Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-12-16183/USCOURTS-ca9-12-16183-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE ONLINE DVD-RENTAL

ANTITRUST LITIGATION,

ANDREA RESNICK; BRYAN

EASTMAN; AMY LATHAM; MELANIE

MISCIOSCIA; STAN MAGEE;

MICHAEL OROZCO; LISA SIVEK;

MICHAEL WIENER,

Plaintiffs-Appellants,

v.

NETFLIX, INC.; WAL-MART STORES,

INC.; WALMART.COM USA LLC,

Defendants-Appellees.

No. 11-18034

D.C. No.

4:09-md-02029-

PJH

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2 IN RE ONLINE DVD-RENTAL ANTITRUST LITIG.

IN RE ONLINE DVD-RENTAL

ANTITRUST LITIGATION,

ANDREA RESNICK; BRYAN

EASTMAN; AMY LATHAM; MELANIE

MISCIOSCIA; STAN MAGEE;

MICHAEL OROZCO; LISA SIVEK;

MICHAEL WIENER,

Plaintiffs-Appellants,

v.

NETFLIX, INC.,

Defendant-Appellee,

and

WAL-MART STORES, INC.;

WALMART.COM USA LLC,

Defendants.

No. 12-16160

D.C. No.

4:09-md-02029-

PJH

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 3

IN RE ONLINE DVD-RENTAL

ANTITRUST LITIGATION,

ANDREA RESNICK; AMY LATHAM;

MELANIE MISCIOSCIA; STAN

MAGEE; MICHAEL OROZCO; LISA

SIVEK; MICHAEL WIENER; BRYAN

EASTMAN,

Plaintiffs-Appellees,

v.

NETFLIX, INC.,

Defendant-Appellant,

and

WAL-MART STORES, INC.;

WALMART.COM USA LLC,

Defendants.

No. 12-16183

D.C. No.

4:09-md-02029-

PJH

OPINION

Appeal from the United States District Court

for the Northern District of California

Phyllis J. Hamilton, District Judge, Presiding

Argued and Submitted

February 13, 2014—San Francisco, California

Filed February 27, 2015

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4 IN RE ONLINE DVD-RENTAL ANTITRUST LITIG.

Before: Sidney R. Thomas, Chief Judge, Stephen

Reinhardt, Circuit Judge, and Lloyd D. George, Senior

District Judge.*

Opinion by Chief Judge Thomas

SUMMARY**

Antitrust

The panel affirmed the district court’s summary judgment

and affirmed in part and reversed in part its award of costs in

consolidated antitrust actions arising out of a promotion

agreement whereby Walmart transferred its online DVDrental subscribers to Netflix, and Netflix agreed to promote

Walmart’s DVD sales business.

The plaintiffs, individuals representing a class of Netflix

subscribers, contended that this arrangement violated §§ 1

and 2 of the Sherman Act by illegally allocating and

monopolizing the online DVD-rental market. The panel held

that the subscribers did not raise a triable issue of fact as to

whether they suffered antitrust injury-in-fact on a theory that

they paid supracompetitive prices for one of Netflix’s

subscription plans because Netflix would have reduced the

* The Honorable Lloyd D. George, Senior District Judge for the U.S.

District Court for the District of Nevada, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 5

price of that plan but for its allegedly anticompetitive

conduct.

In light of Taniguchi v. Kan Pac. Saipan, Ltd., 132 S. Ct.

1997 (2012), which underscored the narrow scope of taxable

costs under 28 U.S.C. § 1920, the panel affirmed in part and

reversed in part the district court’s cost award. Finding

persuasive the reasoning of the Third, Fourth, and Federal

Circuits, the panel held that certain charges for “data upload”

and “keywording” were not recoverable as costs for making

copies under § 1920(4). The panel remanded for

consideration of whether costs were properly awarded for

“professional services.” The panel concluded that of the costs

challenged as non-taxable under § 1920(4), only those costs

attributable to optical character recognition, converting

documents to TIFF, and “endorsing” activities ̄all of which

were explicitly required by the plaintiffs ̄were recoverable

on the record before it. The panel held that the district court

did not abuse its discretion in awarding costs for preparation

of visual aids, for TIFF conversions, and for copying of paper

documents. The district court also did not abuse its discretion

in declining to award Netflix costs for production of certain

PowerPoint documents.

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COUNSEL

Robert G. Abrams and Gregory Lynn Baker, Baker Hostetler

LLP, Washington, D.C.; William G. Caldes, Eugene A.

Spector, and Jonathan M. Jagher, Spector Roseman Kodroff

& Willis, P.C., Philadelphia, Pennsylvania; Merrill G.

Davidoff, H. Laddie Montague, Jr., Sarah Rebecca

Schalman-Bergen, and David Francis Sorensen, Berger &

Montague, P.C., Philadelphia, Pennsylvania; Guido Saveri

and Lisa Saveri, Saveri & Saveri, Inc., San Francisco,

California; Todd A. Seaver and Joseph J. Tabacco, Jr.,

Berman DeValerio; San Francisco, California, for PlaintiffsAppellants/Cross-Appellees.

Jeffrey Bank, Tiffany L. Lee, Jonathan M. Jacobson and

David Reichenberg, Wilson Sonsini Goodrich &Rosati, New

York, New York; Keith Edward Eggleton, Dylan James

Liddiard, Maura L. Rees, and Anthony Weibell, Wilson

Sonsini Goodrich & Rosati, Palo Alto, California; Scott Sher,

Wilson Sonsini Goodrich & Rosati, Washington, D.C.;

attorneys for Defendant-Appellee/Cross-Appellant Netflix.

Lawrence C. DiNardo and Paula W. Render, Jones Day,

Chicago, Illinois; Richard Wolf Hess and Neal Manne,

Susman Godfrey, LLP, Houston, Texas; Kathryn Parsons

Hoek and Marc M. Seltzer, Susman Godfrey L.L.P., Los

Angeles, California; Stephen E. Morrissey and Genevieve

Vose, Susman Godfrey LLP, Seattle, Washington, for

Defendants Wal-Mart Stores, Inc. and Walmart.com USA

LLC.

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 7

OPINION

THOMAS, Chief Judge:

These consolidated antitrust actions arise out of an

agreement (“Promotion Agreement”) between Netflix and

Walmart1 wherebyWalmart transferred its onlineDVD-rental

subscribers to Netflix, and Netflix agreed to promote

Walmart’s DVD sales business. The plaintiffs, individuals

representing a class of Netflix subscribers (“Subscribers”),

contend that this arrangement violated §§ 1 and 2 of the

Sherman Act by illegally allocating and monopolizing the

online DVD-rental market. The Subscribers’ theory of injury

is that they paid supracompetitive prices for one of Netflix’s

subscription plans because Netflix would have reduced the

price of that plan but for its allegedly anticompetitive

conduct.

