Zubulake III: Applying Seven-factor Test, Court Orders Plaintiff to Pay 25 Percent of Costs for Restoration of Backup Tapes

Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (“Zubulake III”)

After reviewing the results of the sample restoration, plaintiff moved for an order compelling defendant to produce all remaining backup emails at its expense. The sample restoration netted approximately 600 responsive emails, costing defendant $19,003 for restoration, attorney review and paralegal work associated with the production. The defendant asked that the cost of any further production – estimated to be $273,649 (including $165,955 to restore and search the tapes and $107,695 in attorney and paralegal review costs) – be shifted to plaintiff.

The court applied its seven-factor test, and determined that cost-shifting was appropriate, although the defendant should pay the majority of costs. It determined that plaintiff should bear 25 percent of only the costs of restoration and searching:

As a general rule, where cost-shifting is appropriate, only the costs of restoration and searching should be shifted. Restoration, of course, is the act of making inaccessible material accessible. That “special purpose” or “extraordinary step” should be the subject of cost-shifting. Search costs should also be shifted because they are so intertwined with the restoration process; a vendor like Pinkerton will not only develop and refine the search script, but also necessarily execute the search as it conducts the restoration. However, the responding party should always bear the cost of reviewing and producing electronic data once it has been converted to an accessible form.

2003 WL 21714957, at *8 (footnotes omitted). It stated that there are two reasons why this is so: first, the producing party has the exclusive ability to control the cost of reviewing the documents by choosing the attorneys who will do the work. Further, the producing party unilaterally decides on the review protocol. Second, cost-shifting is only appropriate for inaccessible data; once data is restored to an accessible format, the usual rules of discovery should apply.

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