Recovery Of E-Discovery Costs: A Vital Consideration From Beginning To End

The costs of electronic discovery have traditionally been borne by the producing party. Even a defendant found free of liability could still be stuck with the bill for these costs. But a growing number of court decisions indicate that a prevailing party may recover some e-discovery costs. Understanding the potential for recovering these costs not only may enable a defendant to avoid a Pyrrhic victory at the end of a case, but also will empower a defendant to set reasonable limits on the scope of discovery at the beginning.

The starting point for recovering e-discovery costs is Fed. R. Civ. P. 54(d)(1), which states that "unless a federal statute, these rules, or a court order provides otherwise, costs – other than attorney's fees – should be allowed to the prevailing party." These costs include "fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." 28 U.S.C.A. § 1920(4). The critical determination, then, is whether e-discovery costs are "necessary."

Where a party requests the production of documents in an electronic format, some courts have found costs related to the technical aspects of making such a production (as distinct from the legal aspects associated with reviewing documents) to be "necessary" and, therefore, taxable, rather than merely for the convenience of counsel. See, e.g., In re Ricoh Company, Ltd. Patent Litigation, 2011 WL 5928689, *3 (Fed. Cir. 2011) (costs related to vendor's "electronic document database" taxable but subject to parties' cost-sharing agreement); Race Tires America, Inc. v. Hoosier Racing Tire Corp., 2011 WL 1748620, *8-9 (W.D. Pa. 2011) (collecting cases); In re Aspartame Antitrust Litigation, 2011 WL 4793239, *2-3 (E.D. Pa. 2011).

The Aspartame decision from the Eastern District of Pennsylvania is particularly instructive for methodically addressing e-discovery costs in itemized fashion. After noting that "e-discovery saves costs overall by allowing discovery to be conducted in an efficient and cost-effective manner," the court awarded costs for actions performed by third party vendors which significantly "reduced the pool of potentially responsive documents" i.e., creation of a litigation database, data storage, imaging hard drives, keyword searches, deduplication, data extraction, and processing. Aspartame, at *3. Costs were also awarded for the creation of load files (which were specifically requested in discovery), OCR...