Harry Barko v. Halliburton Company ( 2020 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 6, 2020 Decided March 27, 2020
No. 19-7064
UNITED STATES OF AMERICA, EX REL. HARRY BARKO ,
APPELLANT
v.
HALLIBURTON COMPANY, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:05-cv-01276)
Todd Yoder argued the cause for appellant. With him on
the briefs were Michael D. Kohn, David K. Colapinto, and
Stephen M. Kohn.
Christian D. Sheehan argued the cause for appellees. With
him on the brief were John P. Elwood, Craig D. Margolis, and
Tirzah S. Lollar. Alden L. Atkins, Kathleen C. Cooperstein, and
John M. Faust entered appearances.
Before: SRINIVASAN , Chief Judge, TATEL, Circuit Judge,
and EDWARDS, Senior Circuit Judge.
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Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: At the end of a typical case and at
the discretion of the district court, the winner may bill the loser
for costs authorized by 28 U.S.C. § 1920. In this case, we
consider costs awarded pursuant to two subsections of section
1920: subsection (4), which covers the “costs of making copies
of any materials where the copies are necessarily obtained for
use in the case”; and subsection (2), which covers “[f]ees for
printed or electronically recorded transcripts necessarily
obtained for use in the case.” Id. § 1920(4), (2). Because the
district court awarded costs in excess of those authorized by
these two provisions, we reverse in part, affirm in part, and
remand for the district court to retax costs in accordance with
this opinion.
I.
In this qui tam action brought under the False Claims Act,
31 U.S.C. §§ 3729 et seq., appellant Harry Barko alleged that
his former employer, Kellogg Brown & Root Services (KBR),
and various subcontractors “defrauded the U.S. Government by
inflating costs and accepting kickbacks while administering
military contracts in wartime Iraq.” In re Kellogg Brown &
Root, Inc., 756 F.3d 754, 756 (D.C. Cir. 2014). For purposes of
this appeal, the merits of Barko’s case are less important than
the details of the parties’ discovery.
Barko served sixty-four document requests and filed two
motions to compel; KBR compiled over 2.4 million potentially
responsive pages, ultimately producing over 171,000 of those
pages; and both parties noticed and conducted numerous
depositions. Discovery was so contentious that the case twice
made its way to our court, and both times we issued writs of
mandamus vacating district-court orders that had required
production of privileged documents. See In re Kellogg Brown
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& Root, Inc., 796 F.3d 137, 140 (D.C. Cir. 2015); In re Kellogg
Brown & Root, Inc., 756 F.3d at 756.
To process Barko’s document requests, KBR used an e-
discovery software called Introspect to “host, review, and
export data for production.” Appellees’ Br. 4. The 2.4 million
potentially responsive pages were loaded into Introspect, which
required scanning hard copies of certain documents into
electronic form and converting preexisting electronic files into
the hosting platform’s format. Within the platform, documents
were organized, keyword-searched, indexed, screened, and
otherwise processed—tasks familiar to any law-firm associate
who has survived “doc review.” As a last step, KBR converted
the 171,000 responsive documents into TIFF or PDF files,
transferred them onto USB drives, and produced the materials
to Barko’s counsel.
After the district court granted summary judgment to
KBR, pursuant to Federal Rule of Civil Procedure 54(d)(1)—
the procedural mechanism by which a prevailing party seeks
compensation for litigation expenses—the company filed a bill
of costs with the clerk of the district court, seeking over
$100,000 in costs. As relevant here, those costs fell into two
categories. First, relying on section 1920(4), KBR sought
$33,000 in Introspect licensing fees, $10,000 for preparing files
to be uploaded to the e-discovery platform, $15,000 for the
various “doc review” processing tasks, and $5,000 in
traditional copying-and-printing-related costs. Barko objected,
arguing that such costs fall outside the scope of section
1920(4). Second, relying on section 1920(2), KBR sought
$7,000 in deposition-related expenditures. Although not
disputing that section 1920(2) authorizes such costs, Barko
argued that the specific expenses sought by KBR were not
“necessary.” Appellant’s Br. 35.
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The clerk nonetheless taxed the full bill, prompting Barko
to file a motion in district court to “retax” costs. The district
court denied both the motion to retax and Barko’s subsequent
motion for reconsideration. Barko appeals, reiterating the
arguments made in the district court.
II.
