eDiscovery Daily Blog

Another Case Where Some eDiscovery Costs are Disallowed – eDiscovery Case Law

We haven’t covered a good eDiscovery cost reimbursement case in a while (here is a link to those we covered last year), so here is a case from earlier this month where, once again, the prevailing party had its awarded costs for eDiscovery reduced.

In Kwan Software Engineering v. Foray Technologies, 2014 U.S. Dist. (N.D. Cal. May 8, 2014), the amount of the defendant’s previously awarded costs were significantly reduced following the partial granting of the plaintiff’s Motion for Review of Clerk’s Taxation of Costs, after California District Judge Susan Illston ruled that the majority of the costs requested were not recoverable.

In this copyright infringement and breach of contract case, the motion for review had been filed after a motion for summary judgment was granted and entered in favor of the defendant, who was awarded $88,848.13 in costs. The plaintiff disputed these costs, and filed a motion that requested to specifically disallow “(1) $453.29 in costs for service of summons and subpoena; (2) $6,818.54 in costs for printed or electronically recorded transcripts; and (3) $61,312 in costs for exemplification and the costs of making copies.”

With regard to the larger sum of $61,312, the plaintiff specifically challenged the costs related to eDiscovery, citing the defendant’s submission of a total of eight invoices which the plaintiff contended they should not have been awarded any costs for. The plaintiff alleged that the defendant was “seeking a broad range of eDiscovery related costs that go well beyond the costs associated with the actual production of the documents,” and further that the defendant “failed to provide sufficient detail of its eDiscovery costs to allow the Court to determine what are actual copying costs and what are non-taxable intellectual efforts.”

Additionally, the plaintiff noted that there was a discrepancy between the invoices at issue and the actual production submitted by the defendant. During discovery, the defendant produced approximately 229,000 pages of documents, yet the invoices showed charges for producing 344,445 pages of documents, and thus the defendant was seeking to recover costs for documents that were not used in the litigation.

It was noted that with respect to eDiscovery, other courts in the same district have found recoverable copying fees to be defined as “.TIFF and OCR conversion, Bates stamping, load file and other physical media generation.” However, the invoices submitted by the defendant for cost recovery contained, in addition to costs for documents that were not produced to the plaintiff, other charges for “data storage and data management,” as well as “Project Management” fees. The information that the defendant submitted was not sufficient to show that these costs should have been recoverable.

Judge Illston stated that the court declined to award costs to the defendant for data storage, data management, project management, and copying costs for documents that were not actually produced in litigation. Therefore, of the original $61,312 in copying costs, the defendant’s awarded recoverable costs were reduced to $6,870, an amount that represented “a charge of $0.03 per document for Bates stamping and TIFF conversion for 229,000 documents.”  With regard to the lesser divided costs of $24,199.14 and $1,752.32 which the Clerk awarded to the defendant, these costs were challenged by the plaintiff on the assertion that some of the costs were not recoverable.

Broadly summarizing, the plaintiff argued that delivery invoices for subpoena and summons, and costs related to printed or electronically recorded transcripts, specifically “(1) expedited deposition transcripts; (2) multiple copies of deposition transcripts; (3) additional CDs containing deposition transcripts and exhibits; (4) synchronization of video depositions; (5) multiple copies of DVDs; (6) rough transcripts; (7) color exhibits; (8) shipping of transcripts; and (9) transcripts of proceedings” should not be recoverable.

Judge Illston accordingly reduced the amounts to disallow categories 1 and 2 above ($453.29 and $6,818.54) respectively, leaving the defendant with a total of $32,983.59 in awarded costs.

So, what do you think? Should the costs of labor or intellectual effort be considered recoverable with regard to eDiscovery? How detailed should the level of reporting be when requesting recoverable costs following a judgment? Please share any comments you might have or if you’d like to know more about a particular topic.

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