Unwrapping Zubulake – Part I

Posted by Gregg Mayer on Friday, February 15th, 2008   

No legal case receives more attention regarding electronically stored information (“ESI”) than Zubulake v. UBS Warburg LLC. Without question, it is a landmark case in e-Discovery circles. Judges across the country turn consistently to the reasoning in Zubulake when rendering e-Discovery opinions.

One problem for lawyers and non-lawyers alike is trying to understand everything laid out in Zubulake. The case is spread over six different opinions written in a period of two years. Throughout, we read about the important of maintaining an effective email archiving system and ability to retrieve email.

In the end, CIOs will be convinced that email retention policies are not only important but necessary. More importantly, a company should have an archiving system with the ability to retrieve email – even those purposely deleted by rogue employees.

Zubulake is an employment discrimination case. At issue in the e-Discovery opinions are back-up tapes and deleted email. Ultimately, we learn UBS could not retrieve deliberately deleted email. That results in extraordinary consequences.

This post summarizes the key Zubulake opinions leading up to the multi-million dollar jury verdict. It is meant to provide a basic understanding to CIOs about how Zubulake developed and why it is important. These opinions are chock full of key legal phrases most often used in e-Discovery matters.

CIOs should be familiar with these key phrases and understand a company’s responsibility in retaining and retrieving email and other ESI.

Background

Laura Zubulake, an equities trader who was fired from UBS shortly after filing an EEOC complaint, sued UBS for gender discrimination, failure to promote, and retaliation under federal, state and city law. Zubulake argued key evidence to prove her case was contained in email sent by UBS employees and stored with UBS. At the beginning of the litigation, the email was believed to be on back-up tapes in the control of UBS.

Zubulake I - May 13, 2003

In this first opinion, we learn that UBS claims it will cost approximately $175,000 to restore email on backup tapes that Zubulake wants to review. In this opinion, the judge discusses cost-shifting analysis – that is, who has to pay all that money to restore those backup tapes. In this case, there were 94 backup tapes with potentially responsive email.

Courts may consider cost-shifting analysis when the ESI sought is “not reasonably accessible” – such as back-up tapes – and the other side was not under a duty to preserve the data before moving it onto back-up tapes.

At this stage, the judge believed cost-shifting may be appropriate. In other words, the employee, Laura Zubulake, would have to pay some of the costs associated with retrieving the email. In deciding this, the judge developed a seven-part test to determine how much costs should be shifted:

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.

The first two factors are the most important, the judge wrote. But in order to do a thorough analysis, the judge ordered UBS to restore five backup tapes and detail the results. By examining those five, then the judge could determine how much – if any – of the costs to restore the entire 94 backup tapes should be split with the employee.

Zubulake III – July 24, 2003

Just over two months later, after Zubulake II (which was not an e-Discovery opinion), the court issued its next opinion involving e-Discovery issues.

The judge considered the costs predicted by the sample restoration ordered in the last opinion. Examining the five backup tapes, which cost more than $19,000 to restore, UBS found approximately 600 responsive messages. UBS now estimated it would cost $273,649 to restore the rest of the backup tapes.

With that information at hand, the judge applied the seven-factor test it developed in Zubulake I.

The judge ruled UBS should pay 75 percent of the cost to restore the remaining tapes and the employee the other 25 percent.

Now the stage is set to have the backup tapes restored and the case to move forward. Unfortunately for UBS, it doesn’t go that smoothly.

Coming Soon: Part II - Problems for UBS

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