X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Too often, discovery is not just about uncovering the truth, but also about how much of the truth the parties can afford to disinter.” Rowe Entertainment Inc. v. the William Morris Agency Inc., 205 F.R.D. 421, 423 (S.D.N.Y. 2002). You are a poor working stiff. Working, that is, until you were fired as a result of blatant sex discrimination. You know, you just know it, that the chauvinist pig who fired you has left a trail of boorish e-mails that will prove it. So you file suit and a document request for all e-mails sent to or from the swinish supervisor. You are a reputable corporate member of society who legitimately severed its relationship with a difficult, inadequate employee. True to form, she blames you for her own failings and brings a discrimination suit. But the (insert here the disparaging noun of your choice) has added injury to insult with a document request for all e-mails to and from senior executives for the past five years. Complying with that request will require a hunt through backup computer tapes and data reconstruction efforts that will cost hundreds of thousands of dollars. And these were senior people, whose duties included communications with counsel in various legal actions. So the reconstructed e-mail files have to be carefully reviewed for privilege-at a cost of still more hundreds of thousands. Who pays the costs of data reconstruction? Who pays? The working stiff? The beleaguered company? How much truth can the parties afford to disinter? “Under [the discovery] rules, the presumption is that the responding party must bear the expense of complying with discovery requests.” Oppenheimer Fund Inc. v. Sanders, 437 U.S. 340, 57 L. Ed. 2d 253, 98 S. Ct. 2380 (1978). Sure, but “a court may protect the responding party from ‘undue burden or expense’ by shifting some or all of the costs of production to the requesting party.” Rowe, 205 F.R.D. at 428. So who pays? Requesting parties can be expected to argue that the responding party should always bear the costs of producing electronic data since “if a party chooses an electronic storage method, the necessity for a retrieval program or method is an ordinary and foreseeable risk.” Daewoo Electronics Co. v. United States, 650 F. Supp. 1003, 1006 (The translation of electronic data into a usable form should be the burden of respondent.) But in Rowe, Magistrate Judge James C. Francis IV found that the logic breaks down when it comes to electronic data: “The underlying assumption is that the party retaining information does so because that information is useful to it, as demonstrated by the fact that it is willing to bear the costs of retention. That party may therefore be expected to locate specific data, whether for its own needs or in response to a discovery request. With electronic media, however, the syllogism breaks down because the costs of storage are virtually nil. Information is retained not because it is expected to be used, but because there is no compelling reason to discard it.” Rowe, 205 F.R.D. at 429. So Francis created an eight-factor test to determine whether the costs of electronic discovery should be shifted: (1) specificity of the requests, (2) likelihood of discovering critical information, (3) availability of information from other sources, (4) purposes for which the responding party maintains data, (5) the relative benefits to the parties, (6) total cost associated with production, (7) relative ability and incentive of each party to control costs and (8) resources of each party. Id. The Rowe decision quickly became the gold standard to determine whether to shift costs-until Judge Shira A. Scheindlin upgraded to platinum in Zubulake v. UBS Warburg LLC, 55 Fed. R. Serv. 3d 622 (S.D.N.Y. May 13, 2003) (“ Zubulake I“-you’ll see why soon). Laura Zubulake was a $650,000-a-year trader when UBS fired her. Not exactly a “poor” working stiff, but as between her assets and those of UBS, David and Goliath is not totally inapt. Her claim was certainly not frivolous. It was conceded that she was ill-treated -UBS was reduced to defending on the theory that her supervisor’s conduct was not unlawfully discriminatory because he treated everyone equally badly. Great jury appeal there. And it was clear that there were big holes in UBS’ first wave of discovery responses. UBS produced about 100 pages of e-mails, but Zubulake had copies of other e-mails she had retained herself. UBS refused to search its backup tapes for the material because of the cost, which it estimated at $300,000. Scheindlin acknowledged Francis’ gold standard, but observed that “there is little doubt that the Rowe factors will generally favor cost-shifting. Indeed, of the handful of reported opinions that apply Rowe or some modification thereof, all of them have ordered the cost of discovery to be shifted to the requesting party.” So Scheindlin devised a three-step analysis less biased toward shifting: First, it is necessary to understand the computer system. For accessible data-available online