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Peskoff v. Faber

July 7, 2008

JONATHON E. PESKOFF, PLAINTIFF,
v.
MICHAEL A. FABER, DEFENDANT.



The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge

MEMORANDUM OPINION

I. Background

This Court previously addressed the sufficiency of the search done by defendant Michael Faber for e-mails and other electronically stored information in response to plaintiff Jonathon Peskoff's discovery requests, and determined that it was "appropriate to ascertain the cost of forensic testing of the computers and server at issue to see if it justifies a forensic search of them." Peskoff v. Faber, 244 F.R.D. 54, 63 (D.D.C. 2007). The parties submitted a joint bid proposal, Request for Proposals from Qualified Forensic Computer Technicians to Search for Emails [#68], which the Court distributed to numerous vendors. Three bids were received, the lowest of which was $33,000,*fn1 and the parties were instructed to attempt to reach agreement on how to share that cost. Order (Feb. 21, 2008) [#75]. No agreement could be reached so the matter was subsequently briefed*fn2 and is now ripe for resolution.

II. The Forensic Examination

The Court has determined that electronically stored information sought by Mr. Peskoff from Mr. Faber cannot be obtained without the aid of a forensic examination. Peskoff, 244 F.R.D. at 59. Even though the forensic examination necessarily involves the search of sources "not reasonably accessible because of undue burden or cost," the Court may nonetheless compel Mr. Faber to proceed if Mr. Peskoff "shows good cause*fn3 , considering the limitations*fn4 of Rule 26(b)(2)(C)." Fed. R. Civ. P. 26(b)(2)(B); Best Buy Stores, L.P. v. Developers Diversified Realty Corp., 247 F.R.D. 567, 571 (D. Minn. 2007) (court is to balance costs and potential benefits of discovery). The Court has already conducted much of this analysis and has held that the Rule 26(b)(2)(C) factors weigh strongly in favor of the discovery. Peskoff, 244 F.R.D. at 59-61 (finding, inter alia, that the information sought is highly relevant, not duplicative, and cannot be obtained from other sources).

The analysis was not completed, however, because the cost of the forensic search was not yet known. Id. at 61. We now know that the cost is approximately $33,000, and thus, as expected, "we are not confronting a situation where the anticipated cost of doing the forensic search will dwarf the final recovery." Id. at 59 (noting that Mr. Peskoff demands $2.5 million, and identifying three distinct claims totaling $840,000). It is the determination of this Court that, when balancing the cost of the forensic examination against the factors favoring the discovery, good cause exists to compel the forensic examination. See Id. at 59-60 (finding that the requested discovery is supported by the needs of the case, the sophistication of the parties, the amount in controversy, the importance of the issues at stake, and the importance of the requested discovery to the issues in the litigation). Compare, e.g., Petcou v. C.H. Robinson Worldwide, Inc., No. 06-CV-2157, 2008 WL 542684, at *2 (N.D. Ga. Feb. 25, 2008) (burden or expense of proposed discovery outweighs its likely benefit where requests are overbroad and a response would cost hundreds of thousands of dollars) with PSEG Power N.Y., Inc. v. Alberici Constructors, Inc., No. 05-CV-657, 2007 WL 2687670, at *11 (N.D.N.Y. Sep. 7, 2007) (potential for discovery outweighs the estimated cost of $37,500 for re-production of important e-mails). It will therefore be ordered that the forensic examination proceed.

III. The Allocation of Costs

The Court now turns to the allocation of the cost of the forensic examination.

A. Legal Standards

Under the Federal Rules of Civil Procedure, "the presumption is that the responding party [i.e. Mr. Faber] must bear the expense of complying with discovery requests." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1978). This presumption continues to operate where the discovery sought is electronically stored information. Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 317 (S.D.N.Y. 2003) ("Any principled approach to electronic evidence must respect this presumption."). See also Wiginton v. C.B. Richard Ellis, Inc., 229 F.R.D. 568, 571-72 (N.D. Ill. 2004); Hagemeyer N. Am. Inc. v. Gateway Data Sciences Corp., 222 F.R.D. 594, 600 (E.D. Wis. 2004).

The court has the discretion, however, to shift all or part of the costs of production to the requesting party, i.e. Mr. Peskoff. Oppenheimer, 437 U.S. at 358 (court may "condition[] discovery on the requesting party's payments of the costs of discovery"); Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 283 (S.D.N.Y. 2003); Fed. R. Civ. P. 26(b)(2)(B) ("The court may specify conditions for the discovery."); Fed. R. Civ. P. 34 advisory committee's notes (1970) (court may issue orders that "require[] that the discovering party pay costs"). Where the requesting party seeks electronically stored information, "[s]hifting the cost of production from the producing party to the requesting party should be considered only when inaccessible data is sought." OpenTV v. Liberate Techs., 219 F.R.D. 474, 476 (N.D. Cal. 2003) (citing Zubulake, 216 F.R.D. at 284); Fed. R. Civ. P. 26 advisory committee's notes (2006) (court may order "payment by the requesting party of part or all of the reasonable costs of obtaining information from sources that are not reasonably accessible").

The purpose of shifting the cost of production is to "protect[ the responding party] from 'undue burden or expense.'" Oppenheimer, 437 U.S. at 358 (quoting Fed. R. Civ. P. 26(c)). See also Quinby v. WestLB AG, 245 F.R.D. 94, 104 (S.D.N.Y. 2006) ("[C]ost-shifting is appropriate only where electronic discovery imposes an undue burden or expense."); Fed. R. Civ. P. 34 advisory committee's notes (1970) (court may shift the cost of discovery so as "to protect respondent against undue burden or expense"); Fed. R. Civ. P. 34 advisory committee's notes (2006) (the rules governing "issues of burden" are applicable to disputes arising from the inspection, testing, or sampling of electronically stored information); Fed. R. Civ. P. 26(b), advisory committee's notes (2006) (the inquiry into whether there is good cause to compel burdensome discovery of electronically stored information is "coupled with" court's authority to set conditions for discovery). The burden on the responding party is to be considered in conjunction with the Rule 26(b)(2)(C) analysis, which was discussed above. AAB Joint Venture v. United States, 75 Fed. Cl. 432, 443 (2007).

The question presented can thus be summarized as follows: does the cost of the forensic examination represent to Mr. Faber, the responding party, a burden or expense so undue as to justify an exercise of the Court's discretion to break from the traditional presumption ...


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