Cornell v. Columbus McKinnon Corporation et al
Filing
89
ORDER DENYING MOTION FOR ATTORNEYS' FEES, COSTS AND EXPENSES 83 (Illston, Susan) (Filed on 8/11/2015)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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BRIAN CORNELL,
Case No. 13-cv-02188-SI
Plaintiff,
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v.
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United States District Court
Northern District of California
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COLUMBUS MCKINNON
CORPORATION, et al.,
ORDER DENYING MOTION FOR
ATTORNEYS’FEES, COSTS, AND
EXPENSES
Re: Dkt. No. 83
Defendants.
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Non-party Federal Express Corporation, plaintiff's employer at the time of the accident
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which is at the center of this litigation, has filed a motion for attorneys’ fees, costs, and expenses.
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The motion is currently set for argument on August 13, 2015. Docket No. 83. Pursuant to Civil
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Local Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and
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hereby VACATES the hearing. For the reasons stated below, the Court DENIES FedEx’s motion.
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BACKGROUND
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On February 11, 2013, plaintiff filed a complaint against Columbus McKinnon
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Corporation, American Lifts, Inc., Autoquip, and Does 1-200, alleging he was injured while
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performing his usual work duties for Federal Express at the Oakland Hub at Oakland International
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Airport. Compl. ¶ 3. The complaint, filed in Alameda County Superior Court, alleges that on
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February 16, 2011, his foot was crushed while he used a scissor lift cargo moving system, and that
the injury was caused by defects in the design and/or manufacture of the system. Compl. ¶ 12.
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Plaintiff alleges that his injury caused permanent damage to his person, body and health,
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“including but not limited to severe injuries to muscle, bone, tissue and nerves.” Compl. ¶¶ 12,
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19. Plaintiff alleges that as a result of defendants’ conduct, plaintiff needed to employ the services
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of hospital, surgeons, physicians, and nurses, which led to medical, hospital, professional, and
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incidental expenses. Compl. ¶ 20. Plaintiff believes he will necessarily incur additional expenses
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for an indefinite period into the future. Id. Plaintiff also claims to have suffered continuous
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chronic pain, suffering, anxiety, and emotional distress. Compl ¶ 21. Finally, plaintiff claims he
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sustained a loss of earning capacity because he is now prevented from attending to his usual
occupation for an unforeseeable time into the future. Compl. ¶ 22.
United States District Court
Northern District of California
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On July 17, 2013, the Court denied plaintiff’s motion to remand. Docket No. 24. On May
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29, 2014, plaintiff filed a first amended complaint (“FAC”) to add an additional defendant, Yale
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International, Inc. Docket No. 40. On May 29, 2015, the Court denied plaintiff’s motion to amend
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the FAC. Docket No. 78.
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On November 10, 2014, the Court resolved a discovery dispute initiated by FedEx, a nonparty, against the parties to this action. FedEx had refused to respond to any further discovery
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propounded by the parties absent cost-shifting pursuant to Rule 45. In its order, the Court ordered
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FedEx to comply with the parties’ pending discovery requests, and deferred ruling on the issue of
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cost-shifting, noting:
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Once all discovery has been produced, FedEx may file a motion for
cost shifting. The Court may then rely on the developed record to
determine whether significant expenses have indeed been reasonably
incurred. FedEx’s assertion that it will incur $75,000 in future
expenses is unsupported by any independent facts or data, and does
not provide a proper basis for making such a determination at this
time.
Docket No. 58 at 3-4.
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Having reached the conclusion of fact-discovery, FedEx now makes a renewed motion for
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cost-shifting pursuant to Rule 45. It requests to be reimbursed for $227,597 in attorneys’ fees
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related to compliance with the parties’ discovery requests.
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LEGAL STANDARD
Rule 45(d)(2)(B)(ii) requires that when a court orders compliance with a subpoena over an
objection, “the order must protect a person who is neither a party nor a party's officer from
significant expense resulting from compliance.” Fed. R. Civ. P. 45(d)(2)(B)(ii). The Rule was
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amended in 1991 to “enlarge the protections afforded persons who are required to assist the court
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by giving information or evidence.” Fed. R. Civ. P. 45, Advisory Committee Notes.
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United States District Court
Northern District of California
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Prior to the Amendments, the rule allotted courts broad discretion in deciding whether to
shift costs. However, in its current incarnation, Rule 45 is more directive. “[W]hen discovery is
ordered against a non-party, the only question before the court in considering whether to shift
costs is whether the subpoena imposes significant expense on the non-party.” Legal Voice v.
