Many companies naively rely on backup tapes as assurance that records are being retained. Handling backup tapes in this manner is not a reasonable way to deal with electronic records and can lead to disastrous and expensive consequences should litigation occur. Backup tapes and other disaster recovery systems serve a different purpose from those of a well thought out records management program. A disaster recovery plan or program utilizing backup tapes is designed to allow the organization to continue day to day operations despite a network failure and to rebuild its information systems so that the operations are not significantly impacted by the network failure. Generally, the storage time should be short in duration or limited to the amount of time truly necessary to recover from a disaster. It should not serve as a substitute for records management.
While it is true that backup systems do have the capability of recovering data, the capabilities of backup systems are fundamentally different than the capability requirements of a reasonable, legally defensible information and records management system. After a short period of time, it is impractical for backup systems to efficiently retreive data. It is a poor system for effectively finding specific, targeted information. Thus, the organization will be ill-equipped to recover necessary information that would typically be found in a well-conceived records management policy.
The Federal Rules of Civil Procedure governing ediscovery do recognize the ineffectiveness of backup systems for the retrieval of targeted, specific information. The general rule is that information stored on backup tapes should not be part of a party’s first wave of production responsive to ediscovery requests. However, backup tapes can be the subject of discovery where good cause is shown.
Case law is riddled with examples where retention of disaster recovery media beyond the period necessary to recover data has had disastrous unintended consequences once the organization becomes involved in litigation. In Coleman Parent Holdings, Inc. v. Morgan Stanley & Co., Inc. 2005 WL 679071 (Fla. Cir. Ct. March 1, 2005); 2005 WL 674885 (Fla Cir. Ct. March 23, 2005); 2007 WL 837221 (Fla. Dist. Ct. App. March 21, 2007), the Court actually went so far as to shift the burden of proof requiring Morgan Stanley to show that it did not defraud the Plaintiff due to Morgan Stanley’s repeated location of additional backup tapes after certifying that it located all potentially relevant information. Morgan Stanley simply did not know it had all of the backup tapes due to its misplaced reliance on these systems rather than records retention schedules and management policies. The shifting of the burden of proof assisted the Plaintiffs to obtain a jury award totaling $1.455 billion against Morgan Stanley.
In the landmark ediscovery case, Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 324 (S.D.N.Y. 2003), the use of disaster recovery systems as an electronic records management and retention policy led to a determination that the backup tapes were “accessible” and should be part of the organization’s initial response to ediscovery.
The ediscovery compliance costs for retrieving information from backup systems is enormous. This is especially the case if the backup tapes are kept for an indefinite length of time as would be the case if they were serving as a substitute for a records management policy. The backup tapes must be stored in a logical manner to allow retrieval, time must be allocated to the loading of the tapes so that the server and file in question can be located and significant labor hours for loading the data, restoring the system and locating the file. The cost of recovering a single document can quickly cost thousands of dollars. Then, all of these documents will have to be reviewed to comply with the ediscovery requests. Many of these documents to be reviewed could likely have been disposed of had a legally defensible records management policy been in place.