NOEL L. HILLMAN, District Judge.
This matter has come before the Court on Plaintiffs' Motion to Stay and to Review the Clerk's Order Granting in Part and Denying in Part Defendant Care Alternatives' Bill of Costs. (Docket Item 218.) For the reasons expressed below, Plaintiffs' Motion will be granted in part and denied in part.
Plaintiffs in this case are four former employees of Defendant who initially brought this
Also during that years-long period, Plaintiffs filed their First Amended Qui Tam Complaint, which added a second claim under the New Jersey False Claims Act, 2A:32C-1 et seq. (Docket Items 12.) On July 29, 2015, Defendant was served a redacted copy of that complaint. (Docket Item 16.) Defendant filed a Motion to Dismiss on September 25, 2015. (Docket Item 27.) The late Honorable Jerome B. Simandle granted that Motion in part and denied it in part on February 22, 2016. (Docket Item 48.) This left only the allegations of inappropriate patient admissions and re-certifications for hospice care in violation of the FCA. (Docket Item 49.)
After a period of discovery disputes, Defendant filed both a second Motion to Dismiss (Docket Item 126) and a Motion for Summary Judgment (Docket Item 128) on September 8, 2017. Soon thereafter, the United States docketed a Statement of Interest. (Docket Item 153.) On September 26, 2018, the Court issued an Order denying the second Motion to Dismiss but granting summary judgment in Defendant's favor because Plaintiffs failed to present evidence of "objective falsehoods" or knowingly false certifications. (Docket Item 194.) Plaintiffs timely appealed that Order to the Third Circuit Court of Appeals on October 15, 2018. (Docket Item 196). That appeal is still pending.
Meanwhile, Defendant filed a Motion for Attorney's Fees on October 29, 2018 (Docket Item 199), which the Court denied on January 28, 2019 (Docket Item 216). Defendant also filed a Motion for Bill of Costs on October 29, 2018. (Docket Item 198.) Plaintiffs opposed that Motion. (Docket Item 204.) The Clerk issued an Order on April 2, 2019, which granted Defendant's Motion for Bill of Costs in part and denied the same in part. (Docket Item 217.) Ultimately, the Clerk awarded Defendant $11,039.35 in costs. (
The Court exercises subject-matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 because the claim arises under the laws of the United States. Specifically, Plaintiffs allege violations of the False Claims Act, 31 U.S.C. § 3729 et seq. The issue of the propriety of a stay aside, the Court retains jurisdiction to address the issues of costs although the Court's Order granting the Defendant's Motion for Summary Judgment is on appeal.
Plaintiffs make several arguments in support of their Motion. First, Plaintiffs argue that Defendant's application to tax costs must be stayed pending the outcome of Plaintiffs' appeal of the Court's decision to grant summary judgment in favor of Defendant. Second, Plaintiffs argue that the FCA preempts Rule 54 of the Federal Rules of Civil Procedure and Rule 54.1 of the Local Civil Rules, thereby requiring the Court to vacate the Clerk's Order and deny Defendant's Motion for Bill of Costs. Third, Plaintiffs argue that Defendant failed to submit precise costs and therefore "waives its right to taxable costs." (Docket Item 218-2, at 13-14.) The Court will address these issues in turn.
The Court will first address Plaintiffs' argument that the Court should stay Defendant's Motion for Bill of Costs pending Plaintiffs' appeal of the Court's earlier decision to grant summary judgment in favor of Defendant.
Whether a court will issue a stay is a question of judicial discretion that depends on the circumstances of the case before the court.
"To establish irreparable harm, a stay movant `must demonstrate an injury that is neither remote nor speculative, but actual and imminent.' `The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.'"
In the case at hand, Plaintiffs argue that they will suffer irreparable harm if the Court does not stay Defendant's Motion. They only harm that Plaintiffs allege, however, is monetary: that each of the four plaintiffs would be required to pay approximately $3,000 if the Court were to uphold the Clerk's Order. Because this harm is solely monetary, it cannot constitute irreparable harm under Third Circuit precedent.
Regardless of Plaintiffs' likelihood of success in their appeal, their failure to show irreparable harm precludes this Court from staying Defendant's Motion for Bill of Costs. Therefore, the Court will not consider Plaintiffs' likelihood of success on appeal, and will deny Plaintiffs' Motion to Stay Defendant's Motion for Bill of Costs.
