Balfour Beatty Infrastructure, Inc. v. PB&A, Inc.

Filing 107

ORDER GRANTING IN PART AND DENYING IN PART NON-PARTY 74 URS'S MOTION FOR SANCTIONS by Hon. William H. Orrick. PB&A shall reimburse URS for its travel costs resulting from the cancelled Brokken deposition of $383.46 within thirty days of the date of this Order. The remainder of URSs motion is DENIED.(jmdS, COURT STAFF) (Filed on 3/13/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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BALFOUR BEATTY INFRASTRUCTURE,
INC.,

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United States District Court
Northern District of California

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Plaintiff,
v.

ORDER GRANTING IN PART AND
DENYING IN PART NON-PARTY
URS’S MOTION FOR SANCTIONS
Re: Dkt. No. 74

PB&A, INC.,
Defendant.

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Case No. 16-cv-01152-WHO

INTRODUCTION
Non-party URS Corporation moves for sanctions against defendant PB&A, Inc., seeking

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its costs of production in response to PB&A’s document subpoena, travel costs, and attorneys’

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fees for bringing its motion. Motion for Sanctions (“Mot.”) (Dkt. No. 74). The motion is

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GRANTED in part and DENIED in part. PB&A shall reimburse URS for $383.46 in travel costs

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resulting from the untimely cancelled deposition. The remainder of URS’s requested sanctions,

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however, is denied.
BACKGROUND

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On June 20, 2016, PB&A served a subpoena for document production on URS, requesting

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12 categories of documents related to PB&A’s work on the Transbay Transit Center (the

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“Project”), the earlier state court action and Dispute Resolution Board (“DRB”) proceeding, and

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other aspects of the Project. Declaration of Marion T. Hack (Dkt. No. 74) ¶ 2, Ex. 1. On August

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16, 2016, PB&A also served a subpoena to depose URS employee Steve Brokken on September

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29, 2016. Hack Decl. ¶ 11, Ex. 6.

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In July 2016, URS served objections to the document subpoena and engaged in discussions

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with PB&A to narrow the subpoena’s scope. Hack Decl. ¶¶ 4-5, Exs. 2, 3. On August 9, 2016,

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PB&A stated that production could be limited to 2011, 2012, and 2013, and clarified its

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involvement in the Project. Hack Decl., Ex. 3. On October 18, 2016, URS’s counsel indicated

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that she hoped to complete production by October 31, 2016, and asked PB&A’s counsel to send

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some dates in November for Brokken’s deposition. Opposition (Dkt. No. 68), Ex. C at 2.
URS and PB&A disagreed, however, over the production of approximately 30 handwritten

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notebooks created by Brokken. Hack Decl. ¶¶ 6-7, Ex. 4. The notebooks contained information

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on several different projects, including the Project at issue here. Id. ¶ 8. URS’s counsel

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“repeatedly notified PB&A’s counsel that detailed review of these notebooks would be required to

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ensure that only references to the Project were produced, and that either privileged or confidential

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business information was not inadvertently produced.” Id.
To reduce costs of production, PB&A’s counsel suggested that Brokken tab the relevant

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United States District Court
Northern District of California

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notebook pages so that only those pages would be produced to PB&A, and alternatively offered to

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enter into a protective order regarding the notebooks. Hack Decl., Ex. 5 at 4.1 URS’s counsel

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rejected both of these options: Brokken did not have the time to tab the documents, and URS

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would not agree to a protective order. Id. at 3. URS also requested that PB&A pay $6,000 for the

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production of the notebooks, but PB&A refused, objecting that the cost was unreasonable because

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it was based on an attorney’s rate of $250 per hour and suggesting that the work was more

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appropriate for a paralegal at a lower billing rate. Id.; Hack Decl., Ex. 7 at 4-5.
URS was unable to meet its October 31, 2016 estimated date of production. On November

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2, 2016, URS indicated that it was getting the documents together and that it was willing to

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provide the relevant notebooks if PB&A agreed to pay for half the costs under a paralegal rate of

