Cherry v. Champion International Corp.

• Decision Date: 01 March 1999
• Docket Number: CA-97-145-1-C,No. 98-1618,98-1618
• Citation: 186 F.3d 442
• Parties: (4th Cir. 1999) NANCY C. CHERRY, Plaintiff-Appellee, v. CHAMPION INTERNATIONAL CORPORATION, Defendant-Appellant. EQUAL EMPLOYMENT ADVISORY COUNCIL, Amicus Curiae. () Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 442

186 F.3d 442 (4th Cir. 1999)

NANCY C. CHERRY, Plaintiff-Appellee, v. CHAMPION INTERNATIONAL CORPORATION, Defendant-Appellant. EQUAL EMPLOYMENT ADVISORY COUNCIL, Amicus Curiae.

No. 98-1618 (CA-97-145-1-C)

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: March 1, 1999

Decided: July 27, 1999

Appeal from the United States District Court for the Western District of North Carolina, at Asheville. Max O. Cogburn, Magistrate Judge. [Copyrighted Material Omitted] COUNSEL ARGUED: David Edward Gevertz, PAUL, HASTINGS, JANOFSKY & WALKER, L.L.P., Atlanta, Georgia, for Appellant. George Benjamin Hyler, Jr., HYLER, LOPEZ & WALTON, Asheville, North Carolina, for Appellee. ON BRIEF: R. Lawrence Ashe, Jr., PAUL, HASTINGS, JANOFSKY & WALKER, L.L.P., Atlanta, Georgia, for Appellant. Michele M. Walton, HYLER, LOPEZ & WALTON, Asheville, North Carolina, for Appellee. Ann Elizabeth Reesman, Corrie L. Fischel, MCGUINESS & WILLIAMS, Washington, D.C., for Amicus Curiae.

Before NIEMEYER and KING, Circuit Judges, and LEE, United States District Judge for the Eastern District of Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge Niemeyer wrote the opinion, in which Judge King and Judge Lee joined.

OPINION

NIEMEYER, Circuit Judge:

The district court denied Champion International Corporation, the prevailing defendant in this Title VII action, the costs ordinarily awardable to prevailing parties under Federal Rule of Civil Procedure 54(d)(1) because of the plaintiff's "good faith, modest means, comparative lack of economic power, and the important public interest served by encouraging others in similar circumstances to pursue colorable Title VII claims." Champion appeals, challenging these grounds as improper ones for exercising discretion to deny it costs as the prevailing party. For the reasons that follow, we reverse and remand.

I

Nancy Cherry, who worked in the lumber yard at Champion's pulp mill in Canton, North Carolina, filed this Title VII action against Champion in May 1997, alleging that she had been the victim of eight incidents of sexual harassment over a period of seven years. Cherry also alleged that Champion intentionally inflicted emotional distress upon her in violation of North Carolina common law.

On Champion's motion for summary judgment, the district court found that only a claim based on the most recent incident, which occurred in July 1995, was not time-barred. That incident involved one of Cherry's male coworkers admonishing her to"get her butt back" to a different work location and telling her she was trying "to run everyone else's business except her own," and another male coworker quipping, "Why don't you just bid out from down here? You need to find a job that's for women. This is no place for you in the Wood Yard." The district court granted Champion's summary judgment motion on this incident because Champion promptly and thoroughly responded to Cherry's complaint; Champion"did everything within its power to stop the conduct plaintiff found offensive and to provide her with other employment opportunities." On the state law claim, the court determined that Cherry had failed to produce evidence demonstrating either that the incident involved outrageous conduct or that it caused her severe emotional injury. In entering summary judgment for Champion, the court ruled that"[h]aving found that plaintiff pursued her claims in good faith, the parties shall bear their own costs in this action."

Challenging the district court's taxation of costs, Champion filed a motion pursuant to Federal Rule of Civil Procedure 54(d)(1), requesting the court to reconsider that portion of its judgment requiring the parties to bear their own costs and instead to award costs to Champion. Champion had incurred $3,556 in costs, consisting of $2,353 to transcribe depositions, including the deposition of Cherry; $1,082 to videotape Cherry's deposition; and $121 in copying costs.

