New Law Simplifies Procedures For Non-Party Discovery

February 01, 2003

On Sept. 24, 2002, Governor Pataki signed a law1 designed to simplify the process of obtaining discovery from non-party witnesses. The law also establishes a procedure for admitting business records obtained from non-parties into evidence at trial or hearing without the need of live testimony from a “foundation” witness. The new law, effective Sept. 23, 2003, amends three sections of the Civil Practice Law and Rules (“CPLR”) and adds a new section altogether.

Perhaps most notably, the law eliminates the current requirement that a party obtain a court order before seeking documentary discovery from a non-party. Under the new law, an attorney may simply issue a subpoena duces tecum, requiring the non-party to produce documents. The new law should eliminate the unauthorized – yet relatively common – practice of attorneys serving deposition subpoenas upon non-parties but canceling the depositions upon advance receipt of documents.

Current Law
Under the current law, a party may take the deposition of a non-party without permission of the court simply by serving a subpoena upon the non-party.2 Moreover, a party may require a non-party to produce documents at the deposition, also without a court order.3 All that is required is that the subpoena served upon the non-party state “the circumstances or reasons such disclosure is sought or required.”4 A subpoena that fails to do so is facially invalid and may be held unenforceable.5

An order of the court is required, however, when a party seeks to obtain documents from a non-party without a deposition. CPLR 3120 sets forth the procedure to be followed in this regard. Subsection (a) of CPLR 3120 permits the service of a notice for discovery and inspection upon a party, requiring a party to produce documents, permit an inspection of land, etc. Moreover, subsection (b) requires that “[a] person not a party may be directed by order to do whatever a party may be directed to do. . . .” Thus, to serve a discovery notice upon a non-party, the party seeking such disclosure must make a motion on notice to all adverse parties.6 The purpose of this rule is to “assure that non-parties will not be unduly burdened with discovery demands and that discovery from non-parties is conducted in a fair and open manner . . . .” 7

The provisions of CPLR 3120(b) notwithstanding, courts have routinely been called upon to address the unauthorized practice of attorneys who serve deposition subpoenas upon non-parties coupled with document requests, but then cancel the depositions upon advance production of the documents. Courts have seemingly treated these violations inconsistently. The seminal case on this topic is Matter of Beiny v. Wynyard,8 where the Appellate Division, First Department, affirmed an order suppressing documents obtained in violation of CPLR 3120(b). It also took the unusual step of disqualifying the law firm that obtained the documents from further representing the party on whose behalf it obtained the documents. The facts in Beiny were egregious. A law firm had served a deposition subpoena upon a non-party and, in contravention of CPLR 3120(b), did not provide advance notice to all parties. The firm canceled the deposition when the documents to be produced in connection with the examination – including a multitude of privileged documents – were delivered to counsel a week prior to the scheduled deposition. Adverse parties were given no notice of the document production and, thus, they had no opportunity to object to the same or seek a protective order. The documents were later used by the law firm to surprise an adverse witness at a deposition.

The court affirmed the suppression of the improperly obtained materials in Beiny, noting that they were obtained in a “deliberate and thoroughly unprincipled effort to obtain a litigational advantage by whatever means seemed useful, including deceit.”9 Although the lower court based its suppression order on the privileged nature of the documents, the Appellate Division noted that “this was unnecessary since, regardless of whether the materials were privileged, the highly improper manner in which they were obtained combined with their use . . . would have constituted a sufficient basis for suppression pursuant to CPLR 3103(c).”10 Moreover, the appellate court held that suppression, while necessary, was by itself inadequate to deter such conduct in the future and to “insure the integrity of the process.”11 Accordingly, the court also disqualified the law firm.

In Brussels Leasing Limited Partnership v. Henne,12 the court granted a motion to quash subpoenas issued in violation of CPLR 3120(b), and further directed the parties to appear before the court so that it could consider the imposition of sanctions. In that case, the court held that the use of the subpoenas was improper and was employed to secure production of materials having no direct bearing upon the issues in the case.13

Other courts have been more forgiving of CPLR 3120(b) violations. For example, in Matter of Kochovos,14 the First Department affirmed the trial court’s order which only partially suppressed improperly obtained documents and refused to disqualify counsel. There, the court made clear that the result was appropriate because none of the materials obtained was privileged, and no showing was made that counsel would not have been entitled to obtain the documents in the normal course of discovery. Thus, the court determined that no unfair advantage was gained from any violation of the rule.

