Kelley v. Billings Clinic et al

Filing 59

ORDER granting in part and denying in part 40 Motion to Quash; GRANTED insofar as it addresses the subpoena issued on 3/25/2013; DENIED insofar as it addresses the subpoena issued on 4/15/2013. (SEE ORDER FOR SPECIFICS.) Signed by Magistrate Carolyn S Ostby on 6/3/2013. (JDH, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
MARK J. KELLEY,

CV 12-74-BLG-SEH-CSO

Plaintiff,
ORDER
vs.
BILLINGS CLINIC,
Defendant.

The Montana Department of Labor and Industry (“Department”),
a non-party, moves to quash Defendant Billings Clinic’s subpoena duces
tecum seeking Plaintiff’s unemployment compensation records. ECF
40. Having reviewed the record, the Court will deny the motion for the
reasons and on the terms discussed below.
I.

BACKGROUND
On February 12, 2013, Billings Clinic sent to the State of

Montana Unemployment Insurance Division Plaintiff Mark Kelley’s
(“Kelley”) Authorization for Release of Unemployment Benefits Records
and Reports. ECF 40 at 15.
On March 25, 2013, the Department responded by providing “a
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complete copy of all UI records available to Mr. Kelley relating to the
UI determination regarding his application for unemployment
compensation benefits....” ECF 40 at 18.
On the same date, March 25, 2013, counsel for Billings Clinic
issued a subpoena to produce documents as follows:
All documents of any nature in the possession of the State of
Montana, Unemployment Insurance Division, regarding Mark J.
Kelley’s applications for unemployment compensation benefits on
or after March 1, 2011, including but not limited to, detailed
earning information & job search information, including any job
search log.
ECF 40 at 20. Counsel for the Department responded, stating inter
alia that the Department believed state law prohibited it from
providing any employer’s responses to Kelley’s claims, absent a written
authorization from the affected employer allowing that information to
be released. ECF 40 at 21-22.
On April 15, 2013, counsel for Billings Clinic served a second
subpoena on the Department. The second subpoena requested
essentially the same information as the first:
All documents in the possession of the State of Montana,
Unemployment Insurance Division, regarding Mark J. Kelley’s
applications for unemployment compensation benefits on or after
March 1, 2011, including but not limited to all earnings
information and all job search information, including any and all
job search logs.
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ECF 40 at 23. Billings Clinic does not dispute the motion to quash the
first subpoena. Thus, only the second subpoena is at issue.
II.

DISCUSSION
A.

The Department’s Arguments

The Department advances two principal arguments. First, the
Department argues that the information Billings Clinic seeks is
confidential and protected from disclosure by federal and state law. Id.
at 6-11. The Department argues that U.S. Department of Labor
regulations require state unemployment compensation (“UC”) agencies
to “file and diligently pursue a motion to quash” any subpoena that
seeks disclosure of confidential information of the type sought here. Id.
at 11. Also, the Department argues that the Court should quash the
subpoena to protect information submitted by Kelley’s other past
employers, because the other past employers are not on notice of the
issuance of the subpoena. Id. at 3.
Second, the Department argues that, if the Court declines to
quash the subpoena in its entirety, the Court should issue an
appropriate order prohibiting Billings Clinic from disclosing the
information provided. Id. at 12.

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B.

Billings Clinic’s Arguments

Billings Clinic first argues that the motion to quash should be
denied because it is untimely and fails to comply with court rules. ECF
48 at 6.
Next, Billings Clinic argues that federal regulations and case law
allow discovery of this UC information. ECF 40 at 9-11. Citing 20
C.F.R. § 603.5 and § 603.7(b), Billings Clinic argues that federal
regulations anticipate discovery of such information by specifically
providing that when the information is sought with a court-ordered
subpoena in accordance with that state’s law, the subpoena must be
granted.
Second, Billings Clinic argues that Montana law permits this
discovery and that other employers need not be on notice. Billings
Clinic agrees that the information should only be produced pursuant to
a protective order and that the names of other employers may be
redacted. Id. Billings Clinic also agrees to pay the Department’s
reasonable costs to produce.
C.

