As published in the Independent Community Bankers of South Dakota newsletter, April 2017 edition. Sign up for ICBSD e-news here.
A litigant frequently needs financial information from their opponent, and a good lawyer knows a great way to access that information is by subpoenaing the opponent’s bank. That can put the bank in the difficult position of balancing laws protecting its customer’s privacy with laws requiring it to comply with a subpoena. Privacy laws, including the Gramm-Leach-Bliley Act and the Right to Financial Privacy Act, generally include exceptions for subpoenas, but only if properly authorized. Knowing how to respond when a subpoena arrives at your bank is vitally important to keep the bank out of unnecessary litigation and free from regulatory scrutiny.
There are three basic steps to follow after receiving a subpoena: identify, authenticate, and respond appropriately.
Three Steps to Follow After Receiving a Subpoena
You must first identify what type of subpoena you have received so you can respond appropriately. Information identifying the case, court or administrative agency, parties, and type of action is found in the case caption. The rules that apply to subpoenas vary significantly depending on the type of subpoena (civil, criminal, or administrative/investigative), and whether it is issued from a state or federal court. Since civil lawsuits are almost always about money, banks tend to see a lot civil subpoenas. As such, the particular rules discussed in this article will generally refer to state court subpoenas related to a civil action.
The next step is to authenticate the subpoena to ensure it is both genuine and properly issued. In most cases, attorneys can issue subpoenas without any prior authorization from the court, and often a subpoena is simply the printed product of a word processor without a special seal or stamp. Before producing any documents in response to the subpoena, contact the office of the issuing attorney to confirm that he or she in fact sent it. A quick Google search will allow you to independently verify the contact information for the issuing attorney most of the time.
To ensure it is properly issued, first check to make sure the subpoena reasonably identifies the documents it seeks and a reasonable place for production. The subpoena also needs to have been properly served, usually by a process server. Finally, the court under whose authority the subpoena is issued needs to have jurisdiction, that is, authority over the bank. A federal court can issue subpoenas nationwide. But a subpoena through an out of state court probably is not properly issued to a South Dakota bank unless the bank regularly conducts business there. There is a process by which out-of-state attorneys can have a South Dakota state court issue a subpoena for them. Make them follow that process before divulging your customer’s information.
Finally, respond appropriately. If the subpoena is authentic and properly issued, then the bank will be required to produce the requested documents. If the request seems oppressive, requires the bank to produce documents at an unreasonable location, or is objectionable for some other reason, then the bank must object in writing to the issuing attorney before the deadline to comply or within 10 days (14 days in federal court), whichever is sooner. Failing to make a timely objection to a subpoena will waive any objection.
Properly balancing customer privacy with a bank’s legal obligations to produce documents requires the bank to evaluate each subpoena it receives using the three steps described in this article. However, questions will inevitably arise about how the rules apply in a particular case. Many times, those questions can be answered with telephone call to your attorney, but knowing what to look for (and why) can help a bank quickly get the correct answer when deciding how to respond to a subpoena.
Vince Roche and Joel Rische are attorneys at Davenport, Evans, Hurwitz & Smith, LLP in Sioux Falls, SD. Vince Roche can be reached at [email protected] or 605-357-1250. Joel Rische can be reached at [email protected] or 605-357-1259.
Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the State’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.