ALABAMA AIRCRAFT INDUSTRIES, INC., Alabama Aircraft Industries, Inc.—Birmingham, and Pemco Aircraft Engineering Services, Inc. Plaintiff, v. The BOEING COMPANY, Boeing Aerospace Operations, Inc. and Boeing Aerospace Support Center, Defendant The Boeing Company, Plaintiff, v. Tennenbaum Capital Partners, LLC, Defendant CIVIL ACTION NUMBER: 2:11-cv-03577-RDP Case No.: 2:16-mc-01216-RDP United States District Court, N.D. Alabama Filed October 17, 2016 Counsel J. Michael Rediker, Meredith Jowers Lees, Rebecca A. Beers, Peter Tepley, R Scott Williams, Rumberger Kirk & Caldwell PC, Reginald L. Jeter, Law Office of Celeste P. Armstrong, Roger A. Brown, Haskell Slaughter Young & Rediker LLC, Birmingham, AL, Joshua D. Lerner, Rumberg Kirk & Caldwell PC, Miami, FL, for Plaintiff. Craig S. Primis, Erin C. Johnston, John C. O'Quinn, Matthew E. Papez, Rebecca L. Taibleson, Tia T. Trout-Perez, Alexia R. Brancato, Kirkland & Ellis LLP, Washington, DC, John Thomas Richie, Kevin C. Newsom, Reed Thomas Warburton, Bradley Arant Boult Cummings, LLP, Birmingham, AL, for Defendant. Proctor, R. David., United States District Judge REPORT AND RECOMMENDATION *1 Before the Special Master is Tennenbaum Capital Partners, LLC's “Motion for Sanctions and Cost Sharing” (Doc. 8) (“the Motion” or “TCP's Motion”), which was referred to the undersigned by Judge Proctor in an order dated August 16, 2016 (Doc. 40 at 1) in the matter of The Boeing Company v. Tennenbaum Capital Partners, LLC, Case No. 2:16-mc-01216-RDP. The Motion was fully briefed in its initial venue of the Central District of California (Doc. 3 at 52-71 & Doc. 35 at 3-6) and was also the subject of oral argument at a hearing before that court on July 21, 2016 (Doc. 38); although the Court ultimately denied TCP's request for cost shifting, it did so without prejudice, allowing for the Motion's renewal upon transfer to the Northern District of Alabama. Following the matter's transfer and referral, TCP requested the opportunity to submit supplemental briefing on the issue of cost sharing, a request that was approved by the undersigned in an order dated August 26, 2016 (Doc. 41 at 2-4). Such supplemental briefing has since been completed, with TCP submitting an Initial Brief on September 2, 2016 (“TCP's Initial Brief”), Boeing countering with a Response on September 16, 2016 (“Boeing's Response”), and TCP filing a Reply (“TCP's Reply”) on September 23, 2016. For the reasons explained below, it is the recommendation of the Special Master that TCP's Motion be DENIED. I. FINDINGS OF FACT A. Underlying Subpoenas & Independent Production Agreement 1. On February 18, 2015, Boeing served TCP with its first subpoena, issuing the document request out of the Southern District of California. (Doc. 3, Richie Dec. at Ex. 3; TCP's Initial Brief at 2). 2. Following TCP's objections as to Boeing's selection of the Southern District of California as the court of issuance, Boeing re-issued the subpoena from the Central District of California, serving it on TCP on March 5, 2015. (Doc. 3, Richie Dec. at Ex. 5; TCP's Initial Brief at 2). 3. After extended negotiations over TCP's responsive obligations under the second subpoena, the parties entered into an independent production agreement in November 2015, pursuant to which TCP agreed to turn over certain documents in lieu of complying with the subpoena. (TCP's Initial Brief at 2; Doc. 3, Richie Dec. at Ex. 37). 4. Prior to entering into the aforementioned agreement, TCP requested on numerous occasions that Boeing share in its costs of production, but was unable to procure any such commitment from Boeing. (TCP's Initial Brief at 4). 5. Nevertheless, TCP continued to pursue the issue in the production agreement, reserving a limited right to seek cost sharing from Boeing: TCP's agreement to produce ... is an offer in compromise, without waiver of any of TCP's previously stated objections or its right to seek cost shifting from Boeing should this dispute become the subject of motion practice. Should that happen, TCP reserves its right to, among other things, ... ask the Court to order Boeing to share the costs of TCP's review and production of hard copy documents and emails made to Boeing at any time in this matter. *2 (Doc. 3, Richie Dec. at Ex. 37). 