Opinion
CC14-100
02-04-2016
Westchester Stone Co., Inc., Plaintiff, v. Master Mason of New York Inc., Defendant.
Plaintiff by Matthew T. Worner, Esq., White Plains, NY Defendant by Lenihan & Associates by James Lenihan, Esq., White Plains, NY
Plaintiff by Matthew T. Worner, Esq., White Plains, NY Defendant by Lenihan & Associates by James Lenihan, Esq., White Plains, NY Joseph L. Latwin, J.
This is a commercial claims action for breach of contract in connection with the sale of stone. A trial of this case began. At the close of plaintiff's witness's testimony, defendant sought production of certain items demanded in a trial subpoena previously served by defendant upon plaintiff. The documents and things sought by the subpoena included plaintiff's computerized billing records. Defendant had already produced hard copies of its records. These items became significant as a question was raised concerning the timing of the bill rendered to defendant. Recognizing the limited amount in controversy in this commercial claims case, to wit, a maximum of $5,000.00 exclusive of costs but here, only $3,204.06, the Court implored the parties to work out a cost effective solution to the issue. The Court suggested following the parameters of the Zubulake case and creating a CD, thumb drive or zip drive of the data on plaintiff's computer that defendant could review. After several attempts to allow the parties to come to a reasonable and agreeable resolution, the Court indicated it was going to decide the issue and asked for supporting authority. The defendant indicated it would cost his expert some $18,000 to analyze plaintiff's hard drive and defendant wants plaintiff to pay for this. The question is who, if anyone, pays for the analysis of the data. The general rule is that, during the course of the action, each party should bear the expenses it incurs in responding to discovery requests (see Waltzer v Tradescape & Co., L.L.C., 31 AD3d 302, 304, 819 NYS2d 38 [1st Dept 2006]). The question of which party is responsible for the cost of searching for, retrieving and producing discovery has become unsettled because of the high cost of locating and producing electronically stored information (ESI). The CPLR and UCCA are silent on the topic. Moreover, while our courts have attempted to provide working guidelines directing how parties and counsel should prepare for discovery, including ESI, these guidelines generally abstain from recommendations concerning the issue of cost allocation. Even the Rules of the Commercial Division for Supreme Court, Nassau County, previously recognized as the most sophisticated rules concerning discovery, including ESI, in the state (see, Tener v. Cremer, 89 AD3d 75, 931 NYS2d 552 [2011] ), are largely silent on the issue of cost allocation, merely noting that the law in New York on cost shifting is "still developing" and referring counsel to decisions of the Nassau County Commercial Division (Commercial Division, Nassau County, Guidelines for Discovery of ESI, Section V, Costs). See, U. S. Bank Nat'l Assoc. v. Greenpoint Mortgage Funding, Inc., 94 AD3d 58, 939 NYS2d 395 [1st Dept 2012]. The courts that have spoken on the issue of cost allocation have not done so with one voice. For example, at least one court has held that the requesting party should bear the entire cost of searching for, retrieving and producing discovery that included ESI (see e.g. Lipco Elec Corp. v. ASG Consulting Corp., 4 Misc 3d 1019[A], 798 N.Y.S.2d 345 [Sup Ct Nassau County 2004], but see, Connors, Which Party Pays the Cost of Document Disclosure? 29 Pace L. Rev. 441, 450 [2009]). The First Department has acknowledged the requestor's obligation to pay for discovery and ESI costs (see e.g. Response Personnel, Inc. v. Aschenbrenner, 77 AD3d 518, 909 NYS2d 433 [1st Dept 2010]), but has allowed for an exception requiring the producer to pay where the cost of ESI production is less significant, such as where the ESI is readily available (Waltzer v. Tradescape, 31 AD3d 302, 304, 819 NYS2d 38 [1st Dept 2006]). By contrast, there has been a movement among other courts, where the cost of discovery production is significant, to adopt the standards articulated by the United States District Court in Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 317—318 [SDNY 2003], and to place the cost of discovery, including searching for, retrieving and producing ESI, at least initially, on the producing party. See, 4E-Commerce and Internet Law 58.03[6] [2015-16]. Zubulake presents the most practical framework for allocating all costs in discovery, including document production and searching for, retrieving and producing ESI. As noted, Zubulake requires, consistent with the Federal Rules of Civil Procedure, the producing party to bear the initial cost of searching for, retrieving and producing discovery, but permits the shifting of costs between the parties. In Zubulake, Judge Shira Scheindlin laid out a three-step analysis for evaluating disputes regarding the scope and cost of electronic discovery, including consideration of a seven factor test for determining whether the cost of responding to electronic discovery should be shifted from the producing party to the responding party. First, a court must "thoroughly understand the responding party's