Cataphora, Inc. v. Parker et al

Filing 334

ORDER by Magistrate Judge Bernard Zimmerman granting plaintiff nontaxable costs (bzsec, COURT STAFF) (Filed on 1/20/2012)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 ) ) ) Plaintiff(s), ) v. ) ) JERROLD SETH PARKER, et al.,) ) Defendant(s). ) ) CATAPHORA INC., No. C09-5749 BZ ORDERING GRANTING PLAINTIFF NONTAXABLE COSTS 16 17 On December 27, 2011, the Clerk taxed costs in the amount 18 of $17,565.76 against Defendants.1 19 additional costs under the parties’ contract in the amount of 20 $33,231.90, for expert witness fees, travel expenses, jury 21 consultant fees, deposition costs, printing/copying costs and Plaintiff now moves for 22 23 24 25 26 27 28 1 The determination of taxable costs is governed by 28 U.S.C. § 1920 and, more particularly, Civil L.R. 54-3, which specifically enumerates the standards for costs recoverable in this District. This court may only tax costs explicitly authorized by § 1920. See Alflex Corp. v. Underwriters Labs., Inc., 914 F.2d 175, 177-78 (9th Cir. 1990); see also Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442(1987). Section 1920 permits the taxing of costs for various items, such as deposition transcripts and copying of papers, if they are “necessarily obtained for use in the case.” 28 U.S.C. § 1920. 1 1 postage/messenger costs. The contractual provision upon which 2 Plaintiff relies states that the “prevailing party in any 3 legal action ... shall be entitled ... to reimbursement for 4 its costs and expense [sic] (including court costs and 5 reasonable fees for attorneys and expert witnesses) incurred 6 with respect to the bringing and maintaining of any such 7 action.” 8 Because Plaintiff is relying on the parties’ contract in 9 order to recover costs beyond those permitted under 28 U.S.C. 10 § 1920, California law governs. 11 jurisdiction, a federal court must follow the substantive law 12 as derived from the state’s statutes and the state’s highest 13 court decisions. 14 1385, 1391 (9th Cir. 1994). 15 the state’s highest court has not yet ruled on an issue, a 16 federal court may consider state appellate court opinions, 17 statutes and treatises to “determine what result the state 18 supreme court would reach.” 19 California Supreme Court has not yet ruled on whether a 20 prevailing party may recover out-of-pocket expenses such as 21 expert fees, postage and telephone/photocopying charges 22 pursuant to contract (see Davis v. KGO-T.V., 17 Cal. 4th 436, 23 446 fn. 5 (1998)), and there is a split of appellate authority 24 on this issue. 25 out-of-pocket costs to be recovered from the prevailing party, 26 even items specifically not allowable as costs under Code Civ. 27 Proc. § 1033.5(b). When sitting in its diversity See Vernon v. City of Los Angeles, 27 F.3d In determining state law where Id. (citations omitted). The One appellate court has allowed counsel’s See Bussey v. Affleck, 225 Cal. App. 3d 28 2 1 1162, 1165, 1167 (1990).2 2 to statutory costs. 3 4th 1616, 1619 (1994).3 Another court has limited recovery See Ripley v. Pappadopoulos, 23 Cal. App. 4 While an undefined general contractual provision 5 entitling a prevailing party to “reasonable attorneys’ fees 6 and costs” may not extend to expert fees, that is not the 7 situation presented here. 8 entered into a contract that entitles the prevailing party “to 9 reimbursement for its costs and expense [sic] (including court 10 costs and reasonable fees for attorneys and expert witnesses) 11 ... .” 12 reported cases, this contract expressly allows for recovery of Here, the parties negotiated and Unlike the contracts in Ripley and Bussey and other 13 14 15 16 17 2 In Bussey, the trial court refused to allow recovery of expert witness fees to a prevailing plaintiff. The Court of Appeal reversed, concluding that where a contract between the parties provides for the payment of costs and attorney fees, expenses of experts paid by counsel may be recovered as attorney fees if they represent an expense ordinarily billed to a client rather than an overhead component of the attorney’s hourly rate. Id. at 1166. 18 3 19 20 21 22 23 24 25 26 27 28 In Ripley, the court disagreed with Bussey and concluded instead that because the express provisions of section 1033.5 do not allow for recovery of expert witness expenses as costs, except where the expert was ordered by the court, such costs are not recoverable. Ripley, 23 Cal. App. 4th at 1624-25. Nearly every subsequent reported decision considering the issue has followed Ripley and rejected Bussey, concluding that “contractual costs provisions are presumed to adopt the statutory definition [contained in section 1033.5] absent evidence to the contrary.” Hsu v. Semiconductor Systems, Inc., 126 Cal. App. 4th 1330, 1341-1342 (2005); see also Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 47 Cal. App. 4th 464, 491-492 (1996); Fairchild v. Park, 90 Cal. App. 4th 919, 931 (2001); Steiny & Co. v. California Electric Supply Co., 79 Cal. App. 4th 285, 293-294 (2000); First Nationwide Bank v. Mountain Cascade, Inc., 77 Cal. App. 4th 871, 878 (2000); Robert L. Cloud & Associates, Inc. v. Mikesell, 69 Cal. App. 4th 1141, 1154 (1999); California Housing Finance Agency v. E.R. Fairway Associates I, 37 Cal. App. 4th 1508, 1514-1515 (1995). 