UNITED STATES OF AMERICA, ex rel. ANA SANCHEZ, AMBER HAVERFIELD, and DANA WHITE, Plaintiffs, v. AHS TULSA REGIONAL MEDICAL CENTER LLC, d/b/a TULSA REGIONAL MEDICAL CENTER. Defendants Case No. 05-CV-442-TCK-PJC United States District Court, N.D. Oklahoma Filed August 06, 2010 Cleary, Paul J., United States Magistrate Judge ORDER *1 This matter came on for hearing on July 15, 2010, on Plaintiffs' Motion to Compel Defendants to Produce Internal Emails [Dkt. No. 204, Redacted Dkt. No. 217].[1] Defendant objects to the motion and further asks that if the Court orders restoration of the email backup tapes and production of the emails, it also order that Plaintiffs/Relators bear the cost of that effort. [Dkt. No. 224]. Background This is a qui tam action under the False Claims Act, 31 U.S.C. § 3729 et seq., (“the Act”). Relators contend that Tulsa Regional Medical Center (“TRMC”) violated the Act by, among other things, knowingly submitting claims for payment for service that were not rendered or not rendered properly. This lawsuit was filed under seal on August 3, 2005. After the United States decided not to intervene in the case, the Complaint was unsealed in May, 2007.[2] The major focus of the case was then Relators' access to certain confidential records related to patients' drug and alcohol treatment in light of the Alcohol, Drug Abuse, and Mental Health Administration Reorganization Act (“ADAMHA”), 42 U.S.C. §§ 290aa-290ff, and its implementing regulations, 42 C.F.R. §§ 2.1-2.67. Following several hearings, notice to patients of the request to see their records, and the Court's ruling on this matter, a schedule was set. [Dkt. No. 158]. Pursuant to that schedule, discovery was to be completed by April 23, 2010, with trial set for September 20, 2010. Defendant had produced some emails in response to Rule 34 discovery. In February 2010, Relators issued new Rule 34 requests for all emails from Jan. 1, 2001 to Dec. 31, 2006, between/among nine persons and relating to six designated topics.[3] On March 29, 2010, Defendant responded to the requests as overbroad, burdensome and not relevant. Relators' filed their Motion to Compel on June 7, 2010, and the motion was fully briefed on June 28, 2010. A hearing on pending motions was held July 15, 2010. Defendant has submitted the Declaration of John Westbrook (“Westbrook”), Senior System Engineer in the I.T. Department of Ardent Health Services, LLC (“Ardent”) attesting to the following. Ardent acquired TRMC in August 2004. [Declaration of John Westbrook, Dkt. No. 224-13, at ¶ 10]. The emails at issue in this Order are those of five of the nine discovery targets. These individuals primarily used GroupWise email accounts for internal communications. In September 2006, Ardent moved TRMC's GroupWise email accounts to a Microsoft Outlook System. Neither Ardent nor TRMC currently uses GroupWise. [Id.]. Furthermore, GroupWise automatically deleted emails every 90 days unless they were manually saved. [Id. at ¶ 18]. The only way to access these deleted emails is to restore the backup tapes that were used for disaster recovery purposes. [Id. at ¶¶ 11, 12, 18]. Email data from GroupWise are stored on about 60 monthly backup tapes. [Id. at ¶ 12]. *2 Westbrook states that the estimated cost involved in obtaining necessary equipment and software in order to attempt restoration of these emails will be approximately $55,360 and will take 200 hours. This does not include the time to review the emails for privilege. [Id. at ¶ 15]. Westbrook also states that he has surveyed unnamed persons associated with the ArcServe software that is needed to read the emails and has been told that the current version of ArcServe is “unlikely to be able to read backup tapes that were written with ArcServe 9.1 with the SMS function enabled.” [Id. at ¶ 17]. He also says that he has spoken with software resellers who have advised him that ArcServe 9.1 is no longer available. [Id.]. Applicable Legal Principles There is a presumption that the party responding to discovery will bear its own costs of production. Semsroth v. City of Wichita, 239 F.R.D. 630, 633 (D.Kan. 2006). However, pursuant to Rule 26 of the Federal Rules of Civil Procedure: A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery. Fed. R. Civ. P. 26(b)(2)(B). Rule 26 further provides: (C) When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues. Fed. R. Civ. P. 26(b)(2)(C). The burden of establishing that the information is not reasonably accessible because of undue burden or cost is on the party responding to the discovery request – here, TRMC. If the responding party establishes that the electronically stored information is not reasonably accessible, the requesting party may still obtain the discovery by making a showing of good cause, balancing the costs and potential benefits of the proposed discovery. Fed. R. Civ. P. 26(b)(2)(B). The requesting party must establish that the likely benefit from discovery outweighs the cost/burden given the considerations set forth in Rule 26(b)(2)(C). In weighing the issues, the court may use the same Rule 26(b)(2)(C) factors to determine whether cost-shifting is appropriate. See Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 323 (S.D.N.Y. 2003) (“Zubulake I”).