Discovery is not about gamesmanship, and parties are expected to engage in meaningful negotiation about the terms of discovery agreements. That is the message from Judge A. Kathleen Tomlinson of the Eastern District of New York, who recently ordered cost shifting when parties failed to meaningfully meet and confer about their electronically stored information (ESI) agreement. The decision is remarkable, because it orders cost shifting in a case where there is no claim that the discovery sought is unreasonable in scope or unnecessary to resolve the claims in the dispute. The court did not analyze and weigh the proportionality factors in Rule 26, which might have resulted in a more nuanced ruling. While serving as a valuable reminder of the importance of meet and confers in the discovery process, the decision sets a potentially dangerous precedent that parties who object to the expense of discovery that is completely reasonable in scope and necessary to resolve matters in dispute can still shift the cost of that discovery to their adversaries.
In Bailey v. Brookdale University Hospital, a single-plaintiff employment litigation, Mr. Bailey claimed he should not have to bear the burdensome cost of production despite a negotiated, executed, and ordered ESI agreement between the parties. Judge Tomlinson concluded that cost shifting was appropriate in this case, because the ESI agreement was not meaningfully negotiated, resulting in an agreement that was inappropriate for the litigation.
Despite guidance from the court and the parties’ presentation of a fully executed ESI agreement, Judge Tomlinson’s review of its scope and depth revealed an inadequately negotiated agreement – one more suited to corporate disputes than to single-plaintiff employment litigation. From this, Judge Tomlinson concluded that no meaningful discussions were had; otherwise, many of the provisions would have been the subject of “zealous negotiation and compromise.” Counsel for the parties did not thoroughly review or consider the ramifications of the agreement, nor did Bailey’s counsel have adequate meaningful discussions with his client about the potential costs or the overly complex terms of the agreement.
Judge Tomlinson does not discuss the specific form of production set forth in the ESI agreement, but she does note that absent the agreement, Bailey would have been free to use any form of production that is compliant with Rule 34 – as the documents are kept in the ordinary course of business or in a reasonably usable format. Of course, this is likely to bring the issue full circle, because the case law on whether a production is reasonably usable focuses on whether the producing party is degrading the functionality of the ESI – for example, by taking a searchable document and making it not searchable. That said, neither the volume of documents nor the importance of the ability to search is clear from the decision. In addition, the court also relied on older ESI case law, primarily the reasonably accessible analysis from Zubulake, to determine that “the usual rules of discovery apply: the responding party should pay the costs of producing responsive data.” It is unclear whether that reasonably accessible analysis would be the same today following the 2015 amendments to the Rules.
In the end, although Judge Tomlinson did not find sufficient grounds to rescind the ESI agreement, she ordered cost shifting to level the playing field between Bailey and the hospital. Brookdale University Hospital was ordered to pay 40 percent of the costs, while Bailey’s counsel, in recognition of his poor client counseling in the matter of the ESI agreement, was ordered to bear the cost of Bailey’s 60 percent.
In her memorandum and order, Judge Tomlinson emphasizes that “the scope and parameters of ESI should be a party-driven process.” Early and adequate meet and confers help identify and resolve disputes, moving the case forward, saving parties money, and preserving goodwill with the courts. Early cooperation helps parties “maintain greater control over the dispersal of information,” and negotiations need to include ESI discovery parameters, a process ultimately driven by the parties who must make the “tough decisions” concerning the ESI needs of a particular case. Parties must prepare prior to meet and confers and be knowledgeable about preservation, relevant custodians, sources of ESI, and the associated steps and costs to produce that ESI. These are valuable reminders for all attorneys.