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Zubulake v. UBS Warburg LLC, 2003 U.S. Dist. LEXIS 1077 (S.D.N.Y. May 13, 2003).

Overview
Considering a request for discovery of information contained on backup tapes, the court established a new three-pronged analysis for deciding disputes regarding the scope and cost of discovery of electronic data. The court's analysis established a method for examining electronic discovery disputes in the context of whether requested data is stored in "accessible" or "inaccessible" format.

Relevant electronic information that is stored in an accessible format must be produced at the responding party's expense. A cost-shifting analysis is appropriate when relevant information is stored in an inaccessible format.

Factual Background
This matter came before the court on plaintiff's ("Zubulake") motion to compel defendant ("UBS") to produce email messages existing only on backup tapes and other archived media.

Zubulake filed suit against UBS, her former employer, alleging gender discrimination and retaliation. Zubulake estimates she may be entitled to as much as $13,000,000 in damages for full back pay and front pay related to her Federal, State and City law claims.

In Zubulake's first document request, she asked for "all documents concerning any communication by or between UBS employees concerning plaintiff." The term "document" was defined in the request to include "without limitation, electronic or computerized data compilations." In response to the request, UBS produced approximately 350 pages of documents, including approximately 100 pages of email messages.

After several months of disagreement and a conference before U.S. Magistrate Judge Gabriel W. Gorenstein, the parties reached an agreement with regard to the document request in question. The agreement stated in part:
Defendants will ask UBS about how to retrieve emails that are saved in the firm's computer system and will produce responsive emails if retrieval is possible and plaintiff names a few individuals.
Zubulake at *8. Pursuant to this agreement, UBS agreed unconditionally to produce responsive emails from the accounts of five individuals named by Zubulake. UBS was to produce emails sent between August 1999 (Zubulake's hire date) and December 2001 (one month after her termination) to the extent production was "possible."

UBS produced no additional emails, and insisted that its original production of approximately 100 pages of email communications was complete. The court noted that UBS never claimed to have searched backup tapes for responsive emails. UBS thereafter informed Zubulake that the cost of producing emails from backup tapes would be prohibitive, and initially estimated the expenses would be in the range of $300,000.

Zubulake took issue with UBS's failure to produce additional emails, claiming that their prior discovery agreement included production of messages from backup tapes. To support her insistence that additional emails existed, Zubulake advised the court that she herself had produced approximately 450 pages of relevant email correspondence, more than four times what UBS had produced.

When the parties reached an impasse on their prior discovery agreement, they appeared again before Judge Gorenstein. The judge ordered UBS to produce a deponent with knowledge of the company's email retention policies so a determination could be made as to whether the backup tapes contained the deleted emails and the burden of producing them. A UBS employee with the title "Manager of Global Messaging" thereafter gave testimony on UBS's email backup protocol and the cost associated with restoring relevant data.

The court analyzed UBS's email backup protocol in the context of the company's business operations and in light of the fact that the SEC requires extensive email backup and preservation protocols. UBS was storing email in two separate places: on backup tapes and on optical disks. The same backup protocol was in place during the entire time period in question, from 1999 through 2001. Backups were performed at regular intervals: daily (at the end of each day); weekly (on Friday nights); and monthly (on the last business day of the month). Nightly backups were kept for 20 working days, weekly tapes were kept for one year, and monthly tapes were kept for three years. After the designated time period passed, the tapes were recycled.

The witness produced for testimony on the company's backup procedures was able to determine that the email files responsive to Zubulake's request were stored on a total of 94 backup tapes. In addition to the backup tapes, emails of some employees (including registered traders) were stored on optical disks if the emails were sent to or received from outside sources. Internal emails were not stored on optical disks. Because the optical disks were neither erasable nor re-writable, UBS retained every external email sent or received by registered traders during the entire period of Zubulake's employment. Testimony from UBS's witness indicated that information on the backup tapes would be difficult to access and search, but that the optical disks would be relatively easily searchable. Four of the five custodians whose documents were requested by Zubulake fell in the category of registered trader, and, therefore, the court presumed their emails-at least external emails-would be contained on the optical disks.

At the time of the present motion, the UBS attorneys presented revised cost estimates, claiming restoration of emails from backup tapes would cost approximately $175,000.

Legal Discussion
In ruling on Zubulake's motion, the court noted the long-standing principles favoring broad discovery, as well as the changing landscape of business communications and the resulting expansion of the universe of discoverable electronic materials. The court summarized the issue presented as follows: "To what extent is inaccessible electronic data discoverable, and who should pay for its production?"

