Zubulake I

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Zubulake v. UBS Warburg [1] is a landmark decision in the area of electronic discovery and the burden of costs for such discovery. It was released on May 13, 2003 and was written by Judge Shira A. Scheindlin of the United States District Court for the Southern District of New York. It is the first in a series of Zubulake judgements relating to discovery issues, and is also referred to as "Zubulake I". See section "Other Proceedings" for information on other Zubulake decisions.

Electronic discovery refers to discovery in legal proceedings such as litigation, government investigations, or Freedom of Information Act requests, where the information sought is in electronic format. Electronic discovery is subject to rules of civil procedure and agreed-upon processes, often involving review for privilege and relevance before data are turned over to the requesting party.

Discovery (law) pre-trial procedure in common law countries for obtaining evidence

Discovery, in the law of common law jurisdictions, is a pre-trial procedure in a lawsuit in which each party, through the law of civil procedure, can obtain evidence from the other party or parties by means of discovery devices such as a request for answers to interrogatories, request for production of documents, request for admissions and depositions. Discovery can be obtained from non-parties using subpoenas. When a discovery request is objected to, the requesting party may seek the assistance of the court by filing a motion to compel discovery.

Shira Scheindlin American judge

Shira A. Scheindlin is a retired United States District Judge of the United States District Court for the Southern District of New York.

Contents

Facts

In the context of a gender discrimination and retaliation lawsuit, the plaintiff Laura Zubulake moved to obtain from defendants UBS Warburg LLC, UBS Warburg and UBS AG ('UBS') "all documents concerning any communication by or between UBS employees concerning the Plaintiff." UBS responded by providing several documents, including e-mail records totaling 100 pages, but did not search its backup tapes or other archives for responsive e-mails. The Plaintiff requested emails from UBS' optical disks, servers and backup tapes.

According to the decision, UBS e-mails were automatically backed up on tapes and optical disks. Optical disks contained only the internal emails of registered traders. To restore a backup tape would take UBS approximately five days, although such restoration could be faster if using services available in the private sector for a higher price. Ninety-four backup tapes were identified as containing information relevant to Zubulake's request.

UBS objected to the plaintiff's request, stating that the cost associated with complying would be too high, which they estimated to be about $175,000 excluding the cost of lawyers reviewing the e-mails. Alternatively, the defendants asked that the plaintiff shoulder the cost of such electronic discovery.

Issues

The issues identified by the Court for consideration were:

1) Should discovery of UBS' electronic data be permitted?

2) Should cost-shifting be considered?

3) What is the proper cost-shifting analysis?

Laws considered by the Court

U.S. Federal Rules of Civil Procedure Rule 26(b)(1) states that "Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense…" creating a wide scope for discovery. [2]

The Federal Rules of Civil Procedure govern civil procedure in United States district courts. The FRCP are promulgated by the United States Supreme Court pursuant to the Rules Enabling Act, and then the United States Congress has seven months to veto the rules promulgated or they become part of the FRCP. The Court's modifications to the rules are usually based upon recommendations from the Judicial Conference of the United States, the federal judiciary's internal policy-making body. Although federal courts are required to apply the substantive law of the states as rules of decision in cases where state law is in question, the federal courts almost always use the FRCP as their rules of civil procedure.

Rule 26(b)(2) of the Rules limits the scope of discovery with proportionality considerations. For example, if "(iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues." [3]

Rule 34 states that one may request the discovery of documents. [4] This applies to electronic data, even if it may "be obtained only with the use of detection devices" where the "respondent may be required to use his devices to translate the data into usable form." [5]

The Court also considered the legal presumption that the side which is responding to a discovery request should pay for the expenses incurred to comply with such a request. [6] ('Oppenheimer presumption'). Although such a presumption exists, the Court does have the discretion (supported by Rule 26(c)) to have the requesting party pay the cost of the discovery if it would result in "undue burden or expense." This is known as "cost shifting." A leading judgment in this area considered by the Court in Zubulake I is The Rowe Entertainment eight factor test. [7]

Analysis of the Issues by the Court (application of the law to the facts)

Should discovery of UBS' electronic data be permitted?

Citing Rule 34, the Court in Zubulake I stated that electronic documents can equally be the subject of discovery as paper documents. Furthermore, this is equally valid for digital data on backup tapes.

