The “American Rule” Rules: Court Declines to Compel Defendants to Share Cost of Plaintiffs’ Subpoena

Last Atlantis Capital LLC v. AGS Specialist Partners, No. 04 C 0397, 2011 WL 6097769 (N.D. Ill. Dec. 5, 2011)

In this case, Plaintiffs proposed that Defendants share in the cost of obtaining data that Plaintiffs subpoenaed.  Obtaining the information at issue was described by the court as “the linchpin of this entire matter.”  Moreover, the court had suggested (at a status conference) that it would be “reasonable” for Defendants to aid in half the costs.  However, Defendants “steadfastly maintained that they ha[d] no independent need for the information, except for rebuttal purposes” and objected strongly to the proposed cost-sharing on the grounds that there was “neither reason nor precedent” for it.  Noting that “the time to take definitive stance on the issue ha[d] arrived,” the court agreed.

In its analysis of Plaintiffs’ proposal, the court acknowledged their reliance on The Sedona Conference Commentary that advocated that parties “address” cost-sharing, but pointed out that the Commentary itself declared that cost-shifting was “inconsistent with the so called ‘American Rule’ that each party bears its own litigation costs” and that “‘[t]he party seeking cost-shifting … bears the burden of overcoming that presumption.’”  The court went on to reject Plaintiffs’ assertions that Defendants’ need for the information was “much greater than they claim,” reiterating that it was Plaintiffs’ burden to prove their claims and to bear the costs of doing so.  The court also acknowledged that Defendants had “substantially more resources,” but pointed out that this was a fact it could not consider.  Accordingly, the court concluded that “it would not force Defendants to pay for the evidence that Plaintiffs need in order to prove their case against Defendants.”  Plaintiffs’ proposal for cost-shifting was denied.

A full copy of court’s order is available here.