Court Denies Defense Request To Allocate Discovery Costs

1 Jul 2019

In East Coast Test Prep, LLC, v. ALLNURSES.COM, Inc., et al., Civil No. 15-3705(JRT/ECW)(D. MN April 4, 2019), the United States District Court for Minnesota denied Defendant’s motion for a protective order that sought to allocate the costs associated with complying with Plaintiff’s Request for Production of Documents on the grounds that the motion was not timely.

On August 10, 2018, the Court dismissed the last remaining Defendant and dismissed the action. Two weeks later, and nearly fifteen months after they started to incur storage costs related to Plaintiff’s Fifth Request for Production of Documents, Defendants filed a Motion for Protective Order.

At the heart of the discovery dispute was Plaintiff’s Fifth Request, which sought: “Any and all computers, servers, devices, network appliances, backups, ESI storage, or other information technology equipment and media (collectively “IT Equipment and Media”) (i) belonging to Brian Short, (ii) used by Brian Short at his home, or (iii) used by Brian Short to remotely access”

On the same day that Plaintiffs filed the above request, they offered to send their own consultant to examine and create digital images of the information on Defendant’s computers and devices, but Defendant did not respond. Rather, Defendants hired their own consultant and forensically “imaged” the relevant devices at a cost of $7,500.00 and paid an additional $25,755.00 per month to store the imaged data.

Over the following months, the parties engaged in a heated discovery dispute which culminated in Defendants filing a protective order on August 9, 2018 which sought to allocate the cost associated with Plaintiff’s request. On October 26, 2018, a Magistrate Judge denied Defendants Motion for a protective order.

In ruling on the motion, the Court held that the principal reason for denying the motion was that it was neither timely nor reasonable under Federal Rule of Civil Procedure 26(c), stating, “the optimal time for Defendants to bring this motion would have been before the imaging and storage costs were incurred. The next best time would have been while Defendants were incurring the exorbitant storage charges, which is to say any time between when the devices were imaged and first stored and when they were eventually transferred to an external hard drive. In any case, bringing this motion postjudgment, and more than a year after Defendants incurred the costs is not seasonable or timely.”

Additionally, the Court upheld the Magistrate Judge’s conclusion that the Defendants’ failed to engage in any related motion practice before or while incurring the costs of storing the ESI. The Court stated, “while Defendants made some attempts to resolve the issue of storage costs, which they unilaterally elected to incur, they cannot claim to have exhausted their potential avenues for resolution because they did not file a motion. While Defendants’ attempts to resolve the issue without the Court’s intervention are appreciated, the issue did not get resolved. Defendants never gave the Court the opportunity to resolve the issue because Defendants did not bring a motion.”

As such, the Court upheld the Magistrate Judge’s conclusion that the Motion for a Protective Order must be denied.