Facts
- A former employee sued her employer for gender discrimination and retaliatory discharge.
- During discovery, the plaintiff sought emails for numerous employees using terms aimed at locating messages about the plaintiff and potentially sexist language.
- The employer maintained current employees’ emails in an accessible system but deleted former employees’ emails from that system and retained them only on backup tapes.
- After the discovery request was narrowed, the employer hired an outside vendor to restore and search backup tapes for former employees’ emails.
- The vendor restored and searched a large number of backup tapes, produced tens of thousands of documents, and billed more than $180,000, including a premium for expedited work and additional charges for format conversion.
- The employer moved under Rule 26 to shift some or all restoration and search costs to the plaintiff.
Issues
- Whether the employer had a duty to preserve the former employees’ emails at the time it deleted them from the accessible system and left them only on backup tapes.
- Whether a protective order under Federal Rule of Civil Procedure 26(c) should shift any costs of restoring and searching backup tapes to the requesting party.
- How the Zubulake-style marginal-utility factors apply when ESI is burdensome to retrieve due to the producing party’s own retention practices and vendor choices.
Decision
- The court granted the motion in part and denied it in part.
- The court held the employer had a preservation duty as to most of the former-employee emails when they were removed from the accessible system, because the employer knew or should have known the emails would be relevant to anticipated litigation.
- The court found no preservation duty at the relevant time for one former employee who left before any complaint that would reasonably trigger anticipation of litigation.
- The court permitted cost shifting only as to that one former employee’s backup-tape restoration and search, and only at 30% of those costs.
- The court declined to shift the vendor’s above-market charges and rejected shifting the expedited-work premium for lack of adequate justification.
Legal Principles
- The default rule is that the responding party bears the costs of complying with discovery; cost shifting is an exception available through a Rule 26(c) protective order when discovery is unduly burdensome or expensive.
- A producing party generally cannot rely on burdens it created by placing reasonably foreseeable discoverable information into inaccessible storage to justify shifting retrieval costs to the requesting party.
- In ESI disputes involving inaccessible sources (such as backup tapes), courts apply a factor-based proportionality and marginal-utility analysis (commonly associated with Zubulake) that weighs tailoring, alternative sources, cost relative to stakes and resources, cost-control ability and incentives, issue importance, and relative benefits.
- Discretionary choices by the producing party that increase costs (including selection of an unusually expensive vendor or paying premiums for speed without need) weigh against shifting those costs to the requesting party.
Conclusion
The court largely left backup-tape restoration and search expenses with the employer because it had a duty to preserve most of the emails and could not shift costs arising from its own storage practices and vendor decisions; only a limited 30% cost shift was allowed for one former employee’s emails where no preservation duty existed at the time of deletion.