Back to the Future: Discovery Cost Allocation and Modern Procedural Theory
61 Pages Posted: 9 Jun 2010 Last revised: 1 Sep 2010
Date Written: May 10, 2010
It has long been established that as a general rule, discovery costs are to remain with the party from whom discovery has been sought. While courts have authority to "shift" costs in an individual instance, the presumption against such an alteration in traditional practice is quite strong. Yet at no point did the drafters of the original Federal Rules of Civil Procedure ever make an explicit decision to allocate discovery costs in this manner. Nor, apparently, did they (or anyone since) ever explain why such an allocation choice is to be made in the first place. As a result, our procedural system has developed a virtually unwavering practice as to discovery cost allocation which has never been rationalized or justified.
In this article, we argue that had those who adopted the Rules in the first instance actually given appropriate thought to the issue, they would have realized how counterintuitive the choice to leave discovery costs on the producing party actually is. We reach this conclusion on several grounds. Initially, discovery costs are properly viewed as a form of quantum meruit: the producing party is incurring costs not for his own benefit, but solely to benefit the discovering party, who reasonably expects this benefit to be conferred on him. Viewed in this manner, discovery costs are a classic case for precepts of quasi-contract, which are designed to prevent injustice. Secondly, principles of economic efficiency dictate a presumption in favor of imposing costs on the discovering party, because that party is “the cheapest cost avoider.” In other words, he is in the best position to determine whether particular discovery is necessary in light of its costs. When discovery costs are imposed on the producing party, an externality is created for the requesting party, who lacks any incentive to make economically efficient discovery choices. Finally, we argue that principles of constitutional due process dictate that the discovering party, rather than the responding party, pay for discovery costs, at least where the defendant is the responding party. Otherwise, a defendant will be required to pay a benefit to the plaintiff on the basis of nothing more than plaintiff’s unilateral, unproven allegations of liability.
We recognize that it is, as a practical matter, too late in the day to expect a reversal of the cost allocation presumption. However, we hope that by returning to what should have been recognized as the relevant first principles at the time of the Rules’ origination, we will have encouraged modern day courts to be more willing to consider requests to shift costs to the requesting party.
Keywords: Civil Procedure, Discovery, Litigation, Constitutional Law, Due Process, Constitutional Rights
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