Oct 07

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California district court creates broader cost-shifting standard

Couch v. Wan, 2011 WL 2971118 (E.D. Cal. July 20, 2011) raises the possibility that cost-shifting will be applied much more widely. In this action, the requesting party (plaintiffs) sought reconsideration of a magistrate judge’s order requiring the parties to share ESI (electronically-stored information) costs. The plaintiffs argued the cost-shifting order was contrary to law because the requested data was stored on reasonably accessible hard drives or optical drives. Upon review, the District Court found for the defendants. Although hard drives were “reasonably accessible” in terms of being able retrieve the data, the District Court found that this did not by itself require the producing party to bear the costs of production.

Uniquely for the Couch vs. Wan Court, accessibility depends upon the cost of the production. Simply put, because the Court found that the CDCR claimed it could not afford the expected cost, the costs are shifted to the requesting party under Rule 26(b)(2)(B).

The facts of Couch vs. Wan are remarkably common. Technically, the data was readily accessible, from sources that typical e-discovery and any computer administrator views as easy to accomplish. Complaints regarding the cost of e-discovery are so common that it might be hard to find many cases where the producing party would not like to apply the Couch vs. Wan test. If the test from Couch vs. Wan becomes widely applied – meaning the producing party thought it was expensive – the vast majority of current e-discovery will involve cost shifting.

This article provides additional details, including a discussion of the widely-accepted Zubulake case upon which the Wan vs. Couch Court supposedly relied.


About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

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