The court also noted the inherent difficulties in applying the various discovery rules in a world where electronic data is often available only from "expensive-to-restore" backup media. Analyzing cost-shifting trends, which consider requiring the requesting party to bear the cost of discovery, the court noted that Rowe Entertainment, Inc. v. William Morris Agency, Inc., 2002 U.S. Dist. LEXIS 8308 (S.D.N.Y. May 9, 2002) has been "the most influential response to the problem of cost-shifting." The court recapped Rowe's eight-factor test for determining when shifting costs of document production to the requesting party is appropriate:
  1. The specificity of the discovery requests.
  2. The likelihood of discovering critical information.
  3. The availability of such information from other sources.
  4. The purposes for which the responding party maintains the requested data.
  5. The relative benefits to the parties of obtaining the information.
  6. The total cost associated with production.
  7. The relative ability of each party to control costs and its incentive to do so.
  8. The resources available to each party.
Zubulake and UBS both agreed that the Rowe test should be applied in this case, but the court was unwilling to accept the notion that cost-shifting must be considered in every case involving the discovery of electronic data. The court noted that electronic data is now involved in virtually every case.

The court determined that cost-shifting should be considered only when electronic discovery imposes an undue burden or expense on the responding party, and questioned the rulings of other courts which have automatically assumed that an undue burden or expense may arise simply because electronic evidence is involved. Rather, the court stated:
Electronic evidence is frequently cheaper and easier to produce than paper evidence because it can be searched automatically, key words can be run for privilege checks, and the production can be made in electronic form obviating the need for mass photocopying.
Zubulake at *27-28.

Setting forth a new analysis for consideration of electronic discovery disputes, the court stated that the question of undue burden must turn primarily on whether the evidence is kept in accessible or inaccessible format. The court further reasoned that, "thanks to search engines, any data that is retained in a machine readable format is typically accessible." Id. at *29. The court further stated, "As long as the data is accessible, it must be produced." Id. at *41.

Therefore, the court reasoned, the determination of whether data is accessible or inaccessible must turn largely on consideration of the type of media on which it is stored. Because backup tapes require a restoration process and therefore do not contain readily usable data, the court determined that data contained on them is typically inaccessible. With this in mind, the court decided that a consideration of cost-shifting was appropriate with regard to the emails stored by UBS on backup tapes, but that all responsive emails stored on the accessible optical disks or active servers must be produced at UBS's expense.

Noting that the Rowe factors generally favor shifting the cost of production to the requesting party, the court reworked the cost-shifting analysis and presented a new seven-factor test:
  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.
  7. The relative benefits to the parties of obtaining the information.
Zubulake at *43. The court instructed that the seven factors should not be weighted equally (as was typically done with the Rowe factors). Instead, the central question must be whether the request imposes an undue burden or expense on the requesting party-or, stated differently, "How important is the sought-after evidence in comparison to the cost of production?" Id. at *44.

The court stated that the first two factors-comprising a "marginal utility" test-are the most important. The second part of the analysis should consider factors three, four and five in making a determination of expense and relative ability to bear the burden of the expense. The court further stated that factor six, considering the importance of the litigation itself, must stand on its own, and has the potential to predominate over the other factors when it comes into play. Finally, factor seven was listed as the least important because of the general presumption that the response to a discovery request will generally benefit the requesting party.

The court concluded that the circumstances in the pending case warranted a sampling of information from the backup media in question to enable the court to develop a factual basis for applying the seven-part test. The court warned against applying the cost-shifting test in a vacuum-as had been done by decisions following Rowe-when information about the data requested is not fully developed. In addition to producing all responsive and accessible data from the optical disks and active servers, the court ordered UBS to produce, at its expense, responsive emails from any five backup tapes selected by Zubulake. UBS was ordered to prepare an affidavit detailing the results of its search of those tapes, as well as the time and money spent. With information from this sampling in hand, the court would be positioned to conduct the appropriate cost-shifting analysis.

In conclusion, the court set forth a new three-step analysis for deciding disputes regarding the scope and cost of discovery of electronic data:
  1. The court must thoroughly understand the responding party's computer system, both with respect to active and stored data. For data kept in an accessible format, the usual rules of discovery apply and the responding party will be required to pay for production. A court should consider cost-shifting only when inaccessible data (such as that contained on backup tapes) is at issue.


  2. Because the cost-shifting analysis is so fact-intensive, the court must determine what data may be found on the inaccessible media. A "sampling" approach is sensible in most cases.


  3. In conducting the cost-shifting analysis, the seven-factor test should be applied and weighted in the manner described above.


Id. at *49-50.


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The information contained herein is not intended to provide legal or other professional advice. Applied Discovery encourages you to conduct thorough research on the subject of electronic discovery.