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In an employment discrimination suit against an investment bank, a 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 May ruling, Judge Scheindlin dealt with an e-mail discovery request by Laura Zubulake, who claimed she was illegally fired from UBS Warburg. While UBS 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 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 cited evidence that the plaintiff was terminated in retaliation for filing a discrimination complaint with the Equal Employment Opportunity Commission, and said she had “already produced a sort of ‘smoking gun’: an e-mail suggesting that she be fired ‘ASAP’ after her E.E.O.C. charge was filed, in part so she would not be eligible for year-end bonuses,” the judge said. Scheindlin referred to the eight-step analysis set forth in Rowe Entertainment Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002), which stated that courts should consider: 1) The specificity of the request; 2) The chance of discovering critical information; 3) The availability of the information from other sources; 4) The purpose for which the data is kept; 5) “The relative benefits to the parties of obtaining the information”; 6) The total cost of producing the data; 7) “The relative ability of each party to control costs and its incentive to do so”; and, 8) The “resources available to each party.” But Scheindlin said “there is little doubt that the Rowe factors will generally favor cost-shifting,” for in the few reported cases, “all of them have ordered the cost of discovery to be shifted to the requesting party.” Scheindlin proposed adding two factors, “the amount in controversy” and the “issues at stake in the litigation.” While Rowe considers the resources available to each party, “the absolute wealth of the parties is not the relevant factor.” Instead, “the focus should be on the total cost of production as compared to the resources available to each party.” “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,” she said “close calls should be resolved in favor of the presumption” that the defendant should bear the cost. Judge Scheindlin outlined her own seven-part test:

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