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Court Taxes eDiscovery Costs Despite Parties’ Agreement to Bear Own Production Costs

Posted on June 1st, 2015

In CSP Technologies, Inc. v. Sud-Chemie AG, et al., No. 4:11-cv-00029-RLY-WGH (S.D. Ind. May 20, 2015), the Southern District of Indiana considered whether parties can preclude a court from taxing eDiscovery costs if the parties agree in writing that each party will pay its own ESI costs.

The parties’ initial Case Management Plan, signed by both parties, stated that the parties would produce documents in electronic and searchable format as TIFF images and that “each [would] party bear its own production costs.” The court granted summary judgment in favor of Defendants.  Plaintiff argued that they should not be taxed any ESI production costs because of the agreed-upon order. The court disagreed, holding that the agreement functioned solely to streamline the discovery process so the parties would not need to exchange invoices during the production process, and that the terms did not address the costs recoverable to a party at the conclusion of the case. The court concluded, therefore, that Defendants had not waived their right to recover costs for the eDiscovery production.

Defendants presented a bill for $359,215 (most of which was related to eDiscovery costs). Plaintiffs objected to the costs. The court considered the costs allowable pursuant to 28 USC § 1920(4), relying on the Third Circuit’s Race Car Tires decision stating that “only the scanning of hard copy documents, [and] the conversion of native files to TIFF . . . were recoverable as the costs of making copies….”  Accordingly, the court denied cost shifting for services including data loading, data processing, de-duplication, and culling but did tax $94,766 in eDiscovery costs for scanning, OCR’ing, Bates labeling, and TIFF/PDF conversion costs.

ILS – Plaintiff Electronic Discovery Experts

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