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Shifting the Costs of E-Mail Discovery in Employment Discrimination Cases

With increasing frequency, offensive, and sometimes blatantly sexist or bigoted, e-mails are playing a prominent role in employment discrimination cases. The informal, ephemeral nature of e-mail often results in employees making statements in e-mails that they would never dream of putting on paper. Sometimes, the e-mails take the form of tasteless bad jokes between colleagues. Occasionally, the existence of an offensive e-mail prompts the plaintiff to commence a lawsuit. Other times, the purported “smoking gun” is found during discovery in a thoughtless e-mail. Hence, discovery issues relating to e-mail often take on heightened importance in employment discrimination cases.

In recent years employers and other defendants have sought to have the costs of any such production shifted to the requesting parties in appropriate circumstances. In Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002), a case in which our Firm was counsel for one of the defendants, Magistrate Judge Francis granted defendants’ motion to shift the cost of producing e-mails to the plaintiffs and established an eight-pronged test for shifting the costs of electronic discovery. In Rowe, a group of African-American concert promoters brought suit against numerous booking agencies and other promoters, alleging that they excluded plaintiffs from promoting concerts with white bands through discriminatory and anti-competitive practices. Defendants moved for a protective order relieving them of any obligation to conduct a search for e-mails on an expansive range of topics that were not narrowly focused on plaintiffs’ claims, or, in the alternative, for a shifting of the costs of such discovery to plaintiffs.

Magistrate Judge Francis permitted the discovery to go forward, but weighed the following eight factors in analyzing whether the costs of discovery should be shifted: (1) the specificity of the discovery requests; (2) the likelihood of a successful search; (3) the availability of the requested information from other sources; (4) the purposes of retention; (5) the benefit to the parties; (6) the total costs; (7) the ability of each party to control costs; and (8) the resources of the parties.1 Despite a significant amount of discovery having already taken place, plaintiffs failed to proffer any evidence relevant to the issue of whether defendants’ actions were discriminatory or anti-competitive, leading Magistrate Judge Francis to conclude that “the marginal value of searching the e-mails is modest, at best.”2 After finding that six of the eight factors favored cost-shifting, Magistrate Judge Francis held that “[t]he relevant factors thus tip heavily in favor of shifting to the plaintiffs the costs of obtaining discovery of e-mails,” and shifted all of the costs of such production to the plaintiffs.3 The Rowe test quickly became the “gold standard for courts resolving electronic discovery disputes.”4

Last year, however, in Zubulake v. UBS Warburg LLC, 217 F.R.D 309 (S.D.N.Y. 2003) (Zubulake I), and 216 F.R.D. 280 (S.D.N.Y 2003) (Zubulake III), Judge Scheindlin rendered two related decisions that modified the Rowe test in the context of an employment discrimination case. A new seven factor test was promulgated, expressly designed to make cost-shifting less prevalent than it may have been under the Rowe test. In this month’s column, we describe and analyze the Zubulake decisions and discuss the uncertain impact they may have on employers faced with employment discrimination lawsuits.


The Federal Rules of Civil Procedure and state rules of civil procedure generally allow for the discovery of electronic information. By way of example, Federal Rule 34(a) allows for the production of “any designated documents (including writings, . . . and other data compilations from which information can be obtained, translated, if necessary, by the respondent through detection devices into reasonably usable form). . . . ”5

Rule 26(b)(2) permits a court to limit discovery on a number of grounds, including if “the burden or expense of the proposed discovery outweighs its likely benefit.” Under the Federal Rules, “the presumption is that the responding party must bear the expense of complying with discovery requests, but [the responding party] may invoke the district court’s discretion under Rule 26(c) to grant orders protecting [the responding party] from ‘undue burden or expense’ in doing so, including orders conditioning discovery on the requesting party’s payment of the costs of discovery.”6

