Richard H. Bliss
Richard H. Bliss ()

Although the procedural and substantive requirements for obtaining disclosure from nonparties in New York civil practice have been relaxed by legislative and judicial action over the past 30 years, questions regarding the availability of such disclosure have troubled the courts and practitioners alike. With its April 3, 2014, decision in Matter of Kapon v. Koch,___NY3d___, 2014 WL 1315590, 2014 Slip Op 02327 (2014) the Court of Appeals has now resolved a disagreement between the departments of the Appellate Division as to the substantive requirements for obtaining disclosure from nonparties.

Procedural Requirements

The most significant procedural change in the past 30 years was the elimination of the requirement that the party seeking disclosure from a nonparty first obtain a court order. Prior to its amendment in 1984, CPLR 3101(a)(4) authorized the deposition of a nonparty only “where the court on motion determines that there are adequate special circumstances.” Except where the deposition of an adverse party’s expert is sought (see CPLR 3101[d][iii]), the statute now provides for disclosure from “any other person” merely “upon notice stating the circumstances or reasons such disclosure is sought or required.” The “circumstances or reasons” should appear on the face of the subpoena (service of which secures jurisdiction over the witness) or on a separate notice accompanying the subpoena, with a copy to all parties appearing.

The 1984 amendment did not dispose of the motion requirement where documents were involved. That change was effected by a 2002 amendment to CPLR 3120, a provision that previously authorized such disclosure from “a person not a party” only by court order. Now, a mere subpoena suffices where the production or copying of documentary evidence, or the inspection, testing, or photographing of real or personal property is sought (CPLR 3120[1]). A particularized objection to such disclosure must be served within 20 days (CPLR 3122[a][1]), and failure to do so has been held to limit a court’s review of the disclosure demand to a question of privilege.1

Often overlooked is the amendment’s addition of CPLR 3122-a, which sets forth the procedure for certification of business records produced in compliance with CPLR 3120, thus paving the way for their admissibility (subject to timely objection) without the foundational testimony required by CPLR 4518(a).

Finally, CPLR §3119—New York’s version of the Uniform Interstate Depositions and Discovery Act—permits nonparty disclosure for use in an action pending in another state without the court order that was usually required by CPLR 3102(e). Now, all that is required is the filing of the out-of-state subpoena with the appropriate county clerk or a New York attorney retained by the party seeking disclosure, either of whom is then empowered to issue a corresponding New York subpoena covering almost anything discoverable in an action pending here. A court order is still required, however, where the action is pending in a foreign jurisdiction.

While these procedural changes have presented few problems, a common mistake—and one likely to carry more serious consequences after Kapon—is a failure by the party seeking disclosure to include the notice required by CPLR 3101(a)(4). This has resulted in invalidation of the subpoena,2 although it is apparently a waivable defect.3

Substantive Requirements

Prior to Kapon, and notwithstanding the 1984 amendment, courts were reluctant to relax the burden that had traditionally been placed on one seeking disclosure from a nonparty of showing a particularized need for the information. This reluctance was reflected in inconsistent and divergent appellate decisions that often frustrated the disclosure process.

In Kooper v. Kooper, 74 AD3d 6 (2d Dept. 2010), a matrimonial action in which the wife subpoenaed the husband’s financial documents from third parties, the Second Department held that the threshold inquiry as to whether the disclosure sought was “material and necessary” had been satisfied, since the parties’ financial information was obviously relevant to a determination of the nature and value of the marital assets. The court then explored what it characterized as the “additional consideration” presented by the fact that the information was sought from nonparties.

Reviewing the 1984 amendment’s elimination of the court order and “special circumstances” requirements as well as its own case law (which, despite the amendment, had continued to require a showing of “special circumstances”),4 the court concluded that “more than mere relevance and materiality is necessary” to warrant such disclosure.5 While understandably hesitant to set forth a list of “circumstances or reasons” that would satisfy the requirement, the Kooper court noted that inability to obtain the information from other sources would qualify, as would a conflict in statements between a party and the nonparty, inconsistencies in the nonparty’s statements, or an unexplained discontinuance against the witness who was formerly a party.

