S.W.2d at 128.
CELLC'S MOTION FOR PROTECTIVE ORDER AND TO
QUASH THEDEPOSITION OF AUBREY McCLENDON
1160349_1 Page 6 of8
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served without prior leave of the Court; and (iv) grant CELLC all other relief to which it
is justly entitled at law or in equity.
Respectfully submitted,
BartA. Rue
State Bar No. 17380500
LenA. Wade
State BarNo. 2063 7070
Clark H. Rucker
State Bar No. 24066011
KELLY HART & HALLMAN LLP
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Telephone: (817) 332-2500
Facsimile: (817) 878-9280
ATTORNEYS FOR DEFENDANTS
CHESAPEAKE EXPLORATION, L.L.C.
AND PFM, L.L.C.
CERTIFICATE OF CONFERENCE
I conferred with Kip Petroff, opposing counsel, on August 17, 2010, about the
deposition of Aubrey McClendon and Chesapeake's intent to file this motion to quash
such deposition. No agreement could be reached, and Plaintiff is opposed to the relief
requested in this motion.
BartA. Rue
CELLC'S MOTION FOR PROTECfiVE ORDER AND TO
QUASH TIIEDEPOSITION OF AUBREY McCLENDON
1160349_1 Page 7 of8
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CERTIFICATE OF SERVICE
I hereby certify that on this 25th day of August, 2010, a true and correct copy of
the foregoing document has been delivered via certified mail, return receipt requested, to
the following counsel of record:
Dean A. Riddle Kip Petroff
Christopher A. Payne Carlos A. Fernandez
Caroline A. McClimon Petroff& Associates
Riddle & Williams, P.C. 3838 Oak Lawn Avenue
3710 Rawlins Street Suite 1124
Suite 1400 -Regency Plaza Dallas, Texas 75219
Dallas, Texas 75219
Randal Mathis
Mark Donheiser
Mathis & Donheiser, P.C.
2575 Trammell Crow Center
200 1 Ross Avenue
Dallas, Texas 75201
BartA. Rue
CELLC'S MOTION FOR PROTECTIVE ORDER AND TO
QUASH THEDEPOSITION OF AUBREY McCLENDON
1160349_1 Page 8 of8
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PETROFF & AsSOCIATES
•
ArroRNm AT LAw
3838 OAX LAWN AVEN\JE
sum 1124
DALLAS, TEXAS 75219
TELf.PHONE: 214-526-5300 • FAX: 214-526-5354
PARTNERS WWW,PEfROFFASSOOATES.
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• • CAUSE NO. 67-246639-10 DEER CREEK ESTATES § HOMEOWNERS' ASSOCIATION, § INC. § § Plaintiff, § § v. § § CHESAPEAKE EXPLORATION, LLC § AND PFM, LLC, § § Defendants. § TARRANTCOUNTY,TEXAS CHESAPEAKE EXPLORATION, L.L.C.'S MOTION FOR PROTECTIVE ORDER AND TO QUASH THE DEPOSITION OF AUBREY MCCLENDON TO THE HONORABLE DON COSBY: Defendant Chesapeake Exploration L.L.C. ("CELLC"), pursuant to Texas Rule of Civil Procedure 192.6, files this Motion for Protective Order and to Quash the Deposition of Aubrey McClendon, and would respectfully show the Court as follows: I. BACKGROUND Plaintiff Deer Creek Homeowners' Association, Inc. ("Plaintiff') has asserted claims against CELLC and PFM, L.L.C. ("PFM") (together, "Defendants") relating to lease negotiations in 2008 concerning neighborhood properties in southern Tarrant County, Texas. This lawsuit was filed on or about July 12, 2010; no discovery has been conducted in this case other than outstanding written disclosures. Before conducting any other discovery in this case, Plaintiffs counsel requested the deposition of CELLC's Chief Executive Officer, Aubrey McClendon. A true and correct copy of Plaintiffs CELLC'S 1\!0TION FOR PROTECTIVE ORDER AND TO QUASH TIIEDEPOSITION OF AUBREY McCLENDON 1160349_1 Page 1 of 8 .. • • counsel's letter is attached hereto as Exhibit A and is hereby incorporated by reference for all purposes. Thereafter, Plaintiff served CELLC with a deposition notice for Mr. McClendon's deposition. A true and correct copy of Plaintiffs Notice of Intention to Take Oral and Video Deposition and Subpoena Duces Tecum is attached hereto as Exhibit B and is hereby incorporated by reference for all purposes. Mr. McClendon's deposition constitutes an "apex deposition;" therefore, Mr. McClendon is afforded the protections of the Texas apex doctrine. CELLC respectfully requests that the Court quash this deposition and issue a protective order preventing Plaintiff from serving Mr. McClendon with any other deposition notice without Court approval. II. ARGUMENTS & AUTHORITIES A. The requirements for an apex deposition. "[D]epositions of persons in the upper level management of corporations present problems which should reasonably be accommodated in the discovery process." 1 Recognizing these problems, the Texas Supreme Court, in Crown Central Petroleum Corporation v. Garcia, specifically set forth the requirements for apex depositions. Under Crown Central, in order to depose a corporate president or other high-ranking corporate official, a party must demonstrate that the officer in question has "unique or superior personal knowledge" of facts relevant to the lawsuit. 