Specht et al v. Google Inc et al

Filing 335

REPLY by Defendant Google Inc in Support of its Bill of Costs (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Finn, Herbert)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ERICH SPECHT, et al.,
Plaintiffs,
v.
GOOGLE INC.
Defendant.

)
)
)
)
)
)
)
)

Civil Action No. 09-cv-2572
Judge Leinenweber
Magistrate Judge Cole

GOOGLE INC.’S REPLY BRIEF IN SUPPORT OF ITS BILL OF COSTS
On March 23, 2011, Defendant Google Inc. (“Google”) filed its Bill of Costs (Dkt. No.
321) and supporting documentation,1 requesting that the Court tax $45,282.00 in costs against
Plaintiffs to which Google is entitled under Fed. R. Civ. P. 54(d)(1) as the prevailing party in this
litigation. Plaintiffs filed a response to Google’s Bill of Costs styled as a “Motion to Disallow or
Stay Taxation of Costs” (“Response”, Dkt. No. 328), in which Plaintiffs opposed Google’s
entitlement to various items listed in Google’s Bill of Costs. Regrettably, Plaintiffs’ response is
what this Court has become accustomed to -- a pleading that is unsupportable in either fact or
law causing both the Court and Google unnecessary effort and expense. Google responds to
Plaintiffs’ arguments as set forth below.
I.

AS THE PREVAILING PARTY, GOOGLE IS ENTITLED TO RECOVER ITS
TAXABLE COSTS FROM PLAINTIFFS UNDER RULE 54(d)(1)
As the prevailing party in this litigation, Google is entitled to recover its taxable costs

under Fed. R. Civ. P. 54(d)(1), which provides that “costs other than attorney’s fees shall be
allowed as of course to the prevailing party unless the court otherwise directs.” Rule 54 creates a
“presumption that the losing party will pay costs but grants the court discretion to direct
1

Google’s supporting documentation for its Bill of Costs included the Declaration of Cameron
M. Nelson attached as Exhibit G thereto (“Nelson Decl.”), together with copies of invoices from
Google’s counsel and third-party vendors attached as Exhibits A-F.

otherwise.” Rivera v. City of Chicago, 469 F.3d 631, 634 (7th Cir. 2006). However, that
presumption is difficult to overcome, and the district court’s discretion is narrowly confined.
Indeed, Rule 54(d)(1) establishes a “principle of preference,” under which the district court must
award costs unless it states good reasons for denying them. Congregation of the Passion, Holy
Cross v. Touche, Ross & Co., 854 F.2d 219, 222 (7th Cir. 1988). Generally, only misconduct by
the prevailing party worthy of a penalty or the losing party’s inability to pay will suffice to
justify denying costs. Id.
Clearly, Google is the “prevailing party” in this case for purposes of Rule 54(d)(1), and
Plaintiffs have not argued otherwise. “Prevailing party” is interpreted to mean “the party in
whose favor judgment has been entered.” Republic Tobacco Co. v. N. Atlantic Trading Co., 481
F.3d 442, 446 (7th Cir. 2007). The Clerk entered judgment on March 11, 2011 in favor of
Google on all counts of Plaintiffs’ Second Complaint and Counts I and III of Google’s
Counterclaim (Dkt. No. 311).2 Google prevailed on every claim decided by the Court on the
merits, and therefore is clearly the prevailing party under Rule 54(d)(1). See Slane v. Mariah
Boats, Inc., 164 F.3d 1065, 1068 (7th Cir. 1999) (noting that “when one party gets substantial
relief it ‘prevails’ even if it doesn’t win on every claim”).
While Plaintiffs argue that Google is not entitled to an award of costs because the Court’s
judgment “did not specifically allow costs” (Response, pp. 2-3), that argument is unavailing and

