Has The Supreme Court Eviscerated Recovery Of eDiscovery Costs?

It sure seems that way thanks to an opinion by Justice Kavanaugh handed down in March.

Back in March when we were all checking our brackets, the Supreme Court quietly issued an opinion that, at least on the surface, appears to bring an end to prevailing parties recovering costs related to eDiscovery. I find it strange, however, that the Court makes no reference whatsoever to the various district and circuit courts decisions that have dealt with the issue.

Maybe there’s still hope?

In Rimini Street, Inc. et al vs. Oracle USA, Inc., et al., No. 17-1625 (Mar. 4, 2019), a copyright infringement case brought by Oracle against one of its competitors, a jury awarded Oracle $50 million dollars in damages. Post-verdict, the Court ordered defendants to also pay $28 million in attorneys’ fees, $4.9 million in costs and, most relevant here, $12.8 million in litigation expenses for expert witness fees, eDiscovery, and jury consulting.

By the time the case reached the Supreme Court, the only issue in dispute was the $12.8 million in litigation expenses. Justice Kavanaugh framed the question before the Court as “whether the term ‘full costs’ in §505 of the Copyright Act authorizes awards of expenses other than those costs identified in §§1821 and 1920.”

Title 28 U.S.C. §1821 authorizes witness and mileage fees. Section 1920 provides for six specific items which a prevailing party may seek to recover as costs. And §505 of the Copyright Act provides that in a copyright infringement action “the court in its discretion may allow the recovery of full costs by or against any party.”

For years, litigants have relied upon §1920 to seek recovery of eDiscovery costs. Under §1920(4), the court may tax as costs “fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” Litigants consider this statute and the interplay of Rule 54(d) of the Federal Rules of Civil Procedure as the basis for seeking post-judgment costs other than attorneys’ fees.

Unfortunately, for more than 10 years, the courts have been indecisive on the issue of recovering eDiscovery costs. Some courts have found the costs recoverable; others have found the opposite; and yet others have split the baby and found partial costs recoverable. See, Race Tires America v. Hoosier Racing Tire Corp., 674 F. 3d 158 (3rd Cir. 2012); The Country Vintner of North Carolina, LLC v. E & J Gallo Winery, Inc., 718 F.3d 249 (4th Cir. 2013); CBT Flint Partners, LLC v. Return Path, Inc., 737 F. 3d 1320 (Fed. Cir. 2013); Colosi v. Jones Lang LaSalle Americas, Inc., 781 F.3d 293 (6th Cir. 2015) and Balance Point Divorce Funding, LLC v. Scrantom, 305 F.R.D. 67 (S.D.N.Y. 2015). There’s a collection of lower court decisions courtesy of our friends at Logikcull here.

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It seems to me that the question whether eDiscovery costs are recoverable turns on the use of the word “exemplification” and the phrase “making copies” in §1920(4). Exemplification means to provide an example, illustration, or representative sample. It is nearly the essence of discovery to identify, produce, and present at trial documents and other tangible items relevant to one or more subjects. Doing so seems like a form of exemplification.

And making copies? At the risk of slipping into a 1990s SNL skit, making copies means making a copy of an original object or tangible item, something that is done repeatedly in litigation.

A clear reading of the statute appears to authorize recovery of at least some portion of eDiscovery costs. Collecting ESI in discovery, for instance, constitutes making copies of data “for use in the case.” Same thing for converting native-format ESI to static images for review. Copies of ESI are routinely made for document production purposes. And arguably, presenting ESI during depositions, hearings, and trials is a form of exemplification as well.

Without a doubt, there’s a circuit split on the question of whether eDiscovery costs may be recovered by the prevailing party. The Court’s opinion in the Oracle case, such that it narrowly tailored the question to a provision of the Copyright Act and fails to mention the circuit split on eDiscovery cost recovery, does not appear to resolve that disagreement. The court appears to have kicked the can down the road and left the question for another day.

To me, this is another instance of the law not keeping up with technology. For legal operations people and law firms faced with this issue, I would suggest you clearly record your exemplification and copying costs during discovery. My sense is these costs are still recoverable.

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But what we could really use is an amendment to Rule 54 and §1920 to clarify what eDiscovery costs are recoverable.


Mike Quartararo

Mike Quartararo is the managing director of eDPM Advisory Services, a consulting firm providing e-discovery, project management and legal technology advisory and training services to the legal industry. He is also the author of the 2016 book Project Management in Electronic Discovery. Mike has many years of experience delivering e-discovery, project management, and legal technology solutions to law firms and Fortune 500 corporations across the globe and is widely considered an expert on project management, e-discovery and legal matter management. You can reach him via email at mquartararo@edpmadvisory.com. Follow him on twitter @edpmadvisory.

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