CRS Recovery Inc et al v. Laxton et al

Filing 397

ORDER by Judge Claudia Wilken DENYING DEFENDANTS 371 MOTION OBJECTING TO THE CLERKS TAXATION OF COSTS Attachments: # 1 Certificate/Proof of Service) (ndr, COURT STAFF) (Filed on 1/10/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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CRS RECOVERY, INC., a Virginia
corporation; and DALE MAYBERRY,

v.

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JOHN LAXTON, aka
[e-mail]; and
NORTHBAY REAL ESTATE, INC.,
Defendants.

United States District Court
For the Northern District of California

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ORDER DENYING
DEFENDANTS’ MOTION
OBJECTING TO THE
CLERK’S TAXATION
OF COSTS (Docket
No. 371)

Plaintiffs,

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No. C 06-7093 CW

________________________________/
Defendant Northbay Real Estate, Inc., through its Chapter 7

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Bankruptcy Trustee, Linda Green, seeks review of the Clerk’s order
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taxing costs against it and Defendant John Laxton.1

Laxton has

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not joined in the motion or separately objected to the taxation of
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costs.

Plaintiffs CRS Recovery, Inc. and Dale Mayberry oppose

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Northbay’s motion.

The Court took the motion under submission on

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the papers.

Having reviewed the papers filed by the parties, the

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Court DENIES the motion.
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BACKGROUND
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CRS Recovery, Inc. and Mayberry filed this action on November
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15, 2006, against, among others, Laxton and Northbay.

Docket No.

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1.

On October 30, 2007, Plaintiffs filed their second amended

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complaint (2AC).

Docket No. 51.

In the 2AC, they asserted claims

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The motion purports to be filed on behalf of “Defendants,”
although it does not specifically identify them. The motion is
signed by George Donaldson, special counsel to Green, Trustee of
Northbay’s estate, and is not signed by Laxton, who is proceeding
pro se in this action. In addition, only Northbay is identified
in the heading of the document.

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for conversion, intentional interference with contract,

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declaratory relief and unfair competition.

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On September 26, 2008, the Court granted Plaintiffs’ motion

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for summary adjudication on their claims against Laxton and

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Northbay for conversion and declaratory relief.

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The Court also dismissed Plaintiffs’ claims for intentional

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interference with contract and unfair competition because, at the

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hearing, Plaintiffs agreed to dismiss these claims if they

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prevailed on the motion for summary adjudication of the other

Docket No. 170.

United States District Court
For the Northern District of California

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claims.

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part this Court’s summary adjudication order, finding that, under

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the facts presented at that time, material disputes remained

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regarding the circumstances under which Mayberry lost control of

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rl.com, the domain name which is the subject of the dispute,

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including whether this was the result of theft, fraud or

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abandonment.

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Id. at 18.

Subsequently, the Ninth Circuit reversed in

On October 13, 2010, Laxton filed for bankruptcy under

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Chapter 13.

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filed for bankruptcy as well and Green was appointed as its

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bankruptcy trustee.

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Docket No. 226-5.

On November 15, 2010, Northbay

Docket No. 236-1.

Subsequently, Plaintiffs filed, in Laxton’s and Northbay’s

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bankruptcy cases, motions to lift the automatic stay so that this

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case could be litigated to final resolution in this Court.

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Plaintiffs’ motions were granted on February 25, 2011 and March 1,

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2011.

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(Bankr. N.D. Cal.); Docket No. 15, In re Northbay Real Estate,

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Inc., Case No. 10-14390 (Bankr. N.D. Cal.).

Docket No. 25, In re John Douglas Laxton, Case No. 10-13957

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On July 26, 2011, Laxton filed a motion to dismiss his

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bankruptcy case, asserting that a Chapter 13 plan had not been

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confirmed because he is not able to fund the plan.

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In re John Douglas Laxton, Case No. 10-13957 (Bankr. N.D. Cal.).

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On August 7, 2011, the court dismissed his bankruptcy case.

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Docket No. 41, In re John Douglas Laxton, Case No. 10-13957

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(Bankr. N.D. Cal.).

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Docket No. 39,

A four day trial was held in the instant action on May 7
through 10, 2012.

