Demonstrating the True Burden of e-Evidence

Approximately 3 years ago in Danis v. USN Communications, 2000 WL 1694325 (N.D. Ill. Oct. 23, 2000), Magistrate Judge Schenkier stated: “At some point, a party and/or its attorneys must be held responsible for knowing what documents are discoverable and where to find them.” He prefaced this statement by reasoning that we cannot create a loophole in the discovery rules by allowing counsel to argue: “Judge, we just didn't know those tapes existed.”

Case law in the past 3 years, most notably in Zubulake v. UBS Warburg, 2003 WL 21087884 (S.D.N.Y. May 13, 2003) decision, has expanded a corporate counselor's Danis duty to “know thy e-data.” See also Zubulake v. UBS Warburg, 216 F.R.D. 280 (S.D.N.Y. 2003). Counsel representing today's 21st century companies need to know more than simply where electronic evidence resides; they also have a duty to know if that data is accessible (ie, how easily it can be restored and produced) and how much the whole process is going to cost.

The Archeological Expedition for e-Documents

Federal Rule of Civil Procedure 26(b)(2)(iii) provides that if the specific burden or expense associated with the proposed production of records is overly broad or unduly burdensome to the producing party, the court has the power to limit the discovery. This rule applies equally to electronic documents as to paper documents. See Anti-Monopoly, Inc. v. Hasbro, Inc., 1995 WL 649934 (S.D.N.Y. Nov. 3, 1995). When it comes to demonstration of burden, blanket objections of burden and expense have been largely unsuccessful for producing parties. See Wright v. AmSouth Bancorp, 320 F.3d 1198 (11th Cir. 2003). Instead, counsel for both parties must advocate with technical specificity.

In the opinion of Judge Scheindlin as expressed in Zubulake, whether the production of electronic documents is unduly burdensome turns primarily on whether it is kept in an accessible or inaccessible format. In the paper document world, the demonstration of burden was more obvious. A paper document is accessible if it exists (ie, is not shredded), is readily available or retrievable from a box in offsite storage, and perhaps, if it is reasonably indexed. The paper world compelled corporate counsel to ask whether its companies' documents were stored in a hard to reach location (such as out of the country), whether the documents were converted to microfiche, or if they were stored chaotically, with no organizational system.

In the world of electronic data, the question in-counsel must posit is slightly different and definitely more complex. The demonstration of burden turns on whether the electronic data is stored in an accessible or inaccessible media format. Zubulake identified five categories of data and listed them in what Judge Scheindlin stated as the order from most accessible to least accessible. While many experts debate the labels assigned to these categories, counsel should certainly consult an e-evidence expert with regard to determining the true accessibility of client data. The categories are:

1. Active, online data: Data that can be seen and accessed upon normal booting of the computer is known as active, online data. This data is generally stored on desktop, laptop, and server hard drives. Active data is accessed frequently and quickly by users.

2. Near-line data: Near-line data typically consists of a removable storage device that houses data. Data can be created on and read from the storage device if placed into a computer system. Today, the most common type of removable media, the 3.5″ floppy disk, has virtually gone the way of the dinosaur due to the small amount of data these disks can hold. The more likely find is the floppy disk's descendants, the CD-ROM and DVD or their high-density counterparts such as the Zip disk and PCMCIA memory cards. Near-line data is easily accessible if already placed in the appropriate read device.

3. Offline storage/archives: Offline storage media is a removable optical disk or magnetic tape, which can be labeled and stored in a shelf or rack. Off-line storage of electronic records is traditionally used for making disaster copies of records. Likelihood of retrieval of offline storage is minimal and accessibility is much slower than online or near-line storage.

4. Backup tapes: Backup tape data is created by a device much like a tape recorder that reads data from the computer system and writes it onto a tape. As with offline storage, organizations typically back data up to tape to archive electronic information in the event of catastrophic loss or disaster recovery. Tape drives have data capacities of anywhere from a few hundred kilobytes to several gigabytes. Data contained on backup tapes is not very accessible because the lack of data organization on the tape and the special restoration software needed to restore the tape.

