A recent electronic discovery dispute in the US District Court for the Southern District of New York has resulted in several written opinions which experts are hailing as seminal in the field of electronic discovery. Zubulake, a single plaintiff in an employment discrimination case, requested an order requiring UBS to produce, at its expense, thousands of back-up emails stored on numerous archival tapes. UBS objected to the request, largely due to the undue burden and expense entailed by the requested production, and because UBS had already produced a raft of responsive emails. In Zubulake v UBS Warburg(1) (Zubulake I) Judge Scheindlin held that the back-up tapes should be produced, but set out a new test for determining which party should bear the cost. In Zubulake v UBS Warburg(2) (Zubulake II) Scheindlin applied her test, ordering Zubulake to pay 25% of the cost of recovering archived emails.

In Zubulake I Scheindlin noted that under the federal rules of discovery, "Zubulake is entitled to discovery of the requested emails so long as they are relevant to her claims, which they clearly are".(3) However, the judge further observed that:

"The application of...various discovery rules is particularly complicated where electronic data is sought because otherwise discoverable evidence is often only available from expensive-to-restore back-up media."(4)
"By-and-large," noted the court, "the solution has been to consider cost-shifting: forcing the requesting party, rather than the answering party, to bear the cost of discovery."(5)

Scheindlin cautioned that cost-shifting should be ordered sparingly:

"Courts must remember that cost-shifting may effectively end discovery, especially when private parties are engaged in litigation with large corporations... Thus, cost-shifting should be considered only when electronic discovery imposes an 'undue burden or expense' on the responding party." (6)

Scheindlin criticized those courts that have "automatically assumed that an undue burden or expense may arise simply because electronic evidence is involved", observing that, to the contrary, "electronic evidence is frequently cheaper and easier to produce than paper evidence".(7) The question of whether production of electronic documents is truly "unduly burdensome or expensive...turns primarily on whether it is kept in an accessible or inaccessible format", an inquiry that is based "largely on the media on which [electronic data] is stored".(8) Accordingly, Scheindlin set out the first of three required steps in deciding disputes regarding the scope and cost of discovery of electronic data:(9)

"First, it is necessary to understand the responding party's computer system, both with respect to active and stored data. For data that is kept in an accessible format, the usual rules of discovery apply: the responding party should pay the costs of producing responsive data. A court should consider cost-shifting only when electronic data is relatively inaccessible, such as in back-up tapes."(10)

The court further observed that "requiring the responding party to restore and produce responsive documents from a small sample of back-up tapes will inform the cost-shifting analysis".(11) Scheindlin remarked that by ordering such a sampling to be performed, "the entire cost-shifting analysis can be grounded in fact rather than guesswork".(12) Thus, the second step of her three-part test provides as follows:(13)

"Second, because the cost-shifting analysis is so fact-intensive, it is necessary to determine what data may be found on the inaccessible media. Requiring the responding party to restore and produce responsive documents from a small sample of the requested back-up tapes is a sensible approach in most cases."

The court accordingly ordered UBS "to produce, at its expense, responsive emails from any five back-up tapes selected by Zubulake" and to "prepare an affidavit detailing the results of its search, as well as the time and money spent".(14)

Finally, the court spelled out seven factors to be used in the third and final prong of the test:(15)

"Third, and finally, in conducting the cost-shifting analysis the following factors should be considered, weighted more or less in the following order:

1. The extent to which the request is specifically tailored to discover relevant information;
2. The availability of such information from other sources;
3. The total cost of production, compared to the amount in controversy;
4. The total cost of production, compared to the resources available to each party;
5. The relative ability of each party to control costs and its incentive to do so;
6. The importance of the issues at stake in the litigation; and
7. The relative benefits to the parties of obtaining the information.

Scheindlin emphasized that "the seven-factor[s]...cannot be mechanically applied" and stressed the importance of the first two factors.(16)

In Zubulake II Scheindlin applied her seven-factor cost-shifting analysis in light of the information provided by UBS concerning the small sampling of five back-up tapes. That sampling cost $11,524.63, exclusive of attorney review time. Addressing factors one and two above - which "should be weighted the most heavily in the cost-shifting analysis"(17) - Scheindlin concluded that Zubulake's request "was narrowly tailored to discover relevant information" and, because it was evident that some emails were available only on back-up tape, "direct evidence of discrimination may only be available through restoration".(18) Nevertheless, the court took note of the fact that "none of [the emails restored in the five tape restoration] provide any direct evidence of discrimination".(19) Scheindlin thus concluded that "while restoration may be the only means for obtaining direct evidence of discrimination, the existence of that evidence is still speculative".(20) Accordingly, she found that factors one and two weighed only slightly against cost-shifting.(21)

