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Cedar Rapids Lodge & Suites, LLC v. Seibert

United States District Court, D. Minnesota

June 18, 2018

Cedar Rapids Lodge & Suites, LLC, et al., Plaintiffs,
John F. Seibert, et al., Defendants.


          Katherine Menendez United States Magistrate Judge

         This matter is before the Court on the Plaintiffs' request to compel compliance with a Rule 45 subpoena by non-party Phillip A. Cole, an attorney with the Lommen Abdo law firm. Mr. Cole asks the Court to Order the Plaintiffs to compensate him for his time in responding to the subpoena. For the reasons that follow, the Court grants the Plaintiffs' motion to compel compliance with the subpoena and denies Mr. Cole's request for an Order requiring payment.


         The Plaintiffs are attempting to collect on several million dollars in separate judgments obtained years ago against Defendant John Seibert and one of his companies, JFS Development Inc., in the Northern District of Iowa. However, Plaintiffs allege that they have been unable to collect on those judgments because Mr. Seibert and his spouse, Defendant Julie Seibert, have engaged in fraudulent transfers and other fraudulent conduct to avoid paying the debt. Mr. Cole is familiar with these proceedings, having represented Ms. Seibert from at least July 1, 2016 (ECF No. 58), until current defense counsel substituted into the case on July 25, 2017 (ECF No. 166).

         During discovery, as the Plaintiffs attempted to obtain information relevant to the alleged fraudulent transfers, John and Julie Seibert stated that certain financial decisions they made were based on the advice of their attorneys. As the Court recently explained, both John and Julie Seibert thereby invoked an advice-of-counsel defense on behalf of themselves and Trinity Business Consulting. As a result, they waived the work-product protection and attorney-client privileges as to several specific subject areas delineated by the Court. (Order (Jun. 1, 2018), ECF No. 265.) Perhaps obviously, Defendants' assertion of the advice-of-counsel defense and the resulting waivers means that the Plaintiffs are entitled to discover information from the attorneys who allegedly advised the Defendants' conduct. To probe such information, the Plaintiffs served a subpoena on Mr. Cole. Given that this case will be tried in less than three months, time is of the essence.

         The Dispute Over the Subpoena

         The Plaintiffs and Mr. Cole presented their dispute concerning that subpoena to the Court by email. The relevant emails are included in the Appendix attached to this Order. (See App.) The Plaintiffs asked the undersigned to intervene about Mr. Cole's request for payment before he complies with the subpoena. (App. at A-2). The Court construes the Plaintiffs' email as a motion to compel production or inspection. Fed.R.Civ.P. 45(d)(2)(B)(i). In his email to the Court, Mr. Cole asks: “Please consider this email an objection under the Rule. . . .” (App. at ¶ 1.) He further states that he “hope[s] to avoid appearing in court and plead[s] with the Court to rule upon the issue with the communications in hand.” (Id.) The Court construes Mr. Cole's emails as a response in opposition to the Plaintiffs' motion to compel compliance.

         In his emails, Mr. Cole does not argue that the Plaintiffs' subpoena seeks irrelevant information, fails to allow a reasonable time to comply, or requires him to comply beyond the geographical limits specified in Rule 45(c). See Fed. R. Civ. P. 45(d)(3)(A)(i)-(iii) (allowing the Court to quash or modify a subpoena under certain circumstances). He argues only that he should be compensated at his professional rate for the time it takes him to respond to the subpoena's commands. Specifically, Mr. Cole estimates that it will take him three hours to review the file and comply with the subpoena. Because his own hourly rate for legal work performed on behalf of clients is $450/hour, he asks the Court to require the Plaintiffs to pay him $1, 350 to cover his costs of complying with the subpoena. (See App. at ¶ 5.) The Plaintiffs argue that no such payment is required. (See Id. at A2-A3.)

         Significant Expense

         Rule 45 requires a Court compelling compliance with a subpoena to protect a person who is not a party from “significant expense resulting from compliance.” Fed.R.Civ.P. 45(d)(2)(B)(ii). “‘Rule 45(d)(2)(b)(ii) requires the district court to shift a non-party's costs of compliance with a subpoena, if those costs are significant.'” Balfour Beatty Infrastructure, Inc. v. PB & A, Inc., 319 F.R.D. 277, 281 (N.D. Cal. 2017) (quoting Legal Voice v. Stormans Inc., 738 F.3d 1178, 1184 (9th Cir. 2013)). Whether a subpoena imposes significant expense on a non-party depends on the “‘circumstances of a particular case.'” Id. (quoting Untied States v. McGraw-Hill Cos., Inc., 302 F.R.D. 532, 536 (C.D. Cal. 2014)).

         Although the Rule requires a Court to protect the non-party from significant expense, “[a] non-party can be required to bear some or all of its expenses where the equities of a particular case demand it.” In re Honeywell Int'l, Inc. Sec. Litig., 230 F.R.D. 293, 303 (S.D.N.Y. 2003) (denying a request for costs of compliance with a subpoena where the non-party was “not a classic disinterested non-party” and offered no “basis for determining the reasonable costs for compliance with the subpoena”); Honda Lease Trust v. Middlesex Mut. Assur. Co., No. 3:05-cv-1426 (RNC), 2008 WL 349239, at *5 (D. Conn. Feb. 6, 2008) (“‘Typically, a non-party is required to absorb the costs of complying with a subpoena duces tecum. Generally, reimbursement only occurs where the costs are great or the document demand unreasonably broad.'”) (quoting Florida Software Systems, Inc. v. Columbia/HCA Healthcare Corp., No. 99-MC-0036E, 2002 WL 1020777 (W.D.N.Y. Feb. 25, 2002)).

         Mr. Cole has not demonstrated that the cost of compliance with the Plaintiffs' subpoena or the three hours he estimates it will take him to provide responsive documents amounts to a “significant expense.” Mr. Cole asserts only that complying with the subpoena will require him to spend time examining his file to provide documents that are responsive to the subpoena while not providing information that remains privileged. But this is an ordinary incident of responding to a subpoena, not a demonstration of significant expense. At the heart of the matter, rather than a payment to offset significant expense, Mr. Cole's request is to be compensated for the loss of three hours that he could otherwise spend earning an attorney's fee. However, that is a cost of doing business, and the cost-shifting provisions of Rule 45 do not kick in merely because a party may be mildly inconvenienced.

         In determining whether a subpoena imposes a significant expense, courts also consider a non-party's “financial ability to bear the costs of production.” Balfour Beatty, 319 F.R.D. at 281. This consideration does not support Mr. Cole's request. He did not present any argument or proof to demonstrate that he cannot bear the costs of production. Given that he bills his time at $450 per hour, it seems unlikely that the costs associated with three hours of gathering and reviewing documents for production really amounts to a significant expense.

         Undue ...

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