In crafting the “more than mere relevance and materiality” pre-condition to nonparty disclosure, the Kooper court drew support from the Legislature’s inclusion in CPLR 3101(a)(4) of the requirement that the “circumstances or reasons such disclosure is sought or required” be set forth in the subpoena or notice. The court found in such language a legislative intent that a stronger showing was needed to require that nonparties become involved in lawsuits in which they have no stake or interest.

Although in Schroder v. Consolidated Edison, 249 AD2d 69 (1st Dept. 1998), the First Department rejected any suggestion that the “special circumstances” requirement survived the 1984 amendment, the same court, citing Second Department precedent, backtracked in both Tannenbaum v. City of New York, 30 AD3d 357 (1st Dept. 2006), holding that a nonparty judge should not be deposed absent a showing of special circumstances or that the information was unobtainable from other sources, and Reich v. Reich, 36 AD3d 506 (1st Dept. 2007), where the deposition of a nonparty corporate officer was denied.

The burdensome Kooper standard was embraced by the Third Department in Matter of Troy Sand & Gravel v. Town of Nassau, 80 AD3d 199 (3d Dept. 2010). The Fourth Department, which even prior to Kooper stated that the 1984 CPLR amendment eliminated the necessity to show “special circumstances,” appeared to require only that the disclosure sought be “material and necessary” (Cavaretta v. George, 270 AD2d 862 [4th Dept. 2000]).

The decisions, even within the same department, were often difficult to reconcile. Kapon now addresses the problem and alters the nonparty disclosure landscape. In Kapon, which arose in the context of disclosure pursuant to the Uniform Interstate Depositions and Discovery Act, respondent William Koch sought documents and the deposition of nonparties for use in a California fraud action against the seller of wine that Koch claimed was counterfeit. The sales were allegedly made through the nonparty retailers and auctioneers who brought a special proceeding to quash the deposition subpoenas and for a protective order (CPLR 2304, 3103), asserting that 1) the parties to the California action should be deposed first; 2) questioning should be limited to matters material and necessary to the action; and 3) use of the depositions should be limited to the California action (apparently, there was a prior New York action pending).

Petitioners also challenged the sufficiency of the required CPLR 3101(a)4 notice, and they contended that the subpoenas constituted an attempted “end-run” around the discovery deadline in the New York action. The First Department affirmed the Supreme Court’s denial of the petition (except with regard to confidential information and trade secrets), and the Court of Appeals granted leave and affirmed.

In a unanimous decision authored by Judge Eugene F. Pigott Jr. (with Judge Robert S. Smith taking no part), the court first rejected the argument that CPLR 3101(a) distinguishes between the disclosure obligations of parties and nonparties. In so doing, the court impliedly rejected the rationale adopted by the Second and Third Departments in their respective decisions in Kooper and Troy Sand & Gravel, where, in crafting the more stringent prerequisites to such disclosure, reliance was placed upon the fact that CPLR 3101(a) includes different subsections for parties (subdivision 1) and nonparties (subdivision 4). That distinction, said the Court of Appeals, is meaningful only in providing for the CPLR 3101(a)4 notice, the purpose of which is to apprise a nonparty stranger to the litigation of the “circumstances or reasons” why the disclosure is sought or required.

Accordingly, a party seeking disclosure need not establish that the evidence is unobtainable from other sources or discharge any obligation other than to show that the information sought is “material and necessary,” concededly a low threshold. Agreeing with the First and Fourth Departments, the court drew support from its seminal decision in Allen v. Crowell-Collier Publishing, 21 NY2d 403 (1968), and it reaffirmed its traditionally liberal posture regarding disclosure, holding that the same standard is to be applied to parties and nonparties. “[S]o long as the disclosure sought is relevant to the prosecution or defense of an action, it must be provided by the nonparty” (Slip Op at 8).

Addressing the litigants’ respective burdens where the issue of discoverability is raised, the court rejected the nonparties’ contention that CPLR 3101(a)4′s “circumstances or reasons” requirement placed the burden on the one seeking disclosure to make a threshold showing of entitlement to the information.

Citing a series of cases, several of which, however, involved subpoenas issued by official investigative agencies where, one might posit, a different standard should apply,6 the court held that a subpoena should be quashed only where the futility of the information-seeking process is inevitable or obvious or where the information is “utterly irrelevant to any proper inquiry” (Slip Op at 9).

