Are E-Discovery Services Taxable?

In this IP case, Return Path Inc., et al. filed a motion to tax the costs related to using CBT Flint Partners, LLC to assist with the production of 1.4 million electronic documents and 6 versions of source code. CBT Flint Partners, LLC argued that fees associated with the collection of documents for production are not taxable under 28 U.S.C. § 1920. Justice Thomas Thrash acknowledged the differing opinions as to whether or not U.S.C § 1920 allows recovery. In the end, the court cited the “highly technical” nature and necessity of e-discovery services in the electronic age [see page 11] to overrule the plaintiff’s objection and hold the $268, 311.22 in costs to be recoverable. The court supported its findings by reasoning that the “[t]axation of these costs will encourage litigants to exercise restraint in burdening the opposing party with the huge cost of unlimited demands for electronic discovery.”