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$180 per hour. Id. at 3. Based on the time spent in review thus far, URS estimated 20 hours to

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review 21 notebooks within the requested date range, resulting in $3,600 costs. Id. URS

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requested that PB&A pay $1,800. Id. PB&A also refused to pay this amount.
URS’s counsel attests that, on an unknown date, PB&A’s counsel and URS’s counsel

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agreed over the phone to reset Brokken’s deposition for November 30, 2016. Hack Decl. ¶ 12. As

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a result, URS’s counsel purchased plane tickets and made hotel reservations in San Francisco for

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Citations to exhibits containing emails refer to the ECF-generated page number.
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that deposition. Id. ¶ 15. PB&A’s counsel declares that “PB&A indicated that it would be

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available to take Steven Brokken’s deposition on November 30, 2016, based upon Attorney

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Hack’s representation that URS would complete document production by October 31, 2016.”

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Declaration of Todd J. Stalmack (Dkt. No. 86-8) ¶ 3.

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On November 7, 2016, PB&A’s counsel emailed URS, stating, “We still have not received
any documents and this has put us in a tight spot given the court’s case management order,

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Brokken’s dep date and the deps of the experts.” Hack Decl., Ex. 7 at 3. URS then produced all

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documents except for the Brokken notebooks on November 8, 9, and 15, 2016, totaling at least

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42,000 pages. Hack Decl. ¶ 6, Ex. 4. PB&A’s counsel declares that “the vast majority” of the

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documents produced by URS “were not limited to the time frame of 2011-2013 and/or PB&A’s

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United States District Court
Northern District of California

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design of the interior bracing and access trestle.” Stalmack Decl. ¶ 2.

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On November 23, 2016, PB&A’s counsel told URS that it still needed Brokken’s

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notebooks and requested that they be produced by December 2, 2016. Hack Decl., Ex. 8 at 3.

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URS produced approximately 50 pages of Brokken’s notebooks on November 29, 2016, and its

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privilege log the following day. Hack Decl., Ex. 4. On November 29, 2016, URS’s counsel

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Marion Hack “called PB&A’s counsel to verify the deposition location, and was for the first time

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told that the November 30, 2016, deposition was cancelled.” Hack Decl. ¶ 16. At this time, Hack

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and URS’s in-house counsel were on their way to the airport. Id. Hack emailed PB&A’s counsel

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stating that she had to cancel the travel plans and that PB&A should pay for the travel cancellation

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fees. She also asserted that there was no need to cancel the deposition because PB&A had all of

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URS’s production except for 50 pages, and noted that URS would be filing a motion for costs.

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Hack Decl., Ex. 8.

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URS’s counsel attests that “[a]t no time did PB&A’s counsel ever indicate that the

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November 30, 2016, deposition was not going forward,” and PB&A’s counsel never “stated that

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the production of the notebook documents would cause the deposition to be rescheduled.” Hack

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Decl. ¶¶ 13-14. PB&A’s counsel avers that “PB&A did not confirm [Brokken’s] November 30,

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2016 deposition because URS had promised to produce the documents prior to the two previously

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subpoenaed deposition dates and failed to produce any documents.” Stalmack Decl. ¶ 4.
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On January 5, 2017, URS sent PB&A its proposed motion for costs and sanctions,

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requesting payment of $28,693.22 by January 31, 2017. Oppo., Ex. H. On February 1, 2017,

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URS filed this motion for sanctions, seeking reimbursement for $25,309.76 in costs and fees

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resulting from its discussions with PB&A’s counsel, document review, and document production

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in relation to PB&A’s document subpoena. Hack Decl. ¶ 20. It also seeks reimbursement of non-

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refundable travel and hotel costs of $383.46. Id. Lastly, URS requests attorneys’ fees of

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$3,645.00 for filing its motion. Id. ¶ 21.
DISCUSSION

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URS moves for sanctions against PB&A under Federal Rules of Civil Procedure

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45(d)(3)(C)(ii)2 and 45(d)(1). PB&A argues that sanctions are unwarranted, and provides that

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United States District Court
Northern District of California

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URS and Brokken possess information “critical” to PB&A’s defenses in this action. Oppo. at 1.

