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DE District Court Test Drives Race Tires America, Curbs Taxation of eDiscovery Costs
As readers of this blog likely know, there's a mini-trend in eDiscovery to recover vendor costs in Federal courts as "taxable" under 28 U.S.C. §1920(4). That section allows courts to require losing parties to reimburse prevailing parties for "fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." There recently have been several cases around the country where prevailing parties have successfully recovered costs this way. (See footnote 2 here for a short list of cases.)
In Race Tires America Inc. v. Hoosier Racing Tire Corp, the Western District of Pennsylvania awarded over $367,000 of "taxable costs" to the prevailing defendants for eDiscovery services like hard drive imaging, data processing, keyword searching, and file format conversion. However, the 3rd U.S. Circuit Court of Appeals vacated the award, defining copies as only scanning and file-format conversion, drawing a sharp distinction between "exemplification" and "making copies" in §1920(4).
In Delaware District Court recently, in Cordance Corp. v. Amazon.com, Inc., C.A. No. 06-491-MPT (D. Del. Apr. 11, 2012), Amazon prevailed and requested $447,694.69 reimbursement for electronic discovery costs under D. DEL. LR54.1(b)(11). According to Magistrate Judge Thynge
D. DEL. LR54.1(b)(11) provides “Other costs: Claims for costs other than those specifically mentioned in the preceding paragraphs of subpart (b) of this rule ordinarily will not be allowed, unless the party claiming such costs substantiates the claim by reference to a statute or binding decision.” Discovery or ediscovery expenses are not specifically itemized under LR 54.1(b)
Applying Race Tires, Judge Thynge approved just $1,729.28 as taxable, and requires Amazon to "produce documents that distinguish the costs for converting documents, which were recoverable, from costs for processing, which were not" in order to recover any other eDiscovery costs.
Clearly §1920(4) still has some value to prevailing parties in Delaware District Court (and elsewhere in the 3rd Circuit), just not as much as it once appeared.