Buffett May Be Deposed in Former Berkshire Manager's Lawsuit
Warren Buffett, chief executive officer of Berkshire Hathaway speek during a meeting in Omaha. Photographer: Daniel Acker/Bloomberg
Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc., may be ordered to submit to questioning under oath in a wrongful- dismissal lawsuit.
Brad Mart, a former executive at Berkshire unit Forest River Inc., petitioned for a deposition of Buffett to demonstrate the parent company’s role in his firing, according to a June 17 motion in federal court in South Bend, Indiana. Omaha, Nebraska-based Berkshire, one of the defendants named in Mart’s lawsuit, has said it wasn’t involved in the dismissal. In a July 6 brief, Berkshire asked the court to protect Buffett from questioning.
The request to depose Buffett, the world’s third-richest person, escalates a conflict that already includes Mart’s allegations of fraud and threats of violence at Forest River, the Elkhart, Indiana-based recreational vehicle maker. Mart’s chance of winning a settlement may improve if the judge orders the deposition, said lawyers including Robert F. Parker of Merrillville, Indiana-based Burke Costanza & Cuppy LLP.
“There’s no denying that that can have an effect on how the defense looks at the litigation,” Parker, who isn’t involved in the Berkshire case, said in an interview. “The word might come down, ‘Fight this deposition as hard as you can but if we lose, settle the case.’”
Companies including BP Plc have tried to block efforts to depose executives. John Browne, the former chief executive at BP, fought for 18 months against a court-ordered deposition tied to a 2005 explosion at a refinery in Texas before going under oath. BP tried to protect Browne, arguing that he had no unique knowledge of the blast that killed 15.
Gates’s Deposition
Bill Gates was described by U.S. District Judge Thomas Penfield Jackson as unresponsive after portions of a videotaped deposition by the Microsoft Corp. co-founder were played at a 1998 government antitrust trial.
Buffett isn’t accused of wrongdoing. His deposition would help determine facts of the case, and may lead to his testimony at trial. Buffett didn’t immediately respond to an e-mail request for comment sent to an assistant.
The court may withhold an order for a deposition of Buffett, at least temporarily, and direct Mart to seek discovery through affidavits and interviews with lower-ranking Berkshire employees, lawyers said.
“Before you go straight for the top dog, you gotta lay some foundations,” said Dean Rauchwerger, a Clausen Miller PC lawyer and co-author of “Top-Dog Depositions, the Hurdles to Overcome,” a 2006 report. “It’s a little bit of a wrestling match.”
Mart requested Buffett’s deposition to combat Berkshire’s claim that the firm should be dropped from the lawsuit for lack of jurisdiction.
Indiana Law
Berkshire, the parent company, doesn’t do business in Indiana and shouldn’t be subject to courts in that state, the company said in a June 1 request to dismiss the case. Mart said Berkshire’s control over Forest River submits the firm to Indiana law and Buffett’s statements can help show that.
“In this case, Berkshire Hathaway did direct substantial contacts towards Indiana, including the expectation that Forest River comply with its codes of procedure,” said J. Richard Moore, a partner at Alford, Clausen & McDonald LLC in Mobile, Alabama. “That really is probably the best hook to establish that the Indiana court has personal jurisdiction over Berkshire Hathaway.” Moore isn’t involved in the case.
Berkshire, built by Buffett through four decades of acquisitions, employs more than 200,000 people at businesses that build homes, produce power, sell insurance and haul freight by rail. Buffett picks the CEOs of each of Berkshire’s more than 70 operating units and oversees the firm with a staff of about 20 at the company’s Omaha headquarters.
Forest River
Buffett, 79, bought Forest River in 2005 and left its CEO, Peter Liegl, in charge of the unit. Mart, who helped arrange the $800 million sale to Berkshire, was fired last year after he went to Buffett and accused Liegl of fraud, according to the April complaint.
Liegl required Forest River to buy parts at inflated prices from a company he owned and appropriated cash from factory vending machines, Mart said. Liegl also reneged on a promise to make Mart CEO, according to the complaint. Mart alleged in the suit that Liegl threatened his life.
“There is no legitimate basis to the allegations of the threats or the fraud,” said Jeanine Gozdecki, lead attorney for Liegl and Forest River. “We will vigorously defend these claims on behalf of the company and on behalf of Pete Liegl.” Gozdecki, of Barnes & Thornburg LLP, is seeking a dismissal.
No Berkshire Role
Liegl said in a sworn statement that he runs Forest River independently of Berkshire and the parent company didn’t play a role in his decision to fire Mart. Liegl, who is also a defendant in the case, didn’t mention the allegations of fraud in a statement in support of his motion for a dismissal.
Mart has also asked to depose Berkshire Chief Financial Officer Mark Hamburg and Secretary Forrest Krutter. The company offered Hamburg in exchange for Mart’s renouncing his request for depositions of other executives including Buffett, according to court filings. Mart rejected that offer. Berkshire’s Krutter declined to comment.
Mart’s lawyer, Stephen Kennedy, of Kennedy Clark & Williams PC in Dallas, said it would be inappropriate to comment. Kennedy made the deposition request.
Judge Christopher Nuechterlein scheduled a hearing for July 26 to consider Mart’s requests for discovery.
The case is Mart v. Berkshire Hathaway Inc., 3:10-cv-00118, U.S. District Court, Northern District of Indiana (South Bend).
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net
Rate this Page