Introduction

The case of Bigie Lee Rhea v. Apache Corporation et al. adjudicated by the United States Court of Appeals for the Tenth Circuit on October 23, 2020, addresses crucial issues surrounding subpoenas issued to non-parties and the obligations of courts under Rule 45(d)(2)(B)(ii) of the Federal Rules of Civil Procedure. The litigation originated from allegations that Apache Corporation systematically underpaid royalty owners for minerals produced from their wells. In pursuit of evidence, Plaintiff Rhea issued subpoenas to Enable Gas Gathering entities, non-parties to the original suit, seeking extensive documentation over a 16-year period. Enable contested these subpoenas, citing significant expense and burden, leading to a series of judicial decisions culminating in an appellate review.

Summary of the Judgment

The Tenth Circuit Court of Appeals vacated the district court's orders compelling Enable to produce documents and holding it in contempt for non-compliance. The appellate court found that the district court failed to adequately apply Rule 45(d)(2)(B)(ii), which mandates protection for non-parties from significant expenses incurred in responding to subpoenas. Consequently, the appellate court remanded the case for further proceedings, emphasizing the necessity for courts to evaluate the significance of expenses and provide appropriate safeguards under Rule 45.

Analysis

Precedents Cited

The judgment extensively referenced several precedents to delineate the proper application of Rule 45. Notably:

• New Prods. Corp. v. Dickinson Wright, PLLC: Emphasized the mandatory nature of Rule 45(d)(2)(B)(ii) in protecting non-parties from significant expenses.
• Legal Voice v. Stormans Inc.: Reinforced that Rule 45(d)(2)(B)(ii) leaves no exceptions for protecting against significant expense.
• LINDER v. CALERO-PORTOCARRERO: Illustrated the application of significant expense with specific monetary thresholds.
• Firestone Tire & Rubber Co. v. Risjord: Discussed appellate jurisdiction over contempt rulings in discovery disputes.

These precedents collectively underscored the necessity for courts to rigorously assess the financial burden imposed on non-parties and to enforce Rule 45(d)(2)(B)(ii) without equivocation.

Legal Reasoning

The court's reasoning hinged on the non-compliance with Rule 45(d)(2)(B)(ii). The district court had ordered Enable to produce an extensive range of documents without adequately assessing whether the associated costs were "significant." Enable provided detailed affidavits estimating expenses upwards of $800,000, yet the district court dismissed these claims, focusing instead on the burden rather than the financial implications. The appellate court identified this as a misapplication of Rule 45, which explicitly requires protection against significant expenses, regardless of the burden the subpoena might impose.

The appellate court further critiqued the district court's lack of specificity in addressing Enable's cost estimates and its reliance on an undeclared affidavit from Rhea, which lacked factual grounding regarding Enable's internal systems. This oversight led to the conclusion that the district court's order was in violation of the mandatory provisions of Rule 45.

Impact

This judgment serves as a critical checkpoint for future litigations involving subpoenas to non-parties. It clarifies that:

• Court orders compelling production must rigorously evaluate and protect non-parties from significant expenses.
• Failure to apply Rule 45(d)(2)(B)(ii) appropriately can lead to the vacating of compelling orders and sanctions.
• Courts must rely on concrete evidence when assessing the financial burden of compliance, rather than abstract notions of burden.

Legal practitioners must now be more meticulous in arguing the financial impacts of subpoenas to non-parties and ensure courts uphold the protective measures stipulated in Rule 45.

Complex Concepts Simplified

Rule 45(d)(2)(B)(ii) Explained

Rule 45(d)(2)(B)(ii) of the Federal Rules of Civil Procedure addresses subpoenas directed at non-parties (individuals or entities not involved in the lawsuit). When such a subpoena is issued, the rule mandates that the court must protect the non-party from significant expenses arising from compliance. This means that if responding to the subpoena would impose substantial financial burdens, the court must require the party seeking the information to cover at least part of these costs, ensuring they do not become prohibitive for the non-party.

Contempt and Sanctions in Discovery

When a party fails to comply with a court order, such as producing documents in response to a subpoena, the court may hold that party in contempt. This can lead to sanctions, which are penalties imposed to compel compliance and maintain the authority of the court. In this case, Enable was sanctioned $1,000 per day for non-compliance. However, without proper application of protective measures under Rule 45, such sanctions were deemed inappropriate.

Significant Expense

The term "significant expense" lacks a precise monetary threshold within Rule 45. However, circuits have indicated ranges that generally qualify as significant. For instance, expenses between $9,000 to $20,000 are often considered significant, and cases exceeding these amounts may warrant protective measures under Rule 45(d)(2)(B)(ii). The judgment highlighted that Enable’s projected expenses far exceeded these ranges, reinforcing the need for the district court to mitigate such burdens.

Conclusion

The Tenth Circuit's decision in Bigie Lee Rhea v. Apache Corporation et al. reinforces the imperative for courts to diligently apply Rule 45(d)(2)(B)(ii) when issuing subpoenas to non-parties. By vacating the district court's orders and sanctions, the appellate court underscored that significant financial burdens must be carefully evaluated and mitigated to uphold the rule's protective intent. This judgment not only sets a precedent within the Tenth Circuit but also serves as a persuasive authority for other jurisdictions, ensuring that non-parties are shielded from undue financial strain in legal proceedings. Legal professionals must heed this ruling to advocate effectively for their clients' financial protections during discovery.