However, the Court also recognizes that, in the interest of practicality, it is desirable to limit the number of times that money exchanges hands between the parties as a result of the analysis below. The Court wishes to avoid, for instance, a scenario in which Plaintiffs first pay Defendant in accordance with this decision, the Third Circuit then rules in Plaintiffs' favor on appeal, and Defendant finally has to return the money to Plaintiffs. The 2018 Amendments to Rule 62(a) of the Federal Rules of Civil Procedure provides a means by which the Court can do just that: "[E]xecution on a judgment and proceedings to enforce it are [automatically] stayed for 30 days after its entry,
Although it will stay execution of its decision on costs pending the resolution of Plaintiffs' appeal, the Court will now reach the question of whether it should vacate the Clerk's April 2, 2019 Order granting costs in the amount of $11,039.35 in favor of Defendant.
Rule 54(d) of the Federal Rules of Civil Procedure states 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. . . . The Clerk may tax costs on 14 days' notice. On motion served within the next 7 days, the court may review the clerk's action." Likewise, Rule 54.1(h) of the Local Civil Rules states that a "dissatisfied party may appeal to the Court upon written notice of motion served within seven days of the Clerk's action, as provided in FED. R. CIV. P. 54(d)(1)."
If a party timely appeals the clerk's award, the district court will review the award
The Court will employ the above standard in determining whether Defendant should receive costs in the amount calculated in the Clerk's Order.
Plaintiffs' first substantive argument is that the False Claims Act preempts Rule 54 of the Federal Rules of Civil Procedure ("Rule 54") and Rule 54.1 of the Local Civil Rules ("Rule 54.1"). This, Plaintiffs argue, moots Defendant's right to taxable costs.
In making this argument, Plaintiffs first point out that Rule 54(d) states in part that, "[u]nless a federal statute . . . provides otherwise, costs — other than attorney's fees — should be allowed to the prevailing party." They then argue that the FCA "provides otherwise," and therefore dictates whether Defendant is entitled to costs. The basis for this argument comes from the fee-shifting provision of the FCA, which reads:
31 U.S.C. § 3730(d)(4).
In other words, there are two requirements for a defendant in a
The core of the issue, then, is whether "reasonable attorneys' fees and expenses," as described in the FCA, includes "costs," as described in Rule 54. If "costs" are a subset of "reasonable attorneys' fees and expenses," then the FCA will apply and Defendant will not be entitled to costs for lack of showing that Plaintiffs' action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment. Conversely, if "costs" are not a subset of "reasonable attorneys' fees and expenses," then Rule 54 will apply and Defendant will be entitled to costs.
Plaintiffs contend that the FCA's language must be interpreted as being inclusive of "costs" because of the purpose behind the FCA. They argue that the FCA "encourage[s] whistleblowers to file suits, encourage[s] relators to proceed on declined cases, and encourage[s] pursuit of fraud on the Government." (Docket Item 218-2, at 8.) Congress thus wrote the FCA "expansively . . . to reach all types of fraud, without qualification, that might result in financial loss to the Government."
Instead, Plaintiffs rely on several other arguments. First, they note that no case exists in the Third Circuit of a party to an FCA case being awarded both fees and expenses. Next, they argue that Defendant's Motion is a nefarious attempt to get around the FCA's high bar for awarding costs, which Defendant knows it cannot meet. Then, Plaintiffs argue that allowing for costs would have a chilling effect on whistleblowers. They then note that, per another subsection of the FCA that applies when the United States is a plaintiff, a prevailing defendant must obtain its taxable costs via 28 U.S.C. § 1920, separate from other costs, which are obtained via 28 U.S.C. § 2412. Plaintiffs make all of these arguments without citing a single authority other than the statutory language itself and the
While it is true that the Third Circuit has not yet addressed squarely the issue before this Court, other Circuits have explained compellingly why Plaintiffs' argument is untenable. In
The Second Circuit was not convinced. It noted that "the distinction between `costs' and `expenses' is well established in the Federal Rules of Civil Procedure[:] `Taxable costs are limited to relatively minor, incidental expenses,' while `nontaxable expenses [are those] borne by litigants for their attorneys, experts, consultants, and investigators.'"
The Second Circuit noted that, "by arguing that Congress used the terms interchangeably, [the plaintiff] in effect asks this Court to read the terms
The Second Circuit's ruling aligned with three other Circuits' rulings on the same issue.