Factors three, four and five - all of which concern cost issues - were next assessed. Scheindlin found that factor three did not support cost-shifting: "Assuming this to be a multi-million dollar case, the cost of restoration is surely not 'significantly disproportionate' to the projected value of this case".(22) Next, comparing the resources of each party to the cost of production under factor four, the court observed that UBS had "exponentially more resources available to it than Zubulake".(23) Yet while this factor "weighs against cost-shifting", the court explained that it "does not rule it out".(24) On the one hand, "given the difficulties in the equities market and the fact that [Zubulake] is suing her former employer, she may not be particularly marketable".(25) At the same time, however, Zubulake was suing for as much as $19 million and might have the means to cover part of the costs. Moreover, "it is not unheard of for plaintiff's firms to front huge expenses when multi-million dollar recoveries are in sight".(26) As for factor five, Scheindlin considered as "neutral" the relative ability of each party to control costs.(27)

The sixth factor in the analysis - the "importance of the issues at stake in the litigation" - was likewise deemed neutral.(28) However, the court found that factor seven - the "relative benefit to the parties of obtaining the information" - favoured UBS, noting that "there can be no question that Zubulake stands to gain far more than does UBS, as will typically be the case".(29)

Concluding her analysis of the seven factors, Scheindlin again stressed that "a list of factors is not merely a matter of counting and adding; it is only a guide".(30) Thus, the court held that:

"Because some of the factors cut against cost-shifting, but only slightly so - in particular, the possibility that the continued production will produce valuable new information - some cost-shifting is appropriate in this case, although UBS should pay the majority of the costs."(31)
The court determined that a 25% allocation of restoration costs - but not of attorney review time - was appropriate:

"The next question is how much of the cost should be shifted. It is beyond cavil that the precise allocation is a matter of judgment and fairness rather than a mathematical consequence of the seven factors discussed above. Nonetheless, the analysis of those factors does inform the exercise of discretion. Because the seven factor test requires that UBS pay the lion's share, the percentage assigned to Zubulake must be less than 50%. A share that is too costly may chill the rights of litigants to pursue meritorious claims. However, because the success of this search is somewhat speculative, any cost that fairly can be assigned to Zubulake is appropriate and ensures that UBS's expenses will not be unduly burdensome. A 25% assignment to Zubulake meets these goals."(32)


Whether requesting or producing documents in litigation, employers should understand Scheindlin's opinions in Zubulake, which are already being described as seminal in the area of electronic discovery. First, employers should be aware of whether electronic information is kept in accessible or inaccessible form, since the media on which such data is stored is the threshold consideration for whether cost-shifting is appropriate. In particular, employers should communicate any onerous procedures for retrieving electronic data to their counsel. Armed with that information, lawyers can anticipate the results of a cost-shifting analysis using the Zubulake factors, and begin strategizing a sensible electronic discovery strategy.

For further information on this topic please contact Kevin B Leblang or Robert N Holtzman at Kramer Levin Naftalis & Frankel LLP by telephone (+1 212 715 9100) or by fax (+1 212 715 8000) or by email ([email protected] or [email protected]).


(1) 2003 WL 21087884 (SD NY May 13 2003).

(2) 2003 WL 21714957 (SD NY July 24 2003).

(3) Id at *6 (citing Fed R Civ P 26(b)(1)).

(4) Id at *5.

(5) Id.

(6) Zubulake I at *7.

(7) Id.

(8) Id.

(9) Id at *12.

(10) See also Zubulake II, at *3 ("It is worth emphasizing again that cost-shifting is potentially appropriate only when inaccessible data is sought. When a discovery request seeks accessible data - for example, active online or near-line data - it is typically inappropriate to consider cost-shifting").

(11 Zubulake I, at *12.

(12) Id.

(13) Id at *13.

(14) Id.

(15) Id at * 13:

(16) Zubulake I, at *11.

(17) Id at *3.

(18) Id at *6.

(19) Id at *5.

(20) Id at *6.

(21) Id.

(22) Zubulake II, at *7.

(23) Id.

(24) Id.

(25) Id.

(26) Id.

(27) Id.

(28) Id at *7.

(29) Id.

(30) Zubulake II, at *8.

(31) Id.

(32) Id at *8 (footnote omitted).