2 "This requirement is not satisfied by merely showing that a high-level executive has 'some knowledge' of 1 Crown Cent. Petroleum Corp. v. Garcia,904 S.W.2d 125, 128 (Tex. 1995). 2 !d. at 128. CELLC'S MOTION FOR PROTECTIVE ORDER AND TO QUASH THEDEPOSJTJON OF AUBREY McCLENDON 1160349_1 Page 2 of8 .' • • discoverable infonnation."3 If the party seeking the deposition cannot show that the official has any unique or superior personal knowledge of discoverable infonnation, the trial court should quash the deposition and direct the party to employ less intrusive methods of discovery. 4 The party seeking the deposition is then required to make a good-faith effort to obtain any needed infonnation from other sources. 5 Thereafter, the trial court may pennit the apex deposition to go forward only if the party seeking it can show "(1) that there is a reasonable indication that the official's deposition is calculated to lead to the discovery of admissible evidence, and (2) that the less-intrusive methods of discovery are unsatisfactory, insufficient, or inadequate."6 Even if these conditions are met, the trial court "retains discretion to restrict the duration, scope, and location of the deposition." 7 B. Mr. McClendon is a high-level corporate official without unique or superior personal knowledge of the relevant facts in this lawsuit and should therefore be afforded the protections of the apex doctrine. As Chief Executive Officer of CELLC and Chesapeake Energy Corporation (together, "Chesapeake"), Mr. McClendon works in Chesapeake's corporate headquarters in Oklahoma City, Oklahoma, developing overall company strategy and initiating general 3 In re Alcatel USA, Inc.,II S.WJd 173, 175 (Tex. 2000) (emphasis added). 4 !d. at 175-76. 7!d. CELLC'S MOTION FOR PROTECTIVE ORDER AND TO QUASH THEDEPOSITION OF AUBREY McCLENDON 1160349_1 Page 3 of8 .. policies to • be implemented by the numerous • employees ofChesapeake. 8 Mr. McClendon does not normally participate in the day-to-day negotiation, execution, or administration of leases, nor does Mr. McClendon normally participate in the numerous daily land transactions in which CELLC and its affiliates are parties. Mr. McClendon's generalized knowledge does not approach the "unique or superior personal knowledge" required by Crown Centra/. 9 Based on a review of the pleadings in this suit, Mr. McClendon has a general understanding of the above-styled lawsuit and the claims set forth by Plaintiff; however, he does not have any unique knowledge of the underlying facts, transactions, or occurrences in dispute in this case.I 0 Specifically, Mr. McClendon does not have any personal knowledge of the lease negotiations or representations made in these negotiations by any of the parties in this lawsuit. In addition, Mr. McClendon did not have any contact/communication with Plaintiff or its representative during the negotiations at issue. Mr. McClendon was only a recipient of a very limited number of emails that mentioned Plaintiff. These emails do not set out with any specific detail the substance of or address the lease negotiations at issue in this lawsuit. II As held by the 8 Mr. McClendon was unavailable prior to the filingof this Motion to sign an affidavit to support the factual statements contained herein. CELLC will, in the very near future, file an affidavit of Mr. McClendon to support this Motion. 9 See also In re Daisy Mfg. Co., Inc.,976 S.W.2d 327, 329 (Tex. App.-Corpus Christi 1998, orig. proceeding) (holding that a corporate official's generalized opinion of the safety of company products did not endow the corporate official with unique or superior knowledge of the product). 10 See also AMR Corp. v.Enlow, 926 S.W.2d 640, 644 (Tex. App.-Fort Worth 1996, orig. proceeding) (stating, "obvious recognition that the highest-ranking corporate officer of any corporation has the ultimate responsibility for all corporate decisions ... falls far short of the [Crown Central] standard"). IIJd. CELLC'S MOTION FOR PROTECTIVE ORDER AND TO QUASH THEDEPOSITION OF AUBREY McCLENDON 1160349_1 Page4of8 • • Texas Supreme Court "evidence that an apex official received information requires something more to establish that an apex has umque or superior knowledge of discoverable information." 