Grove v. Wells Fargo Financial Cal. Inc

• Decision Date: 20 May 2010
• Docket Number: No. 08-56964.,08-56964.
• Citation: 606 F.3d 577
• Parties: Kenneth H. GROVE, Plaintiff-Appellant,v.WELLS FARGO FINANCIAL CALIFORNIA, INC., a Colorado corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

606 F.3d 577

Kenneth H. GROVE, Plaintiff-Appellant,v.WELLS FARGO FINANCIAL CALIFORNIA, INC., a Colorado corporation, Defendant-Appellee.

No. 08-56964.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 4, 2010.

Filed May 20, 2010.

Robert S. Green, Jenelle Welling, and Charles D. Marshall of Green Welling, P.C., San Francisco, CA, for the appellant.

Jan T. Chilton, Mark D. Lonergan, and Jon D. Ives of Severson & Werson, San Francisco, CA, for the appellee.

Appeal from the United States District Court for the Central District of California, Percy Anderson, District Judge, Presiding. D.C. No. 2:07-cv-07475-PA-JWJ.

Before: PAMELA ANN RYMER, KIM McLANE WARDLAW and N. RANDY SMITH, Circuit Judges.

WARDLAW, Circuit Judge:

Kenneth Grove appeals the district court's award of attorney's fees and costs following the settlement of his Fair Credit Reporting Act (“FCRA”) action against Wells Fargo Financial California, Inc. (“Wells Fargo”). The principle issue before us is whether the expense-shifting provision in the FCRA authorizes district courts to award costs that otherwise would be non-taxable under 28 U.S.C. § 1920, which generally authorizes the award of certain specified costs. Because we conclude that it does, we reverse the district court on this issue, but affirm on Grove's other claims of error.

FACTUAL AND PROCEDURAL BACKGROUND

In spring 2006, Wells Fargo notified various credit reporting agencies that Grove was delinquent on an automobile loan. Grove disputed that he was behind in his payments and sent letters to Wells Fargo requesting that it submit corrected information to the credit reporting agencies. Grove filed a lawsuit under the FCRA when Wells Fargo refused to correct the information it had provided the agencies. A court-ordered mediation session did not result in a settlement, and the parties proceeded with discovery, including depositions and document production.

On the eve of trial, the parties reached a settlement. Pursuant to Federal Rule of Civil Procedure 68, the district court entered the parties' stipulated judgment, which provided that Wells Fargo would submit a written request to the credit reporting agencies to delete the disputed information in Grove's credit report. It also provided that Wells Fargo would pay Grove $20,000 “plus costs incurred to date and recoverable attorney's fees.” The judgment concluded that Grove was the prevailing party and that he was entitled to “recover his reasonable attorney's fees and costs in this action by filing a motion with the Court and that [Wells Fargo] may contest the amount of the fees and costs to be awarded, but not Plaintiff's entitlement to the same.”

Pursuant to the Rule 68 judgment, Grove filed a motion in which he requested $154,578 in attorney's fees and $7,468.41 in costs listed as taxable under 28 U.S.C. § 1920. The district court awarded Grove $85,289.25 in attorney's fees and denied Grove's request for taxable costs. Grove also requested $6,770.60 in non-taxable costs, including the cost of postage, facsimiles, travel, mediation services, and video conferencing services used in depositions. In opposition, Wells Fargo argued that Grove was not entitled to recover any costs that were not listed as taxable under 28 U.S.C. § 1920. The district court agreed with Wells Fargo, concluded that it lacked discretion to award non-taxable costs, and denied Grove's request. Grove appeals.

DISCUSSION

I. Non-Taxable Costs

“Under the ‘American rule,’ litigants ordinarily are required to bear the expenses of their litigation unless a statute or private agreement provides otherwise.” Carbonell v. INS, 429 F.3d 894, 897-98 (9th Cir.2005). At issue in Grove's request for non-taxable costs are two of many statutory exceptions to the American Rule and whether the first trumps the second. Pursuant to the first, 28 U.S.C. § 1920, a “judge or clerk of any Court of the United States may tax as costs” certain expenses: fees of the clerk and marshal; certain fees for transcripts; certain fees for printing and witnesses; the costs of copies needed for use in the case; docketing fees; and compensation of court appointed experts and interpreters. These expenses-known as “taxable costs”-may be recovered by the prevailing party. Section 1920 “define[s] the full extent of a federal court's power to shift litigation costs absent express statutory authority.” W. Va. Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 86, 111 S.Ct. 1138, 113 L.Ed.2d 68 (1991); see also Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 440, 107 S.Ct. 2494, 96 L.Ed.2d 385 (1987) (Section 1920 “embodies Congress' considered choice as to the kinds of expenses that a federal court may tax as costs against the losing party.”). The second expense-shifting provision at issue here is set forth in the FCRA. It permits a prevailing plaintiff to recover “the costs of the action together with reasonable attorney's fees as determined by the court.” 15 U.S.C. § 1681o(a)(2); id. § 1681n(a)(3).