Applicable Law

Fed. R. Civ. P. 45(c)(3)(A)(iii) provides that, “the issuing court
must quash or modify a subpoena that . . . requires disclosure of
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privileged or other protected matter, if no exception or waiver
applies[.]” The party serving the subpoena, here Billings Clinic, bears
the burden of showing the appropriateness of a subpoena served on a
nonparty. Wi-Lan Inc. v. Research in Motion Corp., 2010 WL 2998850
(S.D. Cal. 2010). But a person withholding subpoenaed information
under a claim of privilege or other protection bears the burden of proof
on that claim. Southern Union Co. v. Southwest Gas Corp., 205 F.R.D.
542, 550 (D. Ariz. 2002). A party asserting such a claim must make a
“clear showing” that the privilege or protection applies. Hill v.
McHenry, 2002 WL 598331 (D. Kan. 2002).
Because jurisdiction here is based on diversity, state rules apply.
See Home Indem. Co. v. Lane Powell Moss and Miller, 43 F.3d 1322 (9th
Cir. 1995). In the context of UC information management, Montana
law provides that:
Information obtained from any individual under this chapter
must, except to the individual claimant to the extent
necessary for the proper presentation of a claim, be held
confidential and may not be published or be open to public
inspection, except to public employees in the performance of
their public duties, in any manner revealing the individual’s
or employing unit’s identity, but any claimant or the
claimant’s legal representative at a hearing before the board
or appeal tribunal must be supplied with information from
the records to the extent necessary for the proper
presentation of the claim.
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MCA § 39-51-603(3). The following subsection requires that rules be
adopted to protect the confidentiality of UC information and that the
rules be consistent with similar federal requirements.
Effective April 15, 2011, state rules were adopted. Mont. Admin.
R. 24.11.915. This rule requires the Department to “protect personally
identifying information of claimants and employers.” Id. at
24.11.915(1). Disclosure is permitted only “by the informed consent of
the identified individual(s) or is required under federal or ... pursuant
to a valid subpoena....” Id. at 24.11.915(2). “Valid subpoena” does not
include a subpoena issued by a clerk of court on behalf of a litigant – or,
by extension, a subpoena issued by an attorney on behalf of a litigant.
See id. at 24.11.915(3)(c).
As support of its motion, the Department also cites 29 CFR part
603. These U.S. Labor Department regulations provide that
administration of UC programs:
must include provision for maintaining the confidentiality of
any UC information which reveals the name or any
identifying particular about any individual or any past or
present employer or employing unit, or which could
foreseeably be combined with other publicly available
information to reveal any such particulars, and must include
provision for barring the disclosure of any such information,
except as provided in this part.
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20 C.F.R. § 603.4(b).
The exceptions “provided in this part” are found in 20 C.F.R. §
603.5, which provides, in relevant part, as follows:
The following are exceptions to the confidentiality
requirement. Disclosure of confidential UC information is
permissible under the exceptions in paragraphs (a) through
(g) of this section only if authorized by State law and if such
disclosure does not interfere with the efficient
administration of the State UC law. Disclosure of
confidential UC information is permissible under the
exceptions in paragraphs (h) and (I) of this section without
such restrictions.
*

*

*

(h)

. . . Disclosure of confidential UC information in
response to a court order to an official with
subpoena authority is permissible as specified in
§ 603.7(b).

