Always Document Services to Explain eDiscovery Services for Taxation of Costs

A prevailing party sought $61,548.65 in costs. They got $7,106.65. Kwan Software Eng’G v. Foray Techs., 2014 U.S. Dist. LEXIS 63933, 10-19 (N.D. Cal. May 8, 2014).

United States District Judge Susan Illston is very good at eDiscovery disputes. This case highlights the importance of not just knowing how to conduct eDiscovery services, but how to invoice for them.

The non-prevailing party challenged eight eDiscovery invoices on the grounds the prevailing party sought 1) eDiscovery costs that went beyond the costs associated with the actual production of the documents; and 2) failed to provide sufficient detail of its e-discovery costs to allow the Court to determine what are actual copying costs and what are non-taxable intellectual efforts. Kwan Software Eng’G, at *13.

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The “Document Processing” invoice included fees for conversion from native files to TIFFs; “Bates stamping” each page (which is down by the processing engine, not someone actually stamping); and exporting the associated metadata. Kwan Software Eng’G, at *14. These fees are generally recoverable, but the Court stated that there was insufficient information to determine whether the costs were taxable. Id. Moreover, the prevailing party produced only 229,000 pages of discovery (assuming each TIFF is being counted as a page), but the invoices showed 344,445 pages had been processed (again, assuming TIFFs as pages and not files). Id.

The Court stated that the charges included documents that were not produced, thus not used in the litigation. As such, the Court only awarded costs of $6,870, which represented a charge of $0.03 per document for bates stamping and TIFF conversion for 229,000 documents. Kwan Software Eng’G, at *14-15.

The Court further denied costs for data hosting and management, because those costs are not recoverable. The Court also denied costs for production hard drive not actually produced to the opposing party (which otherwise would have been recoverable if actually produced). Kwan Software Eng’G, at *15-16.

Judge Illston also denied the producing party’s project management costs, because it was “unclear from the invoices whether the project management fees were actually related to document processing as opposed to other non-taxable activities.” Kwan Software Eng’G, at *16.

Bow Tie Thoughts

Judges cannot award costs to prevailing parties if there is not sufficient documentation to explain how the services were necessary for the litigation in producing discovery. This requires service providers to go into detail in their invoicing to explain each step of the workflow.

Consider the project management costs. Those could be recoverable, if there is sufficient information to explain how it was part of processing that went to actual copying, opposed to just intellectual efforts.

eDiscovery requires a specialized skill set and knowledge. Processing is not something done in a vacuum, but takes knowledge of how the application works and understanding what is needed in the case to be done effectively. A party cannot simply invoice “processed data for production” and hope a Judge will opine why those actions were necessary for the case. This takes documentation to educate the Judge on why the actions were done in order to produce the discovery in the litigation.

1 thought on “Always Document Services to Explain eDiscovery Services for Taxation of Costs

  1. Pingback: Always Document Services to Explain eDiscovery Services for Taxation of Costs | The eDiscovery Nerd

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