They are also defendants and potentially crucial witnesses in a billion-dollar shareholder class action accusing the company and top executives of concealing user privacy vulnerabilities, including in the Google+ social network, in securities filings in 2018. The 9th U.S. Circuit Court of Appeals ruled in 2021 that the securities fraud case could move forward, concluding that shareholders had raised a “strong inference” that then-CEO Page and his successor Pichai were aware of glitches that might compromise users’ privacy but concealed those concerns from investors.
Obviously, evidence from Page and Pichai could be of enormous consequence for shareholders, who, after all, have to prove that the execs and the company intended to deceive investors.
But are plaintiffs’ lawyers from Robbins Geller Rudman & Dowd entitled to conduct wide-ranging, hours-long depositions of them? Or does their high rank within Alphabet mean that Page and Pichai aren’t subject to the same discovery rules as everyone else?
As you’ve probably guessed, I’m talking about the so-called apex doctrine, a body of law that has developed to prevent plaintiffs from using the discovery process to harass busy corporate executives. To use an example borrowed from U.S. Magistrate Judge Timothy Hixson of San Francisco, in a 2021 order requiring Apple CEO Tim Cook to sit for seven hours of testimony in antitrust litigation against the company, the doctrine is supposed to shield CEOs from being forced to testify in “a lawsuit by someone who slipped on a banana peel in the produce aisle at Safeway.”
The doctrine has never been successfully invoked in a shareholder class action in federal court, according to shareholder lawyers from Robbins Geller Rudman & Dowd in the Alphabet case.
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They’re trying to make sure that Page and Pichai don’t break new ground in the Alphabet case. To be clear, Alphabet defense lawyers from Swanson & McNamara; Wilson Sonsini Goodrich & Rosati; and Freshfields Bruckhaus Deringer are not asking for Page and Pichai to be entirely exempt from providing deposition testimony to shareholders.
They argue instead that the executives’ depositions ought to be delayed until plaintiffs lawyers have exhausted every alternative, including depositions of less lofty Alphabet witnesses. And even if shareholders can still demonstrate a need to depose Page and Pichai, defense lawyers said in a letter brief in April, the execs’ depositions must be limited in scope and length. (I queried Alphabet’s lawyers from all three defense firms about their apex doctrine arguments but none responded to my email.)
Robbins Geller countered that the Private Securities Litigation Reform Act already protects corporate executives from unwarranted depositions by prohibiting shareholders from demanding any discovery until they’ve survived defense dismissal motions.
They’ve jumped that hurdle in the Alphabet case, Robbins Geller said, by adequately alleging a cover-up that “was orchestrated, approved, and executed at the highest levels of Google and Alphabet.” The entire case, in other words, “is about the intent and acts of apex-level individuals,” the shareholder firm argued.
At a hearing last week before U.S Magistrate Judge Donna Ryu of Oakland, California, plaintiffs’ lawyer Jason Forge of Robbins Geller said Alphabet’s proposal to shield Page, Pichai and Alphabet CFO Ruth Porat would create a “a caste litigation system where someone, just by virtue of their title, can say … I am not subject to the same discovery inconveniences that other, less important people are.”
Page, who stepped down as CEO in 2019, is not even employed full-time at the company anymore, Forge said. To argue that he is still too busy to sit for a seven-hour deposition, is “almost like we’re talking about a monarchy,” Forge said. “He was a very important person before. He’s always a very important person, and he’s more important than everybody else.”
Forge told Ryu that the apex doctrine — which is not found in the Federal Rules of Civil Procedure but is a judge-made corollary to the rules’ restrictions on disproportionate discovery – requires defendants to prove that plaintiffs’ deposition demands are unwarranted.
But Ryu said apex protection is more expansive. Once defendants have shown that prospective witnesses are apex executives, the judge said, “then there’s some fact-building that the plaintiff has to come with” to establish that the apex executive has unique knowledge.
In an order following the hearing, Ryu did not definitely rule on the scope of testimony that Page and Pichai must provide. She held that shareholders are entitled to take testimony about their state of mind. But she also ordered both sides to confer again on restricting the length and scope of the depositions – and warned plaintiffs’ lawyers that they’ll only have one shot at Page and Pichai if they choose to depose them now instead of waiting to take testimony from non-apex witnesses first.
The judge also ruled that shareholders can depose CFO Porat for three hours but said they had not yet established a right to question her about an allegedly deceptive Sarbanes-Oxley certification that was signed only by her and Larry Page.
Forge said in a phone interview that he will ask U.S. District Judge Jeffrey White to reverse Ryu’s holding that shareholders must clear deposition topics and time limits with defense lawyers. “That is a fundamental problem,” he said. “Judge Ryu carved out special rules for this class of defendants that do not apply to anyone else.”
I told you last June about the Georgia Supreme Court’s refusal to adopt special rules to shield high-ranking executives from abusive discovery demands. The Georgia court said those executives are no more laden with responsibility than every other worker whose colleagues depend on their efforts – or, for that matter, than parents juggling jobs and childcare. Forge made a similar pitch at last week’s hearing before Ryu, to little avail.
It appears, at least for now, that if you’re a top-level executive at a big company, even in a case that centers on your conduct and names you as a defendant, you get to pull rank in federal court.
