United States v. Tenn. Walking Horse Breeders' & Exhibitors' Ass'n, 17-5925

• Decision Date: 08 March 2018
• Docket Number: No. 17-5925,17-5925
• Parties: UNITED STATES OF AMERICA, Plaintiff-Appellee, v. TENNESSEE WALKING HORSE BREEDERS' AND EXHIBITORS' ASSOCIATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. TENNESSEE WALKING HORSE BREEDERS'AND EXHIBITORS' ASSOCIATION, Defendant-Appellant.

No. 17-5925

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

March 8, 2018

NOT RECOMMENDED FOR PUBLICATION

File Name: 18a0117n.06

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE

BEFORE: DAUGHTREY, GIBBONS, and WHITE, Circuit Judges.

HELENE N. WHITE, Circuit Judge. Defendant-Appellant Tennessee Walking Horse Breeders' and Exhibitors' Association ("TWHBEA") appeals the district court's denial of its motion for reimbursement of costs incurred complying with administrative subpoenas issued by the United States Department of Agriculture ("USDA"). We AFFIRM.

I.

Defendant-Appellant TWHBEA is a nonprofit corporation whose goal is to "maintain the purity of the [Tennessee Walking Horse], to promote greater awareness of the [breed] and its qualities, to encourage expansion of the breed, and to help assure its general welfare." [R.1 at PID 2] (citation omitted). TWHBEA established and maintains a Tennessee Walking Horse breed registry called "iPeds" to record the pedigrees of Tennessee Walking Horses. The iPeds system contains detailed ownership and other information on hundreds of thousands of horses that are sold or entered into shows and exhibitions across the country.

The Horse Protection Act ("HPA"), 15 U.S.C. §§ 1821-1831, is designed to end the practice of injuring show horses to alter their gait for competitive advantage. The HPA prohibits the showing, sale, auction, exhibition, or transportation of "sored" horses. "Soring" is a practice used to accentuate a horse's gait accomplished by irritating or blistering a horse's forelegs with chemical irritants or mechanical devices. See 15 U.S.C. § 1821(3). When a horse's front feet are sored, "the intense pain which the animal suffer[s] when placing his forefeet on the ground [causes] him to lift them up quickly and thrust them forward," which reproduces "exactly the distinctive high-stepping gait that spectators and show judges look for in a champion Tennessee Walking Horse" and related breeds. Turner v. USDA, 217 F. App'x 462, 463 (6th Cir. 2007) (internal citation and quotation marks omitted). The HPA and TWHBEA require that a Tennessee Walking Horse's gait be the product of breed and training, not soring.

The Secretary of Agriculture is charged with enforcement of the HPA and is authorized to conduct investigations into soring and inspect any horse show, horse exhibition, or horse sale or auction for evidence of soring. See 15 U.S.C. § 1823(e). To facilitate these investigations, the Secretary "may require by subpena [sic] the attendance and testimony of witnesses and the production of books, papers, and documents relating to any matter under investigation or the subject of a proceeding." Id. at § 1825(d)(1). If a recipient fails to comply with a subpoena, "the Secretary, or any party to a proceeding before the Secretary, may invoke the aid of any appropriate district court of the United States in requiring . . . the production of such books, papers, and documents under the provisions of this chapter." Id. at § 1825(d)(2). The Secretary has delegated the authority to administer and enforce the HPA, including the authority to issue administrative subpoenas under the HPA, to the Administrator of the USDA's Animal and Plant Health Inspection Service ("APHIS"). 7 C.F.R. §§ 1.29(a)(1), 2.80(a)(7); [R.12-2]; [R.12-5].

Pursuant to that authority, APHIS conducted inspections at seven shows or exhibitions in Alabama, Mississippi, and Tennessee from November 2014 to September 2015. Based on those inspections, APHIS initiated investigations into 218 Tennessee Walking Horses found to be sore in potential violation of the HPA. As part of its investigation, APHIS sought to determine the ownership of the horses at the time of the alleged violation. 15 U.S.C. §§ 1824(2); 1825(a), (b).

USDA issued a series of administrative subpoenas¹ to TWHBEA seeking horse ownership records and related information for 218 horses. TWHBEA initially responded to three subpoenas, provided the records requested, and attached an invoice for $100 with each response. The parties corresponded regarding the subpoenas, and TWHBEA "indicated [it] was at all times willing to comply with [the subpoenas] so long as [it was] compensated for the time and resources necessary to do so." [R.11 at PID 94]. APHIS denied the requests for compensation, stating "the HPA does not authorize the payment of any fee associated with producing subpoenaed records." [Id. at PID 94-95]. TWHBEA did not comply with subsequent subpoenas.

II.