We agree with the district court that the Subscribers have

not raised a triable issue of fact as to whether they suffered

antitrust injury-in-fact, and we affirm the district court’s grant

of summary judgment. We vacate in part the district court’s

cost award, and remand for consideration in light of this

opinion.

I

In 1997, Reed Hastings and Marc Randolph co-founded

Netflix, the first internet-based DVD rental service. Netflix

commenced operations in 1998, offering customers through

1 For ease of reference, “Wal-Mart Stores, Inc.” and “walmart.com USA

LLC” shall be collectively referred to as “Walmart” throughout this

opinion.

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its website the option to rent or buy DVDs by mail. Netflix

initially offered DVD rentals on a pay-per-rental basis, but

soon replaced that system with a monthly subscription model. 

In 2000, it discontinued its DVD sales business altogether. 

SeveralNetflix subscription plans permitted customers to rent

an unlimited number of DVDs, differing in how many DVDs

a customer could borrow at a given time. For example, in

2003, Netflix offered its “3U” plan, which permitted three

DVDs to be rented at a time, for $19.95 per month, while its

“4U” plan cost $24.95 per month and allowed four DVDs at

a time. Netflix’s DVD-rental business flourished under the

new model, and by 2005 it had a 77.8% share of the online

DVD-rental market, rising to 92.3% by 2010.

Netflix faced no serious competition in its early years. 

However, in 2003, Walmart, one of the nation’s largest retail

companies, launched its own online DVD-rental service. 

Walmart initially offered its 3U plan for $18.76 a month. 

Although Walmart’s 3U plan was cheaper than Netflix’s

($19.95 per month), Netflix did not alter its 3U plan price for

a full year. When Netflix eventually did change its 3U price,

in June 2004, it increased the price to $21.99 per month.

Two months later, in August 2004, Blockbuster, the

largest store-based DVD rental company, launched its own

online DVD rental service, becoming the third major

competitor in the market. Blockbuster offered its 3U plan at

$19.99 per month and included with it two free coupons per

month for in-store rentals.

In October 2004, in apparent response to rumors that

Amazon planned to enter the online DVD-rental market as

well, Netflix announced that it would lower the price of its

3U plan from $21.99 to $17.99 per month. Blockbuster

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 9

responded the next day by announcing that it would cut its 3U

price to $17.49 per month. In November 2004, Walmart

reduced its 3U price to $17.36 per month. In December 2004,

Blockbuster again reduced the price of its 3U plan, this time

to $14.99 per month—the lowest 3U plan price in the market. 

Netflix maintained its $17.99 price until August 2007, when

it lowered the price to $16.99.

During this period, Walmart’s online DVD-rental

business performed poorly. Walmart never had more than

60,000 subscribers. In contrast, in mid-2004 Netflix had over

2 million subscribers, and Blockbuster had 400,000

subscribers. From June 2003, when Walmart opened its

online DVD-rental business, until it signed the Promotion

Agreement with Netflix in March 2005, Walmart gained an

average of 5,000 subscribers per quarter. Netflix added

250,000 subscribers per quarter over the same period. 

Walmart’s subscriber share peaked at 2.4% in early 2004 and

declined from that point. By February 2005, Walmart had

only a 1.4% market share. In contrast, Netflix controlled

77.8% of the market in 2005. Walmart lost 7,000 subscribers

during the final quarter of 2004.

In October 2004, Netflix’s CEO Reed Hastings sought a

meeting with Walmart CEO John Fleming. Hastings testified

that he requested the meeting because he hoped to form a

partnership with Walmart that would strengthen Netflix’s

position before Amazon entered the market. Hastings was

aware that Walmart’s online DVD-rental service was

performing poorly, and hoped that Walmart might therefore

be open to a partnership. The two CEOs met on October 27,

2004. Hastings recounts that Walmart seemed uninterested

in a deal at the time and that there was no discussion about

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Netflix selling new DVDs. Fleming provided a similar

account. No agreement was reached at the meeting.

Unbeknownst to Hastings, Walmart was entertaining

other suitors. Walmart considered a potential partnership

with Yahoo!, and a draft partnership agreement to that effect

was prepared as early as December 1, 2004. Walmart

considered a similar deal with Microsoft.

Walmart began considering alternative strategic options

for its online DVD-rental business, and ultimately looked in

depth at four possibilities: (1) continuing to run the business

with a low subscriber amount, (2) aggressively building the

business, (3) partnering with Yahoo!, and (4) exiting the

online DVD-rental business. After carefully analyzing each

option, Walmart concluded that none would be profitable and

that, in fact, it would probably suffer multi-million dollar

financial losses under all four scenarios.

Walmart made the final decision to exit the market by

early January 2005. It established an impairment reserve to

cover any losses incurred from the closure and stopped

accepting new subscribers for its 3U and 4U plans. By

February 2005, Walmart had incurred $3 million of costs

associated with shuttering its online DVD-rental business. 

By March 2005, Netflix had 3 million subscribers. Walmart

had 52,000. Walmart employees speculated that Walmart’s

online DVD-rental business did notsucceed because Walmart

devoted insufficient resources to marketing, could not match

Netflix’s guaranteed one- to two-day delivery, had a poorly

designed website, and offered a relatively limited selection of

DVDs.

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 11

Aware of Walmart’s market share decline, but unaware of

its plan to discontinue its online DVD-rental business,

Hastings renewed his efforts to meet with Fleming. The two

CEOs met on February 9, 2005. Fleming did not inform

Hastings that Walmart had decided to leave the online DVDrental business. Although no agreement was reached at the

meeting, Hastings’s efforts did eventually bear fruit. By

March 17, 2005, Hastings and Fleming had reached a verbal

agreement, the key terms of which were that: (1) Walmart

DVD-rental subscribers and their rental queues would be

transferred to Netflix, for those customers who so chose, free

of charge, and customers would be offered the same

subscription price for one year; (2) Walmart would promote

on its website Netflix’s online DVD-rental business; (3)

Netflix would pay Walmart a 10% revenue share for each

subscriber who transferred, as well as a $36 bounty for each

new Netflix subscriber gained from Walmart’s referrals; and

(4) Netflix would promote Walmart’s DVD sales business.

These key terms were incorporated into the Promotion

Agreement. The Promotion Agreement did not include a

covenant not to compete, did not prohibit Netflix from selling

new DVDs, and explicitly permitted Walmart to offer an

online DVD-rental service.2 The Promotion Agreement was

publically announced May 19, 2005.

Despite the earlier rumors, Amazon did not initiate an

online DVD-rental service. Thus, after Walmart’s exit in

mid-2005, Netflix and Blockbuster remained as the two major

competitors in the market. Blockbuster eventually filed for

2

In fact, in February 2010, Walmart acquired the streaming video

service VuDu, which competes directly with Netflix by offering rentals to

consumers through Internet streaming.

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12 IN RE ONLINE DVD-RENTAL ANTITRUST LITIG.

bankruptcy in September 2010, leaving Netflix as the sole

major competitor, with over 90% of the online DVD-rental

market.

