How Apple Successfully Recovered eDiscovery Production Costs

Apple-Bite-1Taxation of cost cases involving eDiscovery often end with the prevailing party not recovering any costs. However, in the true spirit of “think different,” Apple was able to recover $238,102.66 in costs for “the amounts associated with electronic preparation and duplication, not the intellectual effort involved in the production, such as searching or analyzing the documents.” Apple Inc. v. Samsung Elecs. Co., 2014 U.S. Dist. LEXIS 132830, at *88, 91 (N.D. Cal. Sept. 19, 2014). The production work included processing documents, uploads, and document productions. Id.

Apple initially sought $1,486,475.01 in costs for the use of their online hosted repository, which uploaded and produced documents to Samsung, in the amount of $287,555.45 between two law firms, and service providers that collected and processed paper and electronic documents that were uploaded to the repository for $1,198,919.56. This amount was later reduced by $9,509.40, for a new total of $1,476,965.61. Apple, at *87-88.

A declaration provided by one of Apple’s attorneys stated the fees did not contain the intellectual effort involved in producing the discovery, but only the amounts associated with the electronic preparation and duplication. Apple, at *88. Moreover, the fees did not include costs from hosting the data, licensing fees for the software, or vendor consulting time. Id.

In the Northern District of California, Local Rule 54-3(d)(2) allows for eDiscovery costs analogous to “making copies,” but not “intellectual effort.” Id. Moreover, these costs must be connected to discovery produced to the adverse party. Apple, at *89.

The issue for the Court ultimately on what was recoverable was what was actually produced to the opposing party.

Math-Student

Based upon the different motions, the Court stated that Apple had produced 338,860 documents, totaling 2,944,467 pages, each document averaging 8.69 pages; however, Apple, uploaded a total of 2,101,808 documents. Apple, at *90.

The Court surmised that if the “same average page count of 8.69 for all documents that Apple produced, Apple uploaded a total of 18,264,712 pages in this litigation.” Apple, at *91.

The Court explained based on Apple’s estimation that it had “uploaded a total of 18,264,712 pages of which 2,944,467 pages were ultimately produced.” Id. As such, the Court determined that 16.12% of Apple’s eDiscovery costs were spent on productions to Samsung and awarded Apple $238,102.66. Id.

Bow Tie Thoughts

I want to congratulate Apple’s attorneys for successfully recovering over $200,000 in eDiscovery product costs. Many taxation of cost cases do not end with the prevailing party taking anything home.

eDiscovery costs cases can make some lawyers do their best Chevy Chase/Gerald Ford impression of, “It was my understanding no math would be involved.” However, no taxation of cost case has the luxury of not determining how much was spent on a production.

Taxation of cost cases are complicated. While some Court would like costs cases to be as simple as a Rob Schneider saying, “Makin’ Copies,” eDiscovery requires special skills to collect and produce ESI.

Some jurisdictions take a fairly hard view that processing and all of the steps in doing a production are not recoverable, because the process does not result in a “copy.” The local rule in the Northern District is fairly forward thinking comparatively thinking when it comes to recovering costs associated with production ESI.

Another factor making taxation cases complicated is the fact how service providers invoice. Most service providers do not have attorneys on staff giving advice on how to document each step to explain how processing is “necessary for the production.” Documenting how a production is de-NISTed, de-duplicated, or emails excluded by domain name (such as irrelevant news services or sales messages), are all steps that enable a Court to decided whether that step was necessary for production.

My best advice on how to navigate this area of the law is to understand your local rules (or Court of Appeal case law). The next step is to work with your service provider at the beginning of the case on how they invoice to demonstrate how every step they take produce ESI is necessary to the case for the production, and not merely “intellectual efforts.”

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