David v. Sirius Computer Solutions

Filing 79

ORDER ON PLAINTIFF'S POST-TRIAL MOTIONS : Plaintiff's Motion to Amend Judgment to Include Statutory Prejudgment Interest 67 is denied. Plaintiff's Motion to Amend Judgment to Include Tax Penalty Offset 68 is denied. Plaintiff 9;s Motion to Review Costs is granted in part and denied in part 71 . The Clerk shall tax costs in the amount of $899.60 to reflect the costs of Greg Peterson's airfare and attendance fees for the two days Peterson spent traveling to and from Denver to testify at trial, by Judge Richard P. Matsch on 3/7/2014.(rpmcd)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Senior Judge Richard P. Matsch
Civil Action No. 11-cv-02030-RPM
DIANE DAVID,
Plaintiff,
v.
SIRIUS COMPUTER SOLUTIONS, INC.,
Defendant.

ORDER ON PLAINTIFF’S POST-TRIAL MOTIONS

Following a 7-day trial, a jury returned a verdict for Plaintiff Diane David on her claim of
negligent misrepresentation against Defendant Sirius Computer Solutions (“Sirius”). [See
Doc. 63, Ex. 1.] David sought economic damages as well as damages for noneconomic
losses and injuries in connection with that claim.

The jury awarded her $231,665 in

economic damages and $0.00 in noneconomic damages.

[See id.] The Court entered

judgment accordingly. [See Doc. 65.]
David has filed a Motion to Amend Judgment to Include Statutory Prejudgment Interest
[Doc. 67]; a Motion to Amend Judgment to Include Tax Penalty Offset [Doc. 68]; and a
Motion to Review Costs [Doc. 71]. Sirius opposes the relief requested in each Motion.
A. Motion to Amend Judgment to Include Statutory Prejudgment Interest [Doc. 67]
David seeks to recover $139,713 in prejudgment interest on her damages award. [See
Doc. 67 at 7.] A federal court sitting in diversity must apply state law to the issue of

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prejudgment interest. Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138,
1156 (10th Cir. 2000). David claims that prejudgment interest is mandatory in this matter
pursuant to Colo. Rev. Stat. § 13-21-101, which provides:
In all actions brought to recover damages for personal injuries sustained by any
person resulting from or occasioned by the tort of any other person [or] corporation . .
. whether by negligence or by willful intent of such other person [or] corporation . . .
and whether such injury has resulted fatally or otherwise, it is lawful for the plaintiff
in the complaint to claim interest on the damages claimed from the date the action
accrued. When such interest is so claimed, it is the duty of the court in entering
judgment for the plaintiff in such action to add to the amount of damages assessed by
the verdict of the jury . . . interest on such amount calculated at a rate of nine percent
per annum . . . .
Colo. Rev. Stat. § 13-21-101(1). “An injury is personal when it impairs the well-being or the
mental or physical health of the victim.” Antolovich v. Brown Grp. Retail, Inc., 183 P.3d
582, 610-11 (Colo. App. 2007) (prejudgment interest available under Colo. Rev. Stat. § 1321-101 because homeowner’s damages derived from “loss of well-being and physical or
mental health”); Schuessler v. Wolter, 310 P.3d 151, 168 (Colo. App. 2012) (Colo. Rev. Stat
§ 13-21-101 did not apply to plaintiff’s economic damages, as “they did not result from an
impairment of [plaintiff’s] mental or physical health or well-being”).
Here, David sought damages for economic losses or injuries as well as noneconomic
losses or injuries related to Sirius’ conduct. The Court instructed the jury as follows:
In determining such damages, you shall consider the following:
1. any economic losses or injuries which Ms. Davis has had or will probably have in
the future including:
The amount that Ms. David would have earned through her employment at
Sirius Computer Solutions if Sirius had not fraudulently misrepresented
information to Mr. David either fraudulently or negligently, relating to her
employment with Sirius, loss of income and benefits, and loss of the ability to
earn money in the future; and

