Failure to Provide Notice of Rule 45 Subpoenas and to Provide Copies of Documents Received Is Sanctionable under the Inherent Power of the Court

From Judson Atkinson Candies, Inc. v. Dhimantec, 2008 U.S. App. LEXIS 11771 (7th Cir. June 3, 2008):

The facts strongly suggest that Judson Atkinson was less than forthright in its use of third-party subpoenas. First, defense counsel was not provided with copies of the subpoenas. Then, although Judson Atkinson began receiving documents in response to the subpoenas in October, it did not provide copies to the defendants until November 15, 2006, ten days after the last installment was received. See Murphy v. Bd. of Educ. of Rochester City Sch. Dist., 196 F.R.D. 220, 226 (W.D.N.Y. 2000) (where attorney issued third-party subpoenas without notifying opposing party, failure to share information obtained pursuant to subpoena weighed in favor of imposing sanctions). When defense counsel finally received the documents and contacted counsel for Judson Atkinson to protest the fact that Judson Atkinson failed to provide the defendants with copies of the subpoenas, Judson Atkinson misrepresented the time that it had received responses to the subpoenas, stating that no documents were received from either bank until after the close of discovery on November 3rd. This was simply untrue. Judson Atkinson received some documents in October. Judson Atkinson's blatant misrepresentation supports the district court's finding that it was not acting in good faith.

In addition, Judson Atkinson's violation of Rule 45 deprived the defendants of the opportunity to object to the subpoenas. Judson Atkinson contends that any prejudice to the defendants was negated by its offer to stipulate not to use some of the subpoenaed documents. But a party may not ignore Rule 45's requirements and then, when caught, dictate the terms under which the subpoenaed materials will be used. Rather, it is within the court's inherent powers to assess the appropriate sanctions for violations of discovery rules. Chambers, 501 U.S. at 43-44, 111 S. Ct. 2123. Judson Atkinson's argument that the subpoenaed documents had been produced in the underlying litigation does not cure the prejudice to the defendants since they were not parties to the breach of contract lawsuit between Judson Atkinson and LMC. The district court did not clearly err in finding evidence of bad faith and prejudice to the defendants and hence, we affirm its imposition of sanctions.

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