Who Pays for Discovery Costs in New York? U.S. Bank v GreenPoint and ESI Cost-Shifting

Few questions in litigation are as practical — and as expensive — as who pays for discovery. New York’s disclosure statute, CPLR 3101(a), requires “full disclosure of all matter material and necessary” to the prosecution or defense of an action, but it says little about who funds the searching, retrieval, and production that compliance requires. The First Department confronted that question in the context of electronically stored information (ESI) in U.S. Bank v GreenPoint, and the answer matters far beyond commercial cases.

Key Takeaways

• Under U.S. Bank v GreenPoint, the party responding to a discovery demand bears the production costs in the first instance.
• The court’s prescribed sequence: first move to limit or strike overbroad demands; if costs remain prohibitive, then move to shift the costs to the demanding party.
• The prevailing party can ultimately tax discovery costs — but since most cases settle, that back-end remedy is often illusory.
• Though the case involved ESI in commercial litigation, the framework reaches discovery disputes generally, including personal injury and no-fault practice.

The Decision

U.S. Bank N.A. v GreenPoint Mtge. Funding, Inc., 2012 NY Slip Op 01515 (1st Dept. 2012)

Cost of discovery. I sue you. I demand a lot of discovery. You bear the burden, in the first instance, to pay the costs of the sought after information. Then, you are stuck engaging in: “The more prudent course of action to first make a motion to limit or strike the discovery requests initiated by plaintiff that it found to be overbroad, irrelevant, or unduly burdensome. If, following the resolution of that motion, defendant still believed the costs associated with searching for, retrieving, and producing ESI to be prohibitive, defendant could then file a motion for the costs to be shifted to plaintiff.”

Read the decision. This is the cliff-notes version. Perhaps in commercial litigation, this might make sense. But, where you are dealing with parties where the inequities in resources are glaring, this seems to really be unfair. The bright side is that the winner can tax the costs at the end. The end, is usually resolved through personal injury or commercial settlement. So, this remedy (which you can find in the opinion) is really illusory. While this case deals with ESI (electronic discovery), its application is probably far beyond the facts of this case.

The Legal Framework

New York discovery is built on CPLR 3101(a)‘s command of full disclosure, tempered by the court’s power under CPLR 3103 to issue protective orders “to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice.” Cost allocation lives in that tension. The demanding party defines the scope of what it wants; the responding party owns the servers, file rooms, and archives where the material sits — and, under the framework above, the bill for getting it out.

The two-step sequence the court prescribed is essentially a burden-management protocol. Step one is a motion under CPLR 3103 (or 3122 objections) to narrow demands that are overbroad, irrelevant, or unduly burdensome — the court trims the scope before anyone spends money. Step two, if the trimmed demands are still prohibitively expensive to satisfy, is a motion to shift the remaining costs to the party that wants the material. The factors courts weigh in ESI disputes include the specificity of the request, the availability of the information from other sources, and the relative cost and burden against the amount in controversy.

ESI sharpened the stakes because electronic production involves forensic retrieval, restoration of backup media, and privilege review at volumes paper discovery never reached. But nothing in the logic confines it to ESI — a demand for decades of paper claim files raises the same question.

Why This Matters Beyond Commercial Litigation

The post’s original criticism still holds: where the parties’ resources are grossly unequal, making the responding party fund production in the first instance can be genuinely unfair. A solo medical provider in a no-fault defense collection action, or an individual plaintiff against an institutional defendant, may face production costs that dwarf the amount in controversy. The taxation-of-costs remedy at the end of the case sounds like a backstop, but most cases end in settlement — and settling parties rarely recover taxed costs. In practice, the cost of discovery becomes a settlement lever.

That makes the motion practice the real protection. A responding party that absorbs costs silently has no record for later shifting; one that moves early to narrow the demands and then documents the prohibitive expense of what remains has positioned itself for relief. For a broader reference on summary judgment standards and discovery procedure in New York, see the legal encyclopedia.

Practice Pointers

• Do not skip step one. Courts expect a motion to limit or strike overbroad demands before they will entertain cost-shifting; jumping straight to the cost argument invites denial as premature.
• Build the cost record. Vendor estimates, IT affidavits, and search-term hit counts turn “this is expensive” into admissible proof of prohibitive burden.
• Negotiate scope in the preliminary conference. Search terms, custodians, and date ranges agreed up front prevent most cost fights.
• Demanding parties: tailor or pay. The more surgical the demand, the weaker the responding party’s shifting motion; scattershot demands are what get costs moved onto the requester.

Related Resources

• A formulation of a prima facie case — the firm’s hub on summary judgment burdens
• NY EBT Venue Rules: When Courts Grant Undue Hardship Exceptions for Depositions
• Appellate Term holds CPLR 3212(f) relief is inappropriate under three separate circumstances
• Discovery Violations and Court Sanctions: When New York Courts Strike Back
• Understanding Discovery Rules and Summary Judgment Timing in NY Personal Injury Cases
• New York No-Fault Insurance Law
• The firm’s Legal Encyclopedia
• Personal injury practice