This is a decision of the District Court of Pennsylvania mainly focusing on the issue of cost allocation of discovery before a decision on class certification, as well as addressing the issue of a discovery “fence”..
This was a typical case of asymmetrical discovery where the plaintiffs had very few documents in contrast to the defendant who possessed millions of documents and millions of items of electronically stored information (“ESI”). The central question was therefore the question of who should bear the cost of discovery.
The court commenced its analysis by referencing the binding Supreme Court direction that “the presumption is that the responding party must bear the expense of complying with discovery requests, but he may invoke the district court’s discretion under Rule 26(c) to grant orders protecting him from ‘undue burden or expense’ in doing so, including orders conditioning discovery on the requesting party’s payment of the costs of discovery.” (Oppenheimer Fund, Inc v Sanders, 437 US 340, 358 (1978))
The court then recognized that while the shifting of the cost burden of discovery is no longer rare, no prior case had dealt with allocation of cost as part of a substantial discovery dispute prior to the class certification decision.
Ultimately, the court held that “where (1) class certification is pending and (2) the plaintiffs have asked for very extensive discovery, compliance with which will be very extensive, absent compelling equitable circumstances to the contrary, the plaintiffs should pay for the discovery they seek. If the plaintiffs have confidence in their contention that the Court should certify the class, then the plaintiffs should have no objection to making an investment. Where the burden of discovery expense is almost entirely on the defendant, principally because the plaintiffs seek class certification, then the plaintiffs should share the costs.”
The court pointed out that “[p]laintiffs have already amassed, mostly at Defendant’s expense, a very large set of documents that may be probative as to the class action issue.” The court is persuaded “that the cost burdens must now shift to Plaintiffs, if Plaintiffs believe that they need additional discovery.”
It is noteworthy to point out that the court noted Plaintiffs were represented by “the very successful and well-regarded Philadelphia firm of Berger & Montague. . . . If the Berger & Montague firm believes that this case is meritorious, it has the financial ability to make the investment in discovery.” Unsurprisingly, the court granted the order in favor of the defendant in this regard.