Plaintiffs Partially Recover Electronic Production Expenses
In Chicago Board Options Exchange, Inc. v. International Securities Exchange, LLC, No. 07 CV 623 (ND Illinois, January 14, 2014), plaintiff CBOE was awarded final judgment and subsequently asked Judge Lefkow for costs under Fed. R. Civ. Pro. 54(d) and 28 U.S.C. §1920. Defendant ISE objected to the requested amount, arguing in part that costs for electronic production in discovery are limited to conversion expenses. The judge’s decision contrasts with CBT Flint Partners, LLC v. Return Path, Inc. and Cisco Ironport Systems, LLC, No. 2013-1036 (Fed.Ct. December 13, 2013), discussed in an earlier series of blogs.
While reviewing case law on recovering costs for electronic production, Judge Lefkow noted Seventh Circuit courts recognize recovery “costs for converting computer data into a readable format in response to plaintiffs’ discovery requests,” see Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. 2009). Considerable differences remain within the Seventh Circuit, however, on what constitutes a recoverable expense. Relying extensively on Race Times Am., Inc. v. Hoosier RacingTire Corp., 674 F3d (3rd Cir. 2012), the court held plaintiffs could recover expenses on conversion and associated costs, but not on creating the litigation database or electronic data hosting.
How Did The Court Sort Electronic Production Costs?
To separate allowable expenses, Judge Lefkow reviewed each of the items in the requested $200,194.91 for electronic discovery. He separated the entries into three categories:
- $41,419.73 for conversion and creation of readable electronic discovery,
- $59,866.35 for post-deduplication processing and hosting of privileged documents, and
- $98,908.83 for a no-detail invoice titled “hosting/endorsing and scanning.”
The conversion and creation of readable electronic discovery costs were readily approved and the post-deduplication processing and hosting of privileged were readily denied, but the third group presented documentation issues. After CBOE provided more detail for the third set of charges, only $24,961.28 in additional costs were approved.
As this and other similar cases looking at this issue reflect, Plaintiffs looking for certainty from the courts can typically count on receiving electronic discovery costs for conversion costs, including making files readable. Costs for bates stamping and other “endorsement” costs are also widely recoverable. However, not nearly as settled are expenses for analyzing metadata, creating litigation databases, and electronic data hosting, because courts still disagree on how unavoidable these expenses are to document processing. We will continue to follow this developing topic.