[00:00:02] Speaker 02: Case number 19-7064, United States of America, ex-rail Harry Barco and Harry Barco appellant versus Halliburton Company at L. Mr. Yoder for the appellant, Mr. Sheehan for the appellees. [00:00:23] Speaker 04: Good morning. [00:00:23] Speaker 04: Good morning. [00:00:24] Speaker 04: May it please the court. [00:00:26] Speaker 04: My name is Todd Yoder and I represent Appellant Harry Barco. [00:00:29] Speaker 04: I ask to reserve three minutes of my time for rebuttal. [00:00:32] Speaker 04: Thank you. [00:00:33] Speaker 04: Mr. Barco respectfully requests that this court reverse the lower court's decision regarding the taxation of contested cost. [00:00:39] Speaker 04: Specifically, with regards to KDR's e-discovery copying cost, Mr. Barco urges that this court follow, one, the plain and ordinary meaning of the statute, two, the Supreme Court's directive to read the cost statute and put the modest scope [00:00:55] Speaker 04: and only tax minor incidental expenses, and three, the reasoning and logic employed by all other circuit courts to address this issue. [00:01:05] Speaker 04: By following this guidance, it is clear that only the costs directly and necessary to copy final produced documents into a suitable electronic production format can be taxed. [00:01:17] Speaker 04: In this case, that represents only [00:01:20] Speaker 04: $62.41 that Mr. Barco has conceded are taxed, which represent the conversion of final production into PDF format and the copying of those PDFs onto a production drive. [00:01:34] Speaker 04: Starting with the plain language of the statute, Section 1920, subsection 4, only allows for the fees for exemplification and the cost of making copies. [00:01:44] Speaker 04: Nowhere in this section does it mention discovery cost. [00:01:47] Speaker 04: In fact, nowhere in the entire cost statute are discovery costs mentioned. [00:01:51] Speaker 04: As such, the Federal Circuit in CBT Flint and the Third Circuit in the Race Tires case, as well as the other courts, have found that the plain and ordinary meaning of the statute limits cost of taxable to only those directly necessary to copy final production copies. [00:02:09] Speaker 04: It does not allow for the discovery obligations that needed to be met [00:02:12] Speaker 01: Let me just interrupt you for a minute. [00:02:15] Speaker 01: You mentioned the $360 that Barkov already agrees, right? [00:02:20] Speaker 01: Yes, sir. [00:02:20] Speaker 01: Let me just ask you about two other items. [00:02:23] Speaker 01: Under your theory, just assume your theory is the right one that's just the cost of copying the final documents turned over to him, right? [00:02:33] Speaker 01: Yes, sir. [00:02:33] Speaker 01: What about, let's see, Vixen and Elkins had [00:02:41] Speaker 01: $7,400. [00:02:43] Speaker 01: Isn't some part of that attributable to converting files to PDFs at the end? [00:02:49] Speaker 04: Your Honor, based on the record, that is not, or that is impossible to tell. [00:02:53] Speaker 04: The record only states. [00:02:54] Speaker 01: But shouldn't the district court figure that out? [00:02:56] Speaker 04: What's that charge? [00:02:57] Speaker 01: Under your theory, on remit, suppose you're right. [00:03:00] Speaker 01: And we adopt your theory. [00:03:01] Speaker 01: Shouldn't we send it back to the district court to find out whether any portion of that was attributable to copying or converting [00:03:11] Speaker 01: the files to PDF. [00:03:13] Speaker 04: No? [00:03:14] Speaker 04: Your Honor, it was KBR's burden to put forth with their bill of costs of supporting documents showing specifically what the costs are for. [00:03:22] Speaker 04: They failed to do so. [00:03:23] Speaker 01: Okay, I get that. [00:03:24] Speaker 01: And what about the $500 external copying labor? [00:03:30] Speaker 04: The copy, external copying documents all show that Mr. Barker was taxed for a per page basis for the copy. [00:03:37] Speaker 04: He was taxed what? [00:03:38] Speaker 04: He was taxed on a per page basis for copying. [00:03:40] Speaker 04: There are specific line items for the number of documents and how much those cost. [00:03:45] Speaker 04: And then in some of the invoices there are random labor times or labor line items, $500 total, which have not been explained and we do not know therefore. [00:03:55] Speaker 04: There is no way to know they're directly attributable to actual copy, not extraneous tasks not covered by the statute. [00:04:01] Speaker 01: I see. [00:04:01] Speaker 01: Okay, thank you. [00:04:02] Speaker 00: Can I ask you a question about the burden point you made, which is, if we abstract away from the e-discovery context and just go to something that is more tangible, like traditional Xerox copies, is it the case that the way this works is that the bill that's submitted is required because the burden exists on the part of the party who's requesting the taxation of