Stormans Inc., 738 F.3d 1178, 1184 (9th Cir. 2013) (citing Linder v. Calero-Portocarrero, 251
F.3d 178, 182 (D.C. Cir. 2001)); see also In re Law Firms of McCourts & McGrigor Donald, No.
M. 19-96 (JSM), 2001 WL 345233, at *1 (S.D.N.Y. Apr. 9, 2001) (“The discretion which the
district court had to alleviate non-party costs under the old Rule [45] bec[ame] mandatory under
the 1991 amendments.”) (internal citations and quotations omitted). However, upon finding that
costs are significant, a court should not automatically shift all of the costs incurred. Instead, the
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rule requires the court to “order the party seeking discovery to bear at least enough of the cost of
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compliance to render the remainder ‘non-significant.’” Legal Voice, 738 F.3d at 1184 (citing
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Linder, 251 F.3d at 182).
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While “[t]he shifting of significant expenses is mandatory, . . . the analysis is not
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mechanical; neither the Federal Rules nor the Ninth Circuit has defined ‘significant expenses,’
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which is a term that readily lends itself to myriad interpretations depending on the circumstances
of a particular case.” United States v. McGraw-Hill Companies, Inc., 302 F.R.D. 532, 536 (C.D.
Cal. 2014). “What constitutes a ‘significant’ cost is at the discretion of the district court.”
Callwave Commc'ns, LLC v. Wavemarket, Inc., No. C 14-80112 JSW (LB), 2014 WL 2918218, at
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*3 (N.D. Cal. June 26, 2014). In making this determination, a court may “take into account the
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financial ability of the non-party to bear some costs” for purposes of establishing whether
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expenses are “significant.” Linder 251 F.3d at 182; see also McGraw-Hill No. CV 13-0779-DOC
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JCGX, 2014 WL 3810328, at *4 (“This consideration makes practical sense – an expense might be
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‘significant,’ for instance, to a small family-run business, while being ‘insignificant’ to a global
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financial institution.”).
Prior to the 1991 Amendments – when the cost shifting inquiry was discretionary – courts
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relied on a multi-factor test to determine whether to shift costs. These factors were “[1] whether
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the non-party actually has an interest in the outcome of the case, [2] whether the non-party can
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more readily bear its costs than the requesting party, and [3] whether the litigation is of public
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United States District Court
Northern District of California
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importance.”1 Linder, 251 F.3d at 182 (internal citations omitted). Many courts have found that
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this test retains its vitality even after the Amendments, and have used to it to determine whether
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costs are “significant,” and thus trigger mandatory cost shifting. In re Exxon Valdez, 142 F.R.D.
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380, 383 (D.D.C. 1992) (“While the drafters of new Rule 45 clearly intended to expand the
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protection for non-parties such as disinterested expert witnesses, see Advisory Committee Note to
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1991 Amendment, there is no indication that they also intended to overrule prior Rule 45 case law,
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under which a non-party can be required to bear some or all of its expenses where the equities of a
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particular case demand it.”); see also Linder, 251 F.3d at 182; Callwave, 2014 WL 2918218, at *3,
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nt. 3; Stormans Inc. v. Selecky, No. C07-5374 RBL, 2015 WL 224914, at *6 (W.D. Wash. Jan. 15,
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2015).
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However, at least one district court in this circuit has taken a different approach. In
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McGraw-Hill the court reasoned that that the multi-factor test was intended to guide courts’ broad
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discretion on whether to shift costs at all, and is therefore ill-suited to today’s Rule 45 analysis
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The Ninth Circuit also identified four additional factors which may be considered: (1) the
scope of the discovery; (2) the invasiveness of the request; (3) the extent to which the producing
party must separate responsive information from privileged or irrelevant material; and (4) the
reasonableness of the costs of production. United States v. Columbia Broadcasting System, Inc.,
666 F.2d 364, 371 nt. 9 (9th Cir.1982).
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which asks courts to focus solely on whether costs are “significant.” 302 F.R.D. at 534-36. The
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McGraw-Hill order highlights that the pre-1991 rule did not even use the term “significant,” but
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rather asked courts to determine whether the costs were “unreasonable or oppressive.” Id. at 535.
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It also notes that a number of the factors simply do not touch on whether costs are significant. Id.
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(“Absent a strained definition of ‘significant,’ for example, a non-party’s expenses are not made
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less significant by the fact that the litigation is important to the general public.”).
