Beast of (Shifting) Burden: What Constitutes Undue Burden Sufficient to Shift ESI Production Costs Under Fla. R. Civ. P. 1.280?
While most companies (and people) store the majority of their information electronically, discovery of electronically stored information (ESI) has lagged behind reality. The lower cost of storing documents electronically, as well as the widespread use of email and other electronic messaging systems as the primary form of communication, has made it so that litigants have amassed an immense amount of ESI. As a result, discovery expenses have soared. Like other discovery requests, the general presumption is that the responding party bears the costs of production. However, Florida law permits shifting the cost of production from the responding party to the requesting party, in the ESI context, if the responding party can show that retrieving the information would be overly burdensome.1 No Florida state court case specifically addresses or defines the standard for “burdensomeness” for fee-shifting under the rule2; therefore, this article reviews the genesis of the Florida rule, an analogous federal rule, and the cases interpreting the federal rule.
Fla. R. Civ. P. 1.280
In 2012, the Florida Supreme Court amended Fla. R. Civ. P.1.280 (General Provisions Governing Discovery) to include §1.280(d), which addresses discovery of ESI. This provision, titled “Limitations on Discovery of Electronically Stored Information” provides, in pertinent part, that a “person may object to discovery of electronically stored information from sources that the person identifies as not reasonably accessible because of burden or cost.”3 If the responding party can show that the retrieval of the requested information would be unduly burdensome or expensive, “the court may specify conditions of the discovery, including ordering that some or all of the expenses incurred by the person from whom the discovery is sought be paid by the party seeking the discovery.”4 In the three years since this rule has been in effect, no reported decision by a Florida state court has interpreted ESI discovery cost-sharing or shifting; however, the commentary to the rule and the analogous federal rule provide valuable insight into ESI discovery cost shifting.5
Commentary to Fla. R. Civ. P. 1.280
Courts are generally granted broad discretion when ruling on discovery issues.6 The committee notes to the 2012 amendment to Rule 1.280 indicate that “the court should balance the costs and burden of the requested discovery, including the potential for disruption of operations or corruption of the electronic devices…against the relevance of the information and the requesting party’s need for that information.”7
The court may attempt to ascertain what information is included in the sources by directing the parties to provide samples of the requested discovery.8 Discovery samples can assist the court’s determination of what costs and burdens are associated with retrieving, reviewing, and producing the information. In addition, the samples may allow the court to establish whether the requested information relates to the specific issues involved in the litigation. This comment appears to incorporate the “marginal utility” standard from the cases interpreting the federal rule, which are discussed below. In one way or another, all fee-shifting tests consider the total cost of production. Therefore, before a court can decide whether to grant a motion to shift costs, it must determine what the actual costs of production are and analyze the specificity of the requested information; sampling seems to be the best way to accomplish this task.
The Analogous Federal Rule
Fed. R. Civ. P. 26 is substantially similar to Rule 1.280. The following steps describe how a party can meet the burdensomeness test, under the federal rule, and shift the cost of production.
Step 1: Show Undue Burden or Expense in the Discovery Request
Rule 26(b)(2)(B) allows a court to grant a protective order from an ESI discovery request if the responding party can show that the requested information is not reasonably accessible because of undue burden or cost.9 Good cause exists when “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”10 The Advisory Committee Notes provide, “[t]he amendment to Rule 26(b)(2) is designed to address issues raised by difficulties in locating, retrieving, and providing discovery of some electronically stored information. [S]ome sources of electronically stored information can be accessed only with substantial burden and cost.”11 Courts should only consider shifting costs when the “electronic discovery imposes an ‘undue burden or expense’ on the responding party.”12
The manner in which ESI is kept ultimately determines whether a court will shift discovery costs. “When a discovery request seeks accessible data…it is typically inappropriate to consider cost-shifting.”13 There is a causal relationship between the accessibility of the requested ESI and the time and expense required to retrieve it.14 When electronic documents are kept in an inaccessible format, courts are more likely to shift the costs because courts presume that producing documents stored in an inaccessible format is overly burdensome and expensive.
Federal courts have separated data into five categories and have listed them in order from most accessible to least accessible.15 Those categories follow:
• Active, Online Data —This storage is generally provided by magnetic disk. It is used in the active stages of an electronic record’s life — when it is being created or received and processed, as well as when the access frequency is high and the required speed of access is very fast (milliseconds). A hard drive is an example of this type of storage.16
• Near-Line Data —This storage is usually provided on optical disks and generally consists of a robotic storage device that houses removable media. Access speeds can range from milliseconds to a couple of minutes.17
• Offline Storage/Archives —This storage is also a removable optical disk or magnetic tape media, but it is labeled and stored on a shelf or rack through manual intervention as opposed to a robotic storage device. Because of this, it is much slower than online or near-line storage, and access speed can be minutes, hours, or even days, depending on the access effectiveness of the storage facility.18
• Backup Tapes — Backup tapes include a device, like a tape recorder, that reads data and writes it onto a tape. These tapes are sequential-access devices and, as such, in order to read any particular block of data, one needs to read all of the preceding blocks. In addition, backup tapes typically employ some sort of data compression, permitting more data to be stored on each tape, which makes restoration more time-consuming and expensive.19
• Erased, Fragmented, or Damaged Data —This data includes storage that has been deleted or damaged. If theses files are capable of restoration, they can only be accessed after significant processing.20
Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003),the seminal federal ESI burdensomeness case that many courts look to in determining whether to shift costs,held that the first three categories (active, online data, near-line data, and offline storage/archives) are accessible, and the latter two categories (backup tapes, and erased, fragmented or damaged data) are inaccessible.
