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In an employment discrimination suit against an investment bank, a Southern District of New York judge has proposed a new standard for evaluating whether the cost of electronic discovery requests should be shifted to the plaintiff. Judge Shira Scheindlin said the prevailing cost-shifting analysis has led to an imbalance in favor of large corporate defendants and “may ultimately deter the finding of potentially meritorious claims.” In a ruling issued Tuesday, Judge Scheindlin dealt with an e-mail discovery request by Laura Zubulake, who claimed she was illegally fired from UBS Warburg. While UBS Warburg had already turned over hundreds of pages of e-mails in Zubulake v. UBS Warburg, 02 Civ. 1243, Scheindlin said it had not searched for responsive e-mails on backup tapes maintained by the company. UBS Warburg argued that a search of the backup tapes would cost in excess of $175,000, exclusive of attorney time, and that Zubulake should bear at least part of the cost. Scheindlin said that “Zubulake’s case is certainly not frivolous,” in part because of evidence she was terminated in retaliation for filing a discrimination complaint with the Equal Employment Opportunity Commission. “Indeed, Zubulake has already produced a sort of ‘smoking gun’: an e-mail suggesting that she be fired ‘ASAP’ after her EEOC charge was filed, in part so she would not be eligible for year-end bonuses,” the judge said. Scheindlin then turned to what she labeled the “gold standard for courts resolving electronic discovery disputes” — the eight-step analysis set forth by Southern District of New York Magistrate James C. Francis IV in Rowe Entertainment Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002). In Rowe, Judge Francis said courts should consider: � the specificity of the request; � the chance of discovering critical information; � the availability of the information from other sources; � the purpose for which the data is kept; � “the relative benefits to the parties of obtaining the information”; � the total cost of producing the data; � “the relative ability of each party to control costs and its incentive to do so”; and, � the “resources available to each party.” But Judge Scheindlin said “there is little doubt that the Rowe factors will generally favor cost-shifting,” for in the “handful” of reported cases that have applied Rowe or a similar version of its test, she said, “all of them have ordered the cost of discovery to be shifted to the requesting party.” ADDITIONAL FACTORS She proposes adding two factors, “the amount in controversy” and the “issues at stake in the litigation.” And while Rowe considers the resources available to each party, she said “the absolute wealth of the parties is not the relevant factor.” Instead, she said “the focus should be on the total cost of production as compared to the resources available to each party.” “Courts must remember that cost-shifting may effectively end discovery, especially when private parties are engaged in litigation with large corporations,” she said. “As large companies increasingly move to entirely paper-free environments, the frequent use of cost-shifting will have the effect of crippling discovery in discrimination and retaliation cases.” Insisting that “the cost-shifting analysis must be neutral,” Scheindlin said “close calls should be resolved in favor of the presumption” that the defendant should bear the cost. SEVEN-PART TEST Judge Scheindlin outlined her own seven-part test, which combines some of the factors of Rowe and eliminates others. Those factors are: � the extent to which the request is specifically tailored to discover relevant information; � the availability of such information from other sources; � the total cost of production compared to the amount in controversy; � the total cost of production compared to the resources available to each party; � the relative ability of each party to control costs and its incentive to do so; � the importance of the issue at stake in the litigation and, � the relative benefits to the parties of obtaining the information. The factors are not to be weighted equally she said, because the central question in evaluating cost-shifting is that set forth in the Federal Rules of Civil Procedure: Does the request impose an “undue burden or expense” on the responding party? “The suggestion that a plaintiff must not only demonstrate that probative evidence exists, but also prove that electronic discovery will yield a ‘gold mine,’” is contrary to the plain language of Rule 26(b)(1), which permits discovery of ‘any matter’ that is ‘relevant to [a] claim or defense,’” she said. But Scheindlin also recognized that different types of electronic data are more accessible than others. In Zubulake’s case, the judge said, UBS is ordered to provide, at its own expense, “all responsive e-mails that exist on its optical disks or on its active servers.” She said UBS should then produce, at its expense, responsive e-mails from any five backup tapes selected by Zubulake, and “then prepare an affidavit detailing results of its search, as well as the time and money spent.” Only after that is accomplished, she said, would the court conduct the “appropriate cost-shifting analysis.” James A. Batson and Christina J. Kang of Liddle & Robinson represented Zubulake. Kevin B. LeBlang and Norman C. Simon of Kramer Levin Naftalis & Frankel represented UBS Warburg.

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