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Class Action Countermeasures Discussions of the Strategic Considerations Involved In Class Action Defense

Fighting Fishing Expeditions, Part III: The Cost-Sharing Order

Posted in Discovery

The facts underlying the allegations in Boeynaems v. L.A. Fitness Int’l, LLC, 2012 U.S. Dist. LEXIS 115272 (E.D. Pa. Aug. 16, 2012) are hardly remarkable. The plaintiffs allege that they signed up for gym memberships at a chain gym with no problem, but encountered serious difficulties when they later tried to cancel, a fact pattern that was old when it appeared on 1990s sitcoms NewsRadio and Friends.

And the fact pattern leading to plaintiffs’ motion to compel documents that forms the basis of this opinion is unremarkable as well. The plaintiffs sought sweeping discovery. The defendants, seeking to limit the enormous costs discovery now imposes in class actions, produced what they could, and stood their ground on the remainder. The plaintiffs then moved to compel.

It’s what happened next that makes the case worth looking at. Judge Michael Baylson, after summarizing the policies underlying Rule 23, and the discovery disputes in the case, took particular note of the difficulties raised by the asymmetric nature of discovery in class actions:

The fact that Defendant has more documents than Plaintiffs does not necessarily mean that Defendant’s production should be limited. However, as in this case, where the cost of producing documents is very significant, the Court has the power to allocate the cost of discovery, and doing so is fair. If Plaintiffs’ counsel has confidence in the merits of its case, they should not object to making an investment in the cost of securing documents from Defendant and sharing costs with Defendant.

Judge Baylson is not the first judge to note that asymmetric discovery in class actions imposes asymmetric costs. [http://www.classactioncountermeasures.com/2010/11/articles/discovery/using-the-all-writs-act-to-block-copycat-class-actions/index.html] But he may be one of the first to take action in case management. He noted that significant discovery had already taken place at the time of the motion. As a result, he held:

"The Court is persuaded, it appearing that Defendant has borne all of the costs of complying with Plaintiffs’ discovery to date, that the cost burdens must now shift to Plaintiffs, if Plaintiffs believe that they need additional discovery. In other words, given the large amount of information Defendant has already provided, Plaintiffs need to assess the value of additional discovery for their class action motion. 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, at least until the class action determination is made.

The Court is 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."

(Emphasis added.)  For defense lawyers and their clients, this is a heartening opinion that opens up a new tactic in the ongoing battle against limiting discovery costs in cases of questionable merit. In addition to reminding the court of the high costs of allowing a questionable suit to proceed and heading off fishing expeditions with properly-crafted objections, the defendant can now ask the court to order the plaintiff to share in the costs of discovery. If the plaintiff is convinced of the merits of her claim, she should be happy to do so. If not, that’s valuable information as well.