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Balance Point Divorce Funding, LLC v. Scrantom

United States District Court, S.D. New York

March 6, 2015

BALANCE POINT DIVORCE FUNDING, LLC, Plaintiff,
v.
TIMOTHY D. SCRANTOM, JURIDICA CAPITAL MANAGEMENT LIMITED, JURIDICA CAPTIAL MANAGEMENT (US) INC., and JURIDICA INVESTMENTS LIMITED, Defendants.

MEMORANDUM AND ORDER

P. KEVIN CASTEL, District Judge.

Defendants Juridica Capital Management Limited, Juridica Capital Management (US) Inc., and Juridica Investments Limited (collectively, "Juridica") are the prevailing parties in this action and are entitled to the taxation of costs in their favor. Rule 54(d), Fed.R.Civ.P. The costs to which a prevailing party is entitled are limited to those costs enumerated in 28 U.S.C. § 1920. Juridica has moved for judicial review of the Clerk's denial of the costs of electronic discovery and deposition transcripts. The taxation of costs associated with electronic discovery has not been addressed at length in reported decisions of courts within this Circuit. 77

For reasons explained, the motion is granted to the extent that the Court concludes that costs of the conversion of native files into digital images, in this case TIFF format, of documents actually produced to a requesting party and certain costs associated with uploading and transferring those documents, in this case to FTP, are taxable as "the costs of making copies of any materials where the copies are necessarily obtained for use in the case." 28 U.S.C. § 1920(4). Other costs associated with the electronic discovery process are disallowed. Thus, the Clerk is ordered to tax $493.97 in costs in favor of Juridica in addition to the $690.00 previously awarded to Juridica for costs for fees of the Clerk and fees for service of summons and subpoena. The Court otherwise denies Juridica's application.

BACKGROUND

Plaintiff Balance Point Divorce Funding, LLC ("Balance Point") brought this action against defendants Juridica and Timothy D. Scrantom, asserting claims of tortious interference with contract, tortious interference with business relations, and misappropriation of trade secrets. Juridica and Scrantom filed motions to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P., and the Court dismissed plaintiff's tortious interference with contract claim. Balance Point Divorce Funding, LLC v. Scrantom, 978 F.Supp.2d 341 (S.D.N.Y. 2013). The parties conducted discovery as to the remaining claims and by letter dated September 19, 2014, plaintiff informed the Court of its intention to voluntarily dismiss the action with prejudice. Pursuant to Rule 41(a)(2), Fed. R. Civ. P., the Court entered an Order of voluntary dismissal of the action against all defendants with prejudice and directed the Clerk to tax costs in favor of the defendants. (Docket # 120.)

On October 21, 2014, Juridica submitted a Bill of Costs in the amount of $50, 913.74. The Clerk awarded Juridica $690.00 in costs for fees of the Clerk and fees for service of summons and subpoena. (Docket # 124.) The Clerk declined to award $43, 140.95 in costs associated with electronic discovery, which Juridica categorized as "[f]ees for exemplification and copies of papers necessarily obtained for use in the case." (Id.) The Clerk also declined to award $7, 082.79 in costs for copies of deposition transcripts. (Id.) Juridica categorized the deposition transcript costs as "[f]ees of the court reporter for all or any part of the transcript necessarily obtained for use in the case." (Id.) Juridica requests that the Court review the Clerk's denial of costs and award Juridica costs in the amount of $50, 913.74.

DISCUSSION

I. Legal Standard

Federal Rule of Civil Procedure 54(d)(1) states "[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." Under Rule 54(d)(1) the "[C]lerk may tax costs on 14 days' notice" and the district court, on timely motion made, may review the action of the Clerk. "Where an unsuccessful litigant appeals the Clerk of the Court's award of costs, the district court reviews the award de novo." Karmel v. City of New York, No. 00-CV-9063 (KMK), 2008 WL 216929, at *1 (S.D.N.Y. Jan. 9, 2008) (citing Whitfield v. Scully, 241 F.3d 264, 269 (2d Cir. 2001) ("A district court reviews the clerk's taxation of costs by exercising its own discretion to decide the cost question itself.") (internal quotation marks and citations omitted)). Although the decision whether to award costs is within the district court's discretion, "federal courts have no authority to award costs in excess of statutory limits." Carmody v. City of New York, No. 05 Civ. 8084 (HB), 2008 WL 3925196, at *1 (Aug. 26, 2008) (citing Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987)).

