Universal Delaware, Inc. v. Comdata Corp., 2010 U.S. Dist. LEXIS 32158 (E.D. Pa. Mar. 31, 2010)

Plaintiff voluntarily dismissed a third party without prejudice reserving a right to amend and rename the third party, while tolling the statute of limitations. The parties stipulated that the third party would preserve relevant evidence, respond in good faith to reasonable discovery requests, and would not object to discovery requests as a non-party for the purpose of delaying production past the deadline for amending the complaint.

Requestor subsequently filed a motion to compel third-party producer to comply with a subpoena duces tecum to produce responsive ESI from both backup tapes and active databases without requiring requestor to compensate producer for review costs. Requestor alleged that despite the stipulation, producer began imposing onerous conditions without producing any ESI. After a series of negotiations, requestor agreed that producer’s search would be limited to a Kroll Ontrack database containing ESI from backup tapes for 5 custodians. (As one of the custodians was producer’s general counsel, they later agreed to limit the request to four custodians.) Requestor further agreed that 17 search terms would be used, and that requestor would pay for the costs of obtaining .TIFF images from the Kroll database. Producer refused to produce any ESI, while insisting that requestor pay for ½ of its privilege review costs above $10,000.

The court asked producer to estimate the costs of production. Producer replied that production costs would be about $102,000, while review costs ranged between $705,000 and $991,000. Producer also claimed that Kroll charged it about $8,600 per month to maintain the database, which would be otherwise destroyed as the matter for which it had been created had been resolved. The cost to produce requestor’s data on the database was $4,085. Requestor claimed it offered to pay the cost, but was sent paperwork by Kroll which contained a pricing structure for discovery-related services, but did not state the costs to be paid by requestor.

In a joint conference call involving the court and the parties, a Kroll representative was also joined, and stated that the least expensive alternative would be to copy the documents into a second searchable database, as the original database contained work product from the prior litigation in the metadata. The most economical means of production would be to copy the responsive documents into a third database, for a cost of $17,334, plus shipping pass-through costs.

The court found that “he most efficient way of accomplishing compliance with Plaintiffs’ ESI subpoena can be accomplished by Kroll Ontrack’s creation of a separate database comprised of the .tiffed images of documents from back-up tapes of [third party] Ceridian’s four custodians.” Id. at *21. Producer had satisfied its burden in demonstrating that the ESI was not reasonably accessible, so requestor would be required to pay the $4,085 to Kroll as “an initial start-up fee,” but producer would be required to execute the required paperwork with Kroll, as that was part of producer’s duty to comply with the subpoena.

The court also found that some cost-shifting was appropriate under the seven-factor Zubulake cost-shifting formula:

Both the Plaintiffs and Ceridian have worked to narrow the focus of the search of the four back-up tapes to use search terms that may lead to the discovery of relevant information. Such information is unavailable from other sources, and both Plaintiffs and Ceridian have a high incentive to control the costs of this litigation, particularly Ceridian because it is not currently a party to the litigation. Obtaining the information sought may be helpful to the ultimate resolution of this case. The Plaintiffs have filed ancillary actions around the country in attempts to obtain information from other sources that may be contained within Ceridian’s data. Obtaining this information may help the Plaintiffs in their pursuit of this antitrust action, and it may be helpful to Ceridian to defend its interests, depending on whether Plaintiffs re-plead Ceridian as a Defendant in this suit.

Id. at *22-*23. The court ordered producer to direct Kroll to create the separate database containing responsive documents, and the parties would split the approximately $17,000 cost. Once Kroll searched the database using the agreed-upon search terms, producer would be required to pay the costs of its own privilege review. Producer would then provide responsive documents along with a detailed privilege log.

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