Monday, July 07, 2008

2008-07-07 Peskoff v Faber III: eDiscovery Cost Allocation - Chipping Away at Cost Sharing

In this third eDiscovery decision in Peskoff v Faber 04-526 (HHK/JMF), Magistrate Judge Facciola revisits eDiscovery costs allocation issues. Here, a $33,000 forensic email recovery was held reasonable (especially in light of the $2.5 million in underlying claims at issue).

The Court first noted that the ESI sought by Plainiff Peskoff from Defedant Faber could not be obtained without the aid of a forensic examination. The Court then states that "[e]ven though the forensic examination necessarily involves the search of sources “not reasonably accessible because of undue burden or cost" such discovery could be compelled with a showing of "good cause," and notes that the "[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."

The Court finds here that good cause exists, citing Peskoff v. Faber I: "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 "

Cost Allocation

The second issue addressed by the Court was cost allocation. The Court summarizes its rationale in stating:

"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 and shift some or all of that cost to Mr. Peskoff, the requesting party?"

In seemingly neutral sounding wind-up, the Court takes a "reap what you sow" approach to the actions of defendant Faber in his ESI management:

"As has already been explained in prior opinions and will be summarized below, the need here for a forensic examination is directly attributable to what was and was not done by Mr. Faber to preserve electronically stored information. Peskoff, No. 04-cv-526, 2006 WL 1933483, at *4-6 (D.D.C. July 11, 2006); Peskoff, 240 F.R.D. 26, 29-31 (D.D.C. 2007); Peskoff, 244 F.R.D. at 56-66.

What follows is a sharply worded:

"Taken together, those acts and omissions shatter any argument that the burden or expense of that forensic examination, if incurred by Mr. Faber, would be "undue.'"

The Court then reprises defendant Faber's actions (and inaction) in connection with the pendency of the litigation:

"First, Mr. Faber’s efforts to search for responsive electronically stored information can, at best, be described as inadequate. As was stated in the Court’s Memorandum Opinion of February 21, 2007:
'In this case, a hard drive, never searched, was produced and the plaintiff’s sent and received emails were produced, but (1) there are significant and unexplained gaps in what was produced, and (2) other searches of electronic data that I specifically suggested could be done were not. Furthermore, all of the unopened emails in the Inbox—a total of fourteen—are dated the same day, a date following plaintiff’s departure from NextPoint. The 10,436 emails in the "Old Mail" subfolder are all unopened. The emails in the "Old Mail" subfolder are for the period June 25, 2003, to April 14, 2004, but the emails in the 65 other subfolders are all dated for the period June 2000 to June 2001. Thus, there are gaps of several years among the various subfolders with no emails whatsoever during these time periods. While there may be reasons why this is so, on this record all one can say is that this phenomenon is inexplicable.' "

It doesn't stop there. The Court then takes defendant Faber to task for not taking his discovery obligations seriously:

"Mr. Faber’s unwillingness to take his discovery obligations seriously have contributed to the need for a forensic examination."

"Second, Mr. Faber failed to deactivate network maintenance tools that automatically delete electronically stored information. On February 6, 2004, the day Mr. Peskoff threatened suit, Mr. Faber had an obligation to make a conscientious effort to preserve electronically stored information that would be relevant to this dispute. "

We can see where this is headed, and the Court sums it up in one tidy sentence:

"That this deleted information can only be recovered by a forensic examination, if it can be recovered at all, is directly attributable to Mr. Faber’s inaction."

Finding that this "a problem of Mr. Faber’s own making" the Court then determined that "consequently, the expense and burden of the forensic examination can hardly be described as 'undue.'" and found no reason to depart from tradition (producing party pays).

Result: Defendant Faber was ordered to bear costs of forensic examination.