© 2014 Akin Gump Strauss Hauer & Feld LLP akingump.com

Presented by Amanda Johnson, Stanley Woodward and Ken Reiss

March 20, 2014

12:30 p.m. – 2:00 p.m.

IT’S NOT MY PROBLEM (OR IS IT?) – FACING A THIRD-PARTY SUBPOENA IN LITIGATION

Amanda R. Johnson

Partner

Akin Gump Strauss Hauer & Feld LLP

1

Amanda R. Johnson’s practice focuses on complex litigation,

with an emphasis on patent infringement disputes and

damages analyses. Ms. Johnson’s practice covers a wide array

of technologies, including electronics, telecommunications,

computer software and agricultural chemicals.

Ms. Johnson serves on the firm’s Washington, D.C. pro bono

and hiring committees, and is the chair of the IP Recruiting

Committee, which is responsible for firm-wide IP hiring.

Stanley E. Woodward Jr.

Counsel

Akin Gump Strauss Hauer & Feld LLP

2

Stanley E. Woodward Jr. counsels companies and individuals

responding to government and internal investigations as well as

white collar criminal defense and general civil litigation actions.

Mr. Woodward has represented domestic and international

clients on issues related to global compliance, including matters

arising under the Foreign Corrupt Practices Act and personal

data protection laws, as well as other ethical and legal

compliance matters. Mr. Woodward also has experience in

matters related to equal protection under the Fourteenth

Amendment of the U.S. Constitution, including claims under

Title VII of the Civil Rights Act of 1964, the Age Discrimination in

Employment Act and the Americans with Disabilities Act (ADA).

Kenneth M. Reiss

Senior Counsel

Northrop Grumman

3

Ken Reiss is a Corporate Counsel for Litigation for Northrop

Grumman. He is responsible for managing all types of disputes

for the Company, including those in the areas of contracts, bid

protests, environmental, employment, insurance, intellectual

property, trade secret, personal injury, tax, and real estate. Mr.

Reiss is also a Litigation Forum Co-Chair for WMACCA.

Facing a Third-Party Subpoena in Litigation

2013 Amendments to Rule 45 of the Federal Rules of Civil Procedure

Litigation / Legal Holds

Confidentiality Issues

Cost-Shifting

Responses / Objections Pursuant to Rule 45

● Who is Being Subpoenaed (in the Corporate Context)?

● Establishing Undue Burden (Including Examples)

4

2013 Amendments to Rule 45

“The goal of the present amendments is to clarify and simplify the rule.”

Subpoena Source – Subpoenas are now issued from the court where the related litigation is pending and can be served nationwide.

Dispute Resolution – Subpoena disputes continue to be handled by the court for the district where compliance is required.

Geographic Limitations – Subpoena may only require compliance within the geographic area of the district enforcing compliance.

Contempt Power – Either the court for the district where compliance is required or an issuing court may hold a subpoena recipient in contempt for failure to comply with the subpoena itself, or a court order related to the subpoena.

Notice-of-Service Requirement – Issuing party required to provide notice to all other parties before serving a subpoena.

5

2013 Amendments to Rule 45: Subpoena Source

Old Rule:

● Subpoena for trial testimony issued from the court for the district where the trial is to be held;

● subpoena for deposition testimony to issue from the court for the district where the deposition is to be taken; and

● subpoena for the production or inspection of documents to issue from the court for the district where production or inspection is to be made.

New Rule:

● All third-party subpoenas issue from the court where the litigation is pending. 45(a)(2).

● Service is permitted “at any place within the United States.” 45(b)(2)

6

2013 Amendments to Rule 45: Dispute Resolution

Motion to Quash or Modify brought in “the court for the district where compliance is required.” 45(d)(3).

Bases:

● Fails to allow a reasonable time to comply;

● Requires a person to comply beyond the geographical limits specified in Rule 45(c);

● Requires disclosure of privileged or other protected matter, if no exception or waiver applies; or

● Subjects a person to undue burden.

Documents Only Subpoenas – commanded person may provide an objection; subpoenaing party may then file a motion to compel in “the court for the district where compliance is required.” 45(d)(2)(B).

But, district court hearing dispute may transfer the motion to the issuing court if the subpoenaed person consents or under “exceptional circumstances.” 45(f).

● Upon transfer, “if the attorney for a person subject to a subpoena is authorized to practice in the court where the motion was made, the attorney may file papers and appear on the motion as an officer of the issuing court.”

7

2013 Amendments to Rule 45: Geographic Limitations

Two Limitations – 45(c)

● 100 miles of a subpoena recipient’s residence, employment, or where they regularly transact business; or

● Within the state of a subpoena recipient’s residence, employment, or where they regularly transact business if the person:

■ Is a party or the party’s officer (though the committee notes make clear a party need not be subpoenaed) or

■ Is being subpoenaed for trial and would not incur substantial expense.