Netflix kept its 3U price at $17.99 from November 2004

to August 2007, when it reduced the price to $16.99, which

is where it remained through the end of the class period. 

During the class period, Netflix began offering video

streaming over the Internet, and Netflix has since focused on

developing that aspect of its business.

The Subscribers filed several actions, alleging antitrust

violations byNetflix, Walmart Stores, and Walmart.com, and

seeking to represent a class of Netflix subscribers. The

actions were consolidated and an amended complaint filed. 

The thrust of the Subscribers’ complaint is that the Promotion

Agreement reflected an illegal allocation of the online DVDrental market. The Subscribers assert four causes of action:

(1) a § 1 Sherman Act violation for unlawful market

allocation of the online DVD-rental market (against all

defendants); (2) a § 2 Sherman Act claim for monopolization

of the online DVD-rental market (against Netflix); (3) a § 2

Sherman Act claim for attempted monopolization of the

online DVD-rental market (against Netflix); and (4) a § 2

Sherman Act claim for conspiracy to monopolize the online

DVD-rental market (against all defendants).

The district court granted the Subscribers’ motion for

certification of a litigation class, defining the class as “[a]ny

person or entity in the United States that paid a subscription

fee to Netflix on or after May 19, 2005 up to and including

[December 23, 2010,] the date of class certification.” The

district court subsequently approved Walmart’s settlement

with the class.

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 13

Netflix moved for summary judgment pursuant to Federal

Rule of Civil Procedure 56 as to all claims asserted against it. 

The district court granted the motion, concluding that there

was no per se antitrust violation, and that the Subscribers had

failed to raise a triable issue as to antitrust injury-in-fact. The

district court also excluded tendered evidence of agreements

Netflix had with Amazon, Best Buy, and Musicland, because

the agreements raised new theories of liability that were not

expressly pleaded in the complaint.

The district court entered final judgment against the

Subscribers, after which Netflix filed a bill of costs seeking

$744,740.11 in discovery costs. The district court

subsequently awarded Netflix $710,194.23 in costs. The

Subscribers filed a timely notice of appeal, and Netflix crossappealed.

We have jurisdiction pursuant to 28 U.S.C. § 1291. “We

review de novo the district court’s grant of summary

judgment.” Cascade Health Solutions v. PeaceHealth,

515 F.3d 883, 912 (9th Cir. 2008). Summary judgment is

appropriate when “there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). A genuine issue of

material fact exists when “the evidence is such that a

reasonable jury could return a verdict for the nonmoving

party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). Until recently, “[s]ummary judgment [was]

disfavored in antitrust cases,” High Tech. Careers v. San Jose

Mercury News, 996 F.2d 987, 989 (9th Cir. 1993), but “any

presumption against the granting of summary judgment in

complex antitrust cases has now disappeared,” In re ATM Fee

Antitrust Litig., 554 F. Supp. 2d 1003, 1010 (N.D. Cal. 2008)

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14 IN RE ONLINE DVD-RENTAL ANTITRUST LITIG.

(citing Philip E. Areeda & Herbert Hovenkamp, Antitrust

Law ¶ 308c2 (3d ed. 2007)).

II

The district court properly concluded that the Subscribers

failed to raise a triable issue of fact as to antitrust injury-infact, and that Netflix was thus entitled to summary judgment. 

As with all federal claims, a plaintiff must establish Article

III standing, which requires proof of (1) injury-in-fact,

(2) causation, and (3) redressability. Gerlinger v.

Amazon.com Inc., 526 F.3d 1253, 1255 (9th Cir. 2008). “For

Article III purposes, an antitrust plaintiff establishes

injury-in-fact when he has suffered an injury which bears a

causal connection to the alleged antitrust violation.” Id.

(internal quotation marks and citation omitted).

In addition to Article III standing, private antitrust

plaintiffs must also demonstrate antitrust injury, which is

(1) “injury of the type the antitrust laws were intended to

prevent” that also (2) “flows from that which makes

defendants’ acts unlawful.” Brunswick Corp. v. Pueblo

Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). This can be

established by showing that consumers paid higher prices for

a product due to anticompetitive actions of a defendant, such

as a horizontal market allocation scheme. See In re Cardizem

CD Antitrust Litigation, 332 F.3d 896, 910–11 (6th Cir.

2003).

The Subscribers’ injury-in-fact theory is that Netflix

subscribers paid supracompetitive pricesfortheir DVD-rental

subscriptions once Walmart exited the online DVD-rental

market pursuant to the allegedly anticompetitive Promotion

Agreement. Specifically, the Subscribers contend thatNetflix

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 15

would have reduced its 3U subscription price to $15.99 per

month but for Netflix’s allegedly anticompetitive conduct. 

Free from the competitive threat of Walmart, the Subscribers

allege, Netflix was able to maintain this artificially high price

point.

Applying the standards applicable to antitrust cases, the

district court properly concluded that the Subscribers had not

raised a genuine issue of material fact as to antitrust injury-infact. The Subscribers failed to adduce evidence raising a

triable issue of fact that if Walmart remained in the market,

Netflix would have reduced its prices.

The undisputed record belies this assertion. Netflix never

lowered its 3U price at any time in response to Walmart. 

Even though Walmart entered the market with a lower price

($18.76 to Netflix’s $19.95) for a comparable 3U plan, 

Netflix did not alter its 3U plan price for a full year after

Walmart entered the market. When Netflix eventually did

change the price, a year later, it increased the price to $21.99

per month. Netflix also did not reduce its price when

Blockbuster offered a 3U plan for $14.99 (while Netflix’s

was $17.99), even though Blockbuster had a much greater

share of the market than Walmart, and even though Netflix

rightfully viewed Blockbuster as a competitive threat. Thus,

the district court properly determined that no reasonable juror

could conclude that Netflix was going to lower its 3U price

to $15.99 in response to Walmart when (1) Netflix had never

lowered its prices in response to Walmart at any time and (2)

Netflix did not lower its price in the face of the $14.99 price

cut by Blockbuster, which was objectively a greater

competitive threat.

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Walmart never had more than 60,000 subscribers, in

contrast to Netflix’s two million subscribers in mid-2004. 

Moreover, Walmart gained an average of just 5,000

subscribers per quarter between when it entered the online

DVD-rental market in June 2003 and when the Promotion

Agreement was announced in March 2005; during this same

time period, Netflix was adding 250,000 subscribers per

quarter. Thus, Walmart’s subscriber market share peaked at

2.4% in early 2004 and declined from there, hitting 1.4% in

February 2005. This subscriber decline was most prevalent

during the final quarter of 2004, when Walmart lost 7,000

subscribers. Walmart.com’s director of entertainment and

photo opined that, in mid-2004, it had become clear that

Walmart’s venture would fail. Walmart attributed this selfdescribed “increased rate[] of attrition” from an already

anemic subscriber base to a host of factors, including

Walmart’s inability to match Netflix’s guaranteed 1- to 2-day

delivery and Walmart’s confusing, poorly designed website.

