On February 10, the Iowa Supreme Court issued its decision in In the Matter of the Subpoenas Issued to Dethmers Manufacturing Company. The Court reversed the district court’s refusal to quash two subpoenas that were issued to Dethmers Manufacturing Company and, in the process, adopted a six-factor test for evaluating whether subpoenas impose an undue burden. The case offers an important reminder to banks and other entities who are frequent recipients of subpoenas, as well as to litigants who seek to use these powerful tools.

The subpoenas in the Dethmers decision stemmed from a products liability action brought in Louisiana state court. There, multiple individuals were injured, and one was killed, when a tractor trailer collided with an SUV on a Louisiana interstate. The SUV had pulled onto the shoulder when the U-Haul trailer it was pulling became detached from the hitch. Plaintiff Tharun Mittapalli had pulled over to help. But a portion of the trailer stayed in the lane of traffic and was hit by the tractor trailer. Mittapalli, who was injured, claimed the detachment from the hitch was caused by a defective coupler, which attached the trailer to the hitch ball. As part of this claim, Mittapalli must prove that an alternative design existed.

Dethmers Manufacturing Company did not manufacture the coupler involved in the Louisiana collision, nor is Dethmers a
party to the Louisiana litigation. Instead, Dethmers has manufactured other couplers, including a model that Mittapalli
claimed U-Haul implemented after the collision. Mittapalli claimed that Dethmers’ coupler was an example of a feasible
alternative design.

Mittapalli issued two subpoenas to Dethmers. One sought the production of documents from twenty-two categories, while the other sought to depose a representative of Dethmers who was qualified to testify regarding the same categories. The categories were broad, including, among other categories:

“The general scope of Dethmer/Demco’s business as it relates to the design, development, and manufacturing of trailer
coupling devices.”

“Dethmer/Demco’s history of designing, manufacturing, and/or selling hand wheel couplers and/or lever latch couplers.”

“Facts and circumstances surrounding the design, development, and manufacturing of the Demco EZ Latch coupler.”

“All engineering drawings, testing reports, schematics, diagrams, plans, blueprints, electronically stored information, video, or other documents or tangible items that depict, describe, discuss, refer to, or relate to the design, assembly, testing and/or construction of the Demco EZ Latch coupler.”

“All studies, testing, analysis, investigation and/or statistical data with respect to decoupling and/or detachment incidents involving the Demco EZ Latch Coupler.”

Dethmers moved to quash the subpoenas, arguing that the subpoenas were unduly burdensome, would require the production of trade secrets and confidential commercial information, and would require Dethmers to act as an unretained expert. Dethmers also argued that the information requested could be obtained from other sources, including
Mittapalli’s expert, public sources, and discovery in the Louisiana case. But the district court refused to quash the subpoena.

On appeal, the Iowa Supreme Court reversed the district court’s decision and remanded the case for an order quashing the subpoenas. In determining the subpoenas should not be enforced, the Court adopted a six-factor test for determining
whether a subpoena is unduly burdensome and determined that five of the six factors weighed against enforcement of the subpoenas.

The Court weighed: “(1) the relevance of the information requested; (2) the need of the party for the documents; (3) the
breadth of the document request; (4) the time period covered by the request; (5) the particularity with which the party
describes the requested documents; and (6) the burden imposed.” In the Matter of Dethmers Mfg., 985 N.W.2d 806, 814
(Iowa 2023) (cleaned up). The Court further emphasized that the primary burden of discovery should be on parties, and that third party discovery should only be done when necessary.

While the Court did find that the requested information was relevant, Mittapalli had not demonstrated a need to obtain this information from Dethmers, a non-party. In particular, the Court expressed an expectation that before a litigant pursue third-party discovery, they show what they had requested of the parties, what was not produced, and, if the information produced by parties was insufficient, what actions they took to rectify the insufficiency. In this case, Mittapalli had not demonstrated that he had first requested the information from parties to the Louisiana case and that those parties did not produce the information.

Though failing to show a need for the subpoena was by itself sufficient to warrant quashing the subpoenas, the Court also found that the remaining factors weighed against enforcement as well. The categories of information requested were so broad that they would require Dethmers to produce any document at all related to their trailer-coupling business. Almost all the categories of requested information were not subject to time restrictions. Many categories of requested information were not particular enough to make clear what was covered and what was not. And the burden on Dethmers to respond to twenty-two categories of information would be substantial. The Court also noted that subpoenas should start off with reasonable requests, rather than start with broad requests only to negotiate for more precise categories later.

This decision is important for Iowa financial institutions to keep in mind going forward. It demonstrates a commitment by
the Iowa Supreme Court to keep the primary burden of litigation on the litigants themselves, and it gives recipients of
third-party subpoenas a clear basis to object to overbroad subpoenas. Before requesting information by subpoena to Iowa banks, parties should demonstrate that they have exhausted all avenues of obtaining the information from the parties or from other, less burdensome means. Where the requesting party cannot make such a showing, the Dethmers Manufacturing decision provides a roadmap for objecting which subpoena recipients should consider.

If you are the recipient of a subpoena or have any questions, please contact a banking litigation attorney

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Samuel Gray
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Simmons Perrine Moyer Bergman PLC is a full service law firm with locations in Cedar Rapids and Coralville, Iowa. For more information, visit spmblaw.com.  

Disclaimer: This information is intended for general information purposes only and is not intended, nor should it be construed or relied on, as legal advice. Please consult your attorney if specific legal information is desired.

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