We begin with section 1920(4), which, again, authorizes
district courts to award “the costs of making copies of any
materials where the copies are necessarily obtained for use in
the case.” 28 U.S.C. § 1920(4). Pursuant to this subsection,
KBR billed approximately $65,000 in both e-discovery
expenses and more traditional copying-and-printing costs.
Challenging these costs, Barko argues that some do not qualify
as “making copies” and others were not “necessarily obtained
for use in the case.” Id.For its part, KBR contends that “making copies” includes
not just the act of generating duplicates but also all the
predicate and ancillary steps leading up to and facilitating the
duplication. Emphasizing what it calls “the realities of modern
e-discovery,” KBR insists that its “[e]-discovery hosting and
processing costs” are recoverable because it “incurred [those
costs] during essential steps in the process of copying and
converting data from its raw format to its production format.”
Appellees’ Br. 33, 35.
KBR draws its expansive interpretation of section 1920(4)
from Congress’s 2008 amendment of that statute. Prior to the
amendment, section 1920(4) covered “[f]ees for . . . copies of
papers.” 28 U.S.C. § 1920(4) (2007). Now it covers “the costs
of making copies of any materials.” 28 U.S.C. § 1920(4)
(2018). According to KBR, Congress amended the statute in
order to “make allowable both the costs of the copies
themselves (whether hard copy or electronic) and the costs
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incurred in the process of making such copies.” Appellees’ 34–
35. We find no support for KBR’s capacious interpretation of
the statute.
To begin with, nothing about the edit from “copies of
paper[]” to “making copies of any materials” suggests that
Congress meant to dramatically alter the scope of recoverable
costs. Both versions use the word “copies,” and because that
word is “undefined in [the] statute, we give the term its
ordinary meaning,” Taniguchi v. Kan Pacific Saipan, Ltd., 566
U.S. 560, 566 (2012). “[M]aking copies” means causing
imitations or reproductions of original works to come into
being, see Merriam-Webster’s Collegiate Dictionary 702 (10th
ed. 1997) (“make”: “to cause to happen”); id. at 256 (“copy”:
“an imitation, transcript, or reproduction of an original work”),
and the parties agree that “any materials,” 28 U.S.C. § 1920(4),
includes electronic as well as traditional paper copies. In other
words, the phrase “making copies of any materials” still refers
to the task of duplication; it does not include the steps leading
up to duplication any more than the old version did.
Reinforcing this point, Congress made no change to
section 1920(4)’s remaining clause: “necessarily obtained for
use in the case.” Id. To be cost-recoverable, then, a copy must
also be “obtained to be produced pursuant to . . . [a] discovery
rule[].” In re Online DVD-Rental Antitrust Litigation, 779 F.3d
914, 927 (9th Cir. 2015). Indeed, “[c]ourts often contrast copies
necessarily produced to meet discovery obligations, which are
recoverable, with copies produced solely for internal use or the
convenience of counsel in conducting discovery, which are
not.” Colosi v. Jones Lang LaSalle Americas, Inc., 781 F.3d
293, 297 (6th Cir. 2015). For example, as the Federal Circuit
has explained, “if a [defendant] does its chargeable work . . .
on a large volume of documents before culling to produce only
a subset, the awarded copying costs must be confined to the
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subset actually produced.” CBT Flint Partners, LLC v. Return
Path, Inc., 737 F.3d 1320, 1330 (Fed. Cir. 2013).
Moreover, the author of the 2008 amendment, the Judicial
Conference Committee on Court Administration and Case
Management, emphasized that it intended the amendment to
have “limited” effect. Judicial Conference, Report of the
Proceedings of the Judicial Conference of the United States
(Conference Report) 10 (Mar. 18, 2003). “[T]he Committee
considered whether technological advances that ha[d] occurred
over the past twenty-five years ma[d]e it appropriate to
reevaluate the cost provisions in 28 U.S.C. § 1920, so that
recovery for costs associated with many litigation tools
commonly used today . . . might be permitted.” Committee on
Court Administration and Case Management, Report of the
Judicial Conference, Committee on Court Administration 3–4
(Mar. 2003). It concluded, however, “that the charges for these
new expenses could dramatically expand the intention of the
statute, which was to allow the taxing of costs in a very limited
way.” Id. at 4. Ultimately, the Committee “endorse[d]” only a
“limited amendment[] . . . to permit taxing the costs associated
with copying materials whether or not they are in paper form.”
Conference Report, supra, at 10.
Finally, KBR’s view is unfaithful to the modest way in
which the Supreme Court has long interpreted section 1920.
