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Fourth Circuit Defends its Narrow Interpretation Regarding Taxation of Costs for Making Copies

Posted on May 15th, 2013

In our last blog, we discussed the recent Fourth Circuit case Country Vintner v. Gallo, No. 12-2074 (4th Cir. 2013). In this case, the Fourth Circuit followed the Third Circuit’s reasoning in Race Car Tires Am. Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3rd Cir. 2012) to disallow the taxation of ESI costs under 28 U.S.C. §1920(4). Both circuits followed a narrow interpretation of what constitutes “making copies,” and allowed only the transferring of native files to TIFF or PDF, and the trivial costs of burning the files onto CDs.

What costs were not included?

  • $71,910 for indexing the ESI production, including the use of Optical Character Recognition (OCR)
  • $15,660 for searching, review and metadata extraction
  • $74.16 for electronic Bates stamping
  • $23,185 for management, quality assurance and analyzing the data

The Fourth Circuit also offered further reasoning for denying these costs by citing the recent Supreme Court case Taniguchi v. Kan P. Saipan, Ltd., 132 S. Ct. 1997 (2012), a case we blogged about last year.

Citing Taniguchi that taxation of costs under the statute is “modest in scope” and “limited to relatively minor, incidental expenses,” the Fourth Circuit also anticipated criticism that this narrow interpretation is behind the times.  “That Gallo will recover only a fraction of its litigation costs under our approach does not establish that our reading of the statute is too grudging in the age of unforeseen innovation in litigation support technology.” In this case, the court noted in a footnote that the parties had not agreed on the production of ESI in a particular format, so that hypothetical case might have a different outcome.  It affirmed the district court’s taxation of costs in the amount of $218.59.

ILS – Plaintiff eDiscovery Experts

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