(Various) in re Appraisal v. Anschutz Corp , 2020 COA 67 ( 2020 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
April 9, 2020
2020COA67
No. 19CA1671, (Various) in re Appraisal v. Anschutz Corp —
Corporations — Mergers and Sales — Dissenters’ Rights; Courts
and Court Procedures — Uniform Interstate Deposition and
Discovery Act — Issuance of Subpoena; Civil Procedure —
Discovery Scope and Limits
This opinion addresses, for the first time in a published
opinion in Colorado, whether the intent and motives of a controlling
stockholder are relevant in an appraisal proceeding, where
Delaware Code Annotated title 8, section 262(h) (West 2019),
requires a Delaware court to determine the reliability of and weight
to give to the “deal price” in fixing the “fair value” of shares.
Additionally, this opinion considers, for the first time in a
published opinion in Colorado, whether the Colorado Rules of Civil
Procedure allow us the incorporate the so called “apex doctrine”
into Colorado law, thus shifting the traditional burden of
persuasion under C.R.C.P. 26(c) to the party seeking a deposition.
COLORADO COURT OF APPEALS 2020COA67
Court of Appeals No. 19CA1671
City and County of Denver District Court No. 19CV287
Honorable Christopher J. Baumann, Judge
BlueMountain Credit Alternatives Master Fund L.P., BlueMountain Foinaven
Master Fund L.P., BlueMountain Fursan Fund L.P., BlueMountain Guadalupe
Peak Fund L.P., BlueMountain Kicking Horse Fund L.P., BlueMountain Logan
Opportunities Master Fund L.P., BlueMountain Montenver Master Fund SCA
SICA V-SIF, BlueMountain Summit Trading L.P., GKC Strategic Value Master
Fund LP, and GKC SV SMA I, LLC: In re Appraisal of Regal Entertainment
Group,
Petitioners-Appellants,
v.
Regal Entertainment Group, Anschutz Corporation, and Philip F. Anschutz,
Respondents-Appellees.
ORDER REVERSED AND CASE
REMANDED WITH DIRECTIONS
Division A
Opinion by CHIEF JUDGE BERNARD
Martinez* and Davidson*, JJ., concur
Announced April 9, 2020
Ireland Stapleton Pryor & Pascoe, P.C., Mark E. Lacis, Lidiana Rios, Denver,
Colorado, for Petitioners-Appellants
Hogan Lovells US, LLP, Jessica Black Livingston, Denver, Colorado, for
Respondents-Appellees
*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
¶1 The petitioners in this case are BlueMountain Credit
Alternatives Master Fund L.P., BlueMountain Foinaven Master
Fund L.P., BlueMountain Fursan Fund L.P., BlueMountain
Guadalupe Peak Fund L.P., BlueMountain Kicking Horse Fund L.P.,
BlueMountain Logan Opportunities Master Fund L.P.,
BlueMountain Montenver Master Fund SCA SICA V-SIF,
BlueMountain Summit Trading L.P., GKC Strategic Value Master
Fund LP, and GKC SV SMA I, LLC. We shall call them the “minority
stockholders.”
¶2 The minority stockholders asked the trial court to compel
Philip F. Anschutz, who is the founder and chief executive officer of
the Anschutz Corporation, to comply with a deposition subpoena.
(The Anschutz Corporation is also a party to this appeal.) The court
denied their motion. The minority stockholders appealed. We
reverse the trial court’s order and remand the case to the district
court for further proceedings consistent with this opinion.
I. Background
¶3 Regal Entertainment Group, which, among other things, owns
and manages movie theaters throughout the United States, is a
Delaware corporation. The Anschutz Corporation was Regal’s
1
controlling stockholder. The minority stockholders were
noncontrolling, minority stockholders of Regal.
¶4 In February 2018, a British company called Cineworld Group
plc acquired Regal in a transaction that we shall call “the merger.”
The minority stockholders, contending that they did not receive fair
value for their shares in Regal, dissented from the merger and
sought appraisal of their shares in a statutory proceeding in the
Delaware Court of Chancery.
¶5 To obtain information for the appraisal proceeding, the
minority stockholders served a deposition subpoena on Mr.
Anschutz. In doing so, they relied on section 13-90.5-103, C.R.S.
