Lambland, Inc. v. Heartland Biogas, LLC

          ORDER

          KRISTEN L. MIX MAGISTRATE JUDGE

         This matter is before the Court on Nonparty Board of County Commissioners of Weld County's (“BOCC”) Motion for Shifting of Fees and Costs [#69]^[1] (the “Motion”). Defendant filed a Response [#76] in opposition to the Motion, and the BOCC filed a Reply [#78] and a Notice of Supplementation of the Motion [#87] (the “Notice”). The Court has reviewed the Motion, the Response, the Reply, the Notice, the entire docket, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#69] is GRANTED in part and DENIED in part.

         I. Background

         Plaintiff brings this diversity action based on a claim of breach of contract by Defendant. See generally Second Am. Compl. [#102]. In the present Motion [#69], Nonparty BOCC seeks to shift attorney's fees and costs of production to Defendant in connection with the BOCC's compliance with Defendant's Subpoena [#27-5] (the “Subpoena”). See Motion [#69].

         Defendant here was also the sole plaintiff in Civil Action No. 16-cv-03183-RM-NYW, Heartland Biogas, LLC v. The Board of County Commissioners of Weld County (“Heartland v. BOCC”). Order [#59] at 2. In that case, Defendant first sued the BOCC, the Colorado Department of Agriculture (“CDA”), the Colorado Department of Public Health and Environment (“CDPHE”), and four employees of CDPHE before dismissing claims against CDA and CDPHE and filing an action against those same entities in Denver County District Court (the “State Court Action”). Id. (citations omitted). The remaining parties in Heartland v. BOCC then exchanged initial disclosures pursuant to Fed.R.Civ.P. 26(a)(1), wherein the BOCC produced more than 2, 600 pages of documents. Id. On December 4, 2018, Defendant voluntarily dismissed the federal case.

         Meanwhile, in the State Court Action, Defendant served the BOCC with a Subpoena to Produce Documents on June 20, 2018. BOCC's Ex. D [#27-4]. The BOCC objected to the subpoena, arguing that Defendant sought “duplicative information that would impose an undue burden on BOCC wholly disproportionate to the needs of the State Court Action and that would be burdensome and oppressive to the BOCC.” Order [#59] at 3. The presiding judge overruled the BOCC's objections and ordered it to comply. BOCC's Ex. H [#27-8]. Instead, the BOCC requested that Defendant pay the estimated cost in advance of production pursuant to the Colorado Open Records Act, Colo. Rev. Stat. § 24-72-205(1)(b) (“CORA”) and Colo. R. Civ. P. 26. See BOCC's Ex. I [#27-9]; see BOCC's Ex. J [#27-9]. Defendant refused to pay those costs, and the BOCC refused to produce any documents. Id. Ultimately, the BOCC's second motion to quash was mooted by the court when the BOCC was added as a defendant in the State Court Action. Response [#78] at 8. The BOCC subsequently filed a motion to dismiss, which the court denied. Second Motion for Protective Order [#115] at 7. The most current information the Court has from the parties is that, at least as of November 5, 2019, discovery in the State Court Action is stayed because the BOCC filed an interlocutory appeal pursuant to Colo. Rev. Stat. § 24-10-108. Id. at 10-11.

         In the instant case, Defendant served the BOCC with a Subpoena to Produce Documents [#27-5] (the “Subpoena”) on August 7, 2018. The BOCC filed a Motion to Quash Defendant's Subpoena to Produce [#27] (the “Motion to Quash”) on August 24, 2018, and requested that the Court enter a protective order, quash the Subpoena, and shift costs related to the BOCC's compliance with the Subpoena to Defendant because “[d]oing so is the only way to protect the BOCC from being subjected to the undue burden and costs associated with providing unnecessary and duplicative response to a burdensome and oppressive subpoena . . . .” [#27] at 12-13.

         On November 29, 2018, the Court entered an Order [#59] which denied in part and denied without prejudice in part the BOCC's Motion to Quash [#27]. The Court found that the BOCC had not “satisfied its burden of showing that the Subpoena is unduly burdensome” and denied the request to quash the Subpoena. Order [#59] at 10. Next, the Court denied without prejudice the BOCC's request for a protective order because it had failed to show that “it will suffer a serious injury in the absence of a protective order covering the subpoenaed materials.” Id. at 11. Finally, the Court denied without prejudice the BOCC's request to shift the cost of production because it was unclear whether the BOCC's estimate was accurate and because it made more sense to determine the issue of seeking cost-shifting “once an actual cost of production was determined rather than a mere estimate.” Order [#59] at 12. At that time, the BOCC estimated the cost of compliance to be $8, 350.20, totaling $4, 545.00 in time costs and $3, 805.20 in technology costs. Id. at 12.

