This is the sixth column in a series addressing the challenges and opportunities presented by litigating in forums with no e-discovery rules. Read parts one, two, three, four and five here. This column discusses how your company can use uncertain state court rules to your advantage to create a more level playing field. When neither party is certain whether the court may award e-discovery expenses as taxable costs for a prevailing party, both sides have an incentive to avoid unnecessary e-discovery expense.
In the federal courts, the question of whether Rule 54(d) allows a prevailing party to recover as taxable costs its e-discovery expenses is a hotly contested issue, with no clear consensus yet emerging. The competing policy considerations are not easily resolved. On the one hand, business entities who are repeat players in litigation against individual plaintiffs are eager to use cost-shifting as a deterrent against aggressive counsel who (at least according to the defense bar) use e-discovery expenses to inflate the settlement value of their clients’ claims. Even in relatively simple cases, plaintiff’s counsel may have numerous opportunities to increase the expense of discovery without crossing the line that places counsel at risk for sanctions.
In case management conferences and hearings on discovery disputes, your counsel should explain for the court how the plaintiff’s specific discovery requests are imposing unnecessary costs on your company, laying the foundation for a persuasive argument at the conclusion of trial for an expansive definition of taxable costs.
3. Perpetuate the risk to the plaintiff by avoiding any ruling on this issue by the court before the conclusion of the litigation. Even in the most compelling case, the strong bias in favor of the American Rule may be difficult to overcome. Pressing this issue to decision prior to the conclusion of discovery and trial is likely to backfire on defendant. The defendants’ most persuasive case for an expansive definition of taxable costs will come at the conclusion of trial when the presiding judge has observed directly that the plaintiff’s expansive discovery bore little relationship to the evidence actually presented to the jury. At that point, the prevailing defendant’s taxable costs may become a material consideration in the plaintiff’s calculus for settlement and appeal.