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Vehicle Market Research, Inc. v. Mitchell International, Inc.

United States District Court, D. Kansas

June 26, 2017

VEHICLE MARKET RESEARCH, INC., Plaintiff,
v.
MITCHELL INTERNATIONAL, INC., Defendant.

          MEMORANDUM AND ORDER

          JULIE A. ROBINSON, UNITED STATES DISTRICT JUDGE

         This case proceeded to trial on August 31, 2015, to resolve a dispute between Plaintiff Vehicle Market Research, Inc. (“VMR”) and Defendant Mitchell International, Inc. (“Mitchell”) over whether Mitchell owed VMR royalties under a software development contract. The jury returned a verdict for Mitchell and judgment was entered on the verdict. Plaintiff appealed and the Tenth Circuit Court of Appeals affirmed. Mitchell proceeded to file its Bill of Costs, [1] to which VMR objected.[2] The Clerk of Court taxed costs in the amount of $93, 134.78 against VMR.[3] Before the Court is VMR's Motion to Retax Costs (Doc. 244). The motion is fully briefed, and the Court is prepared to rule. As described more fully below, the Court grants in part and denies in part VMR's motion to retax costs.

         I. Standard

         Under Fed.R.Civ.P. 54(d), “costs should be allowed to the prevailing party.” Such costs may include the expenses provided under 28 U.S.C. § 1920:

(1) Fees of the clerk and marshal;
(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

         The Court's award of costs is discretionary, and its “discretionary power ‘turns on whether or not the costs are for materials necessarily obtained for use in the case.'”[4] The prevailing party bears the burden of showing the amount of costs to which it is entitled, which must be reasonable.[5] “Once a prevailing party establishes its right to recover allowable costs, however, the burden shifts to the ‘non-prevailing party to overcome' the presumption that these costs will be taxed.”[6]

         Transcript and copy costs under § 1920(2) and (4) must be “necessarily obtained for use in the case.” Under this standard, the materials must be “reasonably necessary to the litigation of the case.”[7] These costs are not recoverable if they “merely ‘added to the convenience of counsel' or the district court.”[8] “Materials produced ‘solely for discovery' do not meet this threshold.”[9] However, the Tenth Circuit acknowledges that materials may still be taxable even if they are not “strictly essential” to the Court's “resolution of the case.”[10] If a transcript or copy was “offered into evidence, ” was “not frivolous, ” and was “within the bounds of advocacy, ” then costs may be appropriately taxed.[11] The Court evaluates the reasonableness of the expense at the time it was incurred.[12] Thus, “[i]f ‘materials or services are reasonably necessary for use in the case, ' even if they are ultimately not used to dispose of the matter, the district court ‘can find necessity and award the recovery of costs.'”[13]

         II. Discussion

         VMR objects to the Clerk's award of costs on the following grounds: (1) Mitchell failed to make reasonable efforts with opposing counsel to resolve their disputes before filing the Bill of Costs; (2) transcript fees associated with John Tagliapietra's personal bankruptcy were not necessarily obtained for use in the case; (2) daily trial transcripts were not necessarily obtained for use in the case; (3) copies related to Mr. Tagliapietra's personal bankruptcy were not necessarily obtained for use in the case; (4) copies related to Mr. Tagliapietra's felony conviction were not necessarily obtained for use in the case; (5) internal copying costs were not detailed enough to determine whether they meet the reasonably necessary standard; and (6) most of the costs associated with Mitchell's e-discovery are not allowable copy costs under § 1920(4). The Court addresses each in turn.

         A. Consultation Requirement

         Local Rule 54.1(a) requires the party who files a memorandum in support of a bill of costs to, inter alia, “state that the party has made a reasonable effort, in conference with opposing counsel or pro se party, to resolve disputes regarding costs.” VMR complains that Mitchell did not provide it with enough time to review its costs request to allow any meaningful consultation. The parties do not dispute that Mitchell's counsel called and left a voicemail for VMR's counsel on the same day that its bill of costs was due, and then followed up with an email to VMR's counsel itemizing the costs it planned to seek. Plaintiff's counsel did not respond by phone, but by e-mail replied: “Not much notice. Cannot adequately respond. Certainly no stipulation.”[14] Mitchell included the requisite statement in its memorandum in support of a bill of costs that it made a reasonable effort, in conference with opposing counsel, to resolve disputes regarding costs.

