SBP LLLP v. Hoffman Constr. Co. of Am.

SBP LLLP, an Idaho limited liability limited partnership;JRS PROPERTIES III LP, an Idaho limited partnership;and J.R. SIMPLOT FOUNDATION, INC.,an Idaho corporation, Plaintiffs, v. HOFFMAN CONSTRUCTIONCOMPANY OF AMERICA, an Oregon corporation, Defendant.

Case No. 1:19-cv-00266-DCN

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO

July 23, 2021

MEMORANDUM DECISION AND ORDER

I. INTRODUCTION

Pending before the Court is Plaintiffs' Motion to Quash a Trial Subpoena of their counsel Wayne Meuleman. Dkt. 65. Having reviewed the record and briefs, the Court finds that the facts and legal arguments are adequately presented. Accordingly, in the interest of avoiding further delay, and because the Court finds that the decisional process would not be significantly aided by oral argument, the Court will decide the motion without oral argument. Dist. Idaho Loc. Civ. R. 7.1(d)(1)(B); see also Fed. R. Civ. P. 78(b). For the reasons set forth below, the Court GRANTS the motion.

II. BACKGROUND

This case involves three related construction contracts between Hoffman Construction Company of America ("Hoffman") and the various Plaintiffs and a determination of whether those contracts included a provision to arbitrate disputes arising from them. In short, from 2009 to 2012, Hoffman entered into three separate contracts with the various Plaintiffs to demolish and construct certain improvements on real property located in Ada County. All three written contracts were based, in part, on an American Institute of Architects standard form document A201-1997. However, the three contracts also specifically expressed that incorporation of that document was only as modified by the parties.

The case proceeded through the regular stages of litigation. The Court denied Hoffman's Motion to Dismiss, or in other words its attempt to compel arbitration, finding that "there are factual disputes as to whether the parties agreed to arbitrate." Dkt. 26, at 1. The Court later denied Hoffman's Motion for Summary Judgment because the contracts have a facial ambiguity as to the incorporation of an arbitration agreement and a question of material fact remains as to whether the parties intended to incorporate an arbitration agreement in the contracts. Dkt. 58, at 9. After working through the stages of litigation, the Court set a bench trial to begin on July 28, 2021, to determine whether the contracts include an arbitration agreement. Dkt. 59.

In preparation for trial, Hoffman served a subpoena on Wayne Meuleman, one of Plaintiffs' attorneys, to appear and testify at trial. While Meuleman was somewhat involved in negotiating the contracts and the issue of arbitration with Hoffman, the lead negotiators were John MacDonald and Cade Lawrence. Meuleman currently serves as co-litigation and trial counsel for Plaintiffs. See Dkt. 65-1, at 3-4.

After Meuleman received the subpoena, Plaintiffs filed a motion to quash the subpoena on the grounds that "Hoffman cannot prove that information sought from Meuleman's testimony (1) cannot be obtained by other means; (2) is relevant and is not protected by privilege or the work-product doctrine; and (3) is crucial to preparation of its case." Id. at 2. Plaintiffs also contend that "Meuleman's testimony would require disclosure of privileged information and subject Meuleman and [Plaintiffs] to undue burden." Id. Defendant Hoffman Construction Company of America ("Hoffman") opposes the motion. Dkt. 68. Plaintiffs support their same arguments with their Reply. Dkt. 71.

III. LEGAL STANDARD

Subpoenas are an essential part of the civil discovery process as they are an avenue to obtain evidence from uncooperative nonparties. Under Federal Rule of Civil Procedure 45, there are three types of subpoenas: (1) a subpoena ad testificandum, which commands a person to appear and give testimony; (2) a subpoena duces tecum, which commands the recipient to produce and permit inspection, copying, testing, or sampling of specific documents, things, or electronically stored information; and (3) a subpoena to permit an inspection of other property within the recipient's custody or control. Fed. R. Civ. P. 45(a)(1)(B)-(D). All three of these subpoenas are valuable tools.

However, the value and applicability of subpoenas have their limits. The burden placed on third parties is often much greater than the value of any production. That is why it is the policy of this Court not "to burden third parties [with subpoenas] unless absolutely necessary." Nelson-Ricks Cheese Co. v. Lakeview Cheese Co., No. 4:16-CV-00427-DCN,2017 WL 4839375, at *3 (D. Idaho Oct. 26, 2017). Under appropriate circumstances, a subpoena recipient may move to quash or modify the subpoena.

