Could E-Discovery Taxation Alter Discovery Paradigm?

The rising cost of e-discovery is well-known by litigants, particularly corporate defendants with multiple terabytes of electronically stored information that can become discoverable in litigation. For years, courts and litigants have struggled with the complexity and cost of e-discovery to the point that in many cases e-discovery has become the proverbial tail that wags the dog.

A pair of recent rulings from district courts in the 3rd Circuit, however, offers new hope for litigants hoping to control their e-discovery costs. In Race Tires America Inc., v. Hoosier Racing Tire Corp., a May 6 opinion, and Hank's Beverage Co. v. Ajinomoto Co., a July 26 case, district courts in the Western District of Pennsylvania and the Eastern District of Pennsylvania, respectively, approved the taxation of hundreds of thousands of dollars in e-discovery costs under Rule 54.

The prospect that parties requesting ESI in discovery may be forced to bear at least some of the e-discovery costs incurred by producing parties is a tectonic shift in litigation that may change the way in which e-discovery is handled in the future. This article will examine the possibility that federal courts across the country will follow the trend set by the 3rd Circuit and explore the ways that litigants may respond to the potential taxation of e-discovery costs.

TAXATION OF E-DISCOVERY COSTS IN THE 3RD CIRCUIT

Federal Rule of Civil Procedure 54(d) provides that a prevailing party may recover various costs. These costs, in turn, are specifically enumerated under 28 U.S.C. § 1920 and include "fees for exemplification and the costs of making copies of any materials where the materials are necessarily obtained for use in the case." Importantly, the language of § 1920(4) was amended in 2008: the amendment changed the phrase "fees for exemplifications of copies of papers" to "fees for exemplification and the costs of making copies of any materials." (emphasis added). This change in language has led two district courts within the 3rd Circuit to recently consider the technical complexities of discovery in modern litigation and to allow recovery of some e-discovery costs.

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Source: law.com
By: Philip Yannella