District Court in Colorado Taxes E-Discovery Expenses as Costs to the Prevailing Party

In What's New in E-Discovery and Spoliation?, What's New in the Courts by gravierhouseLeave a Comment

“Courts have recognized that 28 U.S.C. §1920(4) includes e-discovery related costs. Nero v. Am. Family Mut. Ins. Co., No. 11–02717, 2013 WL 5323262 (D.Colo. Sept. 23, 2013) (Defendant ‘is entitled to recover as taxable costs the amount spent on loading data into an electronic database and converting files to TIFF or PDF formats’); Country Vintner of N. Carolina, LLC v. E. & J. Gallo Winery, Inc., 718 F.3d 249, 260 (4th Cir. 2013) (holding that §1920(4) includes taxable costs to ‘converting electronic files to non-editable formats and burning the files onto discs’); Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, 171 (3d Cir. 2012) (‘[T]he scanning of hard copy documents, the conversion of native files to TIFF, and the transfer of VHS tapes to DVD involved ‘copying,’ … the costs attributable to only those activities are recoverable under § 1920(4)’ s allowance for the ‘costs of making copies of any materials.’’).  In this case, Defendants hired a third-party vendor, Cyopsis, to retrieve and restore ESI to produce documents sought by Plaintiffs’ Interrogatories and Requests for Production.  Because of the complexities and time-intensive efforts anticipated in responding to Plaintiffs’ requests for documents, the parties entered into three consecutive tolling agreements. Further, Defendants wrote to Plaintiffs’ counsel three times describing the difficulties and complexities encountered in retrieving and restoring the ESI…. Thus, Plaintiffs were well aware that Defendants required the services of an outside consultant in order to produce the information requested, and they were kept apprised of the difficulties encountered by the vendor, Cyopsis. At no time during this period did Plaintiffs initiate discussion aimed at limiting the scope of their request for information or take other measures to limit the costs of the endeavor. Based on the production of the ESI, Plaintiffs filed a new Complaint including several allegations not included in the version filed in 2010.”  Hence, the court held that “Defendants’ costs related to the ESI are expenses enumerated in 28 U.S.C. §1920(4). The ESI expenses were not merely for the convenience of the parties nor were they materials produced solely for discovery as Plaintiffs filed a new Complaint that included information gleaned from the ESI. Thus, the ESI expenses were reasonably necessary for use in the case. Indeed, Plaintiffs were aware of the monumental effort to retrieve and convert the data into a retrievable format in response to their Interrogatories and Requests for Production. The costs incurred by Defendants, the prevailing party, in responding to Plaintiffs’ requests are expenses that are shifted to Plaintiffs, the losing party. Indeed, Plaintiffs own litigation choices and aggressive course of discovery necessarily resulted in ‘heightened’ defense costs.” Comprehensive Addiction Treatment Center v. Daria Leslea, et al, No.11-03417, 2015 WL 638198 (D.Colo. Feb. 13, 2015).

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