Following a hearing, the district court denied Champion's motion, citing Cherry's "good faith [in bringing the action], modest means, comparative lack of economic power, and the important public interest served by encouraging others in similar circumstances to pursue colorable Title VII claims." The court acknowledged that in 1996, Cherry and her husband filed a joint income tax return, reporting $104,000 in income, and in 1997, when Cherry was not working, she stated that her husband earned approximately $70,000. Also, when Cherry chose not to return to work after having been given a leave of absence, she collected approximately $30,000 from her 401(k) savings plan and spent it on a truck and on motorcycles. The court noted, however, that no evidence was presented that Cherry was currently employed, and she testified that she had no assets independent of assets jointly owned with her husband, which included a house. The court concluded:

In the case at hand, the only argument that plaintiff can afford to pay defendant's costs is that her husband earns a good living. While it is one thing for a potential litigant to weigh the risks of losing personal assets or income before filing a claim, it would be a formidable barrier to require a person who believes, in good faith, that she has been discriminated against in her workplace to put at jeopardy the resources of her family. Indeed, it would run contrary to one's natural instincts. Adding to the calculus is the disparity in economic resources of the litigants from a person who earns nothing to a corporation that earns millions.

In denying Champion's motion for costs, the district court noted that even were it to grant Champion's motion, it would be necessary, pursuant to 28 U.S.C. § 1920(2), "to reduce any [such] award of costs by the cost of the stenographic transcription" of Cherry's deposition because it had also been videotaped.

On appeal, Champion argues that the district court ignored the presumption of an entitlement to the recovery of costs that Rule 54(d)(1) affords the prevailing party by requiring Champion to demonstrate why the presumption should be given effect, rather than requiring Cherry to demonstrate why the presumption should not be given effect. On the substantive application of the rule, Champion asserts that the district court (1) effectively created a"dependent-spouse" exception to Rule 54(d)(1) by considering only Cherry's individual assets in determining her ability to satisfy Champion's bill of costs, and (2) impermissibly compared the parties' wealth in denying its motion. Finally, Champion argues that the district court erred in concluding alternatively that 28 U.S.C. § 1920(2) precludes a prevailing defendant from recovering both stenographic and videotaping deposition costs.

II

Rule 54, entitled "Costs Other than Attorneys' Fees," provides in pertinent part:

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). By mandating that, subject to court intervention, costs be allowed to a prevailing party "as of course," the rule creates the presumption that costs are to be awarded to the prevailing party. See Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1981); Teague v. Bakker, 35 F.3d 978, 995-96 (4th Cir. 1994) (citations omitted). To overcome the presumption, a district court "must justify its decision [to deny costs] by `articulating some good reason for doing so.'" Teague, 35 F.3d at 996 (quoting Oak Hall Cap and Gown Co. v. Old Dominion Freight Line, Inc., 899 F.2d 291, 296 (4th Cir. 1990)). Costs may be denied to the prevailing party only when there would be an element of injustice in a presumptive cost award. See Delta Air Lines, 450 U.S. at 355 n.14. Thus, while Rule 54(d)(1) intends the award of costs to the prevailing party as a matter of course, the district court is given discretion to deny the award, and we review such exercise of discretion for abuse. See Teague, 35 F.3d at 996.

As with any exercise of discretion by the district court, when it is within the bounds of the discretion conferred, we may not question it. But the definition of those bounds is a question of law, and when a court traverses them, it abuses its discretion. See Koon v. United States, 518 U.S. 81, 100 (1996) (stating that"[a] district court by definition abuses its discretion when it makes an error of law" (citation omitted)).

The discretion conferred by Rule 54(d)(1), while only defined in the rule as a general reservation, "unless the court otherwise directs," has been defined more specifically by courts: "only misconduct by the prevailing party worthy of a penalty . . . or the losing party's inability to pay will suffice to justify denying costs." Congregation of the Passion, Holy Cross Province v. Touche, Ross & Co., 854 F.2d 219, 222 (7th Cir. 1988) (citations omitted); see also Schwarz v. Folloder, 767 F.2d 125, 131 (5th Cir. 1985) (describing the denial of costs as "in the nature of a penalty" (internal quotation marks and citation omitted)); Serna v. Manzano, 616 F.2d 1165, 1167 (10th Cir. 1980) (same). We have recognized additional factors to justify denying an award of costs, such as their excessiveness in a particular case, the limited value of the prevailing party's victory, or the closeness and difficulty of the issues decided. See Teague, 35 F.3d at 996. Although the losing party's good faith in pursuing an action is a "virtual prerequisite" to receiving relief from the normal operation of Rule 54(d)(1), that party's good faith, standing alone, is an insufficient basis for refusing to assess costs against that party. See id. With these principles in hand, we turn to the district court's denial of costs in this case.

In denying Champion's motion for costs, the district court relied upon (1) Cherry's good faith; (2)...