Anticipation of Litigation Advisor

Are eDiscovery Costs Still Recoverable after the Supreme Court's decision in Rimi Street, Inc. et al. v. Oracle USA, Inc.?

June 26, 2019

A circuit split has existed for some time on whether eDiscovery costs are recoverable by a prevailing party. Generally, litigants rely on 28 U.S.C. § 1920 to seek recovery of eDiscovery costs. Specifically, litigants often point to section 1920(4), under which a court may award “fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” The Third Circuit Court of Appeals has construed this provision most broadly. In Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012), the Third Circuit held that of the numerous services the electronic discovery vendor performed, only the scanning of hard copy documents, the conversion of native files to the agreed-upon default format for production of electronically stored information (“ESI”), and the transfer of VHS tapes to DVD involved “copying,” and the costs attributable to only those activities were recoverable as “costs of making copies of any materials” under section 1920. The Fourth Circuit Court of Appeals has taken a strict construction approach in Country Vintner of N. Carolina, LLC v. E & J Gallo Winery, Inc., 718 F.3d 249 (4th Cir. 2013), holding that eDiscovery costs are not recoverable by a prevailing party finding that Gallo’s ESI processing charges were not taxable as “[f]ees for exemplification” under section 1920(4). The Federal Circuit Court of Appeals has “split the baby” on this issue, holding in 2013 that eDiscovery costs are partly recoverable. [1]

On March 4, 2019, the Supreme Court of the United States issued an opinion that might end the recovery of costs related to eDiscovery by prevailing parties.[2] Rimini Street, Inc., et al. v. Oracle USA, Inc., et al., 139 S. Ct. 873 (2019) began as a copyright infringement case brought by Oracle against one of its competitors. The jury awarded Oracle $50 million in damages after finding that Rimini Street had infringed various Oracle copyrights. The District Court also awarded Oracle fees and costs, including $12.8 million for litigation expenses such as expert witnesses, eDiscovery, and jury consulting. The Ninth Circuit Court of Appeals affirmed the $12.8 million award. Although the Ninth Circuit acknowledged that the award included expenses beyond the scope of the six categories of costs district courts are authorized to award under 28 U.S.C. §§ 1821 and 1920, the Ninth Circuit still held that the award was appropriate because of the Copyright Act, 17 U.S.C. § 505, gives federal district courts discretion to award “full costs” to a party in copyright litigation.

The question presented to the United States Supreme Court was whether the Copyright Act’s reference to “full costs” authorizes a court to award litigation expenses beyond the six categories of “costs” specified by Congress in the general costs statute. Justice Kavanaugh, writing for a unanimous Court, held that the term “full costs” in section 505 of the Copyright Act means only the costs specified in the general costs statute codified at 28 U.S.C. §§ 1821 and 1920. Section 1821 authorizes the recovery of witness and mileage fees; while section 1920 allows for the recovery of six enumerated items by a prevailing party as costs.[3] The Court found that sections 1821 and 1920 do not authorize an award for expenses such as expert witness fees, eDiscovery expenses, and jury consultant fees because they are not expressly included in the six categories enumerated in the statutes and, therefore, these costs are not recoverable under the Copyright Act.

While the Oracle opinion makes clear that “full costs” for eDiscovery are not recoverable under federal law, it fails to officially close the door on whether some eDiscovery costs are recoverable by a prevailing party. The Supreme Court’s review was narrowly tailored to a specific provision of the Copyright Act and failed to discuss or consider the existing circuit split on the extent to which eDiscovery costs are recoverable. A plain reading of Section 1920 and Federal Rule of Civil Procedure 54(d) appears to authorize the recovery of some portion of eDiscovery costs. For example, the collection of ESI in discovery arguably constitutes “making copies of any materials . . . for use in the case.”[4] Until amendments are made to Rule 54 and Section 1920 to clarify exactly what eDiscovery costs are recoverable, law firms and clients faced with this issue should clearly record exemplification and copying costs during discovery because these eDiscovery costs are arguably still recoverable.

[1] CBT Flint Partners, LLC v. Return Path, Inc., 737 F.3d 1320 (Fed. Cir. 2013).
[2] Has the Supreme Court Eviscerated Recovery of eDiscovery Costs?, Above the Law (May 14, 2019), https://abovethelaw.com/2019/05/has-the-supreme-court-eviscerated-recovery-of-ediscovery-costs/.
[3] The six recoverable costs enumerated in 28 U.S.C. § 1920 are: (1) fees of the clerk and marshal; (2) fees for printed or electronically recorded transcripts necessarily obtained for use in the case; (3) fees and disbursements for printing and witnesses; (4) fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; (5) Docket fees under section 1923 of this title; and (6) compensation of court-appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title. See 28 U.S.C. § 1920.
[4] § 1920(4).

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