Oppressive Taxation: Abuse of Rule 54 and Section 1920 Threatens Justice

OPPRESSIVE TAXATION: ABUSE OF RULE 54 AND SECTION 1920 THREATENS JUSTICE PATRICK T. GILLEN I.
DISCOVERY AND DISCOVERY COSTS UNDER THE FEDERAL RULES 238 A. The Structure of the Federal Rules .......................................... 239 B. The Language of the Federal Rules Relating to Discovery...... 240 C. Recovery of the Costs Incurred to Comply with Discovery Obligations.............................................................. 241 D. Cost Recovery Under Rule 54(d) and 28 U.S.C.A. 1920....... 243 COURTS ARE TAXING DISCOVER COSTS UNDER RULE 54 AND SECTION 1920 .........................................................................246 NEITHER RULE 54(D) NOR 28 U.S.C.A. 1920 AUTHORIZE THE TAXATION OF COSTS INCURRED TO COMPLY WITH DISCOVERY OBLIGATIONS ..............................................................249 A. The Structure and Language of the Federal Rules Demonstrate That Rule 54(d) Does Not Authorize the Taxation of Costs Incurred to Comply with Discovery Obligations. ...... 250 B. The History and Language of 28 U.S.C.A. 1920 Demonstrate That It Does Not Authorize the Taxation of Costs Incurred to Comply with Discovery Obligations............ 252 1. The History of 1920 ........................................................ 252 2. The Statutory Language..................................................... 258 3. Supreme Court Precedent.................................................. 260 MISAPPLICATION OF RULE 54(D) UNDERMINES DISCOVERY AND ULTIMATELY JUSTICE ............................................................271 CONCLUSION ...................................................................................277
II. III.
IV. V.
Of the many remarkable features contained within the Federal Rules of Civil Procedure upon their enactment, the provisions relating to discovery were perhaps the most significant.1 These provisions implemented with the goal of promoting dispute resolution on the meritscalled for a deliberate and thoroughgoing shift towards liberal
Assistant Professor of Law, Ave Maria School of Law. B.A., 1986, Providence College; M.A., 1987, Fordham University; J.D., 1992, Notre Dame Law School; Ph.D, 2004, University of Notre Dame. The author thanks Drew Scott, James W. Devine, JohnMichael Thiessen, and Sal Gerbino for their assistance. 1. For a powerful and somewhat poignant description of the spirit of the rules describing the limited role envisioned for pleading and the central role envisioned for liberal discovery from a leading-light in the field of Civil Procedure, see Arthur R. Miller, McIntyre in Context: A Very Personal Perspective, 63 S.C. LAW REV. 465, 465-66 (2012).
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discovery.2 In service of this goal, the Rules authorized methods of discovery and obliged parties to comply with requests authorized by the Rules.3 As the drafters knew, the Rules increased the risk that parties would encounter significant costs during the discovery phase of the litigation.4 The Rules addressed this concern by authorizing protective orders and the possibility of cost-shifting under Rule 26.5 Taken together, the drafters designed the authority to engage in broad discovery (and obligation to comply) and the protection from abusive discovery authorized under Rule 26(c) to further the legitimate interests of the parties and the court as they move through a process that seeks the just, speedy, and inexpensive determination of every action.6 Despite the straightforward language of the Rules, which were designed to govern all aspects of discovery, including discovery costs, a troubling trend has emerged which threatens to undermine the liberal discovery authorized by the Federal Rules. More specifically, in the last few years, a growing number of federal courts have misinterpreted Rule 54(d) and 28 U.S.C.A. 1920, the federal statute that authorizes the taxation of costs contemplated by Rule 54, to allow a prevailing party to tax discovery costs against a losing party.7 The problem has gone largely unnoticed. The major treatises in Civil Procedure have noted the divergent case law.8 Practitioners have noted the trend as an important consideration bearing on litigation tactics.9 Of
2. E.g., id. at 466. 3. Id. 4. See generally, Stephen N. Subrin, Fishing Expeditions Allowed: The Historical Background of the 1938 Federal Discovery Rules, 39 B.C.L. REV. 691 (1998). 5. FED. R. CIV. P. 26. 6. FED. R. CIV. P. 1. 7. As used in this article, the term discovery costs embraces costs the prevailing party incurs to conduct discovery or comply with discovery obligations. As so defined, discovery costs exclude costs incurred for case presentation, understood as the costs incurred to secure materials used to present to the court the case (whether claim or defense) that makes one a prevailing party within the meaning of Rule 54. 8. 10 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE 2668 (3d ed., 2012) (noting only that courts have broad discretion in awarding costs and that circuits are divergent in awarding discovery compliance copying costs); 3-25 JAMES WILLIAM MOORE ET AL., MOORES FEDERAL PRACTICE 25.61 (2009) (discussing that only copies made for evidence or case presentation are taxable, with no mention of taxing costs for discovery compliance); RUTTER GROUP PRAC. GUIDE FED. CIV. TRIALS & EV. Ch. 19.A. (2012) (noting that generally costs of discovery are not allowable, but some courts have allowed it under the necessity requirement). 9. Mark L. Austrian, Getting Your E-Discovery Money Back, 54 DRI. FOR DEF. 12 (2012) (noting emerging case law allowing taxation of discovery costs); Don Zupanec, Electronic DiscoveryCost ShiftingCopying CostsExemplification Costs, 27 FED.
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the two more academic pieces addressing the developing trend, one has treated it as a pragmatic reality arising from the problems presented by discovery of electronically stored information (ESI), and the other has embraced the result as a way to curb discovery abuses.10 The stakes are very high. For example, in Race Tires America, Inc. v. Hoosier Racing Tire Corp., a recent case out of the Third Circuit, the district court taxed some $365,000 in charges under Rule 54 and 1920(4) that a party had incurred complying with discovery obligations.11 After acknowledging the inconsistent positions that courts have taken on the issue, the Third Circuit reversed, in part, but allowed taxation of approximately $30,000 for scanning and file format conversions undertaken to produce documents in discovery.12 In In re Ricoh Company, the district court taxed about $600,000 of costs incurred by the prevailing party to comply with discovery obligations.13 The ability to tax such significant costs has significant implications for discovery practice, which is why the practicing bar has noted the trend with interest. In this Article, I argue that neither Rule 54(d) nor 28 U.S.C.A. 1920 allow the taxation of discovery costs as a matter of law. In Part I, I briefly survey the structure and language of the Federal Rules and statutes involved to properly frame the question of whether Rule 54 or 1920 should be seen as authorizing the taxation of discovery costs, and demonstrate that the structure and language of the Federal Rules create a carefully crafted system which addresses costs incurred to comply with discovery obligations and provides for a very limited taxation of costs that are supposed to be limited to costs incurred for presentation of the case at the dispositive stage of the litigation. In Part II, I demonstrate that courts have misapplied Rule 54(d) and 1920 by interpreting both to allow the taxation of discovery and lay out the reasons courts have given when reaching this erroneous result. In Part III, I demonstrate that neither
LITIGATOR 13 (2012) (noting developing case law); Lisa C. Wood & Matthew E. Miller, Awarding E-Discovery Costs to Prevailing Parties Under Rule 54(d), 26 SPG ANTITRUST 85 (2012); Jay E. Grenig et al., Discovery and Disclosure of Digital Information; Cost Shifting,1 E-DISCOVERY & DIGITAL EVIDENCE 9:2 (2011). 10. Steven C. Bennett, Are E-Discovery Costs Recoverable By A Prevailing Party?, 20 ALB. L.J. SCI. & TECH. 537, 539 (2010) (noting the uncertainties surrounding the development and some of its implications for litigation strategy); Andrew Mast, CostShifting in E-Discovery: Reexamining Zublake and 28 U.S.C.A. 1920, 56 WAYNE L. REV. 1825, 1844-49 (2010) (noting divergent case law and suggesting that 1920 should be amended to more clearly authorize recovery of discovery costs.). 11. Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, 159-60 (3d. Cir. 2012). 12. Id. at 171-72. 13. In re Ricoh Co. Patent Litig., 661 F.3d. 1361, 1364 (Fed. Cir. 2011).
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Rule 54(d) nor 1920 can be interpreted to allow the taxation of costs incurred to comply with discovery obligations. In Part IV, I show that the misapplication of Rule 54 and 1920 threatens the liberal discovery authorized by the Rules, undermines the carefully crafted mechanism for addressing discovery benefits and burdens built into the Rules, and fosters new discovery abuses. In addition, I consider two related proposals. The first is that 1920 be amended to explicitly authorize the taxation of discovery costs. Second, I venture the thought that the problem examined here provides a useful context in which to examine the desirability of proposals to address rising discovery costs by shifting the costs of compliance to the party conducting discovery. I conclude that the results of such amendments to either 1920 or to the Rules would be undesirable. I. DISCOVERY AND DISCOVERY COSTS UNDER THE FEDERAL RULES The error examined in this Part results from a failure to consider the structure and operation of the Federal Rules as a whole in light of the central place that liberal discovery occupies in the litigation framework created by the Rules. The Rules Advisory Committee, referring to the language of Hickman v. Taylor, states that at the most basic level, the spirit of the rules, (as it relates to discovery) dictate that [m]utual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.14 Beyond allowing for a broad search of fact, liberal discovery has also been credited with eliminating surprise and assisting parties in their preparation for trial.15 The Supreme Court has recognized the connection between the liberal discovery authorized by the Federal Rules and the
14. Hickman v. Taylor, 329 U.S. 495, 507 (1947); FED. R. CIV. P. 26 advisory committees note (1983). The 1983 amendments were prompted to detail growing abuses in the discovery system. FED. R. CIV. P. 26 advisory committees note (1983). As the Committee explained, the spirit of the rules is violated when advocates attempt to use discovery tools as tactical weapons rather than to expose the facts and illuminate the issues by overuse of discovery or unnecessary use of defensive weapons or evasive responses. Id. The amendments were thus designed to encourage district judges to identify instances of needless discovery and to limit the use of the various discovery devices accordingly. See id. 15. FED. R. CIV. P. 26 advisory committees note (1946); see also Subrin, supra note 4, at 697. In addition to the benefits of liberal discovery noted above, Subrin notes that it preserves testimony in the case of death or other unavailability of a witness, diminishes the importance of pleadings, and focuses the trial on the main points in controversy. Id. at 716 (quoting Edson R. Sunderland, Improving the Administration of Civil Justice, in 167 ANNALS OF THE AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE 60-83 (1993)).
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quality of the determination fostered by the litigation process.16 The first place to look for an answer to the question presentedfor instance, whether Rule 54(d) can be used to tax costs incurred to comply with discovery obligationsis in the language and structure of the Federal Rules and statutes that address the costs of litigation. These are examined below. A. The Structure of the Federal Rules The Federal Rules of Civil Procedure have been amended on several occasions to improve their overall uniformity and to group related subjects within the titles organized by stages in the litigation process.17 Courts have recognized that the Federal Rules and related statutes must be read together in light of the structure of the Rules and their language.18 The titles and rules pertinent to the problem at issue are Title V, which addresses Disclosures and Discovery, and Title VII, which addresses Judgment. Title V contains the basic rules governing discovery, and has several rules that address costs (e.g. Rule 26 and Rule
16. See FED. R. CIV. P. 26 advisory committees note (1946); see also Hickman, 329 U.S. at 507 (according deposition and discovery rules broad and liberal treatment); Seattle Times Co. v. Rhinehart, 467 U.S. 20, 34 (1984) (supporting use of liberal discovery for purpose of assisting the preparation, settlement, or litigation of disputes). 17. FED. R. CIV. P. 32 advisory committees note (1970) (stating [a] beneficial byproduct of the rearrangement is that provisions which are naturally related to one another are placed in one rule.); FED. R. CIV. P., Table of Rules, at Tit. IXI. 18. See, e.g., Rachal v. Ingram Corp., 795 F.2d 1210, 1214 (5th Cir. 1986) (For our solution, we must examine Rules 9(h), 15(a), 38 and 39(a) of the Federal Rules of Civil Procedure, and the Jones Act, and apply each of them harmoniously to the case.); Theriot v. ASW Well Serv., Inc., 951 F.2d 84, 86-87 (5th Cir. 1992) (holding that Rules 54, 58, and 79 must be read together); see also Silva v. City of Madison, 69 F.3d 1368, 1371 (7th Cir. 1995) (We must remember, however, that a single rule cannot be read in a vacuum. It must be read in light of the statutory commands of the federal judicial code; it also must be read in light of the structure of the entire Rules of Civil Procedure.) (citing Maybin v. Northside Correctional Ctr., 891 F.2d 72, 74 (4th Cir. 1989) (Rules of civil procedure must be considered in relation to one another and construed together.) (citing Nasser v. Isthmian Lines, 331 F.2d 124, 127 (2d Cir. 1964) ([I]t is essential that we recognize that the Rules were intended to embody a unitary concept of efficient and meaningful judicial procedure, and that no single Rule can be considered in a vacuum.))); see also Weiss v. Regal Collections, 385 F.3d 337, 342 (3d Cir. 2004) (The Federal Rules of Civil Procedure are designed to be interdependent . . . Whenever possible we should harmonize the rules.); Proctor v. Educ. Credit. Mgmt. Corp., No. 2:07-cv-839, 2010 WL 4919670, at *5 (S.D. Ohio Nov. 29, 2010) (FED. R. CIV. P. 2637 govern discovery and the resolution of disputes related specifically to the discovery process. Thus, sanctions related to improper discovery requests or failures are governed by FED. R. CIV. P. 2637 . . . .).
