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“Too often, discovery is not just about uncovering the truth, but also about how much of the truth the parties can afford.” The general rule in civil discovery is that each party pays its own document production costs. Recently, however, legal commentators and burdened parties have attempted to dislodge this rule, complaining that the enormous growth of digital communications has increased the amount of discoverable information to such a degree that civil discovery is no longer affordable. Digital discovery can indeed be enormously expensive. In some cases it costs millions of dollars to satisfy document production requests. In the recent case Rowe Entertainment, Inc. v. The William Morris Agency, Inc. (205 F.R.D. 421 S.D.N.Y. 2002), a litigant estimated it would take nearly $10 million to satisfy a single document request. In such cases there may be millions of e-mails, backup tapes and other responsive material to locate, sort, review and produce. Moreover, high costs are compounded because in some cases litigants must search offices located across the country or globe to satisfy discovery requests. E-discovery is inherently more expensive than paper discovery for several reasons. First, computer technology permits parties to retain greater amounts of data at a lower cost compared with technology available before the personal computer era. Second, digital information is difficult to eradicate — the “deletion” of files is usually not equivalent to their permanent removal. Data that is difficult to eradicate lingers longer; the more data that builds up, the more that is producible, and the more expensive production becomes. Third, in traditional discovery producing parties can conserve production costs by making documents “available for inspection” at the producing parties’ premises. However, with e-discovery, it is often unwise to allow an opponent onsite access to one’s file, e-mail, or backup servers because it can be very difficult to separate producible information from that which is irrelevant, confidential, or privileged. THE DEBATE The high costs of digital discovery have spurred a number of arguments supporting reformation of the producing-party-pays rule. Reformers argue the exorbitant costs of digital discovery can threaten the financial base of a company even before a determination of liability has been made. Further, they assert the rule is too burdensome given that, in addition to paying the costs to produce documents in readable format, producing parties must also bear the costs to screen producible documents for confidential information. In addition, reformers complain that the ability to request large amounts of information at the expense of the producer is improperly used in some cases to “blackmail” information-rich producing parties into unnaturally early settlements because it is simply cheaper to settle than to produce. Further, in cases where both parties have large amounts of digital information, each party may inflict high costs on the other by issuing burdensome production requests. Some parties may drop out of litigation early because they cannot afford to remain. These “wars of attrition” can force some litigants to abandon suits based simply on a cost-benefit analysis, rather than based on merit. Finally, for defendants whose information technology systems are extensive and complex, reformers contend the rule permits unscrupulous litigants to engage in “fishing expeditions” at the expense of their opponent. Supporters of the producing-party-pays rule counter that the cost-allocation rules are appropriate in current form because imposing heavier cost burdens on document requesters would preclude poorer litigants from access to the justice system. They also argue that if poorer litigants are unable to challenge well-heeled corporate defendants, society will lose an important safeguard on the misdeeds of corporate wrongdoers. It is often these poor litigants who bring corporate wrongdoers to account. Moreover, supporters contend, imposing production costs on those who are information-rich is fair and appropriate since they chose to use technology that makes it expensive to produce. THE REFORMERS Unhappy with the current scheme of cost-allocation, several commentators have asked that document requesters bear more of the cost burdens associated with their document requests. In “Electronic Media Discovery: The Economic Benefit of Pay-Per-View” ( Cardozo Law Review), Marnie H. Pulver calls for an amendment to the producing-party-pays rule. He argues for a new rule that requires requesting parties to “pay the [entire] cost for the production of … discovery because it will internalize costs.” Let’s call this proposed rule the “requesting-party-pays rule.” To understand Pulver’s reasoning, it is necessary first to understand the Law and Economics tradition (LE) from which it is derived. LE theories tend to favor rules of law that “internalize” costs on decision-makers in order to achieve economic efficiency. The rationale is: People are presumed to act or make choices that are always in their self-interest. “Cost-internalization” means that the actor or chooser bears the costs of his actions or choices. “Cost-externalization” means costs of actions or choices are borne by others or society as a whole, rather than the chooser. Rational actors/choosers will make more “expensive” choices when they do not have to foot the bill, whereas they will make less expensive choices when they do. Therefore, LE theories generally hold that costs tend to rise under rules that allow choosers to externalize, while costs tend to fall under rules that force choosers to internalize. Since the goal of LE is to conserve costs (no matter who expends them), it generally supports rules that internalize costs on those who are in a position to control them, those who are responsible for causing the costs. If requesting parties are forced to bear the costs of their choices, they will have incentive to limit discovery requests. THE REFORMERS, PART II Another group of reformers have suggested a different alternative. In “Electronic Discovery Issues for 2002: Requiring the Losing Party to