2019, of the Uniform Interstate Depositions and Discovery Act, or
the UIDDA.
¶6 Mr. Anschutz did not comply with the subpoena. So the
minority stockholders filed a motion asking the trial court to order
him to comply with it. They contended that, as the chief executive
of the Anschutz Corporation, Mr. Anschutz was Regal’s controlling
stockholder and, as a result, discovering why Mr. Anschutz sold his
share of Regal was critical and relevant to the appraisal
proceedings. More specifically, they informed the court that they
2
wanted to ask Mr. Anschutz about his motives and personal
considerations for agreeing to the merger.
¶7 The trial court denied the motion, concluding that the
questions the minority stockholders wanted to ask Mr. Anschutz in
a deposition were not “relevant and necessary” to the Delaware
appraisal case.
II. Enforcement of the Deposition Subpoena
A. Standard of Review
¶8 We review a court’s decision to deny a motion to compel
compliance with a subpoena for an abuse of discretion. Gateway
Logistics, Inc. v. Smay, 2013 CO 25, ¶ 13. A court abuses its
discretion if its decision is manifestly unreasonable, arbitrary, or
unfair, or if it misapplies the law. Ferraro v. Frias Drywall, LLC,
2019 COA 123, ¶ 10.
¶9 We will review de novo a trial court’s (1) decisions regarding
choice of law, Mountain States Adjustment v. Cooke, 2016 COA 80,
¶ 13; and (2) interpretation of pertinent statutes, In re Marriage of
Ciesluk, 113 P.3d 135, 141 (Colo. 2005).
3
B. Choice of Law
¶ 10 The UIDDA allows a party to “submit a foreign subpoena to
the district court for the county in which discovery is sought to be
conducted in [Colorado].” § 13-90.5-103(1). An application to the
district court to enforce a subpoena issued under section 13-90.5-
103 must comply with the rules or statutes of Colorado. § 13-90.5-
106, C.R.S. 2019. More specifically, the procedural and evidentiary
laws of Colorado govern this analysis. See § 13-90.5-106 cmt.
(“Evidentiary issues that may arise, such as objections based on
grounds such as relevance or privilege, are best decided in the
discovery state under the laws of the discovery state (including its
conflict of laws principles).”).
¶ 11 But, if Colorado law governs the process that must apply,
what law governs the substantive legal issues that a court may have
to decide? Colorado has adopted the general rule, as set forth in
the restatement (Second) of Conflicts of Law, that the law of the
state with the most “significant relationship” with the occurrence
and the parties governs. AE, Inc. v. Goodyear Tire & Rubber Co.,
168 P.3d 507, 509 (Colo. 2007). Once the state having the most
significant relationship is identified, the law of that state is then
4
applied to resolve the issue. Wood Bros. Homes, Inc. v. Walker
Adjustment Bureau, 198 Colo. 444, 447-48, 601 P.2d 1369, 1372
(1979). “[T]he courts of a state, in cases where the laws of another
state are involved, may and should take notice of the decisions of
the highest courts in the latter jurisdiction upon the law so
involved.” Sullivan v. German Nat’l Bank, 18 Colo. App. 99, 104, 70
P. 162, 164 (1902).
¶ 12 Because Regal was incorporated in Delaware, and the minority
stockholders seek the enforcement of a subpoena for purposes of
obtaining Mr. Anschutz’s testimony in connection with the
appraisal proceedings in a Delaware court, we conclude that we
should apply Delaware law to resolve substantive legal matters. See
Great W. Producers Co-operative v. Great W. Unite Corp., 200 Colo.
180, 182 n.2, 613 P.2d 873, 875 n.2 (1980)(holding that the
substantive law of Delaware applied because defendant corporation
was incorporated under the laws of Delaware).
C. Relevance of Discovery
¶ 13 The Colorado Rules of Civil Procedure govern the scope of
permissible discovery in civil cases. C.R.C.P. 26(b)(1) states that
“parties may obtain discovery regarding any matter, not privileged,
5
that is relevant to the claim or defense of any party and
proportional to the needs of the case . . . . Information within the
scope of discovery need not be admissible in evidence to be
discoverable.”