6. Ultimately, TCP produced more than twenty-three thousand (23,000) documents in connection with the agreement, producing hard copy documents on November 30, 2015 and electronic documents on December 22, 2015. (TCP's Initial Brief at 2; Doc. 3, Richie Dec. at ¶ 24). TCP also produced two privilege logs on January 19, 2016. (Doc. 3, Richie Dec. at Exs. 1 & 2). The entire cost of such production was approximately $183,000.00. (TCP's Initial Brief, Greenwood Dec. at ¶ 6). B. Privilege Dispute, Third Subpoena, & Motion for Cost Sharing 7. After receiving TCP's privilege logs, Boeing informally challenged the privilege assertions made therein, exchanging numerous letters with TCP on the issue. (Doc. 3, Richie Dec. at Exs. 12-15). The parties were unable to resolve their privilege disputes, and, accordingly, Boeing filed a Motion to Compel on February 11, 2016 in the Northern District of Alabama. (Doc. 3, Richie Dec. at Ex. 40). 8. Construing Boeing's Motion to Compel as an attempt to enforce the underlying subpoena (rather than the operative production agreement) (Doc. 3, Richie Dec. at Ex. 41), the Court applied Rule 45(d)(2)(B)(i) of the Federal Rules of Civil Procedure (“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.”) (emphasis added), concluding that the Motion to Compel should have been filed in the Central District of California, as opposed to the Northern District of Alabama. (Doc. 3, Richie Dec. at Ex. 41—“The subpoena was served in California on a California company and seeks documents maintained in California. Nothing in the discovery agreement alters Rule 45's tautological application here.”). Accordingly, it dismissed Boeing's Motion, but did so without prejudice, noting that “Boeing may file its Motion in the court issuing the subpoena (or another court which may have jurisdiction over TCP).” (Doc. 3, Richie Dec. at Ex. 41). 9. On April 7, 2016, Boeing served a third subpoena on TCP, issuing it from the Northern District of Alabama. (Doc. 3, Richie Dec. at Ex. 22). The third subpoena was much narrower than its two predecessors, seeking only those documents that appeared on TCP's privilege logs (“the disputed documents”). (Id.). 10. On June 24, 2016, Boeing filed a number of motions in the Central District of California, seeking to compel production of the disputed documents (Doc. 1) and/or transfer the enforcement proceedings to the Northern District of Alabama (Doc. 2). TCP concurrently filed a number of cross-motions, including a Motion to Quash (Doc. 6), a Motion to Strike (Doc. 9), and the instant Motion for Sanctions and Cost Sharing (Doc. 8). Per local practice in the Central District of California, Boeing and TCP (as well as AAI) submitted their briefing and evidentiary materials to the Court in a Joint Stipulation (Doc. 3). 11. After entertaining the parties' motions at a hearing held on July 21, 2016 (Doc. 38), the California Court entered an order dated August 2, 2016 (attached hereto as Exhibit A),[1] which granted Boeing's Motion to Transfer and denied TCP's “Request for Cost Sharing” without prejudice. C. Supplemental Briefing *3 12. Following the matter's transfer and referral (as described in the introductory paragraph above), TCP requested the opportunity to submit supplemental briefing on the issue of cost sharing, a request that was approved by the undersigned in an order dated August 26, 2016 (Doc. 41 at 2-4). 13. TCP submitted its Initial Brief on September 2, 2016, requesting that Boeing partially reimburse its production costs in the amount of $75,000. (TCP's Initial Brief at 10). Rooting its rationale in the three-factor, cost-sharing framework that the undersigned previously utilized in another R&R (TCP's Initial Brief at 3—“(1) whether the non-party actually has an interest in the outcome of the case, (2) whether the non-party can more readily bear the costs than the requesting party, and (3) whether the litigation is of public importance”), TCP argued that its cost-sharing request was justified, asserting that (1) it was a disinterested party, because of its lack of financial or reputational stake in the outcome of the underlying case (TCP's Initial Brief at 4-7), and (2) Boeing was more capable of bearing the production costs, because of its presumed greater resources (TCP's Initial Brief at 7-10). 