#CaseoftheWeekCase Law

#CaseoftheWeek Episode 55: Can a Party Move to Quash a Third Party Subpoena?

Episode 55 is an analysis of Forefront Machining Tech. Inc. v. Sarix. In this episode of #CaseoftheWeek, we discuss whether a party can file a motion to quash on behalf of a third party, and when a third party can avoid a subpoena under FRCP 45.

Good morning and welcome to our #CaseoftheWeek for February 1st, 2022. My name is Kelly Twigger. Thanks for joining me today. I am the principal at ESI Attorneys and the CEO and founder of eDiscovery Assistant, and I’m so happy to be here with you. I’ve got an interesting decision to talk about today.

As you know, if you join us each week, we choose a case from our eDiscovery Assistant database and in partnership with the Association of Certified eDiscovery Specialists (aka ACEDS), we bring to you this broadcast where we talk about the practical implications of that decision and what it means for you, your clients, and your practice. Today’s decision is an interesting one on Rule 45 and whether the party has the ability to bring a motion for a protective order, or a motion to quash, against a third-party subpoena under Rule 45.

Today’s decision is from a case called Forefront Machining Tech., Inc. v. Sarix, and this decision is from United States Magistrate Judge Sharon Ovington out of the Southern District of Ohio from August 16th of 2021. As always, we tag the issues on a particular case for your review to be able to help find information faster in eDiscovery Assistant. The issues for today’s decision are:

  • Protective order
  • Search terms
  • Third-party subpoena
  • Failure to produce

There are an additional eight cases besides today’s decision in our database from Judge Ovington in the Southern District of Ohio.

Let’s dive into the facts. We are before the Court here on a motion for a protective order or to quash a third-party subpoena. This is not the first discovery decision on this case, so there’s not a huge amount of background from the Court on the underlying facts of the case, but essentially the underlying dispute is over an oral contract for sales commissions between the parties.

This is a motion for a protective order or to quash a third-party subpoena that was not brought by the third-party who received a subpoena. Instead, this motion was brought by the plaintiff in an attempt to ban the third-party subpoena, effectively. Here, the defendants are seeking communications under the subpoena between the plaintiff and the third-party, and the defendant started by seeking the same information from the plaintiff in the normal course of discovery. They sent them a request for production, seeking all communications between the plaintiff and the third-party. The plaintiff effectively objected to the request for production and stated that it was over broad, unduly burdensome, not reasonably calculated to lead the discovery of admissible evidence (even though we know that’s no longer the language in Rule 26) and said that it was not limited to a sufficient time frame under which there was an agency relationship between the plaintiff and the third party.

They also objected that it called for highly confidential information subject to nondisclosure agreements and competitively sensitive information. That’s very important because that’s a key point of the court’s analysis, as we get to later on the motion to quash.

They also object to the extent that it seeks documents that were already in the custody of control of defendants. Now, that little piece is never discussed anywhere further in this decision, so it’s kind of interesting that it’s thrown out there. In response to the request for production, the plaintiff also said that it would produce responsive, non-privileged documents. Well, apparently it never did produce them, although that is not something that is discussed within the decision.

Following that objection from the plaintiff, the defendants then served a subpoena in April of 2021 on the third-party seeking the same documents from the third-party that it had requested from the plaintiff and with defined timelines and categories of information request between the third party and the plaintiff. The third-party then objected on multiple grounds, but said that the documents were available from the plaintiff. The defendant then tried to reach resolution with the third party regarding the scope of the subpoena and the associated cost of compliance by meeting and conferring with them about those particular issues.

In May of 2021, just a month later, the defendants then sought depositions of four individuals from that same third-party. Third-party also refused, and despite multiple meet and confers, the parties were unable to reach any kind of resolution regarding the depositions or the scope of the subpoena.

Now, that month goes by. In June of 2021, the defendants narrowed the scope of the subpoena by date range, custodians, and specific search terms in order to try and resolve the dispute between the parties. The third-party still refused to be able to produce documents, and there was a meet and confer conference that included the Court where there was still no resolution reached. We’re now before the Court on the motion for a protective order or to quash the subpoena that’s brought by the plaintiff on behalf of the third-party.

The Court begins its analysis by looking at Rule 45, and we know that Rule 45 of the Federal Rules of Civil Procedure is the rule under which third-party subpoenas are permitted. The Court says that:

Indeed, the scope of discovery through a subpoena is the same as that applicable to Rule 34 and the other discovery rules. However, a party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena.

That’s what we’re looking at from Rule 45(d)(1).

Now, the Court also discusses that when a party seeks to limit discovery from a nonparty, it can file a motion for a protective order or seek to quash the subpoena. FRCP Rule 26(c) provides that “a court may, for good cause, issue an order to protect a party or a person from annoyance, embarrassment, oppression, or undue burden or expense.”

The Court then goes on to state that to prevail on a motion for a protective border, a party must, under Rule 26(b)(1), show that the requested discovery does not fall within the scope of relevance or that a discovery request would impose an undue burden or expense that is otherwise objectionable. In essence, what they’re saying here is that to prevail on this motion, the plaintiff has to show that the information is not relevant or that it imposes an undue burden or expense on the third party. The defendant essentially seeks compliance with the narrow subpoena and the depositions that it ordered, and the plaintiff is essentially looking to quash both the subpoena and the order for the depositions.

The Court looks first at the standing issue as to whether or not the plaintiff is even entitled to bring this motion. This is one of the key takeaways from this case, because this is a strategic but also a procedural issue that you need to be aware of with regard to Rule 45. Third-party subpoena issues are rampant in commercial litigation, right? Often there are multiple third-parties that need discovery sought from, and it’s very difficult to get third-party compliance. We’ve talked about that previously on the #CaseoftheWeek. The notion here that the party implicated in the subpoena to the third-party can seek a motion is key, and what is the basis for them to be able to do that.