2

Plaintiffs argue that the taxation of costs is premature because the Seventh Circuit Court of
Appeals has now raised questions as to whether it has jurisdiction to hear Plaintiff’s appeal at
this time (Response, pp. 1-2). Regardless of whether this Court’s decision is appealable
according to the Seventh Circuit, Google respectfully submits that as the prevailing party on all
of Plaintiffs’ claims, it has established entitlement to an award of costs under Rule 54(d)(1), and
this Court need not wait for the conclusion of the appeal process to enter an award of Google’s
taxable costs. Indeed, the interest of judicial economy would be promoted by entering such an
award now, so that in the event that Plaintiffs or Google choose to appeal any award, the Seventh
Circuit can address that issue together with Plaintiffs’ appeal on the merits.
2

unsupported by the Federal Rules. It is not surprising that Plaintiffs have not identified any
legal support for their allegation -- as the law is clearly to the contrary.
Under Rule 54(d)(1), a judgment silent about costs is a judgment allowing costs because
the district court has not “otherwise directed.” Congregation of the Passion, 854 F.2d at 221.
As the prevailing party, Google is entitled to an award of costs in the absence of any finding by
this Court of good reasons to deny such an award. Id. at 222. Because Plaintiffs have not
identified any “good reasons” which would serve to rebut the presumption in favor of awarding
costs, this Court must award Google its taxable costs. Id.
II.

GOOGLE IS NOT REQUIRED TO “ITEMIZE” ITS COSTS AMONG SPECIFIC
CLAIMS OR PLAINTIFFS
Plaintiffs next argue that Google should be denied any award of costs because Google

purportedly failed to “itemize” its costs among specific Plaintiffs and/or between Plaintiffs’
claims and Google’s counterclaims (Response, pp. 3-4). That argument is also unsupported by
any authority, and is once again unavailing.
First, Plaintiffs’ argument that Google should not be awarded costs because it did not
prevail on every one of its asserted counterclaims ignores both the law and reality. A party need
not prevail on every single claim asserted in order to be the “prevailing party.” See Slane, 164
F.3d at 1068 (plaintiff who was awarded $225,000 by the jury and thus “won the battle” was the
prevailing party, even though he prevailed on only two of the four claims asserted). As in Slane,
Google “won the battle” by defeating Plaintiffs’ infringement claim and obtaining the
cancellation of Plaintiffs’ federal trademark registration, and therefore is entitled to recover all
costs permitted under 28 U.S.C. §1920.
Further, the law provides that liability for an award of costs to a prevailing party is joint
and several unless it is clear that one or more of the losing parties is responsible for a

3

disproportionate share of the costs. Anderson v. Griffin, 397 F.3d 515, 522-23 (7th Cir. 2005).
Thus, joint and several liability among each of the Plaintiffs is presumed, and it is Plaintiffs’
burden, not Google’s, to “itemize” those costs between one another if there is some legitimate
reason to do so. See White v. Sundstrand Corp., 256 F.d 580, 586-87 (7th Cir. 2001) (finding
liability to be joint and several where plaintiffs made no contention that specific plaintiffs were
responsible for discrete portions of the prevailing defendant’s costs). Plaintiffs have made no
such contention that costs should be divided up because of differing responsibilities. Nor should
they, because the named plaintiff corporations (Android Data Corporation and The Android’s
Dungeon, Inc.) are nothing more than alter egos of Plaintiff Erich Specht, who has at all times
been the “sole officer, director and shareholder” of ADC and the sole shareholder of ADI (see
Plaintiffs’ Second Amended Complaint, Dkt. No. 134, at ¶¶ 7-8). Plaintiffs’ “itemization”
argument is nothing more than a red herring raised by Plaintiffs in an improper effort to make
this Court and Google incur unnecessary effort in addressing a non-issue.
III.

THE COSTS ITEMIZED BY GOOGLE ARE PROPERLY TAXABLE AS COSTS
UNDER 28 U.S.C. §1920
As discussed below, each of the costs itemized by Google in its Bill of Costs qualifies as

a taxable cost under 28 U.S.C. §1920.3 At the outset, Plaintiffs’ confusing argument that
Google’s bill of costs should be denied because Google somehow “inflated its costs” (Response,
pp. 4-6) lacks any merit. While Google strongly disputes the veracity of Plaintiffs’ unsupported,
disparaging representations as to what transpired during settlement negotiations, there is no need
to engage in a “he said, she said” debate, inasmuch as Google’s prior settlement demand and

3

Google hereby withdraws its request for an award of $1,326.14 for printing costs associated
with its response to Plaintiffs’ Petition for Writ of Mandamus to the Seventh Circuit (see Nelson
Decl., ¶13).

