“It’s not fair.” Admittedly, I’ve uttered these words on numerous occasions, both professionally and personally, and then chastised myself for allowing myself to feel powerless—and for believing that if I say “it’s not fair,” someone will miraculously agree with me and change the outcome. And while all may be fair in love and war, Bill Gates reminds us, generally speaking, that “Life is not fair, get used to it.” Of course this advice is coming from a man worth $66 billion. But wait Bill, Judge Michael Baylson of the Eastern District of Pennsylvania has good news for all of us. If not in life, at least in the law of civil discovery: “Discovery need not be perfect, but discovery must be fair.”
In Vaughn v. LA Fitness Judge Baylson, in a case of first impression, held that costs would be shifted and plaintiffs must pay for additional discovery requested in a pre-class certification discovery dispute. Specifically the court said, in the interest of fairness in the “asymmetrical case,” where “plaintiffs have asked for very extensive discovery, compliance with which will be very expensive” and where “the burden of discovery expense is almost entirely on the defendant,” the Federal Rules of Civil Procedure (FRCP) and certain case law provide the court with the power to allocate the costs of discovery among the parties.
The facts are straightforward: Plaintiffs who signed contracts to become members of the national fitness club chain alleged that they “encountered deception and breaches” when attempting to terminate those contracts and sought class certification for thousands of similarly situated members and former members. The plaintiffs requested, and the defendant produced, significant numbers of documents. Then plaintiffs asked for more documents. The fact that the defendant had to review and produce a large number of documents, and then was asked to produce more, was not necessarily determinative. But central to the court’s reasoning in this asymmetrical case was the fact that defendant would have to incur significant discovery costs as a result.
Indeed anyone producing a crib notes version of the opinion would have to include the following three takeaways:
- “Economic motivation and fairness are relevant factors in determining cost-shifting of disputed discovery burdens”
- “If Plaintiffs' counsel has confidence in the merits of its case, they should not object to making an investment in the cost of securing documents from Defendant and sharing costs with Defendant”
- “Discovery burdens should not force either party to succumb to a settlement that is based on the cost of litigation rather than the merits of the case"
Novel? No. Revolutionary? Maybe . . .
But as Judge Baylson reminds us, the authority for cost-shifting has long existed in the FRCP and in Supreme Court precedent in the Oppenheimer Fund, Inc. v. Sanders case. Indeed, Rule 26(c), cited in Oppenheimer, gives a court the ability to protect a party from “undue burden and expense.” And Rule 26(b)(2)(B), entitled “Specific Limitations on Electronically Stored Information,” was specifically included as part of the 2006 amendments to the FRCP recognizing the potential cost burden associated with electronically stored information (ESI) production. As Judge Baylson points out, the fact that cost-shifting was not widely used before the advent of ESI—and one could argue is still not widely used—does not mean the authority and the necessity do not exist in appropriate circumstances. But the issue has always been one of analyzing the burden and making a decision that is fair, which is at the heart of the FRCP.
Although the holding in Vaughn is limited to pre-class certification discovery, Judge Baylson’s opinion certainly makes an argument for cost-shifting in the non-class action asymmetrical case where the burden of discovery is almost entirely on the defendant. Accordingly, expect to see multiple citations of this opinion in discovery dispute briefs. But if you happen to be the party doing the citing, heed the court’s advice: In essence, to be treated fairly you must be willing to act fairly in return. Be prepared to demonstrate the burden and justify the reasons for cost-shifting very precisely in terms of the time and money necessary to comply. Otherwise, demonstrate why complying would a waste of time and money, e.g. because there is evidence that the probability of finding relevant information is highly unlikely.
In today’s world (or altered reality, depending on your perspective) in which Google has an estimated 20 petabytes of data stored on its servers and Twitter users send an average of 400 million tweet per day, the amount of data that parties to litigation potentially seek continues to proliferate at staggering rates. In Vaughn, Judge Baylson issued us all an ESI reality check. Perhaps he was channeling Justice Potter Stewart, who understood a fundamental principle upon which our legal system was built: “Fairness is what justice really is.” Take that Bill Gates.