N.Y. Federal Court Releases Significant E-Discovery Opinion

In a discovery dispute involving a large broker-dealer, a federal court established a new framework for analyzing who must bear the cost of searching computer media for e-mail. The court found that a cost-shifting analysis is not triggered by the mere presence of electronic documents; rather, cost-shifting should be considered “only when electronic discovery imposes an undue burden or expense” – which usually is a function of how it is stored. The court established a new 7-factor test for situations eligible for cost-shifting. Here, the court required defendant to pay for searching all e-mail still on its servers or optical media; however, restoration and searching of backup tapes would be subject to sampling followed by a cost-sharing analysis. Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. May 13, 2003).