3 1 expert fees. 2 Ripley and other courts, of conflating attorney fees with 3 expert fees. 4 App. 4th 1330, 1342 (2005) (“Nor may the disputed costs be 5 awarded to plaintiff as an element of attorney fees under the 6 rationale that the expenses were disbursed by the attorneys in 7 the course of litigation.”).4 8 is entitled to recover the costs of its expert witnesses 9 pursuant to the parties’ contract, which specifically itemizes 10 There is thus no concern, as expressed by Cf. Hsu v. Semiconductor Systems, Inc., 126 Cal. I therefore find that Plaintiff reasonable expert witness fees as a recoverable expense. With respect to the other costs sought by Plaintiff, I 11 12 choose to follow Bussey for a number of reasons. 13 the better reasoned case. 14 on many occasions, parties are free to enter into contracts 15 which shift attorneys’ fees and costs to the prevailing party. 16 See, e.g., Alyeska Pipeline Co. v. Wilderness Society, 421 17 U.S. 240, 257 (1975); Fleischmann Distilling Corp. v. Maier 18 Brewing Co., 386 U.S. 714, 717 (1967). 19 provision which expressly permits the prevailing party to 20 recover costs in addition to court costs as limiting the 21 prevailing party to statutorily recoverable court costs would 22 undermine this long standing rule for no apparent purpose. 23 agree with the Bussey court that to prevent parties from so 24 contracting would “impair the effectiveness of contractual ... First, it is As the Supreme Court has recognized To construe a I 25 26 27 28 4 Indeed, given the express itemization of expert witness fees in this contract as a recoverable expense separate and apart from attorneys’ fees, the parties perhaps drafted this provision to contract around the issues presented in Ripley. 4 1 costs provisions and prevent the prevailing party from being 2 made whole.” 3 Arntz, 47 Cal. App. 4th at 491-92 (“While it is reasonable to 4 interpret a general contractual cost provision by reference to 5 an established statutory definition of costs, we do not 6 discern any legislative intent to prevent sophisticated 7 parties from freely choosing a broader standard authorizing 8 recovery of reasonable litigation charges and expenses.”). 9 rule that limits parties that incorporate express cost- Bussey, 225 Cal. App. 3d at 1166; see also A 10 shifting provisions in their contracts, to the costs permitted 11 by section 1033.5 would negate the contract provision, since 12 the prevailing party is already entitled to statutory taxable 13 costs. 14 Second, permitting parties to contract for reimbursement 15 of reasonable litigation costs beyond those authorized by 16 statute is consistent with federal law. 17 Vision Tech. Sec. Litig, 913 F. Supp. 1362, 1366 (N.D. Cal. 18 1995) (costs and expenses “are subject to a test of relevance 19 and reasonableness in amount . . . . The judge must look at 20 the practical and reasonable needs of the party in the context 21 of the litigation.”); see also In re Immune Response Sec. 22 Litig., 497 F. Supp. 2d 1166, 1177-78 (S.D. Cal. 2007) 23 (awarding expenses for travel costs, filing fees, photocopies, 24 messenger services, and computerized legal research). 25 Finally, as stated above, the cost provision in this contract 26 is broader than the provisions in Ripley and Bussey, and 27 therefore also supports an award of reasonable costs beyond 28 those costs itemized in section 1033.5. 5 See, eg., In re Media 1 Defendants also contend that Plaintiff may not recover 2 non-taxable costs because it did not prove them at trial as 3 damages, citing Hsu and Arntz. 4 the context of an indemnification action such as Arntz, is 5 unsound. 6 indemnification provision, in which the plaintiff seeks to 7 recover litigation costs incurred because of the breach as an 8 element of damages, it makes sense for costs to be proven at 9 trial. To apply these cases outside In a suit for breach of a contractual But in cases such as this one, where reimbursement 10 hinges on which party is the “prevailing party,” requiring 11 costs to be pleaded and proven at trial would waste judicial 12 resources and inject confusion because both parties would be 13 required to put on evidence of their respective costs.5 14 Again, this contract – negotiated and executed by 15 sophisticated parties – includes specific language entitling 16 the prevailing party to reasonable costs and expenses 17 (including court costs and reasonable expert and attorney 18 fees). 19 recovery of attorney fees and the recovery of costs, there is 20 no risk of an “unwarranted conflation of fees and costs.” 21 Hsu, 126 Cal. App. 4th at 1342. 22 to recover its reasonable costs of litigation because they 23 “represent expenses ordinarily billed to a client and are not Since the contract clearly distinguishes between the Plaintiff should be entitled 24 5 25 26 27 28 Moreover, the procedure for obtaining attorneys’ fees and costs when those amounts are not being sought as an element of damages is by way of a memorandum of costs, which is timely so long as submitted no more than 10 days after entry of the judgment. See Cal. Rules Ct., Rule 3.1700(a)(1); Cal. Code Civ. Proc. §§ 1033, 1034(a); see also Silverado Modjeska Recreation & Park Dist. v. County of Orange, 197 Cal. App. 4th 282 (2011). 6 1 included in the overhead component of counsel’s hourly rate.” 2 Bussey, 225 Cal. App. 3d at 1166. IT IS THEREFORE ORDERED that, Plaintiff is entitled to 3 4 recover nontaxable costs in the amount of $33,231.90.6 5 Dated: January 20, 2012 6 Bernard Zimmerman United States Magistrate Judge 7 8 G:\BZALL\-BZCASES\CATAPHORA V. PARKER\ORDER ON NONTAXABLE COSTS.wpd 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 6 28 Defendants did not challenge any specific cost as unreasonable. 7

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