7/29/2019 Subpoena Bankruptcy

1/220 May 2011 ABI Journal

Contributing Editor:Kenneth M. MiskenMcGuireWoods LLP; McLean, Va.kmisken@mcguirewoods.com

Also Written by:Sarah Beckett BoehmMcGuireWoods LLP; Richmond, Va.

sboehm@mcguirewoods.com

The attendance of a nonparty wit-ness at a deposition or trial andthe obligation of a nonparty wit-

ness to produce documents can only becompelled in accordance with Rule 45of the Federal Rules of Civil Procedureand, in bankruptcy cases and proceed-ings, Rule 9016 of the Federal Rules ofBankruptcy Procedure. Bankruptcy Rule9016 incorporates Federal Rule 45 ver-batim, with no additions or modicationswhatsoever. It has long been held that adefense to a contempt motion for failingto comply with a subpoena is to estab-lish that the requirements of Rule 45 arenot met.1 One of those requirements isproper service of the subpoena.

This article will rstanalyze Rule 45 andhow nonbankruptcyfederal courts havedetermined what isrequired for properservice of a sub-poena, then examine

two bankruptcy courtdecisions analyz-ing this issue. Last,

this article will analyze the BankruptcyRules, showing that in bankruptcy casesand proceedings, a party serving a sub-poena on either an individual or corpora-tion may have a powerful, inexpensivetool in Bankruptcy Rule 7004, whichauthorizes service of process by first-class U.S. mail.

Rule 45Rule 45(b)(1) of the Federal Rules of

Civil Procedure provides that[a]ny person who is at least 18years old and not a party mayserve a subpoena. Serving a sub-poena requires delivering a copyto the namedperson and, if thesubpoena requires thatpersonsattendance, tendering the feesfor 1 days attendance and themileage allowed by law.... If thesubpoena commands the produc-

tion of documents, electronicallystored information, or tangiblethings or the inspection of prem-ises before trial, then before it isserved, a notice must be servedon each party.There is no consensus on the proper

standard of service of a subpoena amongnonbankruptcy federal courts. Althoughthe majority require personal service,2 thecourts appear to provide no analysis as

to why personal service is required. Forexample, in In re Johnson & Johnson,3Johnson & Johnson served notices ofdepositions to three individuals, two ofwhom were ofcers for a corporation inwhich Johnson & Johnson was contest-

ing the issuance of trademarks. The threeindividuals were not named parties. Thecourt held that since the subpoenas wereissued to the individuals and not to thecorporation, and the individuals werenot personally served, the court lackedthe power to compel the individuals toappear at depositions.4 Interestingly, andapparently relying on the plain languageof Rule 45, the court stated that [u]nderRule 45, personal service of a subpoenais required when an individual is subpoe-naed.5 No further analysis on the serviceissue was provided.

Other courts have concluded that the

personal-service requirement as outlinedby the majority of courts does not applyto corporations since the plain languageof Rule 45 only references individuals.6However, there is an emerging minority

that have rejected the majority positionand concluded that personal service is notnecessary, but instead service is proper aslong as the manner of service reasonablyensures receipt by the witness.7

Bankruptcy CasesThere a re a fewbankruptcy casesanalyzing whetherpersonal serviceis required underBankruptcy Rule9016 . In O N e i lv . R o b i n s o n ( I nre Thomas PeterPappas),8 the issuewas whether serving

a subpoena on a corporations receptionistwhen no other member of the corporationwas available to receive service consti-

tuted proper service on a corporation. Inconcluding that service was proper, thebankruptcy court explained that sinceRule 45 does not specify what consti-tutes proper service on a corporationcourts have routinely looked to Rule 4 of

the Federal Rules of Civil Procedure forguidance.9 The court, looking at the ser-

vice requirements under Connecticut statelaw, found that Connecticut law allowsfor service on a person in charge of theofce of a corporation.10 Since the cor-poration produced no evidence to showthat the receptionist was not in charge ofthe ofce, the court concluded that servicewas proper under Connecticut law and thefederal rules. Notably, the court did notanalyze whether personal service upon anindividual was required.

More recently, the U.S. BankruptcyCourt for the Southern District of Florida

inIn re Falcon Air Express Inc.

11

ana-lyzed whether personal service of a sub-

Practice & Procedure

About the Authors

Kenneth Misken is counsel in theRestructuring and Insolvency Groupat McGuireWoods LLP in McLean, Va.Sarah Beckett Boehm is counsel in theRestructuring and Insolvency Group at

the rms Richmond, Va., ofce.

