Leveling the E-Discovery Playing Field: Court Shifts Costs to Putative Class Action Plaintiffs Prior to Class Certification
In a case of first impression, a federal judge in Pennsylvania shifted the costs of e-discovery to the plaintiffs in a putative class action before deciding the issue of class certification. Addressing concerns of fairness to defendants in class actions, particularly given that the parties’ respective discovery burdens are “asymmetrical,” the Court held that the plaintiffs should bear the costs arising from their extensive discovery requests. The Court also considered the role of plaintiffs’ counsel as a participant in the process, noting that the plaintiffs are represented by a “very successful and well regarded” class action law firm and reasoning that if the plaintiffs “have confidence in their contention that the Court should certify the class, then plaintiffs and their lawyers should have no objection to making an investment.” Boeynaems v. LA Fitness Int’l, LLC.
The plaintiffs in Boeynaems filed a consolidated class action Complaint alleging that LA Fitness engaged in deceptive and unfair trade practices with respect to membership cancellations. The parties could not agree on the appropriate scope of discovery or the allocation of discovery costs. Ruling on plaintiffs’ motion to compel, the Court created a “discovery fence” to set the boundaries of discovery. The Court then turned to the issue of cost allocation and held that the plaintiffs should bear the cost of additional discovery — at least until the class action determination was made. The Court focused on the fact that discovery was “asymmetrical,” noting that the defendant had millions of documents and millions of items of ESI, while the plaintiffs collectively had relatively few documents. The Court also considered how discovery costs impact litigation, stating that it was “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.” Because the defendant had already incurred significant costs in responding to plaintiffs’ discovery requests, the Court concluded that the cost of further discovery should be shifted to the plaintiffs: “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 . . . .”
The Court established a procedure for the plaintiffs to provide a detailed list of additional discovery they determined was needed and for the defendant to provide a summary of the anticipated cost of providing the requested information. The defendant was expressly permitted to include in the estimate its in-house costs, including “appropriately allocated salaries” of in-house personnel such as managers, in-house counsel and computer technicians. The Court reserved the right to allocate costs later depending on the outcome of the class certification motion and/or the merits of the case.
Although courts have previously shifted discovery costs in class actions, Boeynaems appears to be the first case in which costs were shifted in the pre-certification stage. The decision could prove to be an important and useful precedent for defendants in putative class actions, particularly when they are facing substantial pre-certification discovery costs and plaintiffs’ demands have become unreasonable. The decision is also noteworthy for the Court’s frank discussion of the strategic implications of unbalanced discovery costs and the notion that class action plaintiffs and their attorneys should be willing to make an investment in their case by sharing discovery costs. While class action defendants will still face significant discovery costs, Boeynaems may help stem the tide of burdensome requests by plaintiffs by providing defendants with ammunition in arguing that plaintiffs should foot the bill for at least a portion of the discovery they seek.