Historical ESI Highlights – Part XI – Taniguchi v. Kan Pacific Saipan

When it comes to ESI, it has been stated that: “The fuss is about money. Discovery is expensive, and electronic discovery is really expensive.”[1]

The award of litigation costs will never be the stuff of cocktail party discussions.  However, in many cases, large sums of money are at issue. See, e.g., Ralph Losey, “$3.1 Million e-Discovery Vendor Fee Was Reasonable in a $30 Million Case” (e-Discovery Team).

In 2012, the Supreme Court’s Kan Pacific decision[2] 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).[3]

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.”

In The Same, but Different: Taxation of E-Discovery Costs under the Amended U.S. Code (americanbar.org) (ABA May 18, 2020), Connor Cafferty described an appellate decision  on a $100,000 bill of costs:

The appellee sought to recover the associated costs to prepare, print, and scan into e-discovery software more than 171,000 potentially responsive documents totaling about 2.4 million pages. Over the appellant’s objections, the clerk taxed the full bill and the district court denied the appellant’s motion to retax. The appeal to the D.C. Circuit followed.

The appellee argued that Congress’s 2008 amendment of the taxation statute was intended to “make allowable both the costs of the copies themselves (whether hard copy or electronic) and the costs incurred in the process of making such copies.” The court rejected that argument, and reversed the district court in part….

The court said that Congress “allowed only for the taxation of costs of making copies.”…

The court affirmed that 28 U.S. Code § 1920 should be construed narrowly when taxing e-discovery copying costs. Many costs associated with the e-discovery process cannot be taxed under the taxation statute,

The American Bar Association has advocated reform. See UPDATE:  Recovery of ESI Costs.  That has not occurred.

In a prior blog, I noted that the Federal Rules of Civil Procedure do not define “ESI.”  The historical explanation is concern that technological change would outpace the law. C. Ball, Electronic Discovery Workbook (2019), 47 n. 11.

Craig’s analysis returns with full force here.  Award of reasonable costs is frustrated by an antiquated statute.  Technological change has “outpaced the law.”

I realize that Congress faces many pressing issues, and that the “award of costs” statute may pale in comparison.  However, absent statutory amendment, I have advocated for a “work around”:

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 Rule 26(b)(2)(C) have been moved to Rule 26(b), which states:  “The court may specify conditions for the discovery.”

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

History is important.

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[1] A.L. Brown, “The Manageable Challenge of Electronic Discovery,” formerly posted at www.rkmc.com/.

[2] Taniguchi v. Kan Pacific Saipan, Ltd., 566 U.S. 560 (2012).

[3] The differing Maryland Rules were discussed in Recovery of ESI Costs: “The fuss is about money…. [E]lectronic discovery is really expensive.”