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2. any noneconomic losses or injuries which Ms. David has had to the present time
or which Ms. David will probably have in the future, related to Sirius’s conduct
including:
physical and mental pain and suffering, inconvenience, emotional stress, and
impairment of the quality of life.
[Doc. 72, Ex. A.] Based on that instruction, the jury awarded David $231,665 in damages
for her economic losses or injuries, and $0.00 in damages for non-economic losses or
injuries. Thus, David was compensated for the economic losses she suffered because of
Sirius’ misrepresentations, not for “intangible, subjective, noneconomic losses, including
inconvenience and loss of peace of mind . . . .” Antolovich, 183 P.3d at 611. Indeed, the
jury rejected David’s theory of noneconomic losses completely. Because David’s awarded
damages derived from economic loss, not “from an impairment of [her] mental or physical
health or well-being[,]” her injuries are not “personal” within the meaning of Colo. Rev. Stat.
§ 13-21-101. See Schuessler, 310 P.3d at 168. Therefore, she is not entitled to prejudgment
interest under that statute. See id.
B. Motion to Amend Judgment to Include Tax Penalty Offset [Doc. 68]
As a result of the economic damages she was awarded, David states that she will likely
be in a higher tax bracket for the tax year and will be required to pay additional federal and
state taxes—what she characterizes as a “significant tax penalty.” [Doc. 68 at 2.] She has
therefore moved the Court, pursuant to Federal Rule of Civil Procedure 59(e), to amend the
judgment against Sirius to include a tax penalty offset. [Id. at 1.]
A Rule 59(e) motion should be granted “only to correct manifest errors of law or to
present newly discovered evidence.” Loughridge v. Chiles Power Supply Co., 431 F.3d
1268, 1274-75 (10th Cir. 2005) (quoting Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir.
1997)). The Tenth Circuit has also approved of using a Rule 59(e) motion to contest
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inconsistencies in a jury's verdict. See id. at 1275. David has not alleged that a damages
award without a tax penalty offset will amount to a manifest error of law, that her request is
based on newly-discovered evidence, or that there is an inconsistency in the jury’s verdict.
Accordingly, she is not entitled to relief under Rule 59(e).
While David’s Motion is formally brought under Rule 59(e), her argument is in substance
an appeal to the Court’s equitable powers. Under the current tax code, successful claimants
are prohibited from spreading tax liabilities created by a damages award into a year other
than that in which the award was received. Both the Tenth Circuit and this Court have
awarded successful employment discrimination claimants tax penalty offsets, reasoning that
offsets are appropriate to protect them from being placed in a higher tax bracket in a single
year due to a lump-sum damages payment. See Sears v. Atchison, Topeka & Santa Fe Ry.,
Co., 749 F.2d 1451, 1456 (10th Cir. 1984) (holding that district court did not abuse its
discretion in awarding tax penalty offset); EEOC v. Beverage Distribs. Co., LLC, No. 11-cv02557-CMA, 2013 U.S. Dist. LEXIS 172650, at *28-*30 (D. Colo. Dec. 9, 2013) (“A tax
offset would simply restore [the plaintiff] to the position he would have been but for”
defendant’s wrongdoing); EEOC v. RadioShack Corp., No. 10-cv-02365-LTB, 2012 U.S.
Dist. LEXIS 173846, at *5 (D. Colo. Dec. 6, 2012) (“As stated, I am to exercise my equitable
powers to make [the plaintiff] whole. . . . I conclude that to do so, [the plaintiff] may need to
receive a tax penalty offset award.”) Based on those cases, David argues that she too is
entitled to a tax penalty offset award because she incurred damages over multiple years, she
will be unable to spread her lump-sum award over a multi-year period, and, consequently,
she will likely be forced into a higher income tax bracket. [See Doc. 68 at 3-4.]

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Although courts have “wide discretion in fashioning remedies to make victims of
discrimination whole,” Sears, 749 F.2d at 1456, David has not directed the Court to a case
outside the discrimination context in which a court awarded a tax penalty offset as equitable
relief. Any such award in a tort action before a jury would be for a jury to decide as an
element of damages. To the extent the Court could award a tax penalty offset consistent with
the Seventh Amendment, David has not persuaded the Court that such an award is warranted
here.1 It is not unjust to require a successful tort claimant to pay additional taxes on a lumpsum award; the Internal Revenue Code subjects such awards to taxation without an exception
for circumstances like this.

David’s complaint regarding the tax consequences of her

damages award is better directed at Congress.
C. Plaintiff’s Motion to Review Costs [Doc. 71]
Plaintiff filed her Proposed Bill of Costs in the amount of $22,064.37. [Doc. 66.] The
Clerk of the Court taxed David’s costs in the amount of $10,093.50 and refused to award her
the remaining $11,970.87 she claimed. David now seeks to recover: (1) the cost of her
former Cornerstone boss Greg Peterson’s airfare and the attendance fees incurred to present
him as a witness at trial; and (2) the costs of two transcripts.
1. Greg Peterson
David seeks to recover the full cost of Greg Peterson’s $819.60 round-trip airfare from
Boston to Denver to testify at trial. 28 U.S.C. § 1821(c)(1) provides:

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The Court is skeptical that a tax penalty award that effectively adds to the monetary amount of a jury’s damages
award is actually equitable relief. See J.R. Simplot v. Chevron Pipeline Co., 563 F.3d 1102, 1115 (10th Cir.
2009) ("The general rule is that monetary relief is legal.”). A court order increasing a jury’s finding on damages to
take into account a tax penalty would seem to violate the Seventh Amendment’s command that courts not reexamine
the findings of a jury, and would also appear to deny the defendant’s right to have a jury determine damages. See
Kelley v. City of Albuquerque, No. CIV 03-507JB, 2006 WL 1304954, at *5-*6 (D. N.M. Mar. 31, 2006), for a
well-reasoned discussion of this issue.