Interpreting Rule 54(d)(1), "the Supreme Court has held that the term costs' includes only the specific items enumerated in 28 U.S.C. § 1920 (1994)." Whitfield, 241 F.3d at 269 (citations omitted). 28 U.S.C. § 1920 contains six categories of taxable costs: (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 28 U.S.C. § 1923; and (6) compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under 28 U.S.C. § 1828. Thus, "the discretion granted by Rule 54(d)... is solely the power to decline to tax, as costs, the items enumerated in § 1920." Taniguchi v. Kan.Pac. Saipan, Ltd., 132 S.Ct. 1997, 2006 (2012) (internal quotation marks and citations omitted).

"Local Civil Rule 54.1 further outlines those costs which are taxable in the Southern District of New York." Karmel, No. 00-CV-9063 (KMK), 2008 WL 216929, at *1 (S.D.N.Y. Jan. 9, 2008). Several judges of this Court have read Local Civil Rule 54.1 as merely imposing supplemental constraints on Courts when awarding costs specifically discussed therein. See In re Omeprazole Patent Litig., Nos. M-21-81 (BSJ), 00 Civ. 6749 (BSJ), 03 Civ. 6057 (BSJ), MDL Docket No. 1291, 2012 WL 5427849, at *2-3 (S.D.N.Y. Nov. 7, 2012); Universal City Studios, Inc. v. Nintendo Co., Ltd., No. 82 Ci. 4259 (RWS), 1986 WL 11462, at *2 (S.D.N.Y. Oct. 6, 1986) (construing the Southern District of New York's former Local Rule 11(c)(5) which governed taxation of costs for "Exemplification and Copies of Papers"). But see Carmody v. City of New York, No. 05 Civ. 8084 (HB), 2008 WL 3925196, at *1 (S.D.N.Y. Aug. 26, 2008) (limiting the costs taxable in this district to those which the Local Civil Rule addresses). This Court concludes that Local Civil Rule 54.1 governs to the extent that the Local Rule addresses a particular cost; however, if the Local Rule does not speak to a specific cost, then the Court must apply 28 U.S.C. § 1920's more expansive standard.

Furthermore, taxing costs pursuant to Rule 54(d)(1), 28 U.S.C. § 1920, and Local Rule 54.1 in favor of the prevailing party is the rule, not the exception, in civil litigation. See Whitfield, 241 F.3d at 270 (citation omitted). "For this reason, the losing party has the burden to show that costs should not be imposed" and, "[i]n light of the general rule, when a prevailing party is denied costs, a district court must articulate its reasons for doing so." Id . (citation omitted).

The Court recognizes that Rule 26(b)(2)(B), Fed. R. Civ. P., allows a party to decline to produce electronically stored information in response to an opposing party's discovery request so long as the objecting party shows that the requested "information is not reasonably accessible because of undue burden or cost." If the requesting party shows good cause for the discovery request, the Court may order the party from whom discovery is sought to produce the information. Here, Juridica did not make any Rule 26(b)(2)(B) objections to Balance Point's discovery requests. The Court, in this opinion, limits its decision to the issue of whether Juridica's deposition and electronic discovery costs may be taxed pursuant to Rule 54(d)(1), Fed. R. Civ. P., 28 U.S.C. § 1920, and Local Civil Rule 54.1.

II. Prevailing Party

Here, Juridica is a prevailing party for purposes of taxing costs pursuant to Rule 54(d). By letter dated September 19, 2014, Balance Point informed the Court of its intention to voluntarily dismiss the lawsuit against all defendants with prejudice. (Docket # 110.) Subsequently, the Court dismissed the action with prejudice pursuant to Rule 41(a)(2), ...


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