Can you be Compensated for Converting e-Discovery Files?

Can you be Compensated for Converting e-Discovery Files?

In Bagwe v. Sedgwick Claims Management Services, Inc., the Indian-born Plaintiff sued her former employer under Title VII of the Civil Rights Act, alleging that she had been fired because of her national origin and race.  The United States District Court for the Northern District of Illinois granted the Defendant’s motion for summary judgment and, afterwards, the Defendant filed a Bill of Costs.  The Defendant sought reimbursement for several costs, the most expensive being costs related to e-discovery in the case.  The Defendant made alternative arguments for three different monetary figures that it sought to receive.

First, the Defendant argued that it should receive $57,858.94 for “costs related to obtaining and culling enormous amounts of [electronically stored information] from ‘a hefty 422.05 GB’ of data.”  Should the court decline to award this amount, the Defendant argued that it should receive $7,953.90, which represents the cost of “‘gather[ing] emails with metadata intact . . . by creating forensic images and then extracting the .pst files into .msg files,’ which . . . amounts to converting the files into ‘readable format.”   And, should the court decline to award that amount, the Defendant argued that it should receive $7,266.40 simply for “converting the data obtained into readable form.”

The court began its analysis of the e-discovery issue by citing to another Northern District of Illinois case, Massuda v. Panda Express, Inc.  In that case, the Northern District held that “e-discovery costs . . .  associated with the conversion of [electronically stored information] into a readable format such as scanning or otherwise converting a paper version to an electronic version or converting native files to TIFF files . . .  are compensable under § 1920(4).”  However, the court expressly stated that costs related to “gathering, preserving, processing, searching, culling, and extracting [electronically stored information]” were not compensable under § 1920(4). 

Applying Massuda to the Bagwe case, the court rejected the Defendant’s first two requests (the one for $57,858.94 and the one for $7,954.90).  The court stated that, under Massuda, e-discovery costs are recoverable only when they are “clear analogues” of copying costs.  Because Defendant’s first two requests included obtaining the e-discovery data, they were not compensable under § 1920(4).

The court, however, granted Defendant’s request for the $7,266.40.  According to the court, converting digital files into readable form was analogous to “providing photocopies of the responsive discovery documents to the requesting party.”  Because it was analogous, it was compensable under § 1920(4).

Bagwe v. Sedgwick Claims Management Services, Inc. is significant for its application of the rule that e-discovery costs are recoverable under 28 U.S.C. § 1920(4) only when they are “clear analogues” of copying costs.  Going forward, winning parties that seek e-discovery costs pursuant to 28 U.S.C. § 1920(4) should be mindful that the costs of gathering, preserving, processing, searching, culling, and extracting electronically stored information are not recoverable under this statute.

Peter received his B.A. in Criminal Justice, cum laude, from Rutgers University in 2010 and will receive his J.D. from Seton Hall University School of Law in 2016.  Peter is the Senior Notes Editor of the Seton Hall Legislative Journal and will be clerking for the Honorable Sallyanne Floria, Assignment Judge of the Superior Court of New Jersey, Essex Vicinage, upon graduation.

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