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A.

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Federal Rule of Civil Procedure 45 governs discovery from nonparties by subpoena.

Mandatory Cost Shifting under Rule 45

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Pursuant to Rule 45(a)(1)(D), a party may serve a subpoena commanding a nonparty to produce

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materials. “Rule 45(d)(2)(B)(ii) requires the district court to shift a non-party’s costs of

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compliance with a subpoena, if those costs are significant.” Legal Voice v. Stormans Inc., 738

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F.3d 1178, 1184 (9th Cir. 2013). “[W]hen discovery is ordered against a non-party, the only

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question before the court in considering whether to shift costs is whether the subpoena imposes

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significant expense on the non-party. If so, the district court must order the party seeking

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discovery to bear at least enough of the cost of compliance to render the remainder ‘non-

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significant.’” Id.
“[N]either 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

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Although URS cites Rule 45(d)(3)(C)(ii), it relies only on cases discussing mandatory cost
shifting under Rule 45(d)(2)(B)(ii). Rule 45(d)(3)(C) provides that in circumstances permitting
(but not requiring) a court to quash or modify a subpoena, “the court may, instead of quashing or
modifying a subpoena, order appearance or production under specified conditions if the serving
party: (i) shows a substantial need for the testimony or material that cannot be otherwise met
without undue hardship; and (ii) ensures that the subpoenaed person will be reasonably
compensated.”
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of a particular case.” United States v. McGraw-Hill Companies, Inc., 302 F.R.D. 532, 536 (C.D.

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Cal. 2014). Courts look to the nonparty’s financial ability to bear the costs of production. Id.

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“[A]n expense might be ‘significant,’ for instance, to a small family-run business, while being

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‘insignificant’ to a global financial institution.” Id.

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Courts also consider whether the nonparty has an interest in the outcome of the underlying

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case. Cornell v. Columbus McKinnon Corp., No. 13-cv-02188-SI, 2015 WL 4747260, at *3, 5

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(N.D. Cal. Aug. 11, 2015). Rule 45’s cost-shifting provision “was not intended as a mechanism

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for entities which stand to benefit from certain litigation outcomes to evade discovery costs arising

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from their involvement in the underlying acts that gave rise to the lawsuit.” Id. at *5 (citing
Tutor–Saliba Corp. v. United States, 32 Fed. Cl. 609, 610, nt. 5 (1995) (noting that the nonparty at

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Northern District of California

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issue, unlike many nonparties, was “substantially involved in the underlying transaction and could

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have anticipated that [its involvement might] reasonably spawn some litigation, and discovery”)).

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Additionally, the nonparty seeking cost shifting must demonstrate that its costs are reasonable and

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resulted from compliance with the subpoena. McGraw-Hill Companies, Inc., 302 F.R.D. at 536

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(“Rule 45 does not cut a blank check to non-parties—unnecessary or unduly expensive services do

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not ‘result from compliance’ and, therefore, do not count as ‘expenses.’”).

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I must determine whether URS’s costs of $25,309.76, which resulted from its discussions

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with PB&A’s counsel, document review, and document production in relation to PB&A’s

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document subpoena, are significant and must be shifted. Hack Decl. ¶ 20. First, the parties

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dispute whether URS has the financial ability to bear the costs of production. In Cornell, the court

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found that FedEx’s status as a large multinational corporation ranked on the Fortune 500 and

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recorded net income of $2.57 billion in 2015 weighed in favor of finding that discovery costs of

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$227,597 were insignificant. 2015 WL 4747260, at *4 n.3 (noting FedEx’s claimed costs were

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only about 1% of its profit). FedEx’s ability to bear the costs of discovery, in combination with its

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interest in the outcome to the litigation, led the court to deny its motion for costs. Id. at *5. By

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way of comparison, another court has summarized decisions involving other types of nonparties:
The D.C. Circuit “had no trouble concluding that” estimated
expenses of nearly $200,000 were significant for the Defense
Department, the State Department, and the CIA. See [Linder v.
Calero-Porocarrero, 251 F.3d 178, 179–80, 182–83 (D.C. Cir.