Likewise, in Gutierrez v. Dudock,15 the Second Department affirmed the trial court’s order, which denied a motion to suppress evidence obtained in violation of CPLR 3120(b). Like the Kochovos court, the Second Department found that the plaintiff suffered no prejudice because the documents obtained were not privileged and counsel would have been entitled to obtain them in the normal course of discovery. The use of a subpoena simply to obtain documents from a non-party, without an order of the court, is improper under the current law. Engaging in such litigation tactics could result in penalties, including the suppression of evidence, attorney disqualification, and perhaps even sanctions.

Changes to the Law
Effective Sept. 1, 2003 The bill signed into law is entitled “An Act to Amend the Civil Practice Law and Rules, in Relation to the Production of Non-Party Business Records.”16 It takes effect on Sept. 1, 2003. The new law simplifies the process of obtaining documentary discovery from non-parties. Moreover, with respect to business records, the law establishes a procedure for admitting those records into evidence without the need for a witness at trial to lay an evidentiary foundation.

The law amends three sections of the CPLR and adds a new section altogether. First, it amends CPLR 2305(b) to provide that “a subpoena duces tecum may be joined with a subpoena to testify at a trial, hearing or examination or may be issued separately.” Next, it amends CPLR 3120 in several substantive respects. First, it permits the service of a subpoena duces tecum upon a non-party, requiring production of documents, inspection of land, etc. It also makes the procedural requirements previously applicable to notices for discovery and inspection served on parties, applicable to subpoenas served on non-parties. For example, the 20-day notice requirement previously applicable to notices for discovery and inspection will also be applicable to subpoenas served on non-parties.

Importantly, the new law deletes subsection (b) of CPLR 3120, which had required a court order to obtain documentary discovery from non-parties when the documents are not sought in connection with a deposition. However, the new law assures that non-party discovery is not covertly conducted, for it requires a party issuing a document subpoena on a non-party to simultaneously serve a copy of the subpoena on all parties. Moreover, within five days of the non-party’s compliance with the subpoena, in whole or in part, the party must notify each other party that the items produced are available for inspection and copying. The new law also amends CPLR 3122 in several substantive respects. First, it permits a non-party served with a subpoena to file written objections to the subpoena within 20 days of service, similar to the objections that parties are currently permitted to serve in response to notices for discovery and inspection. If a party is not satisfied with the production made by the non-party, it is authorized by the new CPLR 3122 to move to compel production under CPLR 3124.

CPLR 3122 also permits a non-party to produce complete and accurate copies of documents, unless the subpoena directs that originals be produced for inspection and copying at the place such documents are usually maintained. Moreover, it directs that reasonable production expenses are to be borne by the party seeking the disclosure. The new law also contains safeguards to prevent against the unauthorized disclosure of medical records. When a subpoena seeks the production of medical records, the non-party need not respond to the subpoena at all unless the subpoena is accompanied by a written authorization from the patient. In fact, the subpoena must state on its face, in conspicuous, bold-faced type, that the non-party may not produce records unless the subpoena is accompanied by a patient authorization.

Perhaps the most notable departure from current law is the new CPLR 3122-a, regarding the certification of business records. That section provides that a non-party producing business records pursuant to a subpoena is required to sign an affidavit attesting to the fact that the documents being produced are, indeed, business records prepared in accordance with the evidentiary standards contained in CPLR 4518(a). Once certified, and absent a timely objection from other parties, the records will be deemed business records and admissible at trial as such, without requiring testimony from a live witness to lay a foundation for the admission of the evidence.

