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Who Pays? Courts Reviewing Costs Associated with ESI

Posted on April 7th, 2015

28 U.S.C. § 1920: Taxable Costs

In a world where parties to a litigation may spend thousands of dollars on processing their Electronically Stored Information (ESI), courts are grappling with whether they can properly deem those costs as “taxable” pursuant to 28 U.S. § 1920, a statute passed in 1948 that has never been amended to address modern eDiscovery.

Each year, human beings create more data than the year before. In 2010, the world created and replicated more than a zettabyte (one trillion gigabytes) of electronic information. This information is spread across mobile phones, tablet computers, laptops, desktops, and servers. Collecting and processing the potentially relevant data for discovery purposes is often one of the most costly components of litigation.

The following recent decisions have analyzed whether a victorious party can recover some of their ESI costs under § 1920(4)’s provision permitting recovery of costs related to “making copies.” The U.S. Supreme Court answered that question narrowly in Taniguchi v. Kan Pacific Saipan, Ltd. 132 S.Ct. 1997 (2012) and the circuit courts have largely followed suit, although, as the below cases suggest, some courts have been willing to take a more expansive approach.

Recent Court Opinions Regarding U.S.C. § 1920

  •  Sixth Court Takes Broader View of Taxable eDiscovery Costs Under § 1920, In Colosi v. Jones Lange LaSalle Americas, Inc., No. 14-3710 (6th Cir. Mar. 17, 2015), the Sixth Circuit considered the taxability of eDiscovery costs under 28 U.S. § 1920 and took a broader view of permissible costs than other circuits have. As the prevailing party, Defendant sought recovery of taxable costs under Section 1920, including eDiscovery related costs. The trial court awarded Defendant the costs it incurred for computer forensic imaging. Plaintiff appealed. The court upheld the trial court’s decision, concluding that forensic imaging a hard drive fell squarely within Section 1920’s “making copies” provision. In doing so, the Sixth Circuit expressly rejected the Third Circuit’ oft-cited Race Car Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F3d 158 (3rd Cir. 2012) opinion, which had denied computer imaging costs and held that the only way a court could tax an ESI imaging cost would be where a party converted documents to an agreed-upon format and burned them onto a DVD.
  •  Court Takes a Broad Interpretation of Taxable eDiscovery Costs , In Comprehensive Addition Treatment Center, Inc. v. Leslea, et al., No. 11-cv-03417-CMA-MJW (D. Colo. Feb. 13, 2015), the District Court of Colorado took a broad view of whether a winning party can recover eDiscovery costs under 28 U.S.C. § 1920(4). Defendants had hired a third-party eDiscovery vendor to assist them with electronic discovery document production. After Defendants prevailed on summary judgment, Defendants sought taxable costs from Plaintiff, including costs paid to the eDiscovery vendor. The trial court awarded Defendants their requested costs, awarding approximately $57,000 for costs incurred in collecting, scanning, and preparing the documents for production.
  •  9th Circuit Reviews Taxable eDiscovery Costs Under §1920(4) , In Re Online DVD-Rental Antitrust Litigation, Nos. 11-18034, 12-16160, 12-16183 (9th Cir. Feb. 27, 2015), the Ninth Circuit considered the extent to which a court can tax ESI costs pursuant to U.S. 28 §1920(4). The court first surveyed the general landscape of the law throughout the country, and then analyzed the particular ESI costs at issue, concluding that, for example, keyword searching was not “taxable” under the statute but that costs related to OCR’ing and converting documents to TIFF formatting were taxable, provided they were “necessary” for the litigation.

 

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