The recent decision in the case of In re Aspartame Antitrust Litigation from the U.S. District Court for the Eastern District of Pennsylvania, No. 2:06-cv-01732-LDD (E.D. Pa. Oct. 5, 2011), read Order here, awarding more than $500,000 for the costs of e-discovery to the prevailing parties in an antitrust litigation matter, should be in the back pocket of every litigator.
A former associate of Eckert Seamans prepared this summary.
Businesses’ increased dependence on technology has caused the costs associated with litigation to rise—primarily the costs of e-discovery: gathering, searching and producing documents in response to discovery requests. In complex cases, the anticipated cost of discovery directly affects litigation and settlement strategy. Slowly, courts are trending toward allowing prevailing litigants to shift the costs of e-discovery under Federal Rule of Civil Procedure 54(d). The Aspartame decision is one of the first decisions providing exhaustive detail on the topic, from the factors the court will consider in deciding whether to shift costs, to explaining which costs are taxable to the non-prevailing party (and why).
Following the court’s dismissal of plaintiff’s Sherman Antitrust Act price-fixing claims against multiple manufacturers of aspartame-based sweeteners, the defendants (the prevailing parties) applied for costs under Rule 54(d). The Clerk of Court considered the defendants’ application and found a heavy presumption in favor of imposing the costs of discovery on the plaintiffs. The Clerk placed the burden to show that costs should not be taxed on the plaintiffs. The District Court reviewed the Clerk’s decision de novo, and largely affirmed, but excepted some costs from being taxed against the plaintiffs.
E-Discovery. The Court provided a thorough analysis of case law on the issue of taxing e-discovery, observing that it “is a new area of law where courts have diverged in their approaches.” Several factors played into the Court’s analysis, including the volume of discovery requested and produced; the complexity of the litigation; the e-discovery methods utilized by the defendants; which parties benefitted from those methods; the “necessity” of the e-discovery methods; whether the costs were those typically incurred lawyers or non-lawyers; and the adequacy of documentation submitted to support the defendants’ bill of costs.
The court taxed the following costs to the plaintiffs, citing Rule 54(d)(1) and 28 U.S.C. § 1920, and noting the “staggering” amount of discovery involved in the case:
Creating a litigation database;
Imaging hard drives;
Hosting electronic data;
Conducting keyword and privilege searches;
Making documents searchable using Optical Character Recognition (OCR) software;
Creating “load” files (requested by the plaintiffs);
Creating CDs and DVDs of the electronic documents;
Data recovery and restoration; and
The Court did not tax the plaintiffs with the costs of “the sophisticated e-discovery program Attenex Document Mapper” and related applications, because they were not “necessary” for searching and filtering purposes, and were mainly used for the convenience of counsel. Costs for Bates-labeling documents were similarly not recoverable by the defendants.
Depositions and Document Reproduction. Again citing 28 U.S.C. § 1920, the Court permitted the taxation of costs for either deposition transcripts or videotapes, but not both. The Court focused on whether the videotaped deposition (which was more expensive than the transcript) appeared to be “reasonably necessary” to the defendants at the time of the deposition. Neither did the Court permit the defendants to recover the shipping and handling costs of the deposition transcripts and videotapes. The defendants were, however, permitted to recover costs for the copying of exhibits used at the depositions.
The Court refused to allow the defendants to recover costs that were not sufficiently itemized, specifically those billed for photocopying and scanning documents, and amounts for “hard drives.”
Litigators must keep detailed records and receipts for all costs associated with e-discovery. In re Aspartame also serves as a warning: seeking exhaustive discovery can be a double-edged sword. Attorneys should confer to properly tailor e-discovery stipulations and orders to avoid unnecessary costs. And most importantly, broad discovery requests should be avoided at all costs (pun intended).
Impact on Delaware
In Delaware, costs are not taxed as freely. Chancery Court Rule 54(d) typically allows a prevailing party to recover “court costs,” which includes filing fees and amounts paid to secure a bond. See Wolfe & Pittenger § 13.02[b]. The Court also has authority under 10 Del. C. § 8906 to tax expert witness fees. Contrary to the ruling in In re Aspartame, the Court of Chancery generally does not permit the taxing of costs incurred for (i) photocopying; (ii) travel; (iii) mail/courier services; (iv) computerized legal research; and (v) transcripts. See Wolfe & Pittenger § 13.02[b].
We do not yet know how much (or whether) In re Aspartame will impact the taxing of costs for prevailing parties in Delaware courts. But Delaware does recognize that the Delaware Rules of Civil Procedure are based on the federal rules, and the Delaware Supreme Court has looked to cases that construe Federal Rule 54(d) as persuasive authority. See Dubroff v. Wren Holdings, LLC, 2011 Del. Ch. LEXIS 164, * 49 (Del. Ch. Oct. 28, 2011). But compare: Recent Delaware Supreme Court decision refusing to apply the U.S. Supreme Court’s interpretation of Rule 12(b)(6) to interpret the Delaware version of the rule), highlighted here.