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Breaking down exactly what costs are taxable under Title 28 of the U.S. Code Section 1920(4

The Country Vintner of North Carolina v. E. & J. Gallo Winery Inc clarified the scope of recoverable costs

Read more on this case here.

In The Country Vintner of North Carolina v. E. & J. Gallo Winery Inc., the prevailing party, Gallo, submitted a bill to the court under Title 28 of the U.S. Code Section 1920(4), seeking to recover its e-discovery costs. Gallo attempted to recoup $111,047.75, but the 4th Circuit only allowed it to recover $218.59, because many of the costs it asserted were not taxable under the statute. Below is a breakdown of the specific costs Gallo asserted, according to the 4th Circuit’s decision and whether they were or were not taxable:

  • $71,910: “Flattening” and “indexing” electronically stored information—initial processing that included making the data searchable and removing duplicate files. Not taxable.
  • $15,660: “Searching/Review Set/Data Extraction,” a process that included removing metadata and loading relevant documents onto a “review/production” platform. Not taxable.
  • $178.59: Converting native documents to TIFF or PDF format. Taxable.
  • $74.16: “Bates numbering,” or stamping documents with a number that allowed them to be found later. Not taxable.
  • $40: Moving images to CDs. Taxable.
  • $23,185: Processing, analyzing and preparing data for production. Not taxable.

In this case, the 4th Circuit found that only changing file formats and moving files to CDs counted as “making copies” under the statute, and thus were the only taxable costs. Though the court acknowledged that e-discovery technology makes discovery much more expensive, it did not believe that necessarily meant those costs should be recoverable.

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