Appealability/Discovery/Sanctions: Ninth Circuit Decides That Non-Party’s Appeal Of Interlocutory Orders After Date Of Final Judgment Is Timely

 

Appeals Court Affirms Denial of Sanctions But Remands for Cost-Shifting in Favor of Non-Party in FRCP 45 Subpoena Dispute.

     The Ninth Circuit has ended the year with a “bang” as far as clarifying non-party appeal rights and the circumstances under which subpoena compliance cost shifting is mandatory under F.R.Civ.P. 45.

     The opinion in which this occurred is Legal Voice v. Stormans Inc., Case No. 12-35224 (9^th Cir. Dec. 31, 2013) (published), authored by Circuit Judge Tashima for a 3-0 panel.

     In this one, plaintiffs served a subpoena duces tecum on Law Center, a non-party that had participated in the FDA’s rule-making process regarding emergency contraception dispersals by pharmacists in the State of Washington. Law Center objected to the subpoena and argued that the costs of complying with it should be borne by plaintiffs. The district court denied Law Center’s motion for sanctions under FRCP 45 and its motion for costs shifting under the same federal procedural rule.

     The Ninth Circuit affirmed in part and reversed in part, remanding for a cost allocation consideration in favor of non-party.

     At the outset, the appeals court decided an issue of first impression about appealability. The Ninth Circuit decided that a non-party may appeal an interlocutory order within 30 days from entry of final judgment to the same extent a party could appeal such interlocutory order. So, the appeal was timely even though the non-party appealed from the final judgment rather than prior interlocutory orders.

     Following Linder v. Calero-Portocarrero, 251 F.3d 178 (D.C. Cir. 2001), the Ninth Circuit then decided that the district judge erred in not entertaining Law Center’s cost-shifting request under Rule 45 based on a flawed “undue burden” test. The correct test was whether the non-party faced a significant expense in complying with the subpoena, with the proof below showing it did—evidence demonstrated it had spent $20,000 so far in complying with the subpoena, a significant cost for purposes of cost-shifting analysis.

     However, the denial of sanctions to the non-party Law Center was no abuse of discretion. The subpoena was not facially overbroad, and there was no evidence of bad faith/improper motive by Plaintiffs, especially given some ambiguity in two prior discovery orders issued by the district judge.

     The matter was remanded for consideration of cost allocation in non-party’s favor under Rule 45.