This Court finds that the Second Circuit's analysis, while not binding on this Court, is compelling. Plaintiffs' position does not comport with the plain meaning of § 3730(d)(4). Moreover, Plaintiffs' various musings about the issue — supported by scant authority — do little to persuade this Court. "Costs" is not a subset of the FCA's phrase "reasonable attorneys' fees and expenses." Thus, Rule 54 applies here, and Defendant is not precluded from being awarded costs on that basis.
Having determined that awarding costs in this case is not prohibited by the FCA, the Court will now turn to what amount of costs, if any, should be awarded to Defendant. In making this decision, the Court is bound by 28 U.S.C. § 1920, which in relevant part permits costs to be awarded for "[f]ees for printed or electronically recorded transcripts necessarily obtained for use in the case" and "[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." 28 U.S.C. § 1920(2), (4);
Furthermore, the Court is guided by Local Rule 54.1(b), which provides that
Local Rule 54.1(e) states that if the prevailing party fails to comply with the rest of Local Rule 54.1, then "all costs shall be waived."
Plaintiffs argue that the Clerk's award of costs under both § 1920(2) and (4) was improper. The Court will address each argument in turn.
Plaintiffs first argue that the Clerk's award of deposition costs under § 1920(2) should be vacated. They argue that Defendant's request for deposition costs included "improper costs," rendering those costs waived. Specifically, Plaintiffs say that Defendant's "invoices for each deposition are not precise, because they fail to break out untaxable costs, and fail to precisely divide taxable and untaxable costs." (Docket Item 218-2, at 14.)
Local Rule 54.1(g)(7) provides only that the costs associated with the taking and transcribing depositions "used at the trial" are taxable costs. However, as noted above, § 1930(2) allows the Court to award costs for any deposition "necessarily obtained for use in the case." The Third Circuit has resolved this apparent contradiction between the rules by holding that depositions will constitute taxable costs so long as they are "used in deciding summary judgment motions" or at trial.
Defendant sought costs for eleven deposition transcripts. The Clerk held that all eleven were taxable, and Plaintiffs do not dispute that ruling. Instead, Plaintiffs take issue with what they construe as Defendant's failure to differentiate taxable and non-taxable costs that resulted from the depositions. In essence, Plaintiffs argue that the Clerk's Order properly excluded some non-taxable costs, but not all.
Per the plain language of § 1920(2), the expense of depositions themselves is a taxable cost. Moreover, per Local Rule 54.1(g)(7), the cost of the reporter's attendance is a taxable cost as a "charge[] incurred in the taking and transcribing of depositions." However, per Local Rule 54.1(g)(6), expedition, exhibits, rough drafts, shipping and handling, and other such expenses are not taxable charges under § 1920(2). Those expenses are for the convenience of the attorneys and therefore do not fall under the ambit of costs.
Plaintiffs' argument that the Clerk granted Defendant non-taxable costs seems to stem from the fact that some of Defendant's deposition invoices are more detailed than others. Of the eleven depositions, six were reported by Lyn Rubenstein & Associates, LLC ("Rubenstein") and five were reported by Magna Legal Services ("Magna"). (
Plaintiffs allege that these invoices do not adequately separate out taxable costs from non-taxable costs like expedition fees, rough draft fees, fees for ASCII disks, condensed transcripts, word indices, Realtime, med/tech copies, and exhibits. The Court finds this argument unavailing as to the Magna depositions because those invoices are detailed and adequately separate out the different fees. This allows the Court to determine which of those fees are taxable and which are not. The Clerk awarded costs only for the price of those depositions, the reporter attendance fees, and, in one case, a rough draft of the deposition. The rough draft price was awarded because the Clerk found that the rough draft was necessary, as Defendant cited it in one of its filings. The Court agrees with the Clerk's conclusion as to those five depositions. Defendant was rightly awarded $5,500.65 in costs for the Magna depositions.
The Rubenstein invoices are not as clear. The Clerk correctly did not award costs for the exhibit and delivery/handling line items. He focused solely on the fee associated with the deposition. Four of those depositions were not expedited, so the fee associated with just the deposition line item is the correct amount to award as costs. That totals $3,956.00 for the four depositions.
The two remaining depositions — those of Loretta Spoltore and Martha Susan Coppola — are marked as having been expedited, but the invoice does not distinguish the cost of the deposition itself from the added cost of expedition. The Clerk rightly found that the cost of expedition was not a taxable cost, but he also attempted to rectify the fact that the deposition itself would be taxable under normal circumstances. To resolve this problem, the Clerk first estimated the number of pages in those two depositions by counting "the maximum number of pages he was able to find from perusing the docket." (Docket Item 217, at 13 n.1.) He then multiplied that number by $4.10, Magna's per-page cost for a non-expedited deposition.
