Peter R. Boutin
Partner Keesal, Young & Logan PC
450 Pacific Avenue
San Francisco , CA 94133
Email: peter.boutin@kyl.com
Santa Clara Univ SOL; Santa Clara CA
Sarah Malik
Associate Keesal, Young & Logan PC
While generally considered "strangers" to litigation, nonparties often play a significant role in discovery. In Park v. Law Offices of Tracey Buck-Walsh, involving a collateral dispute between a plaintiff and the California Department of Justice, the California Court of Appeal affirmed an order requiring the plaintiff to pay 50% of the DOJ's costs of complying with a subpoena to produce electronically stored information. Park v. Law Offices of Tracey Buck-Walsh, 2021 DJDAR 13143 (Dec. 27, 2021). The court issued a reminder of the protections afforded to nonparties with no stake in the underlying litigation. In this two-part series, we address 20 questions that arise frequently related to nonparty discovery and that touch upon many of those third-party protections. Here are the first 10.
1. When does a nonparty have a duty to preserve documents?
While California decisions do not specify at what exact moment a duty to preserve arises for nonparties, a general rule of thumb is that a duty to preserve is not triggered until the nonparty is served with a deposition subpoena. In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1068 (N.D. Cal. 2006). The mere awareness of a lawsuit typically is insufficient to trigger preservation obligations. Temple Cmty. Hosp. v. Super. Ct., 20 Cal. 4th 464, 476-77 (1999).
There are instances where this duty may arise sooner than service of a formal subpoena, for example, when provided by statute, contract or a voluntary undertaking to preserve evidence. Temple Cmty., 20 Cal. 4th at 476 (1999); see also Cooper v. State Farm Mutual Automobile Ins. Co., 177 Cal. App. 4th 876, 882 (2009) (finding nonparty State Farm owed plaintiff a duty to preserve evidence by voluntarily undertaking to preserve the evidence "when it made the promise to preserve the tire and plaintiff relied thereon."); Lofton v. Verizon Wireless (VAW) LLC, 308 F.R.D. 276 (N.D. Cal. 2015) (nonparty had a duty to preserve ESI before being served a subpoena because preservation obligations were triggered when the nonparty was previously involved in a similar lawsuit). Preservation letters demanding a nonparty to preserve documents may also trigger a duty to preserve. Messenger, "Non-Party Discovery in California," 12 (Robins Kaplan LLP ed., 2015).
Notwithstanding the foregoing obligations, the California Supreme Court has held, absent a special relationship (e.g., statutory or contractual), a nonparty will not be liable for intentional third-party spoliation of evidence where it fails to preserve evidence unless a party litigant makes a specific request before the destruction of the evidence. Temple Cmty., 20 Cal. 4th at 477.
2. Do parties have a right to challenge nonparty deposition subpoenas?
California parties have a right to challenge a nonparty deposition subpoena in state court, but not in federal court. See Cal. Civ. Proc. Code Section 1987.1(b) ("A motion to quash a deposition subpoena for production of documents may be made by a party."). This right extends also to consumers or employees who may challenge a nonparty deposition subpoena seeking their consumer or employee records. Cal. Civ. Proc. Code Sections 1985.3(g), 1985.6(f).
Challenging parties must be mindful of the possibility of sanctions. Challenging a nonparty deposition subpoena must not be made or opposed in bad faith or without substantial justification, for the losing party may be subject to monetary sanctions, which include payment of the prevailing party's expenses and reasonable attorney fees incurred on the motion to quash. Hon. Lee Smalley Edmon, Hon. Curtis E.A. Karnow, "Cal. Prac. Guide: Civ. Proc. Before Trial," Section 8:602.10 (The Rutter Group 2020); Cal. Civ. Proc. Code Section 1987.2(a).
In federal court, absent a claim of privilege, a party has no standing to challenge a subpoena to a nonparty. Crispin v. Christian Audigier, Inc., 717 F. Supp. 2d 965, 973-74 (C.D. Cal. 2010). In other words, the party to whom the subpoena is directed is the only party with standing to oppose it. Littlefield v. NutriBullet, L.L.C., 2018 WL 5264148, at *4 (C.D. Cal. 2018) (quoting Donahoo v. Ohio Dep't of Youth Servs., 211 F.R.D. 303, 306 (N.D. Ohio 2002)); see also Schmulovich v. 1161 Rt. 9 LLC, 2007 WL 2362598, at *2 (D. N.J. 2007) ("Personal rights claimed with respect to bank account records give a party sufficient standing to challenge a third-party subpoena served upon financial institutions holding such information.").
