The extent to which e-discovery costs are recoverable by prevailing parties in U.S. federal litigation has become a topic of controversy among courts and practitioners. This article focuses on cost recovery against non-prevailing parties after the conclusion of litigation. Some contend that very few e-discovery costs are recoverable. Others argue that such a reading of current law is nonsensical given the inherent complexities and costs associated with the handling of electronic data. Now, more than ever, knowing and understanding a jurisdiction’s decisions on the taxation of e-discovery costs can provide counsel with a significant edge. Focusing on this issue at the outset of litigation can help with negotiating reasonable e-discovery limits and maximizing the potential for cost-recovery at the end of the case.
Since 2008, courts have consistently acknowledged that at least some e-discovery costs are recoverable by a prevailing party; however, courts are split about which specific costs are actually recoverable. As a starting point, courts look to Federal Rule of Civil Procedure 54(d)(1), which provides that prevailing parties should be allowed to recover their costs unless a federal statute, rule or court directs otherwise. The specific costs that may be taxed are set forth in 28 U.S.C. Section 1920. In evaluating the taxability of e-discovery costs, courts rely on the language in 28 U.S.C. Section 1920(4) which provides that the court “may tax as costs ... fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.”