4

Plaintiffs’ prior settlement offer4 is simply irrelevant to the entry of an award of costs under Rule
54(d)(1). Google has submitted a properly itemized and supported Bill of Costs, and Plaintiffs’
disjointed, unsupported and inflammatory accusations have no bearing on the issue now before
this Court.5
A.

Google is Entitled to Recover Its Costs for Private Process Servers

Plaintiffs concede that fees of private process servers are recoverable under §1920(1),
provided they do not exceed the U.S. Marshals rate at the time process was served. Collins v.
Gorman, 96 F.3d 1057, 1060 (7th Cir. 1996). To award costs for the service of subpoenas, the
Court need only determine that the subpoenas were reasonably necessary “in light of facts known
at the time of service.” Perry v. City of Chicago, 2011 WL 612342, *3 (N.D.Ill. Feb. 15, 2011)
(citing Movitz v. First Nat. Bank of Chicago, 982 F.Supp. 571, 574 (N.D.Ill. 1997)). The party
contending that service was not reasonably necessary has the burden of proving that service was
unreasonable, and “must offer some evidence to show that it was unreasonable for [the
prevailing party] to believe that the documents or the testimony were necessary at the time [they
were] sought.” Id. (emphasis added).
Plaintiffs have again offered nothing more than unsupported attorney argument, devoid of
any evidence or citation to the record, in support of their argument that service of the subpoenas
at issue was not reasonably necessary. As such, those arguments (which Google again does not
4

In the spirit of Federal Rule of Evidence 408, the undersigned had attempted to avoid disclosing
the actual settlement discussions between the parties. However, in view of Plaintiffs’ disclosure
of such discussions and Mr. Murphy’s unjustified characterization of the undersigned as
somehow being untruthful as to what Plaintiffs’ demanded as a settlement offer, the undersigned
must clarify further. When he and Richard Harris met with Mr. Murphy in person to discuss
settlement on Tuesday, January 25, 2010, Mr. Murphy orally requested $5 Million as a
settlement amount. We trust that Mr. Murphy’s statements to the contrary, i.e. that no demand
was ever discussed (Response p 4-5), were nothing more than mis-recollection.
5

Moreover, Google fails to see the logic in Plaintiffs’ argument that Google somehow “inflated”
its taxable costs by seeking far less than it had initially estimated.
5

concede the veracity of) are insufficient to justify denial of subpoena service fees. See id.
(awarding service fees where plaintiff provided “no sound basis for an outright denial of
subpoena service fees”).
Moreover, Plaintiffs concede that the testimony of Robblee and Eide was reasonably
necessary for use in this case (Response, pp. 9-10). The remaining entities who were served with
subpoenas by Google (Northwest Repossession/NRI, Picket Fence Realty, and Design Toscan)
were all identified by Plaintiffs as entities having relevant knowledge regarding their purported
trademark use.6 See id. at *2 (noting that each subpoenaed person or institution was identified by
the plaintiff as having discoverable information). As such, Plaintiffs have identified no sound
basis for denying Google’s request for recovery of its service fees.
Google agrees that, under the controlling law, and without some other showing of need, it
is entitled to no more than $55 in taxable costs per subpoena where the invoice does not identify
the actual time spent by the process server. See Davis v. Budz, 2011 WL 1303435, *2 (N.D.Ill.
Mar. 31, 2011) (when an invoice fails to indicate the time spent effectuating service, courts will
award costs for one hour based on current Marshals Service rate of $55 per hour for service of
process). Accordingly, Google limits its request for service fees to a total of $490, based on an
award of $55 for subpoenas served on each of the following entities (see invoices collected at
Ex. B to Bill of Costs):
Entity
Eide C.P.A., LLC
Kenneth A. Robblee
(document subpoena)
Kenneth A. Robblee
(deposition subpoena)

