Court Shifts Costs of Forensic Computer Exam to Plaintiff for Not Preserving Emails

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).

In this complex dispute over a family business, the court redressed the plaintiff’s former counsel’s “pattern of delinquent conduct” and “complete disregard” for court orders. The court shifted 70% of the cost of a forensic computer examination to the plaintiff because the plaintiff failed to preserve relevant emails.

During discovery, the defendants, collectively referred to as the Shaw/Marcus Family, requested forensic examination of a laptop belonging to the plaintiff, Susan Shaw. Despite anticipating litigation, Ms. Shaw had “discarded one computer,” had another computer crash, and did not preserve any emails. Further, Ms. Shaw and her attorney, Joseph Adams, “ignored repeated court orders to produce” the laptop.

The court granted the defendants’ request. The Shaw/Marcus Family then asked the court to shift the examination cost to Ms. Shaw because her spoliation necessitated that extra expense. The Shaw/Marcus Family also requested monetary sanctions and dismissal under Federal Rules of Civil Procedure 16 and 37 and the court’s inherent authority.

The court agreed that Adams engaged in multiple instances of misconduct. He and Ms. Shaw “failed to preserve relevant material” on the laptop and failed to comply with at least five separate discovery orders. However, the court noted that it had to limit its analysis of his conduct. Unfortunately, “both parties’ submissions [were] rife with emotion, frustration and, much to the court’s chagrin, lack of focus.”

A party generally bears its own costs in responding to discovery. However, a court can shift those costs “when electronic discovery imposes an ‘undue burden or expense’ on the responding party.” Whether a court should shift any ediscovery costs is determined by assessing seven factors set out in Zubulake v. UBS Warburg, 216 F.R.D. 280 (S.D.N.Y. 2003). The most important considerations are “the extent to which the request is specifically tailored to discover relevant information” and “the availability of such information from other sources.”

Here, the court found that the Shaw/Marcus Family’s “request was narrowly tailored to seek relevant emails” that would help decide an issue. Secondly, “the Shaw/Marcus Family had no means of accessing this information other than” through forensic examination, since Ms. Shaw had not preserved her emails. The remaining Zubulake factors were either neutral or favored cost-shifting.

Therefore, the court concluded that Ms. Shaw should bear “a portion of the forensic examination cost … designed to yield the discovery of inaccessible electronically stored information.” The court ordered Ms. Shaw to pay 70% of the cost of the forensic examination and restoration of electronic data. The Shaw/Marcus Family would pay the remaining 30% of the examination cost and all review costs.

The court also imposed sanctions under Rule 37 for Adams’s repeated failure to comply with court orders. The court ordered him to pay the Shaw/Marcus Family attorneys’ fees spent on their motions to compel.

However, the court declined the Shaw/Marcus Family’s request to strike any of Ms. Shaw’s pleadings under Rules 16 or 37. The court noted that this “extreme sanction” was unnecessary since “Adams has been relieved as counsel.”

Finally, the court refused to impose any sanctions under its inherent authority where it could resolve the issues on statutory grounds.

Takeaways on relevant misconduct

No matter how hostile the relationship with opposing counsel gets, keep your own filings above reproach. Here, the court considered but did not order terminating sanctions under Rule 37. In so doing, it twice referenced the “parties’ verbose and unfocused submissions” and noted that it could only consider specific relevant misconduct. Had the Shaw/Marcus Family’s counsel stayed clear, precise and focused on the law and the facts, the court might have been persuaded to dismiss the pleadings.

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