Opinion ID: 1199950
Heading Depth: 3
Heading Rank: 3

Heading: Circumstances in Which Courts May Require Parties to Pay a Discovery Master's Fees

Text: In addition to identifying general principles that should guide a trial court's decision to appoint a master, this case also requires us to decide when imposition of master's fees on one or both parties is appropriate. Most courts and commentators that have discussed the issue have concluded that courts should consider the parties' financial means when determining the method of compensating a master. A recently proposed Michigan rule would allow the court to appoint a discovery referee only if it is fair to the litigants based on their conduct and financial means: The court may appoint a discovery master if the court finds ... it is fair to impose the cost of a discovery master on the parties, taking into account the nature of the case, the means of the parties, the conduct of the parties that contributes to the need for a master, and the degree to which appointing a discovery master would facilitate a more speedy and economical determination of the case. [38] Similarly, the California Court of Appeal recently held that trial courts must consider a party's financial condition in determining whether to refer discovery disputes to a master if referral would require imposition of master's fees. [39] One commentator expressed concern that [t]he risk of imposing unfair costs on a party is a particular concern in determining whether to appoint a pretrial master.... Parties are not required to defray the costs of providing public judicial officers, and should not lightly be charged with the costs of providing private judicial officers. [40] We agree with these jurisdictions; courts should logically consider the possibility of economic hardship on one or more parties when fashioning a plan to compensate a discovery master. Progressive claims that the Peters must make a showing of indigency before the court can consider financial hardship in appointing a master. But in cases involving parties of modest means, California courts must still determine a fair and reasonable apportionment of reference costs before issuing [their] order. [41] Indeed, given the fees normally charged by many private referees, [42] even a relatively small number of good-faith disputes could be financially devastating to even a non-indigent party. [43] More fundamentally, all potential litigantsnot just those who are indigent have a constitutional right in Alaska of meaningful access to the justice system. [44] Prohibitively high master's fees could potentially jeopardize such access. In Malvo v. J.C. Penney Co., [45] we invalidated an attorney's fees award that compensated the defendant for the full amount of his attorney's fees, noting that when a plaintiff risks such a high potential liability, the size of a party's bank account will have a major impact on his access to the courts. [46] Even if an imposition of costs or fees is valid on its face, it may offend due process because it operates to foreclose a particular party's opportunity to be heard. [47] We believe the ultimate test, as Justice Matthews expressed it in his dissent in Bozarth v. Atlantic Richfield Oil Co., [48] is whether the [cost] is so great that it imposes an intolerable burden on a losing litigant which, in effect, denies the litigant's right of access to the courts. [49] The Peters argue that any imposition of master's costs on a financially disadvantaged party violates Civil Rule 26, which allows discovery of all relevant nonprivileged material. [50] They argue that discovery requests by indigent parties are chilled when those parties know they must pay extra fees for discovery requests. But such a result is not a per se violation of the rules; the same argument could be made with equal force against the Rule 37 provision forcing parties to pay fees and costs upon losing a good-faith motion to compel. And if a discovery master is otherwise appropriate, appointment should not be deemed a procedural violation merely because it discourages lengthy discovery requests. If the chill is so severe as to effectively end the litigation or destroy a party's meaningful access to the courts, however, then appointment of a master in such circumstances would most likely be inappropriate. [51] Of course, any added cost to the litigants for paying master's fees may be offset by the time and money saved in the long run by the more efficient progress of discovery and the elimination of time spent in motions to compel. [52] The implications of these long-term savings extend beyond a particular case: The cost of a private referee ... must also be weighed against the ... cost of having to seek repeated judicial intervention through motions and Court appearances to resolve disputes and compel compliance with discovery, and the potential prejudice due to delay of the case.... In addition, there is the hidden cost to all users of the judicial system from the waste of scarce judicial resources and increased calendar congestion. [53] Thus, to determine whether master's fees in any given case infringe upon the guaranteed right of access to the justice system in Alaska, courts may take into account the possibility that the costs to the litigants are offset by the efficiency of master-assisted litigation. Although trial courts should not be burdened with performing an elaborate analysis of the total amount of master's fees as a percentage of each party's annual income, courts should not choose a means of compensation without considering whether the parties can reasonably afford the fees and whether potentially viable alternatives exist to the appointment of a private referee. Such alternatives include appointment of masters for a limited purpose or duration or placing a cap, proportionate to a litigant's annual income, on the amount of master's fees imposed on them. [54] To determine whether a party can afford a private referee, trial courts could rely upon financial affidavits similar to those used to determine waiver of filing fees and bonds. In the end, the burden on trial courts from having to consider parties' financial means is minimal compared to the burden on indigent or modest means litigants of having to pay prohibitively high masters' fees in order to have their claims adjudicated. From the point of view of low-income litigants, a loser pays system, in which the loser of each discovery dispute pays the master's fees for that dispute, may be preferable to equal distribution of costs. As the dissent points out, the trial court in this case most likely chose the loser pays system in an attempt to minimize the financial hardship on the Peters. [55] But the fact that such a system is preferable to equal distribution does not make it fair and reasonable in every case. Depending on the number of likely disputes, the master's hourly rate, the party's annual income, and the available alternatives, a loser pays provision may still preclude a financially disadvantaged party from gaining meaningful access to justice. In short, trial courts have an implied obligation under both the Civil Rules and the Alaska Constitution to consider the parties' financial status before issuing an order of reference and to choose a method of compensation that does not restrict litigants' meaningful access to discovery or, more generally, to the justice system.