Compass, Inc. v. Real Estate Board of New York, Inc.

Background

Compass, Inc. and Compass NY RE, LLC, together referred to as “Compass,” issued two subpoenas to non-party Douglas Elliman, LLC. One subpoena sought documents through 20 requests, and the other sought Elliman’s witness for a deposition under Rule 30(b)(6), which permits an organization to designate a witness to testify about matters described in the deposition notice. Compass had named Elliman as an alleged co-conspirator with the Real Estate Board of New York, Inc. in its complaint.

Before fact discovery ended, Compass sought to dismiss its claims voluntarily. On December 19, 2022, the court dismissed the action without prejudice. Elliman later sought fees and costs under Rule 45(d)(1), which requires the party or attorney issuing a subpoena to take reasonable steps to avoid imposing undue burden or expense on the subpoena recipient. The rule allows sanctions, including reasonable attorney’s fees and lost earnings, when that duty is violated.

Discovery and the Motion

Compass and Elliman held multiple meetings about the scope of the document requests. They reduced the initial universe of 223,800 potentially responsive records to 43,000 records. Elliman identified 3,500 records as responsive and reviewed them for privilege, but it produced none before Compass dismissed the action.

Court’s Analysis

The court explained that deciding whether to impose sanctions under Rule 45(d)(1) generally requires two questions: whether the subpoena imposed an undue burden or expense, and, if so, what reasonable steps the subpoenaing party and its counsel took to avoid that burden.

The court concluded that Elliman had not established either required basis for sanctions. First, Elliman did not show that the burden was unwarranted. The court noted that Elliman had been named as an alleged antitrust co-conspirator in a complaint that survived a motion to dismiss and a motion to reconsider. Because Elliman was described as an important witness to the alleged conspiracy, the court found that some discovery burden was likely and was not shown to be undue.

Second, the court found that the record did not show Compass failed to take reasonable steps to reduce the burden. The parties’ meet-and-confer process had substantially narrowed the universe of documents that Elliman would need to produce.

Elliman also argued that Compass’s voluntary dismissal effectively conceded that the complaint’s allegations were false and that Compass knowingly filed a meritless case. The court rejected those arguments. It stated that plaintiffs may voluntarily dismiss claims for various reasons and noted that Compass had identified the withdrawal of certain complaints central to its claims and broader changes in the residential real-estate market. The court’s December 19, 2022, order had found those reasons adequate to explain the dismissal.

Finally, Elliman argued that costs incurred in November and December 2022 were unnecessary because Compass did not tell Elliman that it intended to dismiss the action. The court found that Compass had provided evidence it was awaiting Elliman’s response about an additional custodian and two search terms, while Elliman had not told Compass that it was reviewing documents for production during that period. The court found that evidence undermined Elliman’s argument that Compass was responsible for unnecessary discovery costs.

Disposition

Judge Lorna G. Schofield ordered that Elliman’s motion for fees and costs be DENIED. The Clerk of Court was directed to close the motion.