Zubulake v. ubs warburg llc 216 f.r.d . 280 ( s.d.n.y 2003) “ Zubulake III”

1. Zubulakev. ubswarburgllc216 f.r.d. 280 (s.d.n.y 2003)“Zubulake III”

2. “Zubulake III” • Date • July 24, 2003 • Jurisdiction • U.S. District Court for the Southern District of New York

3. Parties to the Dispute • Plaintiff: Laura Zubulake • Equities Trader former employed by defendant • Buying and selling of company stock shares • Filed suit for gender discrimination • Defendant: UBS Warburg LLC • Global Financial Services Company • Over 80,000 employees in over 50 countries • Approximately 3 trillion US dollars worth of invested assets

4. Facts • ∏ filed a gender discrimination suit against ∆ alleging gender discrimination, failure to promote and retaliation violating federal, state, and city law • May 13, 2003 – “Zubulake I” • ∏ is entitled to discovery of e-mails that are available only on backup tapes • Consideration of cost-shifting may be appropriate

5. Facts • E-mails to be produced are sent to or from 5 specified UBS employees • At the time of Zubulake I, 94 backup tapes are identified by ∆ as containing responsive documents • ∏ is allowed to choose 5 of the tapes to be restored for a factual basis to be created before full restoration is ordered • ∆ states that only 77 tapes contain responsive documents • Restoration would be done by a third-party vendor (Pinkerton Consulting & Investigations)

6. Facts • Results of the 5 Restored Tapes • 8,344 e-mails • 6,203 unique e-mails • Term search of the e-mails • 1,541 e-mails • 1,075 e-mails • ∆’s document review • 600 e-mails

7. Facts • Costs for the 5 tapes • Restoration & Search $11,524.63 • Document review (attorney) $4,633 • Document production (paralegal) $2,845.80 • TOTAL $19,003.43 • Estimated Cost to restore remaining 72 tapes • $273,649.39

8. e-Discovery Legal FrameworkFederal Rules of Civil Procedure • Rule 26 – Initial Disclosure • 26(b)(2)(B) – Specific Limits on Electronically Stored Information • 26(b)(2)(C) – Limiting the frequency/extent of discovery • 26(b)(5) – Claiming Privilege • 26(c)(3) – Awarding Expenses

9. e-Discovery Legal FrameworkFederal Rules of Civil Procedure • Rule 34 – Producing Documents, Electronically Stored Information, and Tangible Things … • 34(a) – requests for electronically stored information directly or after translation into a reasonable usable form • 34(b) – Procedure of request

10. e-Discovery Legal FrameworkZubulake I – 7-Factor Test • Extent to which the request is specifically tailored to discover relevant information • Availability of such information from other sources • Total cost of production compared to the amount in controversy • Total cost of production compared to the resources available to each party

11. e-Discovery Legal FrameworkZubulake I – 7-Factor Test • Relative ability of each party to control costs and its incentive to do so • Importance of the issues at stake in the litigation • Relative benefits to the parties of obtaining the information

12. Analysis using the 7-Factor Test • Extent to which the request is specifically tailored to discover relevant information • All documents concerning any communication by or between UBS employees concerning ∏ • 5 employees • Between August 1999 and December 2001

13. Analysis using the 7-Factor Test • Availability of such information from other sources • Prior to tape recovery - ∆ produced 100 pages of e-mails • After tape recovery - ∆ produced 853 pages of e-mails • Evidence one of the specified employees actively concealed and deleted relevant e-mails after ∏ filed suit

14. Analysis using the 7-Factor Test • Total Cost of Production Compared to the amount in controversy • ∏’s estimated damages with a successful suit • Between 15 and 19 Million US dollars • ∆’s estimated damages • Approximately 1.2 million US dollars • Estimated Cost of restoring all tapes • $165,954.67 • Only cost of restoring tapes – cost of review not included

15. Analysis using the 7-Factor Test • Total Cost of Production Compared to the Resources Available to Each Party • UBS Estimated Net Income for FY 2008 • 17.9 Billion US Dollars • Laura Zubulake • Salary while employed at UBS • $650,000 • Has been unemployed for 2 years

16. Analysis using the 7-Factor Test • Relative Ability of Each Party to Control Costs and Its Incentive to do so • Cheaper vendor could have been chosen • Once vendor is chosen, costs are not within the control of the contracting party • Tapes were relatively well organized allowing for easy selection • Discovery request is already targeted

17. Analysis using the 7-Factor Test • Importance of the Issues at Stake in the Litigation • “Although this case revolves around a weighty issue-discrimination in the workplace-it is hardly unique. Claims of discrimination are common, and while discrimination is an important problem, this litigation does not present a particularly novel issue.” Zubulake v. UBS Warburg LLC , 216 F.R.D. 280, 289 (S.D.N.Y.,2003)

18. Analysis using the 7-Factor Test • Relative Benefits to the Parties of Obtaining the Information • ∏ - discovery of potentially relevant e-mails proving discrimination • ∆ - NONE?

19. Issues $

20. Issues

21. Result of 7-Factor Test • Remaining 72 tapes will be ordered restored • Zubulake (requesting party) will pay for 25% of the restoration costs • Cost of reviewing and producing documents will remain solely with UBS • Cost shifting is only appropriate for inaccessible but otherwise discoverable data • “[T]echnology may increasingly permit litigants to reconstruct lost or inaccessible information, but once restored to an accessible form, the usual rules of discovery apply.” Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 291 (S.D.N.Y. 2003).

22. Conclusion • Cost shifting is only to be applied in specific situations • “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 on-line or near-line data-it is typically inappropriate to consider cost-shifting.” Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 284 (S.D.N.Y. 2003).

23. Conclusion • The 7-Factor Test should be used to evaluate the proportionality portion of Rule 26(b)(2)(C) and as a guide when considering a cost-shifting motion • The 7-factor test is not a numerical equation but is only meant as a guide for judges to utilize • If cost-shifting is granted, the amount shifted is, “a matter of judgment and fairness rather than a mathematical consequence of the seven factors discussed above.” Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 284 (S.D.N.Y. 2003).

24. Question • Was it fair to assess 25% of the restoration costs onto Zubulake? • Considerations • Zubulake has been unemployed for 2 years • Zubulake was making $650,000 prior to ending her employment • UBS is a multi-national corporation with billions in net income • Zubulake’s request was very targeted • The e-mails revealed in the 5 test tapes did not show evidence of discrimination as alleged in the complaint • The e-mails did reveal a hostile work environment

25. Trivia • UBS was named one of the 100 best companies for working mothers living in the U.S. in 2003, 2004, 2005, 2006 by Working Mother Magazine • UBS is a member of the Stonewall Diversity Champion • Britain's good practice forum in which employers can work with Stonewall, and each other, to promote lesbian, gay and bisexual equality in the workplace.