or in media that can be loaded and accessed as if online-the usual rules of discovery apply: the responding party pays the costs of production. Cost-shifting should be considered only for the production of inaccessible data-such as disaster-recovery backup tapes or fragmented drives that are not machine readable without substantial conversion or reconstruction. Second, because the cost-shifting analysis is fact-intensive, it is necessary to sample the inaccessible media to get a sense of the contents. Third, if the first two steps indicate that the case is a candidate for cost-shifting, the analysis should proceed by considering seven factors, “weighted more-or-less in the following order:” 1. The extent to which the request is specifically tailored to discover relevant information. 2. The availability of such information from other sources. 3. The total cost of production, compared to the amount in controversy. 4. The cost of production, compared to the resources of each party. 5. The relative ability of each party to control costs and its incentive to do so. 6. The importance of the issues at stake in the litigation. 7. The relative benefits to the parties of obtaining the information. Enter Zubulake II. Well, actually Zubulake III-but II was on unrelated issues, so let’s skip that. Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. July 24, 2003). At the direction of the court, the parties did a sample test and returned for application of the seven-factor test. UBS asked that the entire cost to review the remaining tapes be shifted to Zubulake. Zubulake, of course, argued that no cost-shifting was warranted. Space does not permit us to set out the detail of Scheindlin’s analysis, but we can summarize her scoring: factors 1 and 2 (the most heavily weighted) tipped slightly against cost-shifting; factors 3 and 4 weighed against cost-shifting; factors 5 and 6 were neutral; only factor 7-the least important-weighed in favor of cost-shifting. And on that record, Judge Scheindlin ordered that the working stiff pay 25% of the restoration costs. Huh? We expect better batting averages than that even of mediocre baseball players. Scheindlin explained that application of the factors “is not merely a matter of counting and adding; it is only a guide . . . . It is beyond cavil that the precise allocation is a matter of judgment and fairness rather than a mathematical consequence of the seven factors.” A wide net had to be cast to find the possibly relevant e-mails, and there were bound to be some privileged dolphins caught up with any legitimate catch. The sheer volume of the electronic files would make the necessary privilege review exceptionally expensive. Tough. “As a general rule, where cost-shifting is appropriate, only the costs of restoration and searching should be shifted. Restoration, of course, is the act of making inaccessible material accessible. That ‘special purpose’ or ‘extraordinary step’ should be the subject of cost-shifting. Search costs should also be shifted because they are so intertwined with the restoration process . . . .However, the responding party should always bear the cost of reviewing and producing electronic data once it has been converted to an accessible form.” Zubulake II. There is a duty to preservecertain backup tapes Zubulake was not quite finished. In the course of the restoration process ordered in Zubulake III, it was learned that a half-dozen or so backup tapes could not be found. Motion for sanctions-Zubulake IV. Zubulake v. UBS Warburg LLC, 2003 U.S. Dist. Lexis 18771 (S.D.N.Y. Oct. 22, 2003). Scheindlin found that UBS had a duty to preserve backup tapes that could be identified as storing information created by or for “key players”; and that UBS’ loss of the tapes exceeded mere negligence. Zubulake requested reconsideration of the cost-shifting order for the spoliation; but the court was aware that certain e-mails had not been retained when it entered the cost-shifting order and thus saw no need to reconsider. Zubulake next argued that UBS’ spoliation warranted an adverse-inference instruction. OK, but to justify that sanction Zubulake had to show that the destroyed evidence would have supported a claim or defense. Zubulake couldn’t show it. No adverse-inference instruction. Zubulake did get a bone. “Even though an adverse inference instruction is not warranted, there is no question that e-mails that UBS should have produced to Zubulake were destroyed by UBS. “That being so, UBS must bear Zubulake’s costs for re-deposing certain witnesses for the limited purpose of inquiring into issues raised by the destruction of evidence and any newly discovered e-mails.” We can’t wait for Zubulake V. Jerold S. Solovy and Robert L. Byman are fellows of the American College of Trial Lawyers and partners at Chicago’s Jenner & Block. Solovy, the firm’s chairman and past chair of the ABA Discovery and Trial Practice Committee, can be reached at [email protected]. Byman can be reached at [email protected].

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.