Strong public policy underpinnings have historically required the producing party to bear the responsibility for e-discovery costs, but because producing electronically stored information (ESI) can easily become prohibitively expensive and time-consuming, at what point is that policy called into question?
In the U.S., the bellwether case of Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) addressed and required that the producing party bear e-discovery costs under the Federal Rules of Civil Procedure (FRCP) but permitted a court to use its broad discretion to shift those costs where it found the execution of e-discovery constituted an undue burden or expense. Nearly a decade later, a uniform understanding of what constitutes “undue burden” remains elusive.
Generally, in order to demonstrate an undue burden, courts require that a party must show that it must take extensive, costly measures to recover ESI. For example, in Annex Books, Inc. v. City of Indianapolis, No. 1:03-cv-918-SEB-TAB, 2012 U.S. Dist. LEXIS 34247 (S.D. Ind. Mar. 14, 2012), the responding party made a “good faith” effort to produce ESI in a reasonably usable format in response to the city’s request by hiring two computer forensic service providers and purchasing the city’s software to import the data. Even so, it could not put the ESI into an acceptable format. Despite these efforts, it was not able to put the ESI into an acceptable format. While the ESI at issue was likely to be relevant, the court found the party had “made a good faith attempt to comply with its discovery obligations” and agreed that accessing the data posed an undue burden.
Furthermore, a number of recent cases suggest that significant expense, standing alone, will not suffice to relieve a party of its discovery obligations. Where parties offer only the exorbitant cost of producing ESI as evidence of an undue burden, courts are less likely to find an undue burden. For instance, in Sundown Energy, L.P. v. Haller, No. 10-4354, 2011 U.S. Dist. LEXIS 124145 (E.D. La. Oct. 26, 2011), the defendant asked the court to compel the plaintiff to produce ESI in native file format, but the plaintiff objected that it would be “costly” to do so. The plaintiff did not show how its ESI was stored or that it was not reasonably accessible, so the court denied the plaintiff’s request for cost shifting and granted the defendant’s motion to compel.
At least one court has found that expense can justify limiting discovery or shifting costs in the class action setting. In Adkins v. EQT Production Co., No. 1:10cv00041, 2012 U.S. Dist. LEXIS 75133 (W.D. Va. May 31, 2012), the court held that an “undue burden” might be imposed on a producing party simply where the cost of undertaking the processing, storing, hosting, and review of roughly six million documents outweighed the potential benefits of access to the data. When the defendant learned that using a litigation support services firm to produce the ESI the plaintiff sought would cost millions of dollars, it filed a motion seeking relief from producing the ESI, despite admitting that the ESI was likely relevant and “readily accessible.” The court concluded that its ability to limit discovery whenever the burden on the producing party was proportionally higher than the potential benefit to the requesting party gave it the power to shift the costs of production.
The U.K., under the guidance of Lord Justice Rupert Jackson and other senior members of the judiciary, is currently considering this important issue in the Jackson reforms set to take effect in April 2013. The reforms are aimed at promoting access to justice at a proportionate cost.
The U.S. may stand to learn from these reforms. But until U.S. courts articulate a clearer and more uniform definition of what constitutes an “undue burden,” parties should be prepared to substantiate the costs of producing the information and to compare these costs to the benefits potentially derived from the ESI. In addition, parties should consider whether their jurisdiction permits the potential recovery of costs under 28 U.S.C. § 1920(4), especially if cost shifting is not available under the FRCP.
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