It has now become generally known that any corporation or entity may, in the course of litigation, be required to respond to discovery demands for electronically stored data. What is less clear is to what extent, if any, a business or organization may be required to produce such data in the context of litigation between others to which it is not a party but may have in its custody data that a court considers potentially relevant to the matter before it.

In such an instance, the entity in question will not have the advantage of retaining the data pursuant to its litigation hold policies and thus it might well be deleted as part of its routine deletion cycle.

The Appellate Division of the New York Supreme Court has recently addressed this issue in the matter of Tener,M.D. v. Cremer, M.D. et al, 2011 NY Slip Op. 06543, N.Y.App. Div. September 22, 2011)

Here, the plaintiff in defamation proceedings against a website, sought data from NYU concerning the identity of all persons who had used one of its computers to access the internet via a particular I.P. address on a given day.

The University took the position that this data appears as a text file that is automatically over written every 30 days.

The plaintiff however, made proof that, in fact, such data although over written can, with expertise and available software be retrieved.

While the trial court sided with the University, the Appellate Division made a number of determinations that must be kept in mind by any entity that operates through the use of electronically stored data.

First, the court held that while deletion makes the retrieval of data more difficult it does not, of itself, lead to a conclusion that such data is irretrievable

Secondly, it cited the non-binding but persuasive Federal Rule 45(d)(1)(D) which provides that a nonparty,

                                         “Need not provide discovery of electronically stored information that the person identifies as not reasonably accessible because of undue burden or cost”.

However the Federal Rules of Procedure accord the courts the authority to order production of such data upon a demonstration of “good cause” and subject to the limitations of section 26 which include a consideration of the burden and expense of production when weighed against its likely benefit ion terms of relevance.

Based upon this consideration, the Appellate Division remanded the case to the court below to determine whether, having regard to the relevance of the data, the University should be ordered, notwithstanding the cost, to retrieve it.

The court also added that, apart from the relevance factors, allowing entities to escape the discovery obligation altogether would encourage them to implement policies of rapid deletion in order to insulate themselves from the issue altogether.