United States: Discovery – Requestor Pays, Part Of The Way, Anyway

Last Updated: May 15 2017
Article by James Beck

One of the issues that the federal Civil Rules Committee's discovery subcommittee considered, but that eventually fell by the wayside, on the way to the 2015 discovery rules amendments, were proposals to convert to a "requestor pays" discovery system.  That would be a very significant change, and one of the criticisms that the other side leveled at such a system was that only rich people (or at least only rich plaintiff lawyers) could afford to bring suit, given the prospect of having to pay for expensive discovery that current system now gives plaintiffs for free.

Well, not for free.  Nothing is free.  The current "producer pays" discovery system gives plaintiffs a windfall by allowing them to demand production of millions of dollars' worth of documents – and as importantly, electronically stored information ("ESI") − and to impose those costs almost entirely on defendants.  As any economist will tell you, any system that provides access to something for free or at greatly below-market cost, be it health care, "dumped" imports, or discovery, creates greater demand for whatever the below-cost item is than would exist otherwise.

It's worse in the legal system, because the other side's heightened demand for "free" discovery has the concomitant effect of increasing the nuisance (that is to say, settlement) value of all litigation in which such demands are made – since one's opponent is stuck with the bill.

All our side got out of the 2015 rules amendments cycle on requestor pays is a provision more clearly recognizing the authority of courts to shift discovery requests.  See Fed. R. Civ. P. 26(c)(1)(B).  As we've mentioned, a couple of courts have done this during prescription drug/device MDL litigation.  See In re Bard IVC Filters Products Liability Litigation, 317 F.R.D. 562 (D. Ariz. 2016); In re Benicar (Olmesartan) Products Liability Litigation, 2016 WL 5817262 (D.N.J. Oct. 4, 2016).  Both of those cases involved what the courts viewed as excessive and unnecessary MDL discovery targeted at the defendants' overseas activities.

Now we've found a third case – it took a little longer because it didn't involve prescription medical products – that also invoked the new cost-shifting provisions in a very familiar (and frustrating) situation.  McClurg v. Mallinckrodt, Inc., 2016 WL 7178745 (E.D. Mo. Dec. 9, 2016), wasn't an MDL, but it could have been, except for a limited geographic scope.  Many hundreds of plaintiffs were all seeking recovery for alleged radiation-induced injuries from the same two defendants.

A situation depressingly familiar to any defense counsel in mass tort litigation developed.  Although plaintiffs are nominally responsible under the rules for collecting (and paying for the collection of) their own medical and related records in response to discovery requests, they botched the job so badly that the defendants – in whose interests it was to have these records – had to step in and do it themselves on their own dime.  Plaintiffs did produce "a list of known health care providers and a signed authorization for the release of medical records."  Id. at *1.  "Because Plaintiffs did not timely and fully produce all of their records, Defendants contracted with a third-party vendor . . . to collect records directly from Plaintiffs' health care providers and employers."  Id.  Also, "the parties in this matter could not agree to a reasonable scope of record collection and allocation of costs."  Id. at *4.

So things stood until bellwether plaintiffs were selected (interestingly, by random selection, id. at *2).  All of a sudden the plaintiffs became very interested in the additional records that the defendants had been collecting at their own expense.  So they served discovery requests seeking those records – only for the bellwether plaintiffs – for free.  Id. ("Plaintiffs served document requests seeking 'all documents and records' that Defendants had collected regarding each of the 16 Bellwether Plaintiffs").  Somewhat ironically, they also claimed that the defendants had engaged in excessive records gathering, and therefore also demanded access to the defendant's records database (also set up at defendants' sole cost) so they could select which records they wanted.  Id. ("Plaintiffs assert that they, too, wish to access [defendants'] secure portal free of charge, in order to decide which records they want").

The two McClurg defendants' response was "hell, no; not without you sharing the cost equally – that is shouldering one-third of the expense along with the defendants each sharing a third.  Id. (subject to a credit for whatever records plaintiffs had actually collected and turned over).

The McClurg court shifted costs, not 33% but 18%, to plaintiffs under Rule 26(c)(1)(B).  2016 WL 7178745, at *3.  Cost-shifting was necessary so that the plaintiffs did not become free riders:

The Court finds . . . that good cause exists to order some amount of cost-sharing before Plaintiffs may obtain the records collected by Defendants here.  Plaintiffs would ordinarily have been, and pursuant to the Court's order were, responsible for gathering and producing their own records.  But while Plaintiffs appear to have produced some records as new complaints were filed, they did not do so in a complete and timely manner.  Indeed, Plaintiffs apparently produced records for a few of the Bellwether Plaintiffs just one or two days before their scheduled depositions.

