Who Pays To Produce ESI?

Posted by Gregg Mayer on Wednesday, February 20th, 2008   

Electronically stored information (“ESI”), particularly old email, can be expensive to retrieve if you do not have an effective archiving system. Moreover, if you move email to backup tapes after you anticipate litigation, the costs could skyrocket.

Why? In litigation you often have to pay to produce your evidence and the other side has to pay to produce theirs.

One exception that has evolved with ESI involves the production of inaccessible information on backup tapes if – and this is a big if – the company could not reasonably anticipate the litigation before it moved the ESI to the backup tapes. Under these circumstances, you may be able to shift the cost to produce the ESI to the other side.

One way to avoid ever worrying about this risk is simply to have an efficient, searchable archive where you store all of your email without resorting to backup tapes. But if you do resort to backup tapes for old email, then cost-shifting may be possible, even if it is for only part of the costs.

An illustrative case for cost-shifting is Quinby v. WestLB, a federal employment discrimination case in New York.

In this case, the company wanted to shift the costs of restoring backup tapes for old email to the plaintiff. The company claimed the tapes were inaccessible and costly to restore. As noted above, backup tapes are generally considered “inaccessible,” so they do not have to be produced for litigation unless the other side shows good cause – or, unless the company reasonably anticipated the litigation for which the email is relevant prior to moving them to backup tapes.

In Quinby, the judge found the company could reasonably anticipate litigation for some email prior to moving them to back-up tapes. As explained by the judge:

(C)ost-shifting may be considered concerning the restoration and search of backup tapes because the process is burdensome and costly, the appropriateness of cost-shifting is less clear here because it appears that defendant converted the Former Employees’ e-mails into an inaccessible format after it should have anticipated this litigation.

It cost the company $226,266.60 to restore the backup tapes. In determining whether any of those costs should be shifted to the plaintiff, the judge walked through a series of factors – a legal test – to determine if any of the costs should be shifted. These factors are:

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 costs of production, compared to the amount in controversy;
4. The total costs 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

After reviewing those factors, the judge decided that the plaintiff – the employee suing – would have to pay 30 percent of the costs. The company had to bear the other 70 percent.

For a nice discussion about cost-shifting written by a federal judge, read this article.

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