[EDRM Editor’s Note: The opinions and positions are those of Michael Berman.]
In Trusted Sci. & Tech., Inc. v. Evancich, 262 Md. App. 621, 2024 WL 3490547 (Apl. Ct. Md. July 22, 2024), the Court addressed the type of objections that a subpoenaed non-party may make. That was a novel issue in Maryland. The Court held “that [nonparty] TST had standing to challenge the subpoena on grounds that some of the requests were overbroad and not relevant to the subject matter involved in the divorce action.”
Simply stated, two spouses were in an acrimonious divorce. Both, but most importantly, the husband, had worked for non-party TST. The wife sought documents to value the husband’s stock and pension rights in TST. In separate litigation, the wife had engaged in improper conduct, including refusal to return and wiping a TST laptop, copying and retaining TST data, and she was held liable for conversion, enjoined, and punitive damages were assessed against her.
TST is an engineering company engaged in cybersecurity, with highly competitive government contracts. Both the husband and wife sought discovery from TST. The wife served a subpoena on TST that sought over 40 categories of documents. The Appellate Court described the wife’s subpoena as seeking “confidential and highly sensitive information, including, all of TST’s compensation and retirement plans, general ledgers and payroll summaries, details about contracts with active clients, and TST’s business plans and projections.”
TST objected on, inter alia, lack of relevance and overbreadth. It asserted that the requests were for documents that were not necessary for appraisal or valuation of the company. Both spouses moved to compel. All parties filed expert declarations and signed an “Attorney’s Eyes Only” protective order.
The trial court rejected TST’s relevance objection, stating: “[A] third party doesn’t really, in my estimation, have standing to argue about relevance and overbreadth. Because you don’t have a dog in the fight, okay? So if you get served with a subpoena to request information, it just seems to me that a relevance objection from a non-party doesn’t really have much merit.” It then, without explanation, credited the spouses’ expert declarations that they needed the information.
The lower court also rejected TST’s undue burden argument. TST argued that “[w]hether a burden is undue dovetails with the relevance inquiry.” In my words, TST argued that, if the subpoena did not seek relevant information, it was per se unduly burdensome. The trial court held that TST could raise that objection, but “whether or not the information is relevant or not, in my estimation, doesn’t, you know, factor into that analysis.” With no other factual predicate to support the objection, it was overruled.
On appeal, TST argued that “[t]hird parties to civil litigation in the courts of this State should have legal standing to object that demands for their documents are disproportionate to the needs of the underlying suit, overbroad, and/or irrelevant to the claims.”
The Appellate Court agreed: “Implicitly—as with all discovery—a request that a nonparty produce documents or other tangible things is necessarily confined by the bounds of Rule 2-402(a),” which defines the scope of discovery. Thus, “[a]lthough no published opinion by a Maryland appellate court has squarely addressed this issue,” “the ability of a person (including a nonparty) to object” to a subpoena “encompasses that most basic objection that the discovery sought by the subpoena exceeds the bounds” of discovery. The Appellate Court explained that nothing in the Rules “expressly indicates that different standards govern discovery sought from a litigant versus discovery sought from a nonparty—only the process by which discovery is sought, or opposed, differs.”
TST also asserted that the Court should adopt an “elevated standard for nonparty discovery.” While not cited, Maryland Rule 2-510(h) states that: “A party or an attorney responsible for the issuance and service of a subpoena shall take reasonable steps to avoid imposing undue burden or cost on a person subject to the subpoena.”
The Appellate Court determined that it need not reach TST’s question. It held that crediting the spousal experts over TST expert, without explanation, was error, and it therefore did not decide whether an elevated standard should be adopted.
In short, whether discovery from nonparties is subject to a higher standard than discovery between parties is a question for another day, but it certainly is not subject to a lower one. The circuit court here erred in compelling TST’s production without considering whether the requests were relevant or overly broad.
Trusted Sci. & Tech., Inc. v. Evancich, 262 Md. App. 621, 2024 WL 3490547 (Apl. Ct. Md. July 22, 2024).
The Court wrote: “In short, whether discovery from nonparties is subject to a higher standard than discovery between parties is a question for another day, but it certainly is not subject to a lower one. The circuit court here erred in compelling TST’s production without considering whether the requests were relevant or overly broad.”
Thus, “certainly, parties cannot use family law divorce cases as a method of obtaining confidential documents from a nonparty without the court giving the nonparty’s interests due consideration.”
The Court “clarify[ied] the guardrails, as imbued within the Maryland Rules, that may prevent parties to a civil action from using civil discovery to improperly obtain companies’ confidential information.”
In short: “Relevance, therefore, is a proper objection to a discovery request,” and “the person to whom a subpoena is directed (whether a party or nonparty) has standing to object based on relevance and overbreadth….”
In note16, the Court discussed the meaning of “relevant”:
The term “relevant” has a slightly different meaning during the discovery and trial phases of litigation. See, e.g., Cole v. State, 378 Md. 42, 61, 835 A.2d 600 (2003) (“The issue at trial is admissibility of offered evidence, while the issue in pre-trial stages is whether a party may obtain information or documents through discovery.”). Nonetheless, in either stage of the case, it remains paramount that information be relevant to the proceedings. Thus, just as [the discovery] Rule 2-402 requires information to be relevant to be discoverable, [the trial] Rule 5-402 requires that information be relevant to be admissible. Md. Rule 5-402 (“Evidence that is not relevant is not admissible.”).
Trusted Sci. & Tech., Inc. v. Evancich, 262 Md. App. 621, 2024 WL 3490547 (Apl. Ct. Md. July 22, 2024).
Although TST had mooted the discovery issue by producing documents, the Court viewed the issue as one of capable of repetition, evading review, and of public importance, in order to reach it. It ordered the parties to return or destroy TST’s confidential documents.
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