The amount and variety of information that businesses continue to maintain in digital form is growing exponentially. Due to the structure and location of data, companies maintain more of these resources in third-party locations, beyond their immediate control. The Federal Rules of Civil Procedure include rules that allow the discovery of ESI from nonparties to litigation. When a company is the recipient of a third-party subpoena seeking electronic ESI, there are several decisions that must be made due to the often high cost of complying with subpoenas. In-house counsel should be proactive when responding to a subpoena and understand the rights they have to limit overbroad requests or shift costs to the requesting party.
The first step is to try and reach an agreement with the requesting party to limit the subpoena to reasonable time and scope to reduce the volume of data produced. Cooperation during the discovery process is something that judges are beginning to expect from parties in litigation, and the lack of reasonable steps is a factor that may prove to have negative consequences. Reasonable cooperation is unsuccessful, then a close review of FRCP Rule 45 may provide some direct protection since it provides that a “person responding to a subpoena need not provide discovery of electronically stored information from sources that the person identifies as not reasonably accessible because of undue burden or cost.”
If the subpoena requests multiple years of data and the older data is only available on backup tapes, an argument can be make that the older data is not readily available due to the high costs of retrieving the data. Unless the request is extremely specific and can be shown to be for good cause by demonstrating its critical direct relevance or that the party has no alternative method to obtain the records, courts are often reluctant to impose such costs on third parties.
In 2007, Guy Chemical Company, Inc. v. Romaco AG, the defendant sought electronic business records from the plaintiff’s customer, a third party to the litigation. The third party did had easy access to the records, but the request included language requiring the third party to search for and locate the records using an outside computer firm with an estimated cost of approximately $7,000. The court held that the cost to locate the records was indicative “that the information is not reasonably accessible absent undue burden," and that the "non-party status is a significant factor to be considered in determining whether the burden imposed by a subpoena is undue.” The court concluded that “it is not [the third party’s] lawsuit and they should not have to pay for the costs associated with someone else's dispute.” In conclusion, the court ordered the third party to produce the requested records to the defendant, but that the defendant bear any and all associated costs.
Each case will need to show reasonableness and balance the burden of third-party compliance with the benefit of the material sought ultimately. Knowing and exercising the rights provided by the FRCP can help counsel limit the burdens associated with responding to third-party discovery. The mere suggestion of cost shifting alone may motivate the party seeking third-party discovery to take a more reasonable view as to what information they really need.
When in-house counsel receive third-party subpoenas for ESI, the first step should be to speak with the requesting party to limit the requests to a reasonable time and scope in order to avoid undue burden. If and when this does not work, then a close review of the FRCP and State procedural rules may provide you with the lever needed to force the requesting party modify the requests to a more reasonable and cost effective position.