What “Expenses” Can a Non-Party Recover for Complying with a Discovery Subpoena?

[EDRM Editor’s Note: The opinions and positions are those of Michael Berman.]

In OL Private Counsel, LLC v. Olson, 2024 WL 4839277 (D. Utah Nov. 20, 2024), the court addressed recovery of expenses by non-parties for responding to a subpoena.

Fed.R.Civ.P. 45 (“Subpoena”) states:

• (b)(1) – Under some circumstances, witness fees and mileage must be paid.^[1]
• (d)(1) – “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. The court for the district where compliance is required must enforce this duty and impose an appropriate sanction–which may include lost earnings and reasonable attorney’s fees–on a party or attorney who fails to comply.”
• (d)(2)(B)(ii) – A court order commanding production “must protect a person who is neither a party nor a party’s officer from significant expense resulting from compliance.” [emphasis added].
• (d)(3)(B) – A court may, on motion, ensure “that the subpoenaed person will be reasonably compensated.”

In OLPC, OLPC sued a former employee for alleged misappropriation of trade secrets.  It was alleged that the former employee shared them with his mother and/or her attorneys.  It is alleged that the documents were then used by the mother in litigation against the sole member of OLPC.

OLPC served subpoenas on the law firm and mother.  They produced documents and a privilege log, but objected to a deposition.  OLPC moved to compel a deposition and for additional documents or an updated privilege log.   That motion was granted in part, with the court ordering the law firm to produce documents or an adequate privilege log and compelling the deposition.

The nonparties filed a Rule 45(d)(2)(B)(ii) motion for “significant expenses” incurred in compliance.  The court wrote: “Specifically, the Kuendig nonparties seek $2,762.50 in costs associated with Ms. Kuendig’s deposition, and $9,100 in costs associated with document and privilege log production, for a total of $11,862.50.8 These costs are based on Ms. Kuendig’s $325 hourly rate as an attorney.”

In part, OLPC replied that the Rule is limited to recovery of expenses, and not reimbursement for time.  Further, it asserted that attorney fees were recoverable only as a sanction for an unduly burdensome subpoena.

The OLPC court recited that Rule 45 mandates that nonparties be protected from any “significant expense” resulting from compliance with orders, and: “Applying this principle, the Kuendig nonparties’ motion is granted in part and denied in part—Rule 45(d)(2)(B)(ii) entitles the Kuendig nonparties to reimbursement of the significant expense incurred in producing documents pursuant to the court’s order, but the Kuendig nonparties have not shown entitlement to reimbursement of deposition costs.”

DEPOSITION COSTS ARE NOT SIGNIFICANT EXPENSES

Turning first to deposition expenses, the nonparties sought reimbursement for time traveling to, and attending, the deposition at an hourly rate of $325, for a total of $2,762.50.  OLPC responded that the statutory fee is $40 plus mileage for a one-day deposition.^[2] It asserted that an attorney was not entitled to a higher fee.

The OPLC court agreed:

The Kuendig nonparties do not identify any authority supporting their contention a salary or hourly billing rate of a deponent may qualify as a “significant expense” reimbursable under Rule 45. Nor do the Kuendig nonparties explain why Rule 45(d)(2)(B)(ii) should be read to award costs beyond those Rule 45(b)(1) provides to deponents. As OLPC notes, Rule 45(b)(1) provides that a party serving a subpoena which requires a person’s attendance must pay the attendee “the fees for 1 day’s attendance and the mileage allowed by law.” Ms. Kuendig is entitled to these statutorily prescribed costs, and OLPC must pay them if it has not already done so. But the Kuendig nonparties do not provide any authority suggesting they are also entitled to Ms. Kuendig’s hourly billing rate. The Kuendig nonparties’ motion is denied to the extent it seeks reimbursement for costs associated with Ms. Kuendig’s deposition.

OL Private Counsel, LLC v. Olson, 2024 WL 4839277 (D. Utah Nov. 20, 2024).

NONPARTIES’ COSTS OF DOCUMENT PRODUCTION WERE SIGNIFICANT EXPENSES

The OLPC court then turned to the request for reimbursement of costs associated with document production.  Here, the nonparties sought $9,100 for 28 hours of attorney work in searching, reviewing, and producing documents and a privilege log.

OLPC raised three objections, none of which was successful.  Id. at *3.  Boiled down to their core, and oversimplified, OLPC argued that the nonparties chose to use an attorney to respond and that was not reasonable.

The court rejected the alleged distinction between “time” and “expense.”  It stated that the attorney spent 28 hours on this production and that was incurring an expense.  The fact that the reviewer was counsel cut against OLPC: “In fact, given Ms. Kuendig’s familiarity with the documents (which relate to her cases), it likely would have cost more for outside counsel to perform the document review. Ms. Kuendig is not precluded from seeking fees under Rule 45(d)(2)(B)(ii) simply because she completed the work herself.”

The OLPC court found that the request was reasonable and that, on the facts presented, it was reasonable for the attorney to do the work herself. It added:

Finally, it is incorrect to say Rule 45 only permits awards of lost earnings and attorney’s fees as a sanction for serving an unduly burdensome subpoena. Rule 45(d) provides two paths to fee recovery. First, under Rule 45(d)(1), if a party serving a subpoena imposes an “undue burden or expense on a person subject to the subpoena,” the court may award fees. Second, Rule 45(d)(2)(B)(ii) protects a nonparty from any “significant expense” incurred in complying with an order to produce discovery. Where the Kuendig nonparties seek recovery of their “significant expense” under Rule 45(d)(2)(B)(ii), they need not show undue burden or otherwise rely on Rule 45(d)(1). Moreover, courts regularly award attorney’s fees under Rule 45(d)(2)(B)(ii).

OL Private Counsel, LLC v. Olson, 2024 WL 4839277 (D. Utah Nov. 20, 2024).

CONCLUSION

As a result, the nonparties were awarded the $9,100 expense that they occurred in complying with the order to produce documents.  It was held to be a “significant expense.”  However, they were not entitled to deposition costs beyond the statutory fees.  In n. 18, the court indicated that appearing at a deposition is not a “significant expense” under the Rule.

The OPLC court also pointed to a possibly missed opportunity by OPLC under Rule 45(d)(2)(B)(ii).  In n. 36, it wrote:

Courts typically apportion fees between the subpoenaing party and the nonparty under this rule, such that any remaining expense borne by the nonparty is “non-significant.” …  However, OLPC did not argue any cost reimbursement should be apportioned. Nor did OLPC address the factors relevant to an apportionment evaluation.…  Where any partial shifting of costs would require pure speculation (due to the lack of substantive argument) the costs are apportioned fully to OLPC.

OL Private Counsel, LLC v. Olson, 2024 WL 4839277, n.36 (D. Utah Nov. 20, 2024).

See generally:

• Who Can Object to a Subpoena? (Oct. 28, 2024);
• What Objections May Be Raised to a Subpoena by a Non-Party? (Oct. 15, 2024);
• Trade Secret – Can Damaged Party Obtain Ex-Worker’s Emails Sent on New Employer’s System? (Mar. 7, 2021)’
• Isn’t It Time for a Uniform National Standard on “Possession, Custody, or Control”? (Sep. 7, 2022).

Notes

[1] The OPLC court wrote that Rule 45(b)(1) attendance and mileage fees are set by 28 U.S.C. § 1821(b) and 28 U.S.C. § 1821(c).

[2] Id.