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2001)]. The Ninth Circuit had “no trouble concluding that $20,000
is ‘significant’ ” for a non-profit legal advocacy group. See Legal
Voice, 738 F.3d at 1181, 1185. In a case cited by both the Ninth and
D.C. Circuits, a district court held that $9,000 might be “significant”
for two attorneys. See Williams v. City of Dallas, 178 F.R.D. 103,
113–14 (N.D.Tex.1998).

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McGraw-Hill Companies, Inc., 302 F.R.D. at 536; see also Nitsch v. Dreamworks Animation SKG

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Inc., No. 14-cv-04062-LHK, 2017 WL 930809, at *1,4 (N.D. Cal. Mar. 9, 2017) (Lloyd, J.)

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(finding $67,787.30 significant for a nonparty consulting company after reviewing its financial

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information under seal).

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PB&A asserts that URS is publicly traded on the New York Stock Exchange and had
revenue over $17.4 billion in 2016. Oppo. at 4. Although URS emphasizes that PB&A failed to
provide evidentiary support for this assertion, URS remains silent on its ability to bear the

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Northern District of California

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financial cost of production. See Hyundai Motor Am., Inc. v. Pinnacle Grp., LLC, No. 14-cv-

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0576, 2016 WL 6208313, at *2 (C.D. Cal. Apr. 20, 2016) (denying motion to shift costs where

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nonparty was not entirely disinterested and failed to provide any financial information that would

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enable the court to find that the requested costs were significant). I recognize that a nonparty’s

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financial status “is not dispositive in every instance,” but here URS has not provided any basis for

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me to determine that it is not financially able to bear the entirety of the costs of production.

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Cornell, 2015 WL 4747260, at *4.

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URS also argues that considering a nonparty’s purported wealth “would encourage abusive

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discovery tactics against non-parties in direct violation of Rule 45’s purpose.” Reply at 4-5. I

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disagree. A non-party has various methods to protect itself from such abuses. For instance, it

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could bring a motion to quash or modify an overly broad or otherwise improper subpoena, and it

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could seek sanctions for subpoenas issued with an improper purpose under Rule 45(d)(1), as

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discussed below. Therefore, this concern does not prevent me from looking to a nonparty’s ability

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to bear the costs of production as one factor in determining whether costs are “significant.”

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Second, there is no evidence that URS has a financial interest in the outcome of this case.

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However, URS perhaps is not in the typical position of a completely uninterested nonparty, as it

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was purportedly involved “in the underlying acts that gave rise to the lawsuit.” Cornell, 2015 WL

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4747260, at *5. For instance, plaintiff Balfour Beatty Infrastructure, Inc., bases its claims against
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PB&A in part on PB&A’s alleged failure to properly design the access trestle on the Project.

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Complaint (Dkt. No. 1) ¶¶ 31-32. PB&A asserts, however, that the Project owner “hired URS and

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Brokken as consulting engineers to review design submittals to ensure compliance with the

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contractual specifications” and that “Brokken was the engineer who reviewed and required PB&A

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to revise and resubmit its design of the temporary access trestle[.]” Oppo. at 1.
Third, it is not clear that all of URS’s costs of production resulted from compliance with

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the subpoena. See McGraw-Hill Companies, Inc., 302 F.R.D. at 536. PB&A’s counsel declares

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that he “reviewed over 45,000 pages of documents produced by URS and the vast majority of

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these documents were not limited to the time frame of 2011-2013 and/or PB&A’s design of the

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interior bracing and access trestle.” Stalmack Decl. ¶ 2. Therefore, it appears that a significant

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Northern District of California

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portion of URS’s production was not responsive to the narrowed scope of the subpoena.

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For all these reasons, I find that URS’s costs are not significant and that cost-shifting is not
required.

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B.