         On January 10, 2019, the BOCC began a rolling production to Defendant of “almost 35, 000 pages of documents and communications, while at the same time raising and preserving various objections to each of the categories of documents and communications sought.” Motion [#69] at 2 (citations omitted). On January 31, 2019, the BOCC began its second rolling production to Defendant of “more than 31, 000 pages of additional documents and communications along with the BOCC's Initial Privilege Log” and noted that “a supplemental log would be forthcoming on or before February 21, 2019.” Id. (citation omitted). Finally, on March 8, 2019, the BOCC submitted to Defendant the “full, 210-page version of its First Supplemental Privilege Log . . . .” Id. at 3.

         On March 12, 2019, four days after it produced the First Supplemental Privilege Log, the BOCC filed the instant Motion seeking “the shifting of fees and costs so incurred in at least the amount of $84, 896.31.” [#69] at 1. The BOCC asserts that “the internal cost [it] incurred in generating a Response to the Subpoena to Produce . . . is $18, 556.31” which includes “$15, 496.31 attributable to the cost of hosting and uploading the massive volume of potentially responsive material with a third-party vendor . . . .” Id. at 3-4 (citation omitted). Further, the BOCC claims that “the external cost [] incurred . . . in terms of being billed the reasonable and customary fees of Hall & Evans, L.L.C. to perform a reasonably necessary second round of review for responsiveness and privilege, and for generation of the BOCC's voluminous Privilege Log in this matter, is $66, 340.00.” Id. at 4.

         On May 23, 2019, the BOCC filed its Notice requesting additional external attorney's fees. [#87] at 2. However, the BOCC fails to state the precise amount it claims in the Notice, although it attaches a bill for an additional $20, 616.50 in external attorney's fees, which it is presumably seeking in full. Billing Records [#87-2] at 38. Thus, in short, the BOCC seeks to shift a total of $86, 956.50 in external attorney's fees consisting of $66, 340.00 from the Motion [#69] and $20, 616.50 from the Notice [#87], in addition to $18, 556.31 in internal and third-party vendor costs, for a total of $105, 512.81 in attorney's fees and costs. The BOCC requests that the Court shifts these fees and costs in an amount appropriate under the circumstances pursuant to Fed.R.Civ.P. 45. Motion [#69].

         II. Legal Standard

         Fed. R. Civ. P. 45 governs the issuance of subpoenas to non-parties and provides that the serving party “may, at any time, move the issuing court for an order compelling production or inspection, ” but 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 (c)(2)(B). If the cost of compliance is significant, courts “must protect the non-party by requiring the party seeking discovery to bear at least enough of the expense to render the remainder ‘non-significant.'” Linder v. Calero-Portocarrero, 251 F.3d 178, 182 (D.C. Cir. 2001). However, this does not necessarily mean that the requesting party must bear the entire cost of compliance. Id. (citation omitted).

         To determine whether, and to what extent, attorney's fees and costs should be shifted from a nonparty responding to a subpoena to the party seeking discovery, courts generally examine the following factors: (1) whether the nonparty actually has an interest in the outcome of the case; (2) whether the nonparty can more readily bear the expense than the requesting party; (3) whether the litigation is of public importance; (4) the scope of discovery and the extent to which the nonparty was required to separate responsive information from privileged or irrelevant material; and (5) the reasonableness of attorney's fees and costs of production incurred. In re Application of Michael Wilson & Partners, Ltd., No. 06-cv-02575-MSK-KMT, 2012 WL 1901217, at *4 (D. Colo. May 24, 2012), aff'd, 520 Fed.Appx. 736 (10th Cir. 2013); see also Crandall v. City & Cty. of Denver, Colo., No. 05-cv-00242-MSK-MEH, 2007 WL 162743 (D. Colo. Jan. 17, 2007) (adopting same factors). The party seeking reimbursement has the burden of establishing “the existence and reasonableness of the costs or fees incurred, and that these expenses should be shifted.” In re Michael Wilson & Partners, Ltd., 2012 WL 1901217, at *4.

         III. Analysis

         The BOCC requests that the Court shift fees and costs in an amount “appropriate under the circumstances” pursuant to Fed.R.Civ.P. 45 based on the following: (1) Defendant failed to take reasonable steps to avoid imposing undue burden or expense on the BOCC; (2) the BOCC, as a nonparty, ought to be protected from the significant expense resulting from its compliance with the Subpoena; and (3) compliance with the Subpoena would have “required the disclosure of privileged or other protected material under several well-recognized privileges.” Motion [#69] at 2.

         In its Response [#76], Defendant asks the Court to deny the Motion [#69] for the following reasons: (1) the Subpoena did not impose an undue burden on the BOCC; (2) the costs incurred by the BOCC in resisting the disclosure of documents were unreasonable and unnecessary and thus not recoverable under Fed.R.Civ.P. 45; (3) the cost of production was not significant when compared to the BOCC's financial status; and (4) the equities do not favor any shifting of costs. [#76] at 3-13. In short, Defendant requests that the ...