In litigation, responding to requests for production of documents can be time-consuming and expensive yet those costs are considered part of litigation and are generally born by the parties themselves. But what happens when discovery is sought from a person or entity who is not a party to the litigation? Who is responsible for paying for the costs associated with responding then? The answer to this question depends on whether the lawsuit is in federal court or state court.
Under the Federal Rules of Civil Procedure, an order compelling compliance with a subpoena “must protect a person who is neither a party nor a party’s officer from significant expense resulting from compliance.” Fed. R. Civ. P. 45(d)(2)(B)(ii) (emphases added). The Ninth Circuit Court of Appeals has interpreted this rule to require the shifting of the non-party’s costs of compliance if those “expenses” are “significant.” Legal Voice v. Stormans Inc., 738 F.3d 1178, 1184 (9th Cir. 2013). Thus, a two-step inquiry is required: (1) whether the subpoena imposes “expenses” on the non-party; and (2) whether those expenses are “significant.”
What are “expenses”?
Generally, “expenses” are those costs resulting from compliance with the subpoena. This includes costs incurred in searching for and collecting documents, reviewing documents for responsiveness, reviewing documents for privileges such as attorney-client privilege, ensuring compliance with laws and regulations such as HIPAA, and preparing the document production.
Costs incurred in fighting the subpoena are not considered “expenses” within the meaning of Rule 45 and are thus not recoverable. Therefore, costs incurred in researching, drafting, and filing a motion to quash the subpoena are not recoverable.1 Unreasonably incurred costs are also not considered “expenses” incurred in responding to the subpoena and are likewise not recoverable. Similarly, expenses that are incurred solely for the third-party’s benefit or peace of mind are not recoverable. For example, if the third-party insists that its attorney sit through a deposition in which the third-party’s documents will be used, those fees would not be considered recoverable expenses as they were not incurred in responding to the subpoena.
Once a court determines that the subpoena imposes “expenses” on the responding party, the court must then determine if those expenses are “significant.”
When are expenses “significant”?
In determining whether an expense is significant, the court must consider the ability of the responding party to bear the costs of responding to the subpoena. For example, courts have found the following to be significant:
- $9,000 in expenses for two attorneys, see Williams v. City of Dallas, 178 F.R.D. 103, 113-14 (N.D. Tex. 1998);
- $20,000 in expenses for non-profit legal group, see Legal Voice v. Stormans, Inc., 738 F.3d 1178, 1181, 1185 (9th Cir. 2013);
- $200,000 in expenses for the Department of Defense, see Linder v. Calero-Portocarrero, 251 F.3d 1178, 1179-80, 1182-83 (D.C. Cir. 2001).
Not all “significant expenses” must be shifted. Once a court determines that a subpoena imposes “significant expense,” the court must protect the responding party. This does not mean that the court must order the payment of all of the responding party’s expenses. Instead, the court must require the party seeking the discovery to pay “at least enough of the expense to render the remainder ‘non-significant.’” Linder, 251 F.3d at 1184.
Under the Hawai‘i Rules of Civil Procedure, the shifting of significant expenses is not mandatory. Instead, in response to a motion to quash the subpoena, the court may condition its denial of the motion on the requesting party’s payment of the reasonable cost of producing the requested documents or things. Haw. R. Civ. P. 45(b). In other words, the decision to shift expenses is left to the discretion of the court. Importantly, and unlike under the Federal Rules of Civil Procedure, in state court, to recover the costs of production, the responding party must bring a motion to quash the subpoena at or before the time specified in the subpoena for compliance. Id.
Whether in federal court or state court, in the absence of an agreement between the parties, it is likely that some type of motion will need to be brought to either compel compliance with the subpoena if you are the requesting party, or, seek payment of the costs associated with responding to the subpoena if you are the responding party, which means that attorneys’ fees will be incurred. Parties should weigh the cost to bring such a motion with the cost of compliance with the subpoena. In other words, if you are the requesting party, it might cost you less to just pay the responding party’s expenses than to file a motion to compel. Conversely, if you are the responding party, it might cost you less to eat the costs of responding to the subpoena than to file a motion to quash.