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A nonparty may also seek sanctions pursuant to Rule 45(d)(1), which provides:
A party or attorney responsible for issuing and serving a subpoena
must take reasonable steps to avoid imposing undue burden or
expense on a person subject to the subpoena. The court for the
district where compliance is required must enforce this duty and
impose an appropriate sanction--which may include lost earnings
and reasonable attorney's fees--on a party or attorney who fails to
comply.

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Discretionary Sanctions under Rule 45

Unlike Rule 45(d)(2)(B)(ii), sanctions pursuant to Rule 45(d)(1) are discretionary. Legal Voice,
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738 F.3d at 1185. “[W]hile failure narrowly to tailor a subpoena may be a ground for sanctions,

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the district court need not impose sanctions every time it finds a subpoena overbroad; such
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overbreadth may sometimes result from normal advocacy, which we have said should not give rise
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to sanctions.” Id. (internal citations omitted). But a court can “impose sanctions when a party

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issues a subpoena in bad faith, for an improper purpose, or in a manner inconsistent with existing
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law.” Id.

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URS argues that an award of sanctions under Rule 45(d)(1) is appropriate because PB&A
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violated its duty to avoid imposing an undue burden. Mot. at 8. Although the subpoena contained
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12 categories of documents, most without limiting time frames, PB&A’s counsel engaged in

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discussions with URS’s former and current counsel to narrow the subpoena, resulting in a scope

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limited to 2011-2013 and with more definite terms. This narrowed scope was not unduly

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burdensome. Therefore, URS is not entitled to sanctions for its costs related to the production that

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occurred on November 8, 9, and 15, 2016.

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PB&A also requested information contained in Brokken’s handwritten notebooks, which

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URS produced on November 29, 2016. Although the notebooks contained confidential

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information relating to several other projects, PB&A suggested ways to reduce the burden on

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URS, including having Brokken tab the relevant pages and offering to enter into a protective
order. URS, however, rejected these options. Also, while URS’s counsel had to separate out the

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Northern District of California

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confidential information, this discovery is highly relevant and needed for PB&A’s defenses, given

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URS’s purported involvement in reviewing PB&A’s designs. Indeed, handwritten notes are often

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more useful than carefully crafted documents. In light of the relevance of these documents and

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PB&A’s attempts to minimize the burden from production, I find that the production of the

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notebooks was not unduly burdensome and that URS is not entitled to these costs.

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However, PB&A’s belated cancellation of the November 30, 2016, deposition did impose

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an undue expense to URS. Although PB&A asserts that it never confirmed the deposition date in

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an email or issued an amended subpoena, it presents no evidence to contradict URS’s counsel’s

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statement that they agreed to November 30, 2016 for the deposition. PB&A, therefore, had a

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responsibility to timely inform URS’s counsel when it determined that it could not take Brokken’s

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deposition on the agreed upon date. Also, PB&A asserts that it agreed to the deposition date based

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on URS’s representation that it would complete discovery by October 31, 2016, but there is no

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evidence that it ever articulated to URS that the deposition would not go forward if production

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was not timely completed. And PB&A had received all but 50 pages from the notebooks and a

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privilege log by November 15, 2016—two weeks before the scheduled deposition. Hack Decl.

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¶ 6. Cancelling just one day before the deposition, without any explanation as to why PB&A’s

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counsel could not have done so sooner, is not timely and imposed an undue expense on URS as a

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nonparty. Accordingly, URS’s request for its non-refundable travel fees of $383.46 is GRANED.

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Hack Decl. ¶ 20.

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Lastly, URS requests that I award $3,645.00 in attorneys’ fees for litigating this motion.
This request is denied.
CONCLUSION

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URS’s motion for costs is GRANTED in part and DENIED in part. PB&A shall reimburse

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URS for its travel costs resulting from the cancelled Brokken deposition of $383.46 within thirty

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days of the date of this Order. The remainder of URS’s motion is DENIED.

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IT IS SO ORDERED.
Dated: March 13, 2017

United States District Court
Northern District of California

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William H. Orrick
United States District Judge

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