Recovery of ESI Costs: “The fuss is about money…. [E]lectronic discovery is really expensive.”

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In 2012, the Supreme Court’s Kan Pacific decision narrowed the scope of costs that may be awarded in federal cases.  “Taxation of E-Discovery Costs Under 28 U.S.C. §1920(4) after Taniguchi v. Kan Pacific Saipan” (Aug. 14, 2012).  In that blog, I suggested:

When it comes to electronically stored information (“ESI”), “[t]he fuss is about money.  Discovery is expensive, and electronic discovery is really expensive.”  A.L. Brown, “The Manageable Challenge of Electronic Discovery,” formerly posted at www.rkmc.com/.  [Emphasis added]

In “Prevailing Parties Recover Some, Not All, E-discovery Costs” (ABA Litigation News Sep. 23, 2020), William H. Newman described a recent decision of the United States Court of Appeals for the D.C. Circuit interpreting 28 U.S.C. §1920(4).  Newman wrote that the decision is in line with other circuits and held “that Section 1920 applies to electronic file conversion costs, but not to hosting, organizing, or Bates stamping documents.”  Newman and the ABA Section of Litigation have asserted that §1920 “is out of touch with the practical realities of e-discovery in 2020.”

Newman reports that decisions have held that deduplication, keyword searching, organizing documents, and Bates stamping have all been rejected as “costs.”  In one case, a claim of $125,000 was reduced to $30,000 “because only those costs were for tasks that ‘involved copying.’”  Id.

 

Section 1920 states in pertinent part:

A judge or clerk of any court of the United States may tax as costs the following:….

(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;….

A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree. [Emphasis added]

The ABA has, quite reasonably, advocated reform.

However, in the interim, there may be some work-arounds.  In my blog “Taxation of E-Discovery Costs Under 28 U.S.C. §1920(4) after Taniguchi v. Kan Pacific Saipan” (Aug. 14, 2012).  I suggested that:

Because of the limitations of §1920(4), litigants may consider using other procedures to recover e-discovery costs, such as a protective order under Rule 26(c), a cost-shifting order pursuant to Rule 26(b)(2)(B),  a limiting order under Rule 26(b)(2)(C), an offer of judgment under Rule 68, or sanctions under Rule 11(“appropriate sanction”) or 28 U.S.C. §1927 (“costs, expenses, and attorneys’ fees”), if substantively appropriate. See generally Marens v. Carrabba’s Italian Grill, Inc., 196 F.R.D. 35, 39(D.Md. 2000)(limiting search time); Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 364 (D.Md. 2008)(discovery budget).

Since then, Rule 26(c)(1)(C) has been amended to provide that a protective order may provide for “the allocation of expenses, for the disclosure or discovery….”  Additionally, the provisions of Rue 26(b)(2)(C) have been moved to Rule 26(b), which states:  “The court may specify conditions for the discovery.”

These Rules and principles provide powerful tools for addressing the shortcomings of §1920(4).

For Maryland practitioners, Rule 2-603(a) states: “Unless otherwise provided by rule, law, or order of court, the prevailing party is entitled to costs. The court, by order, may allocate costs among the parties. If the clerk has any question regarding the allocation of costs, including which party is the prevailing party, the court shall determine the matter.”  Subsection (c) provides: “On motion of a party and after hearing, if requested, the court may assess as costs any reasonable and necessary expenses, to the extent permitted by rule or law.”

The Rule cross-references §7-202 of the Courts & Judicial Proceedings Article of the Maryland Code, which states only:

7-202. Court costs and charges

Determination of costs and charges by State Court Administrator

(a)(1)(i) The State Court Administrator shall determine the amount of all court costs and charges for the circuit courts of the counties with the approval of the Board of Public Works.

(ii) The fees and charges shall be uniform throughout the State.

(2) The Comptroller of the State shall require clerks of court to collect all fees required to be collected by law.

Consent required for clerk to charge fees

(b) The clerk may not charge the State, any county, municipality, or Baltimore City any fee provided by this subtitle, unless the State, county, municipality, or Baltimore City first gives its consent.

Fees for services not enumerated in subtitle

(c) The clerk is entitled to a reasonable fee for performing any other service that is not enumerated in this subtitle or in §§ 3-601 through 3-603 of the Real Property Article.

Surcharges

(d) The State Court Administrator, as part of the Administrator’s determination of the amount of court costs and charges in civil cases, shall assess a surcharge that:

(1) May not be more than $55 per case; and

(2) Shall be deposited into the Maryland Legal Services Corporation Fund established under § 11-402 of the Human Services Article.

Assessment of surcharge

(e)(1) In addition to the surcharge assessed under subsection (d) of this section, the State Court Administrator, as part of the Administrator’s determination of the amount of court costs and charges in civil cases, shall assess a surcharge that:

(i) 1. Except as provided in item 2 of this item, shall be $30 per case; and

  1. Except as provided in paragraph (2) of this subsection, shall be $6 to reopen any civil case; and

(ii) Shall be deposited into the Circuit Court Real Property Records Improvement Fund established under § 13-602 of this article.

(2) A surcharge may not be assessed under this subsection to reopen a case brought by a petitioner under Title 4, Subtitle 5 of the Family Law Article.

Fees for out-of-state attorneys

(f) The State Court Administrator shall:

(1) Assess a $100 fee for the special admission of an out-of-state attorney under § 10-215 of the Business Occupations and Professions Article; and

(2) Pay $75 of the fee to the Janet L. Hoffman Loan Assistance Repayment Program established under § 18-1502 of the Education Article.

Parties aggrieved by fees

(g) If a party in a proceeding feels aggrieved by any fee permitted under this subtitle or by §§ 3-601 through 3-603 of the Real Property Article, the party may request a judge of that circuit court to determine the reasonableness of the fee.

Section 7-404 authorizes limited costs for private process service.

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