Id.  That "Plaintiffs [were] seek[ing] access to the portal establish and maintained at Defendants' expense" further justified a cost allocation order.  Id.

Although it was "unfortunate" that the parties never sought court intervention after failing to reach a records production protocol, id. at *4, giving plaintiffs free access to records collected and maintained at the defendants' expense was unfair.  Id. ("it would be unfair to allow Plaintiffs to gain the benefit of Defendants' early record collection and creation of the portal, which helped move the case forward, without contributing a fair share of the overall costs of such collection").  Crediting plaintiffs' complaints about excessive collection, McClurg reduced the percentage to 18%.  Id. (eliminating records collected concerning plaintiffs that the defendants knew could not be in the bellwether pool).  Plaintiffs also received a credit for the comparatively small amount of timely produced records they had collected.  Id.

Since the same failure by plaintiffs to collect their own records competently is endemic to prescription medical product MDLs, the cost-shifting in McClurg is of significant interest to us.

In fact, the results in all three of these cases – Bard IVC, Benicar, and McClurg – are also of interest to us because they provide pointers to where the requestor pays debate might reasonably go.  We certainly don't agree with the other side's largely bogus argument that across-the-board requestor pays discovery might shut the courthouse doors on the "poor" plaintiffs in the litigation-funded, advertising-driven mass tort industry.  In such litigation, there "does not appear to be a significant financial disparity in the parties' ability to finance these putative litigations.  Thus, what this Court and other courts similarly situated are faced with is 'Goliath versus Goliath.'"  Arch v. American Tobacco Co., 175 F.R.D. 469, 496 (E.D. Pa. 1997).

However, since the federal rules are supposed to be transubstantive, we will accept for the sake of argument that some deserving plaintiffs in some types of litigation might be excluded by a blanket requestor pays regime.  As an alternative, we think that the rules should include a presumption that the requestor pays for certain types of unduly burdensome, or otherwise unfair, discovery.  While such discovery might nonetheless be "proportionate," were it to uncover something significant, these types of discovery are expensive and not particularly likely to produce evidence usable at trial.

Here are some examples of discovery that we have encountered that we think deserve to be presumptively discoverable only at the requestor's expense – there are undoubtedly more:

  • Discovery into a defendant's overseas activities, particularly if the documents are not in English (Bard IVC and Benicar both involved this kind of discovery);
  • Discovery into information independently gathered by the defendant for purposes of the litigation, excepting witness statements, and other items specified by the rules as peculiarly relevant (that's McClurg);
  • Discovery into products manufactured by defendants other than those used by plaintiffs;
  • Discovery into product risks other than those suffered by plaintiffs;
  • Discovery into information in the possession of third parties, including government agencies;
  • Discovery into time periods where recovery is barred by relevant statutes of limitations;
  • Discovery into post-litigation information, after the alleged conduct has ceased;
  • Subjects of Rule 30(b)(6) depositions where the entity faced with deposition has no available percipient witnesses, and any witness would only have reviewed the same documents available to the deposing party;
  • ESI discovery into information located on inactive legacy/obsolete computer systems; and
  • Other similarly burdensome discovery, not of a type likely to produce significant evidentiary benefit, as determined by research commissioned by the Federal Judicial Center.

None of this kind of information is ordinarily essential to the hypothetical impecunious plaintiffs who would otherwise be shut out of court by having to pay for what are almost always expensive wild goose chases.

And if one of these categories turns out to be of particular importance in a given lawsuit, the requestor pays directive is only presumptive.  The party requesting the discovery would be able to go to the judge – either before or after the discovery takes place − and explain why a category of discovery, presumptively disfavored under the new regime, should be exempted from the requestor pays rule on the facts of the case in question.  Likewise, if the requestor is able to overcome the presumption beforehand, and the supposedly important discovery turns out to be a wild goose chase anyway, then the producer should be entitled to file a motion to shift those costs back to the requestor.

Implementing across-the-board requestor pays is a long shot right now, and such a dramatic change in the system could well have unintended and unforeseeable litigation consequences.  We think our proposal is not only a way to discourage types of discovery that are peculiarly prone to abuse, but might also be a way of trying out requestor pays on a smaller scale to see whether it is indeed a desirable change to the system generally.

If anybody out there is interested in this idea, have at it. Unlike discovery, our blogging is free to all readers.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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