Third Circuit Weighs In On Cost Awards For Electronic Discovery

Race Tires America v. Hoosier Racing Tire Corp., 674 F. 3d 158 – Court of Appeals, 3rd Circuit 2012 – Google Scholar.

The 3rd Circuit Court of Appeals decided a case sure to interest many litigators. In litigation these days, everyone wants electronic discovery but no one wants to pay for it. The costs of digging up old emails and finding old documents can be enormous.

Here, the 3rd Circuit dealt with one major issue: who pays for all those consultants when the litigation is over?

The Court frames the issue in this way:

“At issue in this appeal is whether all charges imposed by electronic discovery vendors to assist in the collection, processing, and production of electronically stored information (“ESI”) are taxable against a losing party as “[f]ees for exemplification [or] the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” 28 U.S.C. § 1920(4).”

The district court had awarded $365,000 in electronic discovery costs. The 3rd Circuit reversed the award and concluded that only costs related to scanning and file format conversion could be recovered because those activities constituted “making copies.”

The 3rd Circuit disallowed the remainder of the awarded costs in excess of $300,000 on the ground that the other costs did not relate to file conversion or scanning.

This is an enormous issue in litigation. This opinion, which discusses the issue, is well worth reading.

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