Addressing the statute generally, the Court explained that
“Congress meant to impose rigid controls on cost-shifting in
federal courts.” Crawford Fitting Co. v. J.T. Gibbons, Inc., 482
U.S. 437, 444 (1987). Then, after the 2008 amendment, in
Taniguchi v. Kan Pacific Saipan, Ltd., the Court made clear
that the statute covers only “relatively minor, incidental
expenses.” 566 U.S. at 573.
The Court’s application of that principle in Taniguchi is
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instructive. Addressing a separate subsection of the statute—
subsection (6)—the Court considered whether the phrase
“‘compensation of interpreters’ includes costs for document
translation.” Id. at 566 (quoting 28 U.S.C. § 1920(6)). Finding
that the ordinary meaning of “interpreter” denotes “one who
translates spoken, as opposed to written, language,” id. at 566,
the Court concluded that subsection (6) does not permit
taxation of written translation costs, see id. at 572. “Because
taxable costs are limited by statute and are modest in scope,”
the Court warned, courts must not “stretch the ordinary
meaning of the cost items Congress authorized in § 1920.” Id.
at 573. So too here. We may not “stretch the ordinary
meaning,” id., of the term “making copies” to include all
“preparatory or ancillary costs commonly incurred leading up
to, in conjunction with, or after duplication,” CBT Flint, 737
F.3d at 1328.
In sum, we agree with the Federal Circuit that the 2008
amendment was “modest rather than dramatic.” Id. at 1326. We
also agree that “[a]pplying section 1920(4) . . . calls for some
common-sense judgments guided by a comparison with the
paper-document analogue.” Id. at 1331; see In re Online DVD-
Rental, 779 F.3d at 930–31 (comparing certain e-discovery
activities to their analog analogues). Put another way, section
1920(4) authorizes taxation of costs for the digital equivalent
of a law-firm associate photocopying documents to be
produced to opposing counsel. With that standard in mind, we
turn to the costs at issue in this case.
A.
KBR’s e-discovery costs, all of which the district court
awarded, stem from five different stages: (1) initial conversion,
i.e., converting files from their native formats into a format
compatible with an e-discovery hosting platform;
(2) subscribing to a hosting platform, in this case Introspect,
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that facilitates the various steps of e-discovery; (3) processing
documents, e.g., organizing, keyword-searching, and Bates
stamping; (4) conversion for production, i.e., converting
documents into shareable formats for production to opposing
counsel, and, where necessary, transferring those files onto
portable media, e.g., USB drives; and (5) production
processing, i.e., drafting production cover letters and shipping
discovery materials to opposing counsel.
Hewing close to section 1920(4)’s text and guided by
Taniguchi, we conclude that the only e-discovery costs that
KBR may recover are those incurred in step (4)—converting
electronic files to the production formats (in this case, PDF and
TIFF) and transferring those production files to portable media
(here, USB drives). That means KBR can recover $362.41 in
“External E-Discovery” conversion and production costs—
expenses that Barko concedes are taxable. Appellant’s Br. 3
n.3. These tasks resemble the final stage of “doc review” in the
pre-digital age: photocopying the stack of responsive and
privilege-screened documents to hand over to opposing
counsel. Such costs were taxable then, and the e-discovery
analogs of such costs are taxable now.
But KBR may not collect the more-than-$10,000 in initial
file conversion expenses (stage (1)) because the record
demonstrates that those costs were incurred solely for the
company’s convenience. KBR offers no other reason for
converting the files into Introspect’s proprietary format before
later converting them to PDF or TIFF for sharing with opposing
counsel. In other words, KBR has failed to demonstrate that the
intermediate Introspect files were “necessarily obtained for use
in the case.” 28 U.S.C. § 1920(4).
The remaining e-discovery costs (stages (2), (3), and (5))
are likewise untaxable. “Congress did not authorize taxation of
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charges necessarily incurred to discharge discovery
obligations,” as KBR claims; instead, Congress “allowed only
for the taxation of the costs of making copies.” Race Tires
America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, 169
(3d Cir. 2012). Again, these e-discovery tasks are comparable
to the steps that law-firm associates took in the pre-digital era
in the course of “doc review”—identifying stacks of potentially
relevant materials, culling those materials for documents
containing specific keywords, screening those culled
documents for potential privilege issues, Bates-stamping each
screened document, and mailing discovery materials to
opposing counsel. Because “[n]one of the steps that preceded
[or followed] the actual act of making copies in the pre-digital
era would have been considered taxable,” id., such tasks are
untaxable now, whether performed by law-firm associate or
algorithm.
