Producing party must pay for discovery: First Department, Appellate Division

By: Donald Partyka

A recent decision by the First Department, Appellate Division in U.S. Bank National Association . v GreenPoint Mortgage Funding, Inc. held that the producing party must pay for discovery.

The case involved a dispute over subprime mortgage backed securities.  U.S. Bank requested GreenPoint produce a “vast” number of documents.  The judge’s decision acknowledged that the requesting party (U.S. Bank) stated “that the cost of production could run into the millions of dollars.”

Unfortunately New York’s civil practice rules do not state who is responsible for the cost of discovery. This cost that has skyrocketed in recent years with the advent of electronic discovery, with some state courts ruling in favor of requiring the requesting or the producing party bearing the discovery cost.

New York needs to adopt clear rules regarding electronic discovery, rules that protect parties from the burden of paying for the cost of searching for, retrieving, and producing electronically stored information.  As the costs can run unjustly high, such rules, if adopted, would discourage parties from forcing “unnecessary and oppressive” cost on their adversaries, and ensure greater fairness in litigation for all parties.

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