UK: Modern Day Copying: Recovery Of Costs For Electronic Discovery Under 28 U.S.C. § 1920

Last Updated: 16 January 2012
Article by Michael D. Battaglia, Michael Faris and Cameron R. Krieger

Given the massive volume of electronically stored information (ESI) being maintained by many companies today, discovery costs have skyrocketed as corporate clients are typically required to collect, process, and review thousands of electronic documents in response to an opposing party's discovery requests. In an effort to recoup some of these costs, prevailing parties have begun requesting an award of costs for expenditures related to e-discovery activities pursuant to 28 U.S.C. § 1920. In relevant part, the statute provides that "A judge or clerk of any court of the United States may tax as costs the following: ... (4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." Most courts that have considered whether to award costs under § 1920(4) agree that at least some portion of e-discovery costs are taxable under the statute, but there is a split among the courts as to exactly which e-discovery activities are recoverable. While many of the courts facing this issue wrestle with the question of which activities are necessary to make a copy of an electronic document, a few courts, in recent decisions, have granted an award of costs for a number of e-discovery activities because they are required for efficient discovery in modern litigation.

The Electronic Reproduction of a Paper Document

To reflect the reality of modern litigation, in 2008 the U.S. Congress amended the text of § 1920(4) by replacing the phrase "fees for exemplification of copies of papers" with "fees for exemplification and the costs of making copies of any materials." Even before the Congressional amendment, courts were willing to award costs under the statute for activities deemed to be similar to the copying of paper documents. See, e.g., BDT Products, Inc. v. Lexmark International, Inc., 405 F.3d 415, 420 (6th Cir. 2005) (affirming the district court's decision to award costs for the electronic scanning and imaging of documents on the grounds that such activities "could be interpreted as 'exemplification and copies of papers.'"); Brown v. McGraw-Hill Companies, Inc., 526 F. Supp. 2d 950, 959 (N.D. Iowa 2007) (finding that "electronic scanning of documents is the modern-day equivalent of 'exemplification and copies of paper'"). Since the amendment, a majority of courts are in agreement that costs for scanning and imaging of documents may be recovered under § 1920(4) and, in one noteworthy decision, the District Court for the Northern District of California recently held that the prevailing party was entitled to an award of costs for the scanning and imaging of all documents that were collected for review regardless of whether the documents were actually produced to the opposing party. See Parrish v. Manatt, Phelps & Phillips, LLP, 2011 WL 1362112 (N.D. Cal. Apr. 11, 2011). Courts' interpretation of the statute begins to diverge, however, when parties seek reimbursement for the costs of activities beyond simple imaging or scanning.

What Processes are Necessary to Produce an Electronic Copy of a Document

When requesting an award of e-discovery costs, prevailing parties typically seek reimbursement for a variety of activities, such as document collection and processing, database creation, optical character recognition (OCR) scanning and metadata extraction. Some courts have denied such requests because they are simply unwilling to award costs for activities that are not analogous to the photocopying of paper. For example, in Fells v. Virginia Department of Transportation, 605 F. Supp. 2d 740 (E.D. Va. 2009), the court denied the prevailing party's request for the costs of processing documents, extracting metadata, and converting files, explaining that such techniques were done to "create searchable documents, rather than merely reproduce paper documents in electronic form." Similarly, in Computer Cache Coherency Corp. v. Intel Corp., 2009 WL 5114002 (N.D. Cal. Dec. 18, 2009), the court, citing a Ninth Circuit case from 1989, explained that § 1920(4) only permits the recovery of costs associated with "the physical preparation and duplication of documents." In Computer Cache, Intel successfully defended a patent infringement action and sought recovery of over $84,000 in costs incurred for electronic scanning, OCR scanning, metadata extraction and bates labeling. The clerk originally disallowed approximately $50,000 of the request, but Intel disputed the clerk's decision. Although the court in this case allowed recovery for electronic scanning and bates numbering as necessary reproduction costs, it denied costs for OCR scanning and metadata extraction because they were done "merely for the convenience of counsel."

Other courts have refused to award costs on the grounds that certain e-discovery activities are not necessary to produce an electronic copy of a document because the activities are similar to work that would normally be performed by an attorney or a paralegal. In Kellogg Brown & Root International, Inc. v. Altanmia Commercial Marketing Co. W.L.L., 2009 WL 1457632 (S.D. Tex. May. 26, 2009), Kellogg Brown & Root (KBR) sought to recover costs for, among other things, data extraction and storage services provided by a third-party vendor. The court denied KBR's request stating that "extracting data from an electronic medium and storing that data for possible use in discovery is more like the work of an attorney or legal assistant in locating and segregating documents ... than it is like copying those documents for use in the case." Some courts, however, have rejected this exact same argument in deciding to award costs for a host of e-discovery services and activities. In Race Tires America, Inc. v. Hoosier Racing Tire Corp., 2011 WL 1748620 (W.D. Pa. May 6, 2011), the defendants prevailed at both the trial and appellate courts. The plaintiff filed a motion challenging the clerk's decision to award defendants costs related to electronic discovery totaling more than $360,000. Defendants were awarded costs for a variety of services provided by third-party vendors, including forensic collection of documents, imaging and indexing of documents, metadata extraction, and OCR scanning. In rejecting plaintiff's argument that such services are similar to the work of attorneys or paralegals, the Race Tires court found that "the requirements and expertise necessary to retrieve and prepare these e-discovery documents for production were an indispensable part of the discovery process."

