481 F.3d 355 (6th Cir. 2007), 05-2375, In re Cardizem CD Antitrust Litigation

Docket Nº:05-2375.
Citation:481 F.3d 355
Party Name:In re CARDIZEM CD ANTITRUST LITIGATION. Eugenia Wynne Sams, Plaintif-Appellant, Gordon Ball, Attorney-Appellant, v. State Attorneys General; State Law Plaintiffs, Plaintiffs-Appellees, State of Tennessee, Defendant-Appellee, Hoechst Aktiengesellschaft, et al., Defendants.
Case Date:February 22, 2007
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 355

481 F.3d 355 (6th Cir. 2007)


Eugenia Wynne Sams, Plaintif-Appellant,

Gordon Ball, Attorney-Appellant,


State Attorneys General; State Law Plaintiffs, Plaintiffs-Appellees,

State of Tennessee, Defendant-Appellee,

Hoechst Aktiengesellschaft, et al., Defendants.

No. 05-2375.

United States Court of Appeals, Sixth Circuit.

Feb. 22, 2007

Argued: Dec. 8, 2006.

Page 356


Gordon Ball, Ball & Scott, Knoxville, Tennessee, for Appellants.

Jay Himes, Attorney General, State of New York, New York, New York, for Appellees.


Gordon Ball, Ball & Scott, Knoxville, Tennessee, for Appellants.

Jay Himes, Robert L. Hubbard, Attorney General, State of New York, New York, New York, Michelle M. Rick, Office of the Attorney General, Lansing, Michigan, for Appellees.

Before: CLAY, ROGERS, and SUTTON, Circuit Judges.


SUTTON, Circuit Judge.

At the end of a case, "costs" are awarded to prevailing parties "as of course" for an assortment of trial-related expenses-such as court fees, court reporter fees and, as pertinent here, "compensation of court appointed experts." Fed.R.Civ.P. 54(d)(1); 28 U.S.C. § 1920(6). At the end of this case, the district court ordered Gordon Ball, an attorney for one of the parties to this action, to pay costs associated with the compensation of Rust Consulting, Inc., a class-action settlement administrator hired to disburse the $80 million settlement in this case. Because Rule 54(d)(1) and § 1920(6) permit costs to be charged

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against parties, not their counsel, we reverse.


In 1997, Hoechst Marion Roussel and Andrx Pharmaceuticals allegedly conspired to minimize competition for one of Hoechst's products--Cardizem CD, which is prescribed for the treatment of angina (chronic chest pains) and high blood pressure as well as for the prevention of heart attacks and strokes. In connection with the alleged conspiracy, Hoechst paid Andrx nearly $90 million in return for Andrx keeping a competing generic drug off the market. In August 1998, individual consumers (the "state law plaintiffs") filed what would become the first of 19 state law actions against the companies, and in 1999 the Judicial Panel on Multidistrict Litigation transferred the actions to the Eastern District of Michigan. The attorneys general of all 50 States, Puerto Rico and the District of Columbia (the "attorneys general") eventually joined the litigation on behalf of their States and as parens patriae on behalf of the residents of their respective jurisdictions.

On January 29, 2003, the district court preliminarily approved an $80 million settlement of all of the claims. The proposed settlement class consisted of "[a]ll consumers and Third Party Payers ... who purchased and/or paid all or part of the purchase price of Cardizem CD Products" during the relevant time frame, including "all members of any class or classes asserted in any State Action." JA 390-91. On October 21, 2003, after conducting a fairness hearing concerning the settlement, the court certified the settlement class and granted final approval of the settlement agreement.

Eugenia Sams is a Tennessee resident who purchased Cardizem CD during the time period implicated by the alleged conspiracy. Represented by Gordon Ball, she filed a complaint against the defendants in Tennessee state court in 1998, alleging violations of the Tennessee Trade Practices Act and the Tennessee Consumer Practices Act. The drug companies removed her case to federal district court, after which the court transferred the case to the Eastern District of Michigan along with the other state law actions.

Sams objected to the settlement. While she was not alone in doing so, she was nearly so: she was one of just two class members (out of 37,387) who objected to the settlement. The court found little to be said for her objections, concluding that they were "all without merit." JA 569.