Not only was Walmart’s online DVD-rental business

lagging, it was perceived as such byNetflix, Blockbuster, and

Amazon. For example, Blockbuster’s senior Vice President

testified that Blockbuster was not surprised that Walmart

exited the business, in part because Walmart was unable to be

“the low-cost provider” and received negative reviews from

consumers. He concluded that Walmart’s exit was “logical.” 

Amazon held similar views. As one Amazon employee

stated, he and his colleagues “spent next to no time thinking

about Wal-mart” because Walmart wasn’t “taking it

seriously; they had one distribution center; they had limited

selection; they had faulty systems that didn’t really work.”

The Subscribers’ evidence consists of some internal

documents produced by Netflix and Walmart employees that

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 17

purportedly indicate that Walmart was regarded and treated

and as a true competitor. For example, the Subscribers note

that in November 2003 Walmart described its expectations of

growth in the online DVD-rental market over the coming

months, and that Hastings said in October 2002 that

Walmart’s entrance into the DVD-rental market was

“unsettling.” However, these communications pre-dated

Walmart’s entry into the market and subsequent poor

performance.

The Subscribers also cite a number of documents in

which Walmart claimed that its service was successful, such

as a “talking points” memo. However, these documents were

meant for promotional and motivational purposes, not

performance analysis, and the memos do not contain any hard

market data. Rather, the documents contain language best

described as puffery. The Subscribers also rely on certain

news articles that purportedly show that outside observers

also considered Walmart a threat. However, many of the

documents pre-date Walmart’s entry into the market, and

others refer to the market challenges posed by Blockbuster,

not Walmart. Indeed, Netflix’s internal documents indicate

that it was analyzing a potential price cut to $15.99 in

response to Blockbuster, not Walmart. Further, as the district

court emphasized, any Netflix price decrease was “(1) in

response to Blockbuster (not Walmart); (2) always couched

in terms of possibility; and (3) never actually occurred.” 

Netflix’s internal documents show that by late 2004, Netflix

treated Walmart as a negligible threat. Indeed, much of the

Subscribers’ documentary evidence actually supports

Netflix’s position and convincingly reveals that Walmart did

not view itself and was not viewed by others as a competitive

threat in late 2004 and early 2005.

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The Subscribers also rely on expert testimony. “As a

general rule, summary judgment is inappropriate where an

expert’s testimony supports the nonmoving party’s case.” 

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134,

1144 (9th Cir. 1997) (internal quotation marks and citation

omitted). See also Dolphin Tours, Inc. v. Pacifico Creative

Serv., Inc., 773 F.2d 1506, 1511 (9th Cir. 1985)

(anticompetitive injury could be inferred from an expert’s

conclusion that the plaintiff would have attained “a market

share of roughly twenty percent” instead of the two percent

it did reach). However, the mere proferring of unsupported

expert testimony does not create a triable issue as to antitrust

injury-in-fact. “In the context of antitrust law, if there are

undisputed facts about the structure of the market that render

the inference economically unreasonable, the expert opinion

is insufficient to support a jury verdict.” Rebel Oil Co., Inc.

v. Atl. Richfield Co., 51 F.3d 1421, 1435–36 (9th Cir. 1995). 

“Expert testimony is useful as a guide to interpreting market

facts, but it is not a substitute for them,” and it “has little

probative value in comparison with the economic factors that

may dictate a particular conclusion.” Brooke Group Ltd. v.

Brown & Williamson Tobacco Corp., 509 U.S. 209, 242

(1993) (internal quotation marks and citation omitted). We

agree with the district court that the Subscribers’ experts’

testimony is contrary to the undisputed market facts. The

opinions are founded on speculation about Walmart’s

potential to remain in the market based on its general retail

strength, untethered to its actual performance in this

particular market. The testimony also ignores the fact that the

Promotion Agreement allowed Walmart to rent DVDs.3

3 The district court also did not abuse its discretion in excluding

evidence at summary judgment that supported new, unpled liability

theories, even though the evidence had been adduced in discovery. See

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IN RE ONLINE DVD-RENTAL ANTITRUST LITIG. 19

Gerlinger confirms the conclusion that, as a matter of

law, the Subscribers have failed to raise a triable issue of

antitrust injury-in-fact. In Gerlinger, Amazon.com and

Borders book store entered into an agreement pursuant to

which Borders’ website directed customers to a site hosted by

Amazon.com. 526 F.3d at 1255. In return for referring its

online customers to Amazon, Borders received a commission

for each book sold and agreed to abandon the online book

sales market during the term of the agreement. Id. The

plaintiff alleged that the agreement was an unlawful market

allocation and that he paid supracompetitive prices as a result

of it. Id. Like the Netflix Subscribers, Gerlinger’s theory of

injury-in-fact was that, if Borders continued competing in the

market, book prices would have fallen. Id. But, as here,

defendants presented evidence that prices in fact remained the

same or even went down following the agreement. Id. This

Court concluded that the plaintiff had not raised a triable

issue as to whether he would have paid less for a book absent

the allegedly anticompetitive agreement. Id. at 1256.

Thus, even considering the facts in the light most

favorable to the plaintiffs, the district court properly

concluded that the Subscribers did not raise a genuine issue

of material fact as to antitrust injury-in-fact. Accordingly, we

affirm the district court’s summary judgment as to the four

Sherman Act claims. Because the Subscribers have not

shown injury-in-fact, we need not—and do not—reach the

merits of their antitrust claims. See Gerlinger, 526 F.3d at

1256 (“We do not reach the merits, however, because the

plaintiff has not shown any injury-in-fact caused by the

Oliver v. Ralphs Grocery Co., 654 F.3d 903, 908–09 (9th Cir. 2011) (a

disclosure made during discovery is unlikely to cure lack of notice, which

generally must be provided by a well-pled complaint).

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agreement, and he therefore lacks Article IIIstanding to bring

this claim . . . .”).

III

Both parties contest the district court’s cost award. We

review a cost award under the abuse of discretion standard. 

Arakaki v. Lingle, 477 F.3d 1048, 1069 (9th Cir. 2007). “A

district court abuses its discretion if it does not apply the

correct law or if it rests its decision on a clearly erroneous

finding of material fact.” Jeff D. v. Otter, 643 F.3d 278, 283

(9th Cir. 2011) (internal quotation marks and citation

omitted). However, we review the threshold question of

whether the district court has the authority to award costs de

novo. Russian River Watershed Protection Comm. v. City of

Santa Rosa, 142 F.3d 1136, 1144 (9th Cir. 1998).

