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Guidelines for Taxation of Costs

Introduction

In some instances, Bill of Costs involve small amounts which may include only a filing fee and perhaps less than a hundred dollars in copying costs. In many cases that go to trial, costs run between three and four thousand dollars, requiring a fair amount of time by attorney and paralegal to document the expenses. Occasionally, in protracted, complex cases, the costs may involve thirty to forty thousand dollars, requiring several days’ work. In all cases, counsel must expend valuable time to research this somewhat obscure area of post-trial work. These guidelines will enable counsel in most cases to determine proper costs and minimize the amount of time required for such determination.

I. Federal Rule 54 (d)

The basis for awarding costs in Federal Court comes from Rule 54(d), Federal Rules of Civil Procedure, which provides that:

Except when express provision therefor is made either in a statute of the United States or in these rules, costs other than attorneys’ fees shall be allowed as of course to the prevailing party unless the court otherwise directs.

Fed. R. Civ. P. 54 (d)(1).

Federal Rule 54(d) creates a presumption that the prevailing party shall recover costs. Most judgments expressly state that the party in whose favor judgment was rendered shall recover costs of the action. However, if a judgment fails to state that costs are allowed, the presumption that costs will be awarded to the prevailing party remains because Rule 54(d) directs that costs shall be allowed “unless the court otherwise directs.” Thus, Rule 54 (d)’s presumption remains unless the Court affirmatively states in the judgment that a party should not be awarded costs or that parties should bear their own costs.

II. 28 U.S.C. § 1920

Allowable items of costs are set forth in 28 U.S.C. § 1920, which reads as follows:

A judge or clerk of any court of the United States may tax as costs the following:

  1. Fees of the clerk and marshal;
  2. Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
  3. Fees and disbursements for printing and witnesses;
  4. Fees for exemplification and copies of papers 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.


A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.

Pursuant to § 1920, a clerk of court may tax costs. In the Northern District of Oklahoma, pursuant to Local Rule 54.1, the judges have delegated taxing the Bill of Costs to the clerk’s office. Therefore, counsel must file the Bill of Costs to the court clerk. After the Bill of Costs is filed, the clerk’s office will set a hearing date and give notice to all counsel of record by CM/ECF email service.

III. When and What to file

Local Rule 54.1 requires that a Bill of Costs be filed within fourteen days after the entry of judgment. A Bill of Costs shall be filed on the form provided by the clerk’s office, along with a brief in support. A copy of the form can be found on the Court’s website at www.oknd.uscourts.gov

Local Rule 54.1 provides in part:

(a) A prevailing party who seeks to recover costs against an unsuccessful party pursuant to 28 U.S.C. § 1920 shall file a bill of costs on the form provided by the Court Clerk and support the same with a brief. The bill of costs and brief shall be filed and served not more than fourteen (14) days after entry of judgment. The bill of costs and brief shall be separate documents from the motion for legal fees and its brief.


A Verification of the Bill of Costs is also required by statute which states:

Before any bill of costs is taxed, the party claiming any item of cost or disbursement shall attach thereto an affidavit, made by himself or by his duly authorized attorney or agent having knowledge of the facts, that such item is correct and has been necessarily incurred in the case and that the services for which fees have been charged were actually and necessarily performed.

28 U.S.C. § 1924.

Copies of invoices and receipts or an affidavit are also required by Local Rule 54.1 (b), which states: “The prevailing party shall provide either receipts or documents (or, if unavailable, an affidavit) in support of the requested itemized costs.” These may be attached to the Bill of Costs as an exhibit. It is helpful if the exhibit summarizes on one or two pages the items and amounts followed by the receipts and invoices or affidavit.


IV. When to Object, When to Appear, and When to Seek a Motion to Review.

Local Rule 54.1(b) provides in part:

Objections to the allowance of costs must be filed within 21 days from the date the bill of costs was filed. Fed.R.Civ.P. 6(d) does not apply to this section.

Local Rule 54.1(d) provides:

If a bill of costs is properly and timely filed and no written objection thereto is filed within the time herein specified, the claimed costs may be allowed in full.

If no objection is filed, costs will be taxed pursuant to applicable law and it will not be necessary to appear. In the Order scheduling a Bill of Costs hearing, parties are told that an appearance is not necessary when no written objection is filed.

When written objections are filed, appearance by counsel is necessary. Counsel may request an appearance by telephone if counsel resides outside the Tulsa metropolitan area. The clerk’s office makes every effort to grant requests for appearance by telephone unless persuaded by an objection from opposing counsel or the matters in the Bill of Costs are so complex or paper intensive as to make a telephone appearance unfeasible.

Upon proper motion to review taxation of costs, the clerk’s ruling will be reviewed by the district court: “On motion served within the next 7 days, the court may review the clerk's action.” Fed. R. Civ. P. 54 (d)(1). At this juncture, no supplementation by receipts, documents or affidavit will be allowed, even if the bill of costs is referred to a Magistrate Judge and reviewed via an objection to the Magistrate’s Report and Recommendation.


