e.Digital stipulated, and this Court ordered, that each party would bear its own costs with
respect to all of the affirmative claims asserted in e.Digital’s counterclaim, and several claims
asserted by digEcor, including the unfair competition claims, the defamation claim, the trade
secret claims, the breach of confidentiality agreement claim, and the indemnification claim (the
“Excluded Claims”). Although e.Digital’s Supplemental Bill of Costs acknowledges this by
reducing the costs claimed by approximately $11,000 for costs that e.Digital says are related
solely to the Excluded Claims, e.Digital’s Bill of Costs is still objectionable because e.Digital
continues to ask the Court to award recovery of costs that cannot be recovered because they were
incurred in connection with the Excluded Claims and are therefore barred by the Court’s Orders.
For example, with respect to the depositions of Chris Wood and William Blakeley, e.Digital
reasons that since some of the examination of these persons pertained to issues that were tried,
even though other parts of the examination pertained to the Excluded Claims, e.Digital believes
it should recover costs for the
entire
deposition transcript. e.Digital is barred from recovering
costs for these transcripts because the Court has already ordered that each party will bear its own
costs on the Excluded Claims. Even if some apportionment were appropriate, e.Digital cannot
recover an apportioned amount because it has failed to clearly and concisely apportion costs for
the Excluded Claims for all deposition and copying costs that cannot be solely attributed to the
Excluded Claims.
digEcor also objects to Supplemental Bill of Costs because it seeks to recover OCR costs.
OCR is a computer process that transforms documents that are already readable by humans into a
text format that can be searched electronically. OCR’ing is a unique service that has nothing to
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do with exemplification of any documents, and thus is not recoverable.
digEcor also objects to the Supplemental Bill of Costs on the ground that e.Digital is not
the prevailing party in this litigation as is required to obtain an award of any costs.
PROCEDURAL HISTORY
e.Digital has filed three Bills of Cost in this case. e.Digital filed its first Bill of Cost (Dkt.
407) on October 2, 2009. It filed an amended Bill of Costs (Dkt. 406 & 407) on October 19,
2009 following the Court’s amended judgment awarding digEcor $80,000.00. That same day,
digEcor filed an Objection to the original and Amended Bills of Costs (Dkt. 410). Then, on
October 26, 2009, e.Digital filed a Supplemental Bill of Costs (Dkt. 414). digEcor now objects
to the Supplemental Bill of Costs.
ARGUMENT
The Supplemental Bill of Costs requests costs for the following: (1) fees to the clerk, (2)
fees for service of summons and subpoenas, (3) fees for printed or electronically recorded
transcripts; (4) fees for witnesses pursuant to 28 U.S.C. § 1920(3), and (5) fees for
exemplification and the costs of making copies. Defendant’s Supplemental Itemization of Costs
(Dkt. 414), p. 2.
digEcor objects to e.Digital’s requests for costs for printed or electronically recorded
deposition transcripts and for exemplification and copying for the following reasons: (1)
e.Digital stipulated to, and the Court ordered, the parties to bear their own costs related to the
Excluded Claims; and (2) OCR is not a recoverable cost. In addition, (3) digEcor objects to all
costs because e.Digital is not the globally prevailing party.
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I. RECOVERY OF COSTS RELATED TO THE EXCLUDED CLAIMS IS
BARRED BY THE PARTIES’ STIPULATIONS AND THE COURT’S
PRIOR ORDERS.
The Court should deny e.Digital’s request for costs related to the deposition transcripts
and all copying expenses because the Court has already ordered each party to bear its own costs
incurred with respect to the Excluded Claims. Orders (Dkt. 309, 310, & 347). The Excluded
Claims represented a significant cost to both parties given that they were not dismissed until after
the completion of discovery. Moreover, in light of the factually complicated nature of digEcor’s
claims for unfair competition and e.Digital’s counterclaims, the parties focused significant
discovery efforts—and incurred substantial costs—on these issues. As a result, when the parties
agreed to dismiss the Excluded Claims, the parties’ bargained that each would bear its own costs
on these claims. e.Digital’s request for all of its costs related to copying expenses and deposition
transcripts in the Supplemental Bill of Costs contravenes both the parties’ bargain and the
Court’s Orders.
e.Digital does not dispute that under the Court’s Orders it is responsible for its own costs
incurred with respect to the Excluded Claims. However, e.Digital’s Supplemental Bill of Costs
does not fully and fairly comply with the Court’s Orders because in it e.Digital requests costs
that were incurred on the Excluded Claims. Rather than removing all costs associated with the
Excluded Claims, e.Digital has removed only those costs that can be solely linked to the
Excluded Claims, such as the deposition costs of Fred Rampey and Steven Hurst, or the witness
fees for DeCuir, Inc., Wolf Electronix, and Triad Engineering. e.Digital has failed to remove the
other costs incurred with respect to the Excluded Claims. For example, e.Digital requests a full
reimbursement of its costs for the deposition transcripts and recordings of Brent and Chris
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Wood, Brent Wood’s 30(b)(6) deposition, Robert Putnam, Fred Falk, Kevin Bostenero, Fred
Falk’s 30(b)(6) deposition, William Blakeley, and Scott Hampton (collectively, the “Mixed
Depositions”). These witnesses each were questioned and gave testimony about the Excluded
Claims. Likewise, the parties exchanged a significant number of documents and used as
deposition exhibits a number of documents that were related to the Excluded Claims. By
requesting costs for the entire deposition transcripts and all copying, e.Digital has asked the
Court to award it costs that e.Digital agreed and the Court previously ordered e.Digital to bear on
its own.