Docket Nos. 339-42.

On the first day of trial,

United States District Court
For the Northern District of California

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Plaintiffs moved to dismiss voluntarily their claim for

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intentional interference with contract, which motion the Court

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granted.

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the dismissal.

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Docket No. 381, 4:17-20.

Defendants did not object to

On May 10, 2012, the jury returned a verdict that Plaintiffs

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proved that Laxton and Northbay had converted rl.com.

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345.

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their affirmative defenses.

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verdict, Plaintiffs voluntarily dismissed their claim for

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violation of California’s Unfair Competition Law (UCL), Cal. Bus.

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& Prof. Code section 17200, with the Court’s permission.

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No. 384, 565:15-24.

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Docket No.

The jury also found that Defendants had not proved either of
Id.

After the jury returned its

Docket

Defendants did not object to the dismissal.

On May 29, 2012, Plaintiffs filed their bill of costs,
seeking $25,589.67.

Docket No. 348.

On May 31, 2012, Northbay filed a renewed motion for judgment

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as a matter of law pursuant to Federal Rule of Civil Procedure

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50(b).

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motion.

Docket No. 349.

On June 4, 2012, Laxton joined in the

Docket No. 352.

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On June 11 and 12, 2012, Defendants filed notices of appeal

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and each paid the appellate fee of $455.

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Neither Defendant sought in forma pauperis status for the appeal.

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On June 13, 2012, Northbay filed objections to Plaintiffs’
bill of costs.

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Docket No. 357.2

On June 14, 2012, the Clerk taxed costs in the amount of
$20,767.99 against Defendants.

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Docket Nos. 353-55.

Docket No. 360.

On June 21, 2012, Northbay first filed the instant motion.
Docket No. 367.

However, at that time, Northbay filed the

United States District Court
For the Northern District of California

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document incorrectly and was directed by the Clerk to re-file it.

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Docket No. 370.

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Docket No. 371.

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On July 18, 2012, Plaintiffs filed their opposition to
Northbay’s motion.

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On June 25, 2012, Northbay refiled the motion.

Docket No. 379.3

On today’s date, the Court denied the renewed motion for
judgment as a matter of law.

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DISCUSSION
I.

Objection to Taxing of Exemplification and Copying Expenses
Northbay objects to the taxation of $13,181.80 for

exemplification and copies.

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In violation of Civil Local Rule 54-2(a), Northbay filed
its objections to Plaintiffs’ bill of costs fifteen days after
Plaintiffs filed and served it. The Court exercises its
discretion to excuse the tardiness of Northbay’s submission.
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In violation of Civil Local Rule 7-3(a), Plaintiffs filed
their opposition more than fourteen days after Northbay filed its
motion. Plaintiffs explain that their delay in filing their
opposition was in part due to confusion about the due date because
Northbay filed an amended notice of the hearing date for its
motion on July 2, 2012. See Docket No. 372. The Court exercises
its discretion to excuse the tardiness of Plaintiffs’ filing.
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Federal Rule of Civil Procedure 54(d)(1) provides, “Unless a

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federal statute, these rules, or a court order provides otherwise,

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costs--other than attorney’s fees--should be allowed to the

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prevailing party.”

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part that a judge or clerk may tax as costs “[f]ees for

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exemplification and the costs of making copies of any materials

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where the copies are necessarily obtained for use in the case.”

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28 U.S.C. § 1920(4).

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standards for taxing costs for reproduction and exemplification,

United States District Court
For the Northern District of California

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Title 28 U.S.C. § 1920 provides in relevant

Civil Local Rule 54-3(d) sets forth certain

stating in part,
(4) The cost of reproducing trial exhibits is allowable
to the extent that a Judge requires copies to be
provided.
(5) The cost of preparing charts, diagrams, videotapes
and other visual aids to be used as exhibits is
allowable if such exhibits are reasonably necessary to
assist the jury or the Court in understanding the issues
at the trial.
Civil Local Rule 54-3(d)(4),(5).
In their bill of costs, Plaintiffs sought $16,181.30 for

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these expenses.

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Plaintiffs submitted evidence that they incurred $630.17 for the

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cost of preparing trial exhibit binders as required under the

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Court’s standing order and $15,551.13 for graphics for use at

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trial.