In considering whether the FCRA's expense-shifting provision authorizes district courts to award non-taxable costs to prevailing plaintiffs in FCRA cases, we must “carefully inspect [the expense-shifting provision] for clear evidence of congressional intent that non-taxable costs should be available.” Twentieth Century Fox Film Corp. v. Entm't Distrib., 429 F.3d 869, 885 (9th Cir.2005) (discussing Crawford Fitting Co., 482 U.S. at 437, 107 S.Ct. 2494). Were we interpreting the language of the FCRA in the first instance, without the benefit of controlling case law on point, we might or might not conclude that it satisfies the Crawford Fitting test. However, as discussed in detail below, we-and the Supreme Court-have long interpreted the phrase “reasonable attorney's fees” to include certain litigation expenses, and we are bound to follow that precedent here. See, e.g., Valdivia v. Schwarzenegger, 599 F.3d 984, 990 n. 4 (9th Cir.2010) (“[A]s a three-judge panel, and with no intervening Supreme Court or Ninth Circuit precedent, we are bound by this court's[previous] holding.”); United States v. Vasquez-Ramos, 531 F.3d 987, 991 (9th Cir.2008) (“We are bound by circuit precedent unless there has been a substantial change in relevant circumstances ... or a subsequent en banc or Supreme Court decision that is clearly irreconcilable with our prior holding.” (internal citations omitted)). Therefore, because the FCRA provides for “reasonable attorney's fees,” we conclude that district courts have discretion to award non-taxable costs to prevailing parties under the FCRA and that the district court erred in concluding otherwise. See Oscar v. Alaska Dep't of Educ. & Early Dev., 541 F.3d 978, 981 (9th Cir.2008) (de novo review of legal analysis relevant to fee determination).

In Missouri v. Jenkins, 491 U.S. 274, 109 S.Ct. 2463, 105 L.Ed.2d 229 (1989), the Supreme Court held that a prevailing plaintiff could recover the costs of paralegals' time under a statute allowing for “a reasonable attorney's fee as part of the costs.” Id. at 285, 109 S.Ct. 2463 (quoting 42 U.S.C. § 1988). The Jenkins Court explained that “the fee must take into account the work not only of attorneys, but ... it must also take account of other expenses and profit.” Id. We have interpreted Jenkins to mean that “ ‘reasonable attorney's fees' include litigation expenses ... when it is ‘the prevailing practice in a given community’ for lawyers to bill those costs separate from their hourly rates.” Trs. of the Constr. Indus. and Laborers Health and Welfare Trust v. Redland Ins. Co., 460 F.3d 1253, 1258 (9th Cir.2006). Thus, “we have continued to hold that attorneys' fees awards can include reimbursement for out-of-pocket expenses including ... travel, courier and copying costs.” Davis v. City of San Francisco, 976 F.2d 1536, 1556 (9th Cir.1992) vacated in part on other grounds, 984 F.2d 345.

Consistent with Jenkins, we repeatedly have allowed prevailing plaintiffs to recover non-taxable costs where statutes authorize attorney's fees awards to prevailing parties. In Davis v. San Francisco, we affirmed an award of non-taxable costs under an expense-shifting statute providing that “the court, in its discretion, may allow the prevailing party ... a reasonable attorney's fee.” Id. at 1541 (quoting 42 U.S.C. § 2000e-5(k)). In doing so, we noted that, “the courts have long held [that certain non-taxable costs] can be awarded as part of a reasonable attorneys' fee since they are typically charged to paying clients by private attorneys.” Id. at 1556. Similarly, in Davis v. Mason County, 927 F.2d 1473 (9th Cir.1991), we affirmed an award of travel expenses under a statute providing district courts with discretion to allow the prevailing party reasonable attorney's fees as part of the costs of the action. Id. at 1488; 42 U.S.C. § 1988. We rejected the defendant's argument that costs should be limited to those available under § 1920, explaining that the defendant “fails to see that ... travel expenses were not granted as costs under section 1920, but rather as out-of-pocket expenses, compensable under section 1988.” Davis v. Mason County, 927 F.2d at 1488. We further observed that “[c]ourts have generally held that expenses incurred during the course of litigation which are normally billed to fee-paying clients should be taxed under section 1988.” Id.; see also Chalmers v. City of Los Angeles, 796 F.2d 1205, 1216 n. 7 (9th Cir.1986) ( “Even though not normally taxable as costs, out-of-pocket expenses incurred by an attorney which would normally be charged to a fee paying client are recoverable as attorney's fees under section 1988.”).

More recently, in Redland Insurance, we addressed whether computerized research costs were recoverable under ERISA's expense-shifting provision, which, like the FCRA's expense-shifting provision, authorizes the recovery of “reasonable attorney's fees and costs of the action.” Redland Ins. Co., 460 F.3d at 1256 (quoting ...