9th Circuit Reviews Taxable eDiscovery Costs Under §1920(4)
In Re Online DVD-Rental Antitrust Litigation, Nos. 11-18034, 12-16160, 12-16183 (9th Cir. Feb. 27, 2015), the Ninth Circuit considered the extent to which a court can tax ESI costs pursuant to U.S. 28 §1920(4). Many courts have struggled to answer this question, and the Ninth Circuit’s decision will provide additional clarity, especially to district courts that have been grappling with this issue (see, e.g., Bonillas v. United Air Lines Inc., No. C-12-06574 (EDL) (N.D. Cal. Dec. 19, 2014).)
After extensive electronic discovery, the court granted summary judgment for defendants. Defendants sought to have the court tax their ESI costs. Pursuant to §1920(4), the district court awarded defendants $710,194.23. Both plaintiffs and defendants appealed portions of this award.
The 9th Circuit reviewed the award of costs under the precedent set by the U.S. Supreme Court’s narrow construction of §1920(4) set forth in Taniguchi v. Kan Pacific Saipan, Ltd. 132 S.Ct. 1997 (2012). The court also cited decisions from other circuits, including Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012), Country Vintner of N.C., LLC v. E. & J. Gallo Winery, Inc., No. 12-2074 (4th Cir. Apr. 29, 2013) and CBT Flint Partners, LLC v. Return Path, Inc. 737 F.3d 1230 (Fed. Cir. 2013).
In reviewing the costs awarded, the court reached the following conclusions regarding the taxability of ESI costs:
- “Data upload” is akin to faxing a document, which is a transmission that creates a copy and may, therefore, be taxable under 1920(4) provided that the party seeking the costs establishes that the “data upload” was “necessary” for use in the case. Here, defendant failed to meet its burden and the court deemed the costs non-taxable.
- “Keywording activities,” including using automated software to identify responsive documents for production, were not taxable costs (despite Defendants’ argument that the keyword searching allowed them to identify which documents to copy).
- “Native review processing” included many tasks but only some of which were taxable, including optical character recognition (OCR) and conversion to TIFF formatting.
The court remanded the bill of costs back to the lower court to recalculate the award pursuant to its opinion.