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this amount by $2,999.50, or approximately nineteen percent, and

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awarded $13,181.80.

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costs were adjusted to exclude those “outside ambit of L.R. 54-

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3(d).”

Docket No. 348.

Docket No. 348-7.

With the bill of costs,

When taxing costs, the Clerk reduced

Docket No. 360.

The Clerk explained that

Id.

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Northbay argues that Plaintiffs have not shown that the

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exemplification materials were reasonably necessary for use in the
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case, that “electronic methods of exemplification” are not

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recoverable under 28 U.S.C. § 1920(4), and that the expenses

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incurred “are facially exorbitant, particularly given that the

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trial only lasted two and a half days.”

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appears to challenge the costs requested for demonstratives and

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graphics and not those requested for preparation of trial exhibit

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binders.

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Mot. at 3.

Northbay

The Ninth Circuit has recognized that, in the context of 28
U.S.C. § 1920(4), “‘exemplification and copies of papers’ has been

United States District Court
For the Northern District of California

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interpreted to include all types of demonstrative evidence,

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including photographs and graphic aids” and has held that “the

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common meaning of the phrase ‘exemplification and copies of

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papers’ may under certain circumstances encompass illustrative

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materials if ‘necessarily obtained for use in the case.’”

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v. Hapag-Lloyd Aktiengesellschaft, 862 F.2d 767, 770 (9th Cir.

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1988).

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expenses to produce demonstratives, including graphic aids, that

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were reasonably necessary at trial, they are allowable under 28

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U.S.C. § 1920(4) and Civil Local Rule 54-3(d)(4).

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Maxwell

Thus, to the extent that Plaintiffs incurred these

Northbay’s proffered authority does not hold to the contrary.

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The court in Fells v. Va. Dept. of Transp., 605 F. Supp. 2d 740

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(E.D. Va. 2009), did not address whether a prevailing party could

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recover the cost of preparing demonstratives for use at trial.

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Instead, the district court declined to allow recovery of expenses

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incurred to create electronically searchable documents, in

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contrast with reproducing paper documents in electronic form, in

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order to create an electronic database to assist in discovery.

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Id. at 741, 743-44.
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Here, Plaintiffs seek reimbursement of costs for the creation

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large boards and electronic graphics for display at trial and

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state that the “vast majority--if not all--of these graphics were

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displayed during trial to assist with their understanding of the

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facts and issues in this case.”

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the graphics extensively during the trial and they appear to have

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been reasonably necessary in assisting the jury to understand the

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events, timeline and technology at issue in this matter.

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costs do not appear “exorbitant” for the graphics actually

Lisi Decl. ¶ 3.

Plaintiffs used

The

United States District Court
For the Northern District of California

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produced and used, as Northbay argues.

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whether Plaintiffs in fact used during the course of the trial all

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of the graphics for which they seek costs, and any graphics that

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were not actually displayed during trial cannot be said to have

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been necessarily obtained for use in the case.

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Court finds it reasonable to reduce Plaintiffs’ costs for graphics

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prepared for Plaintiffs for use at trial by about nineteen

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percent, from $15,551.13 to $12,551.63.

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challenge on this basis the amount requested for the preparation

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of trial exhibit binders, $630.17, and the amount requested for

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that expense appears justified, the Court does not apply the same

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reduction to that amount.

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However, it is not clear

Accordingly, the

Because Northbay does not

Thus, the Court denies Northbay’s motion as to the

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exemplification and copying expenses.

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$13,181.80 for these costs is affirmed.

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II.

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The Clerk’s order awarding

Objection to Taxing of Expenses in General
Northbay argues that Defendants should not be required to pay

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costs at all, or the costs should be significantly reduced,

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because Plaintiffs did not pursue their requests for damages and
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abandoned their claims for intentional interference with contract

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and unfair competition at “the very end of trial.”

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Northbay also points to Defendants’ lack of financial resources.

Mot. at 2.

“Federal Rule of Civil Procedure 54(d)(1) creates a

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presumption in favor of awarding a prevailing party its costs

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other than attorneys’ fees, but vests in the district court the

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discretion to refuse to award such costs if the district court

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gives specific reasons explaining why the case is not ordinary and

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why it would be ‘inappropriate or inequitable to award costs.’”

