Requirements for Reimbursement of Federal Subpoena Costs

Requirements for Reimbursement of Federal Subpoena Costs

Getting served with a federal subpoena can be a real headache for companies and individuals. Complying with subpoenas takes time and money – you may need to gather tons of documents, hire lawyers, or make employees available for depositions. Understandably, the costs involved in responding to subpoenas can add up quick. So can you get paid back for all the time and money you spend complying with a federal subpoena? Sometimes, yes. Federal Rule of Civil Procedure 45 allows courts to order the party who issued the subpoena to reimburse the subpoena recipient for their compliance costs. But reimbursement isn’t guaranteed – you have to meet certain requirements laid out in Rule 45. This article will walk you through everything you need to know about getting your federal subpoena compliance costs reimbursed. We’ll cover:

• What types of costs are potentially reimbursable
• The requirements for reimbursement under Rule 45
• How to request reimbursement from the court
• Limits on what you can recover
• Other ways to reduce subpoena compliance costs

We’ll also look at real examples of companies getting their costs reimbursed (and denied) to help illustrate the key issues. Let’s dive in!

What Types of Subpoena Costs Can I Get Reimbursed For?

First, what exactly counts as “compliance costs” that you can potentially recover? The costs that can be reimbursed under Rule 45 include:

• Attorney fees for reviewing the subpoena, meeting with employees, and gathering responsive documents
• Paralegal fees for searching records and preparing documents for production
• Costs paid to e-discovery vendors for collecting, processing, hosting, and reviewing data
• Employee time spent searching for and producing documents
• Expert consultant fees to help interpret technical documents
• Travel costs related to having employees testify at depositions
• Printing, copying, and shipping charges for producing documents

As you can see, a wide range of expenses related to complying with a subpoena can potentially be reimbursed. The key requirements are that the costs must be “reasonable” and “necessary” (more on that below). Not everything will be reimbursable, of course – any costs that are inflated or go beyond what is reasonably required to comply won’t make the cut. But many legit expenses can be recouped if you take the right steps under Rule 45.

What Are the Requirements for Getting Reimbursed Under Rule 45?

Rule 45 sets out specific procedures that must be followed in order to recover your subpoena compliance costs:

1. Object to the Subpoena
2. File a Motion to Compel
3. Get a Court Order Requiring Compliance
4. Submit an Itemized Invoice

As you can see, there are quite a few procedural hoops to jump through. You can’t just comply with a subpoena then send the other side a big bill – you have to object up front and get a court order first. Meeting the technical requirements of Rule 45 is key to successfully recovering your costs down the road. An experienced attorney can help navigate the process.

Real-World Examples of Subpoena Cost Reimbursement

To understand how this plays out in practice, let’s look at a few real-world examples of companies seeking reimbursement of federal subpoena costs:

Example 1: Costs Reimbursed for Reviewing Complex Documents

In a 2014 case, Dairy Farmers of America received a federal subpoena related to a price-fixing lawsuit. Complying required producing over 300,000 pages of documents. Dairy Farmers followed the Rule 45 process – they objected to the subpoena, got a court order compelling compliance, and then sought over $140,000 in reimbursement for attorney review costs. The court agreed the costs were reasonable and necessary given the “complexity and volume” of documents. It ordered the plaintiffs who issued the subpoena to reimburse Dairy Farmers for their document review expenses.

Example 2: Costs Denied for Unnecessary E-Discovery Expenses

In a 2020 case, an insurance company was subpoenaed in a class action lawsuit and spent over $130,000 responding. This included e-discovery costs paid to an outside vendor. The insurance company objected and got a court order compelling compliance. But when it sought reimbursement, the court denied most of the requested costs. The judge found the e-discovery expenses were excessive and not shown to be necessary. The court reiterated that only “reasonable” costs required to comply can be shifted under Rule 45.

Example 3: Travel Expenses Reimbursed for Employees Testifying

In a recent case from 2021, an airline was subpoenaed in an antitrust lawsuit and sought over $18,000 in costs, mainly for employee travel to depositions. The court agreed that the travel costs were reasonable and ordered the plaintiffs who issued the subpoena to reimburse the airline under Rule 45. So in the right circumstances, even travel expenses can be shifted – but they must be reasonable and directly related to complying with the subpoena.

As these examples illustrate, courts will scrutinize subpoena reimbursement requests to ensure the claimed costs are truly necessary and properly documented. Reasonable expenses directly tied to compliance are most likely to be shifted.

Limits on Recoverable Costs Under Rule 45

While Rule 45 opens the door for recipients to recover compliance costs, there are some limits. Courts have denied reimbursement requests in certain circumstances:

• No reimbursement for data requests under privacy laws – If you have to produce customer data to comply with privacy laws like GDPR or CCPA, you generally can’t recover costs (since you’d have to produce it anyway).
• No reimbursement for information you produce voluntarily – As discussed above, the court must enter an order compelling compliance first. Voluntarily producing documents won’t cut it.
• No reimbursement for unreasonable or excessive costs – Courts will cut costs that aren’t necessary or go beyond what’s reasonably required to comply. Details matter.
• No reimbursement for non-compliance expenses – Rule 45 only allows recovery of costs incurred directly due to compliance. Expenses unrelated to actually responding to the subpoena won’t be shifted.
• Reimbursement limited based on connection to case – If the subpoena recipient has little or no direct involvement in the underlying case, the court may limit recoverable costs.

The bottom line is courts are careful to shift only those expenses that are reasonable and directly related to compliance. While Rule 45 provides a path to recover costs, it’s not a blank check.

Other Ways to Reduce Subpoena Compliance Costs

Beyond seeking reimbursement under Rule 45, here are some other tips to minimize the burden of responding to federal subpoenas:

• Negotiate the scope of production – Talk with the issuing party to see if they’ll narrow the subpoena to reduce collection and review costs.
• Leverage technology like AI and analytics – Use modern e-discovery tools to cull data and speed up document review. The right tech can reduce attorney fees.
• Hire contract attorneys for first-level review – Paying hourly rates for junior attorneys to do initial document review is much cheaper than using senior lawyers.
• Petition the court to appoint a special master – In complex cases, asking the court to appoint a special master to oversee discovery can streamline things and reduce costs.
• Move to quash improper or burdensome subpoenas – Fight subpoenas that demand way more than the issuing party reasonably needs.
• Share costs with other parties – If multiple parties are subpoenaed in a case, try to agree to split document repositories and other costs.

Leveraging such cost-saving measures can help minimize the pain of complying with federal subpoenas. But getting reimbursed for reasonable costs is still possible with the right approach under Rule 45.

The Bottom Line on Federal Subpoena Cost Reimbursement

Dealing with federal subpoenas is just part of doing business for many companies these days. But the time and money spent complying can really add up. Thankfully, Federal Rule of Civil Procedure 45 provides a way to recover reasonable costs directly related to responding to subpoenas. This includes attorney fees, vendor costs, employee time, and other expenses. To get reimbursed, you need to object to the subpoena up front, get a court order compelling compliance, and submit detailed invoices. It’s a precise process. An experienced lawyer can help navigate Rule 45’s requirements. Reimbursement of federal subpoena costs is not guaranteed – courts will scrutinize the necessity and reasonableness of expenses claimed. But following the procedures and documenting costs meticulously can pay off in the form of a court order shifting costs to the party who issued the burdensome subpoena. It’s an uphill battle, but Rule 45 levels the playing field a bit. Subpoena targets don’t have to just swallow all the costs of complying. With a smart approach, they can recover their reasonable expenses from the other side.