Major Tours, Inc. v. Colorel, 2010 WL 2557250 (D.N.J. June 22, 2010)
Appealing an order from the magistrate judge, plaintiffs argued that defendants should bear the costs of producing inaccessible data where it was defendants’ failure to preserve that resulted in the data’s inaccessibility. The court declined to support such a rule, finding that defendants’ culpability was merely a factor for consideration when deciding whether to compel production for good cause. The court also found that the magistrate judge had adequately considered defendants’ culpability when crafting the underlying order and did not abuse his discretion. Accordingly, the order was affirmed.
Plaintiffs sought to compel production of inaccessible data which had been deleted from defendants’ active servers and was available only on backup tapes. Defendants sought a protective order to avoid production asserting the estimated cost of recovery was $1.5 million. The magistrate judge found that despite a duty to preserve the information at issue, defendants failed to properly issue a formal litigation hold for almost four years. The magistrate judge also found the data was inaccessible and, after conducting the analysis to determine if plaintiffs had nevertheless demonstrated good cause for production, ordered that plaintiffs could request the production of information on specific tapes if willing to bear part or all of the retrieval costs, depending on which tapes were at issue, and that some tapes need not be produced at all. Plaintiffs appealed and argued that “Defendants’ failure to maintain the emails in an accessible format should not provide a basis upon which to avoid having to produce them, because Defendants had an obligation to produce them for litigation.”
Taking up the issue, the court first questioned “whether, as a matter of law, a protective order under Rule 26(b)(2)(B) can ever be granted to a party when the evidence is inaccessible because of that party’s failure to institute a litigation hold” and concluded that “no such bright line rule exists.” Moreover, the court declined to create such a bright line rule, finding instead that defendants’ culpability in failing to preserve the information was merely one factor for consideration when determining whether to compel production. In response to plaintiffs’ assertions that without such a rule "future parties would have a road map to avoiding discovery obligations", the court made clear that it took no position “as to the question of whether a bright line rule exists with respect to a party intentionally permitting relevant evidence to become inaccessible, rather than negligently failing to preserve it.” The court also noted the existence of “penalties available for spoliation wholly apart from whether the Court will order production of backup tapes” and clarified that “the lack of a bright line rule should not be equated with the existence of the opposite rule; it does not mean that any given defendant will avoid the obligation of expensive retrieval of backup information.”
Considering whether the magistrate judge adequately considered defendants’ culpability in the present case, the court found that he did and affirmed his order. Specifically, the court noted the magistrate judge’s findings that in light of the volume of evidence produced by defendants, the backup tapes were “likely to produce evidence of only marginal, cumulative benefit and at great expense” and that “this outweighed the slim likelihood of the discovery of non-cumulative evidence even if there was some unknown degree of negligent spoliation."