Sumotext Corp. -v- Zoove, Inc. ( 2021 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 SUMOTEXT CORP., Case No. 16-cv-01370-BLF 9 Plaintiff, ORDER DENYING DEFENDANT 10 v. STARSTEVE, LLC’S MOTION FOR REVIEW OF THE CLERK’S 11 ZOOVE, INC., et al., TAXATION OF E-DISCOVERY COSTS 12 Defendants. [Re: ECF 530] 13 14 15 Defendant StarSteve, LLC (“StarSteve”) has filed a Motion for Review of the Clerk’s 16 Taxation of E-Discovery Costs, arguing that the Clerk improperly denied its request for 17 $14,804.00 in electronic discovery costs. See Mot., ECF 530. No response to the motion has been 18 filed by Plaintiff Sumotext Corporation (“Sumotext”) or any other party. The Court finds the 19 motion suitable for decision without oral argument. See Civ. L.R. 7-1(b). 20 The motion is DENIED for the reasons discussed below. 21 I. BACKGROUND 22 Sumotext filed this case on March 21, 2016. See Compl., ECF 1. The case went to trial 23 almost four years later, on February 24, 2020. Sumotext tried two antitrust claims to a jury, 24 asserting that StarSteve and co-defendants Zoove, Inc., Virtual Hold Technology, LLC, and VHT 25 StarStar LLC violated federal antitrust laws by seeking to exclude Sumotext from the markets for 26 leasing and servicing StarStar numbers in the United States. The jury rendered a verdict for 27 Defendants on March 6, 2020 and judgment was entered for Defendants on the same date. See 1 StarSteve filed a Bill of Costs on March 20, 2020. See BOC, ECF 485. Following meet- 2 and-confer between StarSteve and Sumotext, StarSteve filed an Amended Bill of Costs on April 3, 3 2020, requesting costs in the total amount of $26,046.10. See Am’d BOC, ECF 492. StarSteve 4 requested $11,102.10 in costs for deposition transcripts, $140.00 in costs for deposition exhibits, 5 and $14,804.00 in costs for disclosure/formal discovery documents. See id. 6 As to the latter category of costs, StarSteve attached explanatory documents indicating that 7 the $14,804.00 consisted of a portion of the monthly subscription fees paid by StarSteve’s counsel, 8 Apex Law APC (“Apex”), to an electronic data discovery (“EDD”) vendor, Logikcull. See 9 Attachment to Am’d BOC at 1-2, 19-63, ECF 492-1. It appears that Apex uses Logikcull’s cloud- 10 based platform for its EDD needs in all its cases, paying Logikcull a monthly subscription fee of 11 $1,500 for 100 GBs of data storage plus overages when additional data storage is needed or more 12 than four users access the service. See id. A description of Logikcull’s platform explains that 13 “[d]iscovery software that is cloud‐based has the added advantage of making it possible to upload, 14 review, and produce documents online, without the delays, costs, and frustrations associated with 15 eDiscovery approaches such as manual review, third‐party vendors, or legacy software.” Id. at 21. 16 Apex “allocate[s] the portion of the charges to the clients based on their usage of the 17 platform during the month.” Attachment to Am’d BOC at 19, ECF 492-1. A summary table 18 attached to the Amended Bill of Costs reflects the portion of each month’s $1,500 subscription fee 19 that Apex attributed to StarSteve. See id. at 1-2. For the months November 2016 through March 20 2018, Apex allocated $300 of its monthly subscription fee to StarSteve. See id. For the months 21 April 2018 through December 2018, the allocation was $400. See id. For the months January 22 2019 through November 2019, the allocation to StarSteve ranged between $400 and $550. See id. 23 Finally, for the months December 2019 and January 2020 the allocations were $717.20 and 24 $697.20, respectively. See id. No declaration was included to explain how Apex arrived at those 25 figures or to verify any of the facts included in the description of Logikcull’s services. 26 The Clerk taxed costs for StarSteve on May 17, 2021, in the total amount of $10,927.30. 27 See Taxed Costs, ECF 528. The Clerk allowed the bulk of the costs requested for deposition 1 requested for Logikcull’s fees. As to the Logikcull fees, the Clerk indicated that “[s]upporting 2 documentation does not itemize or support full amount claimed.” Id. StarSteve filed the present 3 Motion for Review of the Clerk’s Taxation of E-Discovery Costs on May 25, 2021, seeking 4 review of the Clerk’s denial of the $14,804.00 in Logikcull fees. 5 II. LEGAL STANDARD 6 “As a general rule, costs and fees should be awarded to the prevailing party.” In re Online 7 DVD-Rental Antitrust Litig., 779 F.3d 914, 926 (9th Cir. 2015) (citing Fed. R. Civ. P. 54(d)(1)). 