¶ 14 The concept of relevance for discovery purposes is different
than the concept of relevance of evidence at trial. DA Mountain
Rentals, LLC v. The Lodge at Lionshead Phase III Condo. Ass’n, 2016
COA 141, ¶ 57. “[D]iscovery rules should be construed liberally to
effectuate the full extent of their truth-seeking purpose” and “[i]n
close cases, the balance must be struck in favor of allowing
discovery.” Antero Res. Corp. v. Strudley, 2015 CO 26, ¶ 32
(quoting Direct Sales Tire Co. v. Dist. Court, 686 P.2d 1316, 1321
(Colo. 1984)).
D. Delaware Appraisal Proceedings
¶ 15 Under Delaware law, the statutory appraisal proceeding was
created as a remedy for minority stockholders who view the sale
price of a corporation as inadequate to seek “an independent
judicial determination of the fair value of their shares.” Dell, Inc. v.
Magnetar Glob. Event Driven Master Fund Ltd, 177 A.3d 1, 19 (Del.
2017) (citation omitted). There is one issue in such an appraisal
6
trial: “the value of the dissenting stockholder’s stock.” Id. (citation
omitted).
¶ 16 The Delaware Court of Chancery’s task is to “determine the
fair value of the shares.” Del. Code Ann. tit. 8, § 262(h) (West
2019). To do so, the court “shall take into account all relevant
factors.” Id. The examination requires consideration of “all factors
and elements which reasonably might enter into the fixing of value.”
Tri-Cont’l Corp. v. Battye, 74 A.2d 71, 72 (Del. 1950).
1. Factors in Determining Fair Value
¶ 17 Factors which a Delaware court must consider in determining
fair value include market value, asset value, dividends, earning
prospects, the nature of the enterprise, and any other facts that
were known or that could be ascertained as of the date of merger
and that throw any light on the future prospects of the merged
corporation. Id. (holding that these factors are not only pertinent to
an inquiry as to the value of the dissenting stockholders’ interest
but must be considered by the agency fixing the value).
Additionally, “the deal price as a market indicator of fair value in
appraisal cases conforms to [the Delaware court’s] use of
market-tested prices.” Verition Partners Master Fund Ltd. v. Aruba
7
Networks, Inc., 210 A.3d 128, 135 n.41 (Del. 2019); see also Dell,
177 A.3d at 19 (holding that relevant factors in determining fair
value include the deal price).
¶ 18 The court may not adopt an “either-or” approach at the outset,
thereby relying exclusively on selected factors or accepting
uncritically the valuation of one party. See In re Appraisal of
Metromedia Int’l Grp., Inc., 971 A.2d 893, 899-900 (Del. Ch. 2009),
reargument granted, 2009 WL 1299116 (Del. Ch. 2009). It is the
court’s duty to determine the core issue of fair value on the
appraisal date. Id.; see also Gonsalves v. Straight Arrow
Publishers, Inc., 701 A.2d 357, 361 (Del. 1997)(noting the court’s
responsibility to “independently determine the value of the shares
that are the subject of the appraisal action”). After an analysis of
all relevant factors, the court may then determine “that a single
valuation metric is the most reliable evidence of fair value and that
giving weight to another factor will do nothing but distort that best
estimate.” DFC Glob. Corp. v. Muirfield Value Partners, L.P., 172
A.3d 346, 388 (Del. 2017).
8
2. Reliability and Weight of the “Deal Price”
¶ 19 As the minority stockholders correctly note, Delaware courts
must consider all relevant factors, including the deal price, to
decide whether a corporate sale was for fair value. See Aruba
Networks, 210 A.3d at 135 n.41; Dell, 177 A.3d at 19. After an
analysis of all relevant factors, the court may then determine the
reliability of, and weight to attribute to, each factor, including the
reliability and weight to be given to the deal price. See DFC Glob.,
172 A.3d at 388.
¶ 20 In recent appraisal decisions that have examined the reliability
of a sale process, the Delaware Supreme Court has cited certain
“objective indicia” suggesting that “the deal price was a fair price.”
