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SAN JOSE — Litigants who demand expensive electronic data discovery have to pay for it, the Sixth District Court of Appeal ruled Friday. Noting that the issue is “bound to arise with increasing frequency,” the appellate court reversed a trial court decision that had compelled Toshiba America Electronic Components Inc. to produce data at an estimated cost of $1.5 million to $1.9 million. The dispute stems from Fremont-based Lexar Media Inc.’s suit against the computer giant for misappropriation of trade secrets, breach of fiduciary duty and unfair competition. As part of its suit, Lexar requested discovery including e-mail and “other forms of electronically or magnetically maintained information.” Toshiba indicated it had more than 800 backup tapes for the pertinent eight-year period, and that translating them would be enormously expensive. Santa Clara County Superior Court Judge Patricia Lucas granted Lexar’s discovery request without shifting any of the cost to Lexar. But on Friday, Sixth District Justice Eugene Premo wrote that Lexar’s argument was based on federal law and ignored California Code of Civil Procedure �2031. That law requires production of data compilations “at the reasonable expense of the demanding party.” In light of �2031, “an order compelling [Toshiba] to produce all responsive documents contained in the tapes without also requiring Lexar to pay any of the expense involved in translating the tapes into usable form, is an abuse of discretion absent a finding that translation is not necessary,” Premo wrote for the three-judge panel. Presiding Justice Conrad Rushing and Justice Franklin Elia concurred. Premo stressed that the ruling does not always mean that the requesting party should bear the full costs. “It is clear that the demanding party is expected to pay only its reasonable expense for a necessary translation,” he wrote, remanding the case to superior court for a reasonableness determination. Toshiba attorney Michael Jacobs said the decision was the first by an appellate court to discuss how to deal with the use of backup computer files as evidence in court cases. “This is landmark in the world of day-to-day litigation,” said Jacobs, a partner at Morrison & Foerster in San Francisco. “The statute means the demanding party has to pay for discovery. “We’re talking often about hundreds of thousands in discovery documents, and if the demanding party has to pay, there will always be negotiation about the scope of discovery,” he said. He said the ruling “should shield litigants from excessively burdensome demands” for the production of backup tapes. Lexar’s attorney, David Healey of the Houston office of Weil, Gotshal & Manges, did not immediately return a message requesting comment. The full text of Toshiba America Electronic Components Inc. v. Superior Court (Lexar Media) will appear in Tuesday’s California Daily Opinion Service.

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