Pay for the Costs of Digital Discovery” (presented at the Third Annual Sedona Conference on Complex Litigation), the authors suggest a proposal that would require the losing party to reimburse its opponents for all or part of its production costs at the end of judgment. This may be termed the “losing-party-pays rule.” Under this proposal, the requesting party would not be automatically required to pay for all costs associated with their requests. Instead, courts “would have discretion to determine the amount that should be shifted based on the economic resources of the [requesting] party, the expenses incurred, and the degree to which the requests were frivolous or irrelevant.” In addition to addressing the problems of fishing expeditions, wars of attrition, and litigation blackmail, this proposal would force requesting parties to “particularize” their discovery requests in order to conserve costs they might be required to pay at the end of judgment. It would also force requesting parties to seek only truly relevant information. Further, it is maintained that a losing-party-pays rule would encourage requesting parties to “self-regulate the scope and content of the requests, likely making the process more efficient and perhaps less contentious.” Finally, a losing-party-pays rule “would not preclude litigants with fewer resources from discovering relevant information, as a court could still require the producing party pay for the production up front.” Both of these reformer proposals derive from legitimate concerns about the rising costs of digital discovery. Ideally, it should not cost millions of dollars to satisfy a typical discovery request. Further, discovery should not threaten the financial viability of litigants, or permit one party to blackmail another, engage in fishing expeditions and wage wars of attrition. VIABLE ALTERNATIVES? The question thus presented is twofold: First, are courts unable to control the perceived unfairness and abuse such that the current rules should be amended; and second, if courts are unable to control the abuse, are the above alternatives viable? Some have argued that the requesting-party-pays rule theory is the weaker of the two alternatives. Aside from its highly ideological nature, critics say the theory is structurally unsound. The crux of their argument is that this view fails to recognize that we live in a complex world and causation is multidimensional. The objection is that it is just as plausible to blame corporate planners who chose technology that is ill-adapted for litigation purposes as it is to blame document requesters. After all, if corporate planners had chosen differently, discovery might not be so expensive. A similar argument can be made against those who design and manufacture technology: Had technology been designed differently, discovery costs might not be so high. If we are to take the requesting-party-pays rule at face value, so the objection goes, then shouldn’t corporate planners and technology manufacturers internalize production costs as well? For many, a losing-party-pays rule is preferable because it does not rest on a simple view of causation and responsibility. Moreover, a rule requiring the loser to pay will likely be more palatable to most if courts have discretion to refuse to shift all or a portion of costs if the document requesters are impoverished or if their pleadings are meritorious. What is likely to be the major problem with a losing-party-pays rule is that it makes a controversial value judgment — that discouraging litigation blackmail, fishing expeditions and wars of attrition are more important than keeping corporate defendants in check and giving impoverished plaintiffs their day in court. A losing-party-pays rule will discourage suits against corporate wrongdoers because impoverished plaintiffs and contingent-fee lawyers will be unwilling in many cases to “roll the dice” with respect to the costs of production. It may very well be that neither a requesting-party-pays rule nor a losing-party-pays rule is necessary to reduce problems associated with the high costs of digital discovery. COMMON-SENSE APPROACH The courts already have the authority to shift costs, and recent cases demonstrate that courts are capable of dealing with the cost burdens of digital discovery in practical, judicious ways. Rowe Entertainment Inc. v. William Morris Agency Inc. is an excellent example. Instead of relying on ideology or inflexible rules, the Rowe court took a common-sense, multifactor balancing approach in order to determine whether production costs should be shifted. The court’s approach required that costs be shifted depending on the following considerations: • Specificity of discovery requests: Are the requests too broad? • Likelihood of finding “critical” information: Is there a low probability of a successful search? • Availability from other sources: Is the requested material available from another source at less expense? • Purpose of retention: Was the requested data retained for purposes of ongoing activities? • Benefit to requesting party: Is the requesting party the only party to benefit from the requested production? • Total costs: Are the production costs substantial? • Ability and incentive to control costs: Is the requesting party in a position to control the costs of production? • Resources of each party: Do the resources of each party suggest that the requesting party should pay? The more these questions have answers in the affirmative, the more appropriate it is to shift production costs to the requesting party. An analysis such as the one given by Rowe is likely to become the standard. The rules’ treatment of digital discovery is not likely to be revised any time soon because they already permit cost-shifting. One important point left unresolved by Rowe, however, is whether or not cost-allocation law should emphasize the plight of the poor versus the need to avoid litigation blackmail. And this point is unlikely to be resolved with any degree of satisfaction any time soon. Eric Van Buskirk is an attorney and a former intern at New Technologies Inc., a Gresham, Ore.-based computer forensics firm.

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