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E-discovery: Potential cost shifting for document review

Adair v. EQT Production Co. considers the cost of reviewing ESI when deciding if cost-shifting is appropriate

Courts will often take into consideration the burden placed on a party that is asked to identify, review and produce electronic discovery. Under Federal Rule of Civil Procedure 26, a party may avoid the production of responsive electronically stored information (ESI) if it is able to demonstrate that the information being sought is “not reasonably accessible because of undue burden or cost.”

Under Rule 26(b)(2)(C), the court weighs “the burden or expense of the proposed discovery” against “its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”

In applying Rule 26, some courts have attempted to balance the burden and the necessity of the discovery through a cost-shifting process. In other words, where the financial burden to produce is high, some courts have allowed for the production, but only with the party seeking the discovery bearing some or all of the costs. Typically, costs are considered to be only those associated with retrieving or processing the responsive e-discovery.

The court in Adair v. EQT Production Co. was faced with a slightly different question. In Adair, the plaintiffs sought discovery from the defendant, including the production of emails and other ESI. The defendant sought a protective order to avoid producing the information and asserted in its motion that the plaintiff’s request would require the production of more than 5.5 million documents. Even if the production was limited to the email files of certain employees, it would  need to produce approximately 750,000 documents. The defendant claimed that the cost of processing documents, even within the limited scope, would be in excess of $18,000, and the cost of reviewing the documents for responsiveness and privilege would exceed $750,000.

In this case, the court considered whether “otherwise accessible, responsive documents should not be produced because of the high cost of reviewing those documents for privileged or responsive information, or, in the alternative, whether the cost of such review should be shifted to the requesting party.” Although noting that there was little case law on the issue, the court held that it could consider the cost to review the ESI in deciding whether discovery imposes an undue burden or cost on a responding party. The court found that the corollary to this was that it could “shift the costs of that review, either in whole or in part, to the requesting party.”

Ultimately, the court avoided cost-shifting by finding that all of the costs of review could be avoided by the defendant producing the ESI without first conducting a review of the documents. Because a protective order was in place that contained a clawback provision ensuring that the production of privileged documents would not constitute a waiver, the court held that the defendant would not be prejudiced by producing the ESI without first conducting a review of the documents.

It is debatable whether a clawback provision gives sufficient protection to the party producing ESI. However, the critical point from Adair is the court’s consideration of the costs for review of ESI and the related financial burden placed on the producing party in determining whether cost shifting was appropriate. The costs for reviewing ESI will almost always greatly exceed the costs of retrieving or processing the documents.

When seeking to either limit a request for a voluminous amount of e-discovery, or to shift the costs of production to the requesting party, counsel should quantify both the costs of retrieving the information and the costs of reviewing the information. 

Contributing Author

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Martin O'Hara

Martin J. O’Hara is principal and vice chair in the Litigation & Dispute Resolution group at Chicago-based Much Shelist, and represents clients on commercial...

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