In a newly published opinion, the United States Court of Appeals for the Federal Circuit found that the district court did not err in holding that costs associated with the use of an electronic database to produce email to an opposing party were recoverable under § 1920(4). See In re Ricoh Company, Ltd. Patent Litigation, 661 F.3d 1361 (Fed. Cir. 2011). At the outset of discovery, Ricoh insisted on receiving email in its native form and suggested that Synopsys use a specific e-discovery vendor for the processing, review and production of email. Synopsys agreed to both the use of the third-party vendor and to pay the vendor one half of the invoiced database-related fees. After the district court granted Synopsys' motion for summary judgment, Synopsys was awarded costs for a variety of discovery-related activities, including $234,702.43 for the electronic database used to produce email to Ricoh. On appeal, Ricoh argued that the electronic database costs were not recoverable because the database was unnecessary. In rejecting Ricoh's argument, the Federal Circuit agreed with the district court's conclusion that the use of the electronic database "constituted electronic production" of the email because the database was needed to produce the email in native form. The Federal Circuit, however, ultimately reversed the district court's decision to award the costs for the database finding that despite the absence of any knowing waiver of costs under 28 U.S.C. § 1920, Synopsys' agreement to pay half of the e-discovery vendor's database-related fees was an agreement to split the costs, and that agreement was controlling. See also U.S. ex rel. Davis v. U.S. Training Center, Inc., 2011 WL 6317336 (E.D. Va. Dec. 8, 2011) (finding the issue of whether ESI-related discovery costs are recoverable was moot because the parties had a joint discovery agreement in which they agreed to bear their own production costs).

The Realities of Electronic Discovery in Modern Litigation

Recently, courts have granted awards of costs for numerous e-discovery activities, not because these services are necessary to produce electronic copies of documents, but because such activities are necessary for parties to conduct efficient and effective discovery. In Jardin v. DATAllegro, 2011 WL 4835742 (S.D. Cal. Oct. 12, 2011), defendants were awarded costs for converting documents into .TIFF format, as well as for the project management costs associated with its e-discovery efforts. With respect to the costs of the .TIFF conversion, the Jardin court noted that the Federal Rules of Civil Procedure require parties to produce electronically stored information and that such data may exist in a variety of formats. The court then explained that "converting data into a format that all parties can utilize not only allows for more efficient and less expensive discovery, but is often necessary for any meaningful discovery at all." In upholding the clerk's decision to award the conversion costs, the court relied on the fact that discovery in the case involved "massive amounts of e-data stored in various digital formats," which the parties agreed in advance to produce in .TIFF format "because the .TIFF conversion made discovery easier, more efficient, and less expensive for all parties."

In re Aspartame Antitrust Litigation, 2011 WL 4793239 (E.D. Pa. Oct. 5, 2011), represents the broadest interpretation of recoverable costs under § 1920(4) to date. In this case, defendants sought an award of costs for a number of e-discovery services. Before reaching a decision on this issue, the court noted the huge volume of discovery — over 100 million pages of potentially responsive material was collected between the three defendants — and pointed out that the parties agreed to use keyword searches and de-duplication tools to reduce discovery-related costs. Convinced by the defendants' argument that the various discovery-related activities helped to cut down on costs and make the discovery process more efficient, the court awarded costs for the following activities: creation of a litigation database, data storage, data processing and hosting, metadata extraction, imaging of hard drives, de-duplication, keyword searches and privilege screens, and OCR processing. Additionally, defendants were awarded costs associated with "the technical support necessary to complete these tasks," costs to create load files, and costs for data recovery and tape restoration. The court refused, however, to award costs for a review tool with the capability to conceptually cluster documents. The court found that such a program went above and beyond simple keyword searches and was used "for the convenience of counsel."

Outlook

The types of discoverable evidence has greatly expanded over the last ten years. Gone are the days of clients having to only provide an opposing party with a couple boxes of paper documents. Now litigants have to search, among other sources, email, databases, voicemail, instant messages, and social media websites for documents that may be responsive to a party's discovery requests. In complex litigation matters, the costs associated with collecting, processing and reviewing high volumes of such diverse electronic information are enormous. In light of the realities of modern litigation, there appears to be a shift among courts to award prevailing parties costs for numerous e-discovery activities. While the reasoning relied on by the courts in Jardin and In re Aspartame Antitrust Litigation may turn out to be the exception rather than the rule, these decisions provide a unique argument for parties seeking to recover discovery-related costs under § 1920(4).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.