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In re Aggrenox Antitrust Litigation

United States District Court, D. Connecticut

October 18, 2017




         In the complex multidistrict case In re Aggrenox Antitrust Litigation, the recipient of a Rule 45 non-party subpoena, Gyma Laboratories of America (“Gyma”), has moved to recover costs and fees from the Direct Purchaser Plaintiffs (“the DPPs”). Gyma claims that it incurred $105, 585 in costs and attorneys' fees complying with the DPPs' subpoena, of which it asks to be reimbursed $72, 778.20. Mem. Supp. Mot. Attorney Fees, Doc. No. 597, at 5-6. The DPPs argue that Gyma's claimed expenses are exaggerated, poorly documented, or incurred as a result of its own efforts to resist complying with the subpoena. Mem. Opp'n Mot. Attorney Fees, Doc. No. 601, at 9. The DPPs also argue that the cost of compliance should be shared with the defendants, and ask that I order Gyma to return half of the payment that the DPPs already made. Id.

         After carefully examining the documentation submitted by Gyma's counsel, I conclude that Gyma's reasonable costs of compliance total $21, 343.40. In accordance with my earlier order, see Conf. Mem. & Order, Doc. No. 586, the DPPs already have made a good-faith payment of $20, 000. Under the circumstances of the present case, I conclude that the equities favor placing the remaining $1, 343.40 on Gyma, and exercise my discretion not to award any further costs or fees to Gyma for its compliance with the subpoena.

         I. Standard of Review

         Federal Rule of Civil Procedure 45 provides that “[a] person commanded to produce documents or tangible things . . . may serve on the party or attorney designated in the subpoena a written objection . . . to producing electronically stored information in the form or forms requested.” Fed.R.Civ.P. 45(d)(2)(B). “If an objection is made, ” then:

(i) At any time, on notice to the commanded person, the serving party may move the court for the district where compliance is required for an order compelling production or inspection.
(ii) These acts may be required only as directed in the order, and the order must protect a person who is neither a party nor a party's officer from significant expense resulting from compliance.

Id. The Rule also provides that when a person moves to “quash or modify [a] subpoena, ” the court may “order . . . production . . . if the serving party . . . ensures that the subpoenaed person will be reasonably compensated.” Fed.R.Civ.P. 45(d)(3)(B)-(C).

         Courts have deemed those provisions to “ma[k]e cost shifting mandatory in all instances in which a non-party incurs significant expense from compliance with a subpoena.”[1] Legal Voice v. Stormans, Inc., 738 F.3d 1178, 1184 (9th Cir. 2013) (citing Linder v. Calero-Portocarrero, 251 F.3d 178, 182 (D.C. Cir. 2001)). “Rule 45's required protection of a non-party from significant discovery expenses does not mean that the requesting party must bear the entire cost of compliance, ” however. Wells Fargo Bank, N.A. v. Konover, 259 F.R.D. 206, 207 (D. Conn. 2009). Rather, “[a] non-party can be required to bear some or all of the expenses where the equities of the particular case demand it.” Id. To determine the proper allocation of costs, the court should consider “(1) whether the non-party actually has an interest in the outcome of the litigation; (2) whether the non-party can more readily bear the costs than the requesting party; and (3) whether the litigation is of public importance.” Id. (citing In re Exxon Valdez, 142 F.R.D. 380, 383 (D.D.C. 1992)); In re Honeywell Int'l Sec. Litig., 230 F.R.D. 293, 303 (S.D.N.Y. 2003).

         Furthermore, “only reasonable expenses are compensable” under Rule 45. G & E Real Estate v. Avison Young-Wash., D.C., LLC, 317 F.R.D. 313, 316 (D.D.C. 2016); accord In re Subpoena of Am. Nurses Ass'n, 924 F.Supp.2d 607, 626 (D. Md. 2013); In re Honeywell Int'l Sec. Litig., 230 F.R.D. at 303. “The determination of . . . reasonableness is committed to the sound discretion of the trial court, ” see Travelers Indem. Co. v. Metro. Life Ins. Co., 228 F.R.D. 111, 113 (D. Conn. 2005), but with regard to professional expenses, federal appellate courts have outlined factors that the district judge should consider when setting a reasonable fee.[2] For an attorney, “[t]he reasonable hourly rate is the rate a paying client would be willing to pay.” Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 190 (2d Cir. 2008) (“Arbor Hill”). Therefore, “in exercising its considerable discretion, ” the district court should “bear in mind . . . case-specific variables, ” id. at 190, including the factors set forth in Johnson v. Georgia Highway Express, 488 F.2d 714, 717-19 (5th Cir. 1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 92-93, 96 (1989). Those factors are:

(1) the time and labor required;
(2) the novelty and difficulty of the questions;
(3) the level of skill required to perform the legal service properly;
(4) the preclusion of employment by the attorney due to acceptance of the case;
(5) the attorney's customary hourly rate;
(6) whether the fee is fixed or contingent;
(7) the time limitations imposed by the client or the circumstances;
(8) the amount involved in the case and the results obtained;
(9) the experience, reputation, and ability of the attorneys;
(10) the “undesirability” of the case;
(11) the nature and length of the professional relationship with the client; and
(12) awards in similar cases.

