Apeldyn Corporation v. Sony Corporation et al

Filing 223

MEMORANDUM ORDER granting in part and denying in part 215 MOTION to Review Taxation of Costs re 214 Costs Taxed (also filed on behalf of Sony Corporation and Sony Electronics Inc.) filed by Samsung Electronics Co. Ltd., Samsung Electronics America Inc. Signed by Judge Sue L. Robinson on 7/27/2016. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

APELDYN CORPORATION,

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) Civ. No. 11-440-SLR/SRF
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Plaintiff,
v.

SONY CORPORATION and SONY
ELECTRONICS INC.,
Defendants.

APELDYN CORPORATION,

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)

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Plaintiff,

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v.

) Civ. No. 11-581-SLR/SRF

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SAMSUNG ELECTRONICS CO., LTD. )

and SAMSUNG ELECTRONICS
AMERICA, INC.,
Defendants.

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MEMORANDUM ORDER
At Wilmington this 27 1h day of July, 2016, having examined defendants' motion to
review taxation of costs and the papers submitted in connection therewith;
IT IS ORDERED that said motion (D.I. 215) is granted in part and denied in part,
for the reasons that follow:
1. Standard of review. Federal Rule of Civil Procedure 54(d) authorizes a
district court to award costs to the prevailing party, consistent with the costs

enumerated under 28 U.S.C. § 1920. Race Tires Am., Inc. v. Hoosier Racing Tire

Corp., 674 F.3d 158, 170-71 (3d Cir. 2012). Therefore, although there is a "decided
preference for the award of costs to the prevailing party,"§ 1920 has been construed
"narrowly" in keeping with the "relatively minor, incidental expenses" listed in that
statute. Taniguchi v. Kan Pac. Saipan, Ltd., 132 S. Ct. 1997, 2006 (2012) (the Court
reiterated its view of "the narrow scope of taxable costs").
2. "In the District of Delaware, Local Rule 54.1 'provides guidance to counsel
and litigants as to how this Court has chosen, as a general matter, to exercise its
discretion with respect to taxation of costs.'" Bethea v. Rash, 2015 WL 4477693, at *2
(D. Del. July 22, 2015) (citation omitted). Depending on the circumstances of a case,
"the court retains the discretion to award costs beyond the limitations of Local Rule 54.1
to the fullest extent permissible under§ 1920," or not to award costs at all, since§ 1920
does not guarantee an award of costs.'' Id. (emphasis added).
3. The burden is initially on the party seeking costs "to prove entitlement to
reimbursement." Coalition to Save Our Children v. State Bd. of Educ., 901 F. Supp.
824, 833 (D. Del. 1995) (citing W. Virginia Univ. Hosps., Inc. v. Casey, 898 F.2d 357,
363 (3d Cir. 1990)). Consistent with 28 U.S.C. § 1924, "[b]efore any bill of costs is
taxed, the party claiming any item of cost or disbursement shall attach thereto an
affidavit ... that such item is correct and has been necessarily incurred in the case and
that the services for which fees have been charged were actually and necessarily
performed." In other words, costs will not be taxed unless "the expenses are
reasonable, necessary to the prosecution of the litigation, and adequately documented."

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Coalition, 901 F. Supp. at 833.

4. Deposition costs. Under 28 U.S.C. § 1920(2), a party can claim as costs
the "[f)ees for printed or electronically recorded transcripts necessarily obtained for use
in the case." The Third Circuit has stated in this regard that "deposition expenses,
including the costs of deposition transcripts, may be awarded as costs to the prevailing
party if the court determines, at the end of the litigation, that the copies were of papers
necessary for use in the case." Tabron v. Grace, 6 F.3d 147, 160 n.9 (3d Cir. 1993).
Local Rule 54.1 (b)(3) reflects such guidance, consistent with the discretionary nature of
Fed. R. Civ. P. 54 (d)(1) 1 and§ 1920, 2 by allowing the "reporter's reasonable charge for
the original and one copy of a deposition and the reasonable cost of taking a deposition
electronically or magnetically recorded only where a substantial portion of the
deposition is used in the resolution of a material issue in the case." This latter phrase
has been further interpreted to exclude from taxation deposition transcripts that were
used "to develop general facts of the case, to prepare [an] attorney for crossexamination of [adverse] witnesses, or [that] were merely referenced at trial." Bethea,
2015 WL 4477693, at *4. See also Honeywell lnt'l Inc. v. Hamilton Sunstrand Corp.,
2009 WL 3153496, at *2 (burden on movant to show that "a substantial portion was
actually used in the resolution of a material issue.") (emphasis in original). The fact