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A witness who travels by common carrier shall be paid for the actual expenses of travel
on the basis of the means of transportation reasonably utilized and the distance
necessarily traveled to and from such witness's residence by the shortest practical route in
going to and returning from the place of attendance. Such a witness shall utilize a
common carrier at the most economical rate reasonably available. A receipt or other
evidence of actual cost shall be furnished.
David has provided a receipt of Peterson’ travel confirming the $819.60 figure [see Doc. 66
at 29], and she maintains that Peterson got the most economical rate reasonably available
[see Doc. 77 at 2].

Therefore, David contends that she is entitled to the full cost of

Peterson’s airfare.
David also seeks $80 in witness fees for the days Peterson spent traveling to and from the
trial. Under 28 U.S.C. § 1821(b), a witness may be paid a $40 attendance fee for “each day’s
attendance” and “the time necessarily occupied in going to and returning from the place of
attendance.” The Clerk taxed only $40 for December 4, the day Peterson testified. Peterson
traveled to Denver on December 3, and traveled back to his home in Boston on December 5.
David claims she is entitled to $80 in attendance fees for the travel days that book-ended
Peterson’s testimony.
Sirius objects to David’s request for costs for Peterson’s travel and attendance fees on
two grounds. First, it claims that costs are not allowable because Peterson “was Plaintiff’s
own witness, not under subpoena or otherwise compelled to testify.” [See Doc. 74 at 3.]
The nature of a witness’ attendance at trial – either voluntary or compelled – does not bear
upon the availability of costs under the plain language of 28 U.S.C. § 1821, and Sirius does
not cite a single authority in support of its position. Second, Sirius argues that “the necessity
of [Peterson’s] testimony is questionable.” [Id.] Sirius does not explain why it believes that
to be the case. David, on the other hand, explains why Peterson was important: he testified
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that David would have stayed on at Cornerstone after it merged with Mainline and that she
would have continued servicing her Cornerstone accounts had she stayed there, which
supported David’s economic loss theory; and he testified to her good character, which Sirius
had called into question. [See Doc. 77 at 3.] David also states that she requested that
Peterson be permitted to testify telephonically, which Sirius opposed and the Court denied.
As such, she was required to incur travel expenses to allow him to testify in person. [See id.]
The Court concludes that Plaintiff is entitled to the full cost of Peterson’s airfare,
$819.60, under 28 U.S.C. § 1821(c)(1). She is also entitled to $80 for the two days Peterson
spent traveling to and from Denver under 28 U.S.C. § 1821(b).
2. Transcript costs
David also seeks $184.40 in costs for the transcript of her economic expert Dr. Bill
Kaempfer’s deposition, and $56.40 in costs for the transcript of the hearing on Defendant’s
Motion for Summary Judgment, for a total of $241.20.
28 U.S.C. § 1920(2) permits a court to “tax as costs” “[f]ees for printed or electronically
recorded transcripts necessarily obtained for use in the case.” Whether a transcript was
“necessarily obtained” is a fact-based inquiry committed to the court’s discretion. Crandall
v. City & County of Denver, 594 F. Supp. 2d 1245, 1247 (D. Colo. 2009) (citation omitted).
“[T]ranscriptions that are obtained solely for discovery purposes or for the ‘convenience of
counsel’ are generally not taxable.” Id. at 1248 (quoting James v. Coors Brewing Co., 73 F.
Supp. 2d 1250, 1261 (D.Colo.1999)).
While it was certainly convenient for David’s counsel to have both transcripts to engage
in additional discovery or prepare for trial, David’s description of how counsel used or
intended to use the transcripts at the time they were ordered falls short of establishing that the
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transcripts were “necessarily obtained for use in the case.” Exercising its discretion, the
Court will deny Plaintiff’s request.
D. Conclusion
Upon the foregoing, it is
ORDERED that Plaintiff’s Motion to Amend Judgment to Include Statutory Prejudgment
Interest [Doc. 67] is denied, and it is
FURTHER ORDERED that Plaintiff’s Motion to Amend Judgment to Include Tax
Penalty Offset [Doc. 68] is denied, and it is
FURTHER ORDERED that Plaintiff’s Motion to Review Costs is granted in part and
denied in part. The Clerk shall tax costs in the amount of $899.60 to reflect the costs of Greg
Peterson’s airfare and attendance fees for the two days Peterson spent traveling to and from
Denver to testify at trial.
Dated: March 7, 2014.
BY THE COURT:
s/Richard P. Matsch
______________________
Richard P. Matsch
Senior District Judge

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