14. Boeing filed its Response on September 16, 2016, pushing back on TCP's request for cost sharing with three main arguments: (1) cost sharing would be inequitable, because the instant motion practice was precipitated by TCP's extraordinary assertions of privilege on AAI's behalf (Boeing's Response at 1—“TCP concedes that it asserted the privilege on behalf of AAI only while simultaneously asserting that it has no interest in AAI. Given TCP's remarkable position, Boeing had no choice but to incur the significant time and expense of challenging TCP's privilege objections. It was only after Boeing pursued a motion to compel that TCP decided to seek cost sharing, presumably as a vehicle to punish Boeing for pursuing the production of improperly withheld documents. Cost sharing should not reward this type of conduct.”); (2) cost sharing would be inappropriate, given TCP's involvement in the underlying facts (see, e.g., Boeing's Response at 5—“TCP is undeniably an interested non-party because it had a financial stake in AAI and exercised control over AAI's business decisions during times relevant to the underlying case.”); and (3) cost sharing is unnecessary, as TCP is fully capable of absorbing the production costs and, likewise, should have anticipated such costs (Boeing's Response at 8 & 9—“TCP indicates only that it manages over $6.1 billion in capital and that it ‘is in a strong financial condition and is capable of bearing the cost of production ... Since TCP's investment strategy necessarily includes the litigation process, it is difficult to imagine that TCP does not anticipate having to produce documents related to its portfolio companies—particularly for a company like AAI that was in financial distress for so long.”). 15. TCP submitted its Reply on September 23, 2016, in which it continued to insist that it is a disinterested non-party and to emphasize that the undersigned's cost-shifting analysis should compare the parties' relative ability to pay. (TCP's Reply at 3 (“Boeing's discussion of TCP's past financial interest in AAI has no bearing on the relevant assessment of whether TCP holds a present interest—whether reputational or financial—in the future outcome of this litigation. It does not.”) & 5 (“Boeing incorrectly focuses on what it asserts is TCP's ability to pay, while disregarding the relevant, comparative inquiry into whether the non-party can more readily bear the costs that the requesting party.”) (internal citations and quotations omitted)). II. CONCLUSIONS OF LAW *4 For the reasons outlined below, it is the undersigned's legal conclusion that TCP's Motion is due to be denied, as TCP has not only failed to articulate a concrete basis for shifting costs in this instance, but has also failed to demonstrate that the equities of the matter tilt in its favor. A. Lack of Concrete Basis For Cost Shifting In its Motion, its portion of the Joint Stipulation, and its Initial Brief, TCP repeatedly invokes Rule 45 and its case law progeny, arguing that the present circumstances are subject to the Rule's cost-shifting mandate. See, e.g., Doc. 8 at 1 (“Tennenbaum Capital Partners, LLP (“TCP”) will and hereby does move this Court pursuant to Federal Rule 37(a)(5)(B), Federal Rule 45(d)(2)(B)(II), Federal Rule 45(d)(1), and the parties' November 10, 2015 discovery agreement for an order for sanctions and cost sharing against The Boeing Company in favor of TCP.”) (emphasis added); Doc. 3 at 56 (“Rule 45 mandates cost shifting to protect a non-party from ‘significant expense resulting from compliance.’ Fed. R. Civ. P. 45(d)(2)(B)(ii).”); TCP's Initial Brief at 3 (“Federal Rule 45 requires cost shifting to protect a non-party from ‘significant expense resulting from compliance.’ Courts in the Eleventh Circuit recognize this mandate under Rule 45 and will ‘shift ... any non-party's subpoena compliance costs if they are significant.’ ”) (internal citations omitted). In doing so, however, TCP has failed to develop an accompanying rationale as to why Rule 45 applies at all under these circumstances, where the underlying document production was made pursuant to an independent production agreement that is not otherwise governed by Rule 45.