1

"Unless ... a court order provides otherwise, costs ... should be allowed to
the prevailing party." (Emphasis added)
2

"A judge ... may tax as costs the following .... " (Emphasis added)

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that judges exercise their discretion differently3 should be neither surprising nor binding.
5. According to the bill of costs at issue, the Clerk of Court relied on the
analyses in Concordance Corp. v. Amazon, Inc., 855 F. Supp. 2d 244, 254-255 (D.
Del. 2012), and Honeywell, 2009 WL 3153496, at *2, for the proposition that "the
taxation of deposition costs should be limited to instances in which 25% or more of the
depositions were used in the resolution of a material issue." (D.I. 214 at 3) As noted
above, the judge in Honeywell required actual use of the deposition. In Concordance,
the judge went the further step of defining what "substantial use" was, by literally
counting the pages of the deposition transcripts made part of the record.
6. The mathematical exercise undertaken by the Clerk's Office at bar is a
reasonable starting point for the administrative task of assigning costs, given that the
Clerk of Court is not in a position to judge the substantive importance of the deposition
testimony.

However, given the limits placed on counsel vis a vis the record they can

present (i.e., limited trial hours and limited page limits), such mathematical precision is
not always the best barometer of whether the depositions were "necessarily used" in a
case to resolve a material issue.
7. In the case at bar, the depositions in dispute were cited as important
considerations in granting summary judgment for defendants on the issues of invalidity
and non-infringement due to collateral estoppel. Although I only cited the most critical
3

See, e.g., Lab. Skin Care Inc. v. Ltd. Brands, Inc., 2016 WL 1266564, at *4 (D.
Del. Mar. 30, 2016) ("The Court finds that Defendants' decision to take the depositions
of corporate representatives and to purchase copies of the transcripts of these
depositions for potential use at trial was at least 'reasonably necessary' as part of their
efforts to effectively litigate this patent case.") (citing 10-54 Moore's Federal Practice
Civil§ 54.103).

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pages of the depositions in support of my decision, that does not mean that the
remainder of the depositions were not reviewed and used in a broader sense in my
analysis. I conclude that the depositions of Rumbaugh, Conner, and Yeh were
necessarily and substantially used to resolve material issues in the case.
8. Videotaped depositions. With respect to the costs of videotaping the
deposition of Dr. Kmetz, I agree that such costs should not be reimbursed. The
videotaped version of Dr. Kmetz's deposition certainly was not used in connection with
the motion practice and, as an expert, it would be exceedingly rare for Dr. Kmetz to
testify at trial via deposition (videotaped or otherwise), as opposed to as a live witness.
In sum, defendants had no reasonable basis to incur this cost.
9. Costs associated withe-discovery. Title 28 U.S.C. § 1920(4) states that a
judge or clerk of any court may tax as costs "[f]ees for exemplification and the costs of
making copies of any materials where the copies are necessarily obtained for use in the
case." Local Rule 54.1(b)(11) provides: "Claims for costs other than those specifically
mentioned in the preceding paragraphs of subpart (b) of this Rule ordinarily will not be
allowed, unless the party claiming such costs substantiates the claim by reference to a
statute or binding court decision." The Third Circuit allows the taxation of e-discovery
costs, albeit limited to the costs associated with those tasks and processes which are
the functional equivalent of "making copies." See Race Tires America, Inc., 674 F.3d at
160 (concluding that "only scanning and file format conversion can be considered to be
'making copies'").
10. The Clerk of Court disallowed certain e-discovery costs at bar, including the

