You’ve Been Served With a Business Records Subpoena. Now what?
In civil lawsuits procedural rules exist that enable the parties to legally obtain information and documents from other parties to the litigation as well as from third parties who are not involved in the lawsuit. The process is referred to as “discovery.” California Courts have construed the discovery rules liberally so as to uphold the right to discovery and to permit, rather than to prevent, discovery of information wherever possible. In general, discovery may be had into any information “relevant to the subject matter involved in the pending action.” The discovery process is an essential aspect of litigation. The purpose of discovery is to allow the parties to obtain the evidence necessary to evaluate and resolve their dispute or to effectively prepare for trial in the event the dispute cannot be settled out of court.
While it may be easy to understand the parties to a lawsuit being obligated to respond to participate in discovery, non-parties may also be required to respond to discovery requests as well. In California, a deposition subpoena for production of business records is the specific discovery tool utilized when a party in a case is seeking the production of documents from a non-party.
For many businesses, receiving a third-party subpoena for business records often comes as a complete surprise. Although some businesses may routinely receive these subpoenas and have a policy for responding, many small businesses receiving a third-party subpoena for the first time may be shocked and concerned about its implications, stressing over what to produce and experiencing frustration about the inconvenience and time required to respond. Businesses need not fear such subpoenas, however, and responding to them need not cause any lost sleep so long as the businesses are aware of what exactly a “business record” is and are informed about the timing and methods of responding.
“Business records” is broadly interpreted by California courts to include documents such as journals, account books, reports, correspondence and the like as well as electronically stored information about the business entity. Personal service of a subpoena for business records generally requires a California resident or entity to produce all documents specified in the subpoena. However, in certain circumstances the subpoenaed party may have grounds to fight the subpoena. For example, the requested records must be records of the business and not a product of the business such as reports, designs, or presentations created for clients of the business. Also, the requested documents actually must be prepared by the subpoenaed business in the ordinary course of business — in other words, the business must be able to authenticate the documents. A subpoena may not be enforceable if the business records sought were prepared or generated by entities other than the subpoenaed business.
Additionally, in California there are legal privileges which protect certain types of information from disclosure and may provide a basis upon which to legally refuse to provide documents requested in a subpoena. Among those privileges are the following:
- Attorney-client privilege – Communications between an attorney and a client (or potential client) are presumed to have been made in confidence;
- Tax return privilege – Prevents the disclosure of information supplied in connection with taxes returns;
- Privilege to protect a trade secret – The owner of a trade secret has a privilege to refuse to disclose the secret and to prevent another from disclosing it.
A deposition subpoena for business records may be legally attacked if the requested information is not within the permissible scope of discovery — i.e., if the records are not relevant to the subject matter of the litigation, are not truly “business records,” or if a privilege applies to the records. For example, the subpoenaed party can file a motion to quash the subpoena in the pending case. The motion can be based on the premise that the subpoena is unduly burdensome because it seeks information regarding topics that are unrelated or beyond the scope of the litigation. Alternatively, the subpoenaed party may seek a protective order in the pending litigation. California courts may generally make whatever orders are appropriate to protect a subpoenaed entity from unwarranted annoyance, unreasonable or oppressive demands, or undue burden and expense. Finally, the non-party served with the subpoena may simply notify the party issuing the subpoena that it objects to production of some or all of the requested documents. If timely objections are made by the non-party, the burden shifts to the party seeking the discovery to file a motion to compel in the pending case in which it must show a “compelling need” for the nonparty information.
Business records subpoenas are a crucial element of our system of justice and they create legal obligations for those who receive them to act in a timely manner - either by producing the documents or taking one of the legal steps described above to challenge the subpoena. If you are served with a third-party subpoena for production of business records, we invite you to contact Ross Schwartz, Dick Semerdjian, Kevin Cauley, John Moot, Sarah Evans or Sierra Spitzer as soon as possible to discuss how to timely and appropriately respond in order to best protect your interests.