Nobody Wants To Pay For eDiscovery; Two February Cases Discuss Costs

AAA

costs-moneyBy IT-Lex Intern Shannon Allen (LinkedIn)

Regular IT-Lex readers are aware of the often litigated subject of eDiscovery cost shifting.  Nobody likes to have to pay for anything, so who should pay for what parts of eDiscovery and when?  There are two recent cases that address this topic with different results.

We begin with civil litigation on the west coast, in the February 6, 2013 case of Connecticut General Life Insurance Co. v. Earl Scheib, Inc., where the Defendant “object[ed] that the cost of production in response to . . . discovery requests, when considered against the claim itself, render[ed] production unduly burdensome.”

The California court agreed.

Defendant argued that

“an outside vendor must be hired to perform the searches for electronic discovery, . . . that it would cost over $121,000 to index, filter, and process the estimated 219 gigabytes. . . .[and] that this estimate d[id] not include any attorney review time, or time spent coordinating the production.”

 The court noted that the cost exceeded what was at stake in the litigation and agreed that “the discovery requests imposed a burden on the responding party that was sufficient to warrant cost-sharing”.

The court further invited the Plaintiff (“General Life”) to “perform its own cost-benefit analysis and determine whether it want[ed] to fund the discovery.”  The court declined to order Earl to comply with the “incredible expense” of responding to General Life’s eDiscovery requests.

Just two days earlier, a ­­­­­court in Iowa addressed a cost-shifting dispute regarding eDiscovery in Amana Society, Inc. & Amana Farms, Inc. v. Excel Engineering, Inc. Here, the prevailing party, the Defendant, moved the court to grant a request for the losing party, the Plaintiff, to pay its Bill of Costs, which included, among other things, electronic discovery costs.

Excel requested “$5,967.58 in copying costs.” Amana countered:

“that the Summation-related fees were incurred for the convenience of Excel’s counsel and, therefore, the court should disallow such fees in total because they were not “necessarily obtained for use in the case.” 28 U.S.C. § 1920(4).”

Excel responded:

“that these costs [we]re taxable under 28 U.S.C. § 1920(4), as “[t]he electronic scanning of documents is the modern-day equivalent of exemplification and copies of paper and therefore can be taxed pursuant to § 1920(4).””

The court found that “scanning for Summation purposes qualifie[d] as “making copies of materials” and that these costs [we]re recoverable.”  In the end, because of the document-intensive nature of the matter, the court decided, under Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir.), cert analysis, to charge Amana with Excel’s TIFF conversion (converting native files to Tagged Image File Format) expenses.  Ultimately, Excel did not recover everything they spent.

Unlike Connecticut General, where the focus was on the burden of the cost to comply with a request to produce eDiscovery, Amana Society focused on reimbursing the cost of eDiscovery at the conclusion of a document-intensive matter.

So there you have it: two cases, similar issues, different stages of trial.  When it comes to eDiscovery, don’t hesitate to push back on unduly burdensome requests to produce.  If you wait until final judgment, you may not recoup all your expenses.

  • Email
  • Facebook
  • Twitter
  • LinkedIn
  • RSS

2 Comments

  1. Kelly Twigger /

    These two cases, together with Race Tires, highlight the need for counsel to educate themselves on the available arguments for recouping costs. Counsel need to understand these issues when making decisions about how to handle eDiscovery up front, so they can take advantage of jurisdictions allowing cost recovery. That being said, there needs to be more education for the courts on how technology is changing what should be covered as “copying costs.” The notion that a party can recover the costs of TIFF conversion or scanning for Summation, when those are really wasted costs, are more steps backward in educating lawyers on best practices. What we need are lawyers who are understanding and utilizing the latest technology to avoid those costs in the first place. I wonder how much of the cost recovery was eaten up by the motion for costs?

  2. My friend James Keuing made a great infographic describing this case that can be found at http://www.lucidatainc.com/2013/05/biomet-mdl-predictive-coding-workflow-upheld-based-on-the-numbers/

Leave a Comment