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ESI Tests: The Seven Factor Zubalake Test for Cost Shifting

Posted by rjbiii on August 29, 2007

Seven Factor Zubulake (Zubulake I, 217 F.R.D. at 322) Test for the cost of producing data from inaccessible sources (an adaptation of the Rowe Test); factors are listed in descending order of importance:

  • The extent to which the request is specifically tailored to discover relevant information;
  • The availability of such information from other sources;
  • The total costs of production compared to the amount in controversy;
  • The total costs of production, compared to the resources available to each party;
  • The relative ability of each party to control costs and its incentive to do so;
  • The importance of the issues at stake in the litigation; and
  • The relative benefits to the parties of obtaining the information.

Application of Seven Factor Test:
The initial question is whether it is appropriate to shift the costs of electronic document production. Quinby v. WESTLB AG, 2006 WL 2597900 (S.D.N.Y. 2006).
When combined, the first two factors are known as the “marginal utility test.” Id. (citing Zubulake III, 216 F.R.D. at 284).
The more likely it is that the backup tape contains information that is relevant to a claim or defense, the fairer it is that the [responding party] search at its own expense. The less likely it is, the more unjust it would be to make the [responding party] search at its own expense. The difference is at the margin.

If the information is available from another source, the marginal utility from the e-discovery is low, and would support cost-shifting. Id.

Application of the first Zubulake factor: The extent to which the request is specifically tailored to discover relevant information.

Π argues that because the court engaged in the “pairing down” process, the document request, as modified by the court, was per se specifically tailored to discover relevant information. The court disagreed. A court may limit the scope of discovery in several ways. Fed. R. Civ. Proc. 26(b)(2) permits the court to limit discovery if the burden or expense of production outweighs its potential benefits, and R. 26(c) permits the issueance of protective orders, including by shifting the costs of unduly burdensome or expensive production. Narrowing a document request pursuant to Rule 26(b)(2) does not preclude the Court from also granting a protective order in the form of cost-shifting for those documents that were ordered to be produced. Id. (citing Zubulake III, 216 F.R.D. at 283).
Even where cost-shifting is granted, the Δ must still pay for the majority of the production b/c of the presumption that the responding party pays for its discovery costs. Id. (citing Wiginton v. CB Richard Ellis, Inc., 229 F.R.D. at 577).
In addition, shifting a share that is too costly may chill the rights of litigants to pursue meritorious claims. Id. (citing Zublake III, 216 F.R.D. 289).

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Posted in 2nd Circuit, Back Up Tapes, Cost Shifting, Judge Shira A. Scheindlin, Marginal Utility Test, S.D.N.Y, Undue burden or cost | 1 Comment »