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37).19 Title VII contains rules relating to Judgmentand features Rule 54, which also addresses costs.20 The problem at issue here concerns how the rules contained in each of these titles relate to one another because courts are using Rule 54(d), which appears in Title VII, to allow taxation of costs incurred to comply with discovery obligations created by Title V. As explained below, the structure of the Federal Rules cuts against any notion that the rules contained in Title VII can be used to tax costs incurred to conduct discovery or comply with discovery obligations created by Title V. Because this becomes clearer when the structure of the Rules is considered along with language of the relevant rules and the statute that authorizes taxation of costs, it is best to turn to the Rules so both their structure and language can be considered together. B. The Language of the Federal Rules Relating to Discovery Rules 26, 33, 34, and 37 contain the basic duties that govern the discovery process, including the power the Rules confer on a party to conduct discovery, the duty to comply with discovery, and the duty to bear the costs of discovery that are laid out in Title V.21 As noted above, when taken as a whole, the Rules contained in Title V place an obligation on each party to comply with discovery requests and also require the responding party to bear the costs of this compliance.22 Rule 26(b) describes the permissible scope of discovery requests, providing in pertinent part: Parties may obtain discovery regarding any nonprivileged matter, that is relevant to any partys claim or defense including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter . . . Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.23
19. 20. 21. 22. 23.
FED. R. CIV. P. 26, 37. FED. R. CIV. P. 54. See FED. R. CIV. P. 26, 33, 34, 37. FED. R. CIV. P. 26, 37. FED. R. CIV. P. 26(b)(1).
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The language of Rule 26(b) authorizes a party to employ the methods of discovery authorized by the Rules and defines the scope of the duty to allow discovery falling within the parameters of Rule 26(b).24 The language of Rules 33 and 34, which address the methods of discovery at the heart of the question presented by taxation of costs incurred to comply with discovery obligations, make explicit the obligation to respond to discovery requests created by Rule 26(b).25 Rule 33, which specifically governs requests for interrogatories, ties the interrogatories to Rule 26(b) and provides that the interrogatories must be answered.26 Subdivision (d) of Rule 33 states that where burdensome or expensive research efforts are required, the responding party can satisfy its duty to respond by making the records available to the requesting party, which allows the party conducting discovery to seek the desired information by means of their own review.27 Rule 34, which governs the inspection and copying of documents, electronically stored information, and tangible items, also makes plain the duty to comply.28 The Rule authorizes the requests, provides that a party must respond, and provides that a party must produce documents as they are kept in the usual course of business or grouped according to the request for production.29 Thus, the burden posed by requests for production does not necessarily excuse the producing party from bearing the cost incurred in complying with the discovery request.30 C. Recovery of the Costs Incurred to Comply with Discovery Obligations As the notes of the advisory committee indicate, the mechanism for recovering the costs of complying with discovery obligations is a protective order, requested pursuant to Rule 26(c).31 This exception to the baseline presumption of compliance was created to address the potential abuse that can arise in the form of overbroad discovery
24. Id. 25. FED. R. CIV. P. 33, 34. 26. FED. R. CIV. P. 33(b)(1). 27. FED. R. CIV. P. 33(d). 28. FED. R. CIV. P. 34. 29. FED. R. CIV. P. 34(a)(1), (b)(2)(B), (b)(2)(E)(1). 30. FED. R. CIV. P. 34 advisory committees note (1970) (The burden thus placed on respondent will vary from case to case, and the courts have ample power under Rule 26(c) to protect respondent against undue burden or expense, either by restricting discovery or requiring that the party pay costs.). The committees note makes no mention of FED. R. CIV. P. 54. Id. 31. FED. R. CIV. P. 26 advisory committees note (1983); FED. R. CIV. P. 26(c).
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requests.32 A request to shift costs may only be made in specific circumstances, with a protective order issued at the courts discretion.33 Recent provisions for the discovery of electronically stored information (ESI) serve to confirm the baseline rule that each party bears the cost of responding to discovery requests, absent an order under Rule 26(c) shifting the burden to the requesting party.34 Rule 26(b)(2)(B), creates an exception to the rule by excusing a responding partys obligation to comply where information is not reasonably accessible because of undue burden or cost.35 Disputes over whether a source is reasonably accessible may be resolved by either a motion to compel discovery, or a motion for a protective order under the Rule.36 As described in the committee note of 2006 to Rule 26: The responding party has the burden as to one aspect of the inquirywhether the identified sources are not reasonably accessible in light of the burdens and costs required to search for, retrieve, and produce whatever responsive information may be found. The requesting party has the burden of showing that its need for discovery outweighs the burdens and costs of locating, retrieving, and producing the information.37 In essence, the new rules governing production of ESI create a qualified privilege that exempts a party from the baseline obligation to comply with discovery requests authorized by the Rules or seek a protective order. More specifically, Rule 26, as amended, gives the party a qualified privilege that relieves it of the baseline duty to comply as a matter of course (and bear the costs of compliance) where it can make the showing required by the rule. The exception from the duty to respond where ESI is involved that was created by Rule 26(b)(2)(B) confirms that the baseline presumption created by the Federal Rules that the producing party bears the burden of costs incurred to comply with discovery obligations, absent an order shifting costs under Rule 26. Taken together, the provisions described above create a sensible discovery regime that fosters the overall purpose of the Rules while, at the same time, providing parties with a mechanism for securing relief in
32. See FED. R. CIV. P. 26 advisory committees note (1983) ([T]he spirit of the rules is violated when advocates attempt to use discovery tools as tactical weapons . . . by overuse of discovery.). 33. FED. R. CIV. P. 26(c). 34. FED. R. CIV. P. 26; FED. R. CIV. P. 34 advisory committees note (2006). 35. FED. R. CIV. P. 26(b)(2)(B). 36. Id. 37. FED. R. CIV. P. 26 advisory committees note (2006).
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cases where the burden of complying with discovery obligations is deemed unfair. The result is a system of liberal discovery that is structured to facilitate the resolution of disputes on the merits, the overarching objective of the Rules. The provisions in Title V take into account the interest of both the party seeking information and the party complying with discovery obligations created by the Rules.38 The Rules obviously serve the interests of the party seeking discovery by licensing efforts to discover information relevant to the issues presented by the claims made and defenses raised.39 As noted long ago in Hickman, [n]o longer can the time-honored cry of [a] fishing expedition serve to preclude a party from inquiring into the facts underlying his opponents case.40 Instead, the requesting party is able to cast a broad net in pursuit of relevant information, alleviating concerns about a miscarriage of justice resulting from an inability to discover evidence relevant to claims made.41 At the same time, Rule 26(c) allows the responding party to secure relief from undue burden and expense.42 D. Cost Recovery Under Rule 54(d) and 28 U.S.C.A. 1920 The Rule at the heart of the problem examined here is Rule 54, which allows the taxation of costs.43 By its terms, Rule 54 allows for the recovery of certain costs to a prevailing party, stating that [u]nless a federal statute, these rules, or a court order provides otherwise, costs other than attorneys feesshould be allowed to the prevailing party.44 In Crawford Fitting Company v. J.T. Gibbons Inc., the Supreme Court held that Rule 54 does not authorize the taxation of costs of its own force but serves only as the procedural vehicle for implementing a recovery of costs authorized by substantive law.45 Put another way, the Supreme Court has recognized that taxation of costs under Rule 54 is dependent
38. FED. R. CIV. P. tit. 5. 39. See, e.g., FED. R. CIV. P. 26(b)(2)(B). 40. Hickman, 329 U.S. at 507. 41. Id. (Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession.). 42. FED. R. CIV. P. 26(c). 43. FED. R. CIV. P. 54. 44. FED. R. CIV. P. 54(d). 45. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-45 (1987).
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upon an underlying statutory authority for the taxation of fees and costs.46 The statutory authorization for taxation of costs derives from 28 U.S.C.A. 1920. This statute allows for the recovery of the following types of costs: (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; (6) Compensation for court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 . . . .47 The provision of central importance is subsection four which authorizes the taxation of fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.48 The critical question is whether the phrase copies of any materials where the copies are necessarily obtained for use in the case encompasses discovery costs.49 Applying the language of these subsections, courts have routinely allowed prevailing parties to recover costs of deposition transcripts and copies obtained by a prevailing party for the purpose of presenting to the
46. Id. 47. 28 U.S.C.A. 1920 (West 2011); see also Sarah Wise, Show Me the Money! The Recoverability of Computerized Legal Research Expenses by the Prevailing Party in the Federal Circuits, 36 CAP. U. L. REV. 455, 464 (2007) (listing the costs recoverable under 1920 as including: [D]eposition expenses when the transcript is received into evidence or was otherwise reasonably necessary for trial . . . the actual cost of preparing demonstrative evidence for trial, the costs of acquiring necessary pretrial transcripts, fees for private process servers, and photocopying charges necessary for trial presentation. 48. 28 U.S.C.A. 1920(4). 49. Id.
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court the claim or defense that results in a favorable judgment, within the meaning of Title VII of the Federal Rules, whether the judgment was secured by means of summary judgment or jury verdict.50 Such recovery
50. See, e.g., McIlveen v. Stone Container Corp., 910 F.2d 1581, 1584 (7th Cir. 1990) (The phrase for use in the case refers to materials actually prepared for use in presenting evidence to the court); Tchemkou v. Mukasey, 517 F.3d 506, 513 (7th Cir. 2008) (the court finding that Although some copying charges undoubtedly were warranted, it is difficult to fathom that there were over 23,000 pages of documents necessarily obtained for this appeal. Consequently, in the absence of adequate explanation by counsel, we shall deny these costs.); Marmo v. Tyson Fresh Meats, Inc. 457 F.3d 748, 763-64 (8th Cir. 2006) ([E]xpenses for copying papers are necessarily obtained if the copies were received as evidence, prepared for use in presenting evidence, or obtained for service on the other parties in the litigation and the court . . . routine copy expenses made for service, filing, or convenience of counsel are not taxable absent prior court approval.) (quoting U.S. DIST. OF NEB., BILL OF COSTS HANDBOOK (2012)); Whitfield v. Scully, 241 F.3d 264, 271 (2d Cir. 2001) (Even more to the point, however, is the fact that the discretion to tax such a deposition is still limited by 28 U.S.C. 1920, which allows taxation of costs only when the deposition was necessarily obtained for use in the case.); Cefalu v. Village of Elk Grove, 211 F.3d 416, 428-29 (7th Cir. 2000) (Among the factors that the judge might consider in evaluating the necessity of a particular type of exemplification is whether the nature and context of the information being presented genuinely called for the means of illustration that the party employed. In other words, was the exemplification vital to the presentation of the information, or was it merely a convenience or, worse, an extravagance?); Cherry v. Champion Intern. Corp., 186 F.3d 442, 449 (4th Cir. 1999) (finding that a prevailing party may not recover costs of both transcription and video recording of a witnesss deposition because party could not show how both would be reasonably necessary instead of just one or the other); Stearns Airport Equip. Co. v. FMC Corp., 170 F.3d 518, 536 (5th Cir. 1999) (stating that it was not required that a deposition actually be introduced in evidence for it to be necessary for a case-as long as there was a reasonable expectation that the deposition may be used for trial preparation); Disc Golf Assn, Inc. v. Champion Discs, Inc., 158 F.3d 1002, 1010 (9th Cir. 1998) (finding district court abused its discretion in awarding copying costs for 14,000 discovery documents despite local rule allowing such a cost to be taxed because many copies were made after the court entered summary judgment); Case v. Unified Sch. Dist. No. 233, Johnson Cnty., Kan., 157 F.3d 1243, 1258 (10th Cir. 1998) (affirming district courts decision to award no recovery when court found 71,194 copies to be grossly excessive with respect to the standard of copies of papers necessarily obtained for use in the case (quoting 28 U.S.C.A. 1920(4)); Herold v. Hajoca Corp., 864 F.2d 317, 322-23 (4th Cir. 1988) (finding that court may tax costs of copies of depositions under 28 U.S.C.A. 1920(4) when the transcripts may be used at trial for impeachment purposes, but are never actually introduced as evidence); Sales v. Marshall, 873 F.2d 115, 120 (6th Cir. 1989) (Ordinarily, the costs of taking and transcribing depositions reasonably necessary for the litigation are allowed to the prevailing party. Necessity is determined as of the time of taking, and the fact that a deposition is not actually used at trial is not controlling.); Farberware Licensing Co. v. Meyer Mktg. Co., No. 09 Civ. 5270 (HB), 2009 WL 5173787, at *5 (S.D.N.Y. 2009) (allowing costs in accordance with local rules under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2) for deposition transcripts reasonably expected . . . [to] be used at trial and not taken solely for discovery.); Adams v. Teamsters Local, 115, 678 F. Supp. 2d 314, 326 (E.D. Pa. 2007) (denying and allowing
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is proper because Rule 54 is intended to allow taxation of costs incurred to present the case that makes one a prevailing party within the meaning of the rule (referred to herein as case presentation costs). In addition, costs incurred for case presentation are necessarily incurred for use in the case as that term is used in 1920.51 Taxation of these case presentation costs is in keeping with the language and purpose of both Rule 54 and 1920 as explained below. This article is focused on the use of Rule 54 and 1920 to allow the recovery of discovery costs. As used here, the term discovery costs refers to costs incurred by the prevailing party either to comply with discovery obligations created by the Rules, or conduct discovery authorized by the Rules.52 It is the application of Rule 54 and 1920 to allow the prevailing party to tax discovery costs that is rejected here for the reasons explained below. II. COURTS ARE TAXING DISCOVER COSTS UNDER RULE 54 AND SECTION 1920 A misapplication of Rule 54(d) and 28 U.S.C.A. 1920 has developed that allows taxation of discovery costs.53 The Third, Fifth,