costs, that they're supposed to itemize it in such a way that all you see on the bill [00:04:29] Speaker 00: is the final stage duplication of documents that are actually either submitted to the court or turned over to the other side? [00:04:36] Speaker 04: There needs to be enough specificity to understand that those costs can be taxed or covered by the statute. [00:04:42] Speaker 04: And that is only for the copying costs. [00:04:44] Speaker 04: So simple words like prepare production is unclear what that means. [00:04:48] Speaker 04: So yes, I believe they need to be more specific to the fact that they're actually related to copying and not simply meeting their discovery obligations. [00:04:55] Speaker 00: And that's how that actually works with hard copy documents? [00:04:59] Speaker 00: As far as you know? [00:05:00] Speaker 04: As far as I know, yes, sir. [00:05:01] Speaker 04: I need to have at least some indication that it was for copying and not other tasks. [00:05:09] Speaker 01: So what about, one of the issues here is the cost of binders, right? [00:05:15] Speaker 01: Those are, I take it that the binders for the documents that were turned over, is that what those are? [00:05:23] Speaker 04: I believe from KBR's pointing out to David's, those are binders to use for exhibits during depositions. [00:05:29] Speaker 04: to house exhibits that were used during depositions. [00:05:32] Speaker 01: Yeah, right. [00:05:33] Speaker 01: And the cost of copying those depositions were taxable, correct? [00:05:37] Speaker 04: Oh, the exhibits, yes. [00:05:38] Speaker 01: Yeah. [00:05:40] Speaker 01: And you say, but not the binders. [00:05:41] Speaker 01: But KBR points out that our local rule 39A for briefs permits the recovery of covers and bindings of briefs. [00:05:55] Speaker 04: That is correct. [00:05:56] Speaker 01: So wouldn't we be, wouldn't this, I mean I realize we're interpreting the statute here, but wouldn't it be odd to allow binders for briefs to be taxed, but not binders for depositions? [00:06:08] Speaker 04: I believe the local rule allows for taxation of the binding and the cover, which [00:06:15] Speaker 04: As the copies of the brief are required to have, the rules also make it necessary to have the bindings and the covers. [00:06:22] Speaker 04: Therefore, those are necessary costs for making the copies that have to be filed with the court. [00:06:27] Speaker 04: The other binders that are issued in this case are simply for organization and a place to put them. [00:06:35] Speaker 04: One of KBR's main arguments and what rests on is that the 2008 amendments to the statute somehow opened up the door to all sorts of discovery costs. [00:06:44] Speaker 04: This is not the case. [00:06:46] Speaker 04: The legislative history clearly shows the amendments only were intended to allow electronic copy costs in addition to a hard copy paper, which had been allowed previously. [00:06:56] Speaker 04: All of the cases, including from the Federal Circuit and CBT Flint, the Fourth Circuit, the Country Venter, race tires, the Third Circuit, [00:07:03] Speaker 04: had looked at the legislative history of the amendments and all decided they were modest and skilled and they did not shift any of the costs from discovery that had not previously been taxed on losing parties. [00:07:18] Speaker 04: I see that my initial time is nearly up. [00:07:20] Speaker 04: I'd like to reserve the rest of my time for rebuttal. [00:07:22] Speaker 00: Can I just ask you one question? [00:07:23] Speaker 00: I don't think it's going to interfere with the rebuttal time. [00:07:26] Speaker 00: As I understand the way the technology works, you have to upload, in order to ultimately be able to convert something into a PDF, which that last stage, even you agree, that's making of copies. [00:07:38] Speaker 00: There has to be an uploading into some format and an image copying that then facilitates the conversion into a PDF. [00:07:46] Speaker 04: Well, as far as we are aware, and from KBR's affidavits, the original documents were in electronic format. [00:07:52] Speaker 04: Those original documents could have simply been converted. [00:07:54] Speaker 04: Instead, they uploaded them into an eDiscovery platform. [00:07:57] Speaker 04: The only purpose of the eDiscovery platform, as they have admitted, is to search through their documents, review their documents, filter documents to figure out what to produce. [00:08:06] Speaker 04: That was not necessary, that upload, to convert to PDF. [00:08:09] Speaker 00: They could have taken the original source and simply converted that to PDF. [00:08:13] Speaker 00: But could you have a situation in which actually the most efficient way in which to convert something to a PDF is to upload it to some platform that serves another purpose too. [00:08:21] Speaker 00: It could serve an e-discovery purpose generally. [00:08:23] Speaker 00: It just turns out that's the best