[4] Using this approach, the Court considers the “marginal utility” of the proposed discovery and the cost of production. Zubulake sets forth seven factors to be considered in analyzing a cost-shifting request: 1. The extent to which the request is specifically tailored to discover relevant information; 2. The availability of such information from other sources; 3. The total cost of production, compared to the amount in controversy; 4. The total cost of production, compared to the resources available to each party; *3 5. The relative ability of each party to control costs and its incentive to do so; 6. The importance of the issues at stake in the litigation; and 7. The relative benefits to the parties of obtaining the information. Zubulake I, 217 F.R.D. at 322. Discussion A. Inaccessibility. Whether electronic data is accessible or not generally turns on the type of medium on which it is stored. Zubulake describes the five most common types of media, ranging from most to least accessible: (1) active, online data; (2) near-line data; (3) offline storage/archives; (4) backup tapes; and (5) erased fragmented or damaged data. Zubulake I, 217 F.R.D. at 318-19. The tapes at issue fall into category four – the second least accessible form. Backup tapes “capture all information at a given time and from a given server but do not catalogue it by subject matter.” McPeek v. Ashcroft, 202 F.R.D. 31, 33 (D.D.C. 2001). Some backup tapes may be routinely used for information retrieval and these are considered are reasonably accessible. Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003) (“Zubulake IV”). However, backup tapes that are made only for disaster recovery purposes are generally not considered accessible. These tapes are a form of off-line storage, not under the control of a processing unit and, therefore, not available for immediate use on demand. They are a disaster-recovery tool, not an archival resource. E.g., McPeek, 202 F.R.D. at 32 (Purpose of backup tapes was to permit recovery from a disaster, not archival preservation.). As the court noted in Zubulake, backup tapes are “sequential-access devices” which means that “to read any particular block of data, you need to real all of the preceding blocks.” Zubulake I, 217 F.R.D. at 319. Backup tapes also use data compression thereby “making restoration more time-consuming and expensive.” Id. In its Response to Relators' Motion to Compel, Defendant has submitted the Declaration of John Westbrook (“Westbrook”), Senior System Engineer in the I.T. Department of Ardent Health Services. Westbrook states as follows: 14. In order to attempt to recreate the requested email accounts, the entire GroupWise post office must be recreated. It is not possible to isolate individual email accounts on backup tapes and restore and extract just those mailboxes. 15. Restoration of the GroupWise post office is complex, and will require several steps. First, hardware must be acquired. ICV Solutions estimates that it will require 2 servers costing $6,500 each, to accommodate the restoration. AHS does not already have available servers that can be employed for this purpose. Second, Novell servers will have to be built on this hardware, requiring the purchase of a license for the Novell software. That license will cost approximately $5,000. Third, the GroupWise software will have to be installed on top of the Novell server structure, requiring the purchase of a license for the GroupWise software. That license will cost approximately $5,000. Fourth, the ArcServe software will have to be installed on the Novell servers in order to read the backup tapes. A license for ArcServe will cost $2,000. Fifth software will have to be acquired to convert the GroupWise emails to Microsoft Outlook format in order for them to be read by counsel. A license for that conversion software will cost approximately $1,200. Finally, the backup tapes can be catalogued into the ArcServe software and restored, and the requested mailboxes isolated and extracted and then converted to Microsoft