Court Sanctions Three Nonparty Companies for Ignoring Subpoenas: eDiscovery Case Law

In Stadler v. Moore, et al., No. 2:20-cv-01808-JMG (E.D. Pa. July 20, 2021), Pennsylvania District Judge John M. Gallagher issued sanctions against three nonparty companies – CVS Pharmacy, Rothman Institute, and Capital Health Systems Primary Care – for ignoring subpoenas issued by the defendant for medical information about the plaintiff relevant to an injury claim.

Case Background

The plaintiff initiated the instant action against defendant TJ Moore and his employer, defendant Old Dominion Freight Line, Inc., alleging that Moore negligently crashed his truck into the plaintiff’s car, causing significant injuries.  On August 6, 2020, defense counsel sent subpoenas via certified mail to several nonparties, including CVS Pharmacy, Rothman Institute, Capital Health Systems Primary Care, and USAA Insurance, to obtain the plaintiff’s relevant medical information. A few months later, in November 2020, HIPAA authorizations were sent to the nonparties. To urge compliance, defense counsel and her staff followed-up “numerous” times to each nonparty. Having received no response from the nonparties for months, counsel filed a motion to compel compliance with the subpoenas on May 4, 2021.

The next day, the Court ordered the nonparties to respond to defense counsel’s motion within one week and defense counsel served the order on the nonparties via Federal Express-Overnight on May 7. Despite having been sent the order, the nonparties neither responded nor reached out to defense counsel.  Therefore, on May 20, 2021, the Court granted the motion to compel and directed the nonparties to comply with the subpoenas within ten days. The Court also warned the nonparties that ignoring subpoenas may result in sanctions and/or civil contempt. The nonparties were sent copies of that order the next day by Federal Express Priority Overnight Mail. 

Having not received any records or communication from the nonparties, defense counsel filed the instant motion for contempt and sanctions against the nonparties on June 10, leading the Court to schedule a show cause hearing and direct defense counsel to personally serve the nonparties with copies of the subpoenas, the motion for sanctions, and the notice of the hearing. The nonparties were warned that failure to attend this hearing could result in monetary sanctions.  This caused CVS Pharmacy to reach out via email requesting yet another copy of the subpoena and authorization, Rothman Institute to contact defense counsel requesting that a different signed authorization form was needed before records could be produced and the agent who initially accepted service for USAA Insurance to send a generic letter to counsel stating that they were rejecting service for one of a variety of potential reasons.

Despite Judge Gallagher’s warning of sanctions for non-attendance, none of the nonparties made an appearance at the hearing on July 12; only defense counsel was in attendance.

Judge’s Ruling

Judge Gallagher began his ruling by stating: “Nonparties that have been served with a subpoena have three acceptable options: comply, formally object, or move to quash. Not an option is ignoring the subpoena entirely. Yet, three nonparties—CVS Pharmacy, Rothman Institute, and Capital Health Systems Primary Care— have, inexplicably, taken that route. Despite providing the nonparties with numerous opportunities to avoid the present outcome, the Court is compelled to now find them in contempt and will sanction them accordingly.”

Judge Gallagher also noted: “Here, the original subpoenas, motion to compel, and order granting the motion to compel were all initially served on the nonparties by certified mail or Federal Express Overnight mail…Those documents, along with the present motion for sanctions and show cause order, were then personally served on the nonparties…Following personal service, two of the nonparties (CVS Pharmacy and Rothman Institute) acknowledged receipt by emailing defense counsel with follow-up questions…An agent for one of the nonparties (USAA Insurance) rejected service, even though they had already accepted the service…The remaining nonparty (Capital Health Systems Primary Care) has not communicated with defense counsel at all… Based on this history, the Court is satisfied that three of the nonparties—CVS Pharmacy, Rothman Institute, and Capital Health Systems Primary Care—were properly served with the subpoenas and the related court orders.”

Judge Gallagher, in sanctioning the three nonparties for ignoring subpoenas, stated: “The present circumstances warrant a daily fine of $250 for every day that the nonparties fail to comply with the subpoenas.”  Because there was “an open question as to whether USAA Insurance was properly served with the subpoena and show cause order” (as the agent initially accepted service on their behalf before subsequently rejecting it), Judge Gallagher “decline[d] to hold USAA Insurance in contempt at this time”, but indicated that defense counsel could “move again for sanctions” once they were re-served.

So, what do you think?  Have you ever seen a case before where major companies were ignoring subpoenas like this?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.

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