Conning the IADC Newsletters.

Recognizing that a wide range of practical and helpful material appears in the newsletters prepared by committees of the International Association of Defense Counsel, this department highlights interesting topics covered in recent newsletters and presents excerpts from them.

Non-parties May Be Able To Recoup Costs

Writing in the September issue of the Advocacy, Practice and Procedure Committee newsletter, Randall R. Riggs and Carol A. Modesitt of Locke Reynolds Boyd & Weisell, Indianapolis, remind counsel of an option:

If you serve or receive non-party subpoenas with numerous requests for production of documents, you should be aware that the non-party may be able to recoup lost earnings and attorney's fees incurred by complying with the subpoena. In Fetch v. Conseco Inc., IP 92-699c M/S (S.D. Ind. Aug. 21, 1998), the U.S. District Court for the Southern District of Indiana allowed a non-party to recover its employees' lost earnings and attorney's fees incurred in responding to a subpoena containing 36 requests for production of documents.

Securities violations alleged

The plaintiff sued Conseco, alleging securities violations, and subsequently served Coopers and Lybrand (C&L), a non-party, with a subpoena containing 36 requests for production of documents concerning Conseco. C&L's attorney informed the plaintiff's attorney that approximately 35 to 40 linear feet of documents had been gathered but that the attorneys had not yet reviewed or screened the documents. C&L requested three extensions of time for filing its response to the subpoena, but it did not file an objection or move to quash.

After complying with the subpoena, C&L sought reimbursement for $10,578.13 in lost earnings for C&L employees and $17,496.39 in attorney's fees. The plaintiff argued that because C&L never provided notice of its intent to seek reimbursement and never objected or moved to quash the subpoena, it should not be entitled to recoupment.

The court rejected the plaintiff's argument and granted C&L's motion, awarding C&L a reduced amount of $12,341.25.

Reliance on rules

The court relied heavily on Rules 45(c) and 26(c) of the Federal Rules of Civil Procedure. Rule 45(c)(1) provides that a party responsible for the issuance of a subpoena shall "take reasonable steps to avoid imposing undue burden or expense on a person subject to that subpoena." Rule 45(c) allows the court to "impose upon the party or attorney in breach of this duty an appropriate sanction, which may include, but is not limited to, lost earnings and reasonable attorney's fee." Rule 26(c) provides that after the parties have in good faith attempted to resolve their dispute without court action, a court may "make any order which justice requires to protect a party or person from annoyances, embarrassment, oppression, or undue burden or expense."

Several courts have cited Rules 45(c) and 26(c) when determining whether a person should be reimbursed for expenses incurred while complying with a subpoena. Spears v. City of Indianapolis, 74 F.3d 153 (7th Cir. 1996); United States v. Columbia Broadcasting System Inc., 666 F.2d 364 (9th Cir. 1982), cert. denied, 457 U.S. 118 (1982); Mycogen Plant Science Inc. v. Monsanto Co., 164 F.R.D. 623 (E.D. Pa. 1996); Compaq Computer Corp. v. Packard Bell Electronics Inc., 163 F.R.D. 329 (N.D. Cal. 1995). In each of these cases, it is interesting to note, the non-party had either filed an objection or moved to quash the subpoena prior to seeking reimbursement.

However, Fetch rejected the plaintiff's argument that the non-party must first object or move to quash the subpoena before seeking reimbursement. C&L was not required to give formal notice of its intention to seek reimbursement or to move to quash, the court stated.

Heavy burden on non-parties

The court reasoned that under the plaintiff's argument, a non-party would "have no alternative but to file a motion to quash and to demand an advancement of fees as a sine qua non of production," even if the non-party was willing to comply with the subpoena, citing Columbia Broadcasting (666 F.2d at 367). Such a rule would require non-parties to interpret discovery and delay the trial process for the sole purpose for preserving their right to costs, the court said. A party should not be required to slow down the trial process in order to be able to recover costs, the court added. Moreover, a party who cooperates and supplies the serving party with the needed information should not receive any less protection because it did not first contest the subpoena. The Advisory Committee notes to Rule 45 also explain that a non-party subpoenaed to produce documents "is protected against significant expense resulting from involuntary assistance to the court."

Easy to locate?

The plaintiff also argued that the requested documents should have been easy to locate and gather and that it was not necessary for an attorney to review and screen all of them. Rejecting this contention, the court stated that the plaintiff should have known that the 36 subpoena inquiries would produce an enormous amount of documents that would require substantial time and effort to locate and review.

For instance, the plaintiff asked for documents such as "all documents concerning any Coopers' internal communications relating to their resolution of problems encountered or questioned raised during the course of any engagement for Conseco" and for documents concerning formal and informal investigations of Conseco. Given the number of the requests and the vagueness of the questions, the court said, the plaintiff could not ignore the reality that such production would be a burden on C&L and would require C&L to involve its attorneys.

Additionally, the court recognized that C&L needed to protect itself against any liability to Conseco if it divulged Conseco's privileged documents.

Although the court granted C&L's motion seeking reimbursement, it reduced the amount of recovery sought. C&L claimed $10,578.13 in lost earnings for C&L employees and $17,496.39 in attorney's fees. The court awarded C&L $2,520.00 for lost earnings and $9,685.75 in attorney fees.

A valuable option

Practitioners should remember that this option is available to a non-party complying with a subpoena. Depending on the required time and legal expertise involved, a non-party may be able to seek reimbursement for all or part of its lost earnings and for attorney's fees. This option is clearly available, at least under Fetch, regardless of whether the non-party provided notice of its intent to seek reimbursement or whether it objected or moved to quash the subpoena before complying.

Ingredient Supplier Not Liable for End Product

Writing in the September issue of the Product Liability Committee newsletter, D. Jeffrey Campbell and Anne K. Walsh of Porzio, Bromberg & Newman, Morristown, New Jersey, discuss a case decided under the new Restatement (Third) of Torts: Products Liability:

In Cimino v. Raymark Industries Inc., 151 F.3d 297 (1998), the Fifth Circuit held that a supplier of raw asbestos was not liable for injuries resulting from use of asbestos-containing end products manufactured by others. The court became the first jurisdiction to expressly follow Section 5 of the new Restatement (Third) of Torts: Products Liability (1997), which deals with ingredient supplier liability.

This landmark and long-awaited decision clearly sets forth the standard that courts should apply to determine the liability of an ingredient supplier for harms caused by use of a finished product.

Ingredient supplier liability

Asbestos Corporation Limited (ACL) sold raw chrysotile asbestos fiber to Fibreboard, a manufacturer of various asbestos-containing finished products such as insulation, shingles, and linoleum. ACL's sole business was the mining and sale of raw asbestos fiber. It did not design, manufacture, sell, or distribute any asbestos-containing finished products.

The Cimino...