MICHAEL HLUCHANIUK, Magistrate Judge.
The complaint in this matter was filed on December 15, 2008, alleging several federal and state causes of action. (Dkt. 1). Jurisdiction over the state claims was based on the court's supplemental jurisdiction regarding such matters. The subsequent litigation resulted in a narrowing of the permissible claims on behalf of the plaintiffs until there was a dismissal of all of the federal claims and the court issued a show cause order as to why the remaining state claims should not be dismissed. (Dkt. 218). The parties prevailed on the court to exercise its discretion and to retain jurisdiction of the remaining state claims given the significant investment in time the parties had put into the litigation. On February 9, 2012, the court entered an order allowing the case to go forward under its supplemental jurisdiction as to claims under Michigan, Massachusetts and Connecticut law. (Dkt. 225). On April 25, 2012, the parties entered into a consent judgment awarding substantial damages to plaintiffs under the Connecticut Securities Act. The present motions for attorney fees and costs were filed on May 11, 2012. (Dkt. 250, 251). These matters were referred to the undersigned on May 20, 2012. (Dkt. 252). Pursuant to notice, a hearing was held on August 9, 2012. (Dkt. 255). After the hearing, the parties entered into a proposed stipulated order that provides as follows:
Plaintiff claims costs under the provisions of federal as well as state law. Those claims that are made exclusively under federal law include: (1) taxable fees of the clerk — $1,728.12; (2) court reporter fees for transcripts — $28,942.41; (3) fees for witnesses — $178.04; (4) fees for service of process — $755.00; and (5) fees for copies — $31,351.93. Claims made exclusively under state law include: (1) expert witness fees — $195, 622.48; (2) attorney travel expenses — $33,210.66; (3) mailing — $3,835.80; and (4) conference calls — $404.15. Plaintiff claims costs for online research fees under federal or state law in the amount of $24,634.50.
As set forth above, a number of these costs have not been objected to by defendant. Defendant has not objected to the taxable costs to the clerk of $1,728.12, the court reporter fees for transcripts of $28,942.41, the witness fees of $178.04, and the service of process fees of $755.00.
Plaintiff seeks costs under federal law pursuant to 28 U.S.C. § 1920 and Fed.R.Civ.P. 54(d). Rule 54(d) provides that unless a statute, rule or order provides otherwise, costs, not including attorney fees, "should" be allowed to the prevailing party. Section 1920 includes a list of items which may be taxed as costs by the clerk or a judge. The Supreme Court has determined "that § 1920 defines the term `costs' as used in Rule 54(d). Section 1920 enumerates expenses that a federal court may tax as a cost under the discretionary authority found in Rule 54(d). It is phrased permissively because Rule 54(d) generally grants a federal court discretion to refuse to tax costs in favor of the prevailing party." Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42 (1987).
Plaintiff also seeks costs under state law. Specifically, the consent judgment in plaintiff's favor was based on an acknowledged violation of the Connecticut Uniform Securities Act (CUSA), Conn. Gen. Stat. § 36b-29(a)(2). That section of Connecticut law provides, in part, that a "person who ... sells ... a security by means of any untrue statement of a material fact ... is liable to the person buying the security [for] the consideration paid for the security, together with interest at eight per cent per year from the date of the payment, costs and reasonable attorney fees ..."
Plaintiff seeks $24,634.50 in costs for online research conducted in this litigation which consists of $20,779.70 in charges for the research by primary and local counsel and $3,854.80 in related printing of the research. Defendant objects to the taxation of these costs as not being allowed under § 1920 and based on the claim the charges are not reasonable. (Dkt. 256, Pg ID 8635-36).
Online research expenses are not included in the list of recoverable costs included in §1920. "[A]bsent explicit statutory or contractual authorization for the taxation of [costs] federal courts are bound by the limitations set out in 28 U.S.C.... § 1920." Crawford Fitting, 482 U.S. at 445. Online research expenses are not a taxable cost under § 1920.