V. Prevailing Party and Entitlement to Costs

As stated in Federal Rule 54(d), there is a presumption in favor of awarding costs to the prevailing party. Sometimes there is a dispute as to who prevailed. Thus, entitlement to costs is the first determination in a cost hearing.

A. Prevailing party is one in whose favor judgment is rendered.

It was argued to the clerk in a case with five causes of action that the plaintiff prevailed on only one cause of action and therefore was not the prevailing party. In that case, judgment had been awarded to plaintiff in excess of $200,000 on the one cause of action which substantially compensated plaintiff’s claimed damages. Therefore, it was found that plaintiff was the prevailing party. The rule of thumb is that the prevailing party is one in whose favor judgment is rendered. See Roberts v. Madigan, 921 F.2d 1047, 1058 (10th Cir. 1990) cert. denied, 505 U.S. 1218 (1992); Compare Howell Petroleum Corp. v. Samson Resources Co., 903 F.2d. 778, 783 (10th Cir. 1990).

B. Costs might be awarded on items connected to the cause of action which prevailed.

There may be circumstances in which clearly-delineated causes of action might allow separating costs between those causes of action which succeeded and those which failed. It was successfully argued to the clerk to separate the causes of action in an insurance contract case in which plaintiff prevailed on the contract but failed on a bad faith claim. In that instance, recovery on the contract was approximately $20,000. Plaintiff had spent most of its costs pursuing a bad faith claim which failed. Costs related to the insurance contract were separated from those relating to the bad faith claim when they could be clearly delineated.

To be absolutely clear on this point, there was not an apportionment in which a percentage reduction occurred. Instead, if an item was completely related to the failed bad faith claim, it was excluded. But, if the item related in some manner to the insurance contract, even though it was also related to the bad faith claim, it was not excluded.

C. Economic Hardship

Notwithstanding the presumption in favor of a prevailing party, indigency of a losing party may avoid costs. The award of costs rests in the sound discretion of the court. See Zeran v.Diamond Broadcasting, Inc. 203 F.3d 714,722 (10th Cir. 2000) (The Tenth Circuit court stated there was no “exclusive list” of valid reasons for denying costs, but a district court may properly exercise discretion to deny costs “when the prevailing party was only partially successful, when damages were only nominal, when costs were unreasonably high or unnecessary, when recovery was insignificant, or when the issues were close or difficult.”) Therefore, arguments have been made that the economic disparity between the parties would render award of costs unfair to the losing party. Generally, to avoid costs it must be shown that the losing party is indigent and the suit neither frivolous nor brought in bad faith. See Badillo v. Central Steel & Wire Co. 717 F.2d 1160, 1165-1166. (7th Cir. 1983) superseded in part by statute on other grounds; Burroughs v. Hills 741 F.2d 1525, 1541-1542 (7th Cir. 1984), cert. denied, 471 U.S. 1099 (1985); Also see discussion in Cantrell v. International Brotherhood of Electrical Workers, 69 F.3d 456, 459-460 (10th Cir. 1995).

These arguments are equitable in nature and, therefore, better reserved for judicial determination rather than for administrative determination by the clerk. Thus, the clerk of court for the Northern District of Oklahoma routinely denies economic hardship arguments, leaving that determination for the District Court if the parties seek review of the taxation of costs.

D. Costs May Be Denied to Prevailing Party in Diversity Action Where Jurisdictional Amount Is Not Obtained.

Although Federal Rule 54(d) creates a presumption in favor of the prevailing party, an express provision in a United States statute may rebut that presumption. An example of this may be found in diversity cases in which the prevailing party obtains less than the jurisdictional amount.

The statute states:
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Except when express provision therefor is otherwise made in a statute of the United States, where the plaintiff who files the case originally in the Federal courts is finally adjudged to be entitled to recover less than the sum or value of $75,000, computed without regard to any setoff or counterclaim to which the defendant may be adjudged to be entitled, and exclusive of interest and costs, the district court may deny costs to the plaintiff and, in addition, may impose costs on the plaintiff.

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28 U.S.C. § 1332 (b).
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VI. Allowable Items

Once entitlement to costs is determined, allowable costs must then be ascertained. Section 1920 sets forth the permitted categories of costs. Costs outside the items enumerated in § 1920 are viewed askance and with a narrow eye. The United States Supreme Court stated: “We do not read [Rule 54(d)] as giving district judges unrestrained discretion to tax costs to reimburse a winning litigant for every expense he has seen fit to incur in the conduct of his case. Items proposed by winning parties as costs should always be given careful scrutiny.” Farmer vs. Arabian American Oil Co., 379 U.S. 227, 235 (1964). In the same opinion, the Supreme Court continued: “Therefore, the discretion given district judges to tax costs should be sparingly exercised with reference to expenses not specifically allowed by statute.” Id.

A. Fees of Clerk

The filing fee is recoverable by the prevailing plaintiff. The removal fee is recoverable by the prevailing defendant.