While this Court appreciates the Clerk's creative and admirable efforts, it also finds that they were inappropriate in this case. Local Rule 54.1 places the burden on the party seeking costs to "precisely set forth each item" in the Bill of Costs "so that the nature of the charge can be readily understood." Here, Defendant failed to meet this burden, and it is not the responsibility of the Clerk, this Court, or Plaintiffs to remedy that error. Defendant did not provide any evidence about the number of pages that the Spoltore and Coppola depositions were, the per-page fee that Rubenstein charged for a non-expedited deposition, or the expedition fee that Rubenstein charged.
In short, Defendant did not meet its burden under Local Rule 54.1, and the Court will not do the heavy lifting for Defendant. Any other conclusion would contravene the relevant Rules of Civil Procedure, reward Defendant despite its failure to follow the Rules, and punish Plaintiffs despite Defendant's failures. Therefore, the Court will reduce the Clerk's award by the cost of the Spoltore and Coppola depositions: $1,307.90.
In sum, the Clerk's award of $10,764.55 for the cost of deposition transcripts pursuant to § 1920(2) will be reduced by $1,307.90. The new award under § 1920(2) will be in the amount of $9,456.65.
Plaintiffs next argue that the Clerk erred in awarding
Defendant $274.80 for the costs of making copies under § 1920(4). Defendant initially sought $10,392.40 in these costs, but the Clerk did not grant the overwhelming majority of that sum for various reasons. Defendant sought costs in four categories that it claimed fall under the ambit of § 1920(4): (1) $700.00 for data processing; (2) 274.80 for image printing; (3) $2,203.60 for document production charges; and (4) $7,214.00 for professional services for exemplification and copying. The Clerk rightly determined that the first, third, and fourth categories did not constitute taxable costs under § 1920(4), and neither party contests that conclusion. However, Plaintiffs do contest the Clerk's conclusion that the second category — image printing — constitutes a taxable cost. Namely, Plaintiffs argue that Defendant's "failure to be precise" resulted in its "waive[r of] the right to taxable costs related to copying and exemplification." (Docket Item 218-2, at 18.)
Only when certain conditions are met will costs associated with copies be taxable. First, as with transcript costs, the costs of making copies are only taxable under § 1920(4) to the extent that they were "necessarily obtained for use in the case." The Clerk found that the six copies at issue in this case met that standard, and the parties do not contest that finding. Second, only certain specific categories of copying and exemplification are taxable in the Third Circuit.
Rather, the crux of Plaintiffs' argument here is that Defendant only clarified that "Image Printing" meant "conversion to TIFF" in their Reply Brief in support of the Motion for Bill of Costs. (
Plaintiffs seem to have come to this conclusion because the Clerk's Order cited Defendant's Reply Brief to support the Clerk's assertion that Defendant "has clarified that the cost arose from the process of converting native files to TIFF format." But that was not the first time that Defendant made that clarification. In the Declaration of Defendant's counsel Jason Popp that accompanied Defendant's Motion for Bill of Costs, Mr. Popp specifically referred to "converting files to TIFF format" as one type of expense that it was trying to recover. (Docket Item 198-2, at 1.)
The Court finds that this Declaration, in concert with the Brief in support of the Motion and the Exhibits attached thereto, was sufficient to satisfy the requirement that the Bill of Costs be "precisely set forth . . . so that the nature of the charge can be readily understood." Defendant will not be penalized for internally using the term "Image Printing Costs" to refer to what the Third Circuit calls "the conversion of native files to TIFF." As a result, the award of $247.80 under § 1920(4) was not granted in error by the Clerk.
Based on the above analysis, the Court will grant in part and deny in part Plaintiffs' Motion to Stay and Review (Docket Item 218) the Clerk's April 2, 2019 Order granting Defendant $11,039.35 in costs (Docket Item 217). Plaintiffs' Motion will be granted insofar as the Court will reduce the amount of costs granted to Defendant from $11,039.35 to $9,731.45. Furthermore, the Court will stay execution of that Judgment pending the outcome of Plaintiffs' appeal. In all remaining respects, Plaintiffs' Motion will be denied.