Plaintiffs rely on Farley v. Country Coach, Inc., 2008 WL 905215 (E.D. Mich. 2008) in support of their request. Indeed, Farley was a case in which on-line research costs were awarded to a prevailing party. The successful plaintiff in Farley had pursued a cause of action pursuant to the Magnuson-Moss Warranty Act which included a provision that allowed "the aggregate amount of cost and expenses (including attorney's fees based on actual time expended) determined by the court" to be recovered by plaintiff. 15 U.S.C. § 2310(d)(2). The Farley opinion relied on decisions from three other circuits (the 9th, 2d and 1st) which awarded on-line research expenses as part of an attorney fee petition, not under § 1920. "The costs that courts may tax under Rule 54(d)(1) are confined to the costs itemized in 28 U.S.C. § 1920." In re Cardizem CD Antitrust Litigation, 481 F.3d 355, 359 (6th Cir. 2007). The cost of on-line research may be taxed under the "cost" provision of 15 U.S.C. § 2310(d)(2), as determined by Farley, but they may not be taxed under Rule 54(d) and § 1920. Plaintiffs cite no other federal law that allows for an award of costs for on-line research in the present circumstances.
Plaintiffs request an award of costs for three expert witnesses totaling $195,622.48. Plaintiffs contend that expert witness fees can be awarded under the "costs" language of Conn. Gen. Stat. § 36b-29(a)(2). Plaintiffs appear to cite Duerr v. Dicesare, 2004 WL 2361833 (Conn. Super. Ct. 2004) in support of their position. (Dkt. 251, Pg ID 7747). Defendant opposes an award of costs relating to expert witness fees under Connecticut law arguing any "cost" award must be clearly provided for in the statute. Defendant cites Arnone v. Town of Enfield, 79 Conn.App. 501 (2003), among other cases, in support of its position. (Dkt. 256, Pg ID 8638).
As to whether Connecticut state law allows for the award of costs beyond that allowed in § 1920, the Supreme Court of Connecticut addressed a related issue in M. DeMatteo Const. Co. v. City of New London, 236 Conn. 710 (1996). In DeMatteo the court considered a situation in which plaintiff had successfully appealed a valuation of real estate for tax purposes by the City of New London. The statute under which the appeal was taken, Conn. Gen. Stat. § 12-117a, provided that if "the assessment made by the board of tax review is reduced by said court, the applicant shall be reimbursed by the town or city for any overpayment of taxes, together with interest and costs." Plaintiff sought an award of costs for the expense of a real estate appraiser who provided a report and subsequently testified at the trial under the provisions of § 12-117a and § 52-260(f), a more general provision that allowed for the award of certain taxable costs to a prevailing party in litigation. The court considered the "settled principle of [Connecticut] common law that parties are required to bear their own litigation expenses, except as otherwise provided by statute ...[and] courts cannot tax [costs]" unless the statute "clearly provides for them." While not identifying what was included in the "costs" provided for in § 12-117a, the court concluded that a real estate appraisal
In 2003, the Connecticut appellate court issued two opinions that relied on DeMatteo in reaching similar decisions based on other state statutes. Miller v. Guimaraes, 78 Conn.App. 760 (2003), involved a successful plaintiff in a case under the Connecticut Unfair Trade Practices Act (CUTPA). The plaintiff sought an award of costs for an attorney expert witness based on language in the CUTPA that provided for an unspecified award of costs to the plaintiff. Concluding the CUTPA did not "clearly" provide for an award of costs for an expert witness, and finding that an attorney expert witness was not included in more general expert witness statute, § 52-260, the request for an award of costs for this witness was denied.
In Arnone, supra, the court considered whether a plaintiff who had successfully sued based on a retaliatory discharge theory was entitled to an award of costs for an economist expert witness who had testified in the case. The plaintiff's cause of action was based on a substantive provision of state law that allowed for an unspecified award of costs to a successful plaintiff. Citing DeMatteo, the Arnone court said that the unspecified "costs" language of the substantive statute giving rise to the cause of action did not clearly provide for an award of costs for plaintiff's expert witness, and the general expert witness statute, § 52-260, did not list this type of expert as one for which an award of costs could be given. As a result, an award of costs for this purpose was not allowed. The court specifically rejected the argument that giving the "costs" language in the substantive statute no broader meaning than the general limitations of § 52-260 "would give no meaning to the legislature's words" in the substantive statute.
