NY First Department: Responding Party to Bear Cost of Answering Discovery Requests for Physical/Electronic Documents

March 15, 2012

On February 28, 2012, one of New York’s appellate courts adopted a standard requiring that the party responding to a document request from an adversary bear its own costs in responding to the request. This burden includes the cost of locating and producing both electronically stored information and documents maintained in paper form. Although this is the standard that has been in place in the vast majority of states, this is the first New York appellate decision that provides a definitive ruling on the issue, as New York’s Civil Practice Laws and Rules are silent on the subject and the New York courts that have spoken on the issue of cost allocation have not done so with one voice.

In dealing with the issue in U.S. Bank National Association v. Greenpoint Mortgage Funding Inc., New York’s Appellate Division, First Department (covering Manhattan and the Bronx) harkened back to the well-known federal court e-discovery case, Zubulake v. UBS Warburg LLC. In Zubulake, the court held that discovery costs should be borne by the party producing the documents, while noting that costs could be shifted depending on several factors considered by the court, including the availability of information, the cost to locate and produce the information, and the benefit of that information to the parties. The Greenpoint court noted that the lower New York courts could determine the need for cost shifting based on the Zubulake factors, which are to be used as a guide to the exercise of discretion, not a checklist. In the instances where a party believes that discovery requests are unduly burdensome, the court noted that the proper course of action would be to move to strike the requests, and if the request is denied, ask the court to shift costs to the requesting party.

The Greenpoint court noted that the Zubulake standard has been adopted by many courts around the country and as a result, discovery in cases of all sizes is moving in the proper direction. It also noted that the decision to require parties to bear their own expenses supports the strong public policy that disputes be resolved on their merits. 

This decision comes shortly after this same New York appellate court’s January 31, 2012, decision in Voom HD Holdings LLC v. Echostar Satellite LLC, which adopted the document preservation standards articulated in Zubulake. Greenpoint resolves a long-standing question in New York state courts regarding which party bears the initial cost of discovery and provides guidance to New York courts dealing with discovery disputes over the allocation of the cost of production among litigants.

For more information, contact:

Carl Pernicone
Partner – New York

Thomas Tobin
Partner – White Plains

Gregory Bautista
Associate – White Plains

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