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costs associated with converting electronic documents into color image files and the
costs associated with Bates labeling. With respect to the latter, I agree with those
courts that have recognized the real-world necessity of Bates labeling a document
production and conclude that the costs associated with such generally should be
recoverable. See DSM Desotech, Inc. v. 30 Systems Corp., 2013 WL 3168730, at *2
(N.D.111. June 20, 2013) ("Courts in this district have allowed costs for Bates labeling as
part of 'making copies' particularly in complex litigation requiring a large amount of
documents to be produced."). 4 See also Nobel Biocare USA, LLC v. Technique
D'Usinage Sin/ab, 2013 WL 819911, at *6 (E.D. Va. March 4, 2013) (collecting cases

which "generally hold that the costs of file format conversion, electronic Bates stamping,
and other costs of actually producing documents for electronic discovery are taxable as
the functional equivalent of copies.").
11. With respect to the costs associated with formatting, the parties in most
sophisticated cases control those costs through agreement. In this case, the parties
agreed in their protective order that
electronically stored information ... shall be produced to the requesting
party as text searchable image files (e.g., TIFF) if the producing party
maintains such text searchable files for its own use. When a text searchable
image file is produced, the producing party must preserve the integrity of the
underlying electronically stored information, i.e., the original formatting, the
metadata and, where applicable, the revision history. Information shall be
produced as single page TIF (black and white) or JPEG (color) images and,
where appropriate, associated multi-page text files containing extracted text
or OCR with Summation load files containing all requisite information, including

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As opposed to the costs associated with confidentiality branding, which is "the
kind of work conventionally performed by attorneys or paralegals, the costs of which are
not recoverable under section 1920 and go beyond mere reproduction or
exemplification." Id.

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relevant metadata ....
(D.I. 86 at~ 26) 5 According to the declaration of Donte Hubbard, 6 submitted in support
of defendants' request for $86,053.33 in such costs, "in accordance with Smart Data's
standard practices, Smart Data prepared native files without color information for
production as black and white images and prepared native files with color information
for product as color [JPEGs]." (D.I. 213,

~~

2, 3) (emphasis added) According to the

declaration of Neil P. Sirota, 7 "the costs being sought represent the cost of uploading
and converting production documents into TIFF files for documents that were actually
produced to Apeldyn pursuant to its requests for production." (D. I. 210,

~

12)

(emphasis added)
12. As plaintiff points out, there are inconsistencies between defendants' ESI
invoices and other of their documents with respect to formatting. In light of these
inconsistencies, along with the fact that there is no reasonable way to determine the
accuracy of the number of color documents produced or the costs associated with
Bates labeling, 8 and keeping in mind that defendants "chose to oppose an early

5

The protective order is generally consistent with the District of Delaware Default
Standard for Discovery, Including Discovery of Electronically Stored Information ("ESI")
at 5(c): "ESI and non-ESI shall be produced to the requesting party as text searchable
image files (e.g., PDF or TIFF), and "the producing party must preserve the integrity of
the underlying ESI, i.e., the original formatting .... "
6

Mr. Hubbard is the former president of Smart Data Consulting ("Smart Data"),
the company that provided ESI production services for defendants in this case.
7

A partner with Baker Botts L.L.P., counsel of record for defendants.

8

The Bill of Costs claims a flat fee of $86,053.33 "in costs associated with
electronic discovery that are the functional equivalent of making copies." (D.I. 208 at 6)

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resolution and proceed with discovery" (D.I. 218 at 4), thereby increasing the costs of
litigation, I believe that defendants should recover some, but certainly not all, of their ediscovery costs. Under all the circumstances, defendants should recover 25% of their
e-discovery costs, or $21,513.33.
12. Conclusion. For the reasons stated, defendants' request for costs is
granted in part and denied in part, and the taxation of costs is amended to include
$6,783.05 in costs associated with the deposition transcripts of Kmetz, Rumbaugh,
Conner, and Yeh (excluding the $850 cost of videotaping the deposition of Dr. Kmetz),
and $21,513.33 of e-discovery costs, for a total of $28,296.38.

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