Outlook format. ICV Solutions estimates that it will take 200 hours and cost approximately $30,360, in addition to the hardware and software licensing costs, to attempt this restoration. Thus the total attempt (sic) of this attempted restoration will be approximately $55,360. This cost does not include the costs associated with any searches or review of those emails by counsel, or the preparation of a privilege log. *4 **** 17. It is extremely unlikely, however, that the backup tapes of the GroupWise system can successfully be restored. The ArcServe software version 9.1 is no longer sold. I have contacted the manufacturer of the ArcServe software and a number of software resellers and have been unable to obtain version 9.1 of the software or determine any other source of acquiring the software. The ArcServe manufacturer informed me that the currently available version of the ArcServe backup software is unlikely to be able to read backup tapes that were written with ArcServe 9.1 with the SMS function enabled. Because ArcServe 9.1 was sold with the SMS function auto-enabled, it is highly likely that the GroupWise backup tapes were written with SMS. It is impossible to tell whether the SMS function was manually disabled until the hardware is purchased, Novell servers are built, GroupWise and ArcServe software is installed, and ICV Solutions attempts to catalogue the tapes into ArcServe. However, based on the information received from the ArcServe manufacturer, it is highly unlikely that the attempted restoration effort will be successful. (Dec. of John Westbrook, Dkt. No. 224-13, ¶¶ 14, 15 & 17). Relators have offered no evidence in response to Westbrook's declaration or to indicate that these emails could be successfully restored in a less costly, less time-consuming manner. Relators also contend that Defendant breached its duty to preserve evidence by making the emails at issue inaccessible being aware of this lawsuit. Relators contend that Defendant knew about this lawsuit shortly after it was filed in August 2005, hired defense outside counsel to aid its defense and, thus, should have preserved the requested emails in an accessible format. Relators argue that by changing from GroupWise to Outlook in September 2006, Defendant failed to preserve the data in an accessible form and violated its duty to preserve evidence. Courts have offered differing views on the duty to preserve evidence in accessible form; however, the majority view is that duty to preserve evidence does not include “a duty to keep the data in an accessible format.” Quinby v. WestLB AG, 2005 WL 3453908 at *8 n.10 (S.D.N.Y. Dec. 15, 2005).[5] See also Best Buy Stores L.P. v. Developers Diversified Realty Corp., 247 F.R.D. 567 (D.Minn. 2007). Preserving data in a format that is less accessible than its original form is not, without more, a violation of the duty to preserve evidence. A different result might obtain if there were evidence that the change to an inaccessible format was done with the intention of hiding or impeding a party's access to relevant information, but no such motive or intent has even been suggested here. Defendant regularly stored GroupWise emails on back up tapes for disaster-recovery purposes. Thus, the fundamental problem of inaccessibility would exist regardless of the change to Outlook in 2006. However, the change to Outlook made the situation more difficult because without the ArcServe 9.1 software that GroupWise used, reading recovered emails is highly problematic. The decision to move from GroupWise to Outlook was made in September 2006. The discovery requests at issue were not served until February 2010. Thus, as the court noted in Best Buy, the move to a different format did not occur when specific discovery requests were pending. Best Buy, 247 F.R.D. at 570 & n.3. *5 Based on the record evidence, the Court concludes that the emails that Relators seek are inaccessible; therefore, the burden shifts to Relators to establish good cause for the discovery considering the limitations of Fed. R. Civ. P. 26(b)(2)(C). B. Good Cause/Cost-Shifting. The Relators must establish that the likely benefit of the requested emails outweighs the burden or expense of restoration “considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.” Rule 26(b)(2)(C). (The same essential factors are considered in deciding whether the cost of producing inaccessible data should be shifted in whole or in part to the requesting party. See Zubulake I, 217 F.R.D. at 322.) Relators contend that the requested emails could show Defendant's knowledge of fraudulent activities, thus going to both liability under the Act and damages. They point to an email dated January 25, 2005, that mentions fraud.