We are all aware that law is based on words and the interpretation of those words. The law is an ever evolving, organic set of rules and regulations that are often changed and revised. Monitoring these changes and how they impact the practice of law is a full time job that most attorneys don’t have time to perform, yet they can dramatically impact how you practice.
On January 3, 2020, Congress passed the Judicial Administration and Technical Amendments Act of 2008, to make improvements in the operation administration of the Federal courts, and for other purposes. Specifically, one of the changes made was a modification to the wording of Section 1920(4), changing the phrase "fees for exemplifications and copies of papers" to read "fees for exemplification and the costs of making copies of any materials." Upon a first read, it seems like the difference between the two phrases is inconsequential ant the extra words merely clarify the prior version. However, based on a recent judicial interpretation, there are plaintiffs attorneys across the nation who should be taking notice.
Why?
In his recent opinion in Race Tires America Inc. v. Hoosier Racing Tire Corp., Judge McVerry of the U.S. District Court for the Western District of Pennsylvania ruled that the winning defendants in the antitrust case are entitled to reimbursement of more than $367,000 in eDiscovery costs. He found that courts are increasingly approving awards of eDiscovery costs in litigation, quoting another judge as saying that they are. “the 21st century equivalent of making copies.”
The plaintiff’s attorney, Joseph Decker of Babst Calland Clements & Zomnir argued that the costs should be disallowed because electronic document collection, drive image and searching (eDiscovery charges) are not specifically enumerated under Section 1920(4) and therefore are not recoverable costs. Judge McVerry disagreed, stating that the Congressional Act of 2008 modified the working with a specific intent and that since the modification, no court had “categorically excluded eDiscovery costs from allowable costs. In fact, Judge McVerry opined that many courts had recently come to recognize that the exemplification in the modern era, included electronic copying and even the creation of electronic databases.
The plaintiffs’ suit was dismissed on summary judgment and this ruling was upheld by the 3rd Circuit on appeal. (See the case for full details). When the defendants attorneys, John R. Gotaskie Jr., Theodore H. Jobes, and Christine Soares of Fox Rothschild filed to recover their costs, including eDiscovery, plaintiffs requested that Judge McVerry disallow any eDiscovery charges since the law on recovery was not clear.
The Ruling
McVerry started his analysis by noting that the 3rd Circuit had not yet addressed the issue of whether eDiscovery costs were recoverable; stating that the current statutes were originated when paper was the only discoverable form of information. For him, the issue became an application of these rules in a world of electronically stored information (ESI). There were two key factors that influenced the courts final decision to have the plaintiff reimburse $367,000 in eDiscovery costs.
1. The plaintiffs had been very aggressive in their pursuit of eDiscovery, filing 273 discovery requests which included 119 separate requests for documents. In order to respond to those requests, the defendants had hired eDiscovery contractors to copy 490 gigabytes of electronic data from its servers and then applied the plaintiffs search term list of 442 searches to produce document. They then created a database to handle the 7 million documents resulting from the searches and convert documents to the required production format.
2. The defendants were not seeking reimbursement for any legal fees for work performed by attorneys or paralegals who reviewed document to determine relevance, privilege and confidentiality designations. They were only seeking reimbursement for the highly technical skills involved in eDiscovery that attorneys generally are not trained to perform and that these skills and services were indispensible to the discovery process.
The Lesson?
eDiscovery rules and procedures are evolving at a dramatic pace. Attorneys need to understand that eDiscovery has become a vital part of practicing law and can impact the bottom line, and can affect both the outcome of a case, and the financial costs of litigation. Having people at your firm that keep abreast of changes to old rules and the implementation of new rules is paramount to your success as a litigator
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