Whether an opposing party should or must cover some or all of the costs associated with eDiscovery is without question a significant concern for companies forced to collect, review, and produce ESI. Courts have struggled with this question, and have come up with several mechanisms to apportion costs, including taxing eDiscovery costs under Rule 54(d) and 28 U.S.C. § 1920 and allowing cost-shifting.
Following on the heels of the decision in Race Tires Am. Inc. v. Hoosier Racing Tire Corp., 2001 WL 1748620 (W.D. Pa. May 6, 2011) (awarding over $370,000 in costs), the Clerk of the Court in the Eastern District of Pennsylvania allowed the taxation of over $576,000 in eDiscovery costs. Hank’s Beverage Co. v. Ajinomoto Co., No. 06-cv-1732, Docket No. 206 (E.D. Pa. July 26, 2011). The various defendants in these consolidated cases prevailed on summary judgment and subsequently filed separate bills of costs seeking to recover, among other things, their eDiscovery costs. Each of the defendants had retained outside vendors to assist in collecting, filtering and culling, processing, reviewing and producing of a large volume of ESI, in addition to converting hard-copy documents into TIFF files. The Clerk of the Court issued a joint decision awarding the defendants their costs, noting that “[f]ederal courts have traditionally seen costs related to the production of copies of documentary evidence, such as records or other documents produced in discovery … as taxable costs pursuant to 28 U.S.C. § 1920(4).”
The plaintiffs have challenged the Clerk’s award of costs, and the matter is now before Judge Legrome D. Davis.
In Couch v. Wan, 2011 WL 2971118 (E.D. Cal. Jul. 20, 2011), Judge Lawrence J. O’Neill rejected the plaintiffs’ argument that the expenses incurred in searching for documents stored on computer hard drives were not eligible for cost shifting because they were per se accessible under Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003). Plaintiffs were two prison officers whose claims included freespeech retaliation and RICO violations against defendant prison officials. The defendants claimed that they downloaded approximately 140 gigabytes of e-mails and other documents from 16 computers but that they lacked the resources to process and review this material, namely, the $54,000 needed to fund the work.
The plaintiff sought reconsideration of the magistrate judge’s decision that cost shifting was appropriate under the Zubulake factors (e.g., “whether production of such documents is unduly burdensome or expensive turns primarily on whether it is kept in an accessible or inaccessible format.”) The plaintiff’s main argument was that the data was from computer hard drives and thus was readily accessible and searchable. Judge O’Neill disagreed and upheld the magistrate’s order, stating that cost is a factor in the determination of whether information is “accessible” under the Zubulake standard, and in this case cost was “a significant, burdensome amount” that warranted cost shifting under Zubulake.