Invoice No.
26444
29212

Invoice Date
09/30/2009
10/21/2009

0908762

11/6/2009

6

See Ex. A, Plaintiffs’ Third Supplemental Responses to Google’s First Set of Interrogatories, at
pp. 6-7 (Design Toscano), pp. 12-13 (Northwest Repossession/NRI), pp. 14-17 (Picket Fence
Realty).
6

Northwest Repossession LLC
NRI, LLC
Picket Fence Realty, Ltd.
Design Toscan, Inc.
Design Toscan Commercial LLC

B.

0909577
0909577
0909577
0909577
0909577

11/17/2009
11/17/2009
11/17/2009
11/17/2009
11/17/2009

Google is Entitled to Recover its Costs for Both Video and Stenographic
Transcription of Depositions

While Plaintiffs claim that a Court may not award a prevailing party its costs for
transcribing a deposition by both video and stenographic means (Response, p. 9), the cases cited
by Plaintiffs are no longer good law. The Seventh Circuit has more recently held that district
courts may tax costs for both video recording and stenographic transcription of a deposition.7
Little v. Mitsubishi Motors N. Am., Inc., 514 F.3d 699, 702 (7th Cir. 2008). Further, most
transcripts of video-recorded depositions fall into the category of “necessarily obtained for use in
the case,” because the Federal Rules require a party seeking to use deposition testimony at trial
to provide a written transcript. Id. Thus, where a party uses a video-recorded deposition to
support its motion for summary judgment, the stenographic transcript of that deposition was
necessarily obtained for use in the case. Id.
Google seeks its costs for transcripts from fourteen (14) depositions taken during
discovery in this case, as summarized in the spreadsheet included in Exhibit C to Google’s Bill

7

While Plaintiffs note that Rule 30(b)(3)(A) states that the noticing party “bears the recording
costs” for a deposition (Response, p. 9), Plaintiffs, as per their practice, cite no authority for the
proposition that this language precludes the Court from taxing those costs to the losing party
under Rule 54(d)(1)—a disingenuous proposition which directly contradicts the vast body of
case law holding that costs for recording a deposition (by audio, audiovisual and/or stenographic
means) are taxable under Rule 54(d)(1).
7

of Costs. Five of those depositions were noticed and taken by Plaintiffs, and therefore Plaintiffs
cannot seriously argue that those depositions were not reasonably necessary for use in this case.8
Of the remaining depositions noticed and taken by Google, each of those transcripts was
relied upon by Google in either its motion for summary judgment and/or its currently pending
motion for sanctions and attorney’s fees.9 While Plaintiffs baldly claim that most of those
transcripts were not necessarily obtained for use in the case, they provide no detailed assertions
or evidence in support of that claim. See BDT Products, Inc. v. Lexmark Int’l, Inc., 405 F.3d
415, 419-20 (6th Cir. 2005) (noting that the party objecting to costs has the burden of
demonstrating “which depositions fall outside the reach of necessity”). Because Google has
actually used each of those transcripts in this case, this Court is justified in finding that they were
necessarily obtained for use in the case, and awarding Google its costs associated therewith. See
Apostal v. City of Crystal Lake, 165 F.R.D. 508, 511 (N.D.Ill. 1996) (awarding costs where all of
the depositions for which defendants sought reimbursement were used in their motion for
summary judgment); MOORE’S FEDERAL PRACTICE (3rd ed.), §54.103[3][c][i] (“If the deposition
was actually used in the case, the necessity of taking it is established by that use, whether the
deposition is offered into evidence at trial, or is merely used in pretrial proceedings, such as on a
motion to dismiss or for summary judgment.”).