Dell, 177 A.3d at 28; accord DFC Glob., 172 A.3d at 376. But the
presence of objective indicia does not establish a presumption in
favor of the deal price, and the Delaware Supreme Court has
rejected requests for the adoption of a presumption that the deal
price reflects fair value if certain preconditions are met. Dell, 177
A.3d at 21. Rather, the indicia are merely a starting point for the
analysis of whether the deal price was fair. But “[t]he fact that a
transaction price was forged in the crucible of objective market
9
reality . . . is viewed as strong evidence that the price is fair.” Van
de Walle v. Unimation, Inc., No. Civ. A. 7046, 1991 WL 29303, at *17
(Del. Ch. Mar. 7, 1991)(unpublished opinion).
¶ 21 When deciding what weight to give a deal price and whether it
was reliable, see DFC Glob., 172 A.3d at 388, Delaware courts have
considered
 whether a merger was an arm’s-length transaction with a
third party, see id. at 349 (citing the fact that “the company
was purchased by a third party in an arm’s length sale” as a
factor supporting fairness of the deal price);
 the absence of explicit or implicit collusion, whether among
bidders or between the seller and a particular bidder, see
M.P.M. Enters., Inc. v. Gilbert, 731 A.2d 790, 797 (Del.
1999)(“A merger price resulting from arms-length
negotiations where there are no claims of collusion is a very
strong indication of fair value.”);
 the possibility that management will favor a particular
bidder for self-interested reasons, which is a common risk
in corporate sale processes, see Huff Fund Inv. P’ship v.
CKx, Inc., No. CV 6844-VCG, 2013 WL 5878807, at *13
10
(Del. Ch. Nov. 1, 2013)(unpublished opinion)(giving
exclusive weight to a sales process where “[t]he record and
the trial testimony support a conclusion that the process by
which [the company] was marketed to potential buyers was
thorough, effective, and free from any spectre of self-interest
or disloyalty”), aff’d, No. 348,2014, 2015 WL 631586 (Del.
2015)(unpublished table decision);
 whether the transaction involves a controlling stockholder,
see Dell, 177 A.3d at 25, 30 (holding that a “market is more
likely efficient . . . if it has many stockholders [and] no
controlling stockholder” and that “this was not a buyout led
by a controlling stockholder” as a factor supporting fairness
of the deal price);
 the existence of meaningful competition among multiple
bidders during the pre-signing phase, see Aruba Networks,
210 A.3d at 136 (holding that where there was an open
chance for buyers to bid, the level of competition was
enough to support the reliability of the deal price); and
 whether there were improper motives behind the negotiation
of the transaction, see Cinerama, Inc. v. Technicolor, Inc.,
11
663 A.2d 1156, 1172 (Del. 1995)(affirming the lower court’s
finding that the evidence did not support an “improper
motive” on the part of the board in negotiating a good
transaction for the stockholders); In re Dollar Thrifty
S’holder Litig., 14 A.3d 573, 577 (Del. Ch. 2010)(crediting
the record that showed the board “had no conflict of interest
that gave them a motive to do other than the right thing” in
their approach to value maximization).
¶ 22 In considering these factors in the determination of the
reliability of the deal price, it is worth noting that Delaware law
presumes that investors act to maximize the value of their own
investments. Unitrin, Inc. v. Am. Gen. Corp., 651 A.2d 1361, 1380-
81 (Del. 1995). “When a large stockholder supports a sales process
and receives the same per-share consideration as every other
stockholder, that is ordinarily evidence of fairness, not of the
opposite . . . .” Iroquois Master Fund Ltd. v. Answers Corp., 105
A.3d 989, 2014 WL 7010777, at *1 n.1 (Del. 2014) (unpublished
table decision).
¶ 23 However, Delaware law also recognizes that, in some
scenarios, circumstances may cause the interests of investors who
12
hold common stock to diverge. For example, desire for liquidity has
been recognized as a benefit that “may lead directors to breach their
fiduciary duties” and stockholder directors may be found to have
breached their duty of loyalty if a “desire to gain liquidity . . .
caused them to manipulate the sales process” and subordinate the
best interests of the corporation and the stockholders as a whole.
In re Answers Corp. S’holder Litig., No. Civ. A. 6170-VCN, 2012 WL
1253072, at *7 (Del. Ch. 2012)(unpublished opinion)(quoting N.J.