Duerr, the case cited by plaintiff, was another CUTPA case where the plaintiff sought an award of costs for an engineer who had testified on plaintiff's behalf. While the trial judge recognized that the provisions of the CUTPA allowed for an unspecified award of "costs," and it would be "logical" to award costs for an expert who was necessary to plaintiff's case, the court ruled that it was bound by Miller to disallow such a cost because that type of expert was not included in § 52-260.
The common principle identified in these Connecticut cases is that unless a statute clearly provides for a specific award of costs none will be allowed. These substantive state statutes differ to some degree in the way they refer to an award of costs but the differences are not significant. The common feature of all of these state statutes is that they all have a substantive provision allowing for an award of costs but do not specify what costs are allowed. Plaintiff contends that because this case was litigated in federal court, rather than Connecticut state court, the state decisional law holding that costs of this nature are controlled by § 52-260, when the substantive law giving rise to the cause of action does not clearly provide for costs of this nature, should not be followed. (Dkt. 251, Pg ID 7747, n. 4). To the contrary, when a case in federal court is based on diversity jurisdiction or supplemental jurisdiction, the law of the state relating to the substantive rights of the parties should be applied as if the case was litigated in state court. "[T]he intent of [Erie R. Co. v. Tompkins, 304 U.S. 64 (1938)] was to insure that, in all cases where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same ... as it would be if tried in a State court." Whenever the "source of substantive rights enforced by a federal court under diversity jurisdiction ... is the law of the States [as] authoritatively declared by a State, whether its voice be the legislature or its highest court, such law ought to govern in litigation founded on that law, whether the forum of application is a State or a federal court." Guaranty Trust Co. of New York v. York, 326 U.S. 99, 109, 112 (1945).
Plaintiff also relies on a few federal cases such as Bristol Tech., Inc. v. Microsoft Corp., 127 F.Supp.2d 64 (D. Conn. 2000) in support of their position. Bristol Tech did award "costs" to the plaintiff under CUTPA noting the provisions in CUPTA, § 42-110g(d), allowed for the award of costs exceeding those costs otherwise allowed in state court and pointing out the desire to apply state law to the case in order to avoid any differences between state and federal law on that subject. However, the court did not address those Connecticut state cases, some of which are cited above, which appear to limit the award of costs to those that are clearly provided for. As a result, Bristol Tech is not persuasive authority for the proposition that Connecticut state law allows for costs beyond those for which there is a clear provision. A second case cited by plaintiff, Emerald Investments, LLC v. Porter Bridge Loan Co., 2007 WL 1834507 (D. Conn. 2007), awarded costs under CUTPA but also without mentioning any Connecticut state cases and therefore suffers from the same malady as Bristol Tech. A third case, Charts v. Nationwide Mut. Ins. Co., 397 F.Supp.2d 357 (D. Conn. 2005), reversed on other grounds, Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d 116 (2d Cir. 2008), awarded some costs under CUTPA and the Franchise Act (costs such as "messenger services, copies, travel and court reporter services") but declined to award expert witness fees as costs citing Miller v. Guimaraes, supra.
The expert witnesses plaintiffs seek an award of costs for include a real estate appraiser (David Burgoyne), an economist (Gordon Yale) and a securities expert (Robert Doty). (Dkt. 256, Pg ID 8639).
To the extent it was not a cost that could be awarded under federal law, plaintiff seeks an award for on-line legal research expenses under state law, specifically the provisions of CUSA. Plaintiff cites Rand-Whitney Containerboard v. Town of Montville, 2006 WL 2839236 (D. Conn. 2006) in support of this argument. While there was an award of costs to the successful plaintiff in Containerboard, the award was made under the provisions of a contract which had been breached by defendant, not CUTPA. The only CUTPA claim was made by defendant in an unsuccessful counterclaim against plaintiff and the cost shifting provisions of CUTPA were not the basis of the award of costs relating to on-line research. A second case cited by plaintiff in this portion of its argument was Pappas v. Watson Wyatt & Co., 2008 WL 45385 (D. Conn.). Pappas involved a Title VII action and an award of attorney fees and costs under that provision of federal law, not Connecticut state law. The opinion did not appear to address on-line research costs. There may be strong arguments in favor of awarding costs associated with on-line research, or at least including them as an expense in an award of attorney fees. However, plaintiff has not cited any persuasive authority that on-line research should be included in an award of costs in a CUSA claim. DeMatteo, and Connecticut cases that have addressed the question of the scope of statutory provisions that include an unspecified allowance of "costs," have not been generous in expanding the scope and have declined to award costs unless "clearly" provided for. On-line research expenses have not been clearly provided for under Connecticut law and therefore plaintiffs' request for $24,634.50 in costs for on-line research is denied.
