Peskoff v. Faber, Case No. 04-526 (D.D.C. July 7, 2008)

The saga of Peskoff v. Faber continues. When last we visited with Magistrate Judge John M. Facciola on this case, discussed here, the court had ordered the parties to work with him to fashion an RFP for a forensic computer technician to perform an examination of all the computers owned by defendant’s company to determine whether emails sent or received by the plaintiff or containing the plaintiff’s name may still exist. We rejoin the court at the point where the RFP has been completed, bids have been taken, the lowest of which was $33,000, and to no one’s surprise the parties have been unable to agree on how to share that cost.

The court began its analysis by noting that it had already decided that a forensic examination is necessary if the plaintiff hopes to obtain the ESI he seeks. By definition, a forensic exam involves the search of sources “not reasonably accessible.” Thus, the search can only proceed if the plaintiff can show good cause, considering the limitations of Rule 26(b)(2)(C), Fed. R. Civ. P. Citing the Best Buy case out of the District of Minnesota, the court noted that the idea here is to balance the costs and potential benefits of discovery. The court had already completed much of the analysis under 26(b)(2)(C) in its previous opinion, but the absence of an actual cost had prevented the completion of the analysis.

With the cost in hand, the court concluded, “we are not confronting a situation where the anticipated cost of doing the forensic search will dwarf the final recovery.” Slip Opinion at 3 (quoting Peskoff v. Faber, 244 F.R.D. 54, 59 (D.D.C. 2007). Indeed, Peskoff is demanding $2.5 Million, and the court noted three distinct claims totaling $840,000. Thus, the court found that good cause exists to compel the forensic examination.

The court then treated the allocation of cost of the forensic examination. Pointing out that the Supreme Court has held that “the presumption is that the responding party must bear the expense of complying with discovery requests, which has not changed with the discovery of electronically stored information, the court noted that it has discretion to shift all or part of the costs of production to the requesting party. The court noted that shifting the cost of production should be considered only when inaccessible data is sought. Indeed, as we have noted before, inaccessible sources are defined under the amended rules as those where production involves undue burden or expense, and as Judge Facciola notes here, the purpose of shifting the cost of production is to “protect the responding party from undue burden or expense.” Slip Opinion at 4, (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1978). In other words, the two analyses are intimately related, although, a responding party may be subjected to undue burden or expense, but be unable to shift the cost of that burden, because, at least in this case, the burden or expense is not really “undue.”

The court found that the need here for a forensic examination was “directly attributable to what was and wasn’t done by Mr. Faber to preserve electronically stored information.” Those acts and omissions, in the court’s words, “shatter any argument that the burden or expense of that forensic examination, if incurred by Mr. Faber, would be undue.” In essence, the court found that the burden or expense was undue for the purpose of determining that the source was inaccessible, but not for the purpose of determining that the cost of the forensic exam should be shifted.

The court went on to provide a laundry list of “inadequate” steps in Faber’s search for responsive documents as well as a list of searches recommended by the court in earlier orders. Many of these steps are detailed in our previous discussion. Faber’s failure to deactivate the automatic deletion tools on his computer network and his failure to preserve backup tapes were probably the principle failures that led to the forensic order. “That this deleted information can only be recovered by a forensic examination, if it can be recovered at all, is directly attributable to Mr. Faber’s inaction.” Slip Opinion at 7. Faber’s failure to appear at the hearing on these matters, and his continual failure to explain his actions has only made the situation worse.

Accordingly, the court ordered Faber to pay $33,000 into the court registry, which will be dispensed to the vendor as invoices are received.

Read the opinion