In re McCourts & McGrigor Donald
In re McCourts & McGrigor Donald
2001 WL 345233 (S.D.N.Y. 2001)
April 9, 2001

Martin, John S.,  United States District Judge

Third Party Subpoena
Cost-shifting
Cost Recovery
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Summary
The Court denied the motion to reconsider and ordered that the Respondents will be required to produce the requested documents only after receiving in advance the reasonably estimated costs of production, including the attorney's fees to be incurred by respondents in reviewing and selecting the documents to be produced. Electronically stored information (ESI) was not mentioned in this case.
In re Application of the LAW FIRMS OF MCCOURTS AND MCGRIGOR DONALD for the Production of Documents from the Law Firms of Condon & Forsyth and Windels, Marx, Lane & Mittendorf for Use in an Action Pending in the High Court of Justiciary of Scotland Pursuant to 28 U .S.C. § 1782
No. M. 19–96(JSM)
United States District Court, S.D. New York
April 09, 2001

Counsel

Frederick R. Dettmer, Law Offices of Frederick R. Dettmer, New York, NY, Stephen C. Leckar, Dennis M. Hart, Butera & Andrews, Washington, DC, for Applicants.
David M. Zornow, Lawrence S. Spiegel, Skadden Arps Slate Meagher & Flom, New York, NY, Laura A. Brevetti, New York, NY, for Respondents.
Martin, John S., United States District Judge