8 “The clerk may tax costs on 14 days’ notice.” Fed. R. Civ. P. 54(d)(1). “On motion served within 9 the next 7 days, the court may review the clerk’s action.” Id. 10 “[A] district court’s discretion to award costs is limited to particular types of costs 11 enumerated in 28 U.S.C. § 1920.” Id. Section 1920 lists six categories of costs that may be 12 recovered by a prevailing party. See id. As relevant here, § 1920(4) provides that taxable costs 13 include “[f]ees for exemplification and the costs of making copies of any materials where the 14 copies are necessarily obtained for use in the case.” 28 U.S.C. § 1920(4). This district’s Civil 15 Local Rules interpret that provision to mean that “[t]he cost of reproducing disclosure or formal 16 discovery documents when used for any purpose in the case is allowable.” Civ. L.R. 54-3(d)(2). 17 III. DISCUSSION 18 StarSteve moves for review of the Clerk’s denial of its request for $14,804.00 in fees to 19 Logikcull. Before turning to the substance of the motion, the Court notes StarSteve’s 20 acknowledgement that the motion was due on May 24, 2021, seven days after the Clerk’s taxation 21 of costs on May 17, 2021. See Fed. R. Civ. P. 54(d)(1). The motion was filed shortly after 1:30 22 a.m. on May 25, 2021. StarSteve explains that its counsel worked diligently to file the motion 23 before midnight on May 24, 2021, but counsel’s health issues and other circumstances prevented 24 the timely filing. See Mot. at 1 n.1, ECF 530. StarSteve asks that the untimeliness of its motion 25 be excused and that the motion be considered on the merits. See id. 26 “Although a party may waive his right to move for review of costs by not filing the motion 27 within the proper time limits, a court has discretion to review an untimely motion, notwithstanding 1 2010); see also U.S., ex rel. Meyer v. Horizon Health Corp., No. C 00-1303 SBA, 2007 WL 2 518607, at *3 (N.D. Cal. Feb. 13, 2007) (“[T]he timeliness requirement of Rule 54(d)(1) is not 3 jurisdictional and therefore a court has discretion to review it on the merits.”). The Court finds 4 that StarSteve has shown good cause for the late filing, and in the exercise of its discretion the 5 Court will consider StarSteve’s motion for review of the Clerk’s taxation of costs. 6 The Court next turns to StarSteve’s contention that the subscription fees paid to Logikcull 7 are taxable costs. StarSteve asserts that those fees constitute electronic discovery costs that 8 properly may be taxed pursuant to § 1920(4), which provides that a court may tax “[f]ees for 9 exemplification and the costs of making copies of any materials where the copies are necessarily 10 obtained for use in the case.” 28 U.S.C. § 1920(4). StarSteve also relies on Civil Local Rule 11 54(d)(2), which interprets § 1920(4) to mean that “[t]he cost of reproducing disclosure or formal 12 discovery documents when used for any purpose in the case is allowable.” Civ. L.R. 54-3(d)(2). 13 The Ninth Circuit has made clear that some electronic discovery costs may be taxable 14 under § 1920(4). See In re Online DVD-Rental Antitrust Litig., 779 F.3d at 932 (affirming in part 15 and vacating in part district court’s taxing of e-discovery and data management costs). For 16 example, when copies are made in a fashion necessary to comply with the parties’ agreed-upon 17 e-discovery obligations, or with a court order, the costs are taxable so long as the copies also are 18 “necessarily obtained for use in the case.” See id. at 928 (quoting § 1920(4). However, “fees are 19 permitted only for the physical preparation and duplication of documents, not the intellectual 20 effort involved in their production.” Id. (quotation marks and citation omitted). 21 District courts within the Ninth Circuit “have allowed e-discovery costs for scanning or 22 converting electronically-stored files into usable formats because such tasks fall within 28 U.S.C. 23 § 1920(4).” Left Coast Wrestling, LLC v. Dearborn Int’l LLC, No. 17-cv-00466-LAB (NLS), 24 2018 WL 2948532, at *2 (S.D. Cal. June 12, 2018), report and recommendation adopted, No. 17- 25 cv-466-LAB (NLS), 2018 WL 3032585 (S.D. Cal. June 19, 2018). “Courts within the Northern 26 District have awarded costs under this provision for scanning paper documents, electronic 27 scanning and conversion to PDF, TIFF conversion, OCR, image endorsement/Bates stamping, slip 1 electronically stamping Bates numbers, slipsheet preparation, blowback preparation, and OCR 2 