costs for certain depositions under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2), the court held that depositions . . . used . . . for summary judgment are necessarily obtained for use in the case . . . . However, costs for depositions obtained . . . for investigatory or discovery purposes, which are not used or intended for use at trial may not be taxed.). 51. 28 U.S.C.A. 1920. 52. It is of course true that at least some of the costs incurred for case presentation may have been initially incurred during the discovery phase of litigation, for example, when a party secures a copy of a document that is used in the presentation of the case. But taxation of such costs is proper so long as the document is obtained for use in case presentation precisely because it is the connection with case presentation that makes taxation proper under Rule 54 and Section 1920 for the reasons explained below. 53. Race Tires Am. Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158,171-172 (3d Cir. 2012) (reversing district courts taxation of $365,000 in charges by discovery vendors incurred to comply with discovery obligations, but holding that scanning and file format conversion of electronic documents for the purpose of complying with discovery requests were taxable under 1920(4)); Rundus v. City of Dallas, 634 F.3d 309, 31516 (5th Cir. 2011) (affirming de novo the district courts granting of costs to prevailing party under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920 for copies of documents made to comply with discovery obligations and reasoning that although parties must bear their own costs initially when actually responding to discovery . . . the trial court clearly has the authority to shift such costs at the litigations conclusion.); Hecker v. Deere & Co., 556 F.3d 575, 591 (7th Cir. 2009) (affirming taxation of $164,814.43 in costs for converting computer data into a readable format in response to plaintiffs discovery request; such costs are recoverable under 28 U.S.C.A. 1920); BDT Prods., Inc. v. Lexmark Intl, 405 F.3d 415, 420 (6th Cir. 2005) (affirming taxation of costs for electronic scanning and imaging of documents under 1920(4)), abrogated by, Taniguchi v. Kan. Pac. Saipan, Ltd., No. 10-
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Sixth, Seventh, Ninth, and Eleventh Circuits have affirmed decisions taxing costs incurred to comply with discovery obligations under Rule 54(d) and 28 U.S.C.A. 1920.54 To the same effect are decisions in the Eighth and Tenth Circuits, which allow the misapplication of Rule 54(d) and 1920 to tax the costs of complying with discovery obligations in principle, while reviewing district court decisions, which refuse to tax costs incurred to comply with discovery obligations under an abuse of discretion standard.55 The Third Circuits recent decision in Race Tires America serves to illustrate the problem and frame the issue for analysis.56 In that case, the
1472, 2012 WL 1810216, 132 S. Ct. 1997 (2012); Jordan v. Vercoe, No. 91-1671, 966 F.2d 1452, *1 (6th Cir. May 7, 1992) (holding that the district court did not abuse its discretion in taxing costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920, and reasoning that 1920(4) authorizes costs for photocopying of documents necessary for maintenance of the action, including . . . documents tendered to the opposing party . . . .); Illinois v. Sangamo Constr. Co., 657 F.2d 855, 867 (7th Cir. 1981) (affirming district courts grant of costs, including costs for the expense of copying . . . discovery documents tendered to defendants under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), reasoning that [t]he expense of copying materials reasonably necessary for use in the case are recoverable costs under 28 U.S.C.A. 1920(4), and finding no abuse of discretion); see also, E.E.O.C. v. W&O, Inc., 213 F.3d 600, 623 (11th Cir. 2000) (affirming taxation of costs of copies made by EEOC for discovery on grounds that copies attributable to discovery are a category of copies recoverable under 1920(4)); In re Ricoh Co. Patent Litig., 661 F.3d 1361, 1365 (Fed. Cir. 2011) (applying Ninth Circuit law and holding that [u]nder section 1920(4) exemplification and copying costs for producing documents in discovery are recoverable.); see also Race Tires Am., Inc., v. Hoosier Racing Tire Corp., 2:07-cv-1294, 2011 WL 1748620 (W.D. Pa. May 6, 2011), affd in part, vacated in part, remanded, 674 F.3d 158 (3d Cir. 2012) (collecting cases); Austrian, supra note 9 (noting emerging case law allowing taxation of discovery costs and collecting cases); Zupanec, supra note 9 (noting developing case law and collecting cases); Wood, supra note 9 (collecting cases); Grenig et al., supra note 9, 9:2 (collecting cases). 54. See supra note 53 and accompanying text. 55. See, e.g., Marmo v. Tyson Fresh Meats, 457 F.3d 748, 762-64 (8th Cir. 2006) (upholding district courts denial of photocopying costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) where district court local limited recovery to cases where the copies were received as evidence, prepared for use in presenting evidence, or obtained for service on the other parties in the litigation and the court . . . but on the grounds that there was no abuse of discretion); Little Rock Cardiology Clinic, P.A. v. Baptist Health, 591 F.3d 591, 601-02 (8th Cir. 2009) (affirming the district courts judgment regarding costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) on the grounds that the trial court did not abuse its discretion while noting whether such costs could be recovered under the Rule 54(d) or 1920(4), as a matter of law, had not been decided); Jones v. Unisys Corp., 54 F.3d 624, 633 (10th Cir. 1995) (affirming the district courts denial of costs for internal copying of documents . . . produced for discovery, under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) on the grounds that the district court did not abuse its discretion.). 56. Race Tires Am., Inc., 674 F.3d at 161-63.
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defendants retained vendors to assist with their production of ESI and after prevailing sought to tax cost incurred to respond to discovery requests.57 The district court taxed these costs, reasoning that the vendors services were the functional equivalent of exemplification and making copies within the meaning of 1920, as well as an indispensable part of the discovery process. Therefore, they were necessarily obtained for use in the case, within the meaning of 1920(4).58 On appeal, the Third Circuit focused on the language of 1920(4), which allows taxation of costs incurred for exemplifications and copies of materials where the copies are necessarily obtained for use in the case.59 It held that the ESI services at issue were not exemplifications because the services had not resulted in illustrative evidence or authentication of public records, so the services did not produce exemplifications even under the broadest construction of the term.60 The court then looked at whether the costs could be taxed as making copies of materials within the meaning of 1920(4).61 After noting that the language of 1920(4) had been changed in 2008 to replace the phrase making copies of papers to the cost of making copies of any materials, the court held some costs incurred to produce documents responsive to discovery requests were taxable but others could not be taxed.62 The court broke down the vendor services relating to ESI into services necessary to: (1) collect and preserve ESI; (2) process and index ESI; (3) keyword search ESI for responsive and then privileged documents; (4) converting native files to TIFF; and (5) scanning paper documents to create electronic images.63 It held that only
57. Id. 58. Id. at 161-64 (noting the steps taken by vendors to comply with the plaintiffs discovery requests, i.e.: (1) preservation and collection of ESI; (2) processing the collected ESI; (3) keyword searching; (4) culling privileged material; (5) scanning and TIFF conversion; (6) optical character recognition conversion; and (7) conversion of racing videos from VHS to DVD format.); Id. at 162-63 (discussing clerk and district courts rationale for allowing the taxation of these costs); Race Tires Am., Inc., 2011 WL 1748620, at *8-11. 59. 28 U.S.C.A. 1920. 60. Race Tires Am., Inc., 674 F.3d at 165-66 (noting that the Sixth Circuit applied the narrow legal definition of exemplification as an official transcript of a public record, authenticated as a true copy for use in evidence, whereas the Seventh Circuit had construed the term expansively as the act of illustration by example . . . a definition broad enough to include a wide variety of exhibits and demonstrative aids.). 61. Id. at 167. 62. Id. at 165 (citing Judicial Administration and Technical Amendments Act of 2008, Pub. L. No. 110-406, 122 Stat. 4291). 63. Id. at 167.
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the scanning and conversion of native files to the agreed-upon format for production of ESI constitute making copies of materials and consequently allowed only costs linked to that stage of the ESI production process to be taxed under 1920(4).64 As the Third Circuit acknowledged in Race Tires, courts allowing the taxation of discovery costs have reached varied results on varied rationales.65 For example, the Sixth and Seventh Federal Circuits have taken a broader view of the discovery costs that can be taxed under 1920(4) by allowing the full range of services that result in production of documents responsive to discovery requests.66 But further elaboration on the grounds for these decisions about the precise scope of discovery costs that can be taxed under Rule 54 and 1920(4) is unnecessary because neither Rule 54 nor 1920 authorize the taxation of any discovery costs as a matter of law. III. NEITHER RULE 54(D) NOR 28 U.S.C.A. 1920 AUTHORIZE THE TAXATION OF COSTS INCURRED TO COMPLY WITH DISCOVERY OBLIGATIONS The use of Rule 54 and 28 U.S.C.A. 1920 to allow recovery of costs incurred to comply with discovery obligations is completely wrong. The structure of the Federal Rules, the language of the specific rules governing discovery obligations and costs, and the language of Rule 54(d) itself show that the rule cannot be used by a prevailing party to tax costs incurred to comply with discovery obligations.67 The history and plain language of 28 U.S.C.A. 1920 show that the statute does not authorize the taxation of discovery costs.68 The use of Rule 54 and 1920 to tax discovery costs is inconsistent with Supreme Court precedent in the area of costs,69 and contradicts a well-established line of cases that has rejected the taxation of discovery costs incurred to conduct discovery which applies to the taxation of costs used to comply with discovery obligations just as forcefully.70
64. Id. at 171. 65. Id. at 159. 66. Heckler, 556 F.3d at 591; BDT Prods., Inc. v. Lexmark Intl, 405 F.3d 415, 420 (6th Cir. 2005), abrogated by, Taniguchi, 132 S. Ct. at 1997; In re Ricoh Co., 661 F.3d at 1361; see also Race Tires Am., Inc., 2011 WL 1748620 (collecting cases). 67. FED. R. CIV. P. 54(d). 68. 28 U.S.C.A. 1920 (West 2011). 69. See, e.g., Taniguchi v. Kan. Pac. Saipan, Ltd., No. 10-1472, 2012 WL 1810216, 132 S. Ct. 1997 (2012). 70. Id.
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A. The Structure and Language of the Federal Rules Demonstrate That Rule 54(d) Does Not Authorize the Taxation of Costs Incurred to Comply with Discovery Obligations. The structure of the Federal Rules indicates that Rule 54 does not authorize the taxation of costs incurred to comply with discovery obligations. As noted above, the Federal Rules are logically divided into distinct articles that govern specific stages of litigation.71 Title V contains provisions relevant to Disclosures and Discovery, authorizing discovery, creating an obligation to comply, which includes bearing compliance costs, and authorizing cost-shifting under Rule 26(c).72 In contrast, Title VII contains provisions relevant to Judgment, including Rule 54, which allows a prevailing party to tax costs.73 The advisory committee has made the implications of this structure obvious by noting that rules are grouped according to the subject treated.74 Allowing Rule 54(d), which is located in Title VII, to serve as a vehicle for recovery of costs incurred to comply with discovery obligations, a matter treated in Title V, is inconsistent with the overarching structure of the Federal Rules. Unlike the provisions addressed to discovery (including discovery costs and costs-shifting), Rule 54(d) is found in Title VIIthe part of the Federal Rules that deals with Judgment.75 This placement of Rule 54 shows that it is concerned with the costs incurred to present the claim or defense that results in the favorable judgment that makes one a prevailing party within the meaning of Rule 54. Reading Rule 54 to authorize the recovery of costs incurred to comply with discovery is inconsistent with the structure of the Federal Rules precisely because Title V governs discovery obligations, including costs incurred to comply with discovery obligations, while Title VII governs Judgment.76 The language of the Rules proper to each title also demonstrates that Rule 54 cannot be interpreted to allow taxation of costs incurred to comply with discovery obligations. Rule 26(b) creates a duty on the part of the responding party to comply with discovery authorized by the
71. See FED. R. CIV. P., Table of Rules, at tit. I-XI. 72. Id. at tit. V. 73. Id. at tit. VII. 74. FED. R. CIV. P. 32 advisory committees note (1970) (stating [a] beneficial byproduct of the rearrangement is that provisions which are naturally related to one another are placed in one rule.); FED. R. CIV. P., Table of Rules, at tit. IXI. 75. FED. R. CIV. P., Table of Rules at tit. VII. 76. FED. R. CIV. P tit. 5; FED. R. CIV. P. tit. 7.
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Federal Rules, including requests to produce documents, unless an order shifting costs is entered pursuant to Rule 26(c).77 The language of Rules 33 and 34, the specific rules that can result in the production of documents during discovery, shows that the Federal Rules create an obligation to respond and require the responding party to bear the burden of compliance costs.78 Moreover, the advisory committee notes to Rules 33 and 34 make plain that the Federal Rules obligate a party to bear the costs of complying with discovery obligations, absent an order shifting costs under Rule 26(c).79 The notes to Rule 33 recognize that interrogatories can give rise to significant compliance costs and indicate that a party may seek cost-shifting to alleviate the burden.80 In pertinent part, the committee notes to Rule 34 state that [p]rotection may be afforded to claims . . . of undue burden or expense under what is now Rule 26(c), and later state that [t]he burden thus placed on the respondent will vary from case to case, and the courts have ample power under Rule 26(c) to protect respondent against undue burden or expense, either by restricting discovery or requiring that the discovering party pay costs.81 The Supreme Court recognized this baseline rule when it described the relationship between Rule 26(b) and Rule 26(c) in Oppenheimer Fund, Inc. v. Sanders, a case that dealt with allocating the costs of notification to class members in class action litigation.82 There the Court reviewed the structure of the Federal Rules and described the overall scheme governing discovery and discovery-related costs as follows: The presumption is that the responding party must bear the expense of complying with discovery requests, but he may invoke the district courts discretion under Rule 26(c) to grant orders protecting him from undue burden or expense in doing so, including orders conditioning discovery on the requesting partys payment of costs of discovery.83 Oppenheimer makes plain that cost-shifting under Rule 26(c) is a court-ordered exception to the baseline presumption created by the rules, i.e., each party bears the burden of costs incurred to comply with discovery obligations created by the Federal Rules.84
77. FED. R. CIV. P. 26. 78. FED. R. CIV. P. 33, 34. 79. FED. R. CIV. P. 33, 34 advisory committees notes (1970). 80. FED. R. CIV. P. 33 advisory committees note (1970) ([T]he court is not deprived of its usual power, in appropriate cases, to require that the interrogating party reimburse the respondent for the expense of assembling his records and making them intelligible.). 81. See FED. R. CIV. P. 34 advisory committees note (1970). 82. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (1978). 83. Id. at 358. 84. See generally, Id. at 340.