In re Vioxx Products Liability Litigation, 438 F.Supp. 2d 664 (E.D. La. 2006) -Amendment resolves a split in interpreting the old rule’s limitations to allow compulsion of a party or party officer to testify more than 100 miles and/or outside the state of that person’s residence, employment, or where they regularly transact business.

8

2013 Amendments to Rule 45: Contempt Power

Subpoena Recipient May be Held in Contempt for Failure to Obey Subpoena 45(g)

Either By:

● Court for the district where compliance is required or

● Where a motion to compel/quash has been transferred to the issuing court, by the issuing court.

9

2013 Amendments to Rule 45: Notice-of-Service Requirement

Documents only subpoenas must be served on each party before being served on the person to whom they are directed. 45(a)(4).

“The Committee has been informed that parties serving subpoenas frequently fail to give the required notice to other parties . . . . The amendments are intended to achieve the original purpose of enabling the other parties to object or to serve a subpoena for additional materials.”

10

Litigation / Legal Holds

Upon receipt/service of Rule 45 subpoena, duty to preserve arises.

● In re Napster, Inc. Copyright Litig., 462 F.Supp. 2d 1060, 1068 (N.D. Cal. 2006).

Duty may arise earlier if:

● You are on notice of the litigation and have a reasonable basis to believe your materials would be relevant; or

● A party to the litigation puts you on notice.

Duration – Be sure to negotiate the duration of any legal hold with subpoena issuer.

11

Confidentiality Issues

Many confidentiality agreements or protective orders do not protect third-parties by default.

Agreement (whether new or amended) should specifically protect you and your company by:

● Defining tiers of protection (e.g., Confidential, Highly-Confidential & Attorneys’ Eyes Only, etc.), how to mark the documents, and specifying who gets access to each tier;

● Expert witness access – such as whether the third party will receive notice before confidential information is shared with a particular party’s expert witness and whether the third-party is given an opportunity to object to that sharing based on conflict grounds (e.g., the expert is adverse to them in a different litigation and could benefit from seeing the confidential information here);

● Whether special procedures and protections for source code are needed – that is a hot button issue in the IP space;

● Procedure for challenging a confidentiality designation;

● Procedures for using confidential information during depositions, as attachments to filings, and during trial; and

● Treatment of materials post litigation (potentially including the duration of any litigation hold).

12

Cost-Shifting: Formal Cost-Shifting

Rule 45(d)(2)(B)(ii), (3)(A)(iv):

● production compelling production “must protect a person who is neither a party nor a party’s officer from significant expense resulting from compliance”

● court may quash a motion that “subjects a person to undue burden”

Rule 45(e)(1)(D) – Inaccessible Electronically Stored Information:

● “not reasonably accessible because of undue burden or cost”

● “the court may nevertheless order discovery . . . if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C) [referring to general limitations on document production].”

In short, court may assign the cost of production in response to a subpoena to the subpoenaing party:

● “[W]hen a subpoena may prove burdensome, the court is able to condition denial of the motion to quash or modify upon the person who requested the subpoena advancing the reasonable cost of producing the material sought.” 9A Wright & Miller, Fed. Prac. & Proc. Civ. § 2459 (3d ed.)

13

Cost-Shifting: Informal Cost-Shifting

A Party may want your subpoena quashed more than you – the subpoena issuer’s opposing counsel.

May offer to draft motion or

There may have been other motions filed.

May also offer incite with respect to litigation’s court helping to make a determination regarding consenting to transfer.

14

Responses / Objections Pursuant to Rule 45: Overview

Reminder:

● Motion to Quash or Modify brought in “the court for the district where compliance is required.” 45(d)(3).

● And documents only subpoenas – commanded person may provide an objection; subpoenaing party may then file a motion to compel in “the court for the district where compliance is required.” 45(d)(2)(B).

Note: The subpoenaed party bears the burden of persuasion.

Next:

● Who is Being Subpoenaed (in the Corporate Context)?

● Establishing Undue Burden (Including Examples)

15

Responses / Objections Pursuant to Rule 45: Who is Being Subpoenaed (In the Corporate Context)?

Corporation Directly (FRCP 30(b)(6))

● “In [a] subpoena, a party may name as the deponent a public or private corporation, a partnership, an association, a government agency, or other entity . . . .”

● “The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf . . .”

● Note: Subpoena must “describe with reasonable particularity the matters for examination.”

Custodian of Records

● Custodian of Records must bring any requested documents within his or her possession, custody, or control (even when located outside the district where subpoena issued or overseas).

■ Note: Old Rule – though unlikely Amended Rule to be interpreted differently.

● Also Note: In general a corporate party’s officers, directors and managing agents do not need to be subpoenaed, but can be commanded to appear for a deposition under a notice under FRCP 30. All others require Rule 45 subpoena.