way to get the documents ready for conversion to PDF. [00:08:29] Speaker 04: Yes, Your Honor, that may certainly be the case, but that is not what KBR has argued the reasoning was for here. [00:08:34] Speaker 04: They have only argued that the conversion of the eDiscovery was for document review. [00:08:40] Speaker 04: And therefore, only the costs related to the production copying should be with that. [00:08:45] Speaker 00: But if you had the other route that I described, that would in your account as making... Only if it was necessary. [00:08:52] Speaker 04: And yes, correct. [00:08:53] Speaker 04: If it was a necessary step. [00:08:56] Speaker ?: Okay. [00:08:56] Speaker 01: Thank you. [00:08:57] Speaker 01: Okay, thank you. [00:09:10] Speaker 02: May it please the court, Christian Sheehan for the appellee, KBR. [00:09:15] Speaker 02: KBR agrees with Mr. Barco that in light of the 2008 amendments, electronic copying costs should be considered at least on par with paper copying costs. [00:09:24] Speaker 02: KBR's interpretation of the statute does that. [00:09:27] Speaker 02: Mr. Barco's does not. [00:09:28] Speaker 02: So for some perspective, if this litigation had been in the pre-electronic discovery era, KBR would have been entitled to recover its per page copying costs. [00:09:36] Speaker 02: Applying standard DC rates at the time [00:09:39] Speaker 02: KBR would have recovered more than $24,000 for paper production related copying costs. [00:09:45] Speaker 02: Producing documents electronically is more expensive than producing a paper, not less. [00:09:51] Speaker 02: And I direct a court to a law review article of 6D Duke Law Journal 547, which discusses the cost of electronic discovery. [00:09:59] Speaker 02: Yet under Mr. Barco's reading of the statute, KBR would be entitled to recover only $362 in electronic copying costs, 1.5%. [00:10:08] Speaker 02: of what it would have been entitled to recover had the productions been made in paper. [00:10:12] Speaker 01: Well, wasn't it KBR's choice to do this with digital technology? [00:10:18] Speaker 01: I mean, it made the choice to do that, right? [00:10:21] Speaker 02: Judge, under federal civil procedure 34, to the extent that information is maintained electronically, there's an obligation to produce it in reasonably usable format. [00:10:31] Speaker 02: And as the Sudona principles make clear, a number of courts have held that if a party maintains [00:10:37] Speaker 02: information electronically that has metadata, that has characteristics about who created the document, when it was created. [00:10:43] Speaker 02: The party does not satisfy its discovery obligations by producing static images without metadata. [00:10:50] Speaker 02: So KBR would have been taking a significant risk. [00:10:53] Speaker 01: If you're wrong about your theory that the 2008 amendments expanded what was recoverable under the statute, can you still prevail here? [00:11:06] Speaker 02: Judge, our view is not... Just yes or no. [00:11:10] Speaker 01: Can you? [00:11:11] Speaker 01: Suppose you're wrong about that. [00:11:12] Speaker 01: Suppose the statute means exactly what it said before. [00:11:16] Speaker 01: It just means that costs that [00:11:21] Speaker 01: Copying costs that were recoverable for physical are now recoverable for digital, but just those costs, nothing else. [00:11:29] Speaker 02: Judge, if just the cost of the physical copy themselves were recoverable, yes, I would agree with you. [00:11:37] Speaker 01: You would agree then that you can't prevail? [00:11:39] Speaker 02: I would agree with you. [00:11:40] Speaker 02: But the statute doesn't say that. [00:11:41] Speaker 02: The statute says the cost of making copies. [00:11:45] Speaker 02: And in this context, the word making is a gerund. [00:11:48] Speaker 02: And according to the Oxford English Dictionary, what it means [00:11:51] Speaker 02: Making means the process of producing something. [00:11:55] Speaker 02: So the cost of making copies means the cost of the process [00:11:59] Speaker 02: of producing copies. [00:12:00] Speaker 03: I mean, if you take that to a logical extreme, you get absurd results. [00:12:05] Speaker 03: You're saying everything that leads up to the final producible copy should be covered later, everything. [00:12:13] Speaker 03: That just doesn't make sense in light of the extensive precedent that we have, what the Supreme Court said, and the language change is nothing to suggest. [00:12:23] Speaker 03: that the statutory language change meant to make that kind of a change in recovery of costs. [00:12:32] Speaker 03: I'm smiling listening to you because the logical extension of what you're saying is everything's covered. [00:12:37] Speaker 03: Everything pre-discovery. [00:12:38] Speaker 03: I mean, everything in preparation for copying would be covered under your theory. [00:12:43] Speaker 03: That's incorrect. [00:12:44] Speaker 03: That's