Electronic discovery costs recoverable by a prevailing party under 28 U.S.C. §1920

Kellogg Brown & Root, Intern., Inc. v. Altanmia Commercial Mktg. Co. W.L.L., 2009 WL 1457632 (S.D. Tex. May 26, 2009)

In one of our prior posts, we discussed the types of ediscovery costs that a prevailing party can recover under Fed. R. Civ. P. 54. The Kellogg Brown & Root (“KBR”) decision addresses that issue. Much of the ediscovery costs which the prevailing party in KBR sought to recover were incurred either before the opposing party issued its discovery requests or after the court entered summary judgment for the prevailing party. Thus, Kellogg Brown, as the prevailing party, could not demonstrate that those ediscovery costs were “necessarily obtained for use in the case.”

The KBR decision was written by the highly respected Judge Lee Rosenthal, who chairs the Judicial Conference Committee on Rules of Practice and Procedure. In KBR, Judge Rosenthal comprehensively reviews the relevant decisions which have addressed the recovery of ediscovery costs under 28 U.S.C. §1920, and identifies a “circuit split” on one point directly relevant to the types of costs that may be recovered under §1920(4). Accordingly, KBR is a decision well worth your time to review when addressing the issue of recoverable ediscovery costs.

Read the rest of this entry »

Fed. R. Civ. P. 1 used to limit Rule 30(b)(6) depositions addressing a party’s email policies and search for responsive emails

Newman v. Borders, Inc., 2009 WL 931545 (D.D.C. April 6, 2009)

In Newman v. Borders, Judge John Fasciola relied upon Rule 1 of the Federal Rules of Civil Procedure to limit a party’s request for an additional 30(b)(6) deposition sought by the plaintiff in a motion to compel. Newman involved a racial discrimination claim where the discovery costs dwarfed the potential recovery. Thus, in order to bring the discovery dispute to “a just and inexpensive conclusion,” rather than allowing another costly 30(b)(6) deposition requested by the plaintiff, Judge Fasciola ordered the defendant to submit an affidavit from a knowledgeable company representative answering a series of nine questions which he outlined, addressing the issues that were the subject of the motion to compel.

In light of the costs of electronic discovery, given Rule 1’s mandate that the Federal Rules should be interpreted to secure the “inexpensive determination of every action and proceeding,” it should be part of any party’s playbook to control ediscovery costs. Frequently however, it seems that court and counsel lose sight of Rule 1’s approach. Perhaps Newman, and other likeminded decisions will signal the way to control the costs of discovery.

Read the rest of this entry »

What types of electronic discovery costs can a prevailing party recover under Fed. R. Civ. P. 54(d)?

Fells v. Virginia Dept. of Transp., 2009 WL 866178 (E.D.Va. March 25, 2009)

One of the latest ediscovery issues that courts have begun to struggle over is the nature and extent to which electronic discovery costs are recoverable by a prevailing party under Fed. R. Civ. P. 54(d). Because the costs of ediscovery in some instances can be staggering, the possible recovery of at least some of these costs has significantly raised the stakes of Rule 54(d) practice for both the prevailing and losing parties in federal court litigation.

In Fells, the district court refused to award costs associated with the initial processing of electronic records, including the expense of metadata extraction and data file conversion. While the district court’s stated rationale for denying these costs can be questioned, it probably reached the right conclusion. The ediscovery costs which the prevailing party sought to recover in Fells related to the first steps taken to create a database that would facilitate discovery. However, the defendant abandoned the database after the plaintiff refused to limit the scope of the data involved. Thus, it is doubtful that the defendant could establish that those costs were “necessarily obtained for use in the case,” which is a prerequisite to recovery. As outlined below, various courts have approved the recovery of certain types of ediscovery costs, but their rulings have only begun to scratch the surface of the relevant issues.

Read the rest of this entry »

OCR cost shifting rejected

Proctor & Gamble Co. v. S.C. Johnson & Son, Inc., 2009 WL 440543 (E.D. Tex., Feb. 19, 2009)

Given today’s economic climate, shifting the costs of electronic discovery is a strategy that should be considered whenever possible. In Proctor & Gamble, the district court rejected the defendant’s attempt to shift the costs of applying optical character recognition (“OCR”) to documents it had agreed to produce in a tagged image file format (“TIFF”). The application of OCR to the TIFF images would make the imaged documents electronically searchable.

While the district court recognized that the application of OCR to the imaged documents was “not absolutely necessary to [the] litigation,” it rejected the defendant’s attempt to shift the cost of OCR processing because the defendant failed to provide any support for its cost estimate, and no valid legal argument to support its claim that the cost burden should be shifted. The defendant advised the court that it did not intend to use the OCR process, and argued that it should not be forced to bear the added OCR expense solely for the plaintiff’s convenience. That argument failed to carry the day in Proctor & Gamble.

Any cost-shifting strategy requires careful advanced planning, and a thorough knowledge of the client’s information systems. While the district court’s ruling in Proctor & Gamble appears relatively straightforward, there are a number of issues that are relevant to any cost-shifting strategy that must be carefully analyzed before a party should even begin to evaluate cost-shifting factors outlined in Zubulake, which was the focus of the district court’s opinion in Proctor & Gamble.

Read the rest of this entry »

Rule 26(c) motion to stay discovery – an underutilized tool to control ediscovery costs

Ellington Credit Fund, Ltd. v. Select Portfolio Servs., Inc., 2009 WL 274483 (S.D.N.Y. Feb. 3, 2009); Stone v. Lockheed Martin Corp., 2009 WL 267688 (D. Colo. Feb. 2, 2009).

Given the current economic climate, many retailers are offering two-for-one specials to boost sales. That same approach is warranted with this post since both the Select Portfolio and Lockheed Martin decisions address the same topic – Rule 26(c) Motions to Stay Discovery.

Read the rest of this entry »

Reducing ediscovery costs, a modern day fairy tale or a road map for the future?

Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354 (D.Md. 2008)

How does a case involving an otherwise pedestrian discovery dispute end up on every e-discovery consultant or blog’s list of top cases for the year?  Mancia is an opinion written by Judge Paul W. Grimm which among other things discusses the report issued by the American College of Trial Lawyers which concludes that our “civil justice system is in need of repair” as well as the Sedona Conference’s recent “Cooperation Proclamation,” that’s how.  For those of you who are unfamiliar with him, Judge Grimm is considered one of the “deep thinkers” when it comes to ediscovery.  He is the author of the Hopson and Victor Stanley decisions, and always seems to be on the leading edge of hot e-discovery issues.  So when he talks, the e-discovery community carefully listens.  That means so should you.

Read the rest of this entry »