Defraying Document Production Costs

Sometimes the litigation costs you most need to defray are not your attorney fees. This can easily be the case when you are not an actual party to the litigation, but merely the hapless recipient of a subpoena served by one or more of the direct participates. Document subpoenas can be hugely complicated, spanning years of business records and requiring careful review for privileged and confidential information. The wrong third party subpoena, in the wrong case, could be as disruptive to your business as actually being sued.

In federal court, three avenues for potential relief from third party document subpoenas are: 1) objecting to the subpoena (Rule 45(C)(2)(B)); 2) moving to quash or modify pursuant (Rule 45(c)(3)); or 3) moving for a protective order ( Rule 26(c)). The second and third avenues often turn on claims of "undue burden" and involve similar analyses. For present purposes we will limit our discussion to motions for a protective order.

Rule 26(c)(1) provides that "[a] party or any person from whom discovery is sought may move for a protective order in the court where the action is pending …. The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." The party seeking the protective order has the burden of convincing the court that compliance with the subpoena will cause a clearly defined and serious injury." See, e.g., Glenmede Trust Co. v. Hutton, 56 F.3d 476, 483 (3d Cir. 1995).

Within the Third Circuit this determination is made by examining the specific circumstances and balancing any conflicts between public and the private interests. Id. While the list of factors the court might consider is not closed, it generally includes the following: “1) whether disclosure will violate any privacy interests; 2) whether the information is being sought for a legitimate purpose or for an improper purpose; 3) whether disclosure of the information will cause a party embarrassment; 4) whether confidentiality is being sought over information important to public health and safety; 5) whether the sharing of information among litigants will promote fairness and efficiency; 6) whether a party benefiting from the order of confidentiality is a public entity or official; and 7) whether the case involves issues important to the public. Id.

The court has broad discretion to fashion a protective order that it feels will balance the competing interests and produce a just result. See, Rodgers v. United States Steel Corp., 536 F.2d 1001, 1006 n. 12 (3d Cir. 1976); Pearson v. Miller, 211 F.3d 57, 73 (3d Cir. 2000).

Given the above, where a third party is faced with a subpoena that appears to have been served for what a court would deem to be a legitimate purpose, and where it cannot argue that the subpoena is seeking information that is privileged or so sensitive that it cannot be adequately guarded through a properly crafted protective order, it will probably have to comply with the subpoena. However, complying with the subpoena does not necessarily mean paying the cost of complying with the subpoena.

Although a nonparty responding to a subpoena is typically required to pay its own costs of production, Rule 45(c)(1) expressly requires the courts and parties to avoid "imposing undue burden or expense" on the nonparty. To do this, courts may require the discovering party to inspect and copy the subpoenaed information at the third party's offices, in a manner that is convenient to the third party and limits its costs. See 45 Moore's Federal Practice § 45.03. In the alternative, courts may simply shift the cost of complying with the subpoena to the discovering party. 

A good example of the latter remedy is found Miller v. Allstate Fire & Cas. Ins. Co., 73 Fed. R. Serv. 3d (Callaghan) 394 (W.D. Pa. Mar. 17, 2009). Interestingly, while the Miller court ordered the discovering party to pick up “all” the third party’s costs associated with the subpoena, it excluded attorney fees from that order. Arguably the court did not want to invite the third party to use the production process as a vehicle for recovering the costs associated with the motion for a protective order, which cost would not normally be shifted absent some other grounds for recovering attorney fees.

The information contained in this blog is not legal advice and should not be relied on as such. For legal advice or for answers to specific questions, please contact the blog's author.