Plaintiffs Fail to Establish that Email in LotusNotes Format was “Not Reasonably Accessible Because of Undue Burden or Cost”

Parkdale Am., LLC v. Travelers Cas. and Sur. Co. of Am., Inc., 2007 WL 4165247 (W.D.N.C. Nov. 19, 2007)

In this case, Carolina corporations that manufacture and sell cotton yarn sought a declaratory judgment that, pursuant to an insurance contract, the defendant was obligated to defend and indemnify plaintiffs concerning claims in ten underlying antitrust lawsuits.  Plaintiffs also asserted state claims for breach of contract, bad faith denial of insurance claims, and unfair and deceptive trade practices.  The court in this opinion resolves a number of discovery disputes, one of which related to the production of email by plaintiffs.

Plaintiffs had raised an objection in their briefs to producing unidentified but admittedly non-privileged emails on the grounds of undue burden and expense ($20,000 to convert the emails into a searchable format).  However, at the hearing the parties’ counsel explained to the court that those emails were a key player’s emails which were subsequently produced at a lesser (and shared) cost.  When defense counsel argued that there was “very little useful information in those emails,” plaintiff’s counsel renewed plaintiffs’ objection as to other emails on the grounds of relevance and the burden and cost of searching them for privileged information.

The court cited Fed. R. Civ. P. 26(b)(2)(B) and 26(b)(2)(C), and found that the disputed discovery requests sought evidence that was relevant, and in some cases, “pivotal” to the issues in the case.  It stated: “In other words, absent a valid privilege or an undue burden or expense in production sufficient to override the Defendant’s right to conduct otherwise reasonable discovery, the Plaintiffs must respond fully to those discovery requests.”

The court then overruled plaintiffs’ objections to the production of email, finding that plaintiffs had not established that the material was “not reasonably accessible because of undue burden or cost”:

Concerning the Plaintiffs’ contention that producing the emails of officers and employees other than Mr. Smeak will constitute an undue burden and expense, particularly to review them for privilege, the undersigned finds that these documents may include relevant and material evidence not only as to whether and when Mr. Smeak or any of Plaintiffs’ other officers/employees knew of the price-fixing scheme, but also as to whether Mr. Smeak was, as his titles clearly suggest, one of Plaintiffs’ officers.  Nor have the Plaintiffs met their burden of establishing that these emails are "not reasonably accessible because of undue burden or cost," Fed. R. Civ. P. 26(b)(2)(B), particularly in light of the Court’s ability to apportion costs between the parties in appropriate cases.  Accord Zubulake, 217 F.R.D. at 316 (discussing complications and expense in discovery where electronic evidence is contained only on "expensive-to-restore backup media"; following restoration and search of 5 sample backup disks, at an expense of $19,000, requiring requesting party to pay 25% of cost of restoration of remaining 72 backup disks); Rowe Entm’t, Inc., 205 F.R.D. at 429 (applying balancing test to apportion costs concerning production from backup media); and McPeek, 202 F.R.D. at 33-34 (same).

According to the Plaintiffs’ briefs, the disputed emails are presently in LotusNotes format, rather than in a less accessible backup media.  Although the Plaintiffs did not offer during the hearing a specific cost projection for converting and searching the subject emails, they contended in their briefs that the cost of producing Mr. Smeak’s emails was no more than $20,000, a fraction of the expense at issue in Zubulake, 217 F.R.D. at 316, where the cost of producing 5 sample disks alone was $19,000.  Taking into account the factors listed in Fed. R. Civ. 26(b)(2)(C)(iii), including the amount in controversy ($3 million policy limit less $280,319.00 previously paid to reimburse Plaintiffs for a portion of their costs of defense), the parties’ apparent resources, and the importance of the proposed discovery in resolving critical factual issues, the Plaintiffs have not articulated a sufficient basis to relieve them of the obligation to produce these emails.  Accordingly, the Plaintiffs’ objections to producing these documents, as expressed in their briefs and renewed in a modified fashion during the hearing, are overruled.

The court tempered its ruling slightly by allowing plaintiffs to raise the issue of cost-sharing if they deemed it appropriate:

If the Plaintiffs conclude that the costs of complying with this Order should be shared by the Defendant, counsel shall first make a good faith effort to agree on an apportionment of the costs as they did regarding the costs of producing Mr. Smeak’s emails.  Should counsel not be able to reach an agreement, however, Plaintiffs may file a Motion and the Court, applying the factors identified in Zubulake, 217 F.R.D. at 316, will decide whether and to what extent the subject costs should be allocated.