Electronic Discovery Fees

Litigation + Practice + Tech
May 2, 2013
Read this in 2 minutes

On April 29, 2013 the U.S. Court of Appeals for the Fourth Circuit further detailed the scope of fees chargeable to a party under 28 U.S.C. §1920(4), which speaks to “the costs of making copies of any materials where the copies are necessarily obtained for use in [a] case.” This clause includes discovery, not just materials actually introduced at trial or attached to dispositive motions.

It’s originally FRCP 54(d)(1) that allows cost-shifting to a prevailing party in the discretion of the court. Section 1920 enumerates the expenses that courts may tax as a cost under that discretionary authority.

The Fourth Circuit was asked to explore the bounds of §1920(4), in particular the meaning of “making copies” and whether a host of preparation and due diligence procedures related to the management of electronically stored information turned over in the case fit within those bounds.

  • decompressing container files
  • making the data searchable using OCR
  • indexing the data
  • removing files not containing user-generated content
  • removing duplicates
  • extracting and indexing metadata
  • reviewing for quality and corrupt files
  • converting to tiff and pdf
  • bates numbering
  • transferring to disc

Country Vintner sued Gallo under state wine distribution and unfair trade practice laws on a dispute over an exclusive wholesaling deal. Country Vintner sought discovery of electronically stored information and Gallo moved for a protective order based primarily on cost. There was also disagreement about the scope of Country Vintner’s requests and how to limit them using keywords.

The district court denied Gallo’s motion for a protective order and ordered it to “run searches on archived email and documents created [in a one-year period] by an initial set of eight identified custodians” using 16 search terms proposed by Country Vintner and any other terms that might produce relevant documents. Gallo forwarded the resulting 62 GB of data to its lawyers for review. Naturally, this is when the bulk of due diligence and prep costs were incurred.

Shortly after Gallo began producing documents the district court granted its motion to dismiss the unfair trade practice claim. The parties filed cross-motions for summary judgment on the remaining claims and the court granted summary judgment in favor of Gallo. Country Vintner appealed, but lost. Gallo then filed in the district court the bill of costs considered here.

The Fourth Circuit gave a narrow interpretation of §1920(4). The operative quote came out of a Third Circuit opinion in Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012).

Section 1920(4) does not state that all steps that lead up to the production of copies of materials are taxable. It does not authorize taxation merely because today’s technology requires technical expertise not ordinarily possessed by the typical legal professional. It does not say that activities that encourage cost savings may be taxed. Section 1920(4) authorizes awarding only the cost of making copies.

The court affirmed the district court’s finding that only the tiff and pdf conversion and the transfer of files to disc constituted “making copies” under §1920(4).

Read the Fourth Circuit’s opinion in The Country Vintner of North Carolina, LLC, v. E. & J. Gallo Winery, Inc.

Did you find value in this post? Tweet or Like it so others can, too.
Media + Arts + Tech

Attributes

I am native to media, arts and tech – as a former touring musician, as one who can and does code, and as a maker fluent in design and multimedia content development (audio, video, photo, graphic, analog, textual). This overlap of niche and background allows me to efficiently and peerlessly integrate legal and creative for clients working in expressive spaces.

Corporate

They are called organizations for good reason. Getting and staying documented, well-papered, compliant, and aligned with pragmatic protocols is prime among best practices. General counsel and correct governance are as important to closely-held companies as they are to those seeking or deploying external funding. There are few investments more sound than a solid foundation.

Contracting

Optimizing a deal requires focussed and technical drafting. What multiple collaborators have in mind when they begin does not automatically manifest when a concept is translated into the physical world. Get ahead of junctures, pivots and transitions. Reflecting on the page what is intended at heart is the ultimate efficiency.

Copyright

There are few disciplines as relevant and fluid as copyright. The media space has enjoyed rapid development over recent decades. Law is not always so quick to follow. Navigating ownership of content is a primary concern for creative enterprises.

Trademark

Impact and impression are salable and demand attention, from protecting to capitalizing. Define your brand, put on a search, definitively document, and enforce with intent – or share, collaborate and cross-pollinate.

Trade Secrets

Assets come in variegated forms – not always capitally quantifiable or neatly captured by intellectual property regimes. But proprietary information can be of principal, or even singular value. Safeguard, manage and leverage such resources prudently and productively.

Licensing

One of the most important tools in the kit of creative profit is the flexibility and extensibility that adept licensing affords. Do it well – do it right.

Regulatory

Interfacing with public agencies is a vastly different experience than cutting deals in the private sector. Conventions, ethics, regulations, policy, and sinuous procedure need not block your path forward. Additionally, the First Amendment was written for you – stand on it.

Litigation

There will almost certainly come a time when dispute crops up and grows entrenched, or rights and obligations are transgressed or ignored. Less talk, more action – bring deft advocacy and mastery of process into play.

Strategic

Creation is nothing if uninspired. Your vocation is to deploy vision and bridge the gap between what is known and unknown, what is possible and impossible. Apply the very same foresight to your company and your career. Chance favors the prepared mind.