[2] Indeed, TCP has consistently maintained that Boeing's first and second subpoenas were fatally deficient (see, e.g., TCP's Initial Brief at 2, n.1—“Boeing issued both of these subpoenas in violation of Rule 45 ... TCP maintains its objection that Boeing's error is jurisdictional, and non-waivable.”), and has likewise emphasized the independent nature of the parties' November 2015 production agreement, particularly when such a characterization is beneficial to its discovery positions (see, e.g., Doc. 3 at 55—arguing that Boeing failed to reserve certain rights under the production agreement—e.g., “the right to challenge any claim of privilege”—to which Boeing would inherently be entitled were the production governed by Rule 45). As such, there is an analytical dissonance that accompanies TCP's attempt to graft Rule 45 and its cost-shifting framework onto the instant case. Granted, TCP seems to recognize this fundamental flaw in its cost-sharing request, and, as such, tries to thread the needle between the apparent disconnect as best it can: “While TCP produced documents pursuant to its discovery agreement with Boeing, rather than in response to a valid Rule 45 subpoena, the agreement was reached under the threat of a Rule 45 subpoena and, as the Northern District of Alabama recognized, ‘[n]othing in the discovery agreement alters Rule 45's tautological application.’ Thus, Federal Rule 45's provisions concerning cost sharing are instructive in determining the proportion of costs Boeing must bear pursuant to the parties' agreement.” Doc. 3 at 56 (emphasis added and internal citations omitted). In essence, TCP concedes that Rule 45 cannot serve as the source of its cost-sharing demand, pointing instead to “the parties' agreement,” in apparent reference to the provision in the production agreement that reserves TCP's right to request cost sharing. See supra at 4, ¶ 5. *5 However, TCP's reservation lacks the mandatory nature of Rule 45's cost-shifting mechanism, and, without a similarly concrete basis, TCP's request for cost sharing amounts to nothing more than an appeal to the undersigned's equitable sensibilities. B. The Equities Weigh Against Cost Sharing Absent an articulable basis for cost sharing, the undersigned is loathe to create the right to such a result through the exercise of his broad discovery discretion. However, assuming arguendo that Rule 45 and/or the independent production agreement effectively create such a right, TCP is still not entitled to the potential remedy, as the equities weigh against cost sharing. Indeed, when TCP's request is evaluated under a Rule 45 analysis—around which both parties frame their cost-sharing arguments (TCP's Initial Brief at 3; Boeing's Response at 2)—its fails to pass muster, with the relevant cost-sharing factors breaking in Boeing's favor. See Underlying Case (2:11-CV-03577-RDP), Doc. 193 at 13 (laying out basic framework of a Rule 45 analysis—“ ‘A non-party can be required to bear some or all of its expenses where the equities of a particular case demand it.’ Indeed, courts typically use the following three-factor balancing test to evaluate the equities involved in shifting subpoena compliance costs from the non-party to the issuing party: ‘(1) whether the non-party actually has an interest in the outcome of the case, (2) whether the non-party can more readily bear the costs than the requesting party, and (3) whether the litigation is of public importance.’ ”) (internal citations omitted). 1. TCP is an interested non-party As the undersigned has previously noted, there do not appear to be any “articulable legal standards for determining whether a non-party is interested,” save for the undersigned's own definition of an “interested non-party,” which attempts to encapsulate the general principles that informed the outcomes of relevant cost-sharing cases: “An interested non-party is an entity that does not have an actionable right at issue in the litigation, but has a significant, underlying connection to the case and, typically, some sort of financial or reputational stake in the litigation's outcome.” Underlying Case, Doc. 193 at 13-14 (citing In re Exxon Valdez, 142 F.R.D. 380, 383-84 (D.D.C. 1992); In re Honeywell Intern., Inc. Securities Litigation, 230 F.R.D. 293, 303 (S.D.N.Y. 2003); Behrend v. Comcast Corp., 248 F.R.D. 84, 87 (D. Mass. 2008); Wells Fargo Bank, N.A. v. Konover, 259 F.R.D. 206, 207 (D. Conn. 2009); Bell Inc. v. GE Lighting, LLC, 2014 WL 1630754 at *13 (W.D. Va. April 23, 2014); United States v. Cardinal Growth, L.P., 2015 WL 850230 at *3 (N.D. Ill. Feb. 23, 2015); Cornell v. Columbus McKinnon Corporation, 2015 WL 4747260 at *3-5 (N.D. Cal. Aug. 11, 2015)). Utilizing this definition, it is easy for the undersigned to conclude that TCP is an interested non-party, as it has “a significant, underlying connection to the case,” namely its intimate involvement in AAI's affairs during the