Your client is resisting a document request and wants to shift the cost of production to the requesting party. You’ll have two burdens to overcome. You must show that the request is unduly burdensome, and you must overcome a presumption that the producing party should bear the costs of production. The greater the damages your client is seeking in the lawsuit, the more difficult your task will be. A recent district court case from the District of Columbia illustrates the point. Oxbow Carbon & Minerals LLC, et al., v Union Pacific Railroad Company, et al., 2017 U.S. Dist. LEXIS 146211 (D.D.C. Sept. 11, 2017).
Plaintiffs Oxbow sued two railroad companies under the Sherman Antitrust Act for more than $50 million in damages. After producing documents from 19 document custodians at a cost of $1.4 million, Oxbow objected to the defendants’ request for a supplemental production that the plaintiffs estimated would cost $250,000. The defendants moved to compel.
The court ordered an analysis of a sampling of the documents by a vendor using the search terms agreed upon by the parties. The sampling found many responsive documents. Sampling reduced the cost estimate to about $142,000. Oxbow maintained its objection to having to review and produce additional responsive documents, asking the court to deny the motion to compel or order the defendants to bear the cost of production of the documents.
The court applied the Rule 26 proportionality factors and granted the motion to compel. The court also ordered that Oxbow bear the cost of the additional production. In its analysis, the court cited the FRCP 26 advisory committee notes a number of times. With regard to the factor requiring courts to compare the cost of discovery to the amount at issue the court stated:
Given the very substantial amount of damages that Oxbow seeks to recover in this case, its cost of complying with the discovery request to produce information relevant to Defendants' defense of Oxbow's claims does not strike the [court] as excessive.
The amount at issue in the lawsuit came up again in the court’s discussion of whether the burden or expense of the proposed discovery outweighed its likely benefit. The court found that given the size of the plaintiff’s damage claim, the estimated production cost of $142,000 was “not so unreasonably high as to warrant rejecting Defendants' request out of hand.”
The court also considered “information asymmetry,” the circumstance in which one party has little discoverable information while the other party has vast amounts of discoverable information. The court quoted the advisory committee notes to FRCP 26, stating “the burden of responding to discovery lies heavier on the party who has more information, and properly so.” Here, that party was the plaintiff.
On the issue of cost shifting, the court determined that Oxbow failed to rebut the presumption in the rules that it should bear the cost of complying with the defendants’ discovery. Referring to the 2015 amendment that added subsection 26(c)(1)(B), the court said:
In considering this amendment, courts have found that determining whether a discovery request warrants cost-shifting based on its burdensomeness turns on: the needs of the case; the amount in controversy; the parties' resources; the importance of the issues at stake; and the importance of the proposed discovery in resolving those issues.
One lesson of Oxbow Carbon is that if you are going to claim millions of dollars in damages, you may have to bear the burden of millions of dollars of discovery costs. Also, be aware of the information-asymmetry issue and how that could impact discovery.
Andrew M. Toft is an attorney in Denver, Colorado.