Should cost-shifting be considered?

The Court clarified that cost-shifting need not be considered in all cases regarding electronic discovery of digital information, and that the Oppenheimer presumption should be respected. [8]

The Court identified the standard for "undue" at 26(b)(2)(B) of the Rules. It clarified that it is wrong for courts to take the position that the standard for undue is met simply because electronic evidence is involved in a particular case. The Court explained that such a presumption is false because electronic evidence is often easier and cheaper to produce than paper evidence as it can be searched automatically, reducing the need for photocopying, etc.

Also, the Court stated that a factor relating to determining what is "undue" is whether the electronic data is in accessible or inaccessible form, which largely depends on the media it is saved to. The Court identified five classes of data and media according to its accessibility, starting with the most accessible and ending with the least accessible. To paraphrase the Court, the five classes identified were:

  1. Active, online data, such as data on a hard drive. This is the most accessible for of data since it is at its most active. For example, when data is created, accessed and processed the most.
  2. Near-line data, such as data contained on optical disks. Retrieval time is slightly slower than from, for example, a hard drive. However, it is still very accessible.
  3. Offline storage/archives data, which is when data is stored to an optical disk or magnetic tape for archival purposes because it was determined that the chance of needing access to the data is low. In this case, access is slower than near-line data because it requires manual retrieval. The speed of accessing such data can take days depending on storage facility arrangements.
  4. Backup tapes involves saving data to tape-recorder type of device and can hold up to many gigabytes of information. It is not possible to retrieve individual documents because backup tapes contain data which is recorded to mirror of each computer's structure. They also often involve compression of data. For these reasons, restoration of tapes and access to data is slow and costly.
  5. Erased, fragmented or damaged data is the least accessible form of data. Fragmented data occurs if data is stored in clusters.

The Court provided the guidance that, in general, the first three classes may be considered accessible while the last two may be considered inaccessible. In the specific case before the Court, it was found that there existed both accessible and inaccessible data, with active e-mail files falling into the first category, and e-mails saved to optical disk falling into the second or third category. Since backup tapes are a form of inaccessible data, the Court found it appropriate to consider cost-shifting for the recovery of e-mails from those tapes.

What is the proper cost-shifting analysis?

The Court examined the Rowe seven factor test and found that it favoured cost-shifting. To respect the Oppenheimer presumption and ensure that the test be neutral, the Court modified the Rowe test to the following 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; and

7. The relative benefits to the parties of obtaining the information.

Further guidance was provided by the Court that these factors should not be weighed equally, but rather in descending order with the first two being given the most weight. Also, a factual basis is required to support the consideration of the factors. To do so, it may be possible to require that a small sample be recovered so as to determine whether the test is met.

Conclusion

The Court concludes by describing its three step approach regarding electronic discovery and costs for such discovery:

  1. Active and stored data of the computer system must be very well understood. Costs for retrieving accessible information should be covered by the responder. Only when retrieving inaccessible data should cost-shifting be considered.
  2. Due to the factual nature of the cost-shifting test, it may be prudent to request that a small sample of the inaccessible data be restored.
  3. Apply the cost-shifting test.

The Court ordered that the defendants:

produce all responsive e-mails that exist on its optical disks or on its active servers (i.e., in HP OpenMail files) at its own expense. UBS is also ordered to produce, at its expense, responsive emails from any five backups tapes selected by Zubulake. UBS should then prepare an affidavit detailing the results of its search, as well as the time and money spent. After reviewing the contents of the backup tapes and UBS's certification, the Court will conduct the appropriate cost-shifting analysis.

Other Proceedings

Zubulake II [9] - also released on May 13, 2003 found that the plaintiff was not under an obligation to report alleged securities violations contained in a deposition to the Court.

Zubulake III [10] - released on July 24, 2003 applied the cost-shifting test outlined in Zubulake I based on the sample recovery of data from five backup tapes. The Court found that the plaintiff should pay for 25 per cent of the cost of recovering the remainder of the back up tapes, as well as the cost to review the data for privileged information. The defendant was ordered pay 75 per cent of the cost of recovering the back up tapes.

