Court Orders Partial Cost Shifting Upon Review of Agreement Entered Into By Parties Regarding ESI Production

31 Jan 2018

Follow ILS for regular blog updatesIn Bailey v. Brookdale Univ. Hosp. Med. Ctr., No. CV-16-2195 (Dist. Court ED, N.Y. 2017) On May 3, 2016, Plaintiff Lloyd Bailey (“Plaintiff”) sued Brookdale University Medical Center (“Brookdale”) and Carlos Ortiz (collectively, the “Defendants”) seeking damages based upon Defendants’ violation of Title VII of the Civil Rights Act of 1964 (“Title VII”), the Age Discrimination in Employment Act (“ADEA”), the New York State Human Rights Law (“NYSHRL”), New York Executive Law and the New York City Human Rights Law (“NYCHRL”).

The parties met and defined the parameters of the electronically stored information (“ESI”) which may be relevant in this case. The parties presented an ESI Agreement, which was accepted by the Court on October 4, 2016. When the parties reconvened for a Discovery Status Conference in January of 2017, Plaintiff’s counsel asked to “undo” various provisions of that agreement, arguing that it would be unduly burdensome and costly for the sole plaintiff to produce the ESI in the manner as set forth in the ESI Agreement. The Court pointed out that the ESI Agreement had been freely negotiated by both parties, and a case of buyer’s remorse was not compelling. However, the Court directed plaintiff’s counsel to obtain a written estimate of the cost involved in making the production, and to provide an affidavit detailing the reasons for asserting a claim of economic hardship.

Plaintiff complied and presented the Court with reasons why the $2,000-$3,000 of seemingly minimal costs was unduly burdensome to him. Defendants’ opposition asserted that the law was clear in showing that the  producing party (Plaintiff) should bear the cost of his own ESI production.  Defendants also argued that the Plaintiff’s $2,000 to $3,000 cost estimate was a very reasonable amount for the production.

In reviewing the question, the Court first considered the general rule, which is that the responding party bears all such costs. Notwithstanding the general rule, the Court also considered that under limited circumstances, it may also look at “cost-shifting” of such production expenses to the requesting party. However, such a deviation should be considered only when electronic discovery imposes an ‘undue burden or expense’ on the responding party.

The Court then pointed out that the record did not contain any facts indicating that the ESI being sought was inaccessible, but only facts relative to the argument that the $2,000 to $3,000 estimated cost of ESI production would create a financial hardship because Plaintiff was the sole source of revenue for his family. The Court noted that whether ESI production is unduly burdensome or expensive so as to justify cost-shifting generally turns directly upon the accessibility or inaccessibility of the data being sought, not upon the financial cirucumstances of the producing party.

The Court further noted that the Agreement appeared to have been drafted for use between corporate entities, as opposed to a situation involving an individual party in an employment discrimination case. The Court observed that Plaintiff’s counsel put his client in the position of being bound by an Agreement which was not necessarily appropriate to the circumstances. While the Court did not find sufficient grounds to rescind the Agreement, to the extent that the Defendants continued to insist on the production being made to the letter they set forth in the Agreement, the Court found that employing a measure of partial cost-shifting was appropriate. Under such circustance, the costs of Plaintiff’s ESI production would be allocated as follows: 40% to Defendants and 60% to Plaintiff.