Non-parties who comply with Rule 45 subpoenas may be able to obtain reimbursement from the requesting party for the costs associated with compliance. However, fee-shifting is not mandatory. Under Fed. R. Civ. P. 45, if a nonparty is served with a document subpoena, it may seek reimbursement of costs it has incurred as a result of its compliance. But first, it must satisfy the following criteria:
Is It Reasonable under the Circumstances?
A nonparty can recover costs and fees only if the court determines that they are reasonable. Consider the recent decision in Nike, Inc. v. Wu, 13 CIV. 8012 (CM), 2020 WL 257475 (S.D.N.Y. Jan. 17, 2020). Here, the plaintiffs sought to recover damages under the Lanham Act, alleging that the defendants sold counterfeit Nike and Converse products. (The plaintiffs subsequently obtained default judgment against all 636 defendants.) After several unsuccessful attempts to enforce the court’s judgment and obtain payment, the plaintiffs (through their assignee), subpoenaed six banks believed to have maintained accounts associated with the judgment debtors. The banks ultimately submitted over 7,000 documents, and sought $1.22 million in related costs.
Despite the quantity of documents rendered, and citing to the extraordinary number of hours spent on document review and duplicitous tasks, the court held that the banks’ costs were unreasonable.
Is the Nonparty Truly Disinterested?
Assuming arguendo, that a nonparty could show that its fees were reasonable, it must have no interest in the outcome of the case. In Wu, this was a factor that weighed in favor of the banks.
Who Can More Easily Bear the Cost?
If the nonparty can more readily bear the costs it has incurred, fee-shifting will not apply. As shown in Wu, because the court determined that the banks consisted of several lucrative financial firms, it decided they were better suited to absorb the cost of compliance. Thus, the banks failed to satisfy this factor.
Is the Litigation of Public Interest?
Fee-shifting is favored where the litigation pertains to “purely private interests.” The Wu court adjudged that while there is public interest in avoiding confusion caused by the presence of counterfeit products, the public interest in third-party subpoena compliance is significantly less. Consequently, this factor weighed against the banks and fee-shifting.
Are there Other Equitable Considerations?
In addition to the aforementioned factors, courts may consider other variables when determining the reasonableness of a nonparty’s fees. For instance, an untimely compliance to the subpoena may weigh against the moving party. In Wu, the banks complied four years after they received the subpoena—and then only after ignoring several orders. Therefore, the court refused to award the costs, as it determined the banks could have reduced its fees by responding sooner.
In sum, fee-shifting under Fed. R. Civ. P. 45 is contingent on the facts and circumstances of each case, and nonparties should be cognizant that they possess the burden to establish that they are entitled to reimbursement of their costs associated with compliance. Therefore, it would behoove nonparties to keep their fees as low as possible, for failure to meet the aforementioned criteria means that fee-shifting will not apply, and they will be “stuck footing the bill. “
Saran Q. Edwards is an attorney with John Rue & Associates, LLC in Lake Hopatcong, New Jersey.