Race Tires America v. Hoosier Racing Tire Corp. - 3d Cir. - March 16, 2012
At issue in this appeal is whether all 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 ―[f]ees for exemplification [or] the costs of making copies of any materials where the copies are necessarily obtained for use in the case.‖ 28 U.S.C. § 1920(4). We have not previously addressed this issue, and the courts that have considered this question have reached conflicting results. Compare, e.g., In re Aspartame Antitrust Litig., No. 2:06-CV-1732-LDD, 2011 WL 4793239, at *3 (E.D. Pa. Oct. 5, 2011) (―We . . . award costs for the creation of a litigation database, storage of data, imaging hard drives, keyword searches, deduplication, data extraction and processing.‖), with Rawal v. United Air Lines, Inc., No. 07 C 5561, 2012 WL 581146, at *2-4 (N.D. Ill. Feb. 22, 2012) (refusing to award electronic processing costs as taxable).
In view of the significant role that electronic discovery plays in litigation today, involving the collection, processing, and production of huge volumes of data generated as a result of the information technology and communication revolutions, we believe it imperative to provide definitive guidance to the district courts in our Circuit on the question of the extent to which electronic discovery expenses are taxable.1
Footnote 1- In 2004, it was estimated that approximately 95% of all documents were created by electronic means. See, e.g., James M. Evangelista, Polishing the "Gold Standard" on the e-Discovery Cost-Shifting Analysis: Zubulake v. UBS Warburg, LLC, 9 J. Tech. L & Pol‘y 1, 2 (2004). More importantly, the ease with which ESI is created, distributed, duplicated, and stored has resulted in exponentially greater volumes of data that must be assembled, analyzed, and produced in litigation. See The Sedona Conference, The Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery, 8 Sedona Conf. J. 189, 193 (2007) (―The shift of information storage to a digital realm has . . . caused an explosion in the amount of information that resides in any enterprise[,] profoundly affecting litigation.‖). 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. See Press Release, EMC Corp., World‘s Data More than Doubling Every Two Years—Driving Big Data Opportunity, New IT Roles (June 8, 2011), available at http://www.emc.com/about/news/press/2011/20110628-01.htm (citing John Gantz & David Reinsel, IDC, 2011 Digital Universe Study: Extracting Value from Chaos (2011)). The burden and expense thus far associated with discovery of ESI has resulted in changes to the Federal Rules of Civil Procedure and to the adoption of Federal Rule of Evidence 502, the rules governing discovery in a number of states, the adoption of proposed uniform rules by the National Conference of Commissioners on Uniform State Laws, and the promulgation of standards by the American Bar Association. See, e.g., Fed. R. Civ. P. 34(a) advisory committee‘s note (2006 amendments) (explaining changes to the Federal Rules of Civil Procedure due to the impact of the exponential growth in recoverable information); Fed. R. Evid. 502 advisory committee‘s note (explaining the adoption of Federal Rule of Evidence 502 to respond, in part, to the proliferation of electronic information); Dan H. Willoughby et al., Sanctions for E-Discovery Violations: By the Numbers, 60 Duke L.J. 789, 791 n.3 (2010) (discussing discovery rule changes in several states due to ESI); Nat‘l Conference of Comm‘rs on Unif. State Laws, Uniform Rules Relating to the Discovery of Electronically Stored Information (2007), available at http://www.law.upenn.edu/b11/archives/ulc/udoera/2007 final.pdf; American Bar Association Civil Discovery Standard § 29 cmt. (2004) (discussing the 2004 amendments to the American Bar Association Civil Discovery Standards to facilitate electronic discovery).