B.
KBR also seeks to recover the roughly $5,000 it paid an
external vendor, Ricoh, to print hard copies of certain exhibits.
Barko challenges two items on the Ricoh invoices.
First, he disputes some $500 in “Hand Time/Labor” costs.
We agree with Barko that these are “ancillary costs . . .
incurred . . . in conjunction with . . . duplication,” CBT Flint,
737 F.3d at 1328, and thus unrecoverable as a matter of law.
Second, Barko objects to some $4,600 for binders, tabs,
and folders used to package the exhibits. According to Barko,
these “office supplies” are untaxable because they too
constitute “ancillary costs” that “have no direct connection to
the actual process of making copies.” Appellant’s Br. 37–38.
On this point we disagree. Like paperclips and staples, binders
and folders are needed to keep the “cop[y]” together and are so
no less taxable than the cost of the “cop[y]” itself. 28 U.S.C.
10
§ 1920(4).
III.
Pursuant to section 1920(2), which permits taxation of
“[f]ees for printed or electronically recorded transcripts
necessarily obtained for use in the case,” the district court
ordered Barko to pay KBR’s deposition-related expenses.
Barko now challenges some $7,000 in such costs: $6,000 for
expediting preparation of five deposition transcripts and $900
for producing a video recording of one deposition. Barko does
not dispute that these costs fall within section 1920(2)’s ambit.
Instead, he argues that the district court abused its discretion in
finding these expenses reasonably necessary.
“Subject to a proper interpretation of section 1920[], we
review the district court’s award of costs for abuse of
discretion.” CBT Flint, 737 F.3d at 1325. Specifically, we ask
whether the district court abused its discretion in deeming the
deposition-related costs “reasonably necessary for the
litigation,” which is “determined as of the time” the costs were
incurred. Colosi, 781 F.3d at 295 (internal quotation marks
omitted). In reviewing a district court’s necessity finding, we
are mindful that trial judges are in a far better position than we
“to assess the needs of the parties in relation to the case
schedule.” Corder v. Lucent Technologies Inc., 162 F.3d 924,
929 (7th Cir. 1998).
As to the $6,000 in transcript-expedition costs, Barko
contends that “KBR provided no acceptable reason for the
necessity of the[] expedited transcripts.” Appellant’s Br. 34.
The district court, however, found that the costs of expediting
some transcripts were justified by a pending “Motion to
Compel” and “dispositive motions deadline.” United States ex
rel. Barko v. Halliburton Co., No. 05-1276, slip op. at 7
(D.D.C. Dec. 6, 2018) (internal citations omitted). Other
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expedition costs were justified by “what at the time seemed like
an inevitable second motion to compel . . . as well as other
ongoing discovery disputes in the highly contentious
discovery.” Id. (internal quotation marks omitted) (alteration in
original). Barko has given us “no reason to meddle in [the
district court’s] finding[s].” Corder, 162 F.3d at 929.
As to the $900 in video-production costs, Barko argues
that KBR offered only “vague claims” of necessity and
proffered no explanation for why it needed the video, given that
it already had the written transcripts. Appellant’s Br. 36. The
district court, however, accepted—reasonably, in our view—
KBR’s explanation that the video was “necessary to prepare for
trial and for potential use for impeachment or to guarantee the
availability of [the witness’s] testimony at trial,” Barko, No.
05-1276, slip op. at 8 (internal quotation marks omitted and
alteration in original). “[T]he cost of taking video depositions
may be awarded if shown to be necessary for use in the
case . . . .” United States ex rel. Long v. GSDMIdea City, LLC,
807 F.3d 125, 130 (5th Cir. 2015).
IV.
Too often “cost disputes embody all the acrimony of hotly
contested litigation, sometimes with great nitpicking and
pettifogging, refusing to ‘go gently into that good night’ of the
closed docket.” Matter of Penn Central Transportation Co.,
630 F.2d 183, 191 (3d Cir. 1980). We trust that this opinion
will ensure that in this circuit “the assessment of [litigation]
costs [will] most often [be] merely a clerical matter that can be
done by the court clerk.” Taniguchi, 566 U.S. at 573 (internal
quotation marks omitted). For the foregoing reasons, we
reverse in part, affirm in part, and remand for the district court
to retax costs in accordance with this opinion.
So ordered.