simply incorrect. [00:12:46] Speaker 02: Judge Edwards, that's not our theory. [00:12:48] Speaker 03: So the Supreme Court has drawn- But if you listen to what you said, [00:12:51] Speaker 03: What you're essentially saying is everything reading what you say is new language in the statute, all costs incurred in getting ready to copy are recoverable. [00:13:05] Speaker 03: That's wrong. [00:13:06] Speaker 02: Judge, I would respectfully that that's not our position. [00:13:08] Speaker 02: Our position is that all costs that are intrinsic to the copying process itself. [00:13:12] Speaker 02: That of what? [00:13:13] Speaker 03: I just didn't hear you, that or what? [00:13:15] Speaker 02: All costs that are intrinsic to the copying process itself. [00:13:18] Speaker 02: So the Supreme Court has drawn clear lines. [00:13:20] Speaker 02: In the Taniguchi case, it held that attorney's fees, investigator fees, expert witness fees are not recoverable. [00:13:28] Speaker 02: In other words, the costs of performing substantive work of the case are not recoverable. [00:13:32] Speaker 02: So if you put that in the electronic discovery context, the cost of identifying [00:13:38] Speaker 02: relevant custodians, the cost of identifying where the relevant documents are. [00:13:42] Speaker 02: That's not recoverable. [00:13:43] Speaker 02: The cost of reviewing is not recoverable. [00:13:46] Speaker 02: But I think maybe to put this in perspective, it's helpful to just walk through what the steps are. [00:13:51] Speaker 02: So the initial step is identifying relevant documents. [00:13:55] Speaker 02: We agree that that is not recoverable, but then the next step [00:14:00] Speaker 02: is imaging or copying the data so that it can be loaded into any discovery. [00:14:05] Speaker 01: Well, what do you think? [00:14:05] Speaker 01: The Ninth Circuit said, I forgot which case it is, but they say, look, the proper analogy here is that at that point, you know, I used to do this as an associate at a big law firm. [00:14:19] Speaker 01: You're in the client's office going through a lot of documents. [00:14:22] Speaker 01: You have two choices. [00:14:23] Speaker 01: You can either review the document there or you can make a fax and take it back with you. [00:14:27] Speaker 01: That's the choice the lawyer makes. [00:14:31] Speaker 01: That's not necessary to the ultimate copy. [00:14:34] Speaker 01: That's what the Ninth Circuit said. [00:14:37] Speaker 01: What's the matter with that? [00:14:39] Speaker 01: If we're trying to think about how the digital world applies to a standard that was developed for paper copies, doesn't that make sense? [00:14:47] Speaker 02: Judge, a couple of responses. [00:14:48] Speaker 02: I think it's not always possible to analogize electronic copying to paper copying. [00:14:56] Speaker 02: And I think the court's first task is to apply the plain language of the statute. [00:14:59] Speaker 01: Well, tell me where it's not possible. [00:15:01] Speaker 01: That would be really helpful, actually. [00:15:03] Speaker 02: Why it's not possible? [00:15:03] Speaker 02: Where does it break down? [00:15:04] Speaker 01: Yeah. [00:15:05] Speaker 01: Sure. [00:15:06] Speaker 01: Where does the model that's in my mind from years as a young associate in a big law firm doing this stuff, where is that? [00:15:15] Speaker 01: Where is what I did then? [00:15:17] Speaker 01: Going to the client's office, looking at documents, copying the ones I wanted to bring back, developing a code, analyzing them, and ending up with a pile of 100 documents [00:15:30] Speaker 01: 25 of which we decided to give to the planet, and our cost was copying those 25. [00:15:36] Speaker 01: So where does that break down? [00:15:39] Speaker 02: Sure, Judge Table. [00:15:40] Speaker 01: Where does that break down? [00:15:41] Speaker 02: So in this context, for KBR, the initial step that KBR had to follow was it first had to retrieve data from tapes. [00:15:50] Speaker 01: It had to what? [00:15:51] Speaker 01: I'm sorry? [00:15:52] Speaker 01: I'm sorry. [00:15:53] Speaker 02: The data, the source data was stored on tapes. [00:15:56] Speaker 01: Oh, on tapes. [00:15:57] Speaker 02: And it wasn't in a readable format. [00:15:58] Speaker 02: So the first thing that KVR had to do was convert it to a readable format. [00:16:02] Speaker 02: So even if Mr. Barko was right, that KVR then could have reviewed the data in native, just copied it, and produced it to him. [00:16:10] Speaker 02: Those initial conversion costs from tapes to a readable format, those are copies that were necessarily obtained for use in the case. [00:16:17] Speaker 02: That's the Pathway Forensics Invoice. [00:16:20] Speaker 02: What's the preparation cost? [00:16:22] Speaker 03: I mean, there are arguments that the original sources could have been converted directly to PDFs. [00:16:29] Speaker 02: That's right, isn't it? [00:16:34] Speaker 02: For