12 In short, Mr. McClendon (1) works and resides in Oklahoma; (2) lacks personal knowledge of the transactions or occurrences which are involved in this lawsuit; and (3) is the Chief Executive Officer of Chesapeake. Based on these circumstances and the timing of this request, CELLC submits Plaintiffs deposition request is burdensome and made for the sole purpose of harassment. For these reasons, CELLC respectfully requests that the Court grant this Motion. C. Plaintiff's failure to utilize less intrusive methods of discovery. Because Mr. McClendon does not have unique knowledge with regard to the facts underlying this lawsuit, Plaintiff is required, under Crown Central, to seek discovery through less intrusive methods. 13 So far in these proceedings, Plaintiff has not conducted any other depositions, engaged in any other forms of discovery, and has completely failed to meet its burden under Crown Central. Given Mr. McClendon's lack of unique personal knowledge of the facts and circumstances of this lawsuit, caselaw requires Plaintiffto begin the discovery process by utilizing other, less-intrusive methods of discovery. Plaintiffs counsel has failed to provide any explanation as to why Mr. McClendon's deposition will lead to the discovery 12 In re Alcatel USA., II S.W.3d at I75-76. 13 Crown Cent., 904 S.W.2d at I28; see also In re Alcatel USA, II S.W.3d at I76 (stating, "absent a showing that an executive has ... superior personal knowledge, a court has no discretion to allow an apex deposition unless the party seeking the deposition establishes that it has attempted to obtain the information through less intrusive means"). CELLC'S MOTION FOR PROTECTIVE ORDER AND TO QUASH TIIEDEPOSITION OF AUBREY McCLENDON 1160349_1 Page5of8 of admissible evidence, •or why the less intrusive methods • of other discovery would be unsatisfactory, insufficient, or inadequate. 14 Accordingly, CELLC requests that the Court grant this Motion. D. Motion to Quash. Pursuant to Texas Rule of Civil Procedure 199 .4, CELLC objects to and hereby moves to quash Plaintiffs Deposition Notice on the ground that the deponent, Mr. McClendon, is not available on September 14, 2010. In addition, CELLC objects to the location of the deposition, which is currently noticed in Arlington, Texas. Opposing counsel has offered to travel to Oklahoma City, Oklahoma, to take Mr. McClendon's deposition. CELLC believes Plaintiffs counsel will honor this agreement as to the location of the deposition. If the Court orders Mr. McClendon's deposition to go forward, CELLC will provide dates for the deposition to take place in October or November 2010 in Oklahoma City, Oklahoma, at Chesapeake's headquarters. This Motion is being filed by the third business day after service of Plaintiffs Deposition Notice. Therefore, the deposition of Mr. McClendon is hereby stayed until this Motion can be heard. III. PRAYER CELLC respectfully requests that the Court (i) grant this Motion; (ii) quash the deposition of Mr. McClendon; (iii) order that no deposition notices of Mr. McClendon be 14 In re Alcatel,II S.W.3d at 176; Crown Cent., 904 S.W.2d at 128. CELLC'S MOTION FOR PROTECTIVE ORDER AND TO QUASH THEDEPOSITION OF AUBREY McCLENDON 1160349_1 Page 6 of8 • • served without prior leave of the Court; and (iv) grant CELLC all other relief to which it is justly entitled at law or in equity. Respectfully submitted, BartA. Rue State Bar No. 17380500 LenA. Wade State BarNo. 2063 7070 Clark H. Rucker State Bar No. 24066011 KELLY HART & HALLMAN LLP 201 Main Street, Suite 2500 Fort Worth, Texas 76102 Telephone: (817) 332-2500 Facsimile: (817) 878-9280 ATTORNEYS FOR DEFENDANTS CHESAPEAKE EXPLORATION, L.L.C. AND PFM, L.L.C. CERTIFICATE OF CONFERENCE I conferred with Kip Petroff, opposing counsel, on August 17, 2010, about the deposition of Aubrey McClendon and Chesapeake's intent to file this motion to quash such deposition. No agreement could be reached, and Plaintiff is opposed to the relief requested in this motion. BartA. Rue CELLC'S MOTION FOR PROTECfiVE ORDER AND TO QUASH TIIEDEPOSITION OF AUBREY McCLENDON 1160349_1 Page 7 of8 • • CERTIFICATE OF SERVICE I hereby certify that on this 25th day of August, 2010, a true and correct copy of the foregoing document has been delivered via certified mail, return receipt requested, to the following counsel of record: Dean A. Riddle Kip Petroff Christopher A. Payne Carlos A. Fernandez Caroline A. McClimon Petroff& Associates Riddle & Williams, P.C. 3838 Oak Lawn Avenue 3710 Rawlins Street Suite 1124 Suite 1400 -Regency Plaza Dallas, Texas 75219 Dallas, Texas 75219 Randal Mathis Mark Donheiser Mathis & Donheiser, P.C. 2575 Trammell Crow Center 200 1 Ross Avenue Dallas, Texas 75201 BartA. Rue CELLC'S MOTION FOR PROTECTIVE ORDER AND TO QUASH THEDEPOSITION OF AUBREY McCLENDON 1160349_1 Page 8 of8 • PETROFF & AsSOCIATES • ArroRNm AT LAw 3838 OAX LAWN AVEN\JE sum 1124 DALLAS, TEXAS 75219 TELf.PHONE: 214-526-5300 • FAX: 214-526-5354 PARTNERS WWW,PEfROFFASSOOATES.