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Finally, the language of Rule 54 demonstrates that it does not authorize the taxation of costs incurred to comply with discovery obligations: [u]nless a federal statute, these rules, or a court order provides otherwise, costsother than attorneys feesshould be allowed to the prevailing party.85 Title V of the Federal Rules allocates the burden of costs incurred on the party that must comply with the discovery obligations; these obligations were created by the Rules absent an order for cost-shifting under Rule 26(c) as the Supreme Court recognized in Oppenheimer.86 This means that the Federal Rules provide[] otherwise for costs incurred to comply with discovery obligations created by the Rules, and as a result, such costs cannot be taxed under Rule 54(d), which allows taxation of costs [u]nless . . . these rules . . . provide[] otherwise . . . .87 B. The History and Language of 28 U.S.C.A. 1920 Demonstrate That It Does Not Authorize the Taxation of Costs Incurred to Comply with Discovery Obligations. 1. The History of 1920 The historical origin and evolution of 1920 provide another independent reason why the use of 1920 to tax discovery costs is fundamentally flawed. When Congress enacted the Judiciary Act of 1789, it made an express and limited provision for the recovery of costs in certain cases in admiralty and equity.88 Five days later, the First Congress required federal courts to follow state law with respect to awarding fees and costs in suits at common law unless federal law provided otherwise.89 Then on March 1, 1793, Congress authorized the prevailing party to tax compensation for travel and attendance, and for attorneys and counselors fees, as allowed by the Supreme Court of the forum state.90 This statute was renewed until it expired in 1799.91
85. FED. R. CIV. P. 54(d)(1). 86. Oppenheimer, 437 U.S. at 358. 87. FED. R. CIV. P. 54(d)(1). 88. See Judiciary Act of 1789, 20, 1 Stat. 73, 83 (allowing recovery of cost in certain actions in equity and admiralty where the plaintiff or petitioner recovered $500 or more). 89. Act of Sept. 29, 1789, Ch. 21, 2, 1 Stat. 93. This legislation was extended twice. Act of May 26, 1790 Ch. 13, 1 Stat.123; Act of Feb. 18, 1791, Ch. 8, 1 Stat. 191. It was later repealed. Act of May 8, 1792, Ch. 36, 8, 1 Stat. 278. 90. Act of Mar. 1, 1793, Ch. 21-22, 4, 1 Stat. 333. 91. See Act of Feb. 25, 1795, Ch. 28, 1 Stat. 419; Act of Mar. 31, 1796, Ch. 11, 1 Stat. 451.
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In 1842, Congress authorized the Supreme Court to enact rules governing the taxation of costs.92 By its terms, the purpose of the act was to further diminish the costs and expenses in suits and proceedings in said courts.93 Although the Supreme Court did not act on the congressional authorization, federal courts continued to follow prior practice laid down by Congress, apparently unaware that the statutory authority for taxation had expired.94 Next, Congress acted with respect to taxation of costs in 1853.95 The Act was designed to regularize practice and minimize costs.96 The purpose of the legislation was to relieve litigants from the burdens created by taxation of fees (including attorneys fees) as authorized by state law, and it did so by prescribing a limited number of definite items to be allowed . . . .97 Significantly, the categories of costs taxable under the Act in 1853 focus on mounting the claim or defense.98 More specifically, the Act allowed taxation of a docket fee, a fee when judgment was rendered, fees for issuance of scire facias and other proceedings on recognizance, and a fee for removal.99 Two provisions are of particular interest. The Act specified that the bill of fees of clerk, marshal, and attorneys, and the amount paid printers, and witnesses, and lawful fees for exemplifications and copies of papers necessarily obtained for use on trial in cases where by law costs are recoverable in favor of the prevailing party, shall be taxed . . . and included in and form a portion of a judgment or decree against the losing party.100 Further, the Act allowed taxation for each deposition taken and admitted as evidence in the cause, an antecedent to current 1920(2).101 These two provisions, focused on exemplifications and copies
92. Act of Aug. 23, 1842, Ch. 188, 7, 5 Stat. 518. 93. Id. 94. See Cost in Civil Cases, 30 Fed. Cas. 1058 (No. 18, 284) (C.C.S.D.N.Y. 1852); 2 STREET, FEDERAL EQUITY PRACTICE, 1188-99 (1986); S. LAW, THE JURISDICTION AND POWERS OF THE UNITED STATES COURTS 271 n.1 (1852). 95. See Cong. Globe, 32d Cong., 2d Sess. App. 207 (1853). 96. Id. (Senator Bradbury noting that the varied practice had created a lack of uniformity and that [i]t is not only the officers of the courts, but the suitors also, that are affected by the present unequal, extravagant, and often oppressive system. . . . It is to correct the evils and remedy the defects of the present system, that the bill has been prepared and passed by the House of Representatives. It attempts to simplify the taxation of fess, by prescribing a limited number of definite items to be allowed . . . .). 97. Id. 98. Id. 99. Id. 100. Act of Feb. 26, 1853, Ch. 80, 10 Stat. 161, 168 (emphasis added). 101. See id. (emphasis added). As explained below, this provision is particular significant because as an early version of the current 1920(2), it demonstrates the focus
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obtained for use at trial, and depositions admitted into evidence in the cause, show that the provisions of the Fee Act of 1853 were intended to allow recovery of costs that attend case presentation.102 An additional feature of the Fee Act was that it set the fundamental baseline presumption that the Court has used to interpret the statute. By its terms, the Act made plain the intent to limit taxation to these narrow categories of costs by prefacing the listed items with the statement that the following and no other compensation shall be taxed and allowed.103 The legislation passed in 1853 and was reiterated in the 1874 revisions.104 It was included when the Judicial Code was moved to Title 28 in 1926 as 830.105 The recodification of federal law in 1948 resulted in the Judiciary and Judicial Procedures Act, which generated changes to the language of what became 1920.106 The predecessor to 1920 had used the term shall in connection with taxation of costs but new 1920 used the term may.107 The revisers notes indicate that the word may was substituted for shall before tax as costs, in view of Rule 54(d) of the Federal Rules of Civil Procedure, providing for allowance of costs to the prevailing party as of course unless the court otherwise directs.108 In addition, the phrasing of the statutory provision of prime importance here, i.e., 1920(4), was changed. The predecessor of 1920, i.e., 28 U.S.C.A. 830, had provided for taxation of lawful fees for exemplifications and copies of papers necessarily obtained for use on trials.109 In contrast, Section 830s counterpart in the revision of 1948 (i.e. 1920), allowed taxation of [f]ees for exemplifications and copies of papers necessarily obtained for use in the case. . . .110 As noted
on case presentation that helps illuminate the limited taxation envisioned by that statutory language. 102. Id. 103. Id. 104. Act of 1874, 823, 18 Stat. 153. Although not at issue here, it appears that 848 may provide the early provision authorizing taxation of witness fees [f]or each days attendance in court, or before any officer pursuant to law . . . . Id. at 160. 105. 28 U.S.C. 571-72 (1926); 28 U.S.C. 830 (1926) (providing that [t]he bill of fees of the clerk, marshal, and attorney, and the amount paid printers and witnesses, and lawful fees for exemplifications and copies of papers necessarily obtained for use on trials in cases where by law costs are recoverable in favor of the prevailing party, shall be taxed . . . and be included in and form a portion of a judgment or decree against the losing party.). 106. See Act of June 25, 1948, Ch. 646, 62 Stat. 955. 107. 28 U.S.C. 830 (1926); 28 U.S.C. 1920 (1948). 108. H.R. 3214, 80th Cong. (1948). 109. 28 U.S.C.A. 571-72 (West 1926) (emphasis added); 28 U.S.C 830 (1926). 110. 28 U.S.C.A. 1920(4) (West 1948) (emphasis added).
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earlier, the revisers explained the change from shall to may as an effort to harmonize the statutory language with the contemplated operation of Rule 54(d).111 But this change merited no specific explanation and, therefore, was explained with reference to the Revisers notes after the section stating [c]hanges were made in phraseology.112 The last change in statutory language of 1920 pertinent to the issue under examination is the change effected in 2008, which originated as Senate Bill 3569 [t]o make improvements in the operation and administration of the Federal courts, and for other purposes.113 The significant change in terms of this study is the language of 1920(4), which was authorized in 6 of the bill addressing assessment of court technology costs.114 On the floor of the Senate, the 2008 amendments were linked to the recommendations of the Judicial Conference of 2003.115 And in the House, the amendment to 1920(4) was described as noncontroversial measures proposed by the Judicial Conference to improve the efficiency of the Federal courts.116 The change in 1920(4) to allow taxation of copies of materials rather than papers was proposed by the Committee of Court Administration and Case Management of the Judicial Conference and related to court technology fees.117 The report indicated that the committee had been asked to consider whether the list of taxable costs should be amended to include the expenses associated with new
111. Id. 112. Id. For its part, the Supreme Court has acknowledged that the changes of 1948 were directed towards statutory codification noting its established view that the function of the Revisers of the 1948 Code was generally limited to that of consolidation and codification. Consequently, a well-established principle governing interpretation of provisions altered in the 1948 revisions is that no change is to be presumed unless clearly expressed. Alyeska Pipeline Serv. Co. v. Wilderness Socy, 421 U.S. 240, 257 n.29 (1975). 113. See S. 3569 110th Cong. (2007). 114. S. 3569, 110th Cong. 6 (2007). 115. 154 CONG. REC. S9897-07 (daily ed. Sept. 27, 2008) (statement of Sen. Leahy describing the bill as intended to improve the administration and efficiency of our Federal court system by replacing antiquated processes, noting the bill contains additional proposals that the Federal judiciary believes will improve its operations, and thanking the Administrative Office of the Courts who, on behalf of the Judicial Conference, sent us policy recommendations from the Federal judiciary.). 116. 154 CONG. REC. H10270-01 (daily ed. Sept. 27, 2008) (statement of Rep. Zoe Lofgren); see also id. at 06 (Comments of Rep. Smith, describing the changes as noncontroversial administrative provisions that the Judicial Conference and the House Judiciary Committee believe are necessary to improve the operations of the Federal Judiciary.). 117. See JUDICIAL CONFERENCE OF THE U.S., REPORT OF THE PROCEEDINGS OF THE JUDICIAL CONFERENCE OF THE UNITED STATES 9-10 (2003).
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courtroom technologies.118 After [c]oncluding that adding the full range of such costs might well go beyond the intended scope of the statute, the committee recommended that the conference endorse two limited amendments to 28 U.S.C.A. 1920 . . . the second to permit taxing the costs associated with copying materials whether or not they are in paper form.119 The relevant change amended the language which authorized taxation of [f]ees for exemplifications and copies of papers necessarily obtained for use in the case, to authorize taxation of [f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.120 Seen in historical context, it is plain that the language of 1920(4), the specific provision at the center of the problem studied here, is focused on materials used for case presentationnot discovery.121 The language of earlier versions of Section 1920(4) made this focus on case presentation very plain by authorizing taxation of fees for exemplifications and copies of papers necessarily obtained for use at trial.122 The change in phraseology the Revisers made in 1948 tends to obscure the statutory focus on case presentation by omitting the reference to trial and substituting broader language that authorizes taxation of [f]ees for exemplifications and copies of papers necessarily obtained for use in the case . . . .123 One might argue that the change in language that occurred in connection with the recodification effort of 1947-48 was deliberately intended to broaden the category of taxable costs to include discovery costs. But this position is untenable. For one thing, such a change would represent a massive expansion in taxable costs as the current case law demonstrates.124 Attaching such a radical significance to the change in language is therefore inconsistent with the revisers characterization of
118. Id. 119. See id. at 10. The related change to 1920(2) struck the language allowing taxation of fees of a court reporter for all or any part of the stenographic transcript to allow taxation of fees for printed or electronically recorded transcripts necessarily obtained for use in the case. See id. 120. See 28 U.S.C. 1920(4) (1948) (emphasis added); c.f. 28 U.S.C.A. 1920(4) (West 2008) (emphasis added). 121. Id. 122. 28 U.S.C. 571-72 (1926). See also 18 U.S.C. 830 (1926) (providing that The bill of fees of the clerk, marshal, and attorney, and the amount paid printers and witnesses, and lawful fees for exemplifications and copies of papers necessarily obtained for use on trials in cases where by law costs are recoverable in favor of the prevailing party.). 123. See 28 U.S.C. 830 (1926); c.f. 28 U.S.C. 1920(4) (1948). 124. Race Tires America Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, 158 (3d Cir. 2012). See In re Ricoh Co. Patent Litig., 661 F.3d 1361, 1361 (Fed. Cir. 2011).