5. Erased, fragmented, or damaged data: Media storage devices may contain deleted data contained in temporary files or damaged data. This data is not accessible to the common computer user. Instead, skilled computer forensic engineers are needed recover and analyze the data in order to make it accessible.

As seen above, information deemed “accessible” is stored in a readily usable format and does not need to be restored or manipulated to be usable. “Inaccessible” data, on the other hand, is not readily usable and must be restored, recovered, or repaired to be usable. Most in-house counsel whose companies are involved in litigation are finding that their cases involve more than one category of media, for example, active user email and documents stored on laptops and desktops, near-line data on removable media, and archived data on backup tape.

Cost Allocation Arguments

Predictably, data accessibility or inaccessibility has a direct impact on the costs involved with collecting and producing a corporation's data. This is primarily due to the fact that an e-evidence expert must render inaccessible data accessible before it can be processed further for production. Thus, understanding the media format, and the accessibility thereof, will help the corporation's counsel quantify burden and expense arguments to the court.

The best way to communicate the quantification of burden and expense is to retain an electronic evidence expert to evaluate the accessibility of the data and then provide an affidavit to the court and opposition, stating what steps will be taken to render inaccessible data accessible and what the cost of the effort will be.

Based on the factual record relating to data accessibility in Zubulake, the court asserted that the ease and low cost associated with the production of online and near-line data meant that the corporate producing party should bear the production costs like most typical discovery requests. In fact, the court stated that “[I]t would be wholly inappropriate to even consider cost-shifting. [The Defendant] maintains the data in an accessible and usable format, and can respond to Zubulake's request cheaply and quickly.”

For backup tape data, however, the court noted that it was an entirely different matter given the expense and time associated with restoration for the corporate defendant. The court stated that for these inaccessible media formats, it is appropriate to consider cost shifting. Judge Scheindlin then set forth a seven-factor test to determine if costs should be shifted to the requesting party. The seven 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 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 issue at stake in the litigation.
7. The relative benefits to the parties of obtaining the information.

Because of the expense and burden associated with e-document production, courts are typically proceeding with caution; setting forth detailed protocols for discovery and production of a sample set of the entire inaccessible data universe. Several cases prior to Zubulake relied on such sampling approaches to determine if producing a larger volume of electronic evidence was worth the cost involved. See, eg, McPeek v. Ashcroft, 202 F.R.D. 31 (D.D.C. 2001). Such cautious sampling approaches are beneficial to a corporate party with large volumes of potentially relevant data in an inaccessible format. In-house counsel should be prepared for the requesting party to identify which of the corporation's backup tapes would most likely produce the largest amount of responsive data to support the case. Once the backup tapes are been selected and the search terms solidified, production is relatively straightforward for the producing corporation. The results of the sample are then presented to the court to determine if additional data restoration and production is necessary.

Putting it all Together

All of these complex issues roll up into two key questions for today's in-house counsel: the extent to which electronic data is discoverable and who should pay for its production? In answering these questions, the following recommendations should guide the corporate counselor:

• Become familiar with the case law. Currently, the law governing electronic discovery is unsettled, inconsistent, and highly case specific. No clear protocol has developed in regards to what data types must be produced. As such, plenty of room exists for strong advocacy.
• Investigate your corporation's and opponent's electronic data infrastructure. Understand what data your corporation and your opponent has and how it is stored. Do not shy away from technical hurdles. Be prepared to argue accessibility and expense. This means quantifying the resources, time, and cost involved in restoring, converting, searching, reviewing, and producing the data.
• Prepare cost shifting arguments and responses. Counsel for both the requesting party and the responding party should become familiar with cost allocation arguments set forth in the Zubulake decisions and other relevant cases. Craft arguments and responses accordingly.

