Requirements for Reimbursement of Federal Subpoena Costs

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Last Updated on: 2nd October 2023, 05:52 pm

Requirements for Reimbursement of Federal Subpoena Costs

Being served with a federal subpoena can be a costly endeavor for companies and individuals who are not a party to the lawsuit. Compliance requires dedicating time and resources to gathering, reviewing, and producing documents. Fortunately, the Federal Rules of Civil Procedure provide a mechanism for non-parties to recover reasonable costs incurred in complying with a subpoena.

This article provides an overview of the reimbursement requirements and process under Federal Rule of Civil Procedure 45. We’ll cover the criteria for reimbursement, how to object to a subpoena, factors courts consider, and tips for maximizing cost recovery.

Criteria for Reimbursement

Under Rule 45, a non-party may seek reimbursement of compliance costs if the following criteria are met:

• The subpoenaing party must be notified of the reimbursement request before costs are incurred through a timely objection.
• The costs incurred must be reasonable under the circumstances.
• Compliance must impose a significant expense.

Let’s unpack each of these requirements:

Timely Objection

The non-party must object to the subpoena before incurring compliance costs. This gives the subpoenaing party notice and an opportunity to modify or withdraw the subpoena to reduce expenses. Failure to object in advance may result in denial of a reimbursement request.

The objection should clearly state that the non-party intends to seek cost reimbursement and describe the burden imposed. It can be made in writing or at a hearing. Timing will depend on the subpoena response deadline, which is usually 14 days from service.

Reasonable Costs

Only reasonable costs tied directly to compliance will be shifted to the subpoenaing party. Reasonable costs may include:

• Employee time spent searching for, gathering, and reviewing documents
• Outside vendor fees for collecting ESI or converting files to specified formats
• Database access and licensing fees
• Postage, shipping, and delivery costs

Costs that generally aren’t recoverable include:

• Legal fees for reviewing subpoena or advising on responses
• Infrastructure upgrades or new software/hardware purchases
• Lost profits or business interruption

Significant Expense

The costs must also be “significant” for the court to shift them to the subpoenaing party. What qualifies as significant depends on factors like the size and resources of the complying party. For large corporations, six-figure compliance costs may be needed. But for a small business or individual, even a few thousand dollars could be deemed significant.

Objecting to the Subpoena

To meet the timely objection requirement, the non-party should file a written objection with the issuing court, ideally before incurring any costs. The objection should:

• State intent to seek reimbursement of compliance costs
• Describe the burden imposed and estimated cost
• Request cost-shifting
• Ask court to quash or modify subpoena

This puts the subpoenaing party on notice and gives them a chance to negotiate the scope. If discussions fail, the non-party can ask the court to decide if costs should be reimbursed.

In urgent cases, a non-party may need to produce some documents before the objection is heard. It’s best to confer with the subpoenaing party and agree on an interim production to avoid a contempt motion.

Factors Courts Consider

If the subpoenaing party opposes reimbursement, the court will decide if cost-shifting is appropriate. Key factors include:

• Relevance – How critical are the documents to resolving key issues? Overly broad requests weigh in favor of reimbursement.
• Benefit – Does only the subpoenaing party benefit, or do all parties gain an advantage? Greater benefit to the requester supports reimbursement.
• Wealth – What is the relative wealth of the parties? Disparity often results in reimbursing costs.

Courts also consider the scope of production, reasonableness of costs, and whether compliance imposes an undue burden. They may require the parties to negotiate the scope first before deciding on cost-shifting.

Tips for Maximizing Cost Recovery

Here are some tips for non-parties to maximize reimbursement of federal subpoena expenses:

• Object early – Don’t wait until you’ve incurred significant costs.
• Keep detailed records – Track employee time, vendor invoices, etc.
• Segregate costs – Isolate expenses that likely won’t be recoverable.
• Confer with requesting party – Be willing to negotiate on scope.
• Highlight undue burden – Emphasize the disruption to your business.
• Consider partial compliance – Offer to produce some records before a ruling.
• Hire counsel – Experienced lawyers can advocate for cost-shifting.

The Bottom Line

Complying with a federal subpoena can become very expensive for non-parties. While the law doesn’t guarantee reimbursement, Rule 45 provides standards for recovering reasonable costs. With proper planning, recordkeeping, and advocacy, non-parties can seek to shift the financial burden back to the party that imposed it.