In an instructive ruling on e-discovery in complex cases, a federal judge in Newark has refused to block an extensive search of a defendant’s emails or to saddle the plaintiff with the cost of it.

U.S. Magistrate Judge Michael Hammer held Monday, in Juster Acquisition Co. v. North Hudson Sewerage Authority, 12-cv-3427, that although some of the requested search terms — like "fee," debt" and "tax" — "appear, at first blush, to be somewhat broad," he could not find them unreasonable given the nature of the dispute and the fact that the plaintiff had complied with the defendant’s own request to search for 100 words.

Nor had the defendant, North Hudson Sewerage Authority, shown that it would be unreasonably cumulative or duplicative to perform the search, even though it had already identified about 8,000 documents that were responsive to 49 requests by the plaintiff, Juster Acquisition Co.

Hammer further found that Juster should not have to reimburse North Hudson for the money it would have to pay an outside vendor to process the word searches and weed out duplicates.

North Hudson said it had obtained an estimate of $6,000 to $16,000 from Kroll Ontrack.

Hammer relied on the general presumption that parties have to pay their own costs for complying with discovery and bear the burden of proving that the cost should be shifted to the requester.

North Hudson might have been able to meet that burden by showing that the emails were in an inaccessible format that would make it more expensive to obtain them.

Backup tapes and erased, fragmented and damaged data are often deemed inaccessible but the authority did not claim that the emails to be searched were in such a condition.

"To the contrary, by asserting that it hired an outside vendor to perform the word searches, [North Hudson] has acknowledged that the ESI [electronically stored information] is accessible," wrote Hammer, adding that it also failed to show undue burden or expense.

Hammer said he did not need more reasons for the ruling but discussed why the cost-shifting was not warranted under the factors set out in Zubulake v. UBS Warburg, 216 F.R.D. 280 (S.D.N.Y. 1983), a widely followed case.

One of those factors is whether the information is available from other sources but, as Hammer pointed out, it was impossible to know that here without doing the searches.

Another factor was the cost. Hammer said the $6,000 to $16,000 cost for the job is dwarfed by the $41 million that Juster is seeking in the case and North Hudson’s resources.

Some of the factors were neutral and none supported making Juster pay for the email search.

Hammer also concluded that principles of fundamental fairness favored not shifting the fees to Juster, which had been asked by North Hudson to search its emails for 100 terms, including "development," "fee," "security" and "finance."

Juster, a New York investment consulting firm, claims in the suit that North Hudson breached a 2011 contract under which Juster was to assist the authority with a restructuring and refinancing deal, for which it would be paid a $6.5 million development fee at closing plus a long-term return on equity whose present value was estimated at $33.5 million.

One of the alleged terms of the arrangement was that Juster would work exclusively with North Hudson for 18 months.

Juster alleges it spent hundreds of hours and paid $1 million to lawyers, investment bankers and accountants it hired to assist with the effort, until North Hudson, without warning, indefinitely suspended the project on Jan. 20, 2012, the day the preliminary offering statement was to be issued.

Subsequently, North Hudson encouraged Juster to keep working without providing direction and needed information or committing to pay the professionals whose help was required, and when Juster complained, it threatened to delay until the 18 months had elapsed, says the complaint.

Instead of waiting, however, it hired NW Financial Group of Hoboken, a financial adviser "with inside political connections" to the authority and used Juster’s "work product" to complete the refinancing transaction on May 24, 2012, claims Juster.

NW’s principal and founder is Dennis Enright, a former director of planning and development for Jersey City.

Juster alleged that NW would receive more than $1 million in fees and that Morgan Stanley would get tens of millions for its role as investment banker for the $368 million transaction, which involved the sale of bonds and certificates of participation.

In addition to its contract claim, Juster seeks to recover under theories of unjust enrichment, quantum meruit and breach of the implied covenant of good faith and fair dealing.

North Hudson denies the existence of a binding contract with Juster and says it paid $588,376 to NW and $1,564,803 to Morgan Stanley.

Juster’s lawyer, Joseph Buckley of Sills Cummis & Gross in Newark, did not return a call. Nor did North Hudson’s attorney, Judson Hand, of Alan Zegas’ law office in Chatham.

North Hudson treats wastewater for Hoboken, Weehawken, Union City and West New York.

Mary Pat Gallagher is a reporter for the New Jersey Law Journal, a Legal affiliate