Carpenters Pension Fund v. Infogroup, Inc., No. Civ. A. 5334-VCN,
2011 WL 4825888, at *9 (Del. Ch. Sept. 30, 2011)(denying a motion
to dismiss where the plaintiff alleged that the director, who was also
a large stockholder, sacrificed value in a sale because he needed
liquidity to satisfy personal debts and fund a new venture)).
Additionally, “certain institutional investors may be happy to take a
sizeable merger-generated gain on a stock for quarterly reporting
purposes, or to offset other losses, even if that gain is not
representative of what the company should have yielded in a
genuinely competitive sales process.” Glob. GT LP v. Golden
Telecom, Inc., 993 A.2d 497, 509 (Del. Ch.), aff’d, 11 A.3d 214 (Del.
2010).
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E. Analysis
¶ 24 C.R.C.P. 26(b)(1) states that “parties may obtain discovery
regarding any matter, not privileged, that is relevant to the claim or
defense of any party and proportional to the needs of the case . . . .
Information within the scope of discovery need not be admissible in
evidence to be discoverable.”
¶ 25 The scope of our evaluation is limited to whether the evidence
sought by the minority stockholders is relevant to their claim, and
would allow the Delaware court to evaluate the reliability of the deal
price. See C.R.C.P 26(b)(1). Given Colorado’s liberal stance on
discovery, and that Mr. Anschutz’s motive, intent, and personal
considerations for divesting his Regal shares would allow a
Delaware court to evaluate the reliability of, and weight to attribute
to, the deal price, we hold, for the following reasons, that Mr.
Anschutz’s testimony is relevant and discoverable. See id.
¶ 26 The minority stockholders allege that the deal price in this
case is an unreliable indicator of fair value and that the Delaware
court should not give it weight in the appraisal case. They state
this is so because Mr. Anschutz may have accepted “less than fair
value in order to accomplish other objectives.” They contend that, if
14
evidence showed that he was willing to take less money for his
Regal shares “so that he could obtain a sale transaction that would
accomplish personal liquidity, tax, estate planning or other
objectives,” then a Delaware court might conclude that the deal
price is not a reliable indicator of fair value.
¶ 27 As noted above, when evaluating the reliability of the deal
price, Delaware courts have considered whether the merger was an
arm’s-length transaction, whether there was collusion, whether the
transaction involved a controlling stockholder, and whether there
was improper motive in the negotiation of the transaction. See DFC
Glob., 172 A.3d at 349; Dell, 177 A.3d at 25, 30; M.P.M. Enters.,
731 A.2d at 797; Cinerama, 663 A.2d at 1172. Mr. Anschutz’s
testimony could shed light on whether he had any improper motive
in negotiating a fair transaction on the minority stockholders’
behalf, whether he had a conflict of interest in his approach to
value maximization on their behalf, or whether the merger was an
arm’s-length transaction. See Cinerama, 663 A.2d at 1172 (holding
that the evidence did not support an “improper motive” in the
negotiation of a good transaction for the stockholders); Dollar
Thrifty, 14 A.3d at 577 (holding that the evidence showed that the
15
board did not have a conflict of interest that gave them a motive to
avoid achieving value maximization for the stockholders). The
testimony that the minority stockholders seek could persuade a
Delaware court to give less weight to the deal price and more weight
to other factors in the determination of the fair value of the Regal
shares. In other words, the minority stockholders have
demonstrated that Mr. Anschutz has knowledge of facts that are
relevant to the resolution of this case.
III. Apex Doctrine
¶ 28 Mr. Anschutz contends that, even if his testimony is relevant
to the appraisal proceedings, we should affirm the trial court’s order
because the minority stockholders’ “subpoena violated the apex
doctrine.” At its most general, the apex doctrine shields high-level
corporate officers from depositions. Zimmerman v. Al Jazeera Am.,
LLC, 329 F.R.D. 1, 6 (D.D.C. 2018). The doctrine is rooted in Fed.
R. Civ. P. 26(c)(1), which provides that a court may, upon motion of
a party or person from whom discovery is sought and “for good
cause, issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.” We
disagree with Mr. Anschutz’s contention.
16
A. Standard of Review, Preservation, and General Legal Principles
¶ 29 Although the trial court did not rule on the applicability of the
apex doctrine, the issue was properly preserved for appellate review
because Mr. Anschutz raised its applicability in pleadings that he
had filed. The court therefore had an opportunity to rule on it.
