Managing The Risks And Costs Of Responding To Third-Party Civil Subpoenas (Electronic Discovery & Records Management - Tip Of The Month)

Keywords: third-party civil subpoenas, securities law, violations, ESI, Rule 45

Scenario

A large customer of a manufacturing company is sued by a putative class of shareholders claiming various securities law violations related to an alleged failure to disclose the declining sales of one of their products, for which the manufacturing company provides parts. The manufacturing company receives a broad third-party subpoena for documents, which requests emails and other communications regarding manufacturing and supply challenges during a specified period of time. To collect and produce all of the electronically stored information (ESI) potentially responsive to this subpoena would take substantial time and effort on the part of the manufacturing company's legal department, IT staff and business management. The manufacturing company's general counsel believes that some or all of the information can be more easily obtained from the defendant-customer.

Rule 45 Limits the Burdens on Third Parties

The Federal Rules of Civil Procedure contains protections designed to minimize burdens on third parties; recipients of third-party subpoenas are wise to take advantage of these protections to try to narrow the scope of the required production. But the Rules are also intended to ensure that important information is produced, even if the production imposes a significant burden on a third party. When documents are produced under a third-party subpoena, counsel should take steps to ensure that the production is made carefully and deliberately. Even when responding to a third-party subpoena, there remains a risk of waiver of privilege, the release of confidential, business-sensitive information, and the disclosure of personal (and potentially protected) information. While organizations often attempt to limit the costs associated with responding to third-party subpoenas, counsel should consider the potential risks of producing documents that have not been fully reviewed by lawyers before production.

Under Federal Rule of Civil Procedure 45, a party seeking discovery from a third party has an affirmative duty to take reasonable steps to avoid imposing an undue burden or expense on the person or entity subpoenaed. Courts have consistently held that third-party status is a significant factor to be considered when determining whether a subpoena is unduly burdensome. Accordingly, a third party's obligation to preserve and produce relevant ESI is far more limited...