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The Third Circuit recently addressed e-discovery, which
is an evolving and developing area of law. The specific issue before the
Third Circuit in Race Tires America, Inc. v. Hoosier Racing Tire Corp., 2012 U.S. App. LEXIS 5511 [an enhanced version of this opinion is available to lexis.com subscribers
/ unenhanced version available from lexisONE Free Case Law], was whether all the charges imposed by
electronic discovery vendors to assist in the collection, processing and
production of electronically stored information ("ESI") are taxable against a
losing party as "fees for exemplification [or] the costs of making copies of
any materials where the copies are necessarily obtained for use in the
case." See 28 U.S.C. § 1920(4) [an annotated version of this statute is available to lexis.com
subscribers]. The Third Circuit had not dealt with issue before and
courts that have opined on this issue have reached conflicting decisions.
The district court had ordered the losing party to pay $365,000 in e-discovery
costs in a market monopoly suit against a competitor. The Third Circuit
cut the award down to $30,000.
The panel discussed the significant role that e-discovery
plays in litigation and noted that it "is estimated that in 2011, 1.8 zettabytes of
data were created, the equivalent of 57.5 billion iPads, each with thirty-two
gigabytes of storage." The Third Circuit held "that of the numerous
services the vendors performed, only the scanning of hard copy documents, the
conversion of native files to TIFF, and the transfer of VHS tapes to DVD
involved 'copying,' and that the costs attributable to only those activities
are attributable under § 1920(4)'s allowance for the 'costs of making copies of
The court also provided some comfort to parties that are
concerned about being held responsible for e-discovery costs when they lose a
case. The court opined that "[n]either the language of § 1920(4), nor its
history, suggests that Congress intended to shift all the expenses of a
particular form of discovery-production of ESI-to the losing party. Nor
can such a result find support in Supreme Court precedent, which has accorded a
narrow reading of the cost statute in other contexts."
Abbey Spanier Rodd & Abrams, LLP,
located in New York City, is a well-recognized national class action and
complex litigation law firm.
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