The Court finds the reasoning in McGraw-Hill to be compelling. The Rule 45 inquiry has
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evolved from one which invited equitable balancing to guide courts’ broad discretion, to one
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which seeks to shift costs as a matter of course upon a finding that they are “significant.” Pre-1991
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case law – while still instructive to the extent it bears of the question of significance – did not
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United States District Court
Northern District of California
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contemplate the Rule’s revitalization, and therefore should not be applied wholesale, without
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further analysis.2
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DISCUSSION
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FedEx’s motion presents an anomalous case for the application of amended Rule 45, since
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here FedEx, the “non-party” seeking relief from the cost of compliance with discovery, actually
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has an interest in the outcome of the case that may well be as great as that of the parties. FedEx,
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as plaintiff’s employer at the time of the accident, has filed a lien against any judgment or
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settlement in plaintiff’s favor in order to recoup worker’s compensation benefits it has paid to him.
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As of April 15, 2015, this lien totaled $233,173. Docket No. 65. The lien has grown rapidly over
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the past 18 months and will continue to grow concomitantly with plaintiff’s medical costs and
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disability benefits, which do not appear to be abating in light of the seriousness of the injury he
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sustained. See Docket Nos. 32, 47, 62 (On January 24, 2014 the lien was $135,504; on July 21,
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2014 it was $158,715, on February 12, 2015 it was $200,185). Should plaintiff prevail in this
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action, FedEx is likely to recover more than its cost of compliance with the parties’ discovery
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requests. Additionally, plaintiff was a FedEx employee, working at a FedEx facility at the time of
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In any event, the Court finds that employing the analysis used in pre-1991 cases would
not affect the ultimate outcome in this case.
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the injury. While slightly more attenuated than its direct financial interest, the outcome of this case
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could also affect FedEx’s employee training, safety policies, and future exposure to liability.
FedEx’s interest in this case is therefore tantamount to that of a party, and it plausibly had
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standing to intervene in this action. See Fed. R. Civ. P. 24. FedEx is quite unlike the type of "non-
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party" entity that Congress envisioned it was protecting when it amended Rule 45. See In re Exxon
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Valdez, 142 F.R.D. 380, 383 (D.D.C. 1992) (listing “disinterested expert witnesses” as an example
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of the class of people Congress meant to protect when enacting the 1991 amendments) (emphasis
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added). FedEx's direct stake in the outcome of this case – namely, the prospect of recouping more
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than its cost of compliance – effectively renders the discovery expenses involved here far less
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"significant" to FedEx. See Selecky, 2015 WL 224914, at *7 (finding, on remand from the Ninth
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United States District Court
Northern District of California
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Circuit, that a non-party that has “a considerable interest in the outcome of the underlying case”
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should bear more of the costs related to compliance with parties’ discovery).
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Whether an expense is “significant” must be analyzed in light of the non-party’s ability to
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pay. Legal Voice v. Stormans Inc., 738 F.3d 1178, 1184 (9th Cir. 2013) (citing Linder 251 F.3d at
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182). The parties point to FedEx’s status as a large multinational corporation that is ranked 65th
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on the Fortune 500, and recorded net income of $2.57 billion in 2015. Opp’n at 8. FedEx counters
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that a non-party’s ability to absorb costs should not be outcome-determinative, and should not be
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“mechanically applied to deny costs to any large corporation.” Rep. at 1-2. FedEx is correct to
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argue that this factor is not dispositive in every instance. However, in this particular case, the
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discovery costs are dwarfed by FedEx’s profit figures, and therefore weigh in favor of finding
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them insignificant. Cf. Selecky, 2015 WL 224914, at *7 (finding, on remand from the Ninth
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Circuit, that $5,000 was a non-significant sum that a small legal aid not-for-profit could bear).3
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The parties and FedEx also engage in vituperative argument about the size of, and reason
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for, the costs incurred by FedEx. The parties argue that the costs do not “result from compliance,”
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and are therefore not compensable under Rule 45. McGraw-Hill, 302 F.R.D. at 536 (C.D. Cal.
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As the parties note in their Opposition, $5000 “represented almost 15% of [the nonprofit’s] operating margin for the year. FedEx’s claimed costs are about 1/100th of [1%] of its
profit.” Opp’n at 8.
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2014) (“unnecessary or unduly expensive services do not ‘result from compliance’ and, therefore,
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do not count as “expenses.”); see also In re Application of Michael Wilson & Partners, Ltd., for
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Judicial Assistance Pursuant to 28 U.S.C. 1782, 520 F. App'x 736, 741 (10th Cir. 2013).
