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When Document Production Costs Can be Recovered
BY: John Burrus, Esq.

Can a Bank recover the costs it incurs in providing requested financial records of its customers? The answer depends on the identity of the person making the request, the nature of the proceeding in which the request is made, and, in some cases, the amount of costs incurred.

Only the Right to Financial Privacy Act and the Internal Revenue Code impose a specific statutory duty to reimburse costs incurred in providing requested documents. The RFPA generally applies (with many exceptions) to document requests by federal agencies in the form of agency subpoenas or summonses, formal written requests, and agency search warrants. The Internal Revenue Code requires reimbursement of costs incurred in complying with an IRS summons.

In all other instances costs can be recovered only if the requesting party agrees to reimbursement or if a court orders it. Typically the requesting party will not agree to reimbursement unless that party believes there is a good chance a court would order it if the issue is pressed.

In civil litigation between private parties, the requesting party will ordinarily offer to pay copying costs, but will not usually offer additional reimbursement for personnel time. A court can order reimbursement if it finds the expense to be "significant" or if the request "subjects a person to undue burden."

The situation in regard to state agency investigations and both state and federal criminal investigations is somewhat different. In a recent case, the Colorado Supreme Court noted that "as a general rule, recipients of subpoenas in criminal proceedings must assume the cost of compliance with such subpoenas as a matter of civic responsibility." The same rule applies to state agency investigations; however, if it can be shown that the cost of compliance "exceeds that which the respondent may reasonably be expected to bear as a cost of doing business", a court can order reimbursement by the requesting party.

In summary, if the request is made by the IRS or another federal agency covered by the RFPA, that agency is required by statute to reimburse reasonable compliance costs. In private civil litigation the requesting party will ordinarily offer to pay copying costs, and a court can compel reimbursement of additional "significant expense". In state agency and both federal and state criminal proceedings, ordinary compliance costs must be borne by the party on whom the request is served, but a court can order reimbursement of excessive or unreasonable costs of compliance.

Contact John E. Burrus at jeb@bsblaywers.com

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