Opinion
Miscellaneous No: 01-3791 Section: "J" (1).
February 4, 2002.
HEARING ON MOTION
FACTUAL BACKGROUND
Seabulk Towing, Inc. and Seabulk Offshore, Ltd. (collectively referred to as "Seabulk") and Otto Candies, L.L.C. ("Candies") are competitors in the offshore supply boat business. Seabulk and Candies have done business in waters off the coast of Mexico by entering into joint ventures with a Mexican partner. Oceanografia S.A. de C.V. ("Oceanografia") and possibly its principal, Amado Yanez Osuna ("Osuna"), entered into separate joint ventures with Seabulk and Candies. Seabulk and Oceanografia are litigating claims arising out of their joint venture.
PROCEDURAL HISTORY
On June 7, 2001, Seabulk filed its complaint against Oceanografia and Osuna in the federal district court in Brownsville, Texas. In the Brownsville action Seabulk filed a motion for third party discovery. Exhibit F to Rec. doc. 6. On August 10, 2001 a United States Magistrate Judge granted Seabulk's motion for third party discovery and ordered such discovery against Merrill Lynch and Candies. Exhibit A Rec. doc. 1.
Seabulk Towing, Inc., f/k/a Hvide Marine Towing. Inc., et al v. Oceanografia S.A. de C.V., et al, CA No. B-01-094 (S.D. Tx.) (the "Brownsville action").
Seabulk caused a subpoena duces tecum to be issued by this Court, dated September 10, 2001, and served on Candies on September 19, 2001. It sought immediate production. Exhibit B to Rec. doc. 1. On September 24, 2001, counsel for Candies, who is also counsel for Oceanografia and Osuna in the Brownsville action, faxed a letter to counsel for Seabulk and stated:
We regard the subpoena served on Otto Candies, L.L.C. (reportedly served on September 19, 2001) to be deficient. It is premature since it is dated and was served before issue was joined. It is also overburdensome (sic) and does not allow time to respond.
Exhibit C to Rec. doc. 1. There was no other written response by Candies to the subpoena until November 2, 2001, when it objected on the grounds of: (1) prematurity; (2) burden; and (3) confidentiality. Attachment to Exhibit A to Rec. doc. 3.
Seabulk's counsel provided an affidavit where he states that, although he believed Candies had waived its right to make specific objections to the subpoena, he orally sought from Mr. Rufty a statement of specific objections by October 26, 2001, but no such statement was timely received. Exhibit E to Rec. doc. 1. The affidavit also describes unsuccessful attempts after October 26, 2001 to reach an agreement with counsel for Candies on the scope of the subpoena. These are referred to in Seabulk's L.R. 37.1. Attached to Rec. doc. 1.
On December 18, 2001, Seabulk filed its motion to compel production and noticed it for hearing on January 2, 2002. Rec. doc. 1. At the request of the parties the hearing was continued until January 9, 2002. Rec. doc. 2. Seabulk urges that Candies waived all of its objections to the subpoena. It seeks an order compelling the requested documents and an award of expenses for filing the motion. Rec. doc. 1. Candies filed its opposition based on the following grounds: (1) it timely objected; (2) the subpoena sought proprietary information; (3) the requested information was irrelevant; (4) the document request was premature; (5) production of the documents would impose an undue burden on Candies; and (6) this Court should defer to Brownsville to establish the scope of discovery. Rec. doc. 3. Seabulk filed a reply. Rec. doc. 6. Candies filed its own reply and Seabulk filed a supplemental reply. Rec docs. 11 and 14. Candies also submitted a letter, which has been filed in the record, and a transcript of a proceeding in the Brownsville action.
On January 30, 2001 there was a telephone conference for the purpose of determining whether there was agreement by the parties that the issues raised by Seabulk's motion to compel to production should be resolved in the Brownsville action. The parties were not in agreement, so the undersigned must resolve the issues.
See In re: Sealed Case, 141 F.3d 337, 343 (D.C. Cir. 1998), where the court held that: "if the nonparty deponent fails . . . to move for a protective order in the trial court, the issuing court must make the decision whether discovery may be had, and its scope, since it is the only court with the power to order enforcement."
WAIVER OF OBJECTIONS
Pursuant to Fed.R.Civ.P. 45(c)(2)(B):
[A] person commanded to produce and permit inspection and copying may, within 14 days after service of the subpoena or before the time specified for compliance if such time is less than 14 days after service, serve upon the party or attorney designated in the subpoena written objection to inspection or copying of any or all of the designated materials or of the premises.Id.
In response to Seabulk's waiver argument, Candies contends it timely objected: first, when it sent the letter of September 24, 2001 (five days after the service of the subpoena on September 19, 2001); and second, when it sent the letter of November 2, 2001. The first letter was timely, but it only made the following objections: (1) prematurity; (2) inadequate time to respond; and (3) burden. The first two objections are now moot.
Candies argued the subpoena was premature because issue had not been joined. Oceanografia and Osuna served their answer and counterclaim on October 2, 2001. Exhibit G to Rec. doc. 6. Although the subpoena sought immediate production, more than four months have passed since the service of the subpoena.
In its November 2, 2001 letter, Candies for the first time made the objection that the subpoena sought proprietary information. Candies waived this objection, because it was not made in any form until November 2, 2001; more than six weeks after the service of the subpoena. The failure of a party to serve written objections within the time specified constitutes waiver. 9 James Wm. Moore, et al., Moore's Federal Practice ¶ 45.04[2] (3d ed. 1999).