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the change as one in phraseology and the Supreme Courts recognition that changes in language accompanying the 1948 revision were largely stylistic.125 Attaching such radical significance to the change in language makes little sense for another reason. Rule 54(d) allows a prevailing party to tax costs and provides that costs are made part of the judgment.126 Read literally, the pre-1948 version of 1920(4), which focused upon use at trial, would exclude use in pretrial motions practice that could produce a favorable judgment (such as a motion for summary judgment and related hearing).127 The broader language makes plain that costs incurred for papers used to support dispositive motions would be taxable. Changes that the revisers made to 1923 in connection with the 1948 codification effort support the view that the change in phrasing from use at trial, to use in the case, in 1920(4) was made with reference to motions practice and related hearings.128 Then, 1923 specified certain costs that can now be taxed under 1920.129 The pre1948 version of 1923 allowed the prevailing party to tax fees on trial before a jury . . . or before referees, or on a final hearing in equity or admiralty . . . . 130 In the 1948 codification effort, the revisers modified the phrasing to allow the fee to be taxed on trial or final hearing in civil, criminal, or admiralty cases . . . and explained that [t]his simplified restatement provides for a single docket fee in each case which reaches final hearing or trial.131 The change that the revisers made to 1923 broadens the focus of taxation to include a case presentation that results in a favorable judgment by means of motionspractice and related hearing at a dispositive stage in the litigation. Reading the change in 1920(4), which also allows that broadened focus on use in connection with a trial or hearing, is both consistent with the focus on case presentation plain in its prior version, as well as the change made to 1923. Read this way, both Sections authorize taxation of costs incurred in connection with the case-presentation that results in a
125. See 28 U.S.C.A. 1920 (1948) (Revisers Note); see also Alyeska, 421 U.S. at 257 n.29 (noting the Courts established view that the function of the Revisers of the 1948 Code was generally limited to that of consolidation and codification. Consequently, a well-established principle governing the interpretation of provisions altered in the 1948 revision is that no change is to be presumed unless clearly expressed.) (internal quotations and citations omitted). 126. FED. R. CIV. P. 54(d). 127. 28 U.S.C. 830 (1926). 128. 28 U.S.C. 1920(4) (1948). 129. See 28 U.S.C. 1923 (1948); c.f. 28 U.S.C. 1920(4) (1948). 130. 28 U.S.C. 1923 (1948) (Revisers Note) (emphasis added). 131. See 28 U.S.C. 1923 (1948) (Revisers Notes) (emphasis added).
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favorable judgment at trial or a hearing. In sum, the historical origin and focus of 1920 demonstrate that it is intended to allow recovery of costs incurred to secure a favorable judgment via case presentation, not discovery costs. 2. The Statutory Language The plain language of current 1920 likewise shows that the Section is designed to authorize taxation of costs incurred for case presentation, not discovery costs, quite apart from its historical origin and development.132 When the categories of costs made taxable under 1920 are taken as a whole, it becomes evident that they are tied to securing the favorable judgment that allows taxation under Rule 54. The listed costs are a small subset of costs a prevailing party necessarily incurs to present the claim or defense which results in a favorable judgment that makes one a prevailing party within the meaning of Rule 54.133 Each category of costs listed is a necessary step in presenting the claim or defense that results in a favorable judgment.134 Subsection one allows recovery of fees of clerk and services of the marshal which relate to filing and service.135 Subsection five authorizes the recovery of docketing fees under 1923, which itself authorizes nominal fees to attorneys and proctors on trial or final hearing (including a default judgment whether entered by the court or by the clerk).136 Fees for printing relate to presenting the case via pleadings or other papers.137 Subdivisions two and three likewise focus on case presentation by allowing the taxation of transcripts or witness fees needed to present testimonial evidence.138 Subsection six focuses on case presentation via court appointed experts (designed to assist the court resolve the merits of technical matters) or interpreters, a term the Supreme Court has held to be focused upon, and limited to, oral translation of witness testimony.139
132. 28 U.S.C. 1920. 133. See 28 U.S.C.A. 1920; see also Beecham v. U.S., 511 U.S. 368, 371 (1994) (noting [t]hat several items in a list share an attribute counsels in favor of interpreting the other items as possessing that attribute as well.). 134. Id. 135. 28 U.S.C.A. 1920(1), (5). 136. See 28 U.S.C.A. 1920(5), 1923(a) (emphasis added). 137. See 28 U.S.C.A. 1920(3). 138. See 28 U.S.C.A. 1920(2), 1920(3). 139. See 28 U.S.C.A. 1920(6); see also Taniguchi v. Kan. Pac. Saipan, Ltd., No. 101472, 2012 WL 1810216, 132 S. Ct. 1997 (2012) (holding that 1920(6) did not authorize the taxation of costs incurred to translate written documents and medical records from Japanese to English).
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The specific language of 1920(4), the provision at the heart of the problem studied here, shares this focus on case presentation.140 For one thing, the subsection allows the taxation of costs incurred for exemplification and cost of making copies . . . necessarily obtained for use in the case.141 An exemplification is an official transcript of a document from public records, made in a form to be used as evidence, and authenticated or certified as a true copy.142 By its terms then 1920(4) demonstrates it is focused on securing admissible evidence to be used in case presentation. Section 1920(4) also allows taxation of costs of making copies . . . where the copies are necessarily obtained for use in the case.143 Although this phrase could be interpreted broadly, such an interpretation would be mistaken. For one thing, when the phrase making copies must be seen in the context created by its grouping with exemplifications it is plain that the use in the case contemplated by 1920(4) is use for case presentation.144 For another, the larger context created by the Federal Rules provides further context for the proper understanding of how to interpret the phrase making copies . . . necessarily obtained for use in the case.145 The idea that taxation under 1920 is tied to the presentation of the case (claim or defense) that results in a favorable judgment making one a prevailing party within the meaning of Rule 54 is in harmony with the structure of the Federal Rules. The idea that the phrase authorizes the recovery of discovery costs does not. Consequently, the phrase making copies should not be construed to move beyond the focus on case presentation evident when the categories described in the Section are taken as a whole.146
140. 28 U.S.C.A. 1920(4). 141. Id. 142. BLACKS LAW DICTIONARY 593 (7th ed. 1999); see also, Kohus v. Toys R Us, Inc., 282 F.3d 1355, 1358-60 (Fed. Cir. 2002) (Federal Circuit predicting Sixth Circuit would use the legal definition of exemplification to interpret the term as it appears in 1920(4) and reject the broader view of exemplification as illustration adopted by the Seventh Circuit in Cefalu v. Vill. of Elk Grove, 211 F.3d 416, 427 (7th Cir. 2000)). 143. 28 U.S.C.A. 1920(4). 144. Id. 145. Id. 146. Id. Davis v. Mich. Dept of Treas., 489 U.S. 803, 809 (1989) (noting the fundamental canon of statutory construction that the words of a statute . . . be read in their context and with a view to their place in the overall statutory scheme.); United Sav. Assn v. Timbers of Inwood Forest Assocs., 484 U.S. 365, 371 (1988) (Statutory construction . . . is a holistic endeavor. A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory schemebecause . . . only one of the
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By specifying that the costs incurred to secure materials can only be taxed if necessarily obtained for use in the case, the statutory language shows that Congress did not intend to authorize recovery of discovery costs.147 Rather, 1920 authorizes a narrow recovery of only a specific subset of costs incurred to copy materials needed to present the claim or defense that results in the favorable judgment which makes one a prevailing party within the meaning of Rule 54.148 So read, Rule 54(d) and 1920(4) dovetail with the larger structure of the Federal Rules as outlined above.149 3. Supreme Court Precedent Although the Supreme Court has not yet examined the question at issue here, the broad reading of 1920(4) to allow the taxation of discovery costs is inconsistent with precedent concerning taxation of costs in which the Court has repeatedly taken a narrow view of the taxation authorized by Congress.150 For example, the Supreme Courts first comprehensive look at costs was Alyeska Pipeline, where the narrow question presented was whether federal courts could award attorneys fees as costs in the absence of express statutory authority.151 The Court treated attorneys fees and other costs together, noting that [a]t common law, costs were not allowed; but for centuries in England there has been statutory authorization to award costs, including attorneys fees.152 The Court also recognized that the English precedent provided the basis for Americas common law rule barring taxation of costs, including attorneys fees, absent statutory authorization.153 In the end the Court
permissible meanings produces a substantive effect that is compatible with the rest of the law.). 147. 28 U.S.C.A. 1920(4). 148. Id. 149. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987) (rejecting a reading of Rule 54 that would create a conflict with 1920 based on duty to construe federal rules and statutes in pari materia). 150. Alyeska, 421 U.S. at 241. 151. Id. 152. Id. at 246. 153. Id. at 249 (noting early Supreme Court precedent indicated that the award of attorneys fees as costs was contrary to general practice in the United States). The Court also reversed the lower courts award of attorneys fees based on the inherent power of the court and noted that: In the United States, the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys fee from the loser. We are asked to fashion a far-reaching exception to this American Rule; but having considered its origin and development, we are convinced that it would be inappropriate for the Judiciary, without legislative guidance, to reallocate the burdens of litigation in the
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refused to depart from its longstanding American Rule based in part on its recognition that the statutory authorization for recovery of costs was meant to be an exclusive listing.154 In Crawford Fitting, the Supreme Court addressed the scope of Rule 54(d) and recovery authorized by 1920.155 The narrow question presented was whether courts possessed authority to tax expert fees as costs under either the rule or statute.156 As an initial matter, the Court held that Rule 54 did not authorize the taxation of fees of its own force but depends upon underlying statutory authority for the taxation of fees and costs. Quite to the contrary, Rule 54 served to give courts the discretion to decline to tax costs.157 The Court then turned to 1920. After noting that the purpose of the Fee Act was to address oppressive taxation of costs, it concluded that [t]he comprehensive scope of the Act and the particularity with which it was drafted demonstrate[] . . . that Congress meant to impose rigid controls on cost-shifting in federal courts.158 Consequently, the Court held that 1920 did not provide any compensation for witness fees other than that authorized by 1920(3), which allows taxation of witness fees as authorized by 1821.159 More recently in Taniguchi, the Supreme Court once again took a narrow view of the costs made taxable under 1920.160 In that case, the question presented was whether 1920(6) authorized taxation of costs incurred to translate written documents (medical records) from Japanese to English.161 Section 1920(6) authorizes the compensation of interpreters, and salaries, fees, expenses and costs of special interpretation services.162 The prevailing party argued that costs incurred to translate documents were taxable under 1920(6) because one definition of interpreter is one who translates, an argument the Ninth
manner and to the extent urged by respondents and approved by the Court of Appeals. Id. at 247. 154. Id. at 260 (noting that Congress has not . . . retracted, repealed, or modified the limitation on taxable fees contained in the 1853 statute and its successors.); id. at 269-71 (refusing to overturn American Rule barring recovery of attorneys fees as costs absent statutory authority). 155. Crawford Fitting Co., 482 U.S. at 438. 156. Id. at 438. 157. Id. 158. Id. at 444. 159. See 28 U.S.C.A. 1920(3) (West 2011) (authorizing taxation of witness fees); 28 U.S.C.A. 1821 (West 2011) (requiring payment of witness fees). 160. See Taniguchi, 132 S. Ct. at 1997. 161. Id. 162. See 28 U.S.C.A. 1920(6).
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Circuit accepted reasoning that 1920 should be interpreted broadly in light of the presumption in favor of taxation created by Rule 54(d).163 The Court rejected the argument, holding that the ordinary meaning of interpreter was one who engaged in oral translation.164 The Taniguchi Court made three additional points relevant to the problem examined here. First, it rejected the broad definition of interpreter to include one who translates in writing with reference to related statutory sections because the underlying statute which had amended 1920 to authorize taxation of costs incurred for interpreting was focused on oral translation in judicial proceedings.165 Second, the Court rejected the Ninth Circuits view that the term interpreter as used in 1920(6) should be construed broadly because Rule 54(d) created a presumption in favor of taxation of costs by noting that its decision in Crawford Fitting undercut any idea that Rule 54(d) added anything to the categories of costs made taxable by 1920.166 Finally, the Court emphasized that taxable costs are limited to relatively minor, incidental expenses as is evident from 1920, and also, that [t]axable costs are a fraction of the nontaxable expenses borne by litigants as further support for its holding that the term interpreter should not be read broadly to include translation understood as a larger group of costs.167 In sum, the Supreme Court has consistently taken a narrow view of taxation under Rule 54(d) and 1920. Accordingly, the Courts precedent regarding Rule 54 and 1920 create a strong presumption against an interpretation of 1920 which would allow taxation of discovery costs when taken as a whole.168
163. See Taniguchi, 132 S. Ct. at 2005-26. 164. Id. at 2007 (holding that [b]ecause the ordinary meaning of interpreter is someone who translates orally from one language to another, we hold that the category compensation of interpreters in 1920(6) does not include costs for document translation.). 165. See id. at 2004 (noting that use of term interpreter consistently appeared in connection with oral translation, e.g., in judicial proceedings . . . in any criminal or civil action . . . if a party or witness speaks only or primarily a language other than the English language . . . so as to inhibit such witness comprehension of questions and the presentation of such testimony . . . [or specifying that translation] shall be in the simultaneous mode for any party . . . and in consecutive mode for witnesses, unless the court directs otherwise.) (internal quotations and citations omitted). 166. Id. at 2005-06 (noting the Court of Appeals reasoned that a broader meaning is more compatible with Rule 54 . . . which includes a decided preference for the award of costs to the prevailing party . . . . To the contrary, we have made clear that the discretion granted by Rule 54(d) is not a power to evade the specific categories of costs set forth by Congress.) (citations omitted) (internal quotation marks omitted). 167. Id. at 2006. 168. See id. at 2006.
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For the reasons previously explained, the use of Rule 54(d) and 1920(4) to tax discovery costs is wrong on all counts. Yet the misuse of Rule 54(d) and 1920(4) to allow taxation of recovery costs is common. Why? Here again the decision in Race Tires provides a useful vehicle to discuss the larger problem.169 Simply put, courts allowing taxation of discovery costs under Rule 54(d) and 1920 have lost sight of the forest for the trees. Race Tires is illustrative of the fundamental flaws running through the case law allowing taxation of discovery costs.170 Addressing the question of whether discovery costs are taxable, the Third Circuit jumps right from Rule 54 to 1920.171 In so doing it wholly neglects the significance of the structure created by the Rules with its treatment of discovery costs under Title V of the Rules and the placement of Rule 54 in Title VII which deals with judgment. The court also ignores the language of Rule 54, which bars taxation where the Rules provide for costs itself.172 There is a certain irony here. In Crawford Fitting, the Court emphatically rejected the view that Rule 54 authorized taxation of costs of its own force.173 The holding in Crawford Fitting has become the starting premise of costs analysis under Rule 54. But the myopic focus on Crawfords holding has led courts to totally ignore the structure of the Federal Rules and the language of Rule 54.174 Consequently, courts fail to see that Rule 54 does prohibit taxation of costs by its terms when it comes to discovery costs.175 Courts allowing the taxation of discovery costs under 1920 also misinterpret the statute for the reasons given above. Again there is irony that arises from the way courts have interpreted necessarily obtained for use in the case, as that phrase appears in 1920(2), (4).176 The district courts decision in Race Tires is illustrative of the fact that courts allowing the taxation of discovery costs under 1920(4) reason that because complying with discovery obligations is a necessary part of litigation, costs incurred to make copies used to comply with discovery
169. 170. 171. 172. 173. 174. 175. 176.
