Ruling Clarifies Limits on Reimbursement for Non-Party ESI Production Costs

Ruling Clarifies Limits on Reimbursement for Non-Party ESI Production Costs

The recent ruling in Barons Media v. Shapiro Legal Group underscores the importance of reasonableness in determining non-party ESI production expenses during discovery (ESI stands for Electronically Stored Information). According to an article by the Farrell Fritz firm, under CPLR §§ 3111 and 3122(d), non-party witnesses are entitled to have “reasonable production expenses” covered by the party seeking discovery, as outlined in the Commercial Division’s ESI Guidelines.

In Barons Media, the court addressed a non-party’s motion for full reimbursement of its production expenses, including fees for outside counsel and eDiscovery consultants and costs incurred in reviewing and organizing responsive materials. The lower court allowed only two-thirds of the requested expenses, finding that Barons’ discovery requests were not narrowly tailored, which justified partial reimbursement. However, it declined to grant the full amount, agreeing with Barons that some of the claimed expenses were inflated and related to the non-party’s resistance to the discovery process.

The First Department of the New York appellate division upheld this decision, citing the importance of scrutinizing claimed expenses, particularly those associated with withholding information and potentially excessive billing rates by outside counsel. The court’s approach highlights that parties cannot recover all costs associated with resistance to discovery or activities outside the scope of essential document production.

The article notes several key takeaways:

• For non-parties, this ruling reinforces the need to substantiate costs as both reasonable and directly related to necessary production efforts.
• For parties requesting non-party discovery, this case emphasizes the value of narrowly tailoring discovery requests to avoid additional expenses. 
• Both sides should approach non-party discovery with an eye toward efficiency and the necessity to control costs and meet the court’s reasonableness standard.