At Lewis & Llewellyn, we represent some of the world’s leading companies in responding to third party subpoenas, in both state and federal courts across the country.  Practitioners should take note that the Ninth Circuit Court of Appeals recently created some potentially helpful law regarding cost shifting for federal third party subpoenas.  Under Federal Rule of Civil Procedure 45(d)(2)(B)(ii), a court order commanding production in response to a subpoena “must protect a person who is neither a party nor a party’s officer from significant expense resulting from compliance.”  Though this language was added when the Rule was amended in 1991, it had not been interpreted by the Ninth Circuit until the recent decision in Legal Voice v. Stormans Inc., 738 F.3d 1178 (9th Cir. 2013).

In Legal Voice, Stormans, Inc. sued Washington State, seeking to enjoin enforcement of rules requiring pharmacies to maintain and dispense certain drugs.  Stormans subpoenaed the Northwest Women’s Law Center (“Law Center”), which had played an important role in the law’s enactment, but was a not a party to the underlying action.  The Law Center objected to the subpoena, and Stormans moved to compel.  The District Court granted the motion to compel as to six of the fourteen requests in the subpoena, but refused to grant the Law Center’s request under Rule 45(d)(2)(B)(ii) for Stormans to pay its cost of compliance.  On appeal, the Ninth Circuit overturned the District Court’s ruling, holding that “Rule 45(d)(2)(B)(ii) requires the district court to shift a non-party’s costs of compliance with a subpoena if those costs are significant.”  Id. at 1184.

Importantly, the court found that the rule “provides no exceptions,” “is mandatory,” and that “when discovery is ordered against a non-party, the only question before the court in considering whether to shift the costs is whether the subpoena imposes significant expense on the non-party.  If so, the district court must order the party seeking discovery to bear at least enough of the cost of compliance to render the remainder ‘non-significant.’”  Id. (citing references omitted).  The court subsequently found that the $20,000 the Law Center had incurred complying with the subpoena was “significant.”

This case is a potentially powerful tool for battling overly burdensome or costly discovery requests served on third parties.  Attorneys on the receiving end of a subpoena, or even a motion to compel, should keep this case in mind in responding – and potentially objecting – to subpoenas here in the Ninth Circuit and elsewhere.