Prevailing Parties May Recover E-Discovery Costs Under the Federal Rules

The Clerk for the U.S. District Court for the Eastern District of Pennsylvania recently ruled that there is a heavy presumption that prevailing parties may recover certain e-discovery costs under 28 U.S.C. § 1920. Federal Rule of Civil Procedure 54(d)(1) allows prevailing parties to submit bills of costs for certain expenses, enumerated in 28 U.S.C. § 1920, for taxation by the Clerk against the non-prevailing parties. For example, that statute provides for the taxation of costs related to obtaining copies of transcripts and printing. More significantly, the statute provides for the taxation of “[f]ees for exemplification and the cost of making copies of any materials where the copies are necessarily obtained for use in the case.” 28 U.S.C. § 1920(4). While the term “exemplification” is undefined, federal district clerks have traditionally awarded, as exemplification and copying costs, those costs related to the production of paper documents, photographs, models, maps, blow-ups, charts, and diagrams.

In expanding the categories of production costs recognized as “exemplification” expenses, the Clerk of Court for the Eastern District of Pennsylvania, in Hank’s Beverage Co. v. Ajinomoto Co., Civ. No. 06-cv-1732 (E.D. Pa. Jul. 26, 2011) (slip op.), awarded to the prevailing defendants e-discovery exemplification costs totaling over $500,000. These costs, which do not include the fees incurred by counsel in reviewing the documents, were related to the production of documents, such as processing native files, restoring back-up tape files, hosting and storing documents in electronic databases, scanning hard copy documents, de-duplicating documents, and filtering the documents to capture the documents containing the agreed-upon search terms. The court described these allowable expenses as the “costs of hiring a private company that possesses the technology to search for, and/or to recreate, copies of evidence in electronic form, for the purpose of making the alleged facts contained in the exhibits more clear to the finder(s) of fact . . . .” The court explained that such costs are justified for taxation because “generally, neither attorneys nor employees of attorneys are competent to conduct such a search, or to recreate such documents in paper format.”

The Clerk in Hank’s Beverage further explained that there is a heavy presumption that “the ‘prevailing party’ automatically is entitled to costs as a matter of course once it has been shown that the costs sought are arguably of the types of costs listed in 28 U.S.C. § 1920.” With this heavy presumption, the Clerk cannot, for example, disallow costs because the losing party is indigent or because the suit was brought in good faith. The “heavy presumption” of automatic taxation exists because the taxation of costs, as opposed to attorney’s fees, is simply “ministerial.” Likewise, since the award of costs is not punitive, the prevailing parties need not demonstrate any bad acts of their adversaries. The Clerk, however, may find that the prevailing parties are undeserving of such costs for their own bad acts or improprieties.

The Clerk’s willingness to treat e-discovery costs as taxable against the non-prevailing party will likely give pause to parties with e-discovery intensive cases. Prevailing parties, in submitting their post-trial bills of cost, should be mindful to request the taxation of e-discovery costs by the Clerk after a victory.  

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Posted in 28 U.S.C. § 1920, 54(d)(1), Ajinomoto, Articles, costs, exemplification

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