A district court's factual findings underlying discovery rulings are reviewed for clear error, and their ultimate decision on whether to quash a subpoena is typically a matter of discretion. Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 813 (9th Cir. 2003). In certain circumstances, however, Federal Rule of Civil Procedure 45 requires a court to quash or modify a subpoena. A court must quash or modify a subpoena, on timely motion, where the subpoena "(i) fails to allow a reasonable time to comply; (ii) requires a person to comply beyond the geographical limits specified in Rule 45(c); (iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subjects a person to undue burden." Fed. R. Civ. P. 45(d)(3)(A)(i)-(iv). It is up to the court to consider the specific facts and circumstances surrounding the issues in making a sound and just determination.

IV. DISCUSSION

Here, Hoffman's subpoena ad testificandum of Meuleman and Plaintiffs' Motion to Quash that subpoena are at issue. The parties have raised three issues through their briefing: (1) whether the subpoena requires disclosure of matters within the attorney-client privilege, (2) whether the subpoena imposes an undue burden, and (3) whether Hoffman has met the three-element test set forth in Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir. 1986). While the Court is satisfied by Hoffman's representations that it does not intend to delve into matters within the attorney-client privilege at the trial, the Court must grant themotion because the subpoena imposes an undue burden. And, even if it did not, the Court would exercise its discretion to grant the motion because Hoffman cannot satisfy the demands of the Shelton test. The Court addresses the undue burden and Shelton elements below. In short, Meuleman need not testify at trial.

A. Privileged Information

Courts must quash or modify a subpoena that "requires disclosure of privileged or other protected matter, if no exception or waiver applies." Fed. R. Civ. P. 45(d)(3)(A)(iii). In general, "[a] person withholding subpoenaed information under a claim that it is privileged or subject to protection as trial-preparation material must: (i) expressly make the claim; and (ii) describe the nature of the withheld documents, communications, or tangible things in a manner that, without revealing information itself privileged or protected, will enable the parties to assess the claim." Fed. R. Civ. P. 45(e)(2). "A party claiming the privilege must identify specific communications and the grounds supporting the privilege as to each piece of evidence over which privilege is asserted. . . . Blanketed assertions are extremely disfavored." United States v. Martin, 278 F.3d 988, 1000 (9th Cir. 2002) (cleaned up).

Here, Plaintiffs have not carried their burden of showing how the information sought is privileged for several reasons. To begin, Plaintiffs have neither identified the communications nor showed with sufficient clarity why the communications are privileged. Instead, Plaintiffs have done precisely what is disfavored by the Ninth Circuit: they have essentially made a blanket assertion of attorney-client privilege. Next, Hoffmanhas persuasively pointed out that the communications it seeks through Meuleman's testimony is not privileged because they were made to third parties during the contract negotiations. Lastly, Hoffman represents that its questions to Meuleman are not related to protected communications, but rather what his emails and contract drafts meant. In sum, the Court cannot quash the subpoena on the basis that it seeks disclosure of privileged information.

B. Undue Burden

Nevertheless, the subpoena at issue does impose an undue burden. A court must quash or modify a subpoena that "subjects a person to undue burden." Fed. R. Civ. P. 45(d)(3)(A)(iv). Typically, the burden in question involves the time, resources, and expense that would be incurred to comply with the subpoena's demands. But courts recognize that subpoenas can impose other types of burdens, like invading the recipient's privacy or confidentiality interests, and will consider those non-economic burdens as well when they are implicated. The analysis involves balancing the burdens imposed against the interest in disclosure of evidence. Mount Hope Church v. Bash Back!, 705 F.3d 418, 427 (9th Cir. 2012).

Here, the burdens imposed on Meuleman in testifying are undue and greatly outweigh the slight interest in his testimony. Several other sources are available to give the information that Meuleman would give. Specifically, John MacDonald and Cade Lawrence were the parties' lead negotiators and can testify as to the negotiations and the parties' intent regarding arbitration. Plus, Plaintiffs have represented, and will be held to theirrepresentation, that Scott Simplot, one of the contract signatories, will be available as a witness. Thus, requiring Meuleman to testify would impose an unnecessary burden. Nelson-Ricks Cheese Co., 2017 WL 4839375, at *3; Pegatron Tech. Serv., Inc. v. Zurich Am. Ins. Co., 377 F. Supp. 3d 1197, 1203 (D. Or. 2019) ("Courts are particularly reluctant to require a nonparty to provide discovery that can be produced by a party." (citing Dart Indus. ...