During discovery, the Subscribers sought production of

electronically stored information. The Subscribers required

that electronic information other than spreadsheets be

produced in the static Tagged Image File Format (“TIFF”).4

The Subscribers also requested that these images contain

searchable text and relevant metadata,5and that the produced

4 TIFF is a “widely used and supported graphic file format for storing

bit-mapped images, with many different compression formats and

resolutions. TIFF images are stored in tagged fields, and programs use the

tags to accept or ignore fields, depending on the application.” Race Tires

America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, 161 n.2 (3d

Cir. 2012) (internal quotation marks, citations, and alterations omitted).

5

“Metadata is simply data that provides information about other data.”

Country Vintner of N.C., LLC v. E. &J. Gallo Winery, Inc., 718 F.3d 249,

253 n.4 (4th Cir. 2013) (internal quotation marks and citation omitted). 

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documents be numbered sequentially and include certain

identifying information. Netflix enlisted electronic discovery

vendors to assist with responding to the Subscribers’

discovery requests.

As can be expected from a case of this magnitude,

discovery was extensive, and Netflix ultimately produced

almost 15 million pages in response to the Subscribers’

discovery requests. After summary judgment was granted,

Netflix requested $744,740.11 as costs for discovery-related

tasks, and was ultimately awarded $710,194.23 by the district

court. The Subscribers appeal portions of that award, and

Netflix cross-appeals.

The Subscribers argue that the district court (1) erred by

broadly construing § 1920(4) in its taxing of e-discovery and

data management costs totaling $317,616.69, and (2) abused

its discretion in taxing consulting fees, TIFFs, and copying

costs totaling $245,471.31. Netflix cross appeals, arguing

that the district court abused its discretion in disallowing

$21,000 in costs to copy certain PowerPoint files.

A

The district court’s decision rested upon a “broad

construction of section 1920 with respect to electronic

discovery production costs.” That determination was largely

founded on our decision in Taniguchi v. Kan Pacific Saipan,

Ltd., 633 F.3d 1218, 1221 (9th Cir. 2011), which was

subsequently reversed by the Supreme Court, 132 S. Ct. 1997

(2012). In light of the intervening Supreme Court precedent,

It is “[s]econdary data that organize, manage, and facilitate the use of

primary data.” Black’s Law Dictionary 1141 (10th ed. 2014).

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we vacate the award of some of the costs the Subscribers

have challenged as “non-recoverable” and remand for further

consideration of some of those costs pursuant to a narrow

construction of § 1920(4). 

1

In awarding costs, the district court explicitly adhered to

a broad interpretation of § 1920(4) pursuant to our decision

in Taniguchi. After the Supreme Court’s reversal of

Taniguchi, we must reassess what electronic discovery costs

may be properly taxed as costs of “making copies of any

materials where the copies are necessarily obtained for use in

the case” under 28 U.S.C. § 1920(4). In conducting this

assessment, we find persuasive the reasoning of the Third

Circuit in Race Tires, the Fourth Circuit in Country Vintner,

and the Federal Circuit in CBT Flint Partners, LLC v. Return

Path, Inc., 737 F.3d 1320 (Fed. Circ. 2013). We are also

guided by the Supreme Court’s reiteration, in Tanaguchi, of

the limited reach of § 1920. In that decision, the Supreme

Court reversed our determination that costs of a translator of

written documents can constitute the costs of an “interpreter”

under § 1920(6). 132 S. Ct. at 2005. In doing so, the Court

underscored “the narrow scope of taxable costs” and

reminded us that “[t]axable costs are limited to relatively

minor, incidental expenses as is evident from § 1920.” Id. at

2006.

In establishing the boundaries that must be given to

§ 1920(4), some historical perspective is useful. “Although

the taxation of costs was not allowed at common law, it was

the practice of federal courts in the early years to award costs

in the same manner as the courts of the relevant forum State.” 

Taniguchi, 132 S. Ct. at 2001 (citing Alyeska Pipeline Serv.

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Co. v. Wilderness Soc’y, 421 U.S. 240, 247–48 (1975)). This

diversity of rules led to a great diversity of awards, which in

turn led to some losing litigants being “unfairly saddled with

exorbitant fees.” Alyeska, 421 U.S. at 251.

“In 1853, Congress undertook to standardize the costs

allowable in federal litigation.” Id. In doing so, they sought

to “simplify the taxation of fees, by prescribing a limited

number of definite items to be allowed.” Country Vintner,

718 F.3d at 255 (quoting Cong. Globe, 32nd Cong., 2d Sess.

App. 207 (1853) (statement of Sen. Bradbury)). The result

was the Fee Act of 1853, ch. 80, 10 Stat. 161, which was a

predecessor to § 1920. The Fee Act “depart[ed] from the

English practice of attempting to provide the successful

litigant with total reimbursement.” Race Tires, 674 F.3d at

164 (quoting 10 Charles Alan Wright, Arthur R. Miller,

Mary Kay Kane & Richard L. Marcus, Federal Practice and

Procedure § 2665 (3d ed. 1998)). The Supreme Court has

since held that Congress intended with the Fee Act to

“impose rigid controls on cost-shifting in federal courts.” 

Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 444

(1987). Thus, § 1920 “define[s] the full extent of a federal

court’s power to shift litigation costs absent express statutory

authority to go further.” W. Va. Univ. Hosps., Inc. v. Casey,

499 U.S. 83, 86 (1991).

The language of § 1920(4) first appeared in § 3 of the Fee

Act, stating that “lawful fees for exemplifications and copies

of papers necessarily obtained for use on trial . . . shall be

taxed by a judge or clerk of the court.” 10 Stat. at 168. The

language was altered over the years to apply to “cases,” not

just trials, and courts were later given discretion to award the

costs, rather than being mandated to do so. Race Tires,

674 F.3d at 165. The statute originally applied to making

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only “copies of paper,” but now applies to the “costs of

making copies of anymaterials.” Judicial Administration and

Technical Amendments Act of 2008, Pub. L. No. 110-406,

§ 6, 122 Stat. 4291, 4292; see also In re Ricoh Co., Ltd.

Patent Litig., 661 F.3d 1361, 1365 (Fed. Cir. 2011)

(“[E]lectronic production of documents can constitute . . .

‘making copies’ under section 1920(4).”).

As a general rule, costs and fees should be awarded to the

prevailing party. Fed. R. Civ. P. 54(d)(1) (“Unless a federal

statute, these rules, or court order provides otherwise,

costs—other than attorney’s fees—should be allowed to the

prevailing party.”). However, a district court’s discretion to

award costs is limited to particular types of costs enumerated

in 28 U.S.C. § 1920. See Crawford Fitting, 482 U.S. at 441

(“[Section] 1920 defines the term ‘costs’ as used in Rule

54(d).”).

As with all statutory construction questions, we “begin

with the language employed by Congress and the assumption

that the ordinary meaning of that language accurately

expresses the legislative purpose.” FMC Corp. v. Holliday,

498 U.S. 52, 57 (1990) (internal quotation marks omitted). 

Section 1920(4) provides that a judge or clerk may tax “the

costs of making copies of any materials where the copies are

necessarily obtained for use in the case.” We first focus on

the phrase “making copies.” 28 U.S.C. § 1920(4). Because

this language is not defined in the statute, we apply “its

ordinary meaning.” Taniguchi, 132 S. Ct. at 2002.

