"Loser pays" reforms have gained little traction in the United States, but prevailing parties in federal civil litigation take modest comfort in 28 U.S.C. § 1920. Under that statute, losers pay the "costs of making copies" of all materials necessary "for use in the case." 28 U.S.C. § 1920(4). Courts are increasingly called upon to decide which activities necessary to produce electronically-stored information (ESI) are the functional equivalents of making copies, and which are mere processing tasks leading up to the copying activity and not recoverable as costs.
Recently, the United States Court of Appeals for the Third Circuit held that when it comes to submitting bills of costs under § 1920(4), generic and undetailed descriptions of ESI activities are not enough—courts need to know how the proverbial sausage gets made.
In Camesi v. University of Pittsburgh Medical Center, the Third Circuit held that litigants seeking § 1920(4) costs must describe ESI activities with precision. — F.3d —, 2016 WL 1085507 (3d Cir. 2016). In that case, the University of Pittsburgh Medical Center and related entities (together "UPMC") successfully moved to decertify a class claiming Fair Labor Standards Act violations. UPMC then filed a bill of costs with the clerk to be footed by the named plaintiffs. Id. at *1.
UPMC sought to recoup as copying costs $310,000 it incurred handling ESI during "a long and contentious course of discovery." Id. Generally, under § 1920(4), ESI costs may be recovered for scanning hard-copy documents and converting file formats for the requesting party's use, but may not be recovered for "extensive processing" activities "'leading up to the actual production.'" Id. (quoting Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, 169 (3d Cir. 2012)). Likewise, § 1920(4) costs may not be recovered for ESI activities taken for the prevailing party's "own benefit." Id. at *7 (citations omitted).
UPMC's submission seeking ESI costs under § 1920(4) was vague: invoices submitted in support of the bill of costs from Kroll Ontrack, UPMC's ESI vendor, loosely described the ESI costs as "process to Ontrack Inview." Id. at *4. Further, the supporting declaration and supplemental declaration of that vendor's representative respectively described the ECSI costs as "digital duplication of data" and "electronically copying documents and data." Id. at *5. In addition, the declarations suggested that the ESI activities for which UPMC sought reimbursement were for its own review and benefit, not the benefit of the named plaintiffs. Id. at *6.
Due to the lack of "specificity and clarity" in the record assembled by UPMC, the Third Circuit concluded, it was "not readily apparent what activities constitute the ESI charges" recoverable under § 1920(4). Id. at *2, 6. The court therefore held that the "sparse record" assembled by UPMC could not support an award of costs under § 1920(4). Id. at *2.
At its core, Camesi provides three take-away points on recovering ESI copying costs under § 1920(4).
- Request ESI judiciously: if you lose the case, you will likely pay some of the prevailing party's ESI-related costs.
- Because the court must "fully understand the ESI charges at issue when determining whether these are taxable," Camesi, 2016 WL 1085507 at *3, educate the court with precise submissions detailing the nature of the ESI activities at issue. Require detailed invoices and declarations from vendors capturing all recoverable costs.
- Only ESI activities which are the "functional equivalent" of "making copies" are taxable. Camesi, 2016 WL 1085507 at *3. These include the scanning of hard copy documents and file conversion for the requesting party's use; they do not include ESI activities of any kind taken only for the benefit of the party seeking costs.
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