Source: http://www.ediscoverylawalert.com/tags/cost/
Timestamp: 2013-05-19 22:53:12
Document Index: 553303734

Matched Legal Cases: ['§1920', '§1920', '§1920', '§1920', '§1920', '§1920', '§1920', '§1920', '§1920', '§1920']

: Cost : E-Discovery Law Alert
Home > Cost > Posted on January 31, 2013 by Paul A. Saso
Tags: Clawback, Cost, Data Preservation, ESI, Inadvertent Disclosure, Legal Decisions & Court Rules, Meet and Confer
Posted on September 19, 2012 by Gibbons P.C.
The plaintiffs in Boeynaems filed a consolidated class action Complaint alleging that LA Fitness engaged in deceptive and unfair trade practices with respect to membership cancellations. The parties could not agree on the appropriate scope of discovery or the allocation of discovery costs. Ruling on plaintiffs’ motion to compel, the Court created a “discovery fence” to set the boundaries of discovery. The Court then turned to the issue of cost allocation and held that the plaintiffs should bear the cost of additional discovery -- at least until the class action determination was made. The Court focused on the fact that discovery was “asymmetrical,” noting that the defendant had millions of documents and millions of items of ESI, while the plaintiffs collectively had relatively few documents. The Court also considered how discovery costs impact litigation, stating that it was “firmly of the view that discovery burdens should not force either party to succumb to a settlement that is based on the cost of litigation rather than the merits of the case.” Because the defendant had already incurred significant costs in responding to plaintiffs’ discovery requests, the Court concluded that the cost of further discovery should be shifted to the plaintiffs: “If Plaintiffs conclude that additional discovery is not only relevant, but important to proving that a class should be certified, then Plaintiffs should pay for that additional discovery from this date forward . . . .” The Court established a procedure for the plaintiffs to provide a detailed list of additional discovery they determined was needed and for the defendant to provide a summary of the anticipated cost of providing the requested information. The defendant was expressly permitted to include in the estimate its in-house costs, including “appropriately allocated salaries” of in-house personnel such as managers, in-house counsel and computer technicians. The Court reserved the right to allocate costs later depending on the outcome of the class certification motion and/or the merits of the case.
Although courts have previously shifted discovery costs in class actions, Boeynaems appears to be the first case in which costs were shifted in the pre-certification stage. The decision could prove to be an important and useful precedent for defendants in putative class actions, particularly when they are facing substantial pre-certification discovery costs and plaintiffs’ demands have become unreasonable. The decision is also noteworthy for the Court’s frank discussion of the strategic implications of unbalanced discovery costs and the notion that class action plaintiffs and their attorneys should be willing to make an investment in their case by sharing discovery costs. While class action defendants will still face significant discovery costs, Boeynaems may help stem the tide of burdensome requests by plaintiffs by providing defendants with ammunition in arguing that plaintiffs should foot the bill for at least a portion of the discovery they seek.
Tags: Cost, Legal Decisions & Court Rules
Posted on June 5, 2012 by Phillip J. Duffy
Posted on March 27, 2012 by Mark S. Sidoti
A Third Circuit Court of Appeals panel, including the Hon. Thomas I. Vanaskie, one of the leading judicial authorities in e-discovery, has spoken -- e-discovery-related cost recovery pursuant to 28 U.S.C. §1920 has limits; the costs must bear a reasonable connection to duplication of materials in the traditional sense to be recoverable by a prevailing party. As the first United States Court of Appeals decision to directly address this closely watched issue, this opinion may disarm a potentially powerful weapon in the already limited arsenal of parties burdened with excessive e-discovery costs.
