This post is mainly for lawyers, but non lawyers (i.e, “clients”) should also read it because almost every client I know has wanted to get every possible fee or cost back from unsuccessful plaintiffs from what they viewed as frivolous law suits. Increasingly one of the larger costs is for obtaining and managing electronic data, but you may not be able to recover those six and seven-figure costs.
You’ve undoubtedly prevailed in a federal case — either at summary judgment or after a trial — and you have probably struggled with what you are entitled to recover as costs under 28 U.S.C. §1920. And recently, your client, being the victor, most likely has asked about the recovery of its costs associated with the production of electronically stored information.
The Fourth Circuit’s decision on Monday of this week in The Country Vintner v. E & J Gallo Winery, Inc. gives answers to those questions, but your prevailing party client won’t like them.
Gallo ran up bills from e-discovery vendors of more than $100,000 in its production to the Plaintiff of its ESI, and it sought to have the District Court award that as an element of costs. The bulk of that amount was for “flattening” and “indexing” the ESI. The Court defined that as the “initial processing” of the data, which:
involved decompressing container files (e.g., ZIP files or Microsoft PST files); making the data searchable by extracting text and creating Optical Character Recognition for text that could not be extracted; indexing the data; removing system files that were known not to contain any user-generated content; and removing duplicate files.
Op. at 5.
That part of the application for costs was denied by the District Court, which was affirmed by the Fourth Circuit.