3. Does a nonparty deponent have to appear in person at a deposition?
A nonparty deponent typically may appear by telephone, videoconference or other remote electronic means with court approval upon a finding of good cause and no prejudice to any party. Cal. Civ. Proc. Code Section 2025.310(b); Cal. R. Ct. 3.1010(d). Similarly, in federal courts, "parties may stipulate -- or the court may on motion order -- that a deposition be taken by telephone or other remote means." Fed. R. Civ. P. 30(b)(4).
As a result of the COVID-19 pandemic, remote depositions have become cost-effective and efficient alternatives to in-person depositions. On September 18, 2020, Gov. Gavin Newsom took a permanent step to facilitating remote depositions by signing Senate Bill 1146, which codified temporary Emergency Rule 11, enacted in response to the coronavirus pandemic. Cal. Civ. Proc. Code Section 2025.310. Among other important changes, SB 1146 permanently amended Cal. Civ. Proc. Code Section 2025.310(b) to allow party and nonparty deponents alike to appear outside the physical presence of the deposition officer and instead by telephone or other remote electronic means.
Federal courts likewise are permitting depositions to be taken by telephone, video conference or other remote means. See Veterans Rideshare, Inc. v. Navistar Int'l Corp., 2021 U.S. Dist. LEXIS 240838, at *4 (S.D. Cal. Dec. 16, 2021) (quoting Grano v. Sodexo Mgmt., 2020 U.S. Dist. LEXIS 72862, at *11-12 (S.D. Cal. 2020)) ("The court reporter may also be remote provided that pursuant to Rule 28, 'a deposition will be deemed to have been conducted before an officer so long as that officer attends the deposition via the same remote means (e.g., telephone conference call or video conference) used to connect all other remote participants, and so long as all participants (including the officer) can clearly hear and be heard by all other participants.'")
4. What if a nonparty fails to comply with a deposition subpoena?
The subpoenaing party may move the court for an order compelling an answer or production from the nonparty. See Cal. Civ. Proc. Code Section 2025.480(b) (a subpoenaing party has 60 days after "the completion of the record of the deposition" to file a motion to compel that is accompanied by a meet and confer declaration). Where a nonparty appears but refuses to testify or to answer particular questions, or answers evasively, the remedy is a motion to compel. Fed. R. Civ. P. 37(a).
In addition, the failure of a nonparty deponent to comply with a deposition subpoena is punishable as contempt. Cal. Civ. Proc. Code Sections 2020.240, 2023.010; see also Gregori v. Bank of America, 207 Cal. App. 3d 291, 311 (1989) ("Deliberate refusal to obey a lawfully issued subpoena to attend a deposition is punishable as a contempt without the necessity of a prior order directing compliance."). A nonparty that fails to appear pursuant to a deposition subpoena is also subject to the payment of damages, in addition to the payment of $500. Cal. Civ. Proc. Code Sections 2020.240 and 1992. Similar sanctions can be sought in federal court. Fed. R. Civ. P. 37(b).
5. What if a nonparty has no responsive documents?
A nonparty may not simply ignore the deposition subpoena if it has no responsive documents. In California, if a nonparty does not possess any responsive documents, then the nonparty must provide an affidavit stating that fact. Cal. Evid. Code Section 1561(b).
6. What if a nonparty receives an unreasonable demand for ESI?
A nonparty may object to an unreasonable demand for ESI on the grounds of undue burden or expense. Cal. Civ. Proc. Code Section 1985.8(e). Undue burden or expense can arise due to "the technical challenge of extracting information from older computer systems or storage media, in another the complexity of the required privilege review or the sheer volume of information potentially responsive to a subpoena." Park. To assert such an objection, the nonparty must identify in its objection, the categories of sources that it asserts are not reasonably accessible. Cal. Civ. Proc. Code Section 2031.210(d).
Even where undue burden or expense is established, the court may still require compliance with a subpoena with limiting conditions, including allocating the expense of production. Park ("The [CA] DOJ's inability to prove that this burden excused it from having to respond at all to the subpoena did not preclude the [CA] DOJ from "seeking reimbursement for 'undue expense' incurred in responding to the subpoena.").
