A commercial transaction (likely the sale of a business) leads to complications and eventually to a legal malpractice case.  What is the status of electronic stored information discovery upstate ?  In this Rochester case we see the parties battling over relatively small amounts of money in allocation of discovery costs.

Wade v McConville  2016 NY Slip Op 51686(U)  Decided on November 3, 2016  Supreme Court, Monroe County  Rosenbaum, J. primarily discusses the allocation of costs.

“Defendants, Michael F. McConville and McConville, Considine, Cooman & Morin, [*2]P.C., move for an order granting a protective order pursuant to CPLR 3103 conditioning the further production of ESI, if any, on Plaintiff’s payment of all costs associated with producing said information. Other motions between the parties were also pending but have been resolved by stipulation and agreement, with one exception. As to the subpoenas issued by Plaintiff, the parties seek guidance from the Court on the appropriate temporal scope of the requests covered by the subpoenas.

This action was commenced on December 30, 2015, alleging among other things, legal malpractice in connection with Defendants’ representation of Plaintiff with respect to a commercial transaction that allegedly closed on December 31, 2012. Defendants answered on February 2, 2016, generally denying the allegations. Significant discovery has been exchanged, including ESI. The parties have come before the Court previously on a discovery motion, and a decision was issued thereon.”

“On July 19, 2016, Plaintiff requested production of the “Case Management System Entries” and the remainder of the ESI for paragraph 9 of Plaintiff’s Notice to Produce (which requested Defendants’ calendar, docket, appointments, diary, and case management system entries from September 1, 2013 to January 7, 2013 as well as documents showing entries related to the representation of Plaintiff). Defense counsel advised on July 22, 2016 that steps were being taken to explore this ESI and that the issue could be addressed further at a court conference scheduled for July 26, 2016.

During the July 26, 2016 conference, defense counsel stated that they were working with a third-party software provider to determine the procedure to obtain further ESI from Defendants’ case management system that had not been previously produced, as well as the cost. Defense counsel suggested that Plaintiff might have to bear the burden of the cost for production.

On September 1, 2016, defense counsel informed Plaintiff that the ESI production would cost $9,000, and advised that due to the undue burden, Plaintiff would have to bear the cost if she wished to proceed. Plaintiff’s counsel disagreed about shifting the cost.

Defendants contend that they should not bear the $9,000 cost for the ESI extraction when Plaintiff has failed to specifically articulate what she is looking for with regard to Defendants’ case management system. If further production is required of Defendants, they request an order conditioning further production of ESI on Plaintiff’s complete payment of costs associated with that production.”

“At least one New York court held that the requesting party should bear the entire cost of searching for, retrieving, and producing discovery that includes ESI. See Lipco Elec. Corp. v. ASG Consulting Corp., 4 Misc 3d 1019(A) (Sup.Ct. Nassau Co. 2004). Other courts have found an exception to that where the cost of production is not significant and the ESI is readily available. See Waltzer v. Tradescape, LLC, 31 AD3d 302, 304 (1st Dept. 2006). See also, MBIA Ins. Corp. V. Countrywide Home Loans, Inc., 27 Misc 3d 1061, 1075 (Sup.Ct. NY Co. 2010) (While producing readily-available electronically-stored information. . . will not warrant cost-allocation, the retrieval of archived or deleted electronic information has been held to require such additional effort as to warrant cost allocation”). Where ESI costs are significant, some courts encourage adoption of the standards articulated by the United States District Court in Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 317-18 (S.D.NY 2003), which places the costs of discovery, including searching for, retrieving and producing ESI, at least initially, on the producing party. See U.S. Bank Nat. Ass’n v. GreenPoint Mortgage Funding, Inc., 94 AD3d 58, 63-64 (1st Dept. 2012). To vary from this standard, a party must demonstrate why the costs should be shifted, assessing several factors: the extent the request is tailored to discover relevant information, the availability of the information from other sources, the cost of products compared to the amount in controversy, the cost of production compared to the party’s resources, the relative ability of each party to control costs and its incentive to do so, the importance of the issues at stake in the litigation, and the relative benefits to the parties obtaining the information. See Id. at 64, quoting Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 317-18 (SDNY 2003).

Defendants do not analyze this standard in arguing in favor of cost-shifting. Moreover, in making this motion for a protective order, Defendants have not proffered to the Court a copy of the $9,000 proposal, nor an affidavit from the Defendants or someone from Aderant.

Here, extracting the ESI requested will allegedly cost $9,000. Plaintiff has requested “Defendants’ calendar, docket, appointments, diary and case management system entries. . . both ESI and documents, showing entries related to the Representations of the Plaintiff.” The Court previously determined that this information was to be produced, and a timely motion to reargue was not made. Accordingly, to the extent it is sought, the Court declines Defendants’ invitation to revisit the issues raised in the previous motion.

Defendants’ motion for a protective order is denied. Defendants’ proffer on this motion is insufficient: they have not submitted a cost proposal or client affidavit on this issue. The Court further notes that Defendants have made no attempt to address the Zubulake factors. Defendants’ motion does not satisfy any burden in seeking to shift the costs of producing discovery to Plaintiff.”