Reprinted with permission from FindLaw.com

As litigants are coming to appreciate, electronic discovery is expensive, and indeed so much so, that at times it can be the dog wagging the tail in driving financial decisions when determining the value of a case from a resolution standpoint.

The general rule of thumb in litigation is that parties responding to discovery must incur the costs of that exercise. However, e-discovery opens up new realms of expense, as parties potentially must extract phenomenal quantities of data from myriad sources, such as servers, hard drives, PDAs, backup tapes, etc. Moreover, parties may be asked to change the format of electronic information to be produced.

To date, while the 2006 amendments to the Federal Rules of Civil Procedure explicitly address e-discovery issues, there has not been uniform guidance on the "who pays" front.

Along comes Dahl v. Bain Capital Partners, recently decided by Massachusetts U.S. District Judge Edward Harrington.

In the e-discovery context, Judge Harrington embraced the traditional notion that responding parties usually should pay their own production costs absent exceptional circumstances, such as lack of reasonable accessibility or undue and unnecessary expense. However, in this new arena of e-discovery, Judge Harrington held that if a demanding party requests electronic materials to be produced in a format different than the way they are maintained in the ordinary business course, then the expense of the format change should be shifted to the demanding party.

In Dahl, an antitrust case, the plaintiffs had demanded from the defendants electronic documents in a format that allowed for full text searching. This would cause the defendants to convert hard copy and electronic documents that were not susceptible to full text searching into that format. The defendants were only willing to undertake that exercise if the plaintiffs would foot the bill. In addition, the plaintiffs demanded various metadata fields for the electronic documents sought. The parties could not agree, requiring resolution of the discovery dispute by Judge Harrington.

Judge Harrington did order that the defendants did have to produce the electronic records demanded by the plaintiffs. But in so doing, he ruled that the plaintiffs, not the defendants, would have to incur the expense of converting the format of the documents. While FRCP 34 was amended in 2006 such that a demanding party may state the form for materials to be produced, Judge Harrington believed that a demand to convert materials into a form different than usually maintained in business would require that demanding party to pay the conversion expense. However, if a litigant on its own opts to convert the format of its electronic materials, then the opposing party should be offered the converted materials at no additional expense.

Judge Harrington also ruled that the plaintiffs in Dahl were not entitled to metadata on a sweeping basis. He explained that metadata may not have true utility, perhaps not leading to admissible evidence and possibly wasting the time and money of the parties. He therefore suggested that the plaintiffs should focus their metadata demands on narrow and specific electronic documents.

When it comes to e-discovery, be careful what you wish for - you may have to pay the freight. Often times, it is better to negotiate e-discovery protocols with opposing counsel, rather than to roll the dice in court in this newly evolving area.

Eric J. Sinrod is a partner in the San Francisco office of Duane Morris. His focus includes information technology and intellectual-property disputes. This column is prepared and published for informational purposes only, and it should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners

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