BURDEN
In addition to burden, Candies argues that the information sought by Seabulk is not relevant to a claim or defense to any party in the Brownsville action. Fed.R.Civ.P. 26(b)(1). Although Candies did not identify an objection based upon relevancy in its September 24, 2001 letter, the issue is subsumed in the question of the burden of responding to the discovery. Undue burden is specifically identified in Rule 45 as a ground for quashing a subpoena. Fed.R.Civ.P. 45(c)(3)(A).
Whether a subpoena subjects a witness to undue burden within the meaning of Rule 45(c)(3)(A)(iv) usually raises a question of the reasonableness of the subpoena. The determination of a subpoena's reasonableness requires a court to balance the interests served by demanding compliance with the subpoena against the interests furthered by quashing it; this balance of the subpoena's benefits and burdens calls upon the court to consider whether the information is necessary and unavailable from any other source.
9A Wright, Miller and Marcus, Federal Practice and Procedure § 2463 (2d ed. 1994).
Candies argues that: (1) Seabulk's requests seek all financial records on its operations in Mexico conducted with Oceanografia; (2) to respond requires it to examine and produce records generated in the operation of numerous vessels over many years; (3) the documents can be obtained from Oceanografia; and (4) Candies was not a party to the dispute between Oceanografia and Seabulk.
Seabulk's response to the issue of burden is limited. It describes its willingness to work with Candies to resolve the burden issue, but contends that Candies' delay forced it to seek relief through the motion to compel. It argues that the close relationship between Seabulk and Oceanografia weighs against consideration of Candies "non-party" status. Seabulk contends that Oceanografia also sought to delay discovery, so it should be permitted to pursue information in the possession of Candies that also may be in the possession of Oceanografia.
Because of the close business relationship between Candies and Oceanografia, and the scheduling order in the Brownsville action, Seabulk should not be required to wait to see what, if anything, Oceanografia produces before seeking production from Candies.
Candies retained as its lawyer to contest Seabulk's subpoena the same lawyer representing Oceanografia in the Brownsville action.
Candies also objects that the requests are burdensome because they are broadly worded and would call for the production of many documents. In some cases Candies objection is well taken, so it necessary to consider each category in the subpoena. The following are summaries of the actual requests.
1. Oceanografia/Osuna/enterprise assets deposited in the United States since January 1, 2000.
"Documents are sought concerning Oceanografia, Osuna and any enterprise which they were participants ("Oceanografia/Osuna/enterprise").
This category only seeks activity since January 1, 2000, so it is does not impose an undue burden on Candies.
2. Oceanografia/Osuna/enterprise assets deposited outside the United States since January 1, 2000.
This category also only seeks activity since January 1, 2000, so it does not impose an undue burden on Candies.
3. Assets owned by Oceanografia/Osuna/enterprise.
As worded by Seabulk this category seeks any document which references or inventories any tangible or intangible asset owned, in whole or in party, by Oceanografia, Osuna or any Oceanografia/Osuna enterprise. This category imposes an undue burden on Candies. It could apply to tools and supplies stored on an Oceanografia vessel or to a car owned by Osuna.
4. Assets owned by Oceanografia/Osuna/enterprise which were removed from the United States since March 15, 2001.
This category is subject to the same deficiency as category no. 3, so it imposes an undue burden on Candies.
5. Debts owed by Oceanografia/Osuna/enterprise to Candies.
This category can only be read as applying to debts owed at the time the subpoena was served on Candies. It does not impose an undue burden on Candies.
6. Financial statements for Oceanografia/Osuna/enterprise since January 1, 1999.
This category only seeks information since January 1, 1999, so it does not impose an undue burden on Candies.
7. Listing of all equipment owned, operated, leased or chartered by Oceanografia, Osuna and Candies or any enterprise in which they have any financial participation.
Because category 7 includes "chartered" in the description of the equipment, the word equipment shall be read as referring only to vessels. Like category no. 5, it must also be read as applying to the time when the subpoena was served. With these limitations category no. 7 does not impose an undue on Candies.
8. The present location of all equipment listed in no. 7.
Category no. 8 does not impose an undue burden on Candies, because of the limitations described for category no. 7.
9. The presence in the United States since March 15, 2001 of any of the equipment referred to in no. 7.
Category no. 9 does not impose an undue burden on Candies, because of the limitations described for category no. 7.
10. The identity of any financial institution or consultant that participated in the formation or funding of any enterprise in which Oceanografia/Osuna and Candies are participants.
Category no. 10 does not impose an undue burden on Candies.
11. Documents exchanged between Oceanografia/Osuna/enterprise and Candies since March 15, 2001.
Even though category no 11 is limited to documents exchanged since March 15, 2001, the request could require the production of voluminous documents relating to the operation of the Oceanografia and Candies. Some of these documents, for example information on weather conditions, log entries, grocery purchases are not relevant to the claims or defenses of the parties in the Brownsville action. Compliance with this category would impose an undue burden on Candies.
IT IS ORDERED that Seabulk's motion for an order compelling Candies to produce certain documents (Rec. doc. 1) is GRANTED in PART and DENIED in PART, as follows:
1. Within ten (10) working days of the entry of this order Candies shall produce all documents responsive to categories 1, 2 and 5 through 10 of the subpoena as limited by this order.
2. Candies is not required to make any response to categories 3, 4 and 11 in the subpoena duces tecum.
3. Seabulk's request for an award of expenses relating to the filing of its motion is denied.