Antitrust Law Daily Wrap Up, ADVERTISING—D. Del.: Motion to quash subpoena requests to non-parties denied, (Dec 8, 2015)

By Michael Menzhuber, J.D., LL.M.

After determining that the defendants in a Lanham Act false advertising action had standing to file a motion to quash subpoenas served on non-parties, the federal district court in Wilmington, Delaware, ordered production of all of the five categories of documents requested (VeriSign, Inc. v. XYZ.Com, LLC, December 4, 2015, Thynge, M.).

Background. VeriSign, Inc. issued subpoenas to non-parties Key Brand Entertainment, Inc. and its wholly-owned subsidiary, KBE gTLD Holding, Inc. in connection with its false advertising action against XYZ.com, LLC and Daniel Negari that was pending in the Eastern District of Virginia. The defendants objected to all five of the requested categories of documents and filed a motion to quash the subpoenas.

Standing. A party generally lacks standing to quash a subpoena directed to a non-party unless the party claims some personal right or privilege with regard to the documents sought. The court noted that the defendants, in their motion to quash, alleged that the subpoenas requested documents between them and KBE, who worked closely with them on business transactions, and required the non-parties to disclose confidential information. It determined that these representations demonstrated sufficient interest in the requested documents to determine the defendants’ standing.

Reasonable time to comply. The defendants argued that VeriSign did not provide KBE a reasonable time to comply with the subpoenas because: (1) they required compliance within five days of the date of service; and (2) one of those days was a federal holiday and two of the days fell on the weekend. VeriSign argued that: (1) the subpoenas called for a shorter production time because KBE represented that it had all of the requested documents on a thumb drive; and (2) KBE consented to the shortened time period.

The court noted that federal courts have concluded that 14 days from the date of service was presumptively reasonable, for purposes of the “reasonable time to comply” requirement of Federal Rule of Civil Procedure 45. It also noted that federal courts have found that seven days is “clearly unreasonable”. Consequently, despite KBE’s failure to object and its willingness to produce the requested documents in a shortened time period, the time allotted for compliance was: (1) unreasonable; and (2) effectively gave the defendants only one business day and a total of five days to seek protection of documents in which they had a sufficient interest.

Scope of requested documents. The defendants moved to quash the subpoenas because: (1) the documents sought were irrelevant to the underlying Virginia Federal Action; and (2) they requested confidential, commercially valuable information, which included XYZ’s trade secrets.

VeriSign contended that: (1) all five categories of documents that it requested were relevant to its Lanham Act false advertising claims; (2) the court in the Virginia State Action had already determined the KBE documents were relevant; and (3) KBE did not seek relief from the subpoenas. VeriSign also contended that it was not requesting any trade secret information and that the defendants were adequately protected by the two-tier protective order entered in the Virginia Federal Action.

To address the defendants’ concerns, the court ordered the production of the first, second, fourth, and fifth categories of requested documents under the “Attorney’s Eyes Only” designation. However, as to the third category, the court found that there was no evidence that these documents contained trade secrets or confidential information of the defendants.

The case is No. 15-mc-175-RGA-MPT.

Attorneys: Jamie Lynne Edmonson (Venable LLP) for Verisign, Inc. Kenneth Laurence Dorsney (Morris James LLP) for XYZ.Com, LLC.

Companies: Verisign, Inc.; XYZ.Com, LLC

Cases: Advertising DelawareNews