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

Taxation of costs in federal court is governed by 28 U.S.C. §1920.  An ABA Litigation Section article, W. Newman, Prevailing Parties Recover Some, Not All, E-discovery Costs (americanbar.org) (ABA Winter 2022), cited a recent decision and noted that “ABA Litigation Section leaders believe this decision reveals that section 1920 is out of touch with the practical realities of e-discovery.” The cited decision rejected taxation for typical ESI costs.

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).

Mr. Newman has repeatedly noted shortcomings in §1920.  In “Prevailing Parties Recover Some, Not All, E-discovery Costs” (ABA Litigation News Sep. 23, 2020), he described a decision of the United States Court of Appeals for the D.C. Circuit interpreting 28 U.S.C. §1920(4).  Mr. Newman noted that, at that time, the ABA advocated reform.

In “Taxation of E-Discovery Costs Under 28 U.S.C. §1920(4) after Taniguchi v. Kan Pacific Saipan” (Aug. 14, 2012) and in Recovery of ESI Costs: “The fuss is about money…. [E]lectronic discovery is really expensive.” (Feb. 13, 2021), 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 Rule 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 may provide 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.”