Is Cost-Shifting the Next E-Discovery Game-Changer?

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Article by Leonard A. Deutchman published by the Legal Intelligencer and posted on law.com on the LTN webpage.

This article discusses cost-shifting, and how it is used to address eDiscovery costs, and decide which party has to pay for such costs.  The article cites two recent cases that illustrate examples of cost shifting, "Race Tires America v. Hoosier Racing Tires, a 2011 case in the U.S. District Court for the Western District of Pennsylvania holding that 18 U.S.C. §1920 allows the prevailing party to recover from the losing party the costs of e-discovery processing and production, can be one important factor in influencing requesting parties to agree to limit the scope of e-discovery requests (and so control the costs they made be ordered to pay under Section 1920 should they not prevail). The recent opinion in Couch v. Wan, a 2011 U.S. District Court case for the Eastern District of California, introduces or, better yet, reminds us of another factor that may influence future discovery requestors: cost-shifting."

The article provides a brief overview of the history of cost shifting.  Then there is an analysis provided of the Couch case, which is a decision that decided to shift costs in a case even where the data was in readily accessible format, simply because the defendant argued that they could not bear the costs.  As the author states, "The plaintiffs' focus, the court concluded, on the technical accessibility of the data, misses the point, as they "fail to focus on the cost to retrieve the requested information" which, at $54,000, was "a significant, burdensome amount." Simply put, the plaintiffs' discovery request was expensive, third party CDCR and defendants could not afford it, and so the court shifted costs under Rule 26(b)(2)(B)."

The article goes on to further state, "What is most striking about Couch is how common the e-discovery fact pattern in it was. As has been stated, the data to be searched was readily accessible from a technical sense. Indeed, the data sought came from the sources standard to e-discovery matters -- desktop or laptop hard drives and servers. The sole fact that made the instant matter something other than a wholly "vanilla" e-discovery matter was that the request was made of a third party. Even that fact, however, was not as significant as it otherwise could have been, given that here, the "third party" was far more so in law than in fact: The defendants were officials of the CDCR being sued for actions taken in their official capacity."

The author states in further summary, "Couch may signal that courts, previously reluctant to shift e-discovery costs absent strange and unusual circumstances, such as when the data resides on technically inaccessible media like backup tapes, may be overcoming that reluctance and be more willing to entertain cost-shifting motions when the cost of e-discovery is great -- which is the case a great deal of the time -- and the producing party cannot afford it -- not as often the case, but still the case in a large number of matters.
If Couch does signal that trend, that trend should lead to a significant drop in e-discovery requests, as requesting parties will have to shoulder far more of the burden of paying for productions than they presently do."

P.S. As the author states, "Couch is not an opinion of precedential force".  Also, it would not surprise the writers of this blog that if this case was appealed it would end in a different result.