ServingSubpoenasinCasesandProceedings

1 See, e.g., Doble v. U.S. District Court,249F.2d734(9thCir.1957).

2 JamesWm.Moore,Moores Federal Practice 3d,45.21(2011)3 59F.R.D.174,177(D.Del.1973).4 Id.at177-78.5 Id.at177.6 See, e.g., Ultradent Prods. Inc. v. Hayman,2002U.S.Dist.LEXIS18000,

2020WL 31119425,at*3(S.D.N.Y.Sept.24,2002)(serviceofsub-

poenaonregisteredagentofcorporationorbycertiedmailsatises

Rule45); see also In re Motorsports Merchandise Antitrust Litigation,

186F.R.D.344(W.D.Va.1999)(explainingthatalthoughRule45is

silentastowhatconstitutesproperserviceofsubpoenaoncorporation,

courtslooktoRule4forguidance). continued on page 71

7 See, e.g., King v. Crown Plastering Corp.,170F.R.D.355(E.D.N.Y.1997).8 214B.R.84(Bankr.D.Conn.1997).9 Id.at85(citing Khachikian v. BASF Corp.,1994U.S.Dist.LEXIS2881

1994WL86702(N.D.N.Y.1994);In re Grand Jury Subpoenas,775F.2

43,46(2dCir.1985)).Rule4oftheFederalRulesofCivilProcedure

providesthatserviceoncorporationsmaybeeffected

[i]na judicialdistrictoftheUnitedStatesinthemanner

prescribedforindividualsbysubdivision(e)(1),orbydeliver-

ingacopyof thesummonsandcomplainttoanofcer,a

managingorgeneralagent,ortoanyotheragentauthorized

byappointmentorbylawtoreceiveserviceofprocess.

Rule4(e)(1)providesthatserviceinanyjudicialdistrictoftheU.S.mayb

effectedpursuanttothelawofthestateinwhich...serviceiseffected.10 ONeil v. Robinson,214B.R.at85-86(citingConn.Gen.Stat.52-57(c)).11 CaseNo.06-11877,2008Bankr.LEXIS1463(Bankr.S.D.Fla.May8,2008)

Sarah Beckett Boehm

Kenneth M. Misken

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2/2ABI Journal May 2011 71

Practice & Procedure: Serving Subpoenas in Cases and Proceedingsfrom page 20

poena was required. The attorney for thetrustee issued and signed a subpoenaduces tecum for a Rule 2004 examina-tion on an individual. Service was effec-tuated by serving the individuals wifeat a residence owned by the individual.

The individual filed a motion to quashthe subpoena arguing that the trusteefailed to personally serve him and,therefore, service was improper. Theissue before the court was whether thistype of substitute service satisfied theservice requirement under BankruptcyRule 9016. Ultimately, the court heldthat substitute service was authorizedand denied the motion to quash.12 Thecourt acknowledged that the majorityview interpreting Rule 45 required per-sonal service, but instead chose to adopt

the better reasoned, modern, emergingminority position, which holds that sub-stitute service of a subpoena is effectiveon a nonparty witness under Rule 45.13

Unlike the many cases following themajority view, the Falcon Aircourt laidout a rather detailed analysis explainingwhy the emerging minority view was thebetter-reasoned approach. First, the courtlooked to the plain text of Rule 4514 andrecognized that there is nothing in thelanguage that requires personal servicenor is there any reference to personal ser-

vice.

15

Instead, Rule 45 merely requiresthat a copy of the subpoena be deliveredto the person whose attendance or pro-duction of documents is demanded.

The court then explained that the dis-agreement over the standard for properservice most likely arose from the ambig-uous word deliver in Rule 45,16 but thecourt looked to the plain language of Rule45(b)(3), which requires that [p]rovingservice, when necessary, requires filingwith the issuing court a statement show-ing the date and manner ofservice and thenames of persons served.17 If Rule 45(b)only allowed for personal service, then thestatement regarding the manner of servicein (b)(3) would be superuous.18

Moreover, the court looked at Rule4(e)(2)(A), which requires the plaintiff

to deliver...a copy of the summons andof the complaintpersonally. The courtexplained that if Rule 45 required personalservice, then the word personally in Rule4(e)(2)(A) would also be superuous.19