The Zubulake Case

The facts underlying plaintiff’s motion to compel in Zubulake reveal a unique and complicated set of circumstances, which appears to have motivated the Court’s analysis of the cost-shifting issue. In that case, UBS Warburg LLC (“UBS”) hired Laura Zubulake in August 1999 as a director and senior salesperson for UBS’s U.S. Asian Equities Sales Desk (“the Desk”). Plaintiff alleged that in December 2000, UBS failed to consider her for a vacant managerial position on the Desk. Instead, according to the plaintiff, UBS hired a male who treated her differently from the male members of the Desk and undermined her ability to perform her job by, inter alia: (1) ridiculing and belittling her in front of co-workers; (2) excluding her from work-related outings with male co-workers and clients; (3) making sexist remarks in her presence; and (4) isolating her from other senior members of the Desk by seating her apart from them. Zubulake filed a discrimination charge with the EEOC in August 2001 alleging gender-based discrimination. Zubulake alleged that UBS subsequently fired her on October 9, 2001. On February 15, 2002, Zubulake filed a lawsuit against UBS, alleging sex discrimination and retaliation under Title VII, the New York State Human Rights Law, and the Administrative Code of the City of New York.

UBS’s Production of E-Mails

In June 2002, Zubulake served a request on UBS for “[a]ll documents concerning any communication by or between UBS employees concerning Plaintiffs.” The request defined the term “document” to include, “without limitation, electronic or computerized data compilations.” The parties subsequently engaged in a dispute over UBS’s production of e-mails, and UBS eventually agreed that it would unconditionally produce responsive e-mails from the e-mail accounts of five individuals named by Zubulake for the period between August 1999 and December 2001. UBS, however, never performed a search for such e-mails on any of its backup tapes, advising Zubulake that the cost of producing the e-mails from the backup tapes would be prohibitively expensive and that its prior production of 100 or so pages of e-mails was complete. Zubulake herself had produced approximately 450 pages of e-mails, indicating to her that there did exist additional responsive e-mails that UBS had failed to produce. Zubulake moved for an order compelling production of all responsive e-mails, including those contained on backup tapes. UBS argued that such discovery was not relevant and could not be had or, in the alternative, that plaintiff should bear the cost of any such production.

Judge Scheindlin issued a decision on May 13, 2003 (Zubulake I). First noting that the e-mails sought were “clearly” relevant to Zubulake’s claims, thereby entitling Zubulake to such discovery under Rule 26(a)(1), she then embarked on a three-step analysis for determining whether to shift the costs of producing electronic documents to the requesting party. The first step was to determine the accessibility of the responding party’s data. Judge Scheindlin identified the following five categories of electronic data, in descending order of accessibility: (1) active, online data (magnetic disks, such as computer hard drives); (2) near-line data (robotic storage devices, such as optical disks); (3) offline storage/archives (such as floppy disks and compact disks); (4) backup tapes; and (5) erased, fragmented, or damaged data.Of these, Judge Scheindlin classified the first three categories as “accessible” because information stored in such media is “in a readily usable format” not needing any restoration. Judge Scheindlin held that she would not consider cost-shifting as to discovery of responsive e-mails that were accessible and stored in a readily usable format. On the other hand, she deemed a cost-shifting analysis to be warranted as to discovery of responsive e-mails on inaccessible backup tapes. The second step of Judge Scheindlin’s analysis was to require UBS to restore and produce e-mails from five of the 94 backup tapes as a sample in order to adequately analyze the relevance of the proposed production and whether cost-shifting is warranted.

Having found the existence of relevant e-mails on the sample backup tapes, Judge Scheindlin embarked on the third step of her analysis, which involved the application of a new seven factor test designed to determine undue burden and expense. Judge Scheindlin chose not to adhere strictly to the Rowe test because she did not believe that it “maintain[ed] the presumption that the responding party pays.” Judge Scheindlin combined the first two Rowe factors and eliminated the fourth Rowe factor – “the purposes for which the responding party maintains the requested data.” She included in her analysis consideration of the amount in controversy and the importance of the issues at stake in the litigation. The result was a seven factor balancing test, as follows: (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.7

The Court noted that the seven factors should not be accorded equal weight; rather, the factors should be considered in descending order of importance, with the first two factors comprising the “marginal utility test” weighted most heavily. In Zubulake III, after considering the seven factors, Judge Scheindlin held that some cost-shifting was warranted. In assessing the amount that plaintiff was to pay, the Court noted that the “precise allocation is a matter of judgment and fairness rather than mathematical consequence of the seven factors discussed above.” The Court also limited its ruling to the cost of restoring the backup tapes, excluding the cost of reviewing the documents for responsiveness. Thus, the Court ruled that the cost of restoring the backup tapes was to be allocated between UBS and Zubulake 75 percent and 25 percent, respectively.

