Schuman Aviation Company, Ltd. v. United States of America

Filing 63

FINDINGS AND RECOMMENDATION THAT DEFENDANT'S BILL OF COSTS BE GRANTED re: 58 . Signed by Judge BARRY M. KURREN on 10/31/2011. (afc)CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
SCHUMAN AVIATION
COMPANY, LTD, dba MAKANI
KAI HELICOPTERS,

)
)
)
)
Plaintiff and
)
Counterclaim
)
Defendant,
)
)
vs.
)
)
UNITED STATES OF AMERICA, )
)
Defendant and
)
Counterclaim
)
Plaintiff.
)
)
_____________________________ )

CV. NO. 08-00289 SOM-BMK
FINDINGS AND
RECOMMENDATION THAT
DEFENDANT’S BILL OF COSTS
BE GRANTED

FINDINGS AND RECOMMENDATION THAT
DEFENDANT’S BILL OF COSTS BE GRANTED
Before the Court is Defendant United States of America’s Bill of
Costs. (Doc. # 58.) After careful consideration of the Bill of Costs, the supporting
and opposing memoranda, and the attached documentation, the Court FINDS and
RECOMMENDS that the Government’s Bill of Costs be GRANTED.1
Briefly stated, this case stems from Plaintiff Schuman Aviation
1

Pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States
District Court for the District of Hawaii (“Local Rules”), the Court elects to decide this matter
without a hearing.
1

Company Ltd’s (“Schuman Aviation”) challenge to the Government’s imposition
of the Air Transportation Excise Tax on its air tour operations during certain
periods. (Order Granting Summ. J., Doc. # 55 at 1.) Schuman Aviation asserted
that the tax did not apply to its operations because it did not operate aircraft “‘on
an established line,’ as contemplated by the relevant portion of the Internal
Revenue Code.” (Id.) Both parties filed motions for summary judgment, and
Chief Judge Susan Oki Mollway granted the Government’s motion for summary
judgment. (Id.) Chief Judge Mollway concluded that Schuman Aviation operated
aircraft on an established line because: 1) it operated air tours between two definite
points; 2) it operated the air tours with some degree of regularity; and 3) it
controlled the air tours sufficiently to render its tours “on an established line.” (Id.
at 16-31.) The Government filed the instant Bill of Costs, asserting that it is
entitled to $4,521.68 in costs for seven deposition transcripts. (Mem. in Supp. of
Bill of Costs, Doc. # 58 at 2.) The Government asserts the deposition transcripts
were necessary for trial preparation because the people deposed “were in charge of
and/or involved in the areas of [Schuman Aviation]’s operation that were necessary
to determine whether the sightseeing tours at issue were operated on an established
line.” (Id.) The Government also asserts that the deposition transcripts were
necessary “to determine the basis of [Schuman Aviation]’s calculation argument.”
2

(Id.) In opposition, Schuman Aviation asserts that the Government’s depositions
were unnecessary and excessive in light of other information produced by the
Government, and that it is inequitable to impose costs on Schuman Aviation
because it is a small company with few employees. (Mem. in Supp. of Obj. to Bill
of Costs, Doc. # 61 at 3-5.)2
Rule 54(d)(1) of the Federal Rules of Civil Procedure (“FRCP”)
provides that “[u]nless a federal statute, these rules or a court order provides
otherwise, costs – other than attorney’s fees – should be allowed to the prevailing
party.” Local Rule 54.2(f) provides that the cost for deposition transcripts
“necessarily obtained for use in the case is allowable” and that a “deposition need
not be introduced in evidence or used at trial, so long as, at the time it was taken, it
could reasonably be expected that the deposition would be used for trial
preparation, rather than mere discovery.” One of the critical issues in the case was
the frequency and flight pattern of the air tours. (Order Granting Mot. Summ. J.,
Doc. # 55 at 16-31.) The Government seeks costs for the deposition transcripts of
the president, employees, accountant, and marketing director of Schuman

2

Schuman Aviation also asserts that the award of costs is discretionary rather than
mandatory (Mem. in Supp. of Obj. to Bill of Costs, Doc. # 61 at 2), but it is unnecessary to
address this argument because the Government has not argued that the award of costs is
mandatory and, as discussed below, the Court has determined that the award of costs is
appropriate in this case. (See Mem. in Supp. of Bill of Costs, Doc. # 58 at 2.)
3

Aviation’s tour company. (Dep. of G.R. Schuman, Doc. # 40 Ex. 14 at 9); (Dep. of
D. Schuman, Doc. # 40 Ex. 15 at 6-7); (Dep. of C. Lanza, Doc. # 40 Ex. 16 at 5);
(Dep. of C. Crawford, Doc. # 40 Ex. 17 at 5); (Dep. of E. Miyasato, Doc. # 40 Ex.
18 at 5); (Dep. of T. Schuman, Doc. # 40 Ex. 19 at 9); (Dep. of P. O’Reilley, Doc.
# 43 Ex. 9 at 9.)3 The Court FINDS that the deposition transcripts were reasonably
necessary for trial preparation. With respect to Schuman Aviation’s argument that
it is inequitable to impose costs, it has not pointed to any evidence in its opposition
that it is a “very small business with few employees” and can avoid the taxation of
costs on that basis. (Mem. in Supp. of Obj. to Bill of Costs, Doc. # 61 at 4-5.)
Therefore, the Court RECOMMENDS that the Bill of Costs be GRANTED.
CONCLUSION
For the foregoing reasons, the Court FINDS and RECOMMENDS
that the Government’s Bill of Costs be GRANTED.

3

The page numbers referred to are the pdf page numbers rather than the transcript

page numbers.
4

IT IS SO FOUND AND RECOMMENDED.

/s/ Barry M. Kurren
United States Magistrate Judge
Dated: October 31, 2011

SCHUMAN AVIATION COMPANY, LTD. V. UNITED STATES OF AMERICA; CV. NO. 08-00289 SOMBMK; FINDINGS AND RECOMMENDATION THAT DEFENDANT’S BILL OF COSTS BE GRANTED

5