Grant Bros. Ranch, LLC v. Antero Res. Piceance Corp., 2016 COA
178, ¶ 11 (“All that is needed to preserve an issue for appeal is for
the issue to be brought to the district court's attention so that the
court has an opportunity to rule on it.”).
¶ 30 When interpreting the Colorado Rules, we rely on various
interpretive aids, including the Federal Rules and federal precedent
interpreting Federal Rules. Garcia v. Schneider Energy Servs., Inc.,
2012 CO 62, ¶ 7; see also Garrigan v. Bowen, 243 P.3d 231, 235
(Colo. 2010)(“Because the Colorado Rules of Civil Procedure are
patterned on the federal rules, we may also look to the federal rules
and decisions for guidance.”).
¶ 31 Colorado has an analogous rule to Fed. R. Civ. P. 26(c)(1).
Like the federal rule, the Colorado rule permits a trial court to issue
a protective order upon a showing of good cause. See C.R.C.P.
26(c)(“[F]or good cause shown, the court may make any order which
17
justice requires to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.”). But
the parties have not cited, and we have not found, any published
Colorado appellate case that has generally applied the apex
doctrine, or, more specifically, decided whether a trial court may
anchor a finding of good cause to issue a protective order primarily
on an individual’s status as a “high ranking and important
executive.” So we must now decide whether we should apply
special discovery rules unique to high-ranking executives to this
case. For the reasons we discuss below, we conclude that we
should not do so. Rather, we determine that the existing discovery
rules, including the protective order provisions of C.R.C.P. 26(c),
provide Mr. Anschutz with sufficient protection from any
inappropriate or improper discovery requests.
B. Application of the Apex Doctrine
¶ 32 Some federal courts developed the apex doctrine because they
decided that “depositions of high-level officers severely burdens
those officers and the entities they represent, and that adversaries
might use this severe burden to their unfair advantage.” United
States ex rel. Galmines v. Novartis Pharm. Corp., No. Civ. 06-3213,
18
2015 WL 4973626, at *1 (E.D. Pa. Aug. 20, 2015); see also EchoStar
Satellite, LLC v. Splash Media Partners, L.P., No. 07-cv-02611-PAB-
BNB, 2009 WL 1328226, at *2 (D. Colo. May 11, 2009)(“[H]igh
ranking and important executives ‘can be easily subjected to
unwarranted harassment and abuse’ and ‘have a right to be
protected, and the courts have a duty to recognize [their]
vulnerability.”)(citation omitted).
¶ 33 The doctrine provides that, before a party may depose a
high-level corporate executive, such party must show that (1) the
deponent has unique, first-hand, nonrepetitive knowledge of the
facts at issue in the case; and (2) other, less burdensome avenues
for obtaining the information sought have been exhausted. In re
Google Litig., No. C 08-03172 RMW PSG, 2011 WL 4985279, at *2
(N.D. Cal. Oct. 19, 2011); Liberty Mut. Ins. Co. v. Superior Court, 13
Cal. Rptr. 2d 363, 365 (Cal. Ct. App. 1992); Alberto v. Toyota Motor
Corp., 796 N.W.2d 490, 495 (Mich. Ct. App. 2010).
¶ 34 An essential component of the doctrine is that the burden of
proof is shifted to the party seeking the corporate executive’s
deposition. See, e.g., Sun Capital Partners, Inc. v. Twin City Fire Ins.
Co., 310 F.R.D. 523, 527 (S.D. Fla. 2015)(“The party seeking the
19
deposition of the high-ranking official has the burden to show that
the deposition is necessary.”); Tierra Blanca Ranch High Country
Youth Program v. Gonzales, 329 F.R.D. 694, 699 (D.N.M.
2019)(quashing subpoenas where the plaintiffs did not show that
the executive possessed “‘unique personal knowledge’ of facts
relevant to any material issue”). “The ‘apex’ doctrine exists in
tension with the otherwise broad allowance for discovery of party
witnesses under the federal rules.” Apple Inc. v. Samsung Elec. Co.,
Ltd, 282 F.R.D. 259, 263 (N.D. Cal. 2012).