The Uncertain Impact of Zubulake

Though the impact of the Zubulake decisions is far from certain, the analysis set forth in those decisions will be a factor in future judicial analyses of the appropriateness of electronic discovery and cost-shifting. Given the state of uncertainty in this area of the law, employers would be well-advised to make themselves familiar with the Zubulake standard, which may turn out to be part of a significant shift in the law from the Rowe standard. Judge Scheindlin’s express purpose in modifying the Rowe test was to “reinforce the traditional presumptive allocation of costs” to the responding party.8 It remains to be seen whether other courts will adopt Judge Scheindlin’s view that historically developed standards for allocation of the costs of paper discovery should be applied in the context of electronic discovery. As recently stated in a new treatise on the subject of electronic discovery, “the future success of litigants seeking to shift the costs of electronic discovery may hinge on which standard [Rowe or Zubulake] predominates going forward.”9

In assessing the impact of Zubulake, practitioners should consider whether the case may be applied outside the narrow circumstances presented in that case. In Zubulake, the plaintiff was able to present specific, detailed facts suggesting that discovery of e-mails contained on backup tapes was likely to reveal relevant evidence. To make this showing, the plaintiff submitted to the court, with her motion to compel, an e-mail that Judge Scheindlin referred to as “a sort of ‘smoking gun,’” indicating to the Court that the plaintiff’s case was “certainly not frivolous.” The so-called “smoking gun” was an e-mail “suggesting that she be fired ‘ASAP’ after her EEOC charge was filed, in part so that she would not be eligible for year-end bonuses.” Moreover, Zubulake produced over 450 pages of e-mail compared to the approximately 100 pages produced by UBS, which UBS repeatedly characterized, to the Court’s apparent consternation, as a “complete” production. Many of those 450 pages of e-mail were responsive and would have been somewhere in UBS’s possession. Probably due to the plaintiff’s factual showing, “UBS expend[ed] most of its efforts urging the court to shift the cost of production . . .” rather than arguing against discovery of the e-mails outright. Thus, employers may argue that under different circumstances, no such burdensome discovery should be allowed at all, or only if cost-shifting is ordered.

Another noteworthy holding from Zubulake was that cost-shifting would not be considered in that case with respect to discovery of accessible e-mails. Pursuant to UBS’s own agreement to produce responsive e-mails “to the extent possible,” Judge Scheindlin ordered UBS to produce e-mails at its own expense from the two forms of accessible media that she had identified because such e-mails are maintained “in an accessible and usable format and [UBS] can respond to Zubulake’s request cheaply and quickly.” As noted above, UBS did not strongly argue against production of e-mails in the first instance due to the plaintiff’s strong factual showing of relevance. Plaintiffs in most employment discrimination cases will be hard-pressed to make similar showings, and employers will often be in a position to argue against broad discovery of e-mails – whether contained on accessible or inaccessible media – outright in the first instance on the basis that any further discovery would be wasteful, unfair, and that the likelihood of discovering relevant evidence is low. To assist the court in making this determination, the employer should be prepared to present a detailed explanation, perhaps in the form of an affidavit, establishing the burden and expense of locating and retrieving e-mails from both “accessible” and “inaccessible” media. Such affidavits were submitted by defendants in Rowe to great effect in obtaining cost-shifting.10

  1. Rowe, 205 F.R.D. at 429.

  2. Id. at 430.

  3. Id. at 432.

  4. Zubulake v. UBS Warburg LLC, 217 F.R.D 309, 320 (S.D.N.Y. 2003).

  5. See also Fed. R. Civ. P. 34 Advisory Comm. Notes, 1970 ("The inclusive description of ‘documents’ is revised to accord with changing technology.").

  6. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1978).

  7. Zubulake I, 217 F.R.D. at 322.

  8. Zubulake II, 216 F.R.D. at 284.

  9. See Adam I. Cohen and David J. Lender, Electronic Discovery: Law and Practice, § 5.04[D], at 5-28 (2004). This treatise, by two partners from our law firm, provides a comprehensive treatment on myriad electronic discovery issues.

  10. See also Xpedior Creditor Trust v. Credit Suisse First Boston (USA), Inc., No. 02 Civ. 9149, 2003 WL 22283835, at *4-5 (S.D.N.Y. Oct. 2, 2003) (Scheindlin, J.) (relying on a detailed factual showing in determining that certain computer files of the defendant were inaccessible).