eDiscovery Daily Blog

Court Denies Request for Cost Reimbursement for Hosted eDiscovery Database: eDiscovery Case Law

In Associated Electric & Gas Insurance Services, et. al. v. BendTec, Inc., No. 14-1602 (D. Minn., Feb. 24, 2016), Minnesota District Judge Michael J. Davis found that the decision in Race Tires America, Inc. v. Hoosier Racing Tire Corp. to deny certain eDiscovery costs to be persuasive and ruled that “the costs of creating and maintaining an electronic platform for e-discovery are not recoverable under § 1920(4)”, denying the prevailing defendant’s request for reimbursement of over $123,000 in costs to maintain their ESI database.

Case Background

The defendant asserted that the plaintiffs produced approximately 19 gigabytes of data from a prior related lawsuit and it retained eDiscovery vendors to create and maintain an electronic platform for these documents (at a cost of $90 per gigabyte per month), so they could be processed and hosted in a viewable format.  The defendant eventually added its additional 192 gigabytes of data in preparation for production to the plaintiffs, which was hosted at the same $90 per gigabyte per month rate.

After the court entered judgment in favor of the defendant in June 2015, the defendant submitted its bill of costs to the Clerk of Court in July 2015 and the plaintiffs filed their objection to the bill of costs in August 2015.  The Clerk of Court entered a Cost Judgment on October 15, 2015 denying the taxation of costs by the defendant on the basis that fees for electronic discovery are not taxable by the Clerk. The defendant subsequently filed a motion for review of cost judgment, seeking to recover $126,970.80 in costs incurred by creating and maintaining an electronic database to hold documents produced by the plaintiffs and collecting and securing its own documents.  Following an objection from the plaintiffs, the defendant reduced the requested amount to $123,260.80.

Judge’s Ruling

Noting that “a number of courts that have addressed whether costs associated with e-discovery are recoverable under § 1092 have found that such costs are recoverable only to the extent they qualify as exemplification fees or the costs of making copies”, Judge Davis cited Race Tires America, Inc. v. Hoosier Racing Tire Corp., indicating that “the district court awarded the prevailing party the costs for e-discovery on the basis that it ‘appeared to be the electronic equivalent of exemplification and copying.’”  However, Judge Davis indicated that, on appeal, “the Third Circuit held that where e-discovery did not produce illustrative evidence or the authentication of public records, the costs for such discovery did not qualify as exemplification fees under § 1920(4) and is not recoverable” (we covered both rulings here and here).  Judge Davis specifically noted that “[a]s to costs associated with the collection and preservation of electronically stored information (“ESI”), processing and indexing ESI, and keyword searching of ESI for responsive and privileged documents, the court held that such costs are not recoverable under §1920(4).”

Indicating that other courts had found the Race Tires decision persuasive, Judge Davis stated that he “also finds the Race Tire decision persuasive and holds that the costs of creating and maintaining an electronic platform for e-discovery are not recoverable under § 1920(4)” and denied the defendant’s motion for recovery of those costs.

So, what do you think?  Is § 1920(4) still timely for consideration of cost reimbursement to prevailing parties?  Or should it be revisited and updated to reflect the current technological environment?  Please share any comments you might have or if you’d like to know more about a particular topic.

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