Electronic Discovery Costs: Loser Pays (for what?)

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To what extent might it be possible to recoup costs associated with electronic discovery as part of a trial judgment? Federal Rule of Civil Procedure 54(d) gives the prevailing party the right to recover costs where authorized by statute. 28 U.S.C. § 1920(4) provides that “fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case” can be assessed as costs. Working to equate “exemplification” and “making copies” with electronic discovery processes, two courts have recently reached substantially different conclusions about the scope of what may be recovered.

Mann v. Heckler & Koch Defense, Inc.1

In Mann, Jason Mann asserted defamation and retaliation claims against his former employer, Heckler & Koch Defense, Inc. (HKD). After succeeding in having certain claims dismissed and ultimately winning summary judgment, HKD sought to recover more than $36,000 in expenses paid to a third-party vendor for various electronic discovery services, including compiling a database, converting documents from native into image format, applying Bates numbers, and burning CDs for production. The court held that only the costs associated with burning the CDs (referred to by the court as the “production costs” of the case) qualified as “copying” for purposes of Section 1920(4).2 Relying heavily on Fells v. Virginia Department of Transportation,3 the court distinguished between tasks that were more appropriately described as “creating” electronic documents and those that were truly just “copying.” The court felt that searching and de-duplicating documents, metadata extraction, and other tasks associated with creating the database were more akin to creating new electronic documents. Refusing to expand the definition of “copying” in this case, the court held that the majority of the expenses paid to the third-party vendor were not reimbursable.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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