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Court Orders Production of Backup Tapes Pursuant to Order of Non-Waiver Under Rule 502(d)

Posted in CASE SUMMARIES

Radian Asset Assurance, Inc. v. Coll. of the Christian Bros. of New Mexico, 2010 WL 4928866 (D.N.M. Oct. 22, 2010)

Plaintiff opposed the court’s proposal to order defendant’s production of backup tapes pursuant to an order of non-waiver and argued that defendant should have to search and produce its own electronically stored information (“ESI”) and that the burden and cost of doing so should not be shifted to plaintiff.  Rejecting the notion that such an order amounted to cost-shifting and upon finding the ESI “not reasonably accessible,” the court ordered the tapes’ production pursuant to an order under Rule 502(d).*

In the course of discovery, disagreement arose regarding the production of ESI on backup tapes.  The court proposed production of the tapes subject to an order under Rule 502(d) which would preserve defendant’s claims of privilege.  Plaintiff objected, arguing that the defendant “should be required to search its own ESI and produce discoverable materials — just as [plaintiff] did — and that the burden and cost of doing so should not be shifted.”  Specifically, plaintiff argued that “(i) the College should bear its own cost of production; (ii) the College has not met its burden of showing that producing the [ESI on backup tapes] would create an undue burden; (iii) producing the [backup tapes] violates rule 34(b)(2)(E) of the Federal Rules of Civil Procedure; (iv) producing all the [backup tapes] amounts to an impermissible "data dump"; and (v) rule 502 is not a cost-shifting tool.”

The court addressed each of plaintiff’s arguments in turn and ultimately rejected each.  Responding to plaintiff’s argument that such an order constituted cost-shifting, the court reasoned that it did not, because defendant would bear the cost of producing the backup tapes and must produce all of its ESI.  The court recognized that by ordering defendant to turn over the tapes unreviewed, it was “in effect forcing [Plaintiff] to bear the costs of that review if it wants certain data,” but reasoned that “[s]uch a protective order is not . . . a traditional cost-shifting order.”

Turning to plaintiff’s remaining arguments, the court first found the ESI contained on the at-issue backup tapes to be not reasonably accessible in light of defendant’s representations of the cost of restoring and searching the tapes and, weighing the cost of the production against the likely relevance of the data (and noting that plaintiff had conceded the data was “largely non-responsive”), found that there was good cause to enter a protective order under Rule 26(c)(1).
 Interestingly, despite stating (in footnote) that defendant had "produced an adequate ‘particularization of the facts to support [its] challenge to discovery of electronic records,’" the court made its order contingent upon the submission of affidavits or declarations in support of defendant’s representations of burden.

The court then turned to plaintiff’s argument that because the tapes had been transferred to third party as the result of the sale of defendant’s assets and then returned to defendant pursuant to subpoena, they could not be produced as they were maintained in the usual course of business.  The court rejected this argument as well, reasoning that “[m]erely transferring material between parties . . . does not necessarily alter how it was kept”, particularly where plaintiff had “produced no evidence that the data was not maintained on tape backups before the sale and transfer, but merely suggest[ed] that the transfer somehow transformed the way the data was stored.”  The court further noted its ability to order the production of information in whatever form it deemed appropriate.  Nonetheless, the court conditioned its order upon the submission of evidence that the at-issue ESI had been maintained on backup tapes in the usual course of business.

Quickly disposing of the argument that the production of the tapes constituted an impermissible “document dump”, the court reasoned that the “central question” was “whether the tape backups will be restored and searched before or after they are produced” and that because plaintiff sought to compel the defendant to search the tapes “using the same narrow categories” previously used for searching electronic mail, plaintiff did not “seek to use [defendant’s] superior knowledge of the documents to produce a more refined search” but rather sought “to have [defendant] perform a search that [plaintiff] is equally competent to perform.”  Thus, the court concluded, “ordering [defendant] to produce the [backup tapes] will not result in a document dump that hides the proverbial ‘smoking gun’ in ‘an ocean of production’.”

Finally, once again addressing plaintiff’s argument that the court’s proposed production protocol constituted cost-shifting, the court established its authority for the proposed non-waiver order pursuant to Rule 502(d) and that such an order did not constitute cost-shifting.

Accordingly, contingent upon the production of certain evidence as discussed above, the court ordered production of the backup tapes, including the already-restored data and other evidence at issue and that pursuant to Rule 502(d) such production would not waive any attendant privilege protection.

* This opinion also addressed the discovery of 135 hard drives for which the defendant was ordered to produce “user logs” and to identify the hard drive belonging to one particular individual for production in its entirety.