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Court Orders Defendant to Restore One-Fourth of Its Backup Tapes, at Defendant’s Expense, Given Gaps in Production

Posted in CASE SUMMARIES

AAB Joint Venture v. United States, 75 Fed. Cl. 432 (Fed. Cl. 2007)

In this construction litigation involving claims for additional compensation based on differing site conditions, plaintiff moved to compel discovery.  Plaintiff noted that defendant had identified in its discovery responses numerous individuals who were active in the review of the project design, and who were known to have generated email related to the subject matter of the litigation.  However, defendant had produced few if any emails from these individuals, and for the six individuals for whom emails were produced, there were gaps in the production.

Defendant maintained that thousands of electronic documents were produced, but conceded that it was unable to locate emails of some individuals.  Nevertheless, defendant argued that to restore backup tapes that may contain such emails would cost between $85,000 and $150,000 and take 30 days.  Defendant further argued that many of the emails that were produced contained communications to/from numerous individuals, including those whose own emails were not produced.  Therefore, defendant contended that defendant had in fact produced emails for almost all of the individuals, and that production of additional email would likely only duplicate those already produced.

The court was not persuaded by defendant’s arguments, and agreed that defendant’s overall production of emails had been far from adequate.  It further stated that, while cost was an issue for the court to consider in addressing a motion to compel, it was not the only consideration.  It continued:

Here, because the Court finds that defendant had a duty to preserve evidence, as set forth below, the Court cannot relieve Defendant of its duty to produce those documents merely because Defendant has chosen a means to preserve the evidence which makes ultimate production of relevant documents expensive.  Accordingly, the Court concludes that Defendant has not adequately responded to Plaintiff’s requests for production of electronic documents and that supplementation of its response to Plaintiff’s requests is necessary.

The court found that the duty to preserve arose in July 2002, when Requests for Equitable Adjustments were filed by the plaintiff, and when defendant could reasonably have anticipated the instant litigation.  It concluded that any relevant email or other documents in defendant’s possession on or after July 2002 should have been preserved by defendant for production during discovery.  Defendant contended that some emails may be among those stored on backup tapes that it argued were very expensive and time-consuming to restore.  Defendant stated that all back-up tapes relating to the project had been collected, and that defendant was willing to restore some of the backup tapes, provided that a manageable number of tapes was requested.

Plaintiff asked the court to order defendant to produce at its own expense those back-up tapes from July 2003 to the present that were preserved, and to provide plaintiff with access to all hard drives.  Plaintiff argued that the fact that defendant chose a more expensive back-up medium provided no justification to shift the cost of producing discoverable documents to plaintiff.

The court ruled as follows:

The Court agrees that Defendant was under a duty to preserve e-mails from July 2002 to the present, and that Defendant’s decision to transfer the e-mails to back-up tapes does not exempt Defendant from its responsibility to produce relevant e-mails.  See, e.g., Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 316-17 (S.D.N.Y.2003); In re Brand Name Prescription Drugs, Nos. 94 C 897, MDL 997, 1995 WL 360526, at * 1 (N.D.Ill. July 15, 1995).  To permit a party "to reap the business benefits of such technology and simultaneously use that technology as a shield in litigation would lead to incongruous and unfair results."  Linnen v. A.H. Robins Co., No. 97-2307, 1999 WL 462015, at *6 (Mass.Super. Ct. June 16, 1999).  On the other hand, back-up tapes are principally deployed to protect against destruction of data if the network crashes, not to catalogue information for business purposes, so to require a responding party to pay the full expense of restoration of back-up tapes may be unreasonable.  McPeek v. Ashcroft, 202 F.R.D. 31, 33-34 (D.D.C.2001).  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, 358 (1978). In assessing whether cost-shifting to the requesting party is appropriate, courts have employed the marginal utility test, McPeek, 202 F.R.D. at 34, or have looked to various factors.  Zubulake, 217 F.R.D. at 322; Medtronic Sofamor Danek, Inc. v. Michelson, 229 F.R.D. 550, 553 (W.D.Tenn.2003); Rowe Entm’t, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421, 429 (S.D.N.Y.2002).  Following either approach, the Court must attempt to balance the likelihood that restored documents will prove relevant to the instant litigation with whether the cost of restoration places an undue burden on Defendant.  RCFC 26(b)(2)(iii); see Medtronic, 229 F.R.D. at 553; In re Amsted Indus., Inc., No. 01 C 2963, 2002 WL 31844956, at *2 (N.D.Ill.Dec. 18, 2002).  The estimated cost of $85,000 to $150,000 to restore the e-mails is small in comparison to the amount of the suit, which is over $30 million.  Additional costs will also be incurred by Defendant, however, in sorting through the e-mails to identify those that are responsive to Plaintiff’s discovery requests.  Meanwhile, Plaintiff has provided no clear evidence to indicate that relevant documents are likely to be contained in the back-up tapes.

Under the circumstances, the Court finds that a reasonable solution is for Defendant to restore a portion of the back-up tapes from time periods specified by Plaintiff.  See, e.g., McPeek, 202 F.R.D. at 34-35; Linnen, 1999 WL 462015, at *5-6.  A phased approach will allow the Court to engage in a more meaningful benefit-burden analysis before determining whether to require cost-shifting or cost-sharing.  Manual for Complex Litigation § 11.423, at 58 (4th ed.2004).  After Defendant restores a portion of the back-up tapes and identifies responsive documents contained therein, Plaintiff will then have the opportunity to review responsive material to determine if it contains relevant evidence and if additional restoration of back-up tapes is warranted.  The Court believes that restoration of one-fourth of the total back-up tapes should be adequate to determine whether the tapes are likely to possess relevant evidence.  Defendant shall bear the costs of restoration of the initial sample of back-up tapes and screening the sample to identify responsive documents.  The parties will then have an opportunity to argue before the Court whether or not additional restoration of back-up tapes is likely to lead to production of relevant evidence and consequently who should bear the cost for additional restoration.

(Footnotes omitted.)