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Party Not Entitled to Shift Costs of Restoring Emails that were Converted to Inaccessible Format After Duty to Preserve was Triggered

Posted in CASE SUMMARIES

Quinby v. WestLB AG, 2006 WL 2597900 (S.D.N.Y. Sept. 5, 2006)

Like the plaintiff in the Zubulake v. UBS Warburg LLC, the plaintiff in this case was a highly-paid investment banker who accused her employer of gender discrimination and illegal retaliation. In her requests for production, plaintiff requested that 19 current and former WestLB employees’ email accounts be searched for certain terms alleged to refer to plaintiff in particular or that were potentially sexist in general. Plaintiff also sought emails relating to discrimination against other women at WestLB and e-mails showing that men were more highly compensated than women. Most of the requests were not limited to any particular period of time.

Defendant objected, claiming the requests were overly broad and would result in undue burden. When the parties were unable to agree on the scope of electronic discovery, they sought the court’s help.

At subsequent discovery conferences, plaintiff claimed that she wanted to search 19 current and former WestLB employees’ emails for over 170 search terms for approximately a five-year period. Some of the proposed search terms were words that were very commonly used in the investment banking industry, such as “asset,” “deal,” “insurance” and “risk,” and others were even more commonly used words that could be present in practically any email, including words such as “go,” “her,” “okay” and “she.”

The court limited the document request with respect to emails to searches of 17 current and former WestLB employees, utilizing individualized search terms for each employee; the search terms used ranged from three to 15 terms for any given employee. The court also limited the period of time to be searched for some of the requests.

Defendant claimed that in order to produce many of the emails, it had to restore and search backup tapes. It explained that, when an employee leaves WestLB, it was WestLB’s practice to delete the employee’s emails from its accessible database and maintain them solely on backup tapes. Of the 17 individuals whose emails WestLB was directed to search, eight were former employees. The emails of six of the former employees were migrated to backup tapes; the emails of the other two employees (one of whom was plaintiff) were still maintained on its accessible database.

Defendant requested that the court shift to plaintiff the costs of restoring and searching and restoring backup tapes containing the emails of the six former employees. Defendant had hired an outside consultant to restore and search the backup tapes, and the process yielded 59,635 original, i.e. non-duplicate, documents consisting of 401,420 pages. By contrast, only 9,622 documents, or 141,702 pages, were produced from accessible sources.

Defendant’s consultant charged $181,013.28 to restore and search the backup tapes, along with another 25 percent premium for expediting the project – a cost which defendant also sought to shift to plaintiff – bringing the total to $226,266.70. Further, defendant sought to shift the cost of re-producing some files into a different format after plaintiff complained that they were produced in a “.tif” format instead of the previously agreed-to format, “.dii.” The consultant charged defendant $5,413.76 to re-produce these files in the .dii format.

The court decided defendant’s motion under the analytical framework articulated in Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 319 (S.D.N.Y. 2003) (“Zubulake I”), and considered the following factors in descending order of importance:

  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 costs of production, compared to the amount in controversy; 
  4. The total costs of production, compared to the resources available to 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; and 
  7. The relative benefits to the parties of obtaining the information.

Before evaluating the Zubulake factors, however, the court noted that the appropriateness of cost-shifting was less clear here because it appeared that defendant converted the former employees’ email into an inaccessible format after it should have anticipated this litigation. Plaintiff argued that cost-shifting was inappropriate because defendant, pursuant to its obligation to preserve evidence, was required to maintain the former employees’ emails in an accessible format. Defendant argued that it satisfied its duty to preserve the emails by maintaining them on backup tapes. The court further observed:

Questions related to the duty to preserve evidence generally arise in the context of motions for sanctions based on alleged spoliation. Plaintiff’s argument here is unique in that she is not claiming that the e-mails have been lost or destroyed; instead she is claiming that defendant had a duty to maintain the e-mails in a particular format and that because defendant violated this duty, it cannot now seek cost-shifting for restoring the e-mails from an inaccessible state. Defendant argues that the duty to preserve evidence does not require the producing party to maintain electronic data in any particular format.

In resolving a sanctions motion in Quinby I, I declined to sanction defendant for converting data from an accessible to an inaccessible format, even assuming that defendant should have anticipated litigation at the time it converted the data. Quinby I, supra, 2005 WL 3453908 at *8 n. 10. This conclusion ensures that in complying with a duty to preserve evidence, a party will be free to preserve electronic evidence in any format it chooses, including inaccessible formats. See Zubulake IV, supra, 220 F.R.D. at 218 (“In recognition of the fact that there are many ways to manage electronic data, litigants are free to choose how this task is accomplished.”). Preservation of data, even in an inaccessible form, will not result in spoliation because the responding party will be able to produce the electronic evidence by restoring it from an inaccessible format, albeit at a higher cost. 

                                      * * *

As previously stated, cost-shifting is appropriate only where electronic discovery imposes an undue burden or expense. I submit, however, that if a party creates its own burden or expense by converting into an inaccessible format data that it should have reasonably foreseen would be discoverable material at a time when it should have anticipated litigation, then it should not be entitled to shift the costs of restoring and searching the data. Cf. Zubulake IV, supra, 220 F.R.D. at 216 (“While a litigant is under no duty to keep or retain every document in its possession . . . it is under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonable likely to be requested during discovery and/or is the subject of a pending discovery request.”) (internal quotations marks and citation omitted); Houlihan v. Marriott Int’l, Inc., 00 Civ. 7439(RCC), 2003 WL 22271206 at *2 (S.D.N.Y. Sept. 30, 2003) (in determining the scope of duty to preserve evidence in the absence of a discovery order, “the critical question is whether the party knew or should have known that the destroyed evidence was relevant” to the litigation). This would permit parties to maintain data in whatever format they choose, but discourage them from converting evidence to inaccessible formats because the party responsible for the conversion will bear the cost of restoring the data. Furthermore, it would prevent parties from taking unfair advantage of a self-inflicted burden by shifting part of the costs of undoing the burden to an adversary.

If, on the other hand, it is not reasonably foreseeable that the particular evidence in issue will have to be produced, the responding party who converts the evidence into an inaccessible format after the duty to preserve evidence arose may still seek to shift the costs associated with restoring and searching for relevant evidence.

(Footnotes and citations omitted.) The court found that, with the exception of one employee, defendant should have reasonably anticipated having to produce all the named former employees’ emails. Thus, it considered cost-shifting with respect to the restored emails of one former employee.

Ultimately, the court granted in part defendant’s motion for an order shifting the costs of producing emails restored from backup tapes, holding that defendant was entitled to recover 30 percent of the costs of restoring and searching backup tapes for responsive emails of one former employee. The court ordered defendant to submit an affidavit setting forth the precise cost of restoring the backup tapes associated with that former employee. Further, the court ruled that because defendant had not offered any argument as to why the “premium” charged by defendant’s e-discovery vendor should be shifted to plaintiff, defendant did not meet its burden of showing that this cost should be shifted. Finally, the court denied defendant’s request to shift the costs of re-producing several emails in a different format, since the argument was only first raised in defendant’s reply brief.