Court Compels Restoration and Production of Emails from Backup Tapes

United States ex rel Guardiola v. Renown Health, No. 3:12-cv-00295-LRH-VPC, 2015 WL 5056726 (D. Nev. Aug. 25, 2015)

In this case, the court addressed Defendants’ claim that emails stored on backup tapes were not reasonably accessible because of undue burden and cost.  Reasoning that “[a]t bottom there will be a burden or a cost, but not both,” the court found that Defendants failed to show undue burden because of their stated intention to rely on a third party vendor, thus reducing the burden of in-house production by adding some cost and that, after disallowing consideration of the cost of document review and storage, the estimated $136,000 for restoration was not sufficient to render the emails inaccessible.  In so finding, the court reasoned that Defendants must bear some responsibility for the consequences of the decision to use an “archival/backup solution that did not maintain ESI in an indexed or otherwise searchable manner.”  The court also found good cause to compel production and that cost shifting was not warranted.

In this case, Defendants resisted Relator’s motion to compel the production of email from a “gap period” during which the emails were stored on backup tapes after 6 months, pursuant to Defendants’ email retention policy.  Defendants alleged that the emails were not reasonably accessible because of undue burden and cost and noted that the restoration of the tape believed to hold the most relevant emails cost in excess of $35,000, excluding attorney review and production and, when accounting for those costs, surpassed $100,000.

Taking up Relator’s motion to compel, the court provided a detailed analysis of the question of inaccessibility.  Turning first to the question of undue burden, the court rejected the notion that any format was inaccessible per se, reasoning that the party who bears the burden of establishing inaccessibility “must establish that restoration and production of its particular tapes or other storage media, due to their particular aspects and features, would impose undue burden or cost.”  Further reasoning that “there will be a burden or a cost, but not both,” the court noted that restoration was “technologically feasible,” as evidenced by the restoration of one tape, and reasoned that because Defendants indicated the need to rely on a vendor, “[b]y implication, [Defendants] will ameliorate the burdens of in-house production, though at some cost.”  Thus, per the court, the “remaining question [was] only whether undue cost of the third-party vendor ma[de] the gap-period emails not reasonably accessible.”

Regarding the question of “undue cost,” the court rejected Defendants’ argument that “cost” under Rule 26(b)(2)(B) included document review and storage.  Thus, assessing only Defendants’ estimate that restoration would cost approximately $136,000, the court concluded that the amount was not undue. Explaining that “[u]ndue cost is examined not as a number alone, but instead within context of myriad facts,” the court went on note that it was Defendants that “elected to store typical disaster recovery tapes with archival data,” and further reasoned that:

ESI is now a common part and cost of business. Businesses are best situated to weigh for themselves the costs and benefits of various technology solutions in light of their needs. These needs should include some thought to the risk of litigation and corresponding discovery obligations. To the extent that restoration costs in this case owe to Renown’s failure to earlier implement a sensible email retention policy and its choice to use an archival/backup solution that did not maintain ESI in an indexed or otherwise searchable manner—a conclusion that Renown itself advances—Renown must bear some responsibility within the consideration of whether the restoration cost is undue.

In further support of its determination that the cost of restoration was not undue, the court noted Relator’s argument that the estimated amount was an “infinitesimally small portion of [Defendants’] annual revenues.”  Accordingly, Relator’s motion to compel was granted.

Having found the emails to be “reasonably accessible and discoverable,” the court nonetheless turned to the question of whether Realtor had established good cause for the emails’ production, noting that “[e]ven  when ESI in not reasonably accessible, Rule 26(b)(2)(B) permits the court to order production upon the requesting party’s demonstration of good cause.”  Applying the seven factors for consideration of good cause as identified in the 2006 Advisory Committee Notes to FRCP 26(b) (“(1) the specificity of the discovery request; (2) the quantity of information available from other and more easily accessed sources; (3) the failure to produce relevant information that seems likely to have existed but is no longer available on more easily accessed sources; (4) the likelihood of finding relevant, responsive information that cannot be obtained from other, more easily accessed sources; (5) predictions as to the importance and usefulness of further information; (6) the importance of the issues at stake in the litigation; and (7) the parties’ resources”), the court held that “even were the gap-period emails reasonably inaccessible due to undue burden or undue cost, good cause support[ed] their discoverability.”

Finally, after establishing that courts may consider cost shifting only in “one, limited circumstance,” namely, when “the ESI is reasonably inaccessible due to undue burden or undue cost, but the requesting party nevertheless renders it discoverable under the relevant factors,” the court found that cost shifting was “unwarranted.”  In so finding, the court considered eight factors: “(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 cost of production, compared to the amount in controversy; (4) the total cost 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.”

A full copy of the court’s order is available here.

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