A Brief History of Section 1920(4)Federal Rule of Civil Procedure 54(d) states that “[u]nless a federal statute, these rules, or court order provides otherwise, costs—other than attorney’s fees— should be allowed to the prevailing party.” 28 U.S.C. § 1920(4) enumerates the litigation expenses that qualify as taxable costs. However, it does not expressly refer to e-discovery costs; it simply allows for prevailing parties to recover costs for “[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.”

A Brief History of Section 1920(4)Federal Rule of Civil Procedure 54(d) states that “[u]nless a federal statute, these rules, or court order provides otherwise, costs—other than attorney’s fees— should be allowed to the prevailing party.” 28 U.S.C. § 1920(4) enumerates the litigation expenses that qualify as taxable costs. However, it does not expressly refer to e-discovery costs; it simply allows for prevailing parties to recover costs for “[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.”

To the extent that a party is obligated to produce (or obligated to accept) electronic documents in a particular format or with particular characteristics intact (such as metadata, color, motion, or manipulability), the costs to make duplicates in such a format or with such characteristics preserved are recoverable under [28 U.S.C. § 1920(4)]. 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.

Attorneys recognize the highly technical work these vendors perform in processing and analyzing electronically stored information (“ESI”), and the expenses are often assumed to be unavoidable. In the fall 2012 edition of the E-Discovery Update, we discussed whether the 28 USC § 1920(4) (“Section 1920(4)”) costshifting provision, that allows “fees for exemplification and the costs of making copies” to be taxed against a losing party, would provide a new avenue for recovery of these often essential e-discovery costs. At the time, the case law implementing Section 1920(4) was unsettled and inconsistent.

Cost of Creating Produced Duplicates Are Included Under 28 U.S.C. § 1920(4), but Preparatory or Ancillary Costs Associated with Duplication Are Not 13-1036 December 13, 2013 Specht, Kara A. Decision Last Month at the Federal Circuit - January 2014Judges: Dyk, O'Malley (concurring-in-part and dissenting-in-part), Taranto (author) [Appealed from: N.D. Ga., Judge Thrash] In CBT Flint Partners, LLC v. Return Path, Inc., No. 13-1036 (Fed. Cir. Dec. 13, 2013), the Federal Circuit held that the district court erred in its interpretation of the statutory provision governing the taxation of costs, 28 U.S.C. § 1920(4). The Court thus reversed-in-part, vacated-in-part, and remanded the case.

In Race Tires America, Inc. v. Hoosier Racing Tire Corp., 2012 WL 887593 (3d Cir. Mar. 16, 2012), the Third Circuit Court of Appeals largely vacated a district court decision holding that electronic discovery expenses are taxable as costs. The Court of Appeals ruled that only the scanning of hard copy documents, the conversion of native files to the agreed-upon default format for the production of electronically stored information, and the transfer of tape formats involve “copying” that are taxable as costs under 28 U.S.C. § 1920(4). In this antitrust action by Race Tires against Hoosier and others, the defendants, after prevailing on summary judgment, submitted a bill of costs for, among other things, “[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case,” pursuant to 28 U.S.C. § 1920(4).

Prevailing Party Required to Provide Adequate Documentation to Recover Costs Under 28 U.S.C. § 1920 11-1199 November 23, 2011 Decision Last Month at the Federal Circuit - December 2011Judges: Lourie, Bryson, Dyk (author) [Appealed from: N.D. Cal., Judge Ware] In In re Ricoh Co. Patent Litigation, No. 11-1199 (Fed. Cir. Nov. 23, 2011), the Federal Circuit affirmed-in-part, reversed-in-part, and vacated-in-part the district court’s award of costs to Synopsys, Inc. (“Synopsys”) under 28 U.S.C. § 1920 and remanded for further proceedings. Ricoh Company, Ltd. (“Ricoh”) owns U.S. Patent No. 4,922,432 (“the ’432 patent”), which claims a system and process for designing application-specific integrated circuits.

E-Discovery Update This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:A Sixth Circuit ruling upholding a district court’s taxation of e-discovery-related costs for imaging a computer hard drive, finding that such imaging fell within the definition of “making copies” under 28 U.S.C. § 1920(4);A Middle District of Florida decision refusing to sanction an employer based on an employee’s spoliation of evidence and bad faith because there was no evidence of employer bad faith and the evidence was not crucial to the case;A Southern District of California ruling granting an adverse inference instruction and awarding fees and costs against a plaintiff for failing to preserve or diligently search for a telephone recording regarding a key issue in the case; andA Western District of Pennsylvania decision rejecting sanctions against defendants for spoliation and failure to institute a litigation hold, finding that the plaintiff had not demonstrated that ESI was actually lost or that defendants acted in bad faith. 1. In Colosi v. Jones Lang LaSalle Ams., Inc., 781 F.3d 293 (6th Cir. 2015), the United States Court of Appeals for the Sixth Circuit upheld a district court decision to allow the taxation of e-discovery-related costs for imaging a computer hard drive, finding that such imag

Award of Costs Under Rule 54(d)(1) Cannot Exceed the Scope of 28 U.S.C. § 1920 05-1292 January 26, 2006 Decision Last Month at the Federal Circuit - February 2006Judges: Rader, Bryson (author), and GajarsaIn Summit Technology, Inc. v. Nidek Co., No. 05-1292 (Fed. Cir. Jan. 26, 2006), the Federal Circuit modified an award of costs to Nidek Company (“Nidek”) because certain portions of the award were not statutorily allowable costs and other portions of the award were not supported by any evidence. The district court awarded costs to Nidek, the prevailing party in the underlying patent infringement suit, without explaining how it computed the amount.

The rule further provides that the clerk of court “may tax costs on 14 days’ notice.” 28 U.S.C. §1920 in turn defines “costs” for purposes of Rule 54 and sets forth the items that the clerk may properly tax. Relevant to e-discovery, the statute also allows taxation of “fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case” (§1920(4)).