As the Fourth Circuit explained in Country Vintner,

“‘[c]opies’ has appeared in the taxation statute since its

enactment in 1853, when ‘copy’ meant a ‘transcript,’ a

‘writing like another writing,’ or an ‘imitation.’” 718 F.3d at

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258 (footnotes omitted). The noun retains an almost identical

meaning today.”

6 The definitions for the verb “make”

relevant to the context of § 1920(4) include “to cause to exist,

occur, or appear” and “to bring (a material thing) into being

by forming, shaping, or alteringmaterial.”7 These definitions

are consistent with our previous observation that “[s]ection

1920(4) speaks narrowly of ‘[f]ees for exemplification and

copies of papers,’ suggesting that fees are permitted only for

the physical preparation and duplication of documents, not

the intellectual effort involved in their production.” Romero

v. City of Pomona, 883 F.2d 1418, 1428 (9th Cir. 1989),

abrogated in part on other grounds by Townsend v. Homan

Consulting Corp., 929 F.2d 1358, 1363 (9th Cir.1991) (en

banc); see also Zuill v. Shanahan, 80 F.3d 1366, 1371 (9th

Cir.1996).

Section 1920(4) further defines the awarding of costs for

making copies, requiring that recoverable costs be restricted

to the making of copies “necessarily obtained for use in the

case.” Applying the statutory construction maxim expressio

unius est exclusio alterius (the express mention of a thing

implicitly excludes others in its class), we presume that

Congress recognized that costs can also be incurred in

litigation for making copies that are not necessarily obtained

for use in the case, and that such costs are not taxable.

Nevertheless, the statute is not so restrictive as to

“specifically require that the copied document be introduced

6

See Webster’s Third New International Dictionary of the English

Language Unabridged 504 (1993) (defining “copy” as “an imitation,

transcript, or reproduction of an original work”).

 

7

Id. at 1363.

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into the record to be an allowable cost.” Haagen-Dazs Co.,

Inc. v. Double Rainbow Gourmet Ice Creams, Inc., 920 F.2d

587, 588 (9th Cir. 1990). Section 1920(4) allows for the

recovery of costs where the copies were obtained to be

produced pursuant to Rule 34 or other discovery rules. See

Country Vintner, 718 F.3d at 257 n.9 (noting decisions of the

Federal Circuit—applying the law of this circuit—as well as

the Fifth, Seventh, and Eleventh Circuits recognizing that

costs are recoverable under § 1920(4) for copying costs for

document production).

The faithful production of electronically stored

information may require processes such as optical character

recognition (which renders material text-searchable),

preservation of metadata, and conversion to a non-editable

file format. Parties might agree to employ a particular file

format or methodology for electronically stored information

production, or the court might order them to produce

electronically stored information with certain characteristics. 

See In re Ricoh, 661 F.3d at 1365 (parties agreed that a third

party vendor would process and store e-mails in a secure

document review database). The Federal Circuit held in CBT

Flint Partners that

To the extent that a party is obligated to

produce (or obligated to accept) electronic

documents in a particular format or with

particular characteristics intact (such as

metadata, color, motion, or manipulability),

the costs to make duplicates in such a format

or with such characteristics preserved are

recoverable as “the costs of making copies . . .

necessarily obtained for use in the case.”

28 U.S.C. § 1920(4).

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737 F.3d at 1328. See also Country Vintner, 718 F.3d at 260

n.19 (“If, for instance, a case directly or indirectly required

production of [electronically stored] unique information such

as metadata, we assume, without deciding, that taxable costs

would include any technical processes necessary to copy

[electronically stored information] in a format that includes

such information.”). When copies are made in a fashion

necessary to comply with obligations such as these, costs are

taxable so long as the copies are also “necessarily obtained

for use in the case.”

That § 1920(4) restricts the award of costs to those

incurred for copies necessarily obtained for use in the case is

not, in itself, a justification permitting the award of costs for

any task necessary to the prosecution or defense of a case. As

noted by the Third Circuit in Race Tires, “[s]ection 1920(4)

does not state that all steps that lead up to the production of

copies of materials are taxable.” 674 F.3d at 169; see also

CBT Flint Partners, 737 F.3d at 1328 (“[O]nly the costs of

creating the produced duplicates are included [as

recoverable], not a number of preparatory or ancillary costs

commonly incurred leading up to, in conjunction with, or

after duplication.”). The Third Circuit further explained,

again in the context of producing electronically stored

information, that “[i]t may be that extensive ‘processing’ of

[electronically stored information] is essential . . . . But that

does not mean that the services leading up to the actual

production constitute ‘making copies.’” 674 F.3d at 169.

The proper application of a narrowly construed § 1920(4)

requires that the tasks and services for which an award of

costs is being considered must be described and established

with sufficient specificity, particularity, and clarity as to

permit a determination that costs are awarded for making

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copies. “‘Document production’ and other similarly generic

statements on the invoices are unhelpful in determining

whether those costs are taxable.” In re Ricoh, 661 F.3d at

1368. Further, a description of a task is useful only to the

extent it accurately reflects the task for which copying costs

are sought.

2

In support of its opposition to the Subscribers’ motion for

the district court to review costs, Netflix submitted the

declaration of Vivian Liu-Somers, a project manager for

Esquire Litigation Solutions, a vendor that provided litigation

support services to Netflix. In her declaration, Liu-Somers

identified 44 different charges appearing on Esquire

Litigation’s invoices, and combines those charges into 21

groups. For each of the 21 groups, Liu-Somers provided a

brief description of the services to which the charges refer.

The Subscribers challenge certain of these groups of

charges as not taxable under § 1920(4), further combining

them into four broader task categories: (1) “data upload,”

(2) “endorsing,” (3) “keyword,” and (4) “professional

services.” The Subscribers also challenge a charge invoiced

by SFL Data, a different litigation support vendor providing

services to Netflix, for “Electronic Data Discovery” tasks. 

We review each of the five challenged categories of charges

asserted by the Subscribers in turn.

a

As challenged by the Subscribers, the “data upload”

category of charges refers to two different groups of charges

described by Liu-Somers in her declaration. She grouped the

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charges of “Data Upload,” and “Catalyst Data Upload,” and

indicated that these charges referred “to the reproduction of

documents for potential production into a database where

they could be viewed.” Separately, Liu-Somers described the

charge of “Upload Production Documents” as referring “to

the process of reproducing the collection of the documents

actually being produced for viewing after all the processes

necessary to prepare the documents in the required formats

and with the required labels have been completed.”

The Subscribers’ challenge to these costs rests on the use

of the word “upload” in the description of the charge. They

note that an “upload” of electronically stored information is

the movement of data from one location to another, and

indicates the data is being transmitted.8 The Subscribers

argue that the costs incurred for such a task are not

recoverable under § 1920(4) because the task is “akin to the

costs of moving boxes of information from client site to law

firm to the room where reviewers would review them.” 