KBR, the initial source data was on tapes. [00:16:38] Speaker 02: That could not have been converted to PDFs. [00:16:40] Speaker 02: That person had to be converted to readable format. [00:16:42] Speaker 02: Then, yes, the documents that were in readable format could have been converted to PDFs. [00:16:49] Speaker 02: The issue here was producing responsive documents to Mr. Barco. [00:16:53] Speaker 02: So Mr. Barco didn't issue a request for all of the email of John Smith. [00:16:58] Speaker 02: He issued 64 specific RFPs asking for documents on specific topics, which meant KBR had to identify sources of those documents, but then it had to identify which documents were actually responsive. [00:17:10] Speaker 02: And to do that, within the six-month discovery period that KBR had, it would not have been possible for KBR to [00:17:19] Speaker 02: rolled through the email inboxes of all these custodians. [00:17:23] Speaker 02: It was a short discovery period. [00:17:27] Speaker 01: Just help me with this. [00:17:28] Speaker 01: Suppose the universe was 1,000 emails. [00:17:32] Speaker 01: So you had to convert those, right, to be able to read them. [00:17:36] Speaker 01: Is that your point, right? [00:17:38] Speaker 01: And that's copy. [00:17:39] Speaker 01: And suppose at the end of the day, you only turned over 10 of those to Barco. [00:17:45] Speaker 01: Would he only be charged for 10 or for all 1,000? [00:17:52] Speaker 02: Sorry, I think the question is analogizing to this case. [00:17:57] Speaker 02: KBR produced 172,000 pages. [00:17:59] Speaker 02: What? [00:18:00] Speaker 02: KBR produced 172,000 pages in this case, and it loaded 2.4. [00:18:03] Speaker 01: It's not answering my question. [00:18:05] Speaker 02: So he would be? [00:18:07] Speaker 01: You're charging him on your theory for copying documents you never gave him. [00:18:13] Speaker 01: Right. [00:18:14] Speaker 01: Yes. [00:18:14] Speaker 01: Why hypothetically against him? [00:18:16] Speaker 03: No, I mean, it really is. [00:18:18] Speaker 03: That's the way it's always been. [00:18:19] Speaker 03: And if the law gets changed and the Supreme Court tells us otherwise, then we'll think about it. [00:18:24] Speaker 03: But it's modest. [00:18:26] Speaker 03: It's a modest amount of money is what the Supreme Court says. [00:18:29] Speaker 03: It's not a windfall. [00:18:30] Speaker 03: You're not looking for hundreds of thousands of dollars in costs. [00:18:33] Speaker 03: That's just not our system. [00:18:35] Speaker 02: So Judge Edwards, a few responses to that first. [00:18:38] Speaker 02: I think it's important to clarify the standard of review for the specific question that we're talking about. [00:18:43] Speaker 02: So there's two components to whether costs are taxable under Section 1920, and they each have a different standard of review. [00:18:49] Speaker 02: So the first is whether a certain category of cost is making copies. [00:18:55] Speaker 02: Then the second question, which is what we're talking about, [00:18:57] Speaker 02: is whether it was necessary to produce, to gather X number of documents and then only produce Y number of documents. [00:19:06] Speaker 02: That's a separate question, that's a factual question, which this court held in the Sonship case, and that's subject to an abuse of discretion standard. [00:19:14] Speaker 03: So here... Abuse of discretion isn't always a winning standard. [00:19:20] Speaker 03: I love that you took us to standard review. [00:19:22] Speaker 03: I guess I would have gone in there too. [00:19:24] Speaker 03: But you can lose under abuse of discretion. [00:19:27] Speaker 03: If we think the district court is including too much or allowing too much, it's abused its discretion. [00:19:33] Speaker 03: It's an incorrect calculation. [00:19:34] Speaker 02: Of course, Judge Edwards, but the district court here reasonably exercised its discretion. [00:19:39] Speaker 02: It was necessary [00:19:41] Speaker 02: for KBR to gather all of the source data. [00:19:43] Speaker 00: But there's also all kinds of preparatory steps, even in the hard copy context, that are necessary. [00:19:48] Speaker 00: It's necessary to cut down a tree to create paper to enable copies, but we don't go back to the cutting down of a tree. [00:19:54] Speaker 00: And I think the analogy that I have in my mind, and it sounds like my colleagues have in their mind too, is in a lot of situations you've got to assemble a boatload of documents to figure out which ones are the ones that are responsive. [00:20:07] Speaker 00: The part where you assemble the documents and then go through the process of identifying which ones are responsive. [00:20:12] Speaker 00: Yeah, you might have to actually copy documents in that process. [00:20:15] Speaker 00: You might have to send emails that attach PDFs. [00:20:18] Speaker 00: You might have to do all kinds of things that enable you to do the calling. [00:20:22] Speaker 