Confusion in New York Regarding Who Bears the Cost of Electronic Discovery

A recent article in the New York Law Journal by the secretary of the e-discovery committee of the Commercial and Federal Litigation Section of the New York State Bar Association underscored the confusion that remains in New York courts with respect to which party is responsible for bearing the cost of electronic document production. The article discusses cases that, on the one hand, state “what many have long believed was the rule in New York,” that “generally, the cost of [electronic] document production is borne by the party requesting the production.” Response Personnel, Inc. v. Aschenbrenner, 77 A.D.3d 518, 519, 909 N.Y.S.2d 433, 434 (1st Dept. 2010) (emphasis added). On the other hand, the First Department has also held that they “see no reason to deviate from the general rule that, during the course of the action, each party should bear the expenses it incurs in responding to discovery requests.” Clarendon Nat. Ins. Co. v. Atl. Risk Mgmt., Inc., 59 A.D.3d 284, 286, 73 N.Y.S.2d 69, 70 (1st Dept. 2009) (citing Waltzer v. Tradescape & Co., L.L.C., 31 A.D.3d 302, 819 N.Y.S.2d 38 (1st Dept. 2006)).

Some New York state trial courts have recently interpreted this conflicting guidance from the First Appellate Department to require each party to bear its own expense in responding to discovery, but that “an exception to the general rule allows discovery cost allocation determinations when the discovery costs at issue concern electronically stored information that is not readily available.” T.D. Bank, N.A. v. J&T Hobby, LLC, Index No. 021293/09, 2010 N.Y.  (Sup. Ct. Nassau Co. Sept. 1, 2010); see also Silverman v. Shaoul, Index No. 603231/08, 2010 N.Y.  (Sup. Ct. New York Co. Nov. 3, 2010).

The article notes that the meaning of what electronic documents are “not readily available” will need to be determined with more clarity by future cases and questions whether the First Department has suggested that courts take into consideration a party’s ability to bear the expense of producing electronic documents in allocating the cost of electronic discovery.

Paul A. Saso is an Associate on the Gibbons E-Discovery Task Force.
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