See generally Race Tires Am., Inc., 674 F.3d at 158. Id. at 160. Id. at 163-64. See FED. R. CIV. P. 54. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987). See FED. R. CIV. P. 54. See 28 U.S.C.A. 1920(6) (West 2011). 28 U.S.C.A. 1920(2), (4).
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obligations are costs of copies necessarily obtained for use in the case, within the meaning of 1920(4).177 But such a broad reading of necessarily obtained for use in the case is inconsistent with the vast weight of case law applying that exact same statutory phrase with respect to efforts to tax discovery costs that a prevailing party incurred to conduct discovery.178 In that context, courts have consistently recognized the focus on case presentation required by Rule 54 and 1920, and have held that discovery costs incurred to conduct discovery are not necessarily obtained for use in the case.179 In
177. See, e.g., Race Tires Am., Inc., v. Hoosier Racing Tire Corp., 2:07-cv-1294, 2011 WL 1748620, at *6-10 (W.D. Pa. May 6, 2011) (collecting cases allowing taxation of ESI costs incurred in connection with discovery). 178. 28 U.S.C.A. 1920(2), (4). 179. See, e.g., Pan. Am. Grain Mfg. Co. v. Puerto Rico Ports Auth., 193 F.R.D. 26, 29 32, 38 (D.P.R. 2000) (denying portion of costs for copies under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), allowing costs for only one set of documents tendered to the court and stating [I]f a deposition is not introduced into evidence or used at trial . . . the determining factor is whether the deposition reasonably seemed necessary at the time it was taken.); Paul N. Howard Co. v. Puerto Rico Aqueduct & Sewer Auth., 110 F.R.D. 78, 8188 (D.P.R. 1986) (denying costs for transcripts, depositions, and miscellaneous expenses under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2),(4); holding that transcripts must be essential to counsel for an effective performance and proper handling of the case, and [c]osts which are incidental to or incurred in preparation for trial are not considered necessarily incurred for use in the case pursuant to section 1920.); Dente v. Riddell, Inc., No. CA77-3000-T, 1982 U.S. Dist. LEXIS 14157, at *78 (D. Mass. Aug. 9, 1982) (denying cost for copies under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) because prevailing party failed to demonstrate that the photocopies were reasonably necessary for presentation of [the] case.); Emerson v. Natl Cylinder Gas Co., 147 F. Supp. 543, 54445 (D. Mass. 1957) (rejecting a portion of prevailing partys costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2), noting that depositions taken as discovery or preparation rather than for use at the trial were not taxable as mere preparation costs.), abrogation recognized by, Summit Tech., Inc. v. Nidek, Co. 435 F.3d 1371 (Fed. Cir. 2006); Farberware Licensing Co. v. Meyer Mktg. Co., No. 09 Civ. 2570(HB), 2009 WL 5173787, at *5 (S.D. N.Y. 2009) (allowing costs in accordance with local rules under Fed. R. Civ. P. 54(d) and 28 U.S.C.A. 1920(2) for deposition transcripts reasonably expected . . . [to] be used at trial and not taken solely for discovery.); S.R. Galves Participacao, Importacao & Exportacao Ltda. v. Natural Source Intl, Ltd., No. 06 Civ. 10182(LLS) 2007 WL 1484465, at *2 (S.D.N.Y. May 21, 2007) (allowing costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920, in accordance with local rules, holding that costs for depositions are taxable if . . . used or received in evidence at trial . . . . Costs are not taxable for depositions taken solely for discovery.); DiBella v. Hopkins, 407 F. Supp. 2d 537, 541 (S.D.N.Y. 2005) (denying deposition costs in accordance with local rules under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2) holding that the deposition in question was purely a discovery deposition where the witness never testified at trial, and his deposition transcript was not used at trial or otherwise in the case.); Boisson v. Banian Ltd., 221 F.R.D. 378, 380 (E.D.N.Y. 2004) (allowing costs in accordance with local rules under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920, holding that the cost of deposition transcripts are properly taxed as
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costs only where such transcripts are obtained for use at trial and not solely for discovery purposes.); Romero v. CSX Transp., Inc., 270 F.R.D. 199, 204 (D.N.J. 2010) (citing local rules when denying cost of copies under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) for trial binders and medical records, holding that documents must both be admitted into evidence or necessarily attached to a document required to be filed and served in support of a dispositive motion and the copies must be in lieu of originals which are not introduced at the request of opposing counsel.); Adams v. Teamsters Local 115, 678 F. Supp. 2d 314, 326 (E.D. Pa. 2007) (holding that Depositions . . . used . . . for summary judgment are necessarily obtained for use in the case . . . . However, costs for depositions obtained . . . for investigatory or discovery purposes, which are not used or intended for use at trial, may not be taxed.); Herbst v. Gen. Accident Ins. Co., No. 978085, 2000 WL 1185517, at *2 (E.D. Pa. Aug. 21, 2000) (denying costs for copies made in complying with discovery under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), holding that the prevailing party failed to demonstrate how the copies were necessarily obtained for use in the case.); Krouse v. Am. Sterilizer Co., 928 F. Supp. 543, 546 (W.D. Pa. 1996) (denying costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) for prevailing partys copying of its own discovery documents and of documents produced by [non-prevailing party] during discovery, because there was no showing that these materials were necessary to the case.); Garonzik v. Diner, 910 F. Supp. 167, 172 (D.N.J. 1995) (denying copying costs in accordance with local rules under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), holding that local rules apply a strict rule to the taxability of photocopies; copies may be taxed only when admitted into evidence or attached to a required document in support of a depository motion, and in lieu of originals at the request of opposing counsel.); Manley v. Canterbury Corp., 17 F.R.D. 234, 236 (D. Del. 1955) (allowing costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2), the court noted a clear distinction between cost of depositions used for discovery purposes merely . . . and such cost where incurred for use at the trial . . . .[W]here the deposition is not subsequently used at the trial, the stenographic cost of the deposition is generally, but not always, disallowed in the costs of the case.); OrthoMcneil Pharm., Inc. v. Mylan Labs., Inc., No. 1:02cv32, 2008 WL 7384877, at *8 (N.D.W.Va. Aug. 18, 2008) (denying costs under Fed. R. Civ. P. 54(d) and 28 U.S.C.A. 1920(4) for expenses incurred in complying with discovery the court held that [a]s a general rule, prevailing parties are not entitled to recover costs incurred in responding to discovery because the producing party possesses the original documents and such papers are not obtained for the purposes of 1920(4).), affd in part, vacated in part, 569 F.3d 1353 (Fed. Cir. 2009); Wyne v. Medo Indus., 329 F. Supp. 2d 584, 591 n.8 (D. Md. 2004) (allowing costs for copies furnished to the Court or opposing counsel under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), the court explicitly noted that costs associated with discovery documents are not taxable against the non-prevailing party.); OBryhim v. Reliance Std. Life Ins. Co., 997 F. Supp. 728, 737 (E.D. Va. 1998) (allowing costs for deposition transcripts under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2) based on finding that the depositions were not obtained for mere discovery.); Sperry Rand Corp. v. A-T-O, Inc., 58 F.R.D. 132, 138 (E.D. Va. 1973) (allowing costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2) for costs of depositions, and noting, [r]ecent decisions concerning the taxability as costs of deposition transcripts reach uniform results. If the depositions were needed merely for discovery, their expense should be borne by the party taking them, as incidental to normal trial preparation. If . . . the deposition transcripts were actually introduced at trial or used for impeachment . . . then . . . they were necessarily obtained for use in the case.), implied overruling recognized by Cofield v. Crumpler, 179 F.R.D. 510 (E.D. Va. 1988); Avena v. Dept. of
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Human Servs., No. SA-05-CA-0653, 2006 WL 3337519, at *1 (W.D. Tex. Nov. 15, 2006) (denying costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), and reasoning that copies of documents that were responsive to Plaintiffs request for . . . discovery do not represent taxable costs because Defendant has not demonstrated that these documents were necessarily obtained for use in the case.); Card v. State Farm Fire & Cas. Co., 126 F.R.D. 658, 66162 (N.D. Miss. 1989) (denying deposition costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2) reasoning that [c]osts are not allowed for depositions which are solely for investigation or discovery purposes.); City of Sterling Heights v. United Natl Ins. Co., No. 03-72773, 2008 WL 920135, at *4 (E.D. Mich. Apr. 3, 2008) (denying deposition costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2) on grounds [d]epositions that are merely investigative, preparatory, or useful for discovery are not taxable as costs.) (citations omitted) (internal quotation marks omitted); Rosser v. Pipefitters Union Local 391, 885 F. Supp. 1068, 1071 (S.D. Ohio 1995) (declining to tax costs for depositions under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2), pursuant to local rules which provided that [d]epositions used in Successful Motions for Summary Judgments, Motion to Dismiss and Motions to Quash are deemed necessary and are, therefore, taxable, while [d]iscovery depositions are not taxable. Depositions not filed with the Court are deemed discovery depositions.); Stachon v. Hoxie, 190 F. Supp. 185, 188 (W.D. Mich. 1960) (allowing costs for depositions under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2), the court noted that a [d]istinction is clearly drawn in the authorities between stenographic cost of depositions used for discovery purpose merely . . . and such cost where incurred for use at the trial . . . . In the former case and where the deposition is not subsequently used at the trial, the stenographic cost of the deposition is generally, but not always, disallowed in the costs of the case.); Bd. of Managers of Dunbar Lakes Condo v. Dunbar Homes Inc., No. 84 C 5391, 1991 U.S. Dist. LEXIS 6283, at *2 (N.D. Ill. May 3, 1991) (denying costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) for copies made in complying with discovery production, reasoning that the prevailing party had the original documents in their custody and copies were made for the convenience of defendants attorneys. The court does not find that these copies were necessarily obtained for use in the case.); Little Rock Cardiology Clinic, P.A. v. Baptist Health, No. 4:06cv01594 JCH, 2009 WL 763556, at *3, 1112 (E.D. Ark. Mar. 19, 2009) (denying costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), the court held that [d]issallowing the costs of copying documents produced in discovery is consistent with the rule that depositions that are merely investigative, preparatory, or useful for discovery, rather than for presentation of the case typically are not taxable costs . . . .[I]t has been the practice in this district to limit costs recoverable under 1920(4) to the costs of copying items used in presenting the case at trial or prepared for that purpose.); Arboireau v. Adidas Salomon AG, No. cv-01-105-ST, 2002 WL 31466564, at *5-6 18 (D. Or. June 14, 2002) (under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(2), the court costs for certain depositions on the grounds that they were not part of the pretrial preparation of the case, rather than merely discovery . . . . [T]o be taxable, depositions must not be merely for discovery. However, under 1920(4), the court held that [c]opying costs for documents produced to opposing parties in discovery, submitted to the court for consideration of motions, and used as exhibits at trial are recoverable.); Pehr v. Rubbermaid, Inc., 196 F.R.D. 404, 408 (D. Kan. 2000) (denying costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4), holding that, [a]s a general rule, prevailing parties are not entitled to recover costs incurred in responding to discovery; because the producing party possesses the original documents, such papers are not obtained for purposes of 1920(4).); Fulton v. Fed. Sav. & Loan Assn v. Am. Ins. Co., 143 F.R.D. 292, 296, 299 (N.D. Ga. 1991) (denying
