In what could be a significant opinion for federal class action
defendants seeking to limit their e-discovery costs, a court in the
Eastern District of Pennsylvania recently held in Boeynaems v. LA Fitness International, LLC,
No. 10-2326, No. 11-2644 (E.D. Pa. Aug. 16, 2012), that plaintiffs
who were seeking broad discovery regarding class certification
issues – including extensive ESI requests -- should share
in the costs of the defendant's discovery production.
Recognizing that the potential for a class action suit
"dramatically increases the economic pressure on the
defendant" and that the economic burden of discovery
production regarding certification often falls primarily on the
defendant, Judge Michael Baylson wrote, "[D]iscovery 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." Where there is a substantial discovery dispute
prior to class certification, Judge Baylson held, "economic
motivation and fairness are relevant factors in determining
cost-shifting of disputed discovery burdens."
In Boeynaems, the five individual plaintiffs had
asserted deception and breach of contract actions relating to their
attempts to cancel their gym memberships with the defendant.
In the process of seeking class certification for what they
anticipated would be a very large class, the plaintiffs sought
extensive discovery from defendants. After the defendant had
already provided some discovery to the plaintiffs,
substantial disputes arose between the parties about the scope of
remaining discovery to be provided by the defendant. Among
other things, the plaintiffs sought "millions of items"
of ESI (electronically stored information). The cost of
production of that ESI, the court noted, was "a significant
factor in the defense of the litigation."
In determining how to allocate discovery costs between the
parties, the court focused on the specific circumstances of the
case. Discovery in the case was called
"asymmetrical," in that discovery production and its
attendant expenses were rather small for the plaintiffs, and
potentially huge for the defendant. The court noted
while class determination requires a "searching inquiry"
and "very detailed analysis," the plaintiffs had already
amassed a very large set of documents that were potentially
probative of the class action issue. With that in mind, the
court held that the plaintiffs should bear the economic
responsibility of any future discovery efforts in regard to class
The Court is persuaded, it appearing that Defendant has borne
all of the costs of complying with Plaintiffs' discovery to
date, that the costs burden 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.
Remarkably, in arriving at its decision, the court took into
consideration the economic resources of the plaintiffs'
counsel. The court observed that the plaintiffs' counsel
was a "very successful and well regarded" firm, and
reasoned that if that firm "believes that this case is
meritorious, it has the financial ability to make the investment in
discovery[.]" The court further noted that while the
discovery costs were likely not recoverable from the defendant in
the event of plaintiff victory,1 the court would
likely allow the firm's "out-of-pocket costs to be
deductible from any award to a class, assuming a class was
Although federal rules have allowed the courts to shift
discovery costs for years, Boeynaems appears to be the
first instance in which a federal court has addressed the
shifting of discovery costs in a pre-class determination
setting. Judge Baylson's analysis in Boeynaems
should present a useful resource to a defendant who is facing the
prospect of class action litigation and seeking to limit the
potential for extensive e-discovery costs.
In a June 20 decision, the Texas Supreme Court applied the economic loss rule to preclude a direct claim for negligent misrepresentation by a construction contractor against an owner's architect based on flawed design documents.
In a recent post, we set forth our views on why, with some forethought, traditional bifurcation—i.e., trying liability for the underlying tort, compensatory damages, and liability for punitive damages in the first phase and, if necessary, the amount of punitive damages in a second phase—can be a beneficial procedural safeguard for defendants.
Judge Conti of the Northern District of California recently issued a decision denying class certification in a consumer class action against The Clorox Company involving claims arising from the marketing and advertising of Fresh Step cat litter (In Re Clorox Consumer Litigation, Case No. 12-00280-SC.