OPINION

*1 Presently before the Court is a motion to reconsider its prior ruling that the Applicants must pay Respondents' reasonable costs and expenses for production of documents in complying with the Applicants' discovery request.
The Applicants are counsel for two Lybian nationals currently on trial before an international tribunal in the Netherlands for the terrorist bombing of Pan Am Flight 103 over Lockerbie, Scotland. Applicants seek a variety of records currently in the possession of two law firms that represented Pan Am and its insurer, United States Aviation Underwriters, Inc. (“USAU”), in a civil action in the Eastern District of New York relating to that tragedy. Respondents contend that in order to comply with Applicants' request, a substantial amount of lawyer time will have to be expended in order to identify the requested material and to segregate out material that is protected by either the attorney/client or work product privilege.
The Federal Rules of Civil Procedure require that non-parties who are asked to respond to discovery requests be protected from “significant expense.” Fed.R.Civ.P. 45(c)(2)(b). Particularly as amended in 1991, Rule 45 requires that orders to compel production, “shall protect any person who is not a party or an officer of a party from significant expense resulting from the inspection and copying commanded.” Id. The Advisory Committee notes clarify the amended provision:
A non-party required to produce documents or materials is protected against significant expense resulting from involuntary assistance to the court. This provision applies, for example, to a non-party required to provide a list of class members. The court is not required to fix the costs in advance of production, although this will often be the most satisfactory accommodation to protect the party seeking discovery from excessive costs.
See also, Standard Chlorine of Delaware, Inc. v. Sinibaldi, 821 F. Supp 232 (D.Del.1992) (interpreting non-party cost question under both old and amended Rule 45).
The discretion which the district court had to alleviate non-party costs under the old Rule 45(c)(2)(b) “become[s] mandatory” under the 1991 amendments. In re First American Corp., 184 F.R.D. 234, 240 (S.D.N.Y.1998). However, the required “[p]rotection from significant expense does not mean that the requesting party necessarily must bear the entire cost of compliance .” In re Exxon Valdez, 142 F.R.D. 380, 383 (D.D.C.1992). “A non-party can be required to bear some or all of its expenses where the equities of a particular case demand it.” Ibid. (citing e.g ., United States v. International Business Mach. Corp., 62 F.R.D. 507 (S.D.N.Y.1974).
Both Exxon Valdez and First American hold that the relevant factors considered under the old rule in determining how much of the costs the requesting party should bear apply to the amended rule as well. First American, 184 F.R.D. at 241; Exxon Valdez, 142 F.R.D. at 383. Those three factors are “whether the nonparty actually has an interest in the outcome of the case, whether the nonparty can more readily bear the costs than the requesting party and whether the litigation is of public importance.” Linder v. Calero–Portocarrero, 180 F.R.D. 168, 177 (D.D.C.1998) (citing In re Exxon Valdez, 142 F.R.D. at 383).
*2 Applicants argue that Pan Am and USAU have an interest in the underlying criminal prosecution because the airline and its insurer have filed a civil action in Scotland against the Applicant's clients and the government of Lybia. Pan Am and USAU seek to recover in excess of $500 million paid to the families of the victims of the crash. Applicants argue that in pursuing that litigation, Pan Am and USUA will have to have the attorneys conduct the same type of review that must be made to respond to the discovery request.
While it is true that courts have held that an interested non-party can be expected to bear some of the costs of compliance with a discovery request, see Exxon Valdez, 142 F.R.D. at 383; First American, 184 F.R.D. at 242, the facts of those cases are substantially different from those presented here.
In re First American was a suit arising out of a massive bank fraud committed by the Bank of Credit and Commerce International (“BCCI”). BCCI's auditor, Price Waterhouse (“PW”), was not a party to the suit but was deemed interested for the purposes of absorbing costs of compliance with First American's subpoena for documents. PW was interested, the court held, because it should have reasonably anticipated being drawn into subsequent litigation. As the auditor for a bank that had committed the “largest bank fraud in world history,” involvement in subsequent litigation was virtually assured. Id. at 235. The amount PW requested as reimbursement for its costs in complying with First American's subpoena, $210,990.67, was reduced to $75,000.00.
In Exxon Valdez, the American Petroleum Institute (“API”) was the non-party trade association from whom plaintiffs requested documents. The court deemed API interested in the outcome of the litigation because 29% of its income came from organizations it represented who were parties to the suit. Id. at 384. Therefore, the court ordered API to pay 29% of the costs of compliance. Id.
Although both Pan Am and USAU are involved in concurrent civil litigation based on the accident that is the subject matter of the criminal prosecution, they are more closely analogous to “the quintessential, innocent, disinterested bystander[s].” First American, 184 F.R.D. at 242, than were the respondents in either Exxon Valdez or First American. Here Pan Am and USUA are themselves victims of the terrorist acts that Applicants' clients have been charged with committing. Thus, the equities strongly militate against requiring the victims to bear the cost of their assailants' defense. United States v. International Business Mach. Corp., 62 F.R.D. 507 (S.D.N.Y.1974).
Even if there were some reason to find that it might be equitable to consider compelling the victims to bear some cost of the defense, Applicants have failed to satisfy the second requirement for compelling a non-party to bear some of the expense of production, i.e., that the non-party is better able to bear the cost. Applicants have presented no evidence concerning the financing of their defense. Since the government of Lybia is a defendant in the civil action commenced by Pan Am and USUA, it may well be financing the defense in the Netherlands. There is, therefore, no basis to conclude that it is inequitable to allow Respondents to recover their costs.
*3 The final factor to be considered in determining whether a non-party should bear the costs of production is the public importance of the subject litigation Both Exxon Valdez and First American stressed the high-profile nature of the cases and the strong public interest in the outcome. Exxon Valdez, 142 F.R .D. at 384; First American, 184 F.R.D. at 242; see also, United States v. International Business Mach. Corp., 62 F.R.D. 507, 509 (S.D.N.Y.1974) (deeming that “all citizens have an interest” in the resolution of a “major antitrust suit”).
While the criminal trial arising out of the Pan Am 103 disaster is undoubtedly of high public interest, that factor alone does not justify requiring victims of that attack to bear a portion of the costs of an apparently well-financed defense.
Thus the motion to reconsider is denied and the Respondents will be required to produce the requested documents only after receiving in advance the reasonably estimated costs of production, including the attorney's fees to be incurred by respondents in reviewing and selecting the documents to be produced. Since Respondent voluntarily produced some documents without seeking reimbursement and Applicants' clients are not before the Court, the Court denies Respondent's motion to compel Applicants to reimburse them for those costs.
SO ORDERED.