[6] Furthermore, at the July 15 hearing counsel stated that he believed that the requested discovery would produce “a smoking gun” that will “blow this case open.” However, when asked to describe the basis for this belief, counsel declined to offer anything in open court. Counsel's statement, “like any other given in the course of litigation, requires more than such a conclusory assertion of the existence of such a fact. It also requires evidence tending to prove or disprove the existence of such a fact.” Oxford House, Inc. v. City of Topeka, 2007 WL 1246200 *3 (D.Kan. April 27, 2007). The Court has been offered none. Considering the various factors listed in Rule 26(b)(2)(C)(iii), the Court finds that good cause has not been shown to order Defendant to attempt restoration of the GroupWise emails. The Court is particularly concerned with the marginal utility of the requested discovery – the first and most important part of the analysis. Zubulake I, 217 F.R.D. at 323 (“The first two factors – comprising the marginal utility test – are the most important.”). The unrefuted record evidence establishes the estimated cost and time burden in seeking to restore these emails, and, importantly, indicates that the effort will be futile. Relators have neither refuted nor rebutted this evidence, or offered anything in response for the Court's consideration. Given the lack of any evidence to rebut the Declarations submitted by Defendant, the Court concludes that Relators have failed to establish good cause for Defendant to incur the cost necessary to attempt a restoration of the requested emails. However, Relators counsel believes the requested discovery is important to plaintiffs' case and that the comparison between the cost involved and potential recovery warrants the effort. Thus, if Relators believe that there are relevant emails critical to their case that can be successfully recovered, they may pursue this course at their own expense. The Court believes that there have been less costly alternatives available to seek the information at issue, i.e. through depositions. While a deposition may not provide all of the advantages of documentary evidence, see Spieker v. Quest Cherokee, LLC, 2009 WL 2168892 at *4 (D.Kan. July 21, 2009), the availability of depositions means Relators have not been precluded from seeking this information in an alternative manner. However, the Court will leave that decision to Relators' judgment. *6 Accordingly, Relators' Motion to Compel Defendant to produce the subject emails at Defendant's expense [Dkt. No. 204, Redacted Dkt. No. 217] is DENIED. Relators shall advise the Defendant and the Court by August 13, 2010, if they wish to pursue these emails at their own expense. IT IS SO ORDERED this 6th day of August 2010. Footnotes [1] The Court previously granted this motion in part. See Dkt. No. 258. Furthermore, Relators withdrew their request for email files for Hinkle from January to December 2006 and limited their request for emails from the MOX system pending an explanatory affidavit regarding whether that system uses a single or double delete function. Accordingly, this Order relates solely to the emails requested from the GroupWise email system used by Martin Bonick, Keith Webber, Eric Burch, Bonnie Peterson and Julie Eccleston. [2] Although the case was not unsealed until 2007, on August 4, 2005, TRMC learned of the existence of the lawsuit, the Relators' names and the fact that it was a qui tam action under the False Claims Act. Apparently this was the result of some sort of sealing error by the Court or by the Relators. [Declaration of Steve Hinkle, Dkt. No. 224-11, ¶ 2]. [3] Relators have narrowed the time period for which email is sought to Jan. 1, 2003 to Dec. 31, 2006. [4] Zubulake v. UBS Warburg LLC spawned at least four widely-cited opinions regarding electronic discovery: 217 F.R.D. 309 (“Zubulake I”); 216 F.R.D. 280 (“Zubulake III”); 220 F.R.D. 212 (“Zubulake IV”); and, 229 F.R.D. 422 (“Zubulake V”). [5] The Court did consider the choice to place data in an inaccessible format in determining a cost-shifting motion. In a subsequent decision the Court declined to shift the cost of recovering data to the requesting party because the defendant chose to downgrade electronic data it should have known would be relevant to litigation. Quinby, 245 F.R.D. at 111. [6] Realtors state that this email “characterized the Defendant's conduct as fraudulent.” [Dkt. No. 204 at 10]. Having examined the email in question, the Court is not convinced that this is a fair description of the document.