While California's ESI rules closely follow the Federal Rules of Civil Procedure, one notable difference is that the federal rules do not require production of ESI that is "not reasonably accessible because of undue burden or cost." Fed. R. Civ. P. 26(b)(2)(B). Federal rules place the burden on the requesting party to make a showing of good cause that a claimed inaccessible data source has to be searched. In contrast, California law places the burden on the responding party to make a showing of inaccessibility.
7. May a nonparty take advantage of clawback provisions for ESI?
The sheer volume of modern ESI discovery increases the likelihood of inadvertent production. Fortunately, California has procedures that allow a nonparty to "claw back" inadvertently produced ESI that is subject to a claim of privilege or attorney work product.
Upon discovering the inadvertent production of privileged information, the nonparty must promptly notify the receiving party, and the receiving party must immediately sequester the materials, and either return the materials (including any copies) or present the materials to the court under seal pending a ruling on the claim of privilege. Cal. Civ. Proc. Code Section 2031.285(b). The party in possession of the inadvertently produced materials is precluded from using or disclosing the information until the claim of privilege is resolved by the court. Cal. Civ. Proc. Code Sections 2031.285(c)(1), (d)(2).
These procedures do not resolve whether such inadvertent production waived the asserted claim of privilege. To ensure an inadvertent production does not waive the asserted privilege, the nonparty should enter into a clawback agreement with the requesting party prior to producing any ESI.
8. On what grounds may a nonparty move to quash a deposition subpoena?
The grounds for objecting to a deposition subpoena are essentially the same in state and federal court. Messenger, "Non-Party Discovery in California" at 15. A deposition subpoena may be challenged for procedural defects as well as substantive defects, which include the following: that the requested documents are "not within the permissible scope of discovery;" privileged; protected by privacy; or "not relevant to the subject matter." Edmon & Karnow, "Cal. Prac. Guide: Civ. Proc. Before Trial," Section 8:598. A motion to quash may also be based on the premise that the demand is unduly burdensome. See Calcor Space Facility, Inc. v. Super. Ct., 53 Cal. App. 4th 216, 223 (1997) (holding that six pages of "definitions" and "instructions" was grossly excessive and made business-records subpoena unduly burdensome).
Where a deposition subpoena requests the production of the records of a nonparty consumer or employee, the deposition subpoena may be challenged to protect that consumer or employee's right of privacy. Edmon & Karnow, "Cal. Prac. Guide: Civ. Proc. Before Trial," Section 8:580(d); Cal. Civ. Proc. Code Section 2020.030; see also Fett v. Medical Bd., 245 Cal. App. 4th 211, 213 (2016) (petitions to quash subpoena to nonparties' doctor because of privacy rights).
9. What constitutes recoverable "reasonable costs" incurred in connection with the production of documents by a nonparty?
In state court, a nonparty is entitled to be reimbursed by the requesting party for "all reasonable costs" incurred in the production of business records requested by a deposition subpoena. Cal. Evid. Code Section 1563(b). Some costs include clerical expenses in locating the records and reproducing them, copying costs, and actual postage charges. Cal. Evid. Code Section 1563(b)(1). If the subpoenaing party merely inspects or makes copies of the documents at the nonparty's place of business, recoverable fees cannot exceed $15, plus any actual costs. Cal. Evid. Code Section 1563(b)(6). Similar protections exist in federal court. Fed. R. Civ. P. 45.
10. Does a nonparty have to produce a privilege log?
A nonparty that objects to a request for document production based on a claim of privilege must support that claim with "sufficient factual information for other parties to evaluate the merits of that claim, including, if necessary, a privilege log." Cal. Civ. Proc. Code Section 2031.240(c)(1); see also Wellpoint Health Networks, Inc. v. Super. Ct., 59 Cal. App. 4th 110, 129 (1997) ("The information in the privilege log must be sufficiently specific to allow a determination of whether each withheld document is or is not fact privileged.").
Failure to timely provide a privilege log does not constitute waiver of the privilege. To preserve the claim to privilege, the nonparty must serve a timely written objection asserting the claim to privilege. See Catalina Island Yacht Club v. Super. Ct., 242 Cal. App. 4th 1116, 1126 (2015) (finding that even if the responding party fails to serve a privilege log, serves an untimely privilege log, or serves a privilege log that fails either to adequately identify the documents to which the objection purportedly applies or provide sufficient factual information for the propounding party to evaluate the objection, a court lacks the authority to order the objection waived).
Written objections should be submitted along with a privilege log to aid the court in deciding whether the requested discovery is privileged. Best Products, Inc. v. Super. Ct., 119 Cal. App. 4th 1181, 1189 (2004).