B. Fees for service of summons and subpoena.

Reasonable service fees for summons, attachments and other process are allowed. Fees of either the marshal or a private process server are allowed. Fees for trial subpoenas and deposition subpoenas are allowed assuming the witness was called to testify or the transcript of the deposition was necessarily obtained for use in the case.

C. Fees of the Court Reporter for all or any part of the transcript necessarily obtained for use in the case.

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1. Transcripts. Transcripts may be found to be necessarily obtained if the court ordered the transcript or if the need arose for purpose of preparation or response to certain motions. For example, a hearing before a magistrate judge which is later appealed to a district judge may require a transcript. Also, certain portions of a trial transcript may be necessarily obtained for post-trial motions. Costs of transcripts ordered by counsel in preparation for the next day of trial are not allowed.

2. Depositions. Costs of depositions are allowed if necessarily obtained for use in the case. A deposition of a witness who testifies at trial will be allowed. If a deposition is read into evidence, it will be allowed. All other depositions are generally disallowed.

Costs of a copy of a deposition will be allowed (e.g., an original and one copy) if the prevailing party conducted the deposition. If the prevailing party defended the deposition, costs of a copy is allowed if such deposition is found to be necessarily obtained for use in the case.

Costs of video depositions and a transcript are recoverable if used during the trial.

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If the case was determined by summary judgment, depositions utilized by the court to determine summary judgment are allowed. Review case law for possible recovery of costs incurred in preparation for trial in cases determined by summary judgment. See,e.g., Mitchell v. City of Moore, Oklahoma, 218 F.3d 1190 (10th Cir. 2000); Tilton v. Capital Cities/ABC,Inc., 115 F.3d 1471 (10th Cir. 1997); Merrick v Northern Natural Gas Co., 911 F.2d 426 (10th Cir. 1990).


D. Fees for Witnesses are allowed under 28 U.S.C. § 1821.

1. Witness Fee. No distinction is made between a fact witness and an expert witness. The allowable costs are $40.00 for each day that it is necessary for the witness to attend trial (usually the day of trial on which the witness testifies). 28 U.S.C. § 1821 (b). If a witness is subpoenaed for trial and paid a witness fee, but is not called as a witness, such expense will not be recoverable.

2. Subsistence. Subsistence allowance is allowed for witnesses who live too far to be expected to travel to and from their residence daily while in attendance at trial. 28 U.S.C. § 1821 (d) (1). Subsistence allowance in Tulsa, Oklahoma, is $129.00 per day for the calendar year 2015. Subsistence rates, as well as mileage rates below, are calculated annually by the Administrator for General Services for the federal government. These rates may be obtained by calling the financial officer in the clerk’s office.

3. Travel Allowance. By car, round trip mileage is allowed at 0.54¢ per mile in the calendar year 2015. 28 U.S.C. § 1821 (c) (2). Witnesses traveling by common carrier will be reimbursed for actual expenses on the basis of reasonably utilized transportation and the most economical rate. 28 U.S.C. § 1821 (c) (1).

4. Miscellaneous Allowance. Toll charges for roads, bridges and tunnels, and costs for ferries and taxi cab fares between lodging and the carrier terminals, and parking fees will be paid in full upon proper proof of expense. 28 U.S.C. § 1821 (c) (3).

E. Fees for Exemplification and Copies of Papers Necessarily Obtained for Use in the Case.

Copies of papers necessarily obtained in the case are those papers which help bring about the disposition of the case. In other words, those papers related to the actual trial (or summary judgment). For example, trial notebooks, trial exhibits, motions in limine and jury instructions are papers and pleadings related to the trial.

Expenses for demonstrative evidence such as blow ups, models, charts, photographs and other graphic aids may be recoverable if the demonstrative evidence was actually used in the trial.

Charge for in-house copies of papers should be at a rate which is charged to the client normally, but in no event should exceed 15¢ per page.

Copies printed outside the law practice should be reimbursed on the basis of actual expense, excluding expedited charges.

F. Other Costs

Costs not enumerated in § 1920 are rarely awarded. Costs from an appeal which are taxable in the District Court are often included in the “Other Costs” category and may be found in Fed. R. App. P. 39(e). This rule includes the premiums paid for costs of the supersedeas bond and the fee for filing notice of appeal.

Under the category “Other Costs” some lawyers include attorney fees. Attorney fees are not recoverable under § 1920, and should be sought under a motion for attorney fees filed with the Court.

Sometimes travel costs of a lawyer to a deposition or other case-related travel are sought as recoverable under “Other Costs.” Lawyers’ travel costs are not recoverable. Other items not recoverable are: Westlaw research costs, postage, phone bills and secretarial or paralegal help. These and other items traditionally absorbed in the “overhead” of a law practice will not be allowed.

Conclusion

These basic guidelines should enable lawyers to prepare a proper Bill of Costs with a minimum amount of time and effort. As always, in the practice of law, there may be issues which do not fall within the parameters of basic guidelines. In those instances, lawyers must review case law and make their best arguments.