Non-Party Subpoenas Quashed For Failure to Justify the Need for Discovery

On December 5, 2013, Justice Sherwood of the New York County Commercial Division issued a decision in Hildene Capital Mgt., LLC v. Bank of N.Y. Mellon, 2013 NY Slip Op. 33181(U), explaining the standard for obtaining non-party discovery.

In Hildene Capital Mgt., plaintiffs issued deposition subpoenas to two non-parties who already had been "deposed at great length in a previous" action in federal court regarding "the facts and circumstances leading to the preparation of an October 2009 opinion letter concerning the transaction that underlies the" Hildene Capital Mgt. action. The court granted the non-parties' motions to quash, holding that even though plaintiffs were not parties to the prior action and thus had never had an opportunity to depose the witnesses, plaintiffs had not sufficiently justified deposing the non-parties again. The court explained:

The threshold requirement for disclosure in New York civil actions is that the disclosure sought be material and necessary in the prosecution or defense of an action. This principle is applicable to non-parties as well as parties. However, a disclosure request directed to a nonparty is governed by principles in addition to those governing a party. CPLR § 3101(a)( 4) directs that a nonparty be given notice stating the circumstances or reasons such disclosure is sought or required so as to afford a nonparty who has no idea of the parties' dispute or a party affected by such request an opportunity to decide how to respond. . . . [T]he determination of whether to quash a nonparty subpoena does not turn solely on whether the discovery sought is relevant. Rather, . . . more than relevance and materiality is necessary to warrant disclosure from a nonparty.

. . .

The court finds [plaintiffs'] proffer in opposition to the motion to quash insufficient in the context of this case to cure the facial deficiency of their subpoenas. It does little to clarify the nature of the inquiry or narrow the scope for the proposed depositions. Thus, [plaintiffs have] failed to meet [their] burden of demonstrating the circumstances and reasons additional testimony from the nonparties is warranted. Moreover, [plaintiffs have] failed to show that the disclosure sought cannot be obtained from other sources.

Litigants often take for granted the right to obtain discovery from third-parties. The court's decision in Hildene Capital Mgt. illustrates the danger of such an approach; the better approach is to take the requirements of CPLR § 3101(a)(4) seriously and ensure that non-party discovery demands are properly justified (and justifiable).