2:11-cv-02644
E.D. Pa.Aug 16, 2012Background
- Five named plaintiffs in two related cases allege deceptive termination policies by LA Fitness; consolidated class action potential discussed; discovery disputes are central to class certification and costly for LA Fitness; court has managed discovery under Hydrogen Peroxide standard; asymmetrical discovery due to defendant’s large ESI volume; court introduces a flexible “discovery fence” to delineate discoverable from non-discoverable materials; unresolved requests concern internal memoranda, cancellation procedures, and preservation of Iron Mountain documents.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether discovery cost shifting is appropriate pending class certification | Plaintiffs should shift costs to Defendant due to class potential | Defendant bears costs to the extent fair and proportional given asymmetry | Yes, costs should shift to plaintiffs other than where equitable factors require otherwise |
| What scope of discovery falls inside the Court’s 'discovery fence' | Plaintiffs seek broad internal documents and memos | Defendant argues limits on internal memoranda and privileged material | Certain categories inside the fence with plaintiffs bearing costs; others outside fence not discoverable at this stage |
| Whether asymmetrical discovery warrants cost sharing for non-ESI and ESI | Large ESI volume justifies cost shifting | Costly production should be controlled, with sharing where appropriate | Court endorses cost shifting in light of asymmetry, with specific allocations |
| What discovery is relevant to class certification under Hydrogen Peroxide and Dukes | Common issues predominate; need wide discovery | Need to limit discovery to proportional, common issues | Favorable to plaintiffs on need for targeted discovery; limits pegged to common questions |
| What procedural steps govern further production if additional discovery is sought | Plaintiffs should detail additional needed documents | Defendant must know costs and search efforts; process orderly | Plaintiffs must specify additional requests; defendant to provide internal cost breakdown; potential future cost sharing depends on class action posture |
Key Cases Cited
- Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (U.S. 1978) (court may condition discovery on payment of costs to avoid undue burden)
- Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (seven-factor test for cost shifting in ESI discovery; limits on access to backups)
- Zubulake v. UBS Warburg LLC (Zubulake I), 217 F.R.D. 309 (S.D.N.Y. 2003) (established framework for ESI cost allocation)
- Simms v. Ctr. for Corr. Health & Policy Studies, 272 F.R.D. 36 (D.D.C. 2011) (endorsed shifting some discovery costs to defendant in narrow contexts)
- Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (U.S. 1978) (discretion to allocate discovery costs under Rule 26(c))
- Hydrogen Peroxide Antitrust Litig., 552 F.3d 307 (3d Cir. 2008) (class certification analysis governs discovery scope under Rule 23; predominance required)
- Dukes v. Walmart Stores, Inc., 131 S. Ct. 2541 (U.S. 2011) (requires common questions to drive resolution of the litigation for class treatment)
- Eisen v. Carlisle & Jacqueline, 417 U.S. 156 (U.S. 1974) (class action considerations and fairness in litigation frameworks)
- Sullivan v. DB Invs., Inc., 667 F.3d 273 (3d Cir. 2011) (en banc; supervising the framework for commonality and predominance)