District of Colorado on the Taxation of Costs: Load Files and FTP Uploads Are Included!

On May 25, 2018, Judge R. Brooke Jackson issued a decision in Johns Manville Corp. v. Knauf Insulation, LLC, 15-cv-00531-RBJ-KLM, 2018 U.S. Dist. LEXIS 88189 (D. Colo. May 25, 2018), granting in part and denying in part a motion for review of the exclusion of electronic discovery costs to the defendants. Knauf Insulation was the prevailing party in the case. The clerk only awarded $23,963.77 of the $253,883.05 in e-discovery costs that the defendant had requested.

The defendant argued that the clerk had incorrectly assessed the which ESI services should be 'taxed' - under 28 U.S.C. § 1920(4), which allows the clerk to tax "[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case". [The taxation of costs can be confusing concept. To be clear see this definition by Lexis, "Taxation of costs is the procedure by which the court assesses the amount of costs payable under a costs order by the paying party to the receiving party (generally the winning party)."

It was uncontested in this case that § 1920(4) should cover the costs of scanning and conversion to the TIFF and PDF image formats. Judge Jackson cited the well known 3rd Circuit decision in Race Tires v. Hoosier which specified that scanning and image conversion costs could be recovered under § 1920(4). See the Tip of the Night for February 12, 2017. She disagreed that costs categorized by Knauf as "collecting, importing, and processing ESI", and described as "the cost of initially uploading data," and "the amount spent on loading data into an electronic database", should be covered by § 1920(4). Id. at *10. "[T]he nature and purpose of these costs requires a certain amount of technical expertise, and Knauf provides no evidence or even a convincing explanation as to how these services are part of the actual making of copies.Rather, its argument essentially amounts to ipse dixit —it is so because Knauf says that it is so. That isn't good enough." Ibid. She also rejected the argument that fees for OCR conversion performed in response to the request to run keyword searches should fall under §1920(4).

Judge Jackson did however allow for the taxation of costs for the preparation of load files and 'FTP uploading'.

Notably, the defendant was further awarded an additional $31,786.94 in costs under Colo. Rev. Stat. § 13-17-202. This state statute allows for costs incurred after a settlement offer has been made and rejected.