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costs for photocopies under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) for lack of substantiation, the court held that charges for copies of original documents possessed by the prevailing party are not taxable.); Postow v. Oriental Bldg. Assn, 455 F. Supp. 781, 793 (D.D.C. 1978) (remanding for a determination of necessity under Rule 54(d) of the Federal Rules of Civil Procedure and 28 U.S.C.A. 1920(2), the court held that [e]xpenses incident to the taking of depositions are taxable as costs if the depositions are reasonably necessary for use in the case, but not if the depositions are necessary only for preparation for the case.); Coats v. Penrod Drilling Corp., 5 F.3d 877, 891 (5th Cir. 1993) (If, at the time it was taken, a deposition could reasonably be expected to be used for trial preparation, rather than merely for discovery, it may be included in the costs of the prevailing party.) (citation omitted); Illinois v. Sangamo Constr. Co., 657 F.2d 855, 867 (7th Cir. 1981) (affirming district courts grant of costs to prevailing plaintiffs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920 for the expense of copying . . . discovery documents tendered to defendants . . . . The expense of copying materials reasonably necessary for use in the case are recoverable costs under 28 U.S.C.A. 1920(4).); Waters v. City of St. Peters, No. 4:06cv876SNL, 2007 WL 1880740, at *1 (E.D. Mo. June 29, 2007) (Copying costs are taxable when necessarily incurred for use in the case . . . . copying documents to be produced in discovery . . . are not taxable.); see also U.S. DIST. COURT FOR THE DIST. OF MINN., LOCAL RULES: UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA, BILL OF COSTS GUIDE (2012), available at http://www.mnd.uscourts.gov/FORMS/Clerks_Office/Bill-of-Costs-Guide.pdf (The Clerk will not tax costs of copies that were obtained for discovery purposes.); Jones v. Natl Am. Univ., No. 06-5075-KES, 2009 WL 2005293, at *6 (D. S.D. July 8, 2009) (holding that FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920 do not cover a partys copying of documents to be produced in discovery, or copying research materials for the convenience of counsel. Rather, the phrase necessarily obtained for use in the case covers the cost of actually trying a case in the courtroom, and includes documents and exhibits used at trial.); Ortho-McNeil Pharm., 2008 WL 7384877, at *8 (denying costs under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920 because [prevailing party] possessed the original documents, the Court finds that the photocopies made . . . were for the convenience of its counsel and was not necessary for litigation.); Sharp v. United Airlines, Inc., 197 F.R.D 361, 362-63 (N.D. Ill. 2000) (I disallow [under Fed. R. Civ. P. 54(d) and 28 U.S.C.A. 1920] Uniteds costs to copy its own set of its documents produced to the plaintiff because however valuable and convenient that may have been to defendants preparation of its case, it was nonetheless for the convenience of defendants attorneys, since defendant after all had the originals of the documents in its possession.); M.D. Pa. R. 54.4(5) (The cost of an exhibit necessarily attached to a document . . . required to be filed and served is taxable. The cost of copies submitted in lieu of originals because of the convenience of offering counsel or client are not taxable.); U. S. DIST. COURT FOR THE E. DIST. OF VA., TAXATION OF COSTS GUIDELINES (2010), available at http://www.vaed.uscourts.gov/formsandfees/documents/TaxationofCostsGuidelines1-2811.pdf (Not taxable . . . .The cost of copies submitted in lieu of originals because of the convenience of offering counsel or his or her client.); S.D. CAL. CIV. R. 54.1(b)(6)(b)(1) (The cost of copies submitted in lieu of originals because of the convenience of offering counsel or client are not taxable.); D. WYO. CIV. R. 54.2(f)(4) (The costs of copies submitted in lieu of originals because of convenience of offering counsel are not taxable.); Desisto College, Inc. v. Howey-in-the-Hills, 718 F. Supp. 906, 913-914 (M.D. Fla. 1989) (denying costs for photocopying under FED. R. CIV. P. 54(d) and 28 U.S.C.A. 1920(4) because defendants made extra copies and conceded that they were made for
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their own convenience rather than for the courts consideration.); Allen v. Freeman, 122 F.R.D. 589, 591 (S.D. Fla. 1988) (To be taxable costs, the copies must be necessarily obtained for use in the case. Copies made for the convenience of counsel are ordinarily not taxable costs.) (citation omitted); Fressell v. AT & T Techs., Inc., 103 F.R.D. 111, 116 (N.D. Ga. 1984) (rejecting the holding that the expense of all copying which is necessary in order to prepare the case for trial is recoverable but rather the court will only allow photocopying charges that were necessary for discovery and for trial presentation and will not allow photocopying charges for the convenience, preparation, research, or records of counsel.); Horizon Hobby, Inc. v. Ripmax Ltd., No. 07-cv-2133, 2009 WL 3381163, at *5 (C.D. Ill. Oct. 15, 2009) (concluding the number of copies made by the plaintiff were staggeringly high and likely made for the convenience of multiple attorneys and thus were not necessary in the litigation.); U.S., ex rel. Meyer v. Horizon Health Corp., No. C 00-1303 SBA, 2007 WL 518607, at *4-5 (N.D. Cal. Feb. 13, 2007) (finding documents produced in response to the governments subpoena duces tecum were not produced in formal discovery, nor were they produced for use for any purpose in the case at bar, and as such were not necessarily obtained for use in the case.); Tibble v. Edison Intl, No. CV 07-5359 SVW (AGRx), 2011 WL 3759927, at *7-8 (C.D. Cal. Aug. 22, 2011) (rejecting taxation of costs incurred in responding to Plaintiffs discovery requests since the proper remedy would have been an objection under FED. R. CIV. P. 26(b)); In re Scientific-Atlanta, Inc. Sec. Litig., No. 1:01-cv-1950RWS, 2011 WL 2671296, at *1 (N.D. Ga. July 6, 2011) (lowering deposition costs since they were for the convenience of counsel and not authorized by 28 U.S.C.A. 1920); Kellogg Brown & Root Intl, Inc. v. Altanmia Commercial Mktg. Co. W.L.L., No. H-072684, 2009 WL 1457632, at *6 (S.D. Tex. May 26, 2009) (finding the plaintiff failed to establish that in-house copies claimed as costs were necessarily obtained for use in the litigation and could not be recovered.); Francisco v. Verizon S., Inc., 272 F.R.D. 436, 445 (E.D. Va. 2011) (reducing costs of additional sets of copies since they were for the convenience of counsel rather than necessary to the litigation.); Tomlinson v. El Paso Corp., No. 04-cv-02686-WDM-MEH, 2011 WL 2297661, at *3 (D. Colo. June 9, 2011) (finding electronic copying costs not recoverable absent a sufficient explanation of their necessity in case preparation, and rejecting other electronic discovery costs since they could have filed an objection under FED. R. CIV. P. 26(b)); EEOC v. W&O Inc., 213 F.3d 600, 620-21 (11th Cir. Fla. 2000) (It is not necessary to use a deposition at trial for it to be taxable [under 28 U.S.C.A. 1920(2)], but admission into evidence or use during cross-examination tends to show that it was necessarily obtained, however, [w]here the deposition costs were merely incurred for convenience, to aid in thorough preparation, or for purposes of investigation only, the costs are not recoverable.); Stearns Airport Equip. Co., 170 F.3d at 536 (affirming district courts finding that deposition costs were not merely for general discovery but necessary for use in the case.); In re Ricoh Co., 661 F.3d. at 1367 (finding that under local rules [t]he cost of reproducing copies of motions, pleadings, notices, and other routine case papers [are] not allowable, but only those copies necessarily obtained for use in the case are recoverable); LG Elecs. U.S.A., Inc. v. Whirlpool Corp., No. 08 C 0242, 2011 WL 5008425 at *6 (N.D. Ill. Oct. 20, 2011) (Courts interpret Section 1920(4) to mean that photocopying charges for discovery and court copies are recoverable, but charges for copies made for attorney convenience are not.); United States Bankr. v. Dorel Indus., No. A 08-CA-354-55, 2010 U.S. Dist. LEXIS 78096, *6-7 (W.D. Tex. Aug. 2, 2010) (finding the Fifth Circuit does require some demonstration that reproduction costs necessarily result from that litigation; for instance, the costs of reproducing relevant documents and exhibits for use in the case is a necessary expense, whereas multiple copies of documents, attorney
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doing so courts have consistently differentiated between costs incurred for discovery and cost incurred for case-presentation purposes. Yet when dealing with efforts to tax costs of conducting discovery, courts have neglected the distinction between case-presentation and discovery costs required by Rule 54(d) and 1920. Why? Although many courts make the error studied here with little or no analysis, the error seems primarily attributable to the amendments to 1920(4) enacted in 2008.180 In Race Tires, both the district court and the Third Circuit relied on the 2008 amendments to justify their view that 1920(4) authorized taxation of discovery costs by emphasizing the change from copies of papers to copies of materials.181 The Federal Circuit has done so, as well, when addressing taxation of costs that the prevailing party has incurred in complying with discovery obligations.182 But the circumstances surrounding the amendments to 1920(4) in 2008 demonstrate there is no way in which this change in language can be read to support taxation of discovery costs.183 On the contrary, the circumstances surrounding the change in language show that the 2008 change took for granted the casepresentation focus of 1920(4). The amended language was contained in 6 of the Judicial Administration and Technical Amendments Act addressing assessment of court technology costs.184 In the House, the amendment to 1920(4) was described as noncontroversial measures proposed by the Judicial Conference to improve efficiency of the Federal courts, something the title of the act conveys.185
correspondence, or any of the other multitude of papers that may pass through a law firms Xerox machines is not.) (citations omitted). 180. Race Tires Am., Inc., 674 F.3d at 165. 181. Id. at 165 (noting significance of 2008 change in language from copies of papers to copies of materials); Race Tires Am., Inc., 2011 WL 1748620, at *2 n.6 (noting that the change to statutory language in 2008 and observing that [a]fter the amendment, no court has categorically excluded e-discovery costs from allowable costs.). 182. In re Ricoh Co., 661 F.3d at 1365 (noting the 2008 amendments and concluding [t]hus, the costs of producing a document electronically can be recoverable under section 1920(4).). 183. See 28 U.S.C.A. 1920. 184. Judicial Administration and Technical Amendments Act of 2008, Pub. L. No. 110-406, 6, 122 Stat. 4291 (2008). 185. 154 CONG. REC. H10270-01 (daily ed. Sept. 27, 2008) (comments of Rep. Zoe Lofgren); see also id. at 06 (comments of Rep. Smith describing the changes as noncontroversial administrative provisions that the Judicial Conference and the House Judiciary Committee believe are necessary to improve the operations of the Federal judiciary.).
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On the floor of the Senate, the 2008 amendments were linked to the recommendations of the Judicial Conference of 2003.186 The change was proposed by the Committee of Court Administration and Case Management of the Judicial Conference and described as related to court technology fees.187 The Committee Report indicated that it had been asked to consider whether the list of taxable costs should be amended to include expenses associated with new courtroom technologies, and as a result it drafted the language to permit taxing the costs associated with copying materials whether or not they are in paper form.188 The Committee expressly eschewed any broader revision of taxable costs after [c]oncluding that adding the full range of such costs might go well beyond the intended scope of the statute.189 All these features of the amendment process cut against any notion that the 2008 amendments to 1920(4) were designed to authorize taxation of discovery costs. Quite the contrary, the details surrounding the 2008 amendments show that they were premised on a recognition that the taxation allowed by the statute is tied to case presentation, the reason given by the committee for its decision not to endorse a broader range of amendments.190 The committees decision to expressly eschew any far-reaching amendments belies any notion that the amendments it did propose were meant to authorize the taxation of discovery costs. In sum, the use of Rule 54 and 1920 to allow taxation of discovery costs is wrong on all counts. The structure and language of the Federal Rules prohibit such taxation. The history and language of 1920 do not support taxation of discovery costs, they indeed show the practice is wrong.191 Supreme Court precedent dealing with taxation of costs provides no support forand indeed cuts againstthe practice.192 The
186. 154 CONG. REC S9897-07 (daily ed. Sept. 27, 2008) (comments of Sen. Leahy describing the bill as intended to improve the administration and efficiency of our Federal court system by replacing antiquated processes, noting the bill contains additional proposals that the Federal judiciary believes will improve its operations, and thanking the Administrative Office of the Courts who, on behalf of the Judicial Conference, sent us policy recommendations from the Federal judiciary.). 187. THE JUDICIAL CONFERENCE OF THE U. S., REPORT OF THE PROCEEDINGS OF THE JUDICIAL CONFERENCE OF THE UNITED STATES 9-10 (2003). 188. Id. 189. Id. at 10. The related change to 1920(2) struck the language allowing taxation of fees of a court reporter for all or any part of the stenographic transcript to allow taxation of fees for printed or electronically recorded transcripts necessarily obtained for use in the case. Id. 190. Id. 191. See supra note 47 and accompanying text. 192. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987); Alyeska, 421 U.S. at 240.
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practice contradicts the great weight of case law applying the same statutory phrase to discovery costs incurred to conduct discovery. This rests upon a recognition of the focus on case presentation required by Rule 54 and 1920 that applies with equal force to the costs incurred to comply with discovery obligations.193 Furthermore, the amendment to the language of 1920 enacted in 2008 does not authorize taxation of discovery costs.194 For these reasons, it is safe to conclude that the use of Rule 54 and 1920 to allow taxation of discovery costs is unquestionably wrong as a matter of law. IV. MISAPPLICATION OF RULE 54(D) UNDERMINES DISCOVERY AND ULTIMATELY JUSTICE The problem arising from the misapplication of Rule 54(d) and 28 U.S.C.A. 1920 is significant. As noted above, the stakes are high for litigants in terms of dollars and cents. But the stakes are also high when considered in terms of the highest aspiration of our litigation systema just resolution on the merits. The stakes are high because the misapplication of Rule 54 and 1920 at issue here undermines the carefully crafted scheme governing discovery created by the Federal Rules in three significant ways. First, it chills the liberal discovery authorized by the Rules in service of a decision on the merits. Second, it undercuts the optimal balancing of discovery benefits and costs fostered by proper use of Rule 26(c). And third, it licenses new discovery abuses foreclosed by a proper application of the Federal Rules. The misapplication of Rule 54 and 1920(4) examined here undermines the liberal discovery authorized under the Federal Rules. It takes no leap of logic to realize that use of discovery will be greatly chilled if serving discovery requests creates the risk of unknown and potentially catastrophic costs upon losing a case.195 Indeed, the pernicious implications which cost-shifting can have for the truthseeking served by robust discovery were recognized in Zubulake v. UBS Warburg LLC, perhaps the leading case on cost-shifting. As the court noted:
193. Crawford Fitting, 482 U.S. at 442. 194. See 28 U.S.C.A. 1920. 195. See, e.g., Kara A. Schiermeyer, The Artful Dodger: Responding Parties Ability to Avoid Electronic Discovery Costs Under 26(b)(2)(b) and 26(b)(2)(c) and the Preservation Obligation, 42 CREIGHTON L. REV. 227, 237 (2009) ([C]ost-shifting would cause crippling effects on discovery . . . [and] would undercut public policy in resolving disputes on their merits as well as potentially discourage the filing of legitimate claims.).
