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Plaintiffs Need Not Pay for Hard Copies Since Defendants Failed to Disclose Existence of Electronic Version

Posted in CASE SUMMARIES

In re Bristol-Meyers Squibb Sec. Litig., 205 F.R.D. 437 (D.N.J. 2002)

“The issues presented here raise the increasingly common problem of fair allocation of costs associated with discovery in the age of electronic information.” 205 F.R.D. at 439. Plaintiffs had agreed to pay $.10 per page for copying documents which defendants estimated to number around 500,000 pages. Defendants subsequently produced over thee million pages of documents, for which they sought over $300,000 in copying charges.

Defendants had failed to disclose that some of the material produced existed in electronic form. Later, when plaintiffs discovered that defendants had scanned the paper documents onto disk, plaintiffs demanded that the defendants produce the disks. In response, defendants demanded another $200,000 from plaintiffs, representing one-half of defendants’ cost of scanning the documents.

Defendants sought an order requiring plaintiffs to reimburse defendants for their portion of the production costs. Plaintiffs countered that defendants should produce all the documents in electronic form, and that plaintiffs should pay nothing. The court ordered the plaintiffs to pay for the paper production, but only at the cheaper $.08 per page rate actually incurred by plaintiffs. Id. at 441. Further, because defendants failed to disclose, pursuant to Fed. R. Civ. P. 26(a)(1)(B), that certain material was in electronic form, the plaintiffs would not have to pay copying costs relating to those materials. Finally, the court required plaintiffs to pay the nominal costs of copying the compact disks containing the digital information. It found that defendants had intended to fully fund the scanning process themselves for their own use in the litigation, and had made the conscious choice of making paper copies for the plaintiffs without having first given the plaintiffs the option. It stated that, while defendants were not required to present such a choice to their adversaries, they could not “have [their] cake and eat it too!” Id. at 443 (footnote omitted; emphasis in original). The court stated, for future reference, that had the defendants not produced paper discovery first, thereby requiring the plaintiffs to incur considerable expense, a greater contribution for the scanning costs might have been appropriate. Id. at 444.

The court also discussed the attorney conference required by Fed. R. Civ. P. 26(f):

In the electronic age, this meet and confer should include a discussion on whether each side possesses information in electronic form, whether they intend to produce such material, whether each other’s software is compatible, whether there exists any privilege issue requiring redaction, and how to allocate costs involved with each of the foregoing.

Id. at 443-44 (emphasis in original). It observed:

As the eve of electronic case filing (ECF) is upon us, in this and most other Districts, the production of electronic information should be at the forefront of any discussion of issues involving discovery and trial, including the fair and economical allocation of costs. Of course, in some instances, paper, rather than electronic, production may still be the preferable method of discovery.

Id. at 444.

In 2003, the United States District Court for the District of New Jersey enacted a local rule that addresses many of the issues raised in the Bristol-Meyers case. The rule imposes explicit duties upon counsel to carefully investigate and become knowledgeable about their clients’ information management systems, to notify opposing counsel that computer-based information will be sought, and to meet and confer with opposing counsel early in the litigation about a range of electronic discovery issues. See D. N.J. L. Civ. R. 26.1(d).