Allocating E-Discovery Costs in New York

The explosion of electronically stored information and the issues it raises for litigators has been well chronicled by federal judges and commentators of federal procedure. So, too, have the issues about who is responsible for paying the soaring costs incurred to preserve, search, retrieve, review and produce ESI in the discovery process.

Indeed, "cost-shifting" with respect to e-discovery was at the center of the seminal decisions Rowe Entertainment Inc. v. William Morris Agency Inc.,[FOOTNOTE 1] and Zubulake v. UBS Warburg LLC.[FOOTNOTE 2] That is because the discovery provisions of the Federal Rules of Civil Procedure presume that the party responding to document requests bears the costs of producing the documents.[FOOTNOTE 3] Consequently, federal courts are routinely required to balance the need of the requesting party for e-discovery against the burden and expense imposed upon the responding party and to decide how the costs of such discovery should be allocated among the parties.

Much less has been written on who pays for e-discovery in New York state court litigation.[FOOTNOTE 4]

Initially, one might conclude that is because the CPLR is clear on the subject: Contrary to the federal courts, New York courts presume, on the basis of CPLR 3120, that the requesting party pays for the documents it seeks.[FOOTNOTE 5] It follows that a requesting party must also bear the costs incurred with the production of ESI. Generally, that has been the conclusion of the trial courts that have been confronted with the question of who should pay for e-discovery.[FOOTNOTE 6]

The issue does not end there, however. No New York appellate court has yet ruled on whether a requesting party presumptively bears the costs of e-discovery. Furthermore, several courts and bar-bench committees have proposed or instituted rules to govern e-discovery and none of them presupposes that the requesting party is exclusively responsible for the costs of e-discovery.

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Source: law.com
By: Christopher M. Caparelli and Tracy Zanco