Facts: Plaintiff brought suit for professional negligence, breach of contract, and breach of fiduciary duty against both its insurer and the counsel retained by the insurer. Defendants requested a number of documents that predated the litigation hold and were only accessible on backup tapes. Faced with this additional cost and burden, the plaintiff asked the defendants to share the cost of the search and had numerous discussions and negotiations on the topic with the defendants. After discovery completed, the first defendant refused to share any of the cost and the second defendant only offered a minimal sum.
Law: The party responding to discovery bears the cost and must identify if there are materials responsive to discovery requests stored on its system. Fed.R.Civ.P. 26(b)(2). If materials are not reasonably accessible or place an undue burden on the responding party, the party may seek the protection of the court. Id. The court will apply an eight-factor test to determine whether it should shift costs. Id.
Holding: Finding the factor test inconclusive (primarily because discovery had completed), the court held that the prior negotiations of the parties controlled. Since the emails from the parties clearly evidenced and addressed the topic of cost-sharing, the court found it only equitable to split the costs — 50 percent to the plaintiff and 50 percent shared equally by the two defendants.
Takeaway Points: Courts can impose litigation costs on the party requesting discovery merely because it has negotiated cost-sharing — even if it has not come to an actual agreement with the responding party. By contrast, the responding party should consider seeking the protection of the court prior to incurring the cost of discovery if asked to produce inaccessible and/or burdensome information. The court can provide protection by limiting the scope of discovery and splitting costs or may even deny discovery requests. Based on Clean Harbors, the court could subsequently exercise its equitable discretion to shift some of the cost, but it is better practice to address the issue early and avoid the risk of bearing all of the costs.
Access the full Clean Harbors opinion here.