The case is Race Tires America, Inc., et al. v. Hoosier Racing Tire Corporation et al., No. 11-2316 (3d Cir. Mar. 16, 2012) . It began in September 2007, when Race Tires filed its $90 million suit accusing Hoosier Racing Tire Corp. and Dirt Motor Sports Inc. of violating the Sherman Act by allegedly monopolizing the market for specialized tires. In September 2009, U.S. District Judge Terrence F. McVerry granted motions for summary judgment by Hoosier and Dirt Motor, finding that they had not committed antitrust violations, which was later affirmed by the Third Circuit. The defendants subsequently sought reimbursement of prevailing party costs pursuant Fed. R. Civ. P. 54(b) and §1920. Throughout the course of the proceedings, Hoosier and Dirt Motor, using separate e-discovery vendors, claimed that they had incurred in excess of $365,000 in e-discovery costs, for activities including preservation and collection of ESI, processing of the collected ESI, keyword searching, culling for privileged material, scanning and TIFF conversion, optical character recognition (“OCR”) and conversion of videos to DVD format. In the application for costs, the defendants cited §1920(4) to recoup the costs of these activities, claiming that they represented fees for “exemplification” and the “costs of making copies of any materials where the copies are necessarily obtained for use in the case.” 28 U.S.C. §1920(4). The District Court found the amounts charged by the e-discovery vendors taxable as “the electronic equivalent of exemplification and copying” and awarded the costs to the defendants. The ruling was certainly not without precedent from other District Courts, including those within the Third Circuit. In several cases, including In re Aspartame Antitrust Litigation, 2011 WL 4793239 (E.D. Pa. 2011), CBT Flint Partners, LLC v. Return Path, Inc., 676 F.Supp. 2d 1376 (N.D. Ga. 2009), and Tibble v. Edison Int’l, (No. CV 07-5359 (C.D. Cal. Aug. 22, 2011), courts have awarded broad e-discovery costs under §1920(4).
Succintly framing the issue, the Race Tires Court stated “the question presented here is whether §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 the case.’” Writing for the panel, Judge Vanaskie prefaced the holding by conceding that the cost burdens of e-discovery are quite real and onerous, and becoming increasingly so. He also noted the 2008 amendments to §1920(4) which, in a nod to today’s digital world, clearly broadened the scope of cost recovery by replacing “copies of papers” with “the costs of making copies of any materials.” However, after carefully outlining the legislative history of §1920, the Court found that broad-based cost recovery for most e-discovery activities simply exceeds the statutory mandate. The Court made short work of defendants’ claim that the e-discovery activities encompassed “exemplification” under the statute, holding that the term applied only to the production of “illustrative evidence or the authentication of public records.” The ESI services provided in this case served neither end. Moving on to the “copying” element of the statute, the Court held that certain of the vendor activities --including conversion of the native files to TIFF images, the scanning of documents for the purpose of creating digital duplicates and the copying of the videos to DVD -- clearly fall within the definition of copying as contemplated by the language and legislative history of §1920(4). The charges for those services, however, totaled only approximately $30,000 - a fraction of the total ESI costs incurred and awarded. The Court specifically noted that the fact that the e-discovery services are “indispensable” to the discovery process, involve “highly technical” expertise or result in significant cost savings -- factors cited by other courts in support of broader cost awards -- are simply not appropriate criteria by which to assess taxability under the plain language of the statute. Citing numerous decisions denying ESI processing costs that do not entail “making copies,” Judge Vanaskie pointedly opined that contrary decisions that allowed the taxation of “all, or essentially all,” e-discovery costs charged by consultants, including that by the District Judge in the Race Tire case, are “untethered from the statutory mooring.” Importantly, however, the Court further noted that the presumption under the Federal Rules that parties bear their own e-discovery expenses can be tempered, where appropriate, by a cost shifting application under Rule 26(c)’s proportionality scheme. In sum, the Race Tires decision has significantly slowed the momentum towards broad-based shifting of ESI costs for prevailing parties pursuant to 28 U.S.C. §1920(4), certainly within the Third Circuit. However, unless and until the Supreme Court provides guidance on this issue, the option to seek such costs in other jurisdictions remains viable. Regardless of jurisdiction, prevailing parties should always at least seek reimbursement of copying expenses, including conversion, scanning and other duplication related costs, for both paper and ESI, and ensure that to accomplish this, their vendors clearly document the costs involved in those activities from the outset of their involvement in the case.