conversion.” Linex Techs., Inc. v. Hewlett-Packard Co., No. 13-CV-00159-CW (MEJ), 2014 WL 3 5494906, at *4 (N.D. Cal. Oct. 30, 2014). “However, courts have not allowed recovery of costs 4 for the hosting of electronic data or for e-gathering and e-processing costs akin to the intellectual 5 effort involved in the production of documents or the research, analysis, and distillation of data.” 6 Left Coast Wrestling, 2018 WL 2948532, at *2; see also Phoenix Techs. Ltd. v. VMWare, Inc., No. 7 15-CV-01414-HSG, 2018 WL 4700347, at *5 (N.D. Cal. Sept. 30, 2018) (“Such e-discovery 8 storage costs or hosting fees are not taxable.”); Linex Techs., 2014 WL 5494906, at *4 9 (“Importantly, e-discovery hosting costs and associated fees are not compensable.”). 10 StarSteve argues that the Logikcull platform is capable of performing many types of tasks 11 for which costs are taxable. Indeed, StarSteve attached to its Amended Bill of Costs a chart 12 showing sixteen different types of tasks that generally are associated with electronic discovery and 13 indicating which of those tasks can be performed by Logikcull. See Attachment to Am’d BOC at 14 22, ECF 492-1. However, the chart does not show what tasks actually were performed on the 15 Logikcull platform with respect to this case during any given month. Thus, it is impossible to 16 determine which of each month’s fees constitute taxable costs, if any. Other courts have declined 17 to tax costs in similar circumstances. See, e.g., Mendoza v. Lithia Motors, Inc., No. 6:16-CV- 18 01264-AA, 2021 WL 354108, at *5 (D. Or. Feb. 2, 2021) (“[B]ased on the invoices submitted the 19 Court cannot discern whether these costs involved some intellectual efforts or were part of normal 20 discovery retention performed by attorneys, both of which are not taxable.”). Moreover, it is not 21 clear that each month’s fees relate to documents that actually were produced in this litigation. “A 22 narrow construction of the statute requires concluding that costs should be awarded based on what 23 Defendant produced, not on what Defendant uploaded to its e-discovery platform.” Phoenix 24 Techs., 2018 WL 4700347, at *5. 25 StarSteve cites a decision from this district in which substantial e-discovery costs were 26 found to be taxable under § 1920(4) and Civil Local Rule 54-3(d)(2). See Apple Inc. v. Samsung 27 Elecs. Co., No. 11-CV-01846-LHK, 2014 WL 4745933, at *11 (N.D. Cal. Sept. 19, 2014). In 1 electronic preparation and duplication, not the intellectual effort involved in the production, such 2 as searching or analyzing the documents.” /d. Additionally, the supporting declarations in Apple 3 represented “that costs associated with hosting the data, software user license fees, and vendor 4 || consulting time have not been included.” Jd. StarSteve did not submit any such attorney 5 declarations to the Clerk. 6 StarSteve has submitted to this Court a declaration of its counsel, Thomas N. Fitzgibbon, 7 || who is the managing shareholder in Apex. See Fitzgibbon Decl., ECF 530. Mr. Fitzgibbon states 8 that the $14,804.00 in fees to Logikcull “were required to use the service so I could efficiently and 9 completely produce electronic documents in response to discovery propounded by the other parties 10 and comply with the E-Discovery Order (ECF No. 113).” □□□ □□□ Mr. Fitzgibbon represents that 11 “It]hese activities can all be recovered consistent with Section 1920 as explained in the table on 12 || pages 21-23 of the Amended Bill of Costs as they were not solely for the convenience of counsel 5 13 and did not include any type of individual review charges by persons doing searching or 14 || manipulating the data.” Id. 42. As discussed above, the table provided with the Amended Bill of 3 15 || Costs does not show what activities actually were performed on the Logikcull platform with a 16 || respect to this case, or when. Mr. Fitzgibbon’s declaration simply does not provide the Court with 3 17 enough specificity to conclude that the $14,804.00 in fees to Logikcull constitute taxable costs 18 || under the authorities discussed above. 19 The Court finds that the Clerk properly disallowed the $14,804.00 in Logikcull fees. 20 || StarSteve’s Motion for Review of the Clerk’s Taxation of E-Discovery Costs is DENIED. 21 IV. ORDER 22 (1) StarSteve’s Motion for Review of the Clerk’s Taxation of E-Discovery Costs is 23 DENIED; and 24 (2) This order terminates ECF 530. 25 26 Dated: August 23, 2021 heh Lh amen) BETH LABSON FREEMAN 27 United States District Judge 28