CPLR 3122-a requires a non-party producing business records pursuant to a discovery subpoena to certify that the documents are indeed business records. To this end, the records must be accompanied by an affidavit of a custodian of the records, or another qualified witness, stating that the affiant is the duly authorized custodian or other qualified witness, that the records are (to the best of the affiant’s knowledge after reasonable inquiry) accurate versions of the responsive documents in the non-party’s possession, custody, or control, and that (to the best of the affiant’s knowledge after reasonable inquiry) the records produced represent all documents responsive to the subpoena.17 Alternatively, the affiant must explain why responsive documents are missing from the production. In addition, the affiant must attest that the record or copies were made by the personnel or staff of the business, or persons acting under their control, in the regular course of business, and that it was the regular course of business to make such records.

CPLR 3122-a sets forth a streamlined procedure for admitting business records produced pursuant to a non-party subpoena at trial or hearing. A certification made in compliance with the aforementioned criteria is admissible as to the matters set forth in the certification and, as to such matters, shall be presumed true. A party intending to offer at trial or hearing business records authenticated by the certification discussed above is required to give notice of its intention to other parties at least 30 days before the trial or hearing. No later than 10 days before the trial or hearing, a party receiving such notice may object to the offer of the business records by certification, stating the grounds for such objection. The rule provides that such objection, “may be asserted in any instance and shall not be subject to imposition of any penalty or sanction.”18 Unless objection is made within the time set forth in the rule, or at trial based upon evidence which could not have been discovered by the exercise of due diligence prior to the time for objection, the records certified “shall be deemed to have satisfied the requirements of subdivision (a) of Rule 4518.”19 However, notwithstanding the issuance of a notice or objection under the rule, a party may still subpoena the custodian of the records to appear FFDOCS1506431.1 and testify in court. A party may similarly require the production of original business records at the time of the trial or hearing.

The new law should go a long way towards simplifying the process of obtaining discovery from non-parties. At a minimum, the new law will obviate the need for needless depositions scheduled for the primary purpose of obtaining documents from non-parties. Moreover, by decreasing the need for a non-party witness to lay an evidentiary foundation for business records, the law should streamline many trials and hearings, particularly for document-intensive, commercial cases.

Eric W. Penzer is associated with the firm of Farrell Fritz, P.C. and is a member of the Commercial Litigation Committee. On January 29, 2003, Mr. Penzer presented a program regarding the new law to the Committee.

1. Chap. 575, L. 2002.

2. See, CPLR 3101(a)(1), 3106(b).

3. See, CPLR 3111.

4. CPLR 3101(a)(4). 5. See, DeStafano v. MT Health Clubs, 220 A.D.2d 331, 632 N.Y.S.2d 569 (1st Dept. 1995); Rickicki v. Burden Chem., 195 A.D.2d 986, 600 N.Y.S.2d 397 (4th Dept. 1993). 6. See, CPLR 3120(b). 7. Matter of Beiny v. Wynyard, 129 A.D.2d 126, 132, 517 N.Y.S.2d 474, 478, rearg. denied, 132 A.D.2d 190, 522 N.Y.S.2d 511 (1st Dept. 1987).

8. 129 A.D.2d 126, 517 N.Y.S.2d 474, rearg. denied, 132 A.D.2d 190, 522 N.Y.S.2d 511 (1st Dept. 1987).

9. Id. at 136, 517 N.Y.S.2d at 480.

10. Id. at 138, 517 N.Y.S.2d at 482.

11. Id. at 141, 517 N.Y.S.2d at 483.

12. 174 Misc. 2d 535, 664 N.Y.S.2d 905 (Sup. Ct. Queens Co. 1997).

13. See, id. at 539, 664 N.Y.S.2d 905.

14. 140 A.D.2d 180, 528 N.Y.S.2d 37 (1st Dept. 1988).

15. 276 A.D.2d 746, 715 N.Y.S.2d 333 (2d Dept. 2000); see, also, Tyrell v. Tyrell, 54 A.D.2d 931, 388 N.Y.S.2d 316 (2d Dept. 1976) (contempt not available as remedy for non-party’s failure to comply with subpoena issued in violation of CPLR 3120(b)).

16. Chap. 575, L. 2002.

17. See, CPLR 3122-a(a).

18. CPLR 3122-a(c).

19. Id.

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