Farmer v. Arabian American Oil Company Arabian American Oil Company v. Farmer

• Citation: 13 L.Ed.2d 248,379 U.S. 227,85 S.Ct. 411
• Decision Date: 14 December 1964
• Docket Number: 33,Nos. 32,s. 32
• Parties: Howard FARMER, Petitioner, v. ARABIAN AMERICAN OIL COMPANY. ARABIAN AMERICAN OIL COMPANY, Petitioner, v. Howard FARMER
• Court: United States Supreme Court

379 U.S. 227

85 S.Ct. 411

13 L.Ed.2d 248

Howard FARMER, Petitioner,

v ARABIAN AMERICAN OIL COMPANY.

ARABIAN AMERICAN OIL COMPANY, Petitioner,

v. Howard FARMER.

Nos. 32, 33.

Argued Nov. 9 and 10, 1964.

Decided Dec. 14, 1964.

Kalman I. Nulman, New York City, for petitioner in No. 32 and respondent in No. 33.

Chester Bordeau, New York City, for respondent in No. 32 and petitioner in No. 33.

Mr. Justice BLACK delivered the opinion of the Court.

The questions presented in this case relate to the power and discretion of a United States district court to tax as costs against the loser in a civil lawsuit expenses incurred by the winner in carrying on the litigation.

Howard Farmer, a physician from Texas specializing in ophthalmology, started this litigation against the Arabian American Oil Company in a New York state court, claiming $4,000 damages¹ for breach of an employment contract. The complaint alleged that in April 1955 the company entered into an agreement to employ Farmer as an ophthalmologist in Saudi Arabia at an annual salary of $16,000 plus a $4,000 living allowance per year, so long as the company continued its oil-well operations there, and that although he began work and properly performed his duties, the company wrongfully discharged him in March 1956. On the company's motion the case was removed to federal court because of diversity. The company admitted that it had employed Farmer but defended on the grounds that the discharge was not wrongful both because he had been employed at will rather than for a definite term, and because he had been discharged for good cause. At the trial Farmer attempted to show that the company discharged him because he had found that a number of Americans employed by the company in Arabia had contracted trachoma, a much dreaded tropical eye disease which may lead to blindness, and that although urged by the company's medical staff to falsify or suppress his findings, he had refused to do so. The company's evidence tended to disprove this charge and to show that Farmer had been discharged because he had operated on a young Arabian boy's eye, without first having received and examined a urinalysis and blood test report. This the company alleged to be in violation of a written company rule and standard surgical practice. Such tests had in fact been completed before Dr. Farmer performed the operation, but whether he had known of the tests or their results, and whether there actually had been a company rule requiring that he have the test results were in sharp dispute.

The company, in order to refute Farmer's charge, brought three witnesses from Saudi Arabia to New York to testify in support of its version of the dispute. The jury failed to agree, after which District Judge Palmieri granted the company's motion for a directed verdict, 176 F.Supp. 45, and approved the clerk's taxation of costs against Farmer in the amount of $6,601.08, which included among other things transportation expenses for the witnesses from Arabia and costs of daily stenographic transcripts of the trial record furnished to the company's lawyers at their request. Holding that a verdict should not have been directed, the Court of Appeals reversed and remanded the case for a new trial, thereby upsetting the judgment and the taxation of costs. 2 Cir., 277 F.2d 46.

On remand to the District Court the company obtained an order directing Farmer to put up security for costs in the sum of $6,000. Because Farmer was unable to post so large a bond, Judge MacMahon dismissed the case. The Court of Appeals reversed in an opinion that strongly indicated its belief that the costs already taxed were exorbitant and that to require Farmer to give the bond would 'for all practical purposes' deny him his day in court. 2 Cir., 285 F.2d 720. On a second trial, this time before District Judge Weinfeld, the jury found for the company and no appeal was taken. The clerk then taxed $11,900.12 against Farmer as the aggregate cost of both trials, but on review Judge Weinfeld found these costs 'staggering' for so uncomplicated a case and reduced them to $831.60. In making this reduction, Judge Weinfeld lowered the cost bill approved by Judge Palmieri in the first trial from $6,601.08 to $496.05. He did this chiefly by eliminating the transportation expenses of the witnesses from Arabia and the costs of supplying the company's counsel with overnight transcripts of the daily trial proceedings. Judge Weinfeld also refused to require Farmer to reimburse the company for its similar expenses in the second trial. 31 F.R.D. 191. Sitting en banc, the Court of Appeals, by a vote of 5—4, affirmed Judge 'Weinfeld's cost taxation for the second trial, but held that he had failed to give proper deference to Judge Palmieri's taxation of costs for the first trial and so reversed that part of his order. The Court of Appeals itself, however, directed that Judge Palmieri's cost allowance be reduced by $2,064 for transportation of two of the witnesses from Arabia, who had 'occupied otherwise empty space in company planes on regularly scheduled flights to and from Saudi Arabia, so that as to them there was no actual travel expense incurred by the company and none should have been allowed.' 324 F.2d 359, 364.