Thus, the initial burden of the party seeking disclosure is met through compliance with the notice requirement of CPLR 3101(a)4, an obligation the court realistically characterized as “minimal.” Once the notice properly serves its function of educating the nonparty as to the “circumstances or reasons such disclosure is sought or required”—a burden that was met by Koch’s attachment to the subpoenas of the amended complaint in the California action—the nonparty has information sufficient to mount a challenge. Should a cogent showing be made that disclosure is unwarranted, the party seeking disclosure will then be required to establish entitlement thereto.

Since the nonparties in Kapon failed to demonstrate that the testimony sought was irrelevant, the Court of Appeals agreed with the Appellate Division that the denial of petitioners’ application (including the request that use of the depositions be limited to the California action) did not constitute an abuse of discretion.

Sweeping Change

The Court of Appeals’ Kapon decision has largely eliminated the substantive distinction between parties and nonparties insofar as their obligation to provide disclosure is concerned. Given this sweeping change, it is highly likely that a surviving procedural distinction—the requirement that the nonparty subpoena or accompanying notice state the “circumstances or reasons such disclosure is sought or required”—will take on increased importance.

Indeed, the court emphasized that “[t]he subpoenaing party must include that information in the notice in the first instance” to avoid a challenge for facial insufficiency (Slip Op at 10). Accordingly, those issuing nonparty subpoenas are well advised to set forth in some detail on either the face of the subpoena or an accompanying notice the circumstances or reasons such disclosure is sought or required.

While Kapon effects a significant and welcome change in an aspect of civil practice that has often proved frustrating, it remains to be seen how the lower courts will respond. In view of the judicial reluctance to compel nonparty disclosure that persisted despite the 1984 statutory revisions, it will be interesting indeed to track the progress in this area now that the Court of Appeals has spoken. One question that immediately arises is how Kapon will be applied in the context of applications to hold a recalcitrant nonparty witness in contempt.

As has always been the case, a court faced with a disclosure dispute is empowered to address any abuse of the process by a timely motion to quash, for a protective order, or for sanctions, provided that the prerequisites thereto have been satisfied.7 Nothing in Kapon deprives a reviewing court of any of the protections that have traditionally been available to deny access to material that is privileged, immune from disclosure, or otherwise unavailable, due to either the nature of the material or the procedural posture of the case.8

Conclusion

The Court of Appeals’ decision in Kapon is a significant development in the evolution of a modern, liberalized view toward the availability of disclosure from nonparties in New York practice. Litigants seeking such disclosure through ethical and responsible use of the subpoena power should reap the benefits.

Richard H. Bliss is a civil and appellate litigator with an office in Manhattan.

Endnotes:

1. Anonymous v. High School for Environmental Studies, 32 AD3d 353 (1st Dept. 2006).

2. See, e.g., DiStefano v. MT Health Clubs, Inc., 220 AD2d 331 (1st Dept. 1995); American Express Property Casualty Co. v. Vinci, 63 AD3d 1065, 1066 (2d Dept. 2009); Rickicki v. Borden Chemical, Div. of Borden, 195 AD2d 986 (4th Dept. 1993).

3. Velez v. Hunts Point Multi-Service Center, 29 AD3d 104, 112 (1st Dept. 2006).

4. See, e.g., Dioguardi v. St. John’s Riverside Hosp., 144 AD2d 333 (2d Dept. 1998).

5. Kooper. at 17-18 (citing Dioguardi at 334-335).

6. See Reuters Limited v. Dow Jones Telerate, 231 AD2d 337, 342 (1st Dept. 1997), where the court noted that “[a] broader view of relevance may be applied when the subpoena is issued by an administrative or legislative investigatory body, since the relevance of such an ‘office subpoena’ depends on the authorized breadth of the investigation itself,” citing Matter of La Belle Creole v. Attorney-General, 10 NY2d 192 (1961), one of the cases also cited in Kapon.

7. See, e.g., CPLR 3122, which requires that objection to a subpoena duces tecum be made, and 22 NYCRR §202.7, which requires that an affirmation of good faith effort to resolve the issues accompany a disclosure-related motion.

8. See, e.g., CPLR 3101(b),(c),and (d) which limit disclosure based upon the nature of the material sought, and 22 NYCRR §202.21(d) dealing with disclosure after the filing of the note of issue.