Tags: 28 U.S.C. 1920, Collection Methods, Cost, Cost-shifting, Dirt Motor Sports, E-Data, E-Records, FRCP 26(b)(2)(C), Hoosier Racing Tire Corp., Judge Vanaskie, Legal Decisions & Court Rules, Race Tires America Inc.
Posted on March 26, 2012 by Elizabeth Ann Fitzwater
Who's Paying For This? First Department Requires the Producing Party to Initially Bear the Costs of Production in U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc.
For the second time this year, New York’s First Department, Appellate Division, has adopted e-discovery standards articulated in Zubulake v. UBS Warburg LLC, 220 FRD 212 (S.D.N.Y. 2003). On January 31, 2012, the First Department’s decision in Voom H.D. Holdings LLC v. EchoStar Satellite LLC, 2012 N.Y. Slip Op. 00658 (1st Dep’t 2012) adopted the Zubulake standard concerning when a party’s preservation obligations are triggered. Read a blog posting on the Voom decision here. Most recently, on February 28, 2012 the First Department held in U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc., 2012 NY Slip Op. 01515 (1st Dep’t 2012), that, consistent with Voom’s “adopt[ion] [of] the standards articulated by [Zubulake] in the context of preservation and spoliation, [it was] persuaded that Zubulake should be the rule in this department, requiring the producing party to bear the cost of production to be modified by the IAS court in the exercise of its discretion on a proper motion by the producing party.” The factual scenario in GreenPoint is a familiar one in the wake of the financial crisis of 2008. GreenPoint Mortgage Funding, Inc. (“GreenPoint”), a mortgage loan originator specializing in “no-doc” or “low-doc” loans, initially sold notes on approximately 30,000 residential mortgages it had securitized (then valued at $1.83 billion). After a series of assignments, the notes were assigned to U.S. Bank, NA (“U.S. Bank”), which claimed that less than two years after the initial sale, approximately $530 million worth of loans had been charged off as a total loss or were severely delinquent. In early 2009, U.S. Bank sued GreenPoint alleging, among other things, that GreenPoint committed “‘gross violations’ of the representations and warranties concerning the attributes of the loans and the policies and practices under which the loans were originated, underwritten and serviced.”
(Emphasis added). The Court went on to list the seven cost shifting factors of Zubulake (see 217 F.R.D. at 322) and cautioned that motion courts “should not follow these factors as a checklist, but rather, should use them as a guide to the exercise of their discretion in determining whether or not the request constitutes an undue burden or expense on the responding party.” The Court called GreenPoint’s motion for a protective order “premature” and found that, given the undeveloped evidence in the record concerning ESI in the underlying litigation, there was “no occasion … for us to opine on the propriety of shifting costs in this matter.” The Court remanded to the trial court with a direction to GreenPoint to bear its own discovery costs, subject to reallocation on a proper showing. Notably, the appellate court’s decision rejected GreenPoint’s citation of the purported “merits” of the “requestor pays” rule, i.e., encouraging parties to self-regulate the scope of their discovery demands and discouraging parties from placing unnecessary and oppressive costs on an opponent. In doing so, the Court cited the strong public policy of resolving disputes on their merits through fair and fulsome discovery and the risk that litigants (particularly individuals) may be deterred from bringing meritorious claims due to the high costs of discovery. Finally, the Court cited the long-standing rule in New York providing that a prevailing litigant may be able to tax expenses incurred in connection with certain disclosure as “disbursements.”
GreenPoint may prove a welcome decision to the New York practitioner, if only in the certainty it provides. Its mandate enables a practitioner to clearly advise her client as to which litigant, in the first instance, is responsible for the costs of e-discovery: the producing party is initially to incur the cost of searching for, retrieving and producing both electronically stored information and physical documents that have been requested as part of the discovery process. Until GreenPoint, New York case law had been unclear on -- and oftentimes in direct conflict with -- this principle.
Tags: Case Summaries, Cost, Legal Decisions & Court Rules, Production, Undue Burden or Expense, Zubulake
Posted on March 20, 2012 by Sandro G. Ocasio