00: to identify which documents are actually responsive, and then at the very end stage, you copy those documents so that you can turn them over. [00:20:29] Speaker 00: But everything that happens before the copying of the identified documents so that you can turn them over is not taxable in the hardcopy context. [00:20:36] Speaker 00: And it sounds like in the e-discovery context, the initial stage, uploading the 2.4 million, let's just use that one, [00:20:45] Speaker 00: Yeah, you have to do that in order to be able to identify which subset of that catch of documents are ultimately going to be imaged, copied, and sent over. [00:20:55] Speaker 00: But the part where you upload the entire gamut in order to call them so you can identify which ones are going to be turned over, that's just not making copies. [00:21:06] Speaker 02: Judge, eDiscovery is just different than producing a paper. [00:21:10] Speaker 02: In the eDiscovery context, [00:21:12] Speaker 02: that it's one holistic process, and all of these steps are intrinsic in the process of making copies. [00:21:18] Speaker 02: While some of the examples you gave in the paper contacts may have been related to copying, so paying rent for an office, they're not intrinsic to the process of copying. [00:21:30] Speaker 02: Electronic discovery is just different. [00:21:32] Speaker 02: And I would also make a movie. [00:21:34] Speaker 00: You go ahead, sorry. [00:21:36] Speaker 00: I don't know what we're supposed to do with searching, for example. [00:21:42] Speaker 00: I mean, e-discovery, part of the e-discovery process is searching all the e-files so that you can identify which ones are responsive. [00:21:48] Speaker 00: That just does not seem like something that the statute meant to allow the prevailing party to recover. [00:21:55] Speaker 00: Because in any conceivable analogy I can come up with, that's just the process of document review. [00:22:03] Speaker 00: So you go through and figure out what's, yeah, you're right. [00:22:05] Speaker 00: It all happens, you know, sort of seamlessly from how I understand these platforms work. [00:22:11] Speaker 00: And so you might pay some e-discovery vendor a significant amount because they can do all of this efficiently. [00:22:16] Speaker 00: But a lot of what they're doing is just not recoverable. [00:22:19] Speaker 02: Joey, we're not requesting costs for searching. [00:22:22] Speaker 02: We agree that that's performing the substantive work of the case, and that's outside the scope of taxable costs. [00:22:27] Speaker 00: But we're seeing the e-discovery platform doing that. [00:22:29] Speaker 00: I thought one of the virtues of the e-discovery platform is that it allows, for example, keyword searching of a bunch of things on the hard drive. [00:22:37] Speaker 02: So the costs the KBR seeks are costs for the platform itself, are not the labor costs, for example, for actually doing the searching. [00:22:45] Speaker 02: And I think I wanted to make one additional point. [00:22:47] Speaker 01: Wait a minute. [00:22:49] Speaker 01: Will you go ahead and make your point? [00:22:51] Speaker 02: Sorry. [00:22:51] Speaker 02: In the paper context, it was priced by page of the final production copies. [00:22:58] Speaker 02: And a number of costs were built into that. [00:23:01] Speaker 02: Labor costs, supplies costs. [00:23:04] Speaker 02: In the eDiscovery context, the pricing model is just different. [00:23:07] Speaker 02: Vendors don't price based on the final electronic copy, which itself has little, if any, monetary value. [00:23:13] Speaker 02: They price based on stages of the process. [00:23:15] Speaker 01: But that doesn't answer our question. [00:23:19] Speaker 01: What you're really saying is that as a result of doing this digitally now is that the recoverable costs are going to be dramatically lower because there is no any longer physical copying. [00:23:33] Speaker 01: There won't be, it's just pushing a button and producing the ten documents. [00:23:37] Speaker 01: So that just reduces the cost. [00:23:39] Speaker 01: It doesn't mean that you need to reach back and it doesn't require that you reach back further into the process. [00:23:45] Speaker 01: and recover more services in order to increase the cost. [00:23:48] Speaker 01: That just doesn't answer the question. [00:23:50] Speaker 02: Judge Tato, I think that that view is contrary to the limited legislative history that exists. [00:23:56] Speaker 01: Before you go into legislative history, my view is the statute is pretty clear, but let me tell you what really worries me. [00:24:04] Speaker 01: If we go beyond sort of the physical model, [00:24:09] Speaker 01: If we go beyond, what is it, $360 here? [00:24:11] Speaker 01: The actual copying of the... 362 is what it is. [00:24:16] Speaker 01: Whatever it is. [00:24:19] Speaker 01: As far as I can tell, and I've been here a long time, the calculation of costs