Written by Attorney G. Frank McKnight, IV

Note: This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.

Interpreting California Code of Civil Procedure Section 2031(g)(1), a California Court of Appeal has ruled that the demanding party in a discovery dispute must pay the reasonable cost of recovering usable information from the responding party’s computer backup tapes. In Toshiba American Electronic Components, Inc. v. Superior Court, No. H027029, 2004 WL 2757873 (Cal. Ct. App. Dec. 3, 2004), the Court found that the statutory language in Section 2031(g)(1) mandated shifting necessary translation costs to the demanding party when the electronic data requested must be converted into a reasonably usable form. In so ruling, the Court noted that the cost-shifting provision in §2031(g)(1) was mandatory in nature and required no showing of “undue burden or expense” as required by the federal rules.

In this case, the plaintiff, Lexar Media, Inc. (Lexar) sued Toshiba America Electronic Components, Inc. (TAEC) for misappropriation of trade secrets, breach of fiduciary duty, and unfair competition. During discovery, Lexar sought to compel production of all responsive materials located on 800 TAEC backup tapes. According to TAEC’s discovery specialist, due to the condition and age of some of the tapes, processing all of them would cost between $1.5 and $1.9 million. Anticipating TAEC’s arguments that Lexar should bear some of these costs, Lexar preemptively argued that it should not be penalized for TAEC’s method of document retention and cited several federal cases in support.[i] Lexar further argued that the cost shifting analysis used in Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003) did not warrant cost shifting in this case. TAEC responded that restoring the tapes was an “undue burden” and that the federal analysis favored cost shifting. The trial court granted Lexar’s motion.

On appeal, TAEC argued for the first time that California Rule of Civil Procedure Section 2031(g)(1) was an automatic cost shifting provision that should apply to require that Lexar pay the cost to convert the backup tapes into a reasonably usable form. The California Court of Appeals agreed, finding the plain language of the statute required that, if data translation is necessary, the responding party must perform it at the demanding party’s reasonable expense. Moreover, the Court found that §2031(g)(1) was mandatory in nature, and, unlike federal law, did not require a showing of “undue burden or expense” before applying.

While the Court recognized that such a shift in the demanding party’s discovery burden could hinder litigants with limited resources, the Court noted that such concerns were mitigated by the statute’s requirement that the demanding party only needs to bear reasonable expenses when translation is necessary to obtain useable data. The Court further noted that if a demanding party thought that certain translations were unnecessary or that certain expenses were unreasonable, the party could seek a protective order or move to compel production, so that the trial court in its discretion could make whatever order justice required.

In holding that §2031(g)(1) mandated cost shifting, the Court vacated the trial court’s order to permit further proceedings and determine to what extent California’s Code of Civil Procedure Section 2031(g)(1) applied to Lexar’s demand.

The Toshiba opinion is a significant victory for corporate defendants in California state courts. The mandatory nature of §2031(g)(1) serves to both protect corporate defendants from onerous electronic discovery requests and provide those defendants with a powerful negotiation tool to guarantee that applicable requests are narrowly tailored.