periods relevant to the instant case. As one would expect, TCP devotes significant energy to demonstrating that it is disinterested (see, e.g., TCP's Initial Brief at 5 & TCP's Reply at 3-4), but, while TCP is successful in showing that it lacks a financial or reputational stake in this case's outcome, it cannot explain away its significant connection to the underlying events. Indeed, as noted by Boeing (Boeing's Response at 6-8), TCP not only had a financial stake in AAI in the form of a loan, but it also exercised a certain level of influence over AAI's decisions and actions due to its control of numerous seats on AAI's Board of Directors. Such connectedness is sufficient on its own to warrant an “interested” designation, but the fact that TCP's relationship with AAI is now central to this case's most significant remaining discovery dispute further buttresses the conclusion that TCP constitutes an interested non-party. 2. TCP is fully capable of bearing the entirety of its production costs *6 The above conclusion as to TCP's “interested” status does not end our cost-shifting inquiry, though, as another balancing factor—TCP's financial ability to bear the costs of compliance—remains to be considered.[3] The outcome of this factor is less readily certain, but, given TCP's admitted ability to pay for its production costs, its apparent reluctance to provide a workable sense of its financial condition, and its established interest in the case, the undersigned is comfortable concluding that this element weighs against shifting costs. TCP spends much of its briefing emphasizing the supposedly “comparative” nature of this portion of the cost-shifting inquiry (see, e.g., TCP's Initial Brief at 7-8—“[T]he pertinent question is not whether TCP can bear the costs of production, but whether TCP is more capable than Boeing of bearing the costs of compliance, while also taking into account TCP's role as a disinterested party.”), and, to TCP's credit, the plain language of the three-factor cost-sharing test (“whether the non-party can more readily bear the costs than the requesting party”) certainly supports such an argument. However, as demonstrated by the representative cases cited in the previous section (supra at 14), the comparative component of the cost-shifting analysis is only relevant to the extent that a clear picture of the non-party's financial resources suggests that the costs of compliance could constitute an undue burden. Here, TCP has avoided providing any financial particulars, only admitting that it “is in a strong financial condition and is capable of bearing the costs of production” (TCP's Initial Brief at 8); such a level of detail precludes a productive comparative analysis, and, in fact, TCP's admission seemingly does away with the need for an undue burden inquiry. Furthermore, as indicated by TCP's own framing of the issue (“while also taking into account TCP's role as a disinterested party”), the outcome of this factor is influenced by a non-party's interested/disinterested status, which, in light of the undersigned's conclusion above, helps turn this factor against cost sharing. In sum, neither cost-sharing factor weighs in favor of shifting a portion of TCP's production costs to Boeing, and, as such, TCP's Motion is due to be denied. III. RECOMMENDATIONS For the reasons outlined above, the undersigned recommends to the Court that TCP's Motion be DENIED. Footnotes [1] The Court's order appeared as Doc. 41 on the docket report of the Central District of California case, which was styled as 2:16-mc-00081-FMO-JPR. However, the order appears to have been lost in the case's transfer, as it does not appear on the docket report of the instant case. Accordingly, for ease of reference, the order has been attached hereto as Exhibit A. [2] TCP has made clear that its request for cost shifting is derived solely from the costs incurred in connection with the production agreement, rather costs that have resulted from Boeing's third subpoena. TCP's Initial Brief at 3, n.3 (“The subpoena under which Boeing is currently seeking to compel privileged documents—a third subpoena Boeing issued on April 7, 2016—is unrelated to TCP's present cost sharing motion.”). [3] Neither party has suggested that the third and final balancing factor (“whether the litigation is of public importance”) is applicable, and the undersigned is unaware of any circumstances that would make it so.