Court Shifts Discovery Costs to Plaintiffs “At Least Until the Class Action Determination is Made”

Boeynaems v. LA Fitness Int’l LLC, Nos. 10-2326, 11- 2644, 2012 WL 3536306 (E.D. Pa. Aug. 16, 2012)

Here, the court considered cost allocation in discovery prior to class certification and, taking into account Defendant’s already significant production and related expenditures, concluded that “where (1) class certification is pending, and (2) the plaintiffs have asked for very extensive discovery, compliance with which will be very expensive, that absent compelling equitable circumstances to the contrary, the plaintiffs should pay for the discovery they seek.”  Thus, Plaintiffs were ordered to bear the costs of additional discovery “at least until the class action determination is made.”

In this case, Plaintiffs sought the production of additional discovery prior to the court’s determination regarding class certification.  Defendant opposed additional discovery arguing that it had already undertaken substantial discovery efforts and that the additional requested discovery was “burdensome and not relevant to the issues in the case, particularly given that Plaintiffs have already secured a great deal of discovery, but the Court has not yet certified a class.”  Considering the asymmetrical nature of discovery in the litigation (namely that the bulk of the discovery obligations fell to the Defendant), cost shifting cases from around the country, and the specific representations of Defendant regarding the significant efforts already undertaken and the estimated costs to perform the requested discovery, the court ultimately concluded that cost shifting was appropriate. 

Laying out its ruling, the court stated:

Based on the legal discussion above and extensive review of the parties positions, the Court mandates cost allocation as fair and appropriate.  The Court concludes that where (1) class certification is pending, and (2) the plaintiffs have asked for very extensive discovery, compliance with which will be very expensive, that absent compelling equitable circumstances to the contrary, the plaintiffs should pay for the discovery they seek.  If the plaintiffs have confidence in their contention that the Court should certify the class, then the plaintiffs should have no objection to making an investment.  Where the burden of discovery expense is almost entirely on the defendant, principally because the plaintiffs seek class certification, then the plaintiffs should share the costs.

*12 Plaintiffs seek to represent a very extensive class, and if, as Plaintiffs anticipate, their class action motion is granted, this case will suddenly turn from a routine case to a major financial exposure for Defendant.  The Hydrogen Peroxide decision and its progeny require that the Court make a very detailed analysis as to whether Plaintiffs can meet their Rule 23 burdens.  Plaintiffs have already amassed, mostly at Defendant’s expense, a very large set of documents that may be probative as to the class action issue.

The Court is persuaded, it appearing that Defendant has borne all of the costs of complying with Plaintiffs’ discovery to date, that the cost burdens must now shift to Plaintiffs, if Plaintiffs believe that they need additional discovery.  In other words, given the large amount of information Defendant has already provided, Plaintiffs need to assess the value of additional discovery for their class action motion.  If Plaintiffs conclude that additional discovery is not only relevant, but important to proving that a class should be certified, then Plaintiffs should pay for that additional discovery from this date forward, at least until the class action determination is made.

The Court is firmly of the view that discovery burdens should not force either party to succumb to a settlement that is based on the cost of litigation rather than the merits of the case.

Accordingly, Plaintiffs were ordered to identify the additional discovery they sought to have produced and Defendant was ordered to respond by “summarizing [its] internal cost for providing this information” including “the appropriately allocated salaries of individuals employed by Defendant who participate in supplying the information which Plaintiffs request, including managers, in-house counsel, paralegals, computer technicians and others involved in the retrieval and production of Defendant’s ESI.”  If, upon receiving that information, Plaintiffs continued to desire the requested production, they would be required to make prompt payment to the Defendant.

Relying on the metaphor of a “discovery fence,” the court also identified those categories of information which were properly discoverable and those which were not.  For those “inside the fence,” discovery would be allowed at Plaintiffs’ cost.  For those outside, no discovery would be allowed, even if Plaintiffs offered to pay.