The cost of producing documents for litigation – which can range from tens to hundreds of thousands of dollars – has become a significant burden for the parties involved, and the inability to recover those costs can have a substantial impact on their bottom line. A recent decision by the U.S. Court of Appeals for the Federal Circuit in CBT Flint Partners, LLC v. Return Path Inc. recently provides guidance for determining the recoverability of those costs.
28 U.S.C. § 1920 states that among the recoverable expenses are “the costs of making copies of any materials where the copies are necessarily obtained for use in the case,” according to Shane Olafson, a partner at Lewis Roca Rothberger LLP, in a recent The National Law Review article. “District courts have been all over the map when deciding what constitutes ‘making copies’ for purposes of recovering taxable costs associated with e-discovery,” Olafson writes.
According to the article, the federal circuit court reviewed the history of section 1920, The Sedona Conference® principles, and other federal court decisions in concluding that section 1920 applies only to documents produced in accordance with Rule 26 or other discovery rules and does not apply to documents a party creates for its own litigation or other use.
Stated the federal circuit: “[R]ecoverable costs under section 1920(4) are those costs necessary to duplicate an electronic document in as faithful and complete a manner as required by rule, by court order, by agreement of the parties, or otherwise. . . . But only the costs of creating the produced duplicates are included, not a number of preparatory or ancillary costs commonly incurred leading up to, in conjunction with, or after duplication.”
In its final opinion, the federal circuit focused on whether various tasks were necessary to fulfill a party’s discovery obligation, acknowledging that deciding where to draw the line is a judgment call. Some of the guidelines set forth in the opinion, according to Olafson’s article, are:
- If a party must convert electronic documents to a uniform production format (e.g., TIFF, or with metadata included), those steps are considered “making copies” for purposes of recovery. If such processing steps are unnecessary, they are not recoverable. For example, if metadata can be preserved without first using imaging and extraction techniques, then those additional steps are not recoverable;
- If a vendor works on a large volume of documents before culling to produce only a subset, awarded costs must be confined to the subset actually produced;
- Costs incurred in preparing to copy are generally not recoverable. For example, keyword searching, reviewing documents for responsiveness and privilege, training to use review software, etc. are not recoverable. Rather, they are part of “the large body of discovery obligations, mostly related to the document-review process, that Congress has not included in section 1920(4).”
- Deduplication and decryption costs are not recoverable.
- The creation of “load files” is covered to the extent those files contain information required by the requested production.
- The costs of slip sheets are recoverable.
- The costs of copying responsive documents to production media are recoverable.
To learn more about discovery of records, see the ARMA International guideline Records Management Responsibility in Litigation Support. This book identifies the steps of a typical litigation and defines the role the records and information management professional plays in the process.