In Matter of Kapon v Koch, 23 NY3d 32, 38 (2014), the Court of Appeals concluded that a party seeking disclosure from a nonparty is not required to show “special circumstances”. Rather, the Court held that the statute “allow[s] for the discovery of any person who possesses material and necessary evidence[.]”
Does this mean that a litigant is entitled to unlimited access to a party’s financial records? Not necessarily.
First, the information subpoenaed must be material and necessary, and “the subpoenaing party [must] state, either on the face of the subpoena or in a notice accompanying it, ‘the circumstances or reasons such disclosure is sought or required’” (id. at 39, citing CPLR 3101). If the subpoena requests irrelevant information, the Court will quash it. Similarly, if the subpoena served on a nonparty fails to set forth the circumstances or reason for the disclosure, a litigant may argue that the subpoena is non-compliant and should be quashed accordingly.
In addition, there are several related objections that are subparts of the material and necessary standard. A party for instance may object to a subpoena on grounds that it is overbroad or constitutes a fishing expedition (see e.g. Saratoga Harness Racing v Roemer, 274 AD2d 887, 889 [3d Dept 2000] [improper “demand for … all of defendant’s balance sheets, income statements, cash flow statements, general ledger statements, expense reports and bank account statements for a period of more than three years” (citation omitted)]; Matter of American Express Prop. Cas. Co. v Vinci, 63 AD3d 1055, 1056 [2d Dept 2009]).
The trial court also has “the authority to impose, in its discretion, appropriate restrictions on demands which are unduly burdensome . . . and to prevent abuse by issuing a protective order where the discovery request may cause unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts” (Rawlins v St. Joseph’s Hosp. Health Ctr., 108 AD3d 1191, 1192 [4th Dept 2013] [internal quotation marks and citation omitted]; see CPLR 3103).
A more aggressive litigant may further attempt to argue that the standard is or should be higher in cases involving sensitive information such as tax returns and personal financial records. The court in Reintsema v Johnson, 2018 NY Slip Op 33612(U) (Sup Ct, Saratoga County 2018), for instance, concluded that “the scope of discovery of personal financial records and specifically income tax returns, is narrow, and such records to be disclosed, must be found indispensable to a party’s claim and unavailable from other sources … [and that] [c]ourts do not allow an adversary to ‘freely roam’ through an opponent’s financial records, except in certain limited circumstances for example when income diversion is alleged and again the relevant information is not available from any other source” (citations omitted).