However, a party cannot store information in an inaccessible format just to avoid production at litigation. Rule 26’s Advisory Committee stated that “in determining whether to order production of inaccessible data and under what conditions, courts may attempt to determine whether the party’s choice to store the data in a difficult-to-access format represents a legitimate means of cheaply storing information for a particular purpose or a strategy to deliberately degrade access to information to deter its discovery in litigation.”21
Step 2: Demonstrate the Cost-Shifting Factors Favor the Responding Party
Once a party demonstrates that accessing the requested ESI is unduly burdensome and/or expensive, the burden shifts to the requesting party to show that good cause exists for its production.22 If the requesting party meets its burden, the court may allow discovery but must limit the scope if the discovery request violates the proportionality test described in Rule 26(b)(2)(C)(iii).23
Federal courts consider three different sets of factors when determining whether to shift fees. One list of factors is contained in the Rule 26(b) Advisory Committee Notes, and the other two were established in federal cases. The leading cases are Zubulake, and Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002). Rowe was the first case to set out a multi-factor test for cost-shifting.24 A year later, Rowe was modified by Zubulake, and the decision and factors listed in Zubulake became one of, if not the most, influential e-discovery decisions to date.25
The 2006 amendments to Rule 26 provide that courts should evaluate the following factors when determining whether to permit fee-shifting:
(1) The specificity of the discovery request [is it specifically tailored to discover relevant information]; (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 the further information; (6) the importance of the issues at stake in the litigation; and, (7) the parties’ resources.26
The Rowe Entertainment factors are:
(1) Specificity of the discovery request; (2) the likelihood of discovering critical information; (3) the availability of such information from other sources; (4) the purposes for which the responding party maintains the requested data; (5) the relative benefit to the parties of obtaining the information; (6) the total cost associated with production; (7) the relative ability of each party to control costs and its incentive to do so; and (8) the resources available to each party.27
Lastly, the Zubulake 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 issues at stake in the litigation; and, (7) the relative benefits to the parties of obtaining the information.28
While the Rowe Entertainment opinion did not weigh the factors, the Zubulake court held that the factors should be weighed in descending order of importance.29 The first two factors, the extent to which the request is specifically tailored to discover relevant information and the availability of such information from other sources, are the most important.30 These two factors make up the marginal utility analysis used by the court in McPeek v. Ashcroft, 202 F.R.D. 31, 34 (D.D.C. 2001). Under the set of facts present in the McPeek case, the court described the marginal utility test as: “[T]he more likely it is that the backup tape contains information that is relevant to a claim or defense, the fairer it is that the responding party search at its own expense. The less likely it is, the more unjust it would be to make that party search at its own expense.”31
Florida Federal Cases Decided Post-Zubulake
Florida federal cases seldom discuss cost-shifting. However in F.D.I.C. v. Brudnicki, 291 F.R.D. 669, 676 (N.D. Fla. 2013), the Northern District ordered the requesting defendants to pay part of the ESI discovery fees for its 94 separate requests for production. While the requesting defendants argued that fee-shifting was inappropriate because the documents were stored in an accessible format, the court disagreed after analyzing the Zubulake factors and held that, in addition to cost-shifting for inaccessibility, Rule 26 permits cost-shifting to enforce proportionality limits.32 The court felt that because the responding plaintiffs had already incurred more than $624,000 in discovery costs, the requesting defendants should also share in the costs.33 However, no other Florida federal court has held that Rule 26 permits costs to shift for proportionality limits.
Rule 26 has also been utilized in the Southern District of Florida to determine whether inaccessible ESI is required to be produced.34 In Calixto v. Watson Bowman Acme Corp., No.07-60077-CIV, 2009 WL 3823390 at *11 (S.D. Fla. 2009), the court denied the requesting party’s motion to compel after the requesting party failed to establish a reasonable expectation that restoring and searching all of the backup tapes would yield relevant documents that other search methods had not. In making this determination, the court also reviewed the total costs associated with producing the documents.35
Federal Cases Decided Post-Zubulake
Cost-shifting under Rule 26 is more common in federal cases nationwide. In one sexual harassment case, the plaintiffs argued that the defendant company should bear the costs of searching the company’s backup tapes to find documents containing pornographic terms and images.36 The plaintiffs provided the court with a list of 92 words it believed were relevant for the search.37 The court sampled through each side, picking four search terms out of the list to run in the system.38 After discussing each of the eight factors (stating that the first two are the most important), the court found that the factors favored cost-shifting, but because the presumption is that the responding party pays for its discovery costs, the defendant company should pay 25 percent and the plaintiffs should pay 75 percent of the costs of restoring the tapes, searching the data, and transferring it to an electric data viewer.39 In another case, the Southern District of New York found that the responding party must pay for the majority of the production because of the presumption that the responding party pay costs, but still required the requesting party to pay 30 percent.40
The Eastern District of Pennsylvania held that the plaintiffs and a third party were both 50 percent responsible for the costs of producing responsive electronically stored information from backup tapes.41 In that case, the third party sampled the backup tapes and found very few relevant materials, despite the high cost of production.42 The court determined that the cost-shifting was appropriate because the information was unavailable from other sources, and the information sought may be helpful to the ultimate resolution of the case.43
Other courts have denied cost-shifting motions because the ESI was not stored in an inaccessible format.44
Because Florida Rule 1.280(d) mirrors federal Rule 26, Florida courts will likely look to the federal court decisions construing Rule 26 for interpreting and deciding fee-shifting cases under Fla. R. Civ. P. 1.280.