8

Specifically, the depositions of Nickolas Sears, Andy Rubin, Jennifer Flannery, Christopher
White and Cliff Petrovsky were noticed and taken by Plaintiffs. Notably, Google does not seek
to recover its actual costs for those transcripts, but rather only seeks to recover the $0.90 per
page permitted under this Court’s fee schedule.
9

See Google’s LR 56.1 Statement of Uncontested Facts (Dkt. No. 256) at ¶¶ 54-56 (Robblee), ¶¶
20, 62 (Megan Specht), ¶¶ 26, 47, 54, 59-63, 66, 68, 72, 75 (Erich Specht), ¶49 (May), ¶ 52, 73
(Crum); Google’s Response to Plaintiffs’ Motion to Strike Google’s LR56.1 Statement of
Uncontested Facts (Dkt. No. 286) at pp. 4-5 (Eide), pp. 8-9 (Martin Murphy); Google’s Reply to
Plaintiffs’ Response to Google’s LR 56.1 Statement of Uncontested Material Facts (Dkt. No.
289), at p. 11 (Wendy Murphy).
8

Moreover, as noted in the Nelson Declaration, Google’s videotaping of several
depositions was justified and necessary, in view of the fact that (i) Mr. Robblee was in ill health
at the time of his deposition, and (ii) the misconduct of Plaintiffs’ counsel at the deposition of
Mr. Murphy. The videotaping of subsequent depositions was in order to minimize the disruptive
behavior that prevented Google from obtaining factual information should be taxed to Plaintiffs
as well. Notably, Plaintiffs do not contend that the costs associated with videotaping those
depositions were unreasonable. Accordingly, Google may recover its costs associated with
videotaping those depositions under Rule 54(d)(1), in addition to the cost of preparing
stenographic transcripts of those depositions. Little, 514 F.3d at 702.
C.

Google is Entitled to Recover its Itemized Costs for Exemplification and
Copy Fees

As discussed in the Nelson Declaration, Google has properly itemized its costs for
exemplification and copy fees, and recovery of those costs is permitted under 28 U.S.C. §1920.
First, Plaintiffs’ statement that “[e]xpenditures for a computerized litigation support system are
not taxable costs” (Response, p. 11) again misstates the law. In the 1991 Seventh Circuit case
which Plaintiffs cite, the Seventh Circuit did not hold that costs for document imaging are never
taxable; rather, it simply held that the district court’s one-sentence comment in that case
regarding a particular database expense was insufficient to permit the appeals court to determine
whether the expense was reasonable and necessary. Northbrook Excess and Surplus Ins. Co. v.
Procter & Gamble Co., 924 F.2d 633, 644 (7th Cir. 1991).
However, in the twenty years since Northbrook, courts have repeatedly recognized that in
this day and age, electronic document imaging has to a large extent replaced making paper
copies, and therefore document imaging expenses can properly be taxed as costs for
“exemplification and copies of papers necessarily obtained for use in the case.” See, e.g., Fast

9

Memory Erase, LLC v. Spansion, Inc., 2010 WL 5093945, *5 (N.D.Tex. Nov. 10, 2010)
(“Recent decisions accounting for technological advances in document storage and retrieval have
recognized that electronic scanning and imaging of paper documents is the modern-day
equivalent of ‘exemplification and copies’ of paper.”). Thus, courts now routinely allow a
prevailing party to recover the costs of converting documents into electronic files. See, e.g., BDT
Prods., 405 F.3d at 420 (finding no abuse of discretion in the district court’s taxation of scanning
and imaging costs, and stating that “electronic scanning and imaging could be interpreted as
‘exemplification and copies of papers’”); Tilton v. Capital Cities/ABC, Inc., 115 F.3d 1471, 1476
(10th Cir. 1997) (affirming district court’s taxation of costs for imaging documents); Brown v.
McGraw-Hill Cos., Inc., 526 F.Supp.2d 950, 959 (N.D.Iowa 2007) (taxing costs of scanning
documents because “the electronic scanning of documents is the modern-day equivalent of
‘exemplification and copies of paper’”). Moreover, where, as here, the parties expressly agreed
to produce documents electronically in TIFF/OCR format, the prevailing party is entitled to
recover its costs for creating TIFF/OCR images of responsive documents. Fast Memory Erase,
2010 WL 5093945 at *5. See also Neutrino Development Corp. v. Sonsonite, Inc., 2007 WL
998636, *4 (S.D.Tex. Mar. 30, 2007) (where electronic data was produced by agreement, in lieu
of paper copies, the cost of production was recoverable under §1920).
As noted in the Nelson Declaration, Google seeks to recover $17,002.67 for imaging and
creating TIFF/OCR versions of documents exchanged during discovery (see Nelson Decl., ¶16).
Moreover, producing documents in that format resulted in significant cost savings over printing
and copying all of the documents that were produced in this case (Id.). See Nault v. Dorel
Indus., Inc., 2010 WL 3064007, *4 (W.D.Tex. Aug. 2, 2010) (finding cost of electronic
production taxable where “the electronic data was produced in lieu of extremely costly paper