¶ 35 But the apex doctrine does not rule the roost in all federal
courts. Some of them have rejected the doctrine altogether, while
others have tried to harmonize the doctrine’s principles with Fed. R.
Civ. P. 26. See, e.g., Novartis Pharm., 2015 WL 4973626, at *2
(holding that “[t]he apex doctrine does not represent an exception to
the rule that a party seeking to quash a subpoena bears the ‘heavy
burden’ of demonstrating that the subpoena represents an undue
burden,” but, rather, the doctrine should be used as a tool for
guiding the court's analysis in determining whether to limit
discovery); Scott v. Chipotle Mexican Grill, Inc., 306 F.R.D. 120, 122
(S.D.N.Y. 2015)(stating that, even in apex doctrine scenarios, the
20
plaintiff bears no burden to show that the deponent has special
knowledge); Van Den Eng v. Coleman Co., No. 05-MC-109-WEB-
DWB, 2005 WL 3776352, at *2 (D. Kan. Oct. 21, 2005)(holding that
high-level executives “are treated under the same standards as any
other protective order, while taking into consideration special
factors that may apply to such officials”).
¶ 36 And, in federal courts that have adopted some version of the
doctrine, the courts are split on which party bears the ultimate
burden of persuasion when a high-level executive invokes the apex
doctrine. Tierra Blanca, 329 F.R.D. at 697. As a result, a hybrid,
burden-shifting version of the doctrine has developed, requiring an
initial showing of unique personal knowledge by the party seeking
discovery, but then placing “the ultimate burden of persuasion” on
the executive to demonstrate that he or she in fact has no unique
personal knowledge. Naylor Farms, Inc. v. Anadarko OGC Co., No.
11-CV-01528-REB-KLM, 2011 WL 2535067, at *2 (D. Colo. June
27, 2011)(citing EchoStar, 2009 WL 1328226, at *2).
¶ 37 Our decision is informed by a trend. As we have just
observed, federal courts do not uniformly follow the apex doctrine.
And a growing number of state courts, including those whose rules
21
of civil procedure, like ours, are modeled on the federal rules, have
rejected it. See Netscout Sys., Inc. v. Gartner, Inc., No. (FS1)
TCV146022988S, 2016 WL 5339454, at *6 (Conn. Super. Ct. Aug.
22, 2016)(unpublished opinion)(holding that the apex doctrine was
incompatible with Connecticut law to the extent that it shifted the
burden of showing good cause); Citigroup Inc. v. Holtsberg, 915 So.
2d 1265, 1269 (Fla. Dist. Ct. App. 2005)(declining to apply the apex
doctrine where Florida’s discovery rules did not contain a
requirement that the party seeking deposition must first show that
the high-level executive has unique or superior knowledge); State ex
rel. Ford Motor Co. v. Messina, 71 S.W.3d 602, 607 (Mo.
2002)(declining to adopt the apex doctrine and holding that the
deposition of high-level executives should proceed in accordance
with the Missouri rules governing discovery); Thomson v. Zillow,
Inc., 32 N.Y.S.3d 455, 459 (N.Y. Sup. Ct. 2016)(declining to extend
discovery rules for executives where respondents had shown that
they seek information which was material and necessary to their
defense); Bradshaw v. Maiden, No. 14 CVS 14445, 2017 WL
1238823, at *5 (N.C. Super. Ct. Mar. 31, 2017)(unpublished
opinion)(declining to apply the apex doctrine, and restricting the
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deposition of an executive under the North Carolina Rules of Civil
Procedure); Crest Infiniti, II, LP v. Swinton, 174 P.3d 996, 1004
(Okla. 2007)(declining to adopt the apex doctrine where it shifted
the burden to the party seeking discovery, because, in Oklahoma,
“the burden of showing ‘good cause’ is statutorily placed on the
party objecting to discovery”). This trend signals to us that the apex
doctrine’s influence has reached its zenith and has begun to
decline.
¶ 38 In addition to the doctrine’s waning influence, which
undercuts Mr. Anschutz’s request to apply it to this case, we
conclude that it is inconsistent with Colorado law.