computer system, both with respect to active and stored data." For data that is kept in accessible format, the usual rules of discovery apply, but when electronic data is relatively inaccessible, "such as in backup tapes," a court should consider cost-shifting. Second, because cost-shifting is so fact-intensive, Judge Scheindlin explained that it is necessary to determine what data may be found on inaccessible media. Judge Scheindlin emphasized that there must be a factual basis underlying any cost-shifting decision and suggested that requiring a sample restoration would allow for a decision on cost shifting that was "grounded in fact, rather than guesswork." She wrote that "[r]equiring the responding party to restore and produce responsive documents from a small sample of the requested backup tapes is a sensible approach in most cases." Third, and finally, in conducting the cost-shifting analysis, the following seven factors should be considered, "weighted more-or-less in the following order:" "(1) [t]he extent to which the request is specifically tailored to discover relevant information; (2)[t]he availability of such information from other sources; (3)[t]he total cost of production, compared to the amount in controversy; (4)[t]he total cost of production, compared to the resources available to each party; (5)[t]he relative ability of each party to control costs and its incentive to do so; (6)[t]he importance of the issues at stake in the litigation; & , (7)[t]he relative benefits to the parties of obtaining the information" (Zubulake, supra at 322). "(1) [t]he extent to which the request is specifically tailored to discover relevant information The subpoena calls for Quickbooks records and is sufficiently tailored to discover information concerning plaintiff's billing practices.
(2)[t]he availability of such information from other sources
Since plaintiff's billing records exist nowhere else, they are not available from other sources.
(3)[t]he total cost of production, compared to the amount in controversy
The amount in controversy is $3,204.06. The cost to produce the data is relatively modest. A zip drive or a 32gig thumb drive costs less than $100.00. A hard drive, or at least the relevant portions of Quickbooks, can be copied onto these media in a matter of an hour or less. Delivery of the media from plaintiff's to defendant's attorney is a matter of walking it over a few blocks as both offices are in downtown White Plains. (4)[t]he total cost of production, compared to the resources available to each party Both parties are small businesses and might bear modest costs for production, but not significant costs. (5)[t]he relative ability of each party to control costs and its incentive to do so Plaintiff has every incentive to minimize costs; defendant has the opposite. The more expensive defendant can make pursuing the litigation, the more likely it is that plaintiff will abandon its case. (6)[t]he importance of the issues at stake in the litigation This is a case involving a modest amount of money. The issues have no importance except to the parties. (7)[t]he relative benefits to the parties of obtaining the information" There is little benefit to the plaintiff to produce the data. There is marginal benefit to the defendant as defendant has already cross examined plaintiff's witness and have raised issues as to the propriety of the billing data. Accordingly, it is ORDERED that: the plaintiff shall produce either the original disk drive or a copy of the Quickbooks data on a zip drive or thumb drive; Plaintiff shall bear the cost of providing the a zip drive or thumb drive, copying the data onto the media, and delivering the media to defendant's attorney; Defendant shall bear any costs relating to the analysis of the data; & The parties shall report to the Court by March 28, 2016 by letter indicating the completion of the copying, delivery and analysis of the data. Dated: 4 February 2016_________________________
JOSEPH L. LATWIN
Rye City Court Judge ENTERED __________________ Mary Jo Garrity Appeals An appeal shall be taken by serving on the adverse party a notice of appeal and filing it in the Rye City Court Clerk's office. A notice shall designate the party taking the appeal, the judgment or order or specific part of the judgment or order appealed from and the court to which the appeal is taken. CPLR 5515. Pursuant to UCCA 1701 Appeals in civil causes shall be taken to the appellate term of the supreme court, 9th Judicial District. An appeal as of right from a judgment entered in a small claim or a commercial claim must be taken within thirty days of the following, whichever first occurs: 1. service by the court of a copy of the judgment appealed from upon the appellant. 2. service by a party of a copy of the judgment appealed from upon the appellant. 3. service by the appellant of a copy of the judgment appealed from upon a party. Where service as provided in paragraphs one through three of this subdivision is by mail, five days shall be added to the thirty day period prescribed in this section. UCCA ' 1703(b). Papers letter of James Lenihan dated 7 January 2016 and attached Exhibits; letter of James Lenihan dated January 16, 2016; & letter of Matthew Worner dated 12 January 2016 and attached emails.