Citing Conference of Chief Justices’ Guidelines to State Courts, North Carolina Court Refuses to Compel Nonparty to Produce Deleted Emails from Backup Tapes

Bank of America Corp. v. SR Int’l Bus. Ins. Co., Ltd., 2006 WL 3093174, 2006 NCBC 15 (N.C. Super. Nov. 1, 2006)

In its introductory remarks, the court advised:

This opinion should be read in conjunction with the opinion in Analog Devices, Inc. v. Michalski, 2006 NCBC 14, (N.C.Super.Ct. Nov. 1, 2006), issued contemporaneously herewith. The decision in that case deals with production of inaccessible data in the context of a party-to-party dispute and provides greater detail concerning approaches used by various courts in e-discovery disputes. Both this opinion and the opinion in Analog should make it clear that: (1) the language of current North Carolina Rules of Civil Procedure 26 and 45 still control trial court decisions and work well, (2) each case is different and fact intensive, (3) there exist numerous factors which might come into play in the varying factual contexts of each case, and (4) trial courts should always be cognizant that e-discovery decisions, especially those involving inaccessible data, have the potential to be outcome determinative because of the costs involved.

In this opinion, the court denied defendants’ motion to compel Marsh, Inc. to retrieve and produce deleted emails from approximately 350 to 400 backup tapes. The court based its decision on the undue burden to Marsh, a nonparty, and the fact that defendants’ request was premature:

Defendants’ request that Marsh identify, restore, extract, convert, process, and search deleted e-mails from some eight authors and recipients contained on some 350 to 400 backup tapes amounts to a significant burden to place on a nonparty. Marsh is faced with not only these expenses but also the burden of having in-house counsel oversee the process and outside counsel conduct responsiveness and privilege review of the documents produced. Moreover, it is likely that Defendants already have in their possession the information that has been requested. During the relevant period, Marsh had a document retention policy in place that "required that a printed copy of every computer-generated document, including those forwarded to the client, and every substitute e-mail discussion (including those relating to instructions from and discussions with the client, underwriter, or brokering center regarding the insurance coverage or program) be maintained as part of the insurance placement file." Among the over 50,000 documents already produced by Marsh to Defendants was the insurance placement file containing printed copies of e-mail discussions that are the subject of Defendants’ request.

Defendants have expressed concern that Marsh would presumably have only printed those e-mails that were "important to its affairs, without regard to the claims and defenses involved in this case" and that Marsh was therefore not in a position at that time to assess which documents ought to be printed under its document retention policy. At the time of Defendants’ motion, however, those concerns were premature, as Defendants had not yet determined with any certainty whether the documents produced failed to contain any substantive e-mail discussions regarding the policies. Defendants’ motion also appears to be premature in light of Defendants’ assertion at oral argument that a certain amount of additional specificity could be provided as they learn more about Marsh’s responses and discussions with relation to the policies at issue.

Given the significant burden that Marsh would undertake in complying with Defendants’ request and in light of the fact that Defendants’ request is clearly premature, the Court has determined that Defendants’ motion to compel the production of deleted e-mails contained on Marsh’s backup tapes should be denied.

Where, as here, the request is not justified on the basis that there are specific documents not otherwise available but seeks to look at inaccessible e-mail history to see what is there, such a low level of marginal utility does not justify imposing a heavy burden on a nonparty.

The court further explained that its decision did not appear to be outcome determinative. “There has been no showing from the thousands of documents produced by Marsh that something is missing or that there is some critical communication between Marsh employees that will affect the outcome of this case. Nor has there been any showing that the information sought is not available from current or former Marsh employees at far less expense.” It further noted that the ability to pay was not an issue, since the parties and Marsh had the resources “to fund most searches for inaccessible data.“

The court went on to state that it had considered as significant facts in the case the following: (1) the size of the expense and the burden of production placed upon a nonparty, (2) the breadth of the information sought, (3) the availability of information from other sources, (4) the fact that the information sought was on inaccessible backup tapes, (5) the absence of any unwarranted or suspicious destruction of information, and (6) the low level of marginal utility shown at this stage of the proceedings. In addition, the court stated it had also considered all the factors set forth in the Guidelines adopted by the Conference of Chief Justices, and attached those Guidelines in their entirety to the decision.

A copy of the full opinion is available on the court’s website here.