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Plaintiff Awarded Sanctions and Reimbursement of Some eDiscovery Costs: eDiscovery Case Law

In Engineered Abrasives, Inc. v. American Machine Products & Service, Inc. No. 13C7342 (N.D. Ill. Mar. 18, 2015), Illinois District Judge Sara L. Ellis awarded the plaintiff damages, attorneys’ fees and some requested costs, as well as granting the plaintiff’s motion for sanctions and ordering the defendants to reimburse the plaintiff $12,800 for the cost of conducting a forensic computer examination, which the plaintiff maintained was necessitated by Defendants’ evasive and incomplete responses and their failure to produce documents during discovery.

Case Background

The plaintiff sued the defendants, former employees of the plaintiff, claiming that the defendants were misrepresenting themselves as representatives of the plaintiff’s company and unfairly competing with EA. After the defendants failed to answer the complaint, they were found to be in default. “Extensive” discovery was conducted on the plaintiff’s damages and an evidentiary hearing was held in November 2014 on the plaintiff’s request for relief, which included monetary damages and reimbursement of attorneys’ fees and other costs, including eDiscovery costs. This opinion and order was based on the “evidence presented at that hearing and the parties’ other submissions”.

Judge’s Opinion

After some analysis, Judge Ellis awarded the plaintiff $207,257 in monetary damages and $499,088.80 in attorneys’ fees, which included PACER costs. Of most of the other costs that Judge Ellis considered, she allowed reimbursement of the $400 filing fee for initiating the action, $165 for service of the Complaint and $55 for one hour for service of summons or a subpoena and disallowed all other requested costs.

As for the eDiscovery costs, Judge Ellis stated that Section 1920 does “not expressly provide for the recovery of e-discovery costs, meaning that the only route to recovery of these costs must pass through the strictures of 28 U.S.C. § 1920(4), which allows for the recovery of ‘fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.’” She also noted that “this Court will follow those courts that have found compensable the costs ‘associated with the conversion of [electronically stored information] into a readable format, such as scanning or otherwise converting a paper version to an electronic version or converting native files to TIFF’ but not the ‘costs related to the `gathering, preserving, processing, searching, culling and extracting of [electronically stored information].’”

As the plaintiff requested compensation for several charges associated with eDiscovery, including for “OCR & TIFF Conversion,” “process[ing] native files through ESI utility to allow for capturing of metadata/indexing of material,” “load[ing] into Summation,” and “prepar[ing] search filters and sav[ing] shared set to database for review team,” Judge Ellis found that “[o]nly the first $48.24 charge is properly compensable, as it involves the conversion of documents into a readable format.” (emphasis added)

Judge Ellis next considered whether the defendants could be sanctioned for their “evasive and incomplete responses and their failure to produce documents during discovery” which led to the plaintiff’s computer forensic examination. With regard to that, Judge Ellis stated: “The Court agrees with EA that Defendants’ conduct during the discovery process warrants sanctions. Defendants’ actions during the discovery process cannot be said to have been done in good faith. They unnecessarily prolonged this case, necessitating the Court’s intervention on several occasions and multiplying the costs involved in the litigation.” As a result, Judge Ellis ordered the defendants to reimburse the plaintiff $12,800 for the cost of conducting the forensic computer examination.

So, what do you think? Was the court right to grant the motion for sanctions? Please share any comments you might have or if you’d like to know more about a particular topic.

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