E.D. Mich.: Bothersome Subpoena Requests Not Unduly Burdensome

Yesterday, Judge Anthony Patti denied non-party Kotz Sangster Wysocki P.C.'s motion for a reconsideration of the court's order granting the Plaintiff's motion to compel in State Farm Mut. Auto. Ins. Co. v. Elite Health Ctrs., No. 2:16-cv-13040, 2018 U.S. Dist. LEXIS 175024 (E.D. Mich. Oct. 11, 2018). The parties exchanged a list of key search terms and Kotz Sangster offered to review a set of 2,000 responsive non-privileged documents, but State Farm refused to pay Kotz Sangster's legal fees. State Farm contended that it was not obligated to do so since it had taken reasonable steps to avoid imposing undue burden and expenses on Kotz Sangster. It also contended that the crime fraud exception should apply to privilege claims made by Kotz Sangster.

The Court's July 31, 2018 Order found that the non-party failed to establish its objection that there was an undue burden, but also held that State Farm's argument regarding the crime fraud exception was not ripe because it had not requested privileged communications. In order to have a motion for consideration granted the movant must show a palpable defect, and not merely present the same issues.

The Court did not consider a pending motion by Kotz Sangster to file a surreply challenging the basis for the subpoena in addressing the existence of a palpable defect because surreplys are generally disfavored and it is within a court's discretion to deny them. The Court also rejected Kotz Sangster's undue burden argument on the basis of State Farm's allegation that they function contrary to their non-corporate status in participating with the Defendants to a scheme to defraud State Farm. Judge Patti noted that the Fed. R. Civ. P. 45 protects a non-party from expenses incurred in complying with subpoenas by requiring the requesting party to to take reasonable steps to avoid imposing an undue burden. "Here, State Farm does appear to have taken reasonable steps to avoid imposing an undue burden, advising Kotz Sangster that it was not seeking privileged communications at this time and exchanging a list of ESI search terms, which apparently lead to a more limited universe of potentially responsive documents." Id. at *14. The cost of a privilege review is only to be borne by the requesting party when there are unusual circumstances. The opinion states that , ". . it is not unusual for a law firm to be required to supply records relating to incorporation in a commercial case, or for a law firm to have to supply testimony regarding incorporation. Occasionally having to do so is part of the cost of doing business. Kotz Sangster simply has not met its burden to demonstrate a palpable defect." Id. at *16-17.

The Court also acknowledged that the scope of discovery under a subpoena is the same as it is under Fed. R. Civ. P. 26 (b)(1). An attorney cannot simply object that a subpoena is unduly burdensome. An objection must be made on, "first hand knowledge by someone who is actually responsible for keeping the records in the ordinary course of business or for assembling the requested discovery." Id. at 18-19. "The Court recognizes that responding to discovery is generally bothersome, and may indeed be, at least to some extent, burdensome. . . But the fact that it will be either bothersome or burdensome to respond to a discovery request does not necessarily mean that it will be unduly so." Id. at 19. Citing a recent article posted on Law 360, Judge Patti believes that non-parties making an undue burden objection should submit, "detailed cost and time calculations, supported by knowledgeable declarations". Matt Hamilton, Donna Fisher & Sandra Adams, Does Rule 45 Protect Nonparties from Undue Burden, Law 360 (Oct. 2, 2018), http://www.law360.com/appellate/articles/1088653 .