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E-discovery Expenses May Now Be Taxed As Costs

Firm attorney, Nicholas Morcom, provides an update regarding recent changes to Florida’s Statewide Uniform Guidelines for Taxation of Costs in Civil Actions (“the Guidelines”).

Effective January 1, 2014, The Guidelines were amended to give courts discretion to award costs related to production of electronically stored information (“ESI”) to the party who prevails in the case.

The first category of ESI expenses that may be taxed (“the cost of producing copies of the relevant electronic media in response to a discovery request”) can be interpreted in two different ways. It could be limited solely to the cost associated with making a copy of the ESI, but might also allow for recovery of other costs associated with producing ESI, including costs related to gathering and searching for ESI. No Florida court has determined which interpretation is correct, but in a recent case decided under the comparable Federal rule, a United States Magistrate Judge held that costs related to gathering and searching ESI were not recoverable as copying costs:

This court agrees with Race Tires, Rawal and Johnson that ESI discovery costs associated with the conversion of ESI into a readable format, such as scanning or otherwise converting a paper version to an electronic version or converting native files to TIFF (if agreed upon by the parties to be the production format), are compensable under § 1920(4). But costs related to the “gathering, preserving, processing, searching, culling and extracting of ESI simply do not amount to ‘making copies'” and thus are non-taxable. [citations omitted]. Massuda v. Panda Express, Inc. (N.D. Ill. 2014)

The second category of expenses (“the cost of converting electronically stored information to a reasonably usable format in response to a discovery request that seeks production in that format”) is more limited in scope. Such expenses are recoverable by a producing party when the requesting party seeks production of ESI in a different format than the producing party maintains the ESI (referred to as the native format).

Courts have discretion in deciding whether to award e-discovery costs. In exercising that discretion, the Guidelines require that courts determine whether the prevailing party has shown that the costs were “reasonably necessary”:

Burden of Proof. Under the guidelines, it is the burden of the moving party to show that all requested costs were reasonably necessary either to defend or prosecute the case at the time the action precipitating the cost was taken.

The prevailing party should be able to meet this burden for at least a portion of the costs if the ESI was responsibly collected.

As case law develops on judicial interpretations of the new Guidelines, we will update this article.

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