Sams appealed the district court's settlement-approval order. In response, the state law plaintiffs and the attorneys general sought, and obtained, permission to require Sams to post an appeal bond. See Fed. R.App. P. 7. The court ordered Sams to post a bond for $174,429 to cover projected attorney fees and administrative costs made necessary by the appeal. Although Sams proceeded with her appeal regarding the propriety of the settlement and appealed the district court's bond order, she never posted the bond.

On December 14, 2004, the Sixth Circuit resolved Sams' appeals in a single opinion. See In re Cardizem CD Antitrust Litigation, 391 F.3d 812 (6th Cir.2004). The court affirmed the appeal bond, reasoning that "costs" under Appellate Rule 7 cover expenses "properly awardable under the relevant substantive statute." Id. at 817 (internal quotation marks omitted). Because Sams had filed her claim under state law, the court held that the "relevant substantive statute" was Tennessee Code § 47-18-109, the consumer-rights statute under which she had filed her lawsuit. Id. The court then held that the statute provided

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for the types of fees and costs covered by the appeal bond, including attorney fees and administrative costs, and that the district court did not abuse its discretion in calculating the amount of the bond. Id. at 818. The court then dismissed Sams' challenge to the settlement agreement because she failed to post the appeal bond. Id.

On remand, the state law plaintiffs and the attorneys general filed a motion to charge Sams with (1) the administrative costs caused by the delay ($255,683) under Rule 54(d)(1) and 28 U.S.C. § 1920(6) and (2) attorney fees caused by the delay ($290,363) under Rule 54(d)(1) and Tennessee Code § 47-18-109. Separately, they also filed a motion (1) to hold Ball and/or Sams in contempt for failing to post the appeal bond, (2) to sanction Ball for costs, fees and expenses incurred by the delay in the settlement under 28 U.S.C. § 1927 and (3) to require Sams to appear and testify at a hearing related to these issues.

The district court granted the motion for costs under § 1920(6), explaining that Rust Consulting, the settlement administrator, was "a court-appointed expert in this matter that provided services essential to the resolution of this case." JA 373. In doing so, the court ordered the lawyer (Ball), not the party (Sams), to pay the $255,683 in administrative costs attributable to the delay.

The court declined to award attorney fees under the Tennessee statute. It first acknowledged uncertainty over whether the law authorized such fees, then explained that, because counsel for the state law plaintiffs and the attorneys general already had been adequately compensated in the case, it "would exercise its discretion and not award these requested" fees even if Tennessee law permitted them. JA 378.

The court denied the § 1927 motion because, while the statute permits federal courts to impose costs and fees on attorneys who "unreasonably and vexatiously" "multipl[y]" proceedings, it permits such sanctions only for misconduct in that court. JA 378-79. In this instance, the court noted, the state law plaintiffs and attorneys general had sought these fees and costs for alleged vexatious conduct that occurred in the Sixth Circuit, not in the district court. The court finally denied the contempt motion, reasoning that even if contempt were appropriate, "[p]laintiffs will have obtained adequate relief for the delay caused by Sams' appeals" through the taxation of costs to Ball. JA 379-80.


On appeal, Ball challenges the district court's authority to issue the costs award--first because the relevant provisions at most allow costs to be imposed on parties, not their attorneys, and second because Rust Consulting was not a "court appointed expert." We give fresh review to questions about the meaning of Rule 54(d) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1920(6); once it is established that the district court has authority to award costs, if indeed it does, we give deferential review to its decision to impose costs and to the amount of any award. See BDT Prods., Inc. v. Lexmark Int'l, Inc., 405 F.3d 415, 417 (6th Cir.2005) ("As long as statutory authority exists for a particular item to be taxed as a cost, we do not overturn a district court's determination that the cost is reasonable and necessary, absent a clear abuse of discretion.") (internal quotation marks and brackets omitted).


Rule 54(d)(1) of the Federal Rules of Civil Procedure says:

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Costs Other than Attorneys' Fees. 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; but costs against the United States, its officers, and agencies shall be imposed only to the extent permitted by law. Such costs may be taxed by the clerk on one day's notice. On motion served within 5 days thereafter, the action of the clerk may be reviewed by the court.

Section 1920 says:

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.

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