Court of Appeals Decides to Adopt Broader Disclosure Standard For Non-Party Subpoenas

In the recent case of Matter of John Kapon, et al. v. William I. Koch, the Court of Appeals decided to adopt a broader interpretation of the  “material and necessary” standard for non-party subpoenas. This case involved the service of a non-party subpoena from an action based in California on a New York entity. After service of the non-party subpoenas, the New York entity sought to quash the subpoena in New York State Court.

CPLR §3101(a)(4) is one mechanism by which a party may obtain discovery from a non-party.  This section provides that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof, by…any other person, upon notice stating the circumstances or reasons such disclosure is sought or required” (emphasis supplied).  Prior to an amendment in 1984, a party seeking disclosure from a non-party was first required to obtain a Court Order based on “adequate special circumstances”.  The 1984 amendment to CPLR §3102(a)(4) weakened this requirement, by now “allow[ing] for the discovery of any person who possesses material and necessary evidence,” and eliminating the requirement that a party seeking disclosure first obtain a Court Order.  However, as the non-party is not likely to be aware of the issues in the pending lawsuit, this section provides a notice provision, which mandates that the non-party is made aware of the “circumstances or reasons” for the requested disclosure.

Since the amendment,  there had been a split among the Departments of the Appellate Division concerning the “circumstances or reasons” required to obtain disclosure from a nonparty pursuant to CPLR §3101(a)(4). The First and Fourth Departments., in defining the “material and necessary” standard, merely require that the requested discovery be relevant to the prosecution or defense of an action[i].  The Second and Third Departments however, have adopted a more stringent approach.   More specifically, in the Second and Third Departments, a motion to quash a subpoena will be granted if “the party issuing the subpoena has failed to show that the disclosure sought cannot be obtained from sources other than the nonparty, and properly denied when the party has shown that the evidence cannot be obtained from other sources”.[ii]

The Court of Appeals has now clarified this split of opinion and adopted the more liberal standard of “material and necessary” as defined by the First and Fourth Departments as the appropriate disclosure requirement under CPLR §3101(a)(4). The Court of Appeals held that the words “material and necessary”, as used in CPLR§3101(a)(4), must “be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity”.[iii] Section 3101(a)(4) imposes no requirement that the subpoenaing party demonstrate that it cannot obtain the requested disclosure from any other source. Thus, so long as the disclosure sought is relevant to the prosecution or defense of an action, it must be provided by the nonparty who has been served the subpoena.

This liberal interpretation is helpful in litigation, as non-parties can no longer hide behind the veil of the allegation that the materials sought in the non-party subpoena could be obtained from a source other than the non-party.  Regardless of whether or not the material sought can be obtained from an alternative source, the Court of Appeals now requires the non-party to provide the materials sought in the non-party subpoena as long as they are “material and necessary in the prosecution or defense of an action”.  As such, non-parties who make a motion to quash a non-party subpoena are less likely to be successful, as they are now required to show that the requested discovery is irrelevant to the prosecution or defense of an action.

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[i] (See Velez v Hunts Point Multi-Serv. Ctr., Inc., 29 AD3d 104, 111 (1st Dept 2006); Catalano v Moreland, 299 AD2d 881, 882 (4th Dept 2002) See also Hauzinger v Hauzinger, 43 AD3d 1289, 1290 (4th Dept 2007), affd 10 NY3d 923 (2008); Schroder v Consolidated Edison Co. of N.Y., 249 AD2d 69, 70 (1st Dept 1998), See Tannenbaum v City of N.Y., 30 AD3d 357, 358-359.