The State of the Law on Shifting the Costs of E-Discovery

by Conduent

Though there has been significant price compression in the market over the last several years, the ever increasing volumes of corporate data during that time have seen the costs of e-discovery continuing to rise, while many litigants hope to shift some of the expense to their adversaries. Although some favorable case law exists, most recent decisions limit the taxation of e-discovery costs to prevailing parties under Federal Rule of Civil Procedure 54(d) and 28 U.S.C. § 1920(4), which have narrowed recovery to activities analogous to “exemplification” and “making copies of any materials where the copies are necessarily obtained for use in the case.”

For example, here is a brief look at some recent e-discovery cost-shifting rulings:

  • 2009: In Hecker v. Deere & Co., the Seventh Circuit allowed the shifting of costs of converting computer data into a readable format.
  • 2011: In Rundus v. City of Dallas, the Fifth Circuit affirmed the recovery of costs related to a request for converting hard-copy documents into text-searchable electronic files.
  • 2012: In Race Tires America Inc. v. Hoosier Racing Tire Corp., the Third Circuit approved the taxation of costs of converting electronically stored information (ESI) into TIFF files but found other processing costs, such as searching, culling, and deduplication, not taxable as they were not the electronic equivalent of making paper copies.
  • 2013: In Country Vintner of North Carolina LLC v. E. & J. Gallo Winery Inc., the Fourth Circuit narrowly construed section 1920(4), limiting recovery to a paltry $218.59 for converting native files into TIFF and PDF format and copying those files to CDs for production.
  • 2013: In CBT Flint Partners, LLC v. Return Path, Inc., a split Federal Circuit, applying Eleventh Circuit law, concluded that taxable costs include “costs necessary to duplicate an electronic document in as faithful and complete a manner as required by rule, by court order, by agreement of the parties, or otherwise,” but that “only the costs of creating the produced duplicates are included, not a number of preparatory or ancillary costs commonly incurred leading up to, in conjunction with, or after duplication.” In ruling, the court divided e-discovery into three stages. The first involves the costs of imaging files and extracting metadata, which are recoverable as they are necessary to produce copies in a particular format with intact metadata. The second involves preproduction costs, including indexing, decrypting, deduplicating, filtering, analyzing, searching, and reviewing the ESI; these costs are not recoverable, with the exception of creating load files. The third consists of copying ESI to physical media for production, the costs of which are recoverable.

As Rule 54(d) indicates, courts can extend recovery beyond the section 1920(4) categories if the rules themselves, a federal statute, or a court order provides otherwise. In the last year, decisions taxing costs have been issued under several statutes. For example, the Southern District of California awarded discovery costs as part of a motion for fees in Gabriel Technologies Corp. v. Qualcomm, Inc. under federal patent law and California’s Uniform Trade Secrets Act. The court allowed the recovery of $2.8 million for the use of TAR, search-term consulting, and related activities and nearly $400,000 for managed review because these methods were more efficient and cheaper than the alternatives. Also last year, one district court awarded e-discovery costs to the prevailing party in a case filed under the Lanham Act and Copyright Act, and another awarded the costs of uploading data, creating a search index, and hosting data under the False Claims Act.

However, favorable cost decisions will likely remain an aberration until Congress or the U.S. Supreme Court takes up these issues. Therefore, litigators must study the case law in the relevant jurisdiction and find creative ways to manage their e-discovery costs. One way is to limit costs by shifting these costs up front; in 2012, a district upheld the terms of a contract that allowed the prevailing party in any litigation to recover its attorneys’ fees, costs, and litigation expenses and awarded more than $3 million in e-discovery costs, mostly attributable to the storage and hosting of ESI. Many parties will balk at these types of contractual arrangements given the uncertainty of litigation; therefore, a more reasonable approach is to use e-discovery experts to develop cost-saving strategies, such as employing the latest tools and technology to limit the pool of documents for review.

Written by:


Conduent on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.