It is generally a bad sign when an opinion begins with a Court banning parties from filing more discovery motions without the Court’s approval. This is one of those cases. Textron Fin. Corp. v. Eddy’s Trailer Sales, Inc., 2009 U.S. Dist. LEXIS 60065 (E.D.N.Y. July 10, 2009).
One of the discovery motions was the Plaintiff’s motion to compel electronic discovery. Textron, 1-2.
The Defendants opposed the motion claiming they could not afford the ESI retrieval and production costs. Id.
The Defendants offered no evidence on the cost to produce, other then them saying “it’s expensive.” Textron, 1-3.
The Issue: Should the Defendant’s Pay for Producing Electronically Stored Information?
The Court had ordered earlier in the case for the Defendants to “to produce all electronic documents responsive to Plaintiff’s demands…” Textron, 2. The Court’s issue was whether the Producing Party was required to pay all of the costs. Textron, 2.
Cost Shifting and Reasonably Accessible ESI
The Federal Rules of Civil Procedure, the Advisory Notes and case law require electronically stored information to be not “reasonably accessible” for cost shifting. Textron, 2-3.
The Court quickly held that the ESI on the Defendants’ two servers was “accessible,” as it was “stored in a readily usable format.” Textron, 2.
Since the electronically stored information was reasonably accessible, cost shifting was not appropriate.
The Defendants also failed to provide any evidence of their “inability to fund” their discovery obligation. Textron, 2.
While a party’s resources is a factor in cost shifting, merely telling a court there is undue burden or financial hardship is not enough for a party to shift any production costs. Textron, 2, citing Fed. R. Civ. P. 26 Advisory Committee Notes (2006).
A court would likely want proposals from an expert or vendors on costs; statements on the party’s financial strength and other evidence beyond a lawyer’s claim ESI productions are “expensive.”
The Court further ordered the parties to meet and confer on the ESI production. The Court also required the Defendants to pay any vendor in advance before production began, if they decided to use a service provider. Textron, 4.
The Court’s Costs Cap
The Court capped the Defendants’ ESI production obligations at $10,000, based on the Court’s own discretion. Textron, 3. Anything above $10,000 would need to be carried by the Plaintiffs. Id.
Bow Tie Thoughts
A producing party cannot dodge its production obligations by merely claiming electronically stored information is expensive to produce. A court will require a showing the ESI is not reasonably accessible for there to be any cost shifting. A party claiming financial hardship will likely need to show some evidence of their financial resources as well.