## Facts

- GreenPoint originated residential mortgage loans, including “no-doc” and “low-doc” loans, and pooled loans into a securitization trust that issued notes paid from loan cash flow.
- Notes backed by roughly 30,000 mortgages were sold and ultimately assigned through intermediaries to U.S. Bank, which served as indenture trustee for a mortgage-backed notes trust.
- In related litigation over alleged breaches of representations and warranties and alleged repurchase failures, U.S. Bank sought extensive paper and electronically stored information (ESI) in discovery concerning loan origination, underwriting, and securitization.
- GreenPoint moved in Supreme Court, New York County, to require U.S. Bank, as the requesting party, to pay the costs of searching for, retrieving, and producing requested documents and ESI.
- The motion court ordered that U.S. Bank bear the costs incurred in the production of discovery, and U.S. Bank appealed from those portions of the orders allocating costs to it.

## Issues

1. What default rule governs which party pays the costs of searching for, retrieving, and producing requested documents and ESI in New York Supreme Court litigation.
2. Whether the court should apply a Zubulake-style framework to permit discretionary cost-shifting in appropriate ESI discovery disputes.
3. Whether the motion court erred by assigning production costs to the requesting party without applying the proper cost-allocation standard.

## Decision

- The Appellate Division, First Department reversed the orders insofar as they required U.S. Bank to bear discovery production costs.
- The court adopted a default rule that the producing party bears the costs of producing requested discovery, including ESI.
- The court held that the trial court may modify that default through discretionary cost-shifting on a proper motion by the producing party, applying a Zubulake-style analysis.
- The matter was remanded for further proceedings under the correct framework.

## Legal Principles

- The default rule is that the producing party pays the costs of complying with discovery requests, including ESI production.
- Cost-shifting is not automatic; it is available only if the producing party moves for it and the court, in its discretion, finds it appropriate under a multi-factor analysis.
- The Zubulake framework applies to New York First Department cost-allocation disputes involving ESI, aligning cost allocation with proportionality considerations.
- In exercising discretion, courts consider factors commonly associated with Zubulake, including tailoring and importance of the requests, availability of the information from other sources, overall production cost in relation to the dispute, and relative party resources.

## Conclusion

The First Department held that discovery production costs, including ESI, are presumptively borne by the producing party, while permitting trial courts to shift costs in appropriate cases under a Zubulake-style discretionary analysis; it reversed the prior cost order and remanded for reconsideration under that standard.


U.S. Bank N.A. v. GreenPoint Mortg. Funding, Inc., 94 A.D.3d 58, 939 N.Y.S.2d 395 (1st Dep’t 2012)