Arbor Hill, 522 F.3d at 186 n.3. The court “should also bear in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively.” Id. at 190.

         A non-party who moves for costs and fees bears the burden of demonstrating that those costs and fees are reasonable. See Blum v. Stenson, 465 U.S. 886, 897 (1984). Therefore, when claiming attorneys' expenses, the movant must provide “contemporaneously created time records that specify, for each attorney, the date, the hours expended, and the nature of the work done.” Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir. 1998). The court may deduct from the requested amount “[h]ours that are ‘excessive, redundant, or otherwise unnecessary.'” Id. (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). Moreover, the movant also “has the burden of showing by satisfactory evidence-in addition to the attorney's own affidavits”-that the requested rates are those “prevailing . . . for comparable attorneys of comparable skill and standing in the pertinent legal community.” Farbotko v. Clinton Cnty., 433 F.3d 204, 209 (2d Cir. 2005) (quoting Blum, 465 U.S. at 896 n.11); Kirsch, 148 F.3d at 172. The pertinent community typically is “the forum of the litigation”-even if that is not where the non-party's “counsel has its primary office”-unless the movant shows that “a reasonable, paying client would have retained out-of-district counsel.” Arbor Hill, 522 F.3d at 184 n.2; Smart SMR of N.Y. v. Zoning Comm'n, 9 F.Supp.2d 143, 149 (D. Conn. 1998).

         In addition to shifting costs for non-parties' compliance with a subpoena, Rule 45 directs district courts to “impose an appropriate sanction-which may include . . . reasonable attorney's fees-on a party or attorney who fails to comply” with the Rule's mandate to “take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena.” Fed.R.Civ.P. 45(d)(1). That provision authorizes district courts to “protect non-parties from abusive subpoenas” by “award[ing] . . . attorneys' fees for litigating the subpoena.” In re Rule 45 Subpoena Issued to Cablevision Systems Corp. Regarding IP Address, 2010 WL 2219343, at *11 (E.D.N.Y. Feb. 5, 2010); Stormans Inc. v. Selecky, 2015 WL 224914, at *6 (W.D. Wash. Jan. 15, 2015). Courts have awarded attorneys' fees for resisting a subpoena if (1) “the subpoena imposed an undue burden” on a non-party, and (2) the party requesting the subpoena “fail[ed] . . . to carry out [its] Rule 45-mandated duty to ‘take reasonable steps to avoid imposing an undue burden'” on the non-party. See Molefi v. Oppenheimer Tr., 2007 WL 538547, at *2 (E.D.N.Y. Feb. 15, 2007). In considering the reasonableness of fees sought in a sanction motion, courts apply the same factors as used in the cost-shifting analysis. See Johnson v. N.Y.C. Transit Auth., 823 F.2d 31, 32-33 (2d Cir. 1987); Molefi, 2007 WL 538547, at *5.

         II. Background

         The present discovery dispute arises out of the complex multidistrict antitrust case, In re Aggrenox Antitrust Litigation. The DPPs have sued a large manufacturer of generic drugs, Teva Pharmaceutical Industries, Ltd., and its various subsidiaries (collectively, “Teva”), alleging that Teva violated federal antitrust law by entering into a reverse payment settlement with Boehringer Ingelheim Pharmaceuticals and its subsidiaries (collectively, “Boehringer”), in which Teva agreed to delay producing a generic version of Boehringer's brand-name anti-stroke medication, Aggrenox. See In re Aggrenox Antitrust Litig., 94 F.Supp.3d 224, 231-32, 236-37 (D. Conn. 2015). In its responses to interrogatories, Teva has told the DPPs that it plans to raise a causation defense to the antitrust claims, namely, that “it could not manufacture commercial quantities of generic Aggrenox between 2009 and the present day” because of “problems obtaining necessary ingredients.” See DPPs' Mem. Supp. Mot. Compel, Doc. No. 500, at 2. One of the necessary ingredients is dipyridamole, an active pharmaceutical ingredient supplied by Gyma. Id. at 1. “Teva specifically implicates quality problems with Gyma's product” as part of its causation defense. Id. at 2 (citing Teva's Resp. to DPPs' First Set of Interrogs., Ex. 5 to Gerstein Decl., Doc. No. 502, at 74-75). To assess Teva's causation defense, in February 2016, the DPPs served a Rule 45 non-party subpoena upon Gyma. DPPs' Mem. Supp. Mot. Compel, Doc. No. 500, at 3.

         A. The Rule 45 subpoena

         The Rule 45 non-party subpoena served upon Gyma included four document requests:

Request No. 1: Communications, including both your internal communications and your external communications with Barr/Teva, relating to Aggrenox or generic Aggrenox.
Request No. 2: Documents regarding any and all contracts or agreements you entered into, or contemplated entering into, with Barr/Teva, concerning any aspect of Aggrenox or generic Aggrenox, including “requests for proposals” or other bidding solicitations and responses thereto; drafts of contracts or modifications to contracts; executed contracts or executed modifications to contracts; performance under or pursuant to any written or unwritten agreements; and internal discussions about any such agreements and performance under such agreements.
Request No. 3: Documents regarding your actual, proposed, contemplated or forecasted supply of any component part(s) or ingredient(s) for ...

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