When drafting a motion to shift ESI costs in Florida, it is important to obtain a burdensomeness affidavit from a knowledgeable employee of the responding party, explaining how the ESI is kept, potentially explaining that a sample of the requested discovery was analyzed, describing the expected costs in obtaining the ESI, and describing the difficulties associated with obtaining the ESI. Obtaining a discovery sample serves judicial economy, and it helps bolster (or undermine) arguments regarding undue burden or expense in obtaining the ESI due to storage in an inaccessible format. Notably, the comments to Rule 1.280(d) state that a court may require the parties to obtain a sample.
Once it is established that the discovery request is unduly burdensome and expensive, parties should be prepared to compare and contrast the Rowe or Zebulake factors. Again, because Florida has yet to decide an ESI cost-shifting case, it will be beneficial to discuss every factor above, with emphasis on the first two Zebulake factors (marginal utility), along with the factors listed in the Rule 26(b) advisory committee notes.
1 Fla. R. Civ. P. 1.280(d).
2 The Florida Bar, Business Litigation in Florida(2014).
3 Fla. R. Civ. P. 1.280(d)(1).
4 Fla. R. Civ. P. 1.280(d)(1).
5 The Florida Bar, Business Litigation in Florida(2014).
6 Florida Highway Patrol v. Bejarano, 137 So. 3d 619, 622 (Fla. 1st DCA 2014).
7 Fla. R. Civ. P. 1.280, 2012 Amendment Committee Notes.
9 Fed. R. Civ. P. 26(b)(2)(B).
10 Fed. R. Civ. P 26 (b)(2)(C)(iii).
11 Fed. R. Civ. P 26, 2006 Amendment Advisory Committee Notes Subdivision (b)(2).
12 Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 318 (S.D.N.Y. 2003).
13 Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 284 (S.D.N.Y. 2003).
14 W.E. Aubuchon Co., Inc. v. BeneFirst, LLC, 245 F.R.D. 38, 42 (D.C. Mass. 2007).
15 Zubulake, 217 F.R.D. at 319.
21 Fed. R. Civ. P. 26, Advisory Notes; see also Quinby v. WestLB AG, 245 F.R.D. 94, 104 (S.D.N.Y. 2006).
22 Zubulake, 317 F.R.D. at 315.
23 Id. at 316.
24 Andrew Mast, Cost-Shifting in E-Discovery: Reexamining Zubulake and 28 U.S.C. §1920, 56 Wayne L. Rev. 1825, 1828 (2010).
25 Id. at 1829.
26 Fed. R. Civ. P. 26, Advisory Notes.
27 Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421, 429 (S.D.N.Y. 2002).
28 Zubulake, 317 F.R.D. at 323.
31 McPeek v. Ashcroft, 202 F.R.D. at 34.
32 F.D.I.C., 291 F.R.D. at 676.
34 Calixto v. Watson Bowman Acme Corp., No. 07-60077-CIV, 2009 WL 3823390 at *11 (S.D. Fla. 2009).
36 Wiginton v. CB Richard Ellis Inc., 229 F.R.D. 568, 570 (N.D. Ill. 2004).
39 Id. at 577.
40 Quinby v. WestLB AG, 245 F.R.D. 94, 111 (S.D.N.Y. 2006).
41 Universal Del., Inc. v. Comdata Corp., No. CIVA. 07-1078, 2010 WL 1381225 at *1 (E.D. Pa. 2010).
42 Id. at *3.
43 Id. at *8.
44 Juster Acquisition Co., LLC v. North Hudson Sewerage Authority, No. CIV.A.12-3427, 2013 WL 541972 at *3 (D.N.J. 2013).
Gregory S. Weiss is board certified in business litigation and a shareholder at Mrachek, Fitzgerald, Rose, Konopka, Thomas & Weiss, P.A., in West Palm Beach.
Shannon Timmann is an associate at Mrachek, Fitzgerald, Rose, Konopka, Thomas & Weiss, P.A., in West Palm Beach.
Michael Kranz is an associate at Mrachek, Fitzgerald, Rose, Konopka, Thomas & Weiss, P.A., in West Palm Beach.
This column is submitted on behalf of the General Practice, Solo and Small Firm Section, Damon C. Glisson, chair, and Joshua Hertz, editor.