The United States filed suit under the HPA, 15 U.S.C. § 1825(d)(2), to compel compliance with the administrative subpoenas. TWHBEA moved for a protective order, asserting that compliance would pose an undue burden and significant expense. The United States filed a petition to enforce the subpoenas and the district court ordered TWHBEA tocomply, stating that TWHBEA could "make application for the reimbursement of the costs of compliance once compliance is complete." [R.27].

TWHBEA complied and then moved for reimbursement of fees under Fed. R. Civ. P. 45. The district court initially granted TWHBEA's fee request, although it reduced TWHBEA's request by half, finding $50.00 per hour was proper.² The court found that TWHBEA was entitled to reimbursement because: (1) "subpoenas issued by administrative agencies are encompassed [by Rule 45]"; and (2) "the targets of the underlying investigation were the horses' owners, and the United States has not alleged that TWHBEA itself committed any wrongdoing in regards to the 'soring' of horses, [so] the Court finds TWHBEA to be a nonparty, and thus Rule 45(d)(2)(B)(ii) is applicable." [Id. at PID 838-39].

The United States then moved to alter or amend the judgment under Fed. R. Civ. P. 59(e). [R. 43]. The district court granted the motion, finding two clear errors of law: "First . . . TWHBEA is certainly a party to this litigation. The action was filed to require TWHBEA, the only Defendant, to comply with certain administrative subpoenas. The fact that the targets of the underlying investigation are horse owners, not TWHBEA, is irrelevant." [R.49 at PID 896]. Second, the court found error in the finding that Rule 45 applies to the administrative subpoenas in this case because "Rule 45 provides that a subpoena must issue from the court where the action is pending and may be issued by the Clerk of Court or attorney authorized to practice in the issuing Court," but the administrative subpoenas at issue "were issued by a federal agency pursuant to the HPA. . . . [and] were issued in furtherance of an agency investigation, not forlitigation." [Id. at PID 896-97] (internal citations omitted). The court found that the previous order awarding TWHBEA fees erroneously relied on an advisory committee note to the 1991 Amendment to Rule 45 in finding the Rule applied to administrative subpoenas.

The court vacated the prior order awarding fees, and TWHBEA appealed.

III.

We review the district court's decision to grant a Rule 59(e) motion for abuse of discretion, Perez v. Aetna Life Ins. Co., 150 F.3d 550, 554 (6th Cir. 1998) (en banc) (citation omitted), although underlying questions of law—including the district court's interpretation of the Federal Rules of Civil Procedure—are reviewed de novo. Jalapeno Prop. Mgmt., LLC v. Dukas, 265 F.3d 506, 510 (6th Cir. 2001). "Abuse of discretion is defined as a definite and firm conviction that the trial court committed a clear error of judgment." Singleton v. Smith, 241 F.3d 534, 538 (6th Cir. 2001) (quoting Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir. 1996)).

IV.

A subpoena issued under Fed. R. Civ. P. 45 "is a mandate lawfully issued in the name of the court [or] by attorneys," and "[i]ts function is to compel the attendance of witnesses and the production of documents so that the court may have access to all of the available information for the determination of controversies before it." 9A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FED. PRAC. & PROC. CIV. § 2451 (3d ed. 2008). The issuing party "must take reasonable steps to avoid imposing undue burden or expense" on the subpoena recipient. Fed. R. Civ. P. 45(d)(1). A court must protect a non-party subject to a subpoena if it "requires disclosure of privileged or other protected matter" or the subpoena "subjects a person to undue burden." Fed. R. Civ. P. 45(d)(3)(A)(iii) and (iv). Under Rule 45(d)(2)(B)(ii), when a court orders compliance with a subpoena over an objection, "the order must protect a person who is neither aparty nor a party's officer from significant expense resulting from compliance." To protect a nonparty, a court may require the subpoenaing party to tailor the subpoenas to impose a lesser burden, or may order the subpoenaing entity to reimburse the recipient for costs associated with compliance. Thus, the district court has a relatively active role in subpoenas issued pursuant to Rule 45.

By contrast, "a district court plays only a limited role in the enforcement of an administrative subpoena." Doe v. United States, 253 F.3d 256, 262 (6th Cir. 2001) (citation omitted). An "agency's request for documents should be approved by the judiciary so long as it 'is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant.'" Id. at 263 (quoting United States v. Morton Salt Co., 338 U.S. 632, 652-53 (1950)). See also Sec. & Exch. Comm'n v. Arthur Young & Co., 584 F.2d 1018, 1033 (D.C. Cir. 1978) ("[S]ubpoenaed parties can legitimately be required to absorb reasonable expenses of compliance with administrative subpoenas."); United States v. Cont'l Bank & Tr. Co., 503 F.2d 45, 48 (10th Cir. 1974) ("[T]he existence of a general duty to respond to a government summons justifies the imposition of some financial burden").

When adopted in 1937...