16

Responses / Objections Pursuant to Rule 45: Establishing Undue Burden

Bases:

● Fails to allow a reasonable time to comply;

● Requires a person to comply beyond the geographical limits specified in Rule 45(c);

● Requires disclosure of privileged or other protected matter, if no exception or waiver applies; or

● Subjects a person to undue burden.

Undue Burden Standard:

● “When evaluating whether the burden of subpoena compliance is ‘undue,’ the court balances the burden imposed on the party subject to the subpoena by the discovery request, the relevance of the information sought to the claims or defenses at issue, the breadth of discovery request, and the litigant’s need for the information.”

■ Call of the Wild Movie, LLC v. DOES 1-1, 062, 770 F.Supp. 2d 332 (D.D.C. 2011).

17

Responses / Objections Pursuant to Rule 45: Establishing Undue Burden Examples (Nationally)

Premium Serv. Corp. v. Sperry & Hutchinson Co., 511 F.2d 225 (9th Cir. 1975) (affirming district court’s quashing of subpoena “sweeping in nature” and “covering every paper touching on any relationship between [the parties], despite subpoena issuer offering to review documents for responsiveness; “no company, having a choice, would permit another company to go on a fishing expedition through its records”).

In re Subpoenas to Wisconsin Energy Corp., 2010 WL 715429 (E.D. Wis. 2010) (subpoena overly broad where production estimated to cost one million dollars and subpoena issuer refused to narrow description of documents sought).

Century Sur. Co. v. Master Design Drywall, Inc., 2010 WL 2231890 (S.D.Cal. 2010) (subpoena overly broad where subpoena issuer sought eight years of documents “not relevant to the claims or defenses presented in this case”).

18

Responses / Objections Pursuant to Rule 45: Establishing Undue Burden Examples (District of Columbia)

Goldstein v. FDIC, 494 F.R. 82 (D.D.C. 2013)

● Chapter 7 Bankruptcy Trustee brought an action against FDIC;

● Trustee moved to quash subpoena issued to financial and tax advisor retained by trustee in bankruptcy case while FDIC moved to compel disclosure;

● Trustee claimed that attorney-client privilege and/or work product doctrine should protect a non-expert witness.

● Court quashed subpoena to the extent it sought material protected by the attorney-client privilege (while rejecting claim of work product protection).

● Court also noted that Rule 45 subpoenas should not be used to circumvent normal discovery.

Miller v. Holzmann, 471 F.Supp. 2d 119, 122 (D.D.C. 2007) (“It is impossible that all the files in the experts’ office could have something to do with this case. This demand is the very zenith of an oppressive burden and I certainly will not enforce such a subpoena.”).

19

Responses / Objections Pursuant to Rule 45: Establishing Undue Burden Examples (Maryland)

Maxtena, Inc. v. Marks, 289 F.R.D. 426 (D.Md. 2012)

● Corporation brought action against former CTO seeking Declaration that corporation was rightful owner of former CTO’s stock.

● Subpoena 1: Corporation issued Rule 45 subpoena to nonparty UAE company, which moved to quash the subpoena claiming substantial expense. The court agreed that substantial expense would be incurred by requiring a corporate representative to travel from the UAE to Maryland.

● Subpoena 2: CTO served subpoena on corporation’s nonparty independent contractor resulting in inadvertent disclosure of email chain involving corporation’s general counsel. Court found that even though disclosure was inadvertent, protection by the attorney-client privilege requires the corporation to have taken reasonable steps to prevent the inadvertent disclosure (and it was unreasonable to assume contract would produce only non-privileged documents).

In re Subpoena of Amer. Nurses Assoc’n, 290 F.R.D. 60 (D.Md. 2013)

● In an FLSA action against employees sought information from nonparty nurses association, which claimed subpoena compliance would be unduly burdensome.

● Court held employees were required to bear the costs for the production of the requested information but that nonparty association was required to bear a portion of its own attorneys’ fees incurred in objecting to the production.

20

Responses / Objections Pursuant to Rule 45: Establishing Undue Burden Examples (Virginia)

Singletary v. Sterling Transp. Co., 289 F.R.D. 237 (E.D.Va. 2012)

● Employee brought action alleging violations of FLSA for employer’s failure to pay overtime;

● Employer served four subpoenas on employee’s previous employers and employee moved to quash.

● Court first found that employee had standing to move to quash the subpoenas as he had a personal right with respect to the information sought in the employment records;

● Court further issued a protective order requiring leave of court before employer sought additional employment records so as to protect employee from annoyance, embarrassment, oppression, or undue burden.

21

Speaker Contract Information

Amanda R. Johnson Akin Gump Strauss Hauer & Feld LLP ajohnson@akingump.com 202.887.4126

Stanley E. Woodward Jr. Akin Gump Strauss Hauer & Feld LLP sewoodward@akingump.com 202.887.4502

Kenneth M. Reiss Northrop Grumman ken.reiss@ngc.com 703.280.4085

22