The individual moving to quash the

subpoena relied on two cases to sup-port his argument that personal serviceof a subpoena was required: KlocknerNamasco Holdings Corp. v. DailyAccess.com20 and Harrison v. Praltner.21 Thecourt explained that those decisions didnot provide any analysis as to why per-sonal service of a subpoena is required. Infact,Harrison was not on point, since theHarrison court only concluded that ser-vice on a partys counsel was not effectiveservice. Since Klocknerpredominantlyrelied onHarrison in concluding that per-

sonal service is required, the court foundthose two cases inappropriate and unper-suasive.22 The court denied the motion toquash, but reserved the issue of whetherthe substitute service on the movant waseffective, looking at the facts of the caseto determine whether substitute servicewas reasonably calculated to ensurereceipt of the subpoena.23

Bankruptcy RulesThe Falcon Aircourt did not ana-

lyze the Bankruptcy Rules. However,in bankruptcy cases and proceedings, itappears that the Bankruptcy Rules allowfor service of a subpoena in accordancewith Bankruptcy Rule 7004. BankruptcyRule 9016 incorporates Rule 45 intobankruptcy cases and proceedings ver-batim without any modications or addi-tions. Similar to Rule 1 of the FederalRules of Civil Procedure, BankruptcyRule 1001 requires the Bankruptcy Rulesto be construed to secure the just, speedyand inexpensive determination of everycase and proceeding. Unlike the FederalRules, Bankruptcy Rule 7004(b), pro-

vides thatin addition to the methods of serviceauthorized by Rule 4(e)-(j) F.R.Civ. P., service may be made withinthe United States by rst class mailpostage prepaid as follows:

(1) Upon an individualother than an infant orincompetent, by mailing

a copy of the summonsand complaint to the indi-viduals dwelling house orusual place of abode or tothe place where the indi-vidual regularly conducts

a business or profession...

(3) Upon a domestic orforeign corporation...by mailing a copy of thesummons and complaintto the attention of anofficer, a managing orgeneral agent, or to anyother agent authorized byappointment or by law toreceive service of process.

By allowing service of the sum-

mons and complaint by mail, BankruptcyRule 7004 aids in the policy outlined inBankruptcy Rule 1001 to provide for thejust, speedy and determination of evencase and proceeding. Unfortunatelynationwide service of process as allowedin Bankruptcy Rule 7004 is inapplicableto serving subpoenas. In fact, BankruptcyRule 7004(d) explicitly provides that [t]hesummons and complaint and all other pro-cess except a subpoena may be servedanywhere in the United States.24 Clearly,the drafters of the Bankruptcy Rules con-

sidered a subpoena to be other process.Since Bankruptcy Rule 7004 outlines howprocess is to be served, it should be the keyfor serving subpoenas in bankruptcy casesand proceedings. Otherwise, the languageexcept a subpoena in Bankruptcy Rule7004(d) would be surplusage.

ConclusionCourts following the emerging minority

position have focused on the plain languageof Rule 45 and concluded that Rule 45 doesnot require personal service. On the otherhand, the majority view relies on the lan-

guage in Rule 4.In bankruptcy cases and proceedings,

bankruptcy practitioners have a powerfultool in Bankruptcy Rule 7004, but theymust remember the exception to nation-wide service of process for a subpoenaRegardless of the minority or majorityviews that the nonbankruptcy federal courtsfollow in your jurisdiction, in bankruptcycases and proceedings, service of a subpoe-na should be consistent with BankruptcyRule 7004. n

12 Id.at*12.13 Id.at*4.14 Id.at*4 (citingGonzalez v. McNary,980F-2d1418,1420(11thCir.

1993)(Asamatterofstatutoryinterpretation,thequerymustbeginby

lookingattheplainlanguageofthestatute.).15 Id.at*4.16 Id.at*4(citing Tubar v. Clift,2007U.S.Dist. LEXIS5674,2007WL

214260(W.D.Wash.2007)).17 Id.at*7(emphasisadded).18 Id.at*8(citingBank of Oklahoma NA v. Arnold,2008U.S.Dist.(Exs

12677,2008WL482860)(N.D.Okla.2008)).

19Fed.RuleCiv.Pro.4(e)(2)(A)(emphasisadded).20404F.2d267(5thCir.1968).21211F.R.D.685(N.D.Ga.2002).22404F.2d267(5thCir.1968);2008BankrLEXIS*10.23 In re Falcon Air Express Inc. ,2008Bankr.LEXIS1463,at*12. 24 Emphasisadded.

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