Commercial Litigation and Arbitration

Document Requests — ‛Possession, Custody or Control“

Party A serves a document request on Party B. Party B has the unconditional right, by contract, to obtain responsive documents held by Party C. Are the documents held by Party C in Party B’s ‛possession, custody or control“ within the meaning of Fed.R.Civ.P. 34? Under the analysis of District Judge Lewis A. Kaplan in United States v. Stein, 2007 U.S. Dist. LEXIS 31513 (S.D.N.Y. May 1, 2007), the answer is ‛Yes.“

Stein was a criminal case — specifically, the KPMG tax shelter prosecution — but, as Judge Kaplan demonstrates, the governing language (‛possession, custody or control“) of Fed.R.Crim.P. 16(a)(1)(E) , and the relevant precedents, derive from Fed.R.Civ.P. 34, which authorizes requests for documents and things ‛which are in the possession, custody or control of the party upon whom the request is served.“ The question for Judge Kaplan was whether to grant the defendants’ motion to compel the government to produce certain KPMG documents to which the government had unfettered access pursuant to its Deferred Prosecution Agreement with KPMG. In ruling in the affirmative, Judge Kaplan quoted with approval § 34.14[2][b] of Moore’s for the proposition that:

"Legal ownership of the requested documents or things is not determinative, nor is actual possession necessary if the party has control of the items. Control has been defined to include 'the legal right to obtain the documents requested upon demand.' The term 'control' is broadly construed."

He then set forth an array of circumstances reflecting the breadth of the concept of ‛possession, custody or control“ for discovery purposes:

These principles have been applied in a wide variety of situations. Parent corporations have been compelled to produce documents in the hands of subsidiaries, subsidiaries documents in the hands of their parent entities, corporations documents in the hands of employees, clients documents in the hands of attorneys, corporate officers and directors documents in the hands of their corporations, and patients documents in the hands of health care providers. Indeed, the principles have been applied even where the legal relationship arguably was less compelling. In In re NTL Securities Litigation, a corporate defendant was sanctioned for failing to produce documents that were in the hands of another company where the possessor was under a contractual obligation to provide the documents to the defendant. [Note: See posting of February 15, 2007 in this blog for a discussion of NTL.] And in In re Auction Houses Antitrust Litigation, a corporation was ordered under an analogous portion of Civil Rule 33 to answer interrogatories calling for information in the hands of its former chief executive officer where the former officer had contracted to provide the company with such information as it might request in exchange for substantial severance payments that had not all been made. [Footnotes omitted.]

Held, government is required to produce KPMG-held documents to which the government has the contractual right to possession.

Share this article:


Recent Posts