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Specifically, they complain that FedEx unnecessarily increased the cost of discovery, and present
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a litany of instances which they characterize as FedEx engaging in “foot-dragging and
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obfuscation, despite having easy access to responsive documents,” and suggest that this conduct
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would be sanctionable were FedEx a party to this action. Opp’n at 1, 4-7. FedEx responds by
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rebutting the specific instances of misconduct described by the parties, and asserting that the
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parties were “willing to mislead the court and outright lie to avoid reimbursing FedEx for [its cost
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of compliance].” Rep. at 6-13. The parties further suggest that FedEx’s attorney fees are inflated
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United States District Court
Northern District of California
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and should be reduced by forty-percent to reflect prevailing rates in Memphis, TN rather than San
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Francisco, CA, because its legal work was performed by in-house counsel in Memphis. Id. at 16-
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17. FedEx responds that as a result of the demands placed upon it by this action, it had to
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outsource more work to a San Francisco-based firm in an unrelated case and should therefore be
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compensated based on this lost opportunity-cost.
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Without taking sides in the ex post facto dogfight, the Court recognizes that discovery
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compliance was unusually hard fought by FedEx, which suggests that it may have unnecessarily
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increased the cost of compliance. See e.g. Docket No. 58 (FedEx previously filed a motion with
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the Court to oppose the production of a spreadsheet it already had in its possession which was
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discoverable under Rule 26). Additionally, that its requested fees of $227,597 so far outstrip its
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earlier projection of $75,000 provides a further indicium that at least a portion of these costs may
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not have been reasonably incurred from compliance.
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While “[t]here are relatively few reported cases applying the new Rule 45,” the weight of
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the case law makes clear that determining what constitutes a “significant cost” is a relative, not an
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absolute, inquiry. Linder, 251 F.3d at 182. Rather than looking to the cost of compliance in a
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vacuum, courts must evaluate that cost in light of all the relevant facts and circumstances in order
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to “protect[]…persons who are required to assist the court by giving information or evidence”
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from incurring significant expense. Fed. R. Civ. P. 45, Advisory Committee Notes. Therefore,
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“Rule 45 does not cut a blank check to non-parties,” but only ensures that they will not be saddled
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with significant costs. McGraw-Hill, 302 F.R.D. at 536. “Thus, a non-party may be required to
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bear some or all of its costs, depending upon the circumstances.” Kwong Mei Lan Mirana v.
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Battery Tai-Shing Corp., No. C 08-80142MISC.JFRS, 2009 WL 290459, at *4 (N.D. Cal. Feb. 5,
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2009) (emphasis added).
Chief among the factors to be considered in this analysis is the extent to which the non-
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party has an interest in the outcome of the case. The Rule is aimed at protecting persons who are
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disinterested, and thus have little to gain from their outlays in compliance cost – such as when “a
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non-party [is] required to provide a list of class members.” Fed. R. Civ. P. 45, Advisory
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Committee Notes. While FedEx is nominally a non-party, its interest in the outcome of this case
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United States District Court
Northern District of California
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rivals that of the parties’. Given this dynamic, FedEx’s motion comes close to wielding the shield
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of Rule 45 as a sword. The Rule was meant to protect those who are “powerless to control the
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scope of litigation and discovery, and should [therefore] not be forced to subsidize an
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unreasonable share of the costs of a litigation” that does not concern them. CBS, 666 F.2d at 371
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(9th Cir. 1982). It was not intended as a mechanism for entities which stand to benefit from certain
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litigation outcomes to evade discovery costs arising from their involvement in the underlying acts
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that gave rise to the lawsuit. See Tutor-Saliba Corp. v. United States, 32 Fed. Cl. 609, 610, nt. 5
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(1995) (the fact that the non-party was “substantially involved in the underlying transaction and
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could have anticipated that [its involvement might] reasonably spawn some litigation, and
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discovery” was a circumstance weighing against shifting costs).
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Therefore, given FedEx’s direct interest in the outcome of the litigation, and its ability to
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“bear some costs,” Linder 251 F.3d at 182, the Court cannot conclude that the expenses it incurred
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imposed a significant burden warranting Rule 45’s protections. See Wells Fargo Bank, N.A. v.
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Konover, 259 F.R.D. 206, 207 (D. Conn. 2009) (denying non-party’s Rule 45 motion because it
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“is not a truly disinterested party entitled to invoke the protections of Rule 45.”); see also United
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States v. Blue Cross Blue Shield of Michigan, No. 10-CV-14155, 2012 WL 4838987, at *4 (E.D.
Mich. Oct. 11, 2012) (non-party required to bear 85% of the cost of compliance where it had some
interest in the outcome of the case). Accordingly, the Court DENIES FedEx’s motion for cost
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shifting.
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IT IS SO ORDERED.
Dated: August 11, 2015
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________________________
SUSAN ILLSTON
United States District Judge
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United States District Court
Northern District of California
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