e.Digital does not dispute that some of the costs for the copying or for the Mixed
Depositions were incurred with respect to the Excluded Claims. Instead, e.Digital justifies its
inclusion of the entire costs on the grounds that it is impossible to determine which copies were
made with respect to the Excluded Claims or because the majority of costs for the Mixed
Depositions were reasonably necessary for trial. Reply in Support of e.Digital’s Bill of Costs
(Dkt. 412), p. 5-6. In support of its argument, e.Digital cites to just 39 of 196 pages of Chris
Wood’s Deposition and to 36 of 193 pages of William Blakeley’s deposition. These references
do not support e.Digital’s assertion that the “majority of costs were incurred” with respect to the
non-Excluded Claims. Moreover, regardless of what percentages of any of the Mixed
Depositions or copying expenses were devoted to the Excluded Claims, e.Digital stipulated and
the Court ordered that e.Digital would bear its own costs related to the Excluded Claims.
Nothing in the stipulations or Orders gives e.Digital the right to pass costs on to digEcor because
part of the cost was incurred on other claims or because apportioning costs is too difficult.
Because the Court has already issued Orders regarding costs, this case is distinguishable from the
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cases cited by e.Digital, in which the Court awarded costs based solely on the determination of
prevailing versus non-prevailing claims, and not based on any prior court order regarding costs.
See Burton v. R.J. Reynolds Tobacco Co.
, 395 F. Supp. 2d 1065, 1075 (D. Kan. 2005).
Moreover, e.Digital has the burden to “clearly and concisely itemize and describe” its
costs pursuant to DUCivR 54-2. By arguing only that the “majority” of costs were incurred with
respect to non-Excluded Claims or that apportionment is impossible, e.Digital has failed to meet
its burden. Because e.Digital has failed to meet its burden, the Court should deny e.Digital’s
request for reimbursement of costs related to the Mixed Depositions and copying expenses.
See
DUCivR54-2(a) (providing that a party’s failure to meet its burden to clearly and concisely
identify costs warrants the disallowance of all costs). It is because e.Digital failed to meet this
burden that digEcor has asserted that the Court should refuse to award costs for the Mixed
Depositions and copying.
e.Digital’s failure to meet its burden to apportion the costs incurred with respect to the
Excluded Claims warrants the disallowance of all costs that have not been apportioned. The
Court should therefore deny e.Digital’s costs related to the Mixed Depositions and the copying.
II. E.DIGITAL CANNOT RECOVER SCANNING AND OCR COSTS.
e.Digital’s Bill of Costs includes Optical Character Recognition (“OCR”) as a cost for
which e.Digital seeks reimbursement.
See
Supplemental Itemization of Costs, Exhibit E (Dkt.
414-6), pp. 3, 4, 6, 7, 10, 11, 13, 14, 17, 18, 19, 20, 23, 25, 26, 28, 29, 30, 31, 32, 34, 35, 36, 37,
38, 41. e.Digital suggests that these costs are recoverable because scanning is the modern day
equivalent of copying. However, OCR does not simply refer to the imaging and scanning of
documents. Rather, OCR refers to a computer program that converts an electronically stored
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document into a searchable text file. OCR is not recoverable as a cost because the OCR
performs the work “an attorney, paralegal or law clerk would have to perform in its absence” and
thus is “more properly considered expenses incidental to an award of attorneys’ fees, not costs of
suit.”
Windy City Innovations, LLC v. America Online, Inc.
, Civ. No. 04-c-4240, 2006 WL
2224057 (N.D. Ill. 2006) (unpublished) (holding that AOL was not entitled to recover costs for
OCR). The Court should therefore deny all costs claimed by e.Digital related to OCR’ing of
documents.
III. E.DIGITAL IS NOT THE PREVAILING PARTY.
This Court should deny e.Digital’s Supplemental Bill of Costs because e.Digital is not the
prevailing party in this case. e.Digital prevailed on only a fraction of the total claims raised in
this litigation, and the Court entered a judgment in favor of digEcor in the amount of $80,000.00.
This argument is set forth in greater detail in digEcor’s Objection to e.Digital’s Amended Bill of
Costs (Dkt. 410), which is incorporated herein.
CONCLUSION
Based on the foregoing, this Court should deny e.Digital’s costs to the extent that
e.Digital’s Bill of Costs fails to apportion costs to the Excluded Claims and seeks reimbursement
for OCR’ing of documents.
DATED this 2nd day of November, 2009.
D
URHAM JONES &PINEGAR, PC
/s/
