Opinion ID: 901146
Heading Depth: 1
Heading Rank: 3

Heading: Award of Terms for Subpoena Abuse

Text: [¶ 16.] Attorney Abourezk issued subpoenas, along with notices of taking depositions, to three lawyers in the Johnson firm: Steven Johnson, Matthew Tobin, and Russ Janklow. Johnson and Tobin had participated in defending the state employees in the federal lawsuit. Russ Janklow had not been involved in that case. The subpoenas commanded the attorneys to produce all billing records and/or statements submitted to the PEPL fund for work done on the federal case, together with all records showing how much was received as payment from the PEPL fund, and the hourly rate charged. The subpoenas also commanded the production of the firm's partnership agreement and other documents which show how all monies received are split by the partners. [¶ 17.] The Johnson firm agreed to turn over its billing records, but moved to quash the subpoenas to the extent that they commanded the firm to produce other materials showing the internal distribution of funds. At the hearing, attorney Abourezk denied seeking this information for political or publicity purposes, as alleged by attorney Johnson. When asked by the court to explain how these partnership and fee sharing arrangements might lead to relevant evidence on the reasonableness of Abourezk's fees, Abourezk responded, It's relevant in that there's a potential conflict of interest because the Governor's son [Russ Janklow], I believe, is receiving money from this contract with the state. Russ Janklow denied the allegation, saying I never worked on this case whatsoever and never billed one hour and never represented the State of South Dakota in any respect. [¶ 18.] The circuit court concluded that Abourezk provided no evidence in support [of his] speculation and no explanation as to how that would have any bearing on the reasonableness of the fee that Abourezk was charging Wagaman. The court ruled that Abourezk issued the subpoena for the fee sharing arrangements and partnership agreement in bad faith. It granted the Johnson firm's motion to quash. The firm requested financial terms, and, after issuing a memorandum opinion explaining its reasoning, the court awarded terms of $350 against Abourezk. [¶ 19.] On appeal, attorney Abourezk does not argue that the court lacked legal authority to impose terms, but he contends that the court abused its discretion in quashing the subpoenas and in imposing terms. Abourezk believes that he should not have been penalized for zealously representing his client in discovery when statutes concerning discovery are to be liberally construed. Our inquiry is two-fold: first, did the court have authority to award terms? And second, were the terms awarded by the court reasonable? Once it is determined that a court has authority to impose sanctions, abuse of discretion is the appropriate standard of review for an order imposing sanctions. Aberle v. Ringhausen, 494 N.W.2d 179, 182 (S.D.1992) (citing Chittenden & Eastman Co. v. Smith, 286 N.W.2d 314, 316 (S.D.1979)). [¶ 20.] SDCL 15-6-26(b)(1) establishes the general scope and limits of discovery. The rule states: Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action.... It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence. When discovery efforts go beyond those subjects not reasonably calculated to lead to the discovery of admissible evidence, a court has authority to issue protective orders, quash subpoenas, and grant terms when appropriate. SDCL 15-6-26(c), 37(a)(4), 45(b) and 45(d)(1). [¶ 21.] SDCL 15-6-45(d)(1) permits the issuance of a subpoena duces tecum commanding the person to whom it is directed to produce and permit inspection and copying of designated books, papers, documents, or tangible things which constitute or contain evidence relating to any of the matters within the scope of the examination permitted by § 15-6-26(b)[.] A subpoena duces tecum is subject to the provisions of §§ 15-6-26(c) and 15-6-45(b). SDCL 15-6-26(c) allows for protective orders, authorizing a court to make any order that justice requires to protect a person from, among other things, annoyance, embarrassment, oppression, or undue burden or expense[.] That statute also states that the provisions of § 15-6-37(a)(4) apply, allowing for the award of reasonable expenses, including attorney's fees. [¶ 22.] Having determined that the circuit court had authority to impose terms in these circumstances, we next examine whether the court abused its discretion in so ordering. We note, first, that the award of terms under § 15-6-37(a)(4) is mandatory, rather than discretionary, unless the non-prevailing person's position was substantially justified or other circumstances make an award of expenses unjust. In State v. Guthrie, we applied a set of considerations for assessing reasonableness in an award of terms. 2001 SD 89, ¶ 12, 631 N.W.2d 190, 195. The factors to consider when determining reasonableness include: (1) reasonable hours expended multiplied by a reasonable fee, (2) the severity of the sanction weighted against the equities of the parties, including ability to pay, (3) availability of less drastic sanctions which would prevent future abuses, and (4) other factors including the offending party's history and degree of bad faith contributing to the violation. [¶ 23.] Under these factors, we conclude that the court awarded reasonable terms. As to the question whether the subpoenas for the Johnson firm's internal records were substantially justified, the court found that the conduct of counsel in this case demonstrates a level of bad faith. That the subpoena was issued in bad faith necessarily subsumes the notion that it was not substantially justified. Attorney Abourezk could give no explanation on how this information would lead to relevant material on the question of the reasonableness of his charges to Wagaman. To the extent that other circumstances might make an award of expenses unjust, the circuit court obviously considered those circumstances when it reduced the Johnson firm's claim. Although the court found the firm's statement of 6.15 hours and a fee of $100 per hour to be reasonable, it further reduced the award to $350, when it balanced the severity of the sanction and the equities of the parties. Accordingly, we conclude that the court did not abuse its discretion in awarding terms under SDCL 15-6-37(a)(4).