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Lotus Industries, LLC v. Archer

United States District Court, E.D. Michigan, Southern Division

May 24, 2019

LOTUS INDUSTRIES, LLC, et al., Plaintiffs,
v.
DENNIS ARCHER, Jr., et al. Defendants.

          Sean F. Cox, District Judge

          MEMORANDUM ORDER GRANTING IN PART, AND DENYING IN PART WITHOUT PREJUDICE, NONPARTY CITY OF DETROIT DOWNTOWN DEVELOPMENT AUTHORITY'S MOTION FOR PROTECTIVE ORDER IN CONNECTION WITH THE COURT'S ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO COMPEL (DE 124)

          ANTHONY P. PATTI, UNITED STATES MAGISTRATE JUDGE

         I. Introduction

         This matter is before the Court for consideration of nonparty City of Detroit Downtown Development Authority's (DDA) motion for protective order in connection with the Court's order granting in part and denying in part Plaintiff's motion to compel documents requested by subpoena (DE 124), Plaintiff's response (DE 133), the parties' joint statement of resolved and unresolved issues (DE 134), and nonparty DDA's submission in connection with the telephone conference concerning DDA's motion (DE 138). All discovery matters have been referred to me for hearing and determination (DE 102), and a hearing on DDA's motion was held on May 8, 2019, at which counsel appeared, the Court entertained oral argument regarding nonparty DDA's motion, and then held that motion in abeyance to permit DDA to conduct a search for responsive documents using newly agreed upon search terms and then to report to the Court the results of that search in a telephonic status conference held on May 23, 2019. Upon consideration of the motion papers and oral argument of counsel, nonparty DDA's motion for protective order (DE 124) is GRANTED IN PART, AND DENIED IN PART WITHOUT PREJUDICE, for the reasons set forth below.

         II. Procedural Background

         On January 27, 2019, Plaintiff filed a motion to compel production of documents requested in his September 13, 2018 subpoena to nonparty DDA. (DE 111.) A hearing was held on Plaintiff's motion on March 26, 2019, after which the Court entered an order granting in part and denying in part Plaintiff's motion, ordering DDA to produce, by April 26, 2019, documents responsive to Request Nos. 4-6 of Plaintiff's subpoena for the November 19, 2016 to present time period, and to produce a privilege log for any documents withheld on the basis of privilege. (DE 119.)

         On April 19, 2019, DDA filed the instant motion for protective order, seeking an extension of time to produce responsive documents and requesting that Plaintiff pay DDA its share of the expenses of production before DDA is obligated to undertake further efforts to comply with the Court's order. (DE 124.) DDA contends that the volume of potentially responsive documents is substantially larger than anticipated (48.5 GB of data) and would impose a significant expense on DDA to produce and require far more time to complete than allowed by the Court's order. (Id. at 11.) DDA initially anticipated the total expense of production at $127, 653.00, which includes $21, 875.00 in costs to upload the data and approximately $105, 778.00 in attorney's fees in connection with a privilege review. (Id. at 19.) DDA requested Plaintiff pay the $21, 875 in costs and 25% of the anticipated attorney's fees ($26, 444.50) before DDA is obligated to undertake further efforts to comply with the Court's order. (Id.) Plaintiff opposed that motion and questioned why the costs were so high. (DE 133.)

         At the May 8, 2019 hearing on this motion, the parties agreed on new search terms in an attempt to further refine the number of responsive documents and the Court scheduled a telephonic status conference for May 23, 2019 to discuss the results of that search. On May 22, 2019, DDA submitted a supplemental brief explaining that the revised search yielded 8.5 GB of data that must be reviewed for privilege, at a cost of $2, 125.00 to upload the data to counsel's e-discovery platform and anticipated costs of $44, 705.00 in attorneys' fees to conduct a privilege review. (DEs 138 at 3, 138-1, 138-2, 138-3.) DDA now seeks an order that Plaintiff pay DDA $2, 125.00 in costs and $11, 176.25 in attorneys' fees (25% of the total attorneys' fees anticipated). (DE 138 at 4.)

         The Court held a telephonic status conference with counsel for the parties on May 23, 2019, at which it entertained further discussion and stated that an Order would be issued GRANTING IN PART, AND DENYING IN PART WITHOUT PREJUDICE, DDA's motion (DE 124).

         III. Standard

         “It is well settled that decisions on matters pertaining to discovery, including subpoena compliance, rest in the sound discretion of the trial court and will not be disturbed absent a showing of an abuse of that discretion.” State Farm Mut. Auto. Ins. Co. v. Elite Health Ctrs., Inc., 364 F.Supp.3d 758, 766 (E.D. Mich. 2018) (citing Bush v. Dictaphone Corp., 161 F.3d 363, 367 (6th Cir. 1988)). Federal Rule of Civil Procedure 45(d)(2) provides that “[a] party or attorney responsible for issuing a subpoena must take reasonable steps to avoid imposing an undue burden or expense on a person subject to the subpoena[, ]” and Rule 45(d)(2)(B)(ii) protects non-parties who object to the subpoena from incurring “significant expense resulting from compliance.” However, “protection of a non-party from significant expense does not necessarily mean that the party issuing the subpoena must bear the entire cost of compliance.” See Hennigan v. General Electric, No. 09-11912, 2012 WL 13005370, at *2 (E.D. Mich. Apr. 2, 2012). Courts have generally considered three equitable factors when considering cost-shifting and non-parties: (1) whether the nonparty has an interest in the outcome of the case; (2) whether the nonparty can more readily bear its costs than the requesting party; and (3) whether the litigation is of public importance. Id. (collecting cases).

         Courts also consider whether a nonparty's legal fees should be considered a cost of compliance, where the work benefits the requesting party. Hennigan, 2012 WL 13005370 at *2 (noting generally that “a privilege review does not benefit the requesting party and is generally an expense that, absent some unusual circumstances, should be borne by the responding party”); see Lefta Assocs. v. Hurley, No. 09-2487, 2011 WL 1793265, at *4 (M.D. Pa. May 11, 2011) (“courts have held that ‘[a] nonparty's legal fees, especially where the work benefits the requesting party, have been considered a cost of compliance' and may be subject to reimbursement.”) (emphasis added); Georgia-Pacific LLC v. American Int'l Specialty Lines Ins. Co., 278 F.R.D. 187, 190-91 (S.D. Ohio 2010) (finding nonparty was entitled to recover at least a portion of its attorney fees because counsel for the nonparties had a duty to protect class members in class action litigation with respect to disclosure of any confidential medical records or other health information falling under HIPAA and had to review ten bankers' boxes of documents as well as electronically stored information, then prepare objections and/or privilege logs).

         IV. Discussion

         The Court here exercises its discretion and finds that, under the facts and circumstances of this case, DDA is entitled to an award of costs (including a percentage of anticipated attorneys' fees) for responding to Plaintiff's subpoena as ordered by the Court (DE 119) and as narrowed at the May 8, 2019 hearing, which must be paid ...


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