Approximately 3 years ago in Danis v. USN Communications, 2000 WL 1694325 (N.D. Ill. Oct. 23, 2000), Magistrate Judge Schenkier stated: “At some point, a party and/or its attorneys must be held responsible for knowing what documents are discoverable and where to find them.” He prefaced this statement by reasoning that we cannot create a loophole in the discovery rules by allowing counsel to argue: “Judge, we just didn't know those tapes existed.”

Case law in the past 3 years, most notably in Zubulake v. UBS Warburg, 2003 WL 21087884 (S.D.N.Y. May 13, 2003) decision, has expanded a corporate counselor's Danis duty to “know thy e-data.” See also Zubulake v. UBS Warburg , 216 F.R.D. 280 (S.D.N.Y. 2003). Counsel representing today's 21st century companies need to know more than simply where electronic evidence resides; they also have a duty to know if that data is accessible (ie, how easily it can be restored and produced) and how much the whole process is going to cost.

The Archeological Expedition for e-Documents

Federal Rule of Civil Procedure 26(b)(2)(iii) provides that if the specific burden or expense associated with the proposed production of records is overly broad or unduly burdensome to the producing party, the court has the power to limit the discovery. This rule applies equally to electronic documents as to paper documents. See Anti-Monopoly, Inc. v. Hasbro, Inc., 1995 WL 649934 (S.D.N.Y. Nov. 3, 1995). When it comes to demonstration of burden, blanket objections of burden and expense have been largely unsuccessful for producing parties. See Wright v. AmSouth Bancorp , 320 F.3d 1198 (11th Cir. 2003). Instead, counsel for both parties must advocate with technical specificity.

In the opinion of Judge Scheindlin as expressed in Zubulake, whether the production of electronic documents is unduly burdensome turns primarily on whether it is kept in an accessible or inaccessible format. In the paper document world, the demonstration of burden was more obvious. A paper document is accessible if it exists (ie, is not shredded), is readily available or retrievable from a box in offsite storage, and perhaps, if it is reasonably indexed. The paper world compelled corporate counsel to ask whether its companies' documents were stored in a hard to reach location (such as out of the country), whether the documents were converted to microfiche, or if they were stored chaotically, with no organizational system.

In the world of electronic data, the question in-counsel must posit is slightly different and definitely more complex. The demonstration of burden turns on whether the electronic data is stored in an accessible or inaccessible media format. Zubulake identified five categories of data and listed them in what Judge Scheindlin stated as the order from most accessible to least accessible. While many experts debate the labels assigned to these categories, counsel should certainly consult an e-evidence expert with regard to determining the true accessibility of client data. The categories are:

1. Active, online data: Data that can be seen and accessed upon normal booting of the computer is known as active, online data. This data is generally stored on desktop, laptop, and server hard drives. Active data is accessed frequently and quickly by users.

2. Near-line data: Near-line data typically consists of a removable storage device that houses data. Data can be created on and read from the storage device if placed into a computer system. Today, the most common type of removable media, the 3.5″ floppy disk, has virtually gone the way of the dinosaur due to the small amount of data these disks can hold. The more likely find is the floppy disk's descendants, the CD-ROM and DVD or their high-density counterparts such as the Zip disk and PCMCIA memory cards. Near-line data is easily accessible if already placed in the appropriate read device.

3. Offline storage/archives: Offline storage media is a removable optical disk or magnetic tape, which can be labeled and stored in a shelf or rack. Off-line storage of electronic records is traditionally used for making disaster copies of records. Likelihood of retrieval of offline storage is minimal and accessibility is much slower than online or near-line storage.

4. Backup tapes: Backup tape data is created by a device much like a tape recorder that reads data from the computer system and writes it onto a tape. As with offline storage, organizations typically back data up to tape to archive electronic information in the event of catastrophic loss or disaster recovery. Tape drives have data capacities of anywhere from a few hundred kilobytes to several gigabytes. Data contained on backup tapes is not very accessible because the lack of data organization on the tape and the special restoration software needed to restore the tape.