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[C]ost-shifting may effectively end discovery, especially when private parties are engaged in litigation with large corporations. As large companies increasingly move to entirely paper-free environments, the frequent use of cost-shifting will have the effect of crippling discovery . . . . This will undermine the strong public policy favor[ing] resolving disputes on their merits, and may ultimately deter the filing of potentially meritorious claims.196 The abuse of Rule 54 and 1920 at issue here undermines use of the liberal discovery authorized by the Federal Rules by raising the realistic possibility that the prevailing party can exact a vicious penalty from the losing litigant given the significant costs associated with electronic discovery.197 And the inherent uncertainty of the litigation process makes that fear very real, despite any best efforts at the most realistic assessment of the merits. The result is a truly perverse dynamic whereby a party seeking to advance its claims must consider curtailing discovery to hedge against potentially draconian costswhich may have the effect of causing the party to lose the case.198 In this way, the error at issue here undermines the ability of the Rules to foster the central goal toward which the Rules are directeda just judgment on the merits. It is true, of course, that parties may decide to forgo discovery because of cost under a proper application of Rule 26.199 But for the reasons explained below, there is a valid reason to believe that the result of that process is much better
196. Zubulake v. UBS Warburg LLC., 217 F.R.D. 309, 317-18 (S.D.N.Y. 2003), (quoting Pecarsky v. Galaxiworld.com, Inc., 249 F.3d 167, 172 (2d Cir. 2001)). 197. David Degnan, Accounting for the Costs of Electronic Discovery, 12 MINN. J.L. SCI. & TECH. 151, 151 (2011) (Experts estimate that conducting an electronic discovery (e-discovery) event may cost upwards of $30,000 per gigabyte.); Thomas Y. Allman, Managing E-Discovery After the 2006 and 2008 Amendments: The Second Wave, 804 PLI/LIT 129 (2009) (advocating cost-shifting due to the extraordinarily high costs associated with discovery and ESI); INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., ELECTRONIC DISCOVERY: A VIEW FROM THE FRONT LINES (2008), available at http://www.du.edu.legalinstitute/pubs/EDiscovery-FrontLines.pdf (noting that a midsize case could cost $2.5 to $3.5 million in the processing, review, and production of electronic information); see also Alfred W. Cortese, Jr., Skyrocketing Electronic Discovery Costs Require New Rules, ALEC POLICY FORUM (Am. Legis. Exchange Council), Mar. 2009, at 10, available at http://www.alec.org/am/pdf/apf/electronicdiscovery.pdf (noting that production of electronically stored information often produces costs in the millions for one case); Steven C. Bennett, Are E-Discovery Costs Recoverable by A Prevailing Party?, 20 ALB. L.J. SCI. & TECH. 537, 538 (2010) (The costs of electronic discovery can be crushing.). 198. See supra note 197 and accompanying text. 199. FED. R. CIV. P. 26.
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calculated to strike an optimal balance between the goals of the rules in tension here, more specifically, the just . . . and inexpensive determination of every action and proceeding.200 There is good reason to believe that the misapplication of Rule 54 and 1920 examined will undermine efforts to balance the benefits and burdens of discovery, which the Rules seek to advance in Title V.201 As an initial matter, the scheme for addressing costs incurred in complying with discovery obligations makes possible an optimal, if imperfect, allocation of discovery burdens and benefits, which is consistent with the concern for efficiency the Rules also seek to advance.202 The Rules authorize a party seeking information to conduct discovery, and the scope of discovery is determined with reference to the claims or defenses at issue in the case and longstanding rules of relevance relied upon for case presentation purposes.203 Ordinarily, a requesting party has no reliable means of determining whether its request is overbroad or unduly burdensome, or making an informed and economically efficient decision on how to proceed.204 Therefore, it would make little sense to place the burden of controlling costs on the requesting party because that party often cannot accurately assess the existence or extent of responsive documents or the costs of production.205 In contrast, the party charged with the obligation to comply with discovery requests has superior knowledge concerning the existence and
200. FED. R. CIV. P. 1. 201. See FED. R. CIV. P. tit. 5. 202. Scott A. Moss, Litigation Discovery Cannot Be Optimal but Could Be Better: The Economics of Improving Discovery Timing in A Digital Age, 58 DUKE L.J. 889, 911 (2009) (A court must undertake a cost-benefit analysis to decide, as the rules require, whether the value of particular discovery is proportional to its cost (both dollar cost and nonpecuniary burdens). It must assess the cost of finding and producing the evidence, and it must compare that cost to the benefit of having that evidence.) (emphasis added); see also Vlad Vainberg, When Should Discovery Come With A Bill? Assessing Cost Shifting For Electronic Discovery, 158 U. PA. L. REV. 1523, 1568 (2010) (recognizing that cost shifting would threaten the ability to advance meritorious claims). 203. FED. R. CIV. P. 26(b). 204. See Hansen v. Bradley, 114 F. Supp. 383, 386 (D. Md. 1953) (discouraging use of a policy which accumulat[es] taxable court costs as tending against the main objective of the Federal Rules of Civil Procedure.); Oleson v. Kmart Corp., 175 F.R.D. 560, 565 (D. Kan. 1997) (The objecting party must show specifically how each discovery request is burdensome or oppressive by submitting affidavits or offering evidence revealing the nature of the burden.); Cipollone v. Liggett Grp., Inc., 785 F.2d 1108, 1121 (3d Cir. 1986) (holding that it is not sufficient to merely state a generalized objection, but, rather, objecting party must demonstrate that a particularized harm is likely to occur if the discovery be had by the party seeking it). The court states that the rules shall be used to secure the just, speedy, and inexpensive determination of every action. Id. 205. Cipollone, 785 F.2d at 1121.
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extent of responsive information, as well as the costs of production.206 The superior knowledge of the requested documents places the responding party in a better position to assess the amount of material that is responsive, as well as the actual burden of production.207 This puts the responding party in the best position to raise an objection based on undue burden or expense if grounds are present.208 For this reason, it makes good sense to place the burden of complianceand opposing complianceon the party responding to discovery. Finally, there is good reason to believe that requiring the party with the duty to comply with discovery obligations triggered by discovery requests to seek protection of cost-shifting under Rule 26(c) promotes the most efficient allocation of discovery benefits and burdens.209 Once the party with the duty to produce brings its objection to the attention of the requesting party by means of a properly substantiated claim, the requesting party has a much more informed basis for weighing the potential benefits of the requested information against the potential burden in the form of costs if cost-shifting is sought.210 Likewise, by forcing the responding party to substantiate its claims of burden in order to justify a protective order (or justify a refusal to respond in the case of ESI), the current system works to ensure that the court confronted with a request for protection has the information needed to strike a balance that respects the legitimate interest of both parties and the larger systemic commitment to a efficiency, as well as decision on the merits. While the Rules cannot provide a perfect solution, there is no doubt that requiring this cost-benefit analysis to be made up front and prior to incurring costs, fosters a much more efficient resolution of the dispute from a systemic perspective. The reason is simply both the parties and the court have at least some chance to engage in an informed evaluation of the real burdens in terms of costs and foreseeable benefits in terms of yield of relevant information and can seek to balance them before costs are incurred, rather than after the fact.211
206. Id. 207. Id. 208. Id. 209. FED. R. CIV. P. 26(c). A party may object during the parties conference, where the court must determine what disclosures, if any, are to be made and must set the time for disclosure when the court rules on the objection. Id. 210. Id. 211. Colleen McNamara acknowledges this contention, despite ultimately arriving at a different conclusion in regard to discovery cost allocation. See Martin H. Redishand & Colleen McNamara, Back to the Future: Discovery Cost Allocation and Modern Procedural Theory, 79 GEO. WASH L. REV. 14 (2001), available at http://www.law.northwestern.edu/searlecenter/papers/Redish_McNamara_Discovery_Fina
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The erroneous application of Rule 54 prevents the significant efficiency gains that can be realized by a diligent application of a discovery regime created by the Federal Rules because it undermines recourse to Rule 26(c) in order to secure cost-shifting ex ante, before costs are incurred. As demonstrated above, the current rules do in fact provide a mechanism that, if diligently employed, makes possible a meaningful balancing of benefits and burdens arising from discovery.212 But the plaintiff cannot invoke costs-shifting and is left to bear the risk created by its lack of information about the scope of responsive information and the costs of production. In this way, the party seeking discovery is forced to bear the burden of costs it did not knowingly incur simply because the party loses the suit, which is the very harm Congress sought to remedy when it enacted the Fee Act.213 In addition, if Rule 54 can be used to tax discovery costs, parties engaged in discovery can make a calculated decision to avoid seeking cost-shifting under Rule 26 to avoid the need to make a meaningful showing required by Rule 26.214 By undermining the need to employ Rule 26(c) in order to secure cost-shifting, the misuse of Rule 54 and 1920(4) prevents the discovering party and the court from engaging in the deliberative process required to shift cost under the Rules before the costs are incurred.215 Rather than employ Rule 26(c) as envisioned, a party obliged to comply with discovery requests is free to incur unreasonable and even pointless discovery costs without any possibility of objection by the party or supervision by the court based on their assessment of the ability to recover later under the relaxed standard some courts use to misapply Rule 54.216 The error at issue also undermines the discovery regime created by the Federal Rules by licensing discovery abuses foreclosed by a proper interpretation of the current rules, i.e., cost-heaping by responding parties. Scholars focused on discovery practice have acknowledged that shifting the cost-burden to the discovering party would risk abuse in the form of cost-heaping.217 The misapplication of Rule 54 and 1920 at
l.pdf. For a discussion on the difficulty of efficiently allocating discovery benefits and burdens, see Frank H. Easterbrook, Discovery as Abuse, 69 B.U. L. REV. 635, 638-39 (1989). 212. FED. R. CIV. P. 26(c). 213. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987). 214. FED. R. CIV. P. 26(c). 215. FED. R. CIV. P. 26(c), 54; 28 U.S.C.A. 1920(4) (West 2011). 216. FED. R. CIV. P. 54. 217. See, e.g., Redish & McNamara, supra note 211, at 39-40 (It is true that if discovery costs were allocated to the requesting party, bill padding would be a legitimate concern, as the producing party would possess some of the same perverse incentives that
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issue here licenses the very costs-heaping that has caused concern, a form of discovery abuse that is not possible if Rule 54 and 1920 are properly applied because neither allow the recovery of discovery costs.218 In an era when the mounting costs of discovery and concerns about the abusive discovery practices receives much deserved attention, the last thing needed is a distortion of the Federal Rules that creates a form of discovery abuses specifically prohibited by the current rules. More fundamentally, this decision must be made by means of the careful deliberation that has characterized the development of the Federal Rules. There is no question that effort to strike a proper balance between the need for meaningful discovery and the burden it can produce will continue to occupy courts, practitioners, and academics.219 The far-flung and useful discussion that attended the recent amendments addressing ESI demonstrate the great benefit such deliberations can have for the optimal balance of discovery benefits and burdens.220 These developments give us good reason to believe that time will yield an approach that allows courts to strike a better balance of discovery benefits and burdens without undue risk to full and fair discovery. The misuse of Rule 54(d) and 1920 only serves to further undermine that legitimate and more deliberate process.221
currently lead to discovery abuse.). See also Robert D. Cooter & Daniel L. Rubinfeld, Reforming the New Discovery Rules, 84 GEO. L.J. 61, 77-78 (1995) ([K]nowing that she will be fully compensated . . . will have no incentive to use the cheapest means of collecting and organizing documentary information . . . . [T]he requesting party may be discouraged from discovering essential facts, the requesting party may be encouraged to settle on unfair terms, or the requesting party may even drop the dispute . . . .These sources of inefficiency . . . could in principle outweigh benefits of the cost-shifting rule by adding to the total cost of litigation, discouraging parties from making legitimate discovery requests, and discouraging plaintiffs from bringing some suits with merit.). 218. Cooter & Rubinfeld, supra note 217. 219. Lucia Cucu, The Requirement for Metadata Production Under Williams v. Sprint/united Management Co.: An Unnecessary Burden for Litigants Engaged in Electronic Discovery, 93 CORNELL L. REV. 221 (2007) (noting the dramatic shift in volume of ESI and discussing the related effects); Douglas L. Rogers, A Search for Balance in the Discovery of ESI Since December 1, 2006, 14 RICH. J.L. & TECH. 8 (2008) (discussing the influx of ESI balanced with the parties, attorneys, and courts best interests and most efficient practices); see also Robert E. Altman & Benjamin Lewis, CostShifting in ESI Discovery Disputes: A Five Factor Test to Promote Consistency and Set Party Expectations, 36 N. KY. L. REV. 569 (2009). 220. See Public Hearing on Proposed Amendments to the Federal Rules of Civil Procedure Before the Civil Rules Advisory Comm. (2005). 221. Id.
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The use of Rule 54 and 28 U.S.C.A. 1920 to tax discovery costs is an error as a matter of law. Courts that commit the error make a number of interrelated mistakes. They fail to see how the structure of the Federal Rules does not support, but rather, prohibits the taxation of discovery costs, because discovery costs are allocated between the parties in Title V of the Rules, whereas costs of securing a favorable judgment are allocated in Title VII. Courts are unsuccessful in grasping how the specific rules dealing with discovery provide for discovery costs and therefore do not see how the language of Rule 54 specifically prohibits its use to tax such costs. Courts fall short because they do not realize that 1920 is designed to allow taxation of a limited number of costs all tied to presenting the claim or defense that makes one a prevailing party within the meaning of Rule 54 and have mistakenly viewed the modest amendments to the statute made in 2008 as authorization for a massive expansion of taxation. Courts making this error mistakenly disregard a well-settled body of case law recognizing that 1920 is focused on case presentation costs developed in the context of efforts to tax discovery costs incurred by the prevailing party to conduct for no good reason.222 Moreover, they fail to recognize that the use of Rule 54 and 1920 to tax discovery costs, including discovery costs incurred by the prevailing party to comply with discovery obligations, is wholly inconsistent with Supreme Court precedent.223 Consequently, the use of Rule 54 and 1920 to tax discovery costs against the losing party should be wholly rejected.
222. See supra note 179. 223. See Crawford Fitting Co., 482 U.S. at 442; Alyeska, 421 U.S. at 246.

Oppressive Taxation: Abuse of Rule 54 and Section 1920 Threatens Justice

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Oppressive Taxation: Abuse of Rule 54 and Section 1920 Threatens Justice

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OPPRESSIVE TAXATION: ABUSE OF RULE 54 AND SECTION 1920 THREATENS JUSTICE PATRICK T. GILLEN I.

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