With the widespread use of computing devices, electronically stored information (ESI) is now an integral part of pretrial discovery. ESI is a potential treasure trove of useful information for both parties, but the oft-vast scope of data and the sometimes astronomical costs of processing and storage associated with a request for production make ESI a double-edged sword. These costs can be an undue burden on parties from whom discovery is sought, so Federal Rule of Civil Procedure 26(c) allows a party, for good cause, to move for a protective order to apportion the costs of processing and storing ESI to comply with a discovery request. While Rule 26(c) permits parties to seek apportionment of costs after the costs are incurred, doing so can be risky.
The recent case East Coast Test Prep, LLC v. Allnurses.com, Inc. illustrates the perils of seeking retroactive apportionment of ESI storage and processing costs. No. CV 15-3705, 2018 WL 7050303 (D. Minn. Dec. 11, 2018), report and recommendation adopted, 2019 WL 1487812 (D. Minn. Apr. 4, 2019). The plaintiffs in a defamation action requested the defendants produce ESI connected to their claim. The defendants transferred all requested ESI onto third-party servers and incurred storage and processing costs before they objected that the request imposed an undue burden. The action was dismissed more than a year later, and the defendants moved for a protective order under Rule 26(c) seeking to apportion the ESI processing and storage costs they had incurred. The defendants contended that the plaintiffs had the ability to reduce the scope of the ESI and that their refusal to do so forced the defendants to incur unduly burdensome processing and storage costs.
The court recognized that when a party is readily aware of the substantial costs of complying with a discovery request before incurring costs, "the clear objective of Rule 26 is the avoidance of undue cost rather than merely the post hoc apportionment of costs . . . ." Id. at *7. While Rule 26(c) sets no time limit to move for a protective order and apportion costs, a motion must be timely. Id. at *6 (citing Brittain v. Stroh Brewery Co., 136 F.R.D. 408, 413 (M.D.N.C. 1991)).
The court reasoned that even had the plaintiffs deliberately driven up ESI processing and storage costs by refusing to limit their request, the defendants were obligated to protect themselves from any undue burden by filing a timely Rule 26(c) motion. While the defendants had objected to the ESI request and alleged that it was an undue burden, they failed to provide the court with any specific information related to the cost of processing and storage and did not seek to allocate the costs before it unilaterally incurred them. The defendants had filed a Rule 26(c) motion for protective order after incurring ESI costs for several months, but voluntarily resolved the motion without apportioning the costs and sought no further judicial relief. The court thus found that the defendants’ motion for protective order was untimely and denied it.
East Coast Test Prep should serve as a reminder for practitioners and litigants to be vigilant of potential ESI processing and storage costs before and while incurring them. Litigants and their counsel would be wise to seek expert estimates of ESI processing and storage costs necessary to comply with a discovery request, and if unduly burdensome, present their estimates to the court and seek to apportion costs before incurring any expenses or at the earliest possible point while they are being incurred.
Thomas E. Walls is a summer clerk in the Winston-Salem, North Carolina, office of Spilman Thomas & Battle, PLLC. He is a 2L at the University of North Carolina School of Law.