is routine. [00:24:26] Speaker 01: It never produces disputes. [00:24:29] Speaker 01: The Supreme Court said in Taniguchi, they're relatively minor incidental expenses. [00:24:36] Speaker 01: They're almost always just calculated by the clerk's office. [00:24:38] Speaker 01: If we go beyond [00:24:39] Speaker 01: sort of a clear line rule, namely it's the cost of ultimate copying the documents of the plaintiffs. [00:24:50] Speaker 01: The recovery of costs is going to become another battleground for litigation. [00:24:54] Speaker 01: It's just we're going to have this in every case where you're trying to figure out where the lines are. [00:25:00] Speaker 01: And not only is that not what [00:25:02] Speaker 01: the recovery of costs is supposed to be, but my other worry is that you're going to be shifting to cost recovery, expenses and costs that can only be recovered under fee shift extensions. [00:25:15] Speaker 01: That worries me also. [00:25:17] Speaker 01: So how do you help me with those two concerns? [00:25:20] Speaker 02: Judge Tatum, so first, KBR provided [00:25:24] Speaker 02: documentation of all of its e-discovery costs. [00:25:26] Speaker 02: There are invoices for its e-discovery costs, and the clerk was able to- That assumes the answer to the question. [00:25:34] Speaker 01: I know you have them there, but the question is, are they recoverable costs under the statute? [00:25:40] Speaker 01: Sure. [00:25:40] Speaker 02: Sorry, I misunderstood your question. [00:25:42] Speaker 02: I thought the question was, can the district court, can the clerk, based on the documentation that exists, [00:25:48] Speaker 02: easily packs the cost and the answer to that is yes. [00:25:51] Speaker 01: Look at the confusion the three of us are having and the disagreement right here in the courtroom about what's included and what's not included. [00:26:00] Speaker 01: We're not going to have the clerk's office try to figure that out. [00:26:02] Speaker 02: Well, I do think this court should give clear guidelines. [00:26:05] Speaker 03: See, when you use the word intrinsic, it's very interesting. [00:26:08] Speaker 03: I mean, I guess I'd use it, too, if I were in your position. [00:26:11] Speaker 03: It kind of hides away everything. [00:26:12] Speaker 03: What you're suggesting is that everything that you have to do to make it convenient for you to make the final copy should be counted as cost. [00:26:21] Speaker 03: That's just wrong. [00:26:23] Speaker 03: There's nothing in the statute of precedent. [00:26:25] Speaker 03: You're absolutely right. [00:26:26] Speaker 03: If you mean intrinsic that way, yeah, then all these processes, they're all intrinsic. [00:26:32] Speaker 03: They're all subsumed under one umbrella. [00:26:34] Speaker 03: But that begs the question that my colleagues and I have been resting. [00:26:37] Speaker 03: The only thing you're entitled to is the cost for the final copy. [00:26:41] Speaker 03: And it's nice that your preparation or getting ready to do that is different and fun and clean, and you can do it in a nice way now. [00:26:49] Speaker 03: It doesn't matter. [00:26:50] Speaker 03: You only are entitled to a recovery for cost for the actual copying of the found documents. [00:26:56] Speaker 02: Judge Edwards, two points. [00:26:58] Speaker 02: So first, if this court were to hold [00:27:00] Speaker 02: A prevailing party is only entitled to the cost for the final copy. [00:27:04] Speaker 02: It would be splitting from four other circuits. [00:27:06] Speaker 02: It would be splitting from the Federal Circuit and CBD Flint, which made clear that... Well, if we adopted the dissent's view. [00:27:13] Speaker 03: I suppose that's true. [00:27:14] Speaker 03: Well, then the dissent's view is picked up by the other circuits. [00:27:18] Speaker 03: Well, so. [00:27:18] Speaker 03: I mean, if you take the descent view in the Ninth Circuit, most of what, I mean, the Federal Circuit, most of what they say is fine. [00:27:25] Speaker 03: The descent cleans it up a little bit. [00:27:27] Speaker 03: And then the other circuits are consistent with that. [00:27:29] Speaker 03: It's a pretty straightforward view in all the circuits. [00:27:32] Speaker 01: Actually, either way we go in this case, there's a circuit split, isn't there? [00:27:36] Speaker 01: Yes, that's correct. [00:27:37] Speaker 01: So we can't avoid a circuit split. [00:27:39] Speaker 01: That doesn't get you anywhere here. [00:27:40] Speaker 01: We just have to pick the circuit we like. [00:27:43] Speaker 02: Judge Tatel, so the split currently is 4 to 2. [00:27:46] Speaker 02: So four circuits have held that initial copying cost. [00:27:49] Speaker 02: So these are the cost of imaging the initial source media are literally copying. [00:27:54] Speaker 02: You're literally copying a hard drive. [00:27:56] Speaker 02: And that those call. [00:27:57] Speaker 01: You're not helping me with this by