Cost-shifting in electronic discovery.

Author:Tennis, Bradley T.

The presumption in U.S. litigation is that each party will bear its own costs of production during discovery. (1) However, the surge in the creation and retention of electronically stored information (ESI) has revealed fundamental inequities in the traditional allocation of discovery costs. (2) While cost-shifting has always been an option for a judge seeking to limit overly aggressive or intrusive discovery requests, (3) no generally applicable framework for determining when cost-shifting is appropriate has yet emerged. (4) Instead, district courts have focused specifically on the problems posed by ESI and developed a patchwork series of tests to determine when the requesting party should bear some or all of the costs of production. In 2006, the Federal Rules of Civil Procedure were amended in an attempt to more explicitly account for the peculiarities of the discovery of ESI and to unify the various district court approaches.

This Comment will explore the developing body of case law pertaining to cost-shifting in electronic discovery and its relationship to the guidelines accompanying the 2006 amendments. Due to the close relationship between the cost-shifting test embedded in the 2006 amendments and the leading doctrines in case law, courts have continued to apply prior case law directly, either alongside or within the amendment framework. While the leading doctrine in case law bears a structural similarity to the amendment test, the two approaches are distinct and have different implications for the substantive protections afforded to responding parties. Moreover, the tendency of courts to apply the tests interchangeably has undermined the development of a unified nationwide approach to cost-shifting in electronic discovery.


    The multifactor balancing test set down in Zubulake v. UBS Warburg LLC (5) has emerged as the leading approach for managing cost-shifting requests arising in the course of discovery of ESI. (6) Zubulake requires a sequential three-step inquiry. First, a court determines whether the requested data is accessible or inaccessible. The accessibility test in Zubulake is predicated primarily on the physical accessibility of the requested information, defining five categories based on how much effort is required to retrieve the data for analysis. (7) If the requested information is deemed inaccessible, Zubulake calls for the production and examination of a representative sample of the requested information to refine the parties' estimates of the costs and benefits of full production. (8) Finally, the court uses this information to inform a seven-factor test to determine the equities of shifting costs. These factors, in order from most to least important, 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 issues at stake in the litigation; and (7) the relative benefits to the parties of obtaining the information. (9) Zubulake is an ideal candidate for comparing pre-amendment case law with the 2006 amendments. The decision is widely recognized as defining the leading cost-shifting test in use in the district courts, (10) and though later courts have occasionally modified and adapted the Zubulake formula, (11) the overall structure of the original formulation has generally been accepted without significant alteration. Moreover, the original Zubulake test, more so than its subsequent refinements, has retained vitality even after the 2006 amendments came into effect. (12)


    On December 1, 2006, a number of amendments to the Federal Rules of Civil Procedure pertaining to electronic discovery came into effect. Rules 26(b) (2)(B) and 26(b)(2)(C) delineate a district court's authority to limit and modify discovery requests for electronically stored information. Rule 26(b) (2)(B) contemplates a two-step test for determining whether or not the requesting party should bear a portion of the costs of production. First, the responding party must demonstrate that the information sought is "not reasonably accessible because of undue burden or cost." (13) Once this showing is made, the burden of proof shifts to the requesting party, who must show that there is "good cause" for requiring that the information be produced. (14) The rules specify that "good cause" is to be evaluated "considering the limitations of rule 26(b)(2)(C)," (15) but due to the vague, generalized provisions of rule 26 (b)(2)(C), a precise formulation of the test has remained elusive. (16)

    To help concretize the good-cause test, the Advisory Committee provided a list of factors in the note accompanying the amended rules that it considered relevant to the determination of whether or not good cause exists. These are:

    (1) the specificity of the discovery request; (2) the quantity of information available from other and more easily accessed sources; (3) the failure to produce relevant information that seems likely to have existed but is no longer available on more easily accessed sources; (4) the likelihood of finding relevant, responsive information that cannot be obtained from other, more easily accessed sources; (5) predictions as to the importance and usefulness of...

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