NY Court of Appeals Clarifies Burdens Relating to Nonparty Subpoenas Under CPLR 3101(a)(4)

The New York Court of Appeals (New York’s highest court) recently clarified the standards applicable when a party to litigation seeks information, or discovery, from a non-party.

The case, Matter of Kapon v. Koch, arises from billionaire William I. Koch’s lawsuit to recover damages for the alleged sale of counterfeit wine. (The court issued the decision on April 3, 2014, shortly after a judge drastically reduced Koch’s damages, including a $12 million punitive damages award.)

In keeping with the subject matter of the case, we invite you to sit back and relax, with a nice glass of wine and an easy chair, and to kick your feet up  all, of course, with this blog post visible on your computer screen – as you prepare to learn about discovery practice under the New York Civil Practice Law and Rules (CPLR)…

The CPLR is the “bible” of New York civil practice. Its many provisions set the procedural stage and context for litigation in New York state courts. CPLR Article 31, entitled “Disclosure”, governs the “who”, “what”, “when”, “where”, and “how” of obtaining information in connection with litigation. The “why” is obvious: lawsuits are won or lost on their facts.

CPLR section 3101 sets the basic standard for what information is subject to disclosure and how that information may be obtained. In particular, CPLR 3101(a)(4) provides, in pertinent part:

There shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof, by … any other person, upon notice stating the circumstances or reasons such disclosure is sought or required. (Emphasis added.)

The Court of Appeals, addressing a split among New York’s appellate departments regarding what “circumstances or reasons” are required, concluded “that the ‘material and necessary’ standard adopted by the First and Fourth Departments is the appropriate one and is in keeping with this State’s policy of liberal discovery. Specifically:

The words “material and necessary” as used in section 3101 must “be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity”. Section 3101(a)(4) imposes no requirement that the subpoenaing party demonstrate that it cannot obtain the requested disclosure from any other source. Thus, so long as the disclosure sought is relevant to the prosecution or defense of an action, it must be provided by the nonparty.

It rejected the argument of petitioners (here the nonparty seeking to quash a subpoena served upon it) that CPLR 3101(a)(4) “requires the subpoenaing party to meet the initial burden of establishing the need for the deposition in preparing for trial”. Rather, held the court, “[i]t is the one moving to vacate the subpoena who has the burden of establishing that the subpoena should be vacated under such circumstances.”

The court concluded that the subpoena here satisfied CPLR 3104(a)(1)’s notice requirement (in that “it gave petitioners sufficient information to challenge the subpoenas on a motion to quash”). This shifted the burden to the nonparty “to establish that they were entitled to prevail on the motion to quash”, i.e., that the deposition testimony sought was “irrelevant”. They failed to meet that burden.

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