LCJ advocates for amending the FRCP to require parties to share the expenses of civil discovery. Doing so would preserve the purpose of discovery – access to information that will enable parties and fact finders to resolve civil litigation – while aligning well-proven economic incentives with the reality of modern litigation.
Today’s default system, in which the “producer” pays all of the expenses incurred in responding to the other party’s requests, undermines the fact-finding purpose of discovery because it provides a strong incentive to use discovery as a tool for imposing undue economic pressure in the hope of forcing parties to settle or abandon their claims for reasons other than the merits. In contrast, a rule requiring parties to share discovery expenses would focus litigants and courts on the information that’s important to claims and defenses while serving as a self-executing restraint against runaway discovery requests. Also, by placing the cost-benefit decision with the party in the best position to limit those costs – the requesting party – such a rule would significantly decrease motion practice concerning the scope of discovery.
Today’s default system, in which the “producer” pays all of the expenses incurred in responding to the other party’s requests, undermines the fact-finding purpose of discovery because it provides a strong incentive to use discovery as a tool for imposing undue economic pressure in the hope of forcing parties to settle or abandon their claims for reasons other than the merits. In contrast, a rule requiring parties to share discovery expenses would focus litigants and courts on the information that’s important to claims and defenses while serving as a self-executing restraint against runaway discovery requests. Also, by placing the cost-benefit decision with the party in the best position to limit those costs – the requesting party – such a rule would significantly decrease motion practice concerning the scope of discovery.
The concept is not new. In fact, allocating the cost of discovery occurs quite frequently in U.S. courtrooms and around the world. And the idea itself is becoming more widely discussed by judges, practitioners, and academics.
COURTROOM ORDERS WITH COST ALLOCATIONJudge Paul W. Grimm, U.S. District Court (MD) has a standing order requiring cost allocation in discovery for his courtroom. See the order here. The Middle District of Tennessee has a standing order regarding discovery of electronically stored information that permits the Court to apportion e-discovery costs upon a showing of good cause. See the order here. In the Nexium Multi-District Litigation case, a cost order of over $500,000.00 in discovery costs was issued after the Court granted summary judgment on causation. Click here for more information. In Gabriel Technologies v Qualcomm, Inc., Civil No. 08cv1992 AJB (SDCA)(February 1, 2013), a judge in the Southern District of California allocated to the plaintiffs all of defendant’s attorneys’ fees (including all e-discovery fees) in a case that required extensive discovery despite apparent lack of merit. View the order here. |
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EXAMPLES OF COST ALLOCATION IN CASE HOLDINGS
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“Although Rule 26(f) does not require the parties to address the cost of processing ESI in their discovery plan, the parties are well advised to follow the Sedona Conference’s best practices and discuss the burden of producing ESI and the possibility of cost sharing at the ‘meet and confer’ conference.” Life Plans, Inc. v. Sec. Life of Denver Ins. Co., 2014 WL 2879881 (N.D. Ill. June 25, 2014). |
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Costs for a non-party to comply with a subpoena over objection may be shifted where those expenses are significant. Legal Voice v. Stormans Inc., 738 F.3d 1178 (9th Cir. 2013).
When class action plaintiffs request “very extensive discovery, compliance with which will be very expensive,” plaintiffs typically should share defendant’s discovery costs – at least until plaintiffs’ certification motion has been filed and decided. Boeynaems v. LA Fitness International, LLC, 2012 WL 3536306 (E.D. Pa. Aug. 16, 2012)
The law governing discovery requests and document production “clearly states” that a requesting party bears expenses associated with making copies of the documents received from the responding party. Lightguard Systems, Inc. v. Spot Devices, Inc., 2012 WL 846548 (D. Nev. March 9, 2012)
“[E]discovery saves costs overall by allowing discovery to be conducted in an efficient and cost-effective manner” in complex cases and such costs may be awarded to a prevailing party. In re Aspartame Antitrust Litig., 2011 WL 4793239 (E.D. Pa. Oct. 5, 2011).
A court may tax the reasonable cost of imaging a computer’s hard drive, “provided the image file was necessarily obtained for use in the case.” Colosi v. Jones Lang Lasalle Ams., Inc., --- F.3d ----, 2015 WL 1186765 (6th Cir. Mar. 17, 2015).
Cost-shifting may be ordered where the ESI sought is beneficial to both parties. Zeller v. S. Cent. Emergency Med. Servs., Inc., 2014 WL 2094340 (M.D. Pa. May 20, 2014).
In order to justify cost-shifting under Rule 26(b)(2)(B), “the cost or burden must be associated with some technological feature that inhibits accessibility.” W Holding Co. v. Chartis Ins. Co. of P.R., --- F. Supp. 2d ---, 2013 WL 1352426 (D.P.R. Apr. 3, 2013).
Splitting the expense of production and requiring a party to post a bond for requested information are practical and appropriate tactics to resolve discovery disputes. Lubber, Inc. v. Optari LLC, 2012 WL 899631 (M.D. Tenn. Mar. 15, 2012).
The producing party bears the initial costs of “searching for, retrieving and producing discovery,” but costs may be shifted based on the Zubulake factors. U.S. Bank National Association v. Greenpoint Mortgage Funding, Inc., 939 N.Y.S.2d 395 (N.Y. App. Div. 2012).
Expenses for preparation of a privilege log, hard copy prints of electronic images, and transferring data to a different format for document review are taxable costs under 28 USC § 1920. Autry Petroleum Co. v. BP Prods. N. Am., Inc., 2010 WL 3239010 (M.D. Ga. Aug. 16, 2010).
Partial cost-shifting found to be appropriate for processing, review and production of ESI spanning 18-year period. Takeda Pharm. Co., Ltd. v. Teva Pharm. USA, Inc., 2010 WL 2640492 (D. Del. June 21, 2010).
Delays in production of ESI may result in a court refusing to shift the costs of production. Federico v. Lincoln Military Housing, LLC, 2014 WL 7447937 (E.D. Va. Dec. 31, 2014).
A prevailing party may be limited in its recovery of taxable costs to an amount associated with documents actually produced. Apple Inc. v. Samsung, 2014 WL 4745933 (N.D. Cal. Sept. 19, 2014).
