Third Circuit Addresses Taxable Costs: Vacates Award of the District Court, Remands with Instructions to Re-Tax Costs in Accordance with Opinion

Race Tires Amer., Inc. v. Hoosier Racing Tire, Corp., --- F.3d ---, 2012 WL 887593 (3d Cir. Mar. 16, 2012)

On appeal, the Third Circuit vacated the District Court’s approval of taxable costs related to electronic discovery and remanded with instruction to re-tax in accordance with this opinion. Specifically, the court concluded that the relevant vendors’ charges “would not qualify as fees for ‘exemplification’” and that “of the numerous services the vendors performed, only the scanning of hard copy documents, the conversion of native files to TIFF, and the transfer of VHS tapes to DVD involved ‘copying’” and were thus recoverable.

Following the District Court’s grant of the defense summary judgment motions, the Clerk for the District Court considered the Bills of Costs submitted by the defendants and ultimately concluded that “electronic discovery costs would be consider[ed] … taxable, as opposed to just … the cost of litigating.” In response, Plaintiff filed a Motion to Appoint a Special Master Regarding E-Discovery Issues and a Motion to Review Taxation of Costs. “[O]n May 6, 2011, the District Court declined to appoint a Special Master and affirmed the Clerk’s taxation of the electronic discovery vendor charges.” In so deciding, the court “essentially found that ‘the steps the third-party vendor(s) performed appeared to be the electronic equivalent of exemplification and copying.’” Plaintiff timely appealed.

The question presented on appeal was whether 28 U.S.C. § 1920(4) "authorizes the taxation of an electronic discovery consultant’s charges for data collection, preservation, searching, culling, conversion, and production as either ‘exemplification [or] the . . . making [of] copies of any materials where the copies are necessarily obtained for use in this case.’” "[W]hether a particular expense falls within the purview of section 1920, and thus may be taxed in the first place, is an issue of statutory construction, subject to de novo review."

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Source: ediscoverylaw.com