ZUBULAKE V.

UBS WARBURG LLC216 F.R.D. 280 (S.D.N.Y 2003)

“ZUBULAKE III”

“Zubulake III”

Date July 24, 2003

Jurisdiction U.S. District Court for the Southern District

of New York

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

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

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)

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

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

e-Discovery Legal Framework

Federal 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

e-Discovery Legal Framework

Federal 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

e-Discovery Legal Framework

Zubulake I – 7-Factor Test

1. Extent to which the request is specifically tailored to discover relevant information

2. Availability of such information from other sources

3. Total cost of production compared to the amount in controversy

4. Total cost of production compared to the resources available to each party

e-Discovery Legal Framework

Zubulake I – 7-Factor Test

5. Relative ability of each party to control costs and its incentive to do so

6. Importance of the issues at stake in the litigation

7. Relative benefits to the parties of obtaining the information

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

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

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

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

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

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)

Analysis using the 7-Factor Test

Relative Benefits to the Parties of Obtaining the Information ∏ - discovery of potentially relevant e-mails

proving discrimination ∆ - NONE?

Issues

$

Issues

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).

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).

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).

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

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.