Author: Nick Plinio

Cases cited: Estate of Shaw v. Marcus, Nos. 14 Civ. 3849 (NSR) (JCM), 14 Civ. 5653 (NSR) (JCM), 2017 WL 825317 (S.D.N.Y. Mar. 1, 2017); Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 283 (S.D.N.Y. 2003);

Implicated Parties: Plaintiff’s counsel, Recipient of discovery request, recipient of motion to compel discovery

E-Lesson learned:Utilize litigation holds, preserve e-documents and ALWAYS act in good faith and make all reasonable efforts to comply with e-discovery requests because a court has the power to shift the costs of discovery if counsel fails to produce documents requested and it would place an undue burden or expense for the requesting party to obtain them.

Tweet this: ATTN all litigators!! Impose litigation holds and urge clients to preserve documents stored electronically or run the risk of facing sanctions or having to pay for forensic computer examinations.

Estate of Shaw v. Marcus, a 2017 case out of the Southern District of New York has BIG implications for litigators and all users of electronic document preservation and discovery.  The big picture?  PRESERVE and COOPERATE, or bear not only the cost of discovery, but sanctions as well.   

Background

The issue in Estate of Shaw stems from the actions of Plaintiff and her counsel during the discovery phase of litigation.  Plaintiff apparently failed to preserve information relevant to the lawsuit contained on a lap top computer, which then required a forensic investigation to extract the information.  Plaintiff’s counsel also repeatedly disregarded requests and court orders to produce this information.  Further, Plaintiff’s counsel invited a third party to eavesdrop on a confidential meet-and-confer and behaved unprofessionally during several hearings before the court.  This conduct formed the basis for Defendant’s motion for sanctions and to shift the costs of discovery to Plaintiff.

The Law

While there is a presumption that the responding party should bear the expense of complying with discovery, a party may make a motion for the cost of discovery to be shifted upon a showing of good cause.[i]  Zubulake makes clear that cost shifting should only occur where e-discovery imposes an undue burden or expense on the responding party.  “[W]hether production of documents is unduly burdensome or expensive turns primarily on whether it is kept in an accessible or inaccessible format (a distinction that corresponds closely to the expense of production).”[ii]

When documents are inaccessible, Zubulake set forth seven factors to consider before shifting costs to the requesting party.  They are, in order of importance, (1) the extent to which the request is specifically tailored to discover relevant information; (2) availability of such information from other sources; (3) the total costs of production, compared to the amount in controversy; (4) the total costs of production, compared to the resources available to each party; (5) the relative ability of each party to control costs and the incentives to do so; (6) the importance of the issues at stake; and (7) the benefits to the parties of obtaining the information.[iii]

The court in Estate of Shaw held that a majority of the Zubulake factors, including the first and second most important factors, weighed in Defendant’s favor.[iv]  It then directed Plaintiff to cover 75% of the cost of the forensic computer analysis.[v] The court also imposed several sanctions requiring Plaintiff to pay Defendant’s attorney’s fees associated with the extra time and resources spent trying to obtain relevant the documents from Plaintiff.[vi]

Shoulda, Coulda, Woulda

Obviously, Plaintiff’s counsel made some serious mistakes here.  For one, it is always a safe bet to advise clients, especially those with pending litigation, to preserve any and all electronic documents that could be relevant to a lawsuit.  As evidenced in Estate of Shaw, failing to preserve computers, or the files contained within them, could lead to cost-shifting in discovery. That aside, however, Plaintiff’s counsel made an even more crucial error in this case.  In failing to at least address reasonable requests for information and Court Orders to produce such information, Plaintiff’s counsel left himself open to sanctions.  Litigators should take a lesson from this: if an opposing party’s discovery request seems unreasonable or impossible, it pays to address this issue rather than producing deficiently or not at all.  It is this blogger’s view that many of the monetary sanctions imposed in Estate of Shaw could have been reduced or even avoided had Plaintiff’s attorney simply acted in good faith and made reasonable efforts to comply with the requests and Court Orders he received.

Nick a Seton Hall University School of Law student (Class of 2018), focuses his studies in the areas of general litigation, labor, employment, and sports law.

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Citations

[i] Estate of Shaw v. Marcus, Nos. 14 Civ. 3849 (NSR)(JCM), 14 Civ. 5653 (NSR) (JCM), 2017 WL 825317 (S.D.N.Y. Mar. 1, 2017) (citing Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 283 (S.D.N.Y. 2003) (“Zubulake 3”))

[ii] Id. (citing Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 322 (S.D.N.Y. 2003) (“Zubulake 1”))

[iii] Zubulake 1, 217 F.R.D. at 322; Estate of Shaw, 2017 WL at 7-8.

[iv] Estate of Shaw, 2017 WL at 16.

[v] Id.

[vi] Id. at 17-26.

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