telling me four circuits went this way and three circuits went the other way. [00:28:03] Speaker 01: I know that. [00:28:05] Speaker 01: This court is trying to interpret this statute. [00:28:07] Speaker 01: So you've got to make your argument about why [00:28:11] Speaker 01: why the costs you're seeking in recovery are quote, making copies. [00:28:15] Speaker 02: Judge Taylor, so I think in the absence of substantial legislative history, it's instructive to look at the context of [00:28:21] Speaker 02: at the time. [00:28:22] Speaker 02: This court presumes that Congress acts with knowledge of the legal landscape in which it's legislating. [00:28:27] Speaker 02: And in 2008, the legal landscape was the federal rules were just amended in 2006 to make clear that a party has the same obligation to produce ESI that it has to produce paper documents. [00:28:38] Speaker 02: The second edition of the Sedona principles were just issued, providing additional guidance and best practices for e-discovery. [00:28:45] Speaker 02: And there were a number of studies and publications about the increased cost of e-discovery. [00:28:50] Speaker 02: Congress dealt with this new reality by amending Section 1920 in a way that accounts for the differences between paper and electronic copies. [00:28:59] Speaker 02: Before 2008, a prevailing party could recover costs for copies of paper. [00:29:03] Speaker 02: This allowed recovery of a substantial portion of the prevailing party's costs because the administrative costs were built into the final per page rate. [00:29:12] Speaker 02: But if Congress had intended to continue that practice in the e-discovery context, it could have changed the statute to say cost of copies of any materials. [00:29:23] Speaker 02: But it didn't say that. [00:29:24] Speaker 02: It said the cost of making copies. [00:29:27] Speaker 02: And the definition of making in this context is the process of producing something. [00:29:35] Speaker 02: That clearly extends beyond the final production copy. [00:29:39] Speaker 02: I think there could be disagreement about how far back it extends, but it clearly extends beyond the final production copy. [00:29:45] Speaker 01: I just have one last question about the binders. [00:29:48] Speaker 01: What did you think about Mr. Yoder's response to my question about the binders, which is that our rule about briefs requires the briefs to be bound and covered? [00:29:58] Speaker 02: So this is a question of necessity, Judge Taylor, which is a factual question. [00:30:02] Speaker 01: In other words, you're going to have a big pile of papers [00:30:05] Speaker 01: You can't just hand them over, you've got to bind them, right? [00:30:09] Speaker 02: Is that your point? [00:30:12] Speaker 02: That is what the district court determined, yes, and that it was reasonably necessary for KBR to do this, and just two points about what necessary means. [00:30:20] Speaker 02: Necessary is determined from the prevailing party's perspective at the time the cost was incurred, and necessary means [00:30:29] Speaker 02: reasonably necessary, not indispensable. [00:30:32] Speaker 02: I think that on this issue, this is a matter where deference to the district court is clearly appropriate. [00:30:37] Speaker 01: Okay. [00:30:38] Speaker 01: Thank you. [00:30:38] Speaker 02: Thank you. [00:30:39] Speaker 01: Did Mr. Yoder have any time? [00:30:44] Speaker 01: Mr. Yoder has one minute and four seconds. [00:30:44] Speaker 01: Okay. [00:30:45] Speaker 01: Mr. Yoder, you can take two whole minutes. [00:30:49] Speaker 04: Thank you, Joe Shea. [00:30:51] Speaker 04: I just have a few points to make regarding KBR's arguments. [00:30:55] Speaker 04: KBR said that they did not at all seek cost to recover searching. [00:31:01] Speaker 04: However, on page A28 of the appendix, it says that KBR internal costs were for their staff to process, load, search, and produce data and provide project management. [00:31:15] Speaker 04: On page 36 of their brief, they specifically say that the eDiscovery platform was used to filter, conduct searches, [00:31:23] Speaker 04: and conduct technology assisted review. [00:31:26] Speaker 04: Secondly, the legislative history as reviewed by all of the courts, the Federal Circuit, the Third Circuit, have found that it did not expand as KBR argues. [00:31:36] Speaker 04: Specifically, the statute was amended word for word by recommendations from the Judicial Conference. [00:31:43] Speaker 04: The report coming out of the judicial conference says the statutory amendments were limited and the amendment to this section would expand the concept of papers. [00:31:54] Speaker 04: It does not say it expands the concept of making copies or copying. [00:31:57] Speaker 04: It's only the concept of what papers means. [00:32:01] Speaker 04: If there are no more questions. [00:32:04] Speaker 01: Okay, thank you both. [00:32:05] Speaker 01: The case is submitted.