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Clean Harbors Environmental Services, Inc., A Massachusetts Corporation v. Esis

May 17, 2011


The opinion of the court was delivered by: Magistrate Judge Susan E. Cox

District Judge Robert W. Gettleman


Susan E. Cox, Magistrate Judge

In this motion for a protective order, plaintiff Clean Harbors Environmental Services, Inc. ("Clean Harbors") seeks to shift certain costs of electronic discovery to defendants ESIS, Inc. ("ESIS"), Myers Miller & Krauskopf, LLC, Howard Krauskopf, and Jason Sax (collectively referred to as "MMK") because it has had to pay a third party vendor to cull, filter, and process the electronically stored information requested by defendants in discovery. Clean Harbors claims that from the beginning it informed defendants of the need to share costs, provided them with the cost comparison of the discovery vendors it considered hiring, and generally believed it to be in negotiations with defendants as to how costs could be split. MMK did not file a response to Clean Harbors' motion. ESIS, however, is disputing Clean Harbors' position. ESIS argues that Clean Harbors did not raise any burden or cost concerns as to the discovery, did not attempt to or ask the Court to limit production, and at no point refused to produce discovery because of the alleged burden. Now the electronic discovery is complete. ESIS believes Clean Harbors' request, at this point, comes too late. As outlined below, plaintiff's motion for Protective Order Relating to its Production of Electronic Data [dkt. 72] is granted in part.

I. Background Facts

To better address this dispute it is helpful to understand the parties' respective roles in this lawsuit. Clean Harbors provides environmental and hazardous waste management services. ESIS, in this circumstance, is a third-party claims administrator that provides claims adjusting services and risk management services. In 2000, Clean Harbors entered into an agreement with ESIS to have it manage and adjust insurance claims asserted against Clean Harbors. So when, in 2002, a lawsuit was filed against Clean Harbors by an employee of Waste Management, Inc., Eddie Lopez, ESIS was involved.

Mr. Lopez, who had been assigned a stop at a Clean Harbors' facility, was to pick up dumpsters containing 55-gallon drums that had been processed at the facility. On several different occasions in April 2001, after completing his job duties, Mr. Lopez visited the emergency room. At these visits he complained of headaches, dizziness, vomiting and blurred vision. Ultimately, at one of these emergency visits Mr. Lopez was hospitalized, lapsed into a coma, and thereafter became paralyzed from the waist down. Following his hospitalization, Mr. Lopez filed the lawsuit against Clean Harbors, alleging that he was exposed to toxic chemicals while at the Clean Harbors facility.

At issue in this case are Clean Harbors' allegations that in Mr. Lopez's underlying case, ESIS retained "instructed and directed"*fn1 legal counsel from MMK to defend Clean Harbors, but did so "without regard to whether [they were] qualified or maintained the skills and experience necessary to properly and competently represent Clean Harbors' interests."*fn2 Specifically, Clean Harbors claims that weeks before trial it was forced to hire independent counsel who soon discovered that MMK had improperly handled the case on several levels.*fn3 Clean Harbors then determined that it was unable, at that point, to successfully defend the case, which forced it into an unfavorable settlement. The present lawsuit against ESIS and MMK, therefore, alleges professional negligence, breach of contract, and breach of fiduciary duty.

II. Analysis

Returning to the discovery dispute before us, Clean Harbors' motion claims that the information sought by ESIS was largely inaccessible. Clean Harbors explains that it did not receive a litigation hold until 2008 but ESIS requested emails dating back to April 2001, when Mr. Lopez was injured, through January 2010 when the settlement was finalized. Clean Harbors, however, did not have a document archive system. Most of that information was kept on backup tapes in the ordinary course of business. To get to the requested discovery, then, Clean Harbors has had to physically pull backup tapes from an offsite storage facility, load them onto their system, extract certain data, and then provide that data to counsel. Because there was no way to search the data themselves, Clean Harbors' counsel retained a third-party vendor to filter, cull, and process the 166 GB of data, which has now cost nearly $91,000.

In Clean Harbors' motion, it argues that if we follow the test most recently used in this Circuit to determine cost shifting, the majority of the factors weigh in favor of cost shifting. In an effort to address all arguments raised by the parties, we will review the dispute through that prism.

Also important in this particular case, however, is the fact that the parties had ongoing discussions, throughout this discovery process, as to how costs could be shared. We find this to be an additional consideration, and perhaps more pertinent here.

A. Standards For Electronic Discovery

The general rule in discovery is that the responding party bears the costs of complying with discovery requests.*fn4 But a responding party may ask the court to protect it from "'undue burden or expense'" by either restricting the discovery sought or by shifting the costs to the non-producing party.*fn5 Cost shifting has been found to potentially be appropriate only when "inaccessible data is sought," such as with backup tapes.*fn6 With respect to electronic discovery, "three main tests have been suggested to determine when it is appropriate to shift the costs of searching and producing inaccessible data to the ...

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