20 C.F.R. § 603.7(b) provides, in relevant part, that:
disclosure is permissible, where –
(1)

Court Decision – a subpoena or other compulsory legal
process has been served and a court has previously
issued a binding precedential decision that requires
disclosures of this type, or a well-established pattern of
prior court decisions have required disclosures of this
type, or

(2)

Official with subpoena authority – Confidential UC
information has been subpoenaed, by a local, State or
Federal governmental official, other than a clerk of
court on behalf of a litigant, with authority to obtain
such information by subpoena under State or Federal
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law. The State or State UC agency may choose to
disclose such confidential UC information to these
officials without the actual issuance of a subpoena.
20 C.F.R. § 603.7(b) must be read in conjunction with the
subsection that immediately precedes it, which provides:
Except as provided in paragraph (b) of this section, when a
subpoena or other compulsory process is served upon a State
UC agency . . . [the] State UC agency . . . must file and
diligently pursue a motion to quash the subpoena or other
compulsory process if other means of avoiding the disclosure
of confidential UC information are not successful or if the
court has not already ruled on the disclosure. Only if such
motion is denied by the court or other forum may the
requested confidential UC information be disclosed, and only
upon such terms as the court or forum may order, such as
that the recipient protect the disclosed information and pay
the . . . State UC agency’s costs of disclosure.
20 C.F.R. § 603.7(a).
D.

Analysis

The Court concludes that the Department has not made a clear
showing that the motion should be quashed. First, the Montana
legislature expressly contemplated that there would be persons to
whom disclosure would be appropriate. MCA § 39-51-603(4). The
administrative rule also contemplates disclosure in appropriate cases.
See Mont. Admin. R. 24.11.915 (2), (4), (5).
As with the state rule, the federal rules require that the
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information be held confidential, but the confidential nature of
documents does not necessarily require that the subpoena be quashed.
See Gray v. Savage Services Corp., 2013 WL 1787999 (D. Maine 2013)
(denying Maine Department of Labor motion to quash a subpoena
seeking unemployment records of plaintiff); Zhou v. Pittsburg State
University, 2002 WL 1932538 (D. Kan. 2002) (denying motion to quash
subpoena seeking EEOC investigative file).
Kelley has not opposed release of the information. And, to the
extent the confidentiality is meant to protect Kelley, he has waived any
right to rely on the confidentiality of the information by his prior
release. In addition, it appears that the information sought is
discoverable under Fed. R. Civ. P. 26(b)(1).
The Department has offered no reason why release of the
information would interfere with the efficient administration of the
Montana UC law. By filing no reply brief, the Department has not
attempted to refute the arguments presented by Billings Clinic.
As requested by the Department, however, Billings Clinic must
not disclose any information provided by the Department to any nonparty, and must not use that information for any purpose other than in
connection with this litigation. Also, Billings Clinic has agreed that the
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Department may redact all information identifying employers other
than the Billings Clinic. ECF 48 at 11.
III. CONCLUSION
Based on the foregoing, IT IS ORDERED that the Department’s
motion to quash (ECF 40) is GRANTED insofar as it addresses the
subpoena issued on March 25, 2013. IT IS FURTHER ORDERED that
the motion is DENIED insofar as it addresses the subpoena issued on
April 15, 2013, on the following terms and conditions:
(1) On or before June 10, 2013, the Department shall provide to
Kelley’s counsel all records sought in the subpoena which have
not previously been provided (if the costs of same have then been
paid as set forth below);
(2) The Department may redact from the records all information
identifying employers other than Billings Clinic;
(3) Billings Clinic shall not further disclose the records and
information provided pursuant to the subpoena to any non-party;
(4) Billings Clinic shall use the records and information provided
only for purposes of this lawsuit and, at the conclusion of this
lawsuit, shall destroy all such records;
(5) The information provided is subject to the Protective Order
previously filed (see ECF 27);
(6) Pursuant to Mont. Admin. R. 24.11.915(5), the Department
shall charge the costs of disclosure to Billings Clinic, which costs
must be paid in full prior to the release of information; and

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(7) Upon receipt of the records, Billings Clinic shall promptly
provide a copy of them to counsel for Kelley.
DATED this 3rd day of June, 2013.
/s/ Carolyn S. Ostby
United States Magistrate Judge

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