Focusing on the word “reproduction” in both of Liu-Somers’

descriptions of the services performed, Netflix responds that

the task of uploading data was not merely for moving data,

but necessarily involved “making copies.” Neither argument

fully responds to the question of whether the charges are

taxable under § 1920(4).

8

“Upload: To move data from one location to another in any manner,

such as via modem, network, serial cable, internet connection or wireless

signals; indicates that data is being transmitted to a location from a

location.” The Sedona Conference, The Sedona Conference Glossary: EDiscovery & Digital Information Management 48 (Sherry B. Harris et al.

Eds., 4th ed. 2014).

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Consideration of whether certain tasks are taxable

pursuant to § 1920(4) “calls for some common-sense

judgments guided by a comparison with the paper-document

analogue.” CBT Flint Partners, 737 F.3d at 1331. Instead of

moving boxes of information, an upload of data is more akin

to the paper-document analogue of faxing a document from

the client site to the law firm, a process which involves the

transmitting of data from location to location and which also

results in a facsimile copy of the original document.

The cost of making the copy is not rendered non-taxable

merely because it was created by using fax machines rather

than a photo-copier. Conversely, § 1920(4) does not award

costs merely because a process resulted in the creation of a

copy. That the fax process creates a copy does not, by itself,

establish that the cost is taxable under §1920(4). Rather, a

further determination is required: whether the copy was

necessarily obtained for use in the case. Like any other copy,

if the faxed copy was created to be produced in discovery, the

cost of making the fax would be taxable under § 1920(4). 

However, if the faxed copy was created solely for the

convenience of counsel, the cost of making the copy would

not be taxable.

Liu-Somers’ description of the “data upload” and

“catalyst data upload” charges indicates the uploading

process created new copies of documents inside a database. 

Assuming, without deciding, that the specific uploading task

constituted “making copies,” the further determination is

required whether the copies were necessarily obtained for use

in the litigation. Liu-Somers declared that “the reproduction

of documents was a necessary step in the document

production process because it facilitated a selection of

documents for production from the set of documents for

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potential production.” This description establishes only that

the copies were essential to the document production process,

and fails to establish the copies were necessarily obtained for

use in the litigation.

A narrow construction of § 1920(4) requires recognition

that the circumstances in which a copy will be deemed

“necessarily obtained” for use in a case will be extremely

limited. That a chosen “document production process”

requires the creation of a copy does not establish that the

copy is necessarily obtained for use in the case. A lawyer

may review electronically stored information for privilege

either by viewing the original documents on the client’s

computer or, alternatively, by viewing copies uploaded to the

lawyer’s computer. Although the latter method of review

requires the creation of a copy, the ability to conduct the

review by looking at the original document establishes that

the uploaded copy was not necessarily obtained for use in the

case.

Similarly, Liu-Somers’ description of the charges for

“Upload Production Documents” indicates that the copies

were created as a “necessary step in the document production

process in order to view the documents as they appeared in

the actual production being made.” As with Netflix’s

description of the other “uploading” charges, this description

establishes only that the copy is essential to the document

production process that Netflix (or its litigation support

vendor) elected to employ, and fails to establish the copies

were necessarily obtained for use in the case. Accordingly,

these charges are non-taxable under § 1920(4).

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b

The Subscribers also challenge what they describe as

“endorsing” activities. However, the only indication in the

Subscribers’ opening brief that they have even challenged the

award costs for “endorsing” activities is the cursory mention,

in their Statement of Facts, that “Netflix incurred $21,134.82

for ‘Endorsing’ tasks, which included the ‘branding of image

files with unique sequential production numbers and

confidentialitydesignations.” Because these matters were not

“specifically and distinctly argued” in the open briefing, we

will not consider them. Christian Legal Soc'y Chapter of

Univ. of Cal. v. Wu, 626 F.3d 483, 487 (9th Cir. 2010).

c

The Subscribers challenge the cost award for what they

term “keywording” activities. As described by Liu-Somers

in her declaration, Esquire Litigation used a variety of terms

to charge Netflix “for the use of automated software

processes to reproduce the set of documents for potential

production into a reduced set of documents that did not

include certain types of documents that did not need to be

produced.” Netflix attempts to shoehorn the filtering process

into the ordinarymeaning of “making copies” by arguing that

filtering is “simply a mechanical process of making a copy of

all documents that fit the supplied criteria.” The argument

reveals its own flaw, disclosing that the charge was incurred

for two separate tasks: (a) identifying the documents that fit

the supplied criteria, and then (b) making copies of those

documents. The former task is akin to a person (lawyer,

paralegal, or otherwise) mechanically reviewing a stack of

documents and (based upon criteria supplied by a lawyer)

separating them into two piles: one consisting of documents

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that might be potentially be produced, and the other

consisting of documents that will not be produced. Netflix

argues that its vendor “simply performed the mechanical

process of applying the criteria it received from Netflix’s

attorneys to the documents being reproduced for production

in the required formats” (emphasis added). The argument is

contradicted by Netflix’s implicit acknowledgment that the

filtering process was also applied to documents that were not

copied. As such, the application of automated software

filtering processes to identify which documents to copy and

which documents to not copy is not taxable.9

d

The Subscribers challenge the cost award for

“professional services.” Absent from Liu-Somers’

declaration are descriptions for any charges titled

“Professional Services,” indicating the Subscribers’ label for

this category amounts to a generic statement “unhelpful in

determining whether those costs are taxable.” In re Ricoh,

661 F.3d at 1368. In their opening brief, the Subscribers

further describe this category as including “activities like

processing, native review, data analysis, project management,

and production services.” Liu-Somers’ declaration

demonstrates that the Subscribers have grouped an extremely

broad range of activities into a single category. The

declaration includes descriptions for a variety of narrower

categories, ranging from “the imaging of the documents to

create an electronic ‘page’ ready for bates and confidentiality

9 While the second task of making copies of the documents arguably

falls within the ordinary meaning of “making copies,” the record suggests

that the charges invoiced byEsquire Litigation for the various keywording

tasks were not for making the copies, but for the filtering process.