         Although the Court agrees that Mitchell could have made a greater effort at meaningful consultation, it is not prepared to conclude that Mitchell has forfeited its right to recover reasonable costs on this basis. And given the positions of the parties as stated in the briefing on this motion, the Court is not convinced that greater consultation would have made any difference in this case. Mitchell has met the requirement in the local rule that its memorandum include a statement that it has made a reasonable effort to confer in order to resolve the dispute.[15]

         B. Transcripts “Necessarily Obtained for Use in the Case”

         1. Bankruptcy Case Transcripts

         The Court decided two rounds of summary judgment motions in this matter. In the first round of summary judgment, Mitchell raised the affirmative defense of judicial estoppel. Mitchell argued that VMR should be judicially estopped from recovering in this case because VMR's sole shareholder, John Tagliapietra, failed to disclose the potential value of his VMR stock during the course of his personal bankruptcy proceedings based on the unpaid royalties that form the basis of VMR's damages in this case. After conducting a hearing, the Court granted Mitchell's motion on the sole basis of judicial estoppel; it did not reach the merits of the contract claims. On appeal, the Tenth Circuit Court of Appeals reversed this Court's summary judgment ruling on judicial estoppel, and remanded the case for further proceedings. On remand, this Court denied the parties' cross-motions for summary judgment on the merits of VMR's contract claims and the case proceeded to trial.

         Plaintiff now argues that the cost of obtaining transcripts of creditors' meetings from Mr. Tagliapietra's personal bankruptcy case is not taxable because Mitchell was ultimately unsuccessful on its judicial estoppel affirmative defense. The Court disagrees. As set forth above, the appropriate standard is not whether or not Mitchell was ultimately successful on its affirmative defense. The question is instead whether the cost of obtaining the bankruptcy transcripts was “reasonably necessary to the litigation of the case.” The Court finds that it was. The parties already litigated whether Tagliapietra's statements during the bankrtupcy proceeding could be used as impeachment in the trial in this matter if he testified about the valuation of VMR. The Court allowed this evidence to be used at trial as impeachment, and the Tenth Circuit affirmed this Court's ruling.[16] Mitchell indeed used these transcripts as impeachment during Mr.Tagliapietra's cross-examination. Such use was not frivolous, and was certainly within the bounds of advocacy. The Court finds that irrespective of the judicial estoppel defense, at the time they were obtained, the bankruptcy case transcripts were reasonably necessary to the litigation.

         2. Daily Trial Transcripts

         Next, Plaintiff objects to the costs associated with Mitchell's use of expedited daily trial transcripts. In this District, judges have found such costs taxable where the case is “‘sufficiently lengthy, complex, and contentious' thus making ‘the cost of a daily transcript reasonably necessary.'”[17] This was a case involving two claims under Kansas law: (1) breach of contract, and (2) breach of the duty of good faith and fair dealing. The elements of such claims are straightforward, not complex. The case was tried over seven days, not a lengthy period of time. And although counsel zealously advocated for their clients, the Court cannot find that their contentiousness went beyond the typical level of advocacy in a case of this nature. Mitchell contends that the daily transcripts were necessary for it to cross-examine certain witnesses whose testimony spanned over more than one day, and to impeach one witness about certain untruthful statements made on his first day of testimony. But the Court is not persuaded that a daily transcript is necessary in order to impeach under such circumstances. Of course, the daily transcripts were helpful, and of course counsel utilized them. But the Court cannot find that such use translates into necessity. Instead, they were obtained for the convenience of counsel. Therefore, the Court sustains VMR's objection to the Clerk's award of $2, 010.15 for daily trial transcripts.

         C. Copies

         1. Copies Related to Tagliapietra's Bankruptcy Case ...


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