As discussed in a recent post, there exists a dichotomy between the New York state and federal courts with respect to which party should bear the cost of producing inaccessible data.
A recent New York Supreme (Trial) Court decision held that New York’s standard “requester pays” rule only applies to data that is not “readily available.” Silverman v. Shaoul, 2010 N.Y. Slip Op. 20507, 2010 N.Y. Misc. (Sup. Ct. New York Cty. Nov. 3, 2010). Defendants there relied on T.A. Ahern Contractors Corp. v. Dormitory Auth. “for the proposition that New York law is well-settled in that the ‘party seeking discovery bears the cost incurred in its production.’” The Silverman court analyzed each of several cases often cited to support the “requester pays” rule in New York. Id. (citing, e.g., Lipco Elec. Corp. v. ASG Consulting Corp., 2004 N.Y. Slip Op 50967[U] (Sup. Ct. Nassau Co. 2004); and Delta Fin. Corp. v. Morrison, 13 Misc. 3d 604, 891 N.Y.S.2d 908) (Sup. Ct. Nassau Co. 2006). The court explained that the “requester pays” rule was developed and applied in cases that, for example, involved “the retrieval of deleted, electronically stored information.” Id. at *3 (quoting Waltzer v. Tradescape & Co., 31 A.D.3d 302, 304, 819 N.Y.S.2d 38 (1st Dept. 2006) ). Other cases shifted the cost of discovery to the requesting party because “separate program[s]” had to be devised and new databases created in order to acquire, read and collate the data. Id. (citing Lipco, 2004 N.Y. Slip Op 50967, at 6-7).
The Silverman court also noted that the “First Department recently stated that it saw ‘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.’” Silverman, 2010 N.Y. Slip Op. at *4 (quoting Clarendon Nat. Ins. Co. v. Atl. Risk Mgmt., Inc., 59 A.D.3d 284, 286 (1st Dept. 2009)). Reading this First Department precedent together with the cases cited by defendants, the Silverman court held that “the requesting party bears the cost of electronic discovery when the data sought is not ‘readily available.’ Data is not readily available upon a showing of undue burden by the producing party to obtain the data.” Id. The mere fact that data is “interspersed” with non-responsive documents or that the data required processing did not establish an undue burden.
Additional discussion concerning this issue can be found here.