Farmer petitioned for certiorari to review the Court of Appeals' refusal to affirm Judge Weinfeld's taxation of costs. The company sought certiorari to review those parts of the Court of Appeals' judgment refusing to allow all costs taxed by Judge Palmieri on the first trial and refusing to allow transportation costs incurred in transporting its witnesses from Arabia for the second trial. We granted both petitions, 376 U.S. 942, 84 S.Ct. 799, 11 L.Ed.2d 766. For reasons to be stated, which are not wholly the grounds relied on by Farmer, we agree with him that Judge Weinfeld's order should have been upheld in its entirety.

I.

We deal first with Farmer's contention that the District Court was wholly without power to tax costs against him to reimburse the company for expenses incurred in bringing the witnesses from Arabia to this country. His argument runs this way. It has long been the law in this country, as now set out in Rule 45(e) of the Federal Rules of Civil Procedure,² that, with exceptions not here relevant, subpoenas requiring the attendance of witnesses at a trial cannot be served outside the judicial district more than 100 miles from the place of trial. Many decisions of district courts and courts of appeals have held that since witnesses cannot be compelled under this rule to travel more than 100 miles, a party who persuades them to do so by paying their transportation expenses cannot have those expenses taxed as costs against his adversary.³ This was the view of three of the dissenting judges below. 324 F.2d 359, 365. The majority, however, while recognizing that the great bulk of judicial authority supports the 100-mile rule, neverthe- less held that district courts do have discretionary power to tax such costs under 28 U.S.C. § 1920(3) (1958 ed.), which provides that '(a) judge or clerk * * * may tax as costs * * * (f)ees and disbursements for * * * witnesses * * *.' The majority also thought the prior 100-mile rule had been undercut by the 1949 congressional amendment to 28 U.S.C. § 1821 (1958 ed.), which provides that 'witnesses who are required to travel * * * to and from the Continental United States, shall be entitled to the actual expenses of travel * * *.'

We cannot accept either the extreme position of the company that the old 100-mile rule has no vitality for any purpose or Farmer's argument that a federal district court can never under any circumstances tax as costs expenses for transporting witnesses more than 100 miles. In this case, however, where taxation of such expenses is being denied, we need not set out the specific circumstances under which such costs can be taxed nor mark precisely the limits of a district court's power to tax them. It is sufficient here to point to Federal Rule of Civil Procedure 54(d), which provides that 'Except when express provision therefor is made either in a statute of the United States or in these rules, costs shall be allowed as of course to the prevailing party unless the court otherwise directs * * *.' While this Rule could be far more definite as to what 'costs shall be allowed,' the words 'unless the court otherwise directs' quite plainly vest some power in the court to allow some 'costs.' We therefore hold that Judge Weinfeld was correct in treating this case as an appeal to his discretion.

II.

The Court of Appeals held, and the company argues here, that, even if Judge Weinfeld did have discretion, it was nevertheless error for him to undertake 'an independent determination de novo of the costs allowed at a prior trial.' 324 F.2d, at 364. We cannot agree. Since Judge Palmieri's judgment and his taxation of costs were both upset by the Court of Appeals' reversal of the first trial judgment, it became the duty of the clerk to tax costs for both trials only when judgment was finally entered for the company. The fact that the clerk accepted Judge Palmieri's former cost taxation put no duty on Judge Weinfeld to accept the same figures. On review of the clerk's assessment, it was Judge Weinfeld's responsibility to decide the cost question himself, and so far as an exercise of discretion was called for, it was then his discretion and not Judge Palmieri's that had to control. True, any judge in a like situation would almost surely hope to agree with his brother judge's prior opinion, but we cannot accept the idea that he is compelled to do so. Judge Weinfeld was aware of intervening circumstances of which Judge Palmieri could not have known, as for example the Court of Appeals' two opinions following the first trial, one of which mentioned cost questions. And Judge Weinfeld in lowering the prior assessment reached a result not greatly different from that of the Court of...