Zubulake IV [11] - issued on October 22, 2003 dealt with the issue of deleted e-mails which were not saved according to the UBS retention policy and in light of the impending litigation of the plaintiff. The plaintiff was not able to show the deleted e-mails would have supported her case. The defendants were nevertheless ordered to cover costs associated with re-deposing certain witnesses.

Zubulake V [12] issued on July 20, 2004, involved the plaintiff wanting an adverse inference to the jury based on the defendants delays and incompleteness in providing requested e-mails from backup tapes. Also, the Court found that deleted e-mails prejudiced the plaintiff's case. The Court examined the issue of destruction of evidence, spoliation and duty of litigation hold.

Zubulake Revisited [13] - In Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, LLC, et al., 05 Civ. 9016 released on January 11, 2010, Judge Scheindlin pens a judgement titled "Zubulake Revisited" regarding spoilation and litigation hold. (Scheindlin's ruling regarding litigation holds was rejected by the Second Circuit Court of Appeals in a different case. [14] )

See also

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Zubulake v. UBS Warburg is a case heard between 2003 and 2005 in the United States District Court for the Southern District of New York. Judge Shira Scheindlin, presiding over the case, issued a series of groundbreaking opinions in the field of electronic discovery. Plaintiff Laura Zubulake filed suit against her former employer UBS, alleging gender discrimination, failure to promote, and retaliation. Judge Shira Scheindlin's rulings comprise some of the most often cited in the area of electronic discovery, and were made prior to the 2006 amendments to the Federal Rules of Civil Procedure. The relevant opinions in the field are known as Zubulake I, Zubulake III, Zubulake IV, and Zubulake V. In 2012, the plaintiff published a book about her e-discovery experiences titled Zubulake's e-Discovery: The Untold Story of my Quest for Justice.

Civil discovery under United States federal law is wide-ranging and can involve any material which is relevant to the case except information which is privileged, information which is the work product of the opposing party, or certain kinds of expert opinions. Electronic discovery or "e-discovery" is used when the material is stored on electronic media.

Einstein v 357 LLC is a United States New York Supreme Court landmark decision which addresses a party's discovery obligations and the safeguarding of evidence. In particular, this decision addresses the issue of the intentional destruction of digital evidence when litigation has commenced or is reasonably anticipated. In short, this decision eradicates the excuse of ignorance in terms of how electronically stored information is saved, deleted, and retrieved.

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References

  1. ↑ 217 F.RD. 309
  2. ↑ Fed. R. Civ. P. 26(b)(1)
  3. ↑ Fed. R. Civ. P. 26(b)(2)
  4. ↑ Fed. R. Civ. P. 34(a)
  5. ↑ Notes of Advisory Committee on 1970 Amendments to Rules, Federal Rules of Civil Procedure: "The inclusive description of "documents" is revised to accord with changing technology. It makes clear that Rule 34 applies to electronic data compilations from which information can be obtained only with the use of detection devices, and that when the data can as a practical matter be made usable by the discovering party only through respondent's devices, respondent may be required to use his devices to translate the data into usable form."
  6. ↑ Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358, 57 L. Ed. 2d 253, 98 S. Ct. 2380 (1978)
  7. ↑ Rowe Entm't, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421
  8. ↑ The Court cited as further rationale that cost-shifting can serve to end the discovery process, especially in the case of private litigants where one of the parties is a large corporation. This is because large corporations tend to use digital methods of communication, with some actively moving towards paper free environments. As a result, in certain situations, cost-shifting may result in claims being prevented which would otherwise be valid.] The Court stated that cost-shifting for electronic discovery should be limited to situations where it poses "undue burden or expense" in order to respond to the discovery request.
  9. ↑ 55 F.R.S. 3d 622 Archived February 22, 2012, at the Wayback Machine
  10. ↑ 216 F.R.D. 280 Archived February 22, 2012, at the Wayback Machine
  11. ↑ 220 F.R.D. 212 Archived February 22, 2012, at the Wayback Machine
  12. ↑ 229 F.R.D. 422 Archived February 22, 2012, at the Wayback Machine
  13. ↑ Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, LLC, et al., 05 Civ. 9016, January 11, 2010
  14. ↑ Chin v. Port Authority 685 F.3d 135, July 10, 2012

United States District Court for the Southern District of New York cases

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