5. Erased, fragmented, or damaged data: Media storage devices may contain deleted data contained in temporary files or damaged data. This data is not accessible to the common computer user. Instead, skilled computer forensic engineers are needed recover and analyze the data in order to make it accessible.

As seen above, information deemed “accessible” is stored in a readily usable format and does not need to be restored or manipulated to be usable. “Inaccessible” data, on the other hand, is not readily usable and must be restored, recovered, or repaired to be usable. Most in-house counsel whose companies are involved in litigation are finding that their cases involve more than one category of media, for example, active user email and documents stored on laptops and desktops, near-line data on removable media, and archived data on backup tape.

Cost Allocation Arguments

Predictably, data accessibility or inaccessibility has a direct impact on the costs involved with collecting and producing a corporation's data. This is primarily due to the fact that an e-evidence expert must render inaccessible data accessible before it can be processed further for production. Thus, understanding the media format, and the accessibility thereof, will help the corporation's counsel quantify burden and expense arguments to the court.

The best way to communicate the quantification of burden and expense is to retain an electronic evidence expert to evaluate the accessibility of the data and then provide an affidavit to the court and opposition, stating what steps will be taken to render inaccessible data accessible and what the cost of the effort will be.

Based on the factual record relating to data accessibility in Zubulake, the court asserted that the ease and low cost associated with the production of online and near-line data meant that the corporate producing party should bear the production costs like most typical discovery requests. In fact, the court stated that “[I]t would be wholly inappropriate to even consider cost-shifting. [The Defendant] maintains the data in an accessible and usable format, and can respond to Zubulake's request cheaply and quickly.”

For backup tape data, however, the court noted that it was an entirely different matter given the expense and time associated with restoration for the corporate defendant. The court stated that for these inaccessible media formats, it is appropriate to consider cost shifting. Judge Scheindlin then set forth a seven-factor test to determine if costs should be shifted to the requesting party. The seven 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 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 issue at stake in the litigation.
7. The relative benefits to the parties of obtaining the information.

Because of the expense and burden associated with e-document production, courts are typically proceeding with caution; setting forth detailed protocols for discovery and production of a sample set of the entire inaccessible data universe. Several cases prior to Zubulake relied on such sampling approaches to determine if producing a larger volume of electronic evidence was worth the cost involved. See , eg , McPeek v. Ashcroft , 202 F.R.D. 31 (D.D.C. 2001). Such cautious sampling approaches are beneficial to a corporate party with large volumes of potentially relevant data in an inaccessible format. In-house counsel should be prepared for the requesting party to identify which of the corporation's backup tapes would most likely produce the largest amount of responsive data to support the case. Once the backup tapes are been selected and the search terms solidified, production is relatively straightforward for the producing corporation. The results of the sample are then presented to the court to determine if additional data restoration and production is necessary.

Putting it all Together

All of these complex issues roll up into two key questions for today's in-house counsel: the extent to which electronic data is discoverable and who should pay for its production? In answering these questions, the following recommendations should guide the corporate counselor:

• Become familiar with the case law. Currently, the law governing electronic discovery is unsettled, inconsistent, and highly case specific. No clear protocol has developed in regards to what data types must be produced. As such, plenty of room exists for strong advocacy.
• Investigate your corporation's and opponent's electronic data infrastructure. Understand what data your corporation and your opponent has and how it is stored. Do not shy away from technical hurdles. Be prepared to argue accessibility and expense. This means quantifying the resources, time, and cost involved in restoring, converting, searching, reviewing, and producing the data.
• Prepare cost shifting arguments and responses. Counsel for both the requesting party and the responding party should become familiar with cost allocation arguments set forth in the Zubulake decisions and other relevant cases. Craft arguments and responses accordingly.