Defendant does not argue that the requested costs associated with attorney travel are unreasonable — just that the costs sought are not authorized under Conn. Gen. Stat. § 52-257, which is the state statute authorizing an award of costs to a prevailing party regardless of the cause of action. Without question such costs are not authorized by § 52-257. As indicated above, the state law relating to an award of costs, as interpreted by the highest courts in the state, would appear to say that unless costs are "clearly" provided for they are not allowed. Plaintiff does cite to a few cases in which an award of costs, under a statute similar to the CUSA, was made for travel expenses. Two of those cases, Emerald Investments, supra, and Bristol Tech, supra awarded travel expenses as a cost item under the CUTPA, which has a statutory provision allowing for attorney fees and costs to be awarded to the prevailing plaintiff, similar to the terms of the CUSA. Those cases were decided in federal court rather than state court and included very little in the way of analysis of state law. As a result, they are not particularly persuasive on that point. The third case, Pappas, supra, awarded attorney fees and costs under Title VII, which has little relevance to the present case.
DeMatteo and the other Connecticut appellate court cases that conclude that "costs" cannot be awarded unless they are "clearly" provided for prohibit the award of costs associated with travel expenses. Plaintiffs' request for an award of costs in the amount of $33,210.66 for attorney travel is denied.
Plaintiffs seek an award of costs in the amount of $3,835.80. The amount sought seems like a reasonable amount but plaintiffs face the same problem here as with other requests. Connecticut law does not clearly provide for an award of costs for mailing and shipping expenses and therefore this request is also denied.
Plaintiffs request an award of costs in the amount of $404.15 relating to conference calls that were made during the course of the litigation. While it may have been reasonable and necessary for conference calls to be made in this case those costs are not clearly provided for under Connecticut law. This request by plaintiffs is also denied.
For the reasons set forth above, the undersigned
1. plaintiffs should be awarded an attorney fee in the amount of
2. as stipulated by the parties, plaintiffs should be awarded costs in the amounts of (1) $1,728.12 for taxable costs to the clerk; (2) $28,942.41 for court reporter fees; (3) $178.04 for witness fees; and (4) $755.00 for service of process fees. Additionally, as discussed above, plaintiff should also be awarded costs in the amounts of (1) $31,351.93 for copying charges; and (2) $4,950.00 for expert witnesses, for a total amount of
Any objections must be labeled as "Objection No. 1," "Objection No. 2," etc. Any objection must recite precisely the provision of this Report and Recommendation to which it pertains. Not later than 14 days after service of an objection, the opposing party may file a concise response proportionate to the objections in length and complexity. Fed.R.Civ.P. 72(b)(2), Local Rule 72.1(d). The response must specifically address each issue raised in the objections, in the same order, and labeled as "Response to Objection No. 1," "Response to Objection No. 2," etc. If the Court determines that any objections are without merit, it may rule without awaiting the response.
I certify that on October 31, 2012, I electronically filed the foregoing paper with the Clerk of the Court using the ECF system, which will send electronic notification to the following:
WHEREBY, upon motion by Plaintiffs, the filing of responsive pleadings by the parties, and the prior Order of the Court during oral argument on August 9, 2012, the parties have conferred and it is hereby ORDERED that:
1. Plaintiffs shall be awarded an attorney fee in the amount of
2. Plaintiffs shall be awarded taxable costs in an amount no less than
3. The parties have not been able to come to an agreement on the remaining issues regarding Plaintiffs' motion for an award of costs, which has been fully briefed and argued before the Court. The Court will take these remaining issues under advisement.
WE HEREBY STIPULATE TO FORM OF THE ORDER, this 6
