Taxation of Costs Could Put the Brakes on the E-Discovery Boom

Most practitioners, including seasoned litigators and in house counsels, are unfamiliar with 28 U.S.C. §1920 or have paid little attention to it. That section of the United States Code grants federal courts the authority to tax certain costs to losing parties, or stated in other words, it allows courts to require losing parties to reimburse the prevailing party for certain fees (e.g., copying costs) expended in the litigation.¹ Due to a recent string of broad district court opinions,² a few circuit opinions, and the U.S. Court of Appeals for the Third Circuit’s forthcoming decision in Race Tires America Inc. v. Hoosier Racing Tire Corp.,³ practitioners better start paying attention.

Section 1920 authorizes U.S. courts to tax “fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.”⁴ On its face, this appears to authorize taxation of the costs for making copies of paper documents, photographs, video recordings or similar materials. Prevailing parties, however, are increasingly asserting that §1920 permits recovery of one of the most costly discovery expenses—e-discovery—and several courts are agreeing. This means that losing parties could foot the bill for all of the e-discovery that they requested in the litigation.