Are ESI Costs Recoverable If The Parties Did Not Have An ESI Formatting Agreement?
Our last post began a discussion of Bonillas v. United Air Lines Inc., No. C-12-06574(EDL) (N.D. Cal. Dec. 19, 2014), where United Airlines has filed a currently pending Bill of Costs for ESI as the prevailing party under § 1920(4). (Read our last post for the details on United’s initial Bill of Costs requesting its ESI costs.) The Northern District of California had directed United to reduce and itemize its costs pursuant to the reasoning in CBT Flint Partners, LLC v. Return Path, Inc., 737 F.3d 1320 (Fed.Cir.2013), by which United had reduced its claim to $19,786.30.
Bonillas still objected to the entirety of the United’s costs, claiming that because the parties did not have an ESI formatting agreement, United could not recover anything. Bonillas argued that because United unilaterally chose the format in which it produced its ESI (which made its own document review easier and accordingly saved attorney time), those costs were non-taxable under § 1920(4) pursuant to CBT Flint Partners. In CBT Flint Partners, the court held that where the parties did not have an ESI formatting agreement, and the producing party engaged in imaging source drives and uploading the images to a database for faster searching and review, these more expensive preliminary costs generally would not be taxable.
Following the reasoning in CBT Flint Partners, the court concluded that without an ESI formatting agreement, the only ESI costs that would remain taxable were United’s costs for converting the files to PDFs, Bates numbering the documents, and loading the files to an FTP site for production.
The court did note, however, that because some of United’s data existed in an unusable electronic format, the court needed to determine whether costs incurred to convert the documents into a usable format should be taxable. The court reasoned that if the formatting was necessary to produce usable data to Bonillas, the costs would be taxable; if unnecessary and done solely for United’s benefit, it would not be taxable. Accordingly, the court ordered United to submit a further declaration of costs to explain:
- A breakdown of PDF conversion costs to note what file and metadata costs were necessary to produce reasonably usable copies (taxable) and which conversion costs were done solely for United’s own benefit (not taxable).
- A breakdown of which load files were created to separate electronic documents (analogous to slip sheets and generally taxable) or were created simply for United’s own convenience (not taxable).
- Whether the “processing costs” United incurred were for all documents reviewed (not taxable) or for the smaller subset of produced documents (taxable).
The ILS blog will continue to monitor this case and will let our blogging audience know once the court reaches its final decision.