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branding and redactions” through “prepar[ing]the documents

for production in the required formats.” Netflix’s response is

equally generic and unhelpful, asserting that “these are all

costs required in order to make copies of the information

being produced” and “are akin to the costs of copy center

employees, photocopy technicians, copier repairmen, and

other overhead costs included with the flat per page rate

charged by traditional outside photocopy vendors—costs

which have always been deemed recoverable.” The record

before us leaves us unable to resolve whether any of the large

variety of specific charges that the Subscribers broadly

challenge as “professional services” are taxable under a

narrow construction of § 1920(4). Thus, we must remand the

issue to the district court for its determination in the first

instance.

e

Finally, the Subscribers challenge a specific item on one

invoice from SFL Data, asserting the charge was for “native

review processing.” Netflix counters that the invoice actually

states that the “cost involved the copying of nearly 80GB of

data for production constituting 167,311 documents.” The

$10,000 cost appears to have been incurred (at a flat rate per

agreement with Netflix) for a variety of different tasks,

including native review processing, optical character

recognition, exporting documents, converting documents to

TIFF, populating custom fields, and prepping for further

processing. Although the cost incurred for some of these

tasks appears to be taxable, the present record does not permit

a conclusion that all of the tasks for which SFL charged

Netflix a flat rate of $10,000 are taxable. To the extent the

invoiced tasks exceeded optical character recognition,

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conversion to TIFF, and other activities essential to the

making of copies necessary to the case, they are not taxable.

3

In summary, we conclude that of the $317,616.69

challenged by the Subscribers as non-taxable under

§ 1920(4), only those costs attributable to optical character

recognition, converting documents to TIFF, and “endorsing”

activities—all of which were explicitly required by

Subscribers—are recoverable on the record before us. We

therefore affirm the cost award in part, and vacate it in part. 

We remand for taxing of costs in accordance with this

opinion.

B

The district court did not abuse its discretion in awarding

$245,471.31 in consulting fees, TIFF images, and copying

costs.

1

The Subscribers first complain that the district court

failed to explain its findings adequately. However, “a district

court need not give affirmative reasons for awarding costs;

instead, it need only find that the reasons for denying costs

are not sufficiently persuasive to overcome the presumption

in favor of an award.” Save Our Valley v. Sound Transit,

335 F.3d 932, 945 (9th Cir. 2003).

Here, the district court explained in its order that it “read

the parties’ papers and carefully considered their arguments

and the relevant legal authority.” Further, the order

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specifically identified the Subscribers’ arguments concerning

“TIFF conversion costs; copying/‘blowback’ costs . . .

documents productions purportedly not delivered;

professional fees re visual aids.” Under our deferential

standard of review, the district court’s explanation was

sufficient. See Save Our Valley, 335 F.3d at 945 (“[W]e have

never held that a district court must specify reasons for its

decision to abide the presumption and tax costs to the losing

party.” (emphasis in original)).

2

The Subscribers next contend that the costs claimed for

preparing visual aids were actually unrecoverable consulting

fees, relying on invoice descriptions of the title of the person

performing the work. To be sure,“[f]ees for exemplification

and copying are permitted only for the physical preparation

and duplication of documents, not the intellectual effort

involved in their production.” Zuill v. Shanahan, 80 F.3d

1366, 1371 (9th Cir. 1996) (emphasis added) (internal

quotation marks and citation omitted). However, there is no

authority for the proposition that the title of the person doing

the work is relevant to classifying the type of work actually

done. In fact, courts have held otherwise. See Race Tires,

674 F.3d at 169 (“Neither the degree of expertise necessary

to perform the work nor the identity of the party performing

the work of ‘making copies’ is a factor that can be gleaned

from § 1920(4).”). In addition, evidence was presented by

Netflix that the vendors were only paid to perform the tasks

associated with production and not for creating the

substantive content of the visual aids. Thus, the record

supports the district court’s conclusion that the tasks done by

the consultants were not “intellectual effort,” regardless of the

job title listed on the invoices. The district court did not

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abuse its discretion in awarding $14,355.50 in costs for

preparation of visual aids.

3

The district court did not abuse its discretion in awarding

costs for TIFF conversions. The Subscribers argue that they

were taxed $167,399.70 in excessive TIFFing costs because

Netflix paid an unreasonable amount per TIFF page. The

Subscribers’ expert concluded that the rate of seven cents per

page of TIFF conversion was unreasonable because it was

above market and because Netflix’s first invoice from its ediscovery vendor charged only two cents per page. Netflix’s

expert testified that the costs Netflix charged were

reasonable. He testified that Netflix reviewed proposals from

six electronic discovery vendors and that the firm that Netflix

eventually went with offered the lowest prices to convert

documents to TIFF images out of the six solicited firms. 

Netflix’s expert further explained that the two-cent rate was

charged only for a certain type of conversion—PDF to

TIFF—and that the total bill for this batch was a mere $54.08.

The district court fully considered the two expert opinions

and decided in favor of Netflix. Given our deferential

standard of review, there is no basis to disturb that

conclusion.

The Subscribers also contend that Netflix was awarded

costs for documents unnecessarily produced, resulting in an

overcharge of $46,773.71. However, the record does not

support that conclusion, and the district court did not abuse its

discretion in awarding these TIFF-related costs.

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4

The district court did not abuse its discretion in awarding

$16,942.40 for copying paper documents. The Subscribers

contend that the documentation for these costs was

inadequate. However, the invoices at issue indicate the

purpose of the charge, such as printing exhibits and copying

deposition transcripts, as well as the dates the work was done. 

Moreover, Netflix supported its bill of costs with a

declaration from one of Netflix’s attorneys, who clarified that

certain documents were produced as “exhibits to depositions”

and “disclosure or formal discovery documents.” Netflix

provided sufficient information for the district court to

identify the documents being reproduced and, ultimately, to

determine which costs were taxable. The district court did

not abuse its discretion in awarding these costs.

C

The district court also did not abuse its discretion in

declining to award Netflix $21,000 for producing certain

black and white PowerPoint documents. The Subscribers had

requested “single-page Group IV TIFF files,” which is a

black and white version, and separately requested that all

documents “be produced in the same order as they are kept or

maintained by you in the ordinary course of your business.” 

In the usual course of business, Netflix maintained the

PowerPoint in color. However, throughout discovery, Netflix

produced black and white PowerPoint presentations. At some

point during the litigation, Netflix submitted to the court a

color version of a PowerPoint presentation. When the

Subscribers learned that were colored slides available, they

requested them, arguing that Netflix’s failure to do so

previously violated the instruction to produce documents as

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they were normally kept by Netflix. Because Netflix

maintained colored slides in the ordinary course of business,

the district court concluded that the Subscribers were entitled

to production of the documents under their previous

discovery requests. Although production of color slides was

in some sense duplicative of the previously-produced black

and white slides, the district court did not abuse its discretion

in denying the cost award given the separate discovery

requests, and the fact that Netflix likely could have avoided

the duplicative production by first producing the color

documents maintained in the usual course of business. The

district court was not confused about the issue, as Netflix

claims. To the contrary, the record reflects that the district

court understood the issue and decided under the

circumstances that a cost award was appropriately denied. 

The district court did not abuse its discretion in doing so.

IV

In sum, we affirm the district court’s grant of summary

judgment on the antitrust claims, for lack of antitrust injuryin-fact. We affirm the cost award in part and reverse it in

part. We need not, and do not, reach any other issue urged by

the parties.

AFFIRMED IN PART; VACATED IN PART;

REMANDED.

Each party shall bear its own costs on appeal.

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