10

production”). Because the parties in this case agreed that documents would be exchanged in
such a format,10 such costs are properly taxed as exemplification costs under §1920.
Further, while Plaintiffs challenge Google’s right to $2,152.15 for photocopying costs,
the law is clear that the prevailing party is “not required to submit a bill of costs containing a
description so detailed as to make it impossible economically to recover photocopying costs,”
and must simply “provide the best breakdown obtainable from retained records.” Bodum USA,
Inc. v. La Cafetiere, Inc., 2009 WL 1702808, *4 (N.D.Ill. June 17, 2009) (citing Northbrook, 924
F.2d at 643). Indeed, a party need not provide a “detailed breakdown of which documents were
copied on which dates,” but need merely produce the best records that it has. Id.
Google has provided in the Nelson Declaration a detailed description of the types of
documents that were copied by Google’s counsel for use in this case, together with copies of
counsel’s invoices showing the precise amounts charged by counsel to Google for copying costs
(see Nelson Decl., ¶15). While Plaintiffs argue that Google should only be entitled to recover
copying costs for documents actually filed with the Court (Response, p. 11), that is not the law.
Copies of documents “necessary for use in the case” may also include “copies attributable to
discovery.” Perry, 2011 WL 612342 at *2. Given the fact that nearly 300,000 pages of
documentation were ultimately produced in this case, and that fourteen depositions were taken
by the parties (each involving many exhibits), Google submits that its request for in-house
photocopying costs for 21,522 pages is manifestly reasonable. See Bodum USA, 2009 WL
1702808 at *4 (finding that requested costs for in-house copying were low “given the amount of
discovery, exhibits and filings required in the case”).

10

See Ex. B, March 26, 2010 Dunning e-mail.
11

IV.

CONCLUSION
For the reasons set forth above, Google requests that the Court enter an Order requiring

Plaintiffs to pay Google’s taxable costs pursuant to Rule 54(d)(1), in the amount of $43,375.86,
calculated as follows:
Fees for service of summons and subpoena:
Fees of the court reporter for all or any part of the
transcript necessarily obtained for use in the case:
Fees for witnesses:
Fees for exemplification and copies of papers
necessarily obtained for use in the case:

$490.00
$20,879.70
$55.00
$21,951.16

Respectfully submitted,

Dated: May 2, 2011

/s Herbert H. Finn
Herbert H. Finn (ARDC #6205685)
Richard D. Harris (ARDC #1137913)
Jeffrey P. Dunning (ARDC #6273364)
Cameron M. Nelson (ARDC #6275585)
GREENBERG TRAURIG, LLP
77 West Wacker Drive, Suite 3100
Chicago, IL 60601
[phone]
COUNSEL FOR GOOGLE INC.

12

CERTIFICATE OF SERVICE
I hereby certify that on the date set forth below, I electronically filed the foregoing
GOOGLE INC.’S REPLY BRIEF IN SUPPORT OF ITS BILL OF COSTS with the Clerk of
Court using the CM/ECF system, which will send notification of such filings to all counsel of
record.

Dated: May 2, 2011

/s Herbert H. Finn

13