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Trend Has Shifted Against Reimbursement of eDiscovery Costs – eDiscovery Case Law

Last year, the trend seemed to be to award the prevailing party reimbursement of eDiscovery costs, including in this case and this case.  Now, that trend appears to have been reversed with those requests being denied (or reversed) by the courts, including this case and this case.  Now, here is another case where reimbursement of eDiscovery costs was denied.

In adhering to the Third Circuit’s 2012 decision in Race Tires America, Inc. v. Hoosier Racing Tire Corp., a district court declined to permit a prevailing party to bill its opponent under 28 U.S.C. § 1920(4) in Abbott Point of Care, Inc. v. Epocal, Inc., No. CV-08-S-543-NE, 2012 U.S. Dist. (N.D. Ala. Nov. 5, 2012) for costs associated with its eDiscovery database because such a request did not comport with a strict interpretation of the statute.

In a lawsuit originally based on Abbott’s allegations that Epocal infringed four of its patents and tortiously interfered with the employment contracts of some of its former employees, a jury awarded Epocal a fully favorable decision. The judgment provided that all costs associated with the lawsuit were taxed to Abbott; accordingly, Epocal filed a bill of costs with the court. This dispute arose when Abbott objected to Epocal’s bill of costs.

The points of the bill that Abbott disputed included “$175,390 in eDiscovery database charges through discovery (item 5) [and] $165,108 in eDiscovery database charges through trial (item 6).” The court pointed out that although “Abbott object[ed] to Epocal’s recovery of any costs for the creation and maintenance of an electronic discovery database under § 1920(4),” the Eleventh Circuit had not issued any controlling guidance on how courts within its limits should interpret the language of Section 1920(4). {emphasis added}

The court noted that Abbott relied on, and many district courts—including those within the Eleventh Circuit—also turned to Race Tires, where “[t]he Third Circuit emphasized that the determination of whether a particular cost can be awarded pursuant to § 1920 is purely a matter of statutory construction.” Section 1920(4) permits taxation only for “‘exemplification’ or ‘making copies,’” and the Third Circuit further explained that those actions meant “‘produc[ing] illustrative evidence or the authentication of public records.’” The court noted that because the statute did not provide for such relief, “[t]he Third Circuit refused to give any weight to equitable considerations, including the importance of database services to the ultimate act of production, the technical skill required to create a database, and the ‘efficiencies and cost savings resulting from the efforts of electronic discovery consultants.’” Moreover, the Third Circuit “refused to allow costs for any of the steps that might lead up to the actual copying of documents or other materials, including ‘gathering, preserving, processing, searching, culling, and extracting’ discoverable information.”

Although the court was “sympathetic to the practical arguments advanced by Epocal,” it declined to extend the scope of the Third Circuit’s interpretation of Section 1920(4). Noting that “[u]nfortunately . . . the law does not always favor efficiency or practicality,” the court followed the Third Circuit’s “thorough, reasonable, and persuasive interpretation of that statute.” As such, it found that Epocal would “not be permitted to recover any costs for the maintenance of an electronic discovery database” and therefore it did not need to distinguish between the costs Epocal requested for eDiscovery charges incurred at different times during the litigation.

So, what do you think?  Should the costs have been reimbursed?  Should prevailing parties have some means for recouping their eDiscovery costs?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

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