¶ 39 As we explained, the doctrine presumes that “apex” executives
should not be deposed unless the party requesting the deposition
can establish reasons why the doctrine should not bar the
deposition. But, much like the cases in our sister states that we
cited above, Colorado law flips the script because it presumes that
such executives should be deposed unless they can show good
cause why the deposition should not be held. See C.R.C.P. 26(c).
¶ 40 The scope of discovery is broad under the Colorado Rules of
Civil Procedure. Williams v. Dist. Court, 866 P.2d 908, 911 (Colo.
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1993). “[A]ll relevant, non-privileged information should be
discoverable unless it would cause annoyance, embarrassment,
oppression, or undue burden or expense.” Hadley v. Moffat Cty.
Sch. Dist. RE-1, 681 P.2d 938, 945 (Colo. 1984). “Discovery rules
should be accorded a broad and liberal interpretation in order to
effect their purpose of adequately informing the litigants of the facts
giving rise to a claim or defense.” Id. And, as Justice White
recognized in the plurality opinion in Branzburg v. Hayes, 408 U.S.
665, 690 n.29 (1972)(quoting 8 J. Wigmore, Evidence § 2192
(McNaughton rev. 1961)), “everyone is obligated to testify when
properly summoned,” and “derogations” to this “positive general
rule” are “obstacle[s] to the administration of justice.”
¶ 41 None of our civil discovery rules, including C.R.C.P. 26, refer
to the apex doctrine. Mr. Anschutz’s request that we apply it to this
case is therefore, at its core, an invitation that we amend the Rules
of Civil Procedure. And that we cannot do because the supreme
court’s power to adopt and to amend such rules is exclusive. See
Colo. Const. art VI, § 21 (“The supreme court shall . . . make and
promulgate rules governing practice and procedure in civil . . .
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cases.”); Gold Star Sausage Co. v. Kempf, 653 P.2d 397, 400 (Colo.
1982)(same).
¶ 42 But our conclusion does not leave Mr. Anschutz without a
remedy. Our supreme court has recognized that the “broad
discovery permitted by C.R.C.P. 26(b)(1) may lead to discovery
abuses,” Williams, 866 P.2d at 912, including, conceivably, the sort
of abuses that the apex doctrine is designed to prevent. But there
are ways to protect against such abuses. “C.R.C.P. 26(c) allows the
trial court to issue protective orders as justice requires ‘to protect a
party . . . from annoyance, embarrassment, oppression, or undue
burden or expense.’” Id. The party seeking protection from
discovery bears the burden to establish good cause to obtain relief.
See C.R.C.P. 26(c); Williams, 866 P.2d at 912.
¶ 43 So, in this case, if Mr. Anschutz can establish such good
cause, the trial court could issue a protective order. In this regard,
Mr. Anschutz could, for example, ask the trial court to consider “the
possibility of harassment and the potential disruption of business”
that his deposition might cause. Gen. Star Indem. Co. v. Platinum
Indem. Ltd., 210 F.R.D. 80, 83 (S.D.N.Y. 2002).
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¶ 44 In reaching the conclusion that we will not apply the apex
doctrine to this case, we note the following:
 The minority stockholders have alleged that Mr. Anschutz’s
testimony is relevant to the question of whether he was
willing to take less money for his Regal shares “so that he
could obtain a sale transaction that would accomplish
personal liquidity, tax, estate planning or other objectives.”
Indeed, he may be the best possible witness to testify about
his intent.
 Mr. Anschutz does not deny that he had knowledge of the
unique and relevant facts. See Naylor Farms, 2011 WL
2535067, at *4 (holding that a declaration sworn under
penalty of perjury where executive unequivocally disavows
any unique personal knowledge is competent evidence that
may be considered by the court); EchoStar, 2009 WL
1328226, at *3 (holding that executive had satisfied his
burden and was entitled to a protective order precluding his
deposition where he provided an affidavit establishing that
he had “no personal knowledge of the circumstances
surrounding” the agreement in dispute).
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¶ 45 We therefore reverse the trial court order denying the minority
stockholders’ motion to compel Mr. Anschutz to testify at a
deposition. We remand the case to the trial court to grant the
minority stockholders’ motion to compel him to testify at a
deposition unless, after an evidentiary hearing, the court
determines that it should issue a protective order under C.R.C.P.
26(c).
JUSTICE MARTINEZ and JUDGE DAVIDSON concur.
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