Well, the Court says that in most circumstances, a party does not have standing to challenge a subpoena issued to a nonparty, yet a party has standing if the party can successfully claim, “some personal right or privilege with regard to the documents sought.” That’s really the key here; can the plaintiff in this instance lay out facts sufficient to establish a personal right or privilege with regard to the documents sought?

The Court goes on to talk about that courts have recognized certain personal rights and privileges in documents such as personal bank records, information and personnel files, corporate bank records, and Indian tribal records. But in this particular instance, the Court found that the plaintiff had not demonstrated a sufficient personal right or privilege to be able to bring this motion. Here, the plaintiff asserts that it has a personal interest in right in its communications with third-party because they relate to, “competitively, sensitive information that includes Forefront sales strategy, client contacts, and work on behalf of other manufacturers that directly compete with the third parties. A disclosure of this information would allegedly cause actual or imminent to injury.”

Now, the Court found that essentially, Forefront didn’t give them any basis for how the specific search parameters as defined in the narrow scope of the subpoena would produce documents that contain competitively, sensitive information. In this place, it’s an instance of the plaintiff falling down on providing sufficient factual basis to establish that right to bring the motion.

The Court goes on to say all is not lost, and that where a party standing may fall short to quash the subpoena under Rule 45, Rule 26 still affords a party the ability to move for a protective order on a third-party’s behalf. Plaintiff has the standing to bring a motion for a protective order, so the analysis turns to, is there a sufficient basis for a protective order.

The basis for the motion for a protective order is really, is there an undue burden against the third-party that the subpoena is sought for. In order to determine whether there is an undue burden, the Court looks at four factors:

  1. The relevance of the documents,
  2. The need for the documents,
  3. The breadth of the document requests, and
  4. The time period were covered by it.

The Court reviews those factors here in an analysis and finds that the documents are relevant. They do a factual analysis of the relevance as well as the naming of the custodians in the narrow subpoena, and it is a very factually driven analysis. This is an instance where the defendant supported its opposition to the motion for a protective order with sufficient facts to show that it met all four of those characters, especially regarding relevance. The Court says that the defendant has made every effort to reduce the burden and decides that the need for the documents outweighs the burden; that the defendants have demonstrated that the relevance of the documents, the time period at issue, the breadth of the request, and the particularity with which the documents are described all weigh in favor of disclosure. In addition, the Court also found that the plaintiff had not demonstrated that production of those documents by the third-party would result in an undue burden or expense that warrants a protective order in this case.

That’s really the Court analysis. You think that at that point, the Court prepared to order production by the third-party and to subject them to those depositions. Well, we have another twist. As this motion is pending before the Court, the defendant shoots themselves in the foot by issuing another request for production to the plaintiff, asking for the same documents covered by the third-party subpoena. The Court says, “wait a minute, now that you’ve got this other request pending, it doesn’t make sense for us to order a third-party to produce these documents. Instead, we’re going to wait and see what the plaintiff says in response to this new request for production.”

We don’t have a ruling from the Court here, although it did look like the Court was prepared to order the third-party production and to deny the motion for protective order and the motion to quash. That leads us to our takeaways from this case because essentially, we’ve got no ruling. What are those takeaways?

First, under Rule 45, a party can bring a motion to quash a subpoena for a third-party if it shows that specific right, that underlying right that would be violated by allowing the subpoena to be responded to. That’s number one; that’s key, but you’ve got to have the right facts to be able to show that. It was not established here.

Now, second, if you can’t file a motion to quash, can you file a motion for a protective order? Yes, under Rule 26, you can, but you’ve got to meet the factual requirements of those four factors that we discussed. Make sure that you’ve laid all of those out sufficiently for the Court in order to be able to establish the motion for a protective order. Here they weren’t met.

Now, the last piece is really this point where the defendant seems to shoot themselves in the foot. They had everything teed up perfectly. They briefed it great. The judge was ready to rule and give them the subpoena from the third-party, but they go and send a request for production for the exact same documents back to the plaintiff. There’s no way of knowing at this point from a strategic perspective what the timing in the case was, there’s no discussion about whether trial was imminent, what the hurry up timeline was to get these documents, or whether it was just a miscommunication among members of the trial team. Who knows. In any event, that essentially changed the Court’s mind and said, “let’s wait and see if they’re going to respond.”

Now, the problem with that is that it’s going to delay you several more months, right, because you’ve got to get back in front of the Court again and the Court’s got to order it, and then the third-party has to respond. You’re looking at a delay of one to six months probably in being able to get those documents because of that request for production that was sent out. Be wary of what you’re doing. Understand strategically how new actions that you take may affect pending ruling and that the Court is going to take those into account.

That’s our #CaseoftheWeek for this week. Thank you so much for joining me. We will be back next week with another decision from our eDiscovery Assistant database.

If you are an ACEDS member and interested in using eDiscovery Assistant there is a discount available for ACEDS members and a trial for folks who are taking the ACEDS exam. If you’re interested in either of those you can drop us a line at ACEDS@eDiscoveryAssistant.com one of our team will be in touch. If you are not an ACEDS member but interested in using eDiscovery Assistant you can go to Free Trial in the upper right hand corner or you can reach out to one of our team at sales@eDiscoveryAssistant.com and one of our team will be in touch to discuss with you getting on boarded or to set up something for your organization.

All right. Thanks so much for joining me. Stay safe and healthy out there and we’ll see you next week.

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