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United States District Court
For the Northern District of California

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Jack Russell Terrier Network v. Am. Kennel Club, Inc., 407 F.3d

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1027, 1038 (9th Cir. 2005) (quoting The Ass’n of Mexican-Am.

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Educators v. California, 231 F.3d 572, 591, 593 (9th Cir. 2000)

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(en banc)).

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losing party’s limited financial resources; (2) misconduct by the

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prevailing party; and (3) the chilling effect of imposing . . .

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high costs on future civil rights litigants, as well as

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(4) whether the issues in the case were close and difficult;

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(5) whether the prevailing party’s recovery was nominal or

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partial; (6) whether the losing party litigated in good faith; and

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(7) whether the case presented a landmark issue of national

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importance.”

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888-89 (9th Cir. 2010) (internal quotation marks and citations

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omitted).

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“Proper grounds for denying costs include (1) a

Quan v. Computer Sciences Corp., 623 F.3d 870,

Northbay contends that, because Plaintiffs abandoned their

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claims for intentional interference with contract and unfair

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competition, which Northbay characterizes as “meritless,” and

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their claim for damages, Plaintiffs should not be awarded costs as

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prevailing parties.

Northbay cites Barber v. T.D. Williamson,
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Inc., 254 F.3d 1223 (10th Cir. 2001), in which the court discussed

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situations where the plaintiffs were “only partially successful,”

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“where neither side entirely prevailed, or when both sides

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prevailed,” as examples of when courts may exercise their

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discretion to reduce or deny an award of costs.

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offers no examples where a plaintiff withdrew certain claims and

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prevailed on the remaining claims and costs were denied.

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However, Northbay

Further, the facts of this case do not support the outcome
that Northbay urges.

Here, the primary issue was the

United States District Court
For the Northern District of California

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determination of the owner of the domain name rl.com, and that

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issue was decided in Plaintiffs’ favor.

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suggestion that Plaintiffs acted in bad faith by dismissing their

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other claims at the end of the trial is not well-taken.

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Plaintiffs dismissed their intentional interference claim at the

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start of the trial and had previously provided notice that they

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would not pursue that claim at the trial.

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the UCL claim, which would have been tried to the Court, after the

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jury verdict because they had already obtained their desired

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relief through the favorable verdict on their other claims.

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there was no reason for the Court to rule on the UCL claim.

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In addition, Northbay’s

Plaintiffs dismissed

Thus,

Northbay also argues that Plaintiffs should be denied costs

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because of Defendants’ indigent status.

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it is in Chapter 7 bankruptcy proceedings and is represented here

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by its bankruptcy trustee and that Laxton had been in bankruptcy

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shortly before trial.

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appropriate because Laxton was not repaid for the amount he

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expended in purchasing rl.com or the amount he incurred in

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successfully defending the domain name against a challenge by

Northbay points out that

Northbay also contends that denial of costs

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Ralph Lauren before the World Intellectual Property Organization,

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which defense benefitted Plaintiffs.

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However, Northbay has not offered proof that Defendants are

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presently unable to pay the fees or that to do so would result in

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a hardship.

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status on appeal and instead each paid $455 for the filing fee of

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their appeal.

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dismissed almost a year before the trial and, although he was

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unable to fund a Chapter 13 plan at that time, there is no

Neither Defendant applied for in forma pauperis

Further, Laxton’s Chapter 13 bankruptcy case was

United States District Court
For the Northern District of California

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evidence that he sought bankruptcy protection under Chapter 7

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instead.

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support reducing the costs award based on expenses that Laxton

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incurred to acquire or defend the domain name.

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Northbay also offers no authority or evidence that would

The Court finds that the equities do not support denial or
reduction of Plaintiffs’ costs.

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CONCLUSION

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For the reasons set forth above, the Court DENIES Northbay’s

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motion objecting to the Clerk’s assessment of costs (Docket No.

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371).

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Taxable costs of $20,767.99 are awarded to Plaintiffs.
IT IS SO ORDERED.

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Dated: 1/10/2013

CLAUDIA WILKEN
United States District Judge

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