9.5 Costs and Interest

Costs may be recoverable under either Federal Rule of Civil Procedure 54(d) or a statute that expressly provides for recovery of costs. Except for cases against federal defendants, Rule 54(d) entitles a prevailing party to recover costs unless a federal statute dictates otherwise. In cases against federal defendants, costs are permitted “only to the extent permitted by law.”/255/ A federal statute that mentions only attorney fees, and not costs, would not supersede Rule 54(d). For example, if a statute provides for an award of attorney fees to a defendant when a suit is frivolous, a prevailing defendant, in a non-frivolous suit may still recover Rule 54 costs./256/

Although Rule 54(d) and various federal statutes may provide for costs, the court has some discretion in imposing responsibility for payment. Specifically, the court may decide to deny awarding costs against indigent parties. Thus, a legal services client who loses a case and is faced with a costs bill should appeal to the court’s discretion. While a court may consider a losing party’s ability to pay, such inability does not automatically exempt a party from paying costs./257/

The ordinary costs recoverable in federal litigation are set forth in 28 U.S.C. § 1920. These costs, however, are limited in certain circumstances. Deposition costs, for example, are recoverable only when the deposition is reasonably necessary to the litigation. For depositions not used at trial, courts generally award deposition costs only upon a showing that the deposition materially advanced the development of the litigation./258/ Furthermore, although 28 U.S.C. § 1920 authorizes the inclusion of witness fees in an award of costs, 28 U.S.C. § 1821 limits witness fees to $40 per day./259/

Because ordinary costs are rather limited, counsel frequently look to fee-shifting statutes as a way to recover out-of-pocket expenses not covered by 28 U.S.C. § 1920. Prior to1991, courts often subscribed to the view that "out-of-pocket expenses incurred by an attorney which would normally be charged to a fee paying client are recoverable as attorneys' fees."/260/ In West Virginia University Hospital v. Casey, however, the Supreme Court imposed limitations on recoverable out-of-pocket expenses regarding expert fees, by holding that “[Section] 1988 conveys no authority to shift expert fees. When experts appear at trial, they are of course eligible for the fee provided by § 1920 and § 1821.”/261/

Partly in response to Casey, Congress amended 42 U.S.C. § 1988 to permit a court to award expert witness fees in racial discrimination cases under Section 1981 and intentional employment discrimination cases under Section1981. Nonetheless, in most other Section 1988 cases and cases arising under most federal fee-shifting statutes, a prevailing party may not recover full expert witness fees./262/ A recent Supreme Court case dealt with just this issue, whether a prevailing parent in an Individuals with Disabilities Education Act (IDEA) case may recover expert witness fees./263/ Observing that IDEA was enacted pursuant to the Spending Clause, the Court held that recovery of expert costs would have be expressed unambiguously in the statute. It held that IDEA’s provision awarding “reasonable attorneys fees as part of the costs” to parents did not clearly put states on notice that they be would responsible for paying expert fees. Rather, the list of recoverable costs in IDEA litigation is that set forth in 28 U.S.C. § 1920.

A prevailing party may be entitled to either prejudgment interest or interest calculated from the date of the final judgment. Interest is always available on a judgment from the date of its entry and is calculated according to the T-bill method outlined in 28 U.S.C. § 1961./264/ The question of whether prejudgment interest is available, however, is more complex. Prejudgment interest is generally favored by federal policy./265/ Nonetheless, prejudgment interest may be unavailable when the plaintiff recovers statutorily authorized liquidated damages. For example, the Age Discrimination in Employment Act authorizes back pay and, in the case of a willful violation, an equivalent amount as liquidated damages./266/ Each circuit that has considered this question has agreed that a plaintiff who sues under the Act and does not recover liquidated damages is entitled to prejudgment interest./267/ Most circuits, however, prohibit the award to plaintiffs who recover liquidated damages.

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

256. United States ex rel. Lindenthal v. Gen. Dynamics Corp., 61 F.3d 1402, 1413-1414 (9th Cir. 1995).

257. See Smith v. Se. Pa. Transp. Auth., 47 F.3d 97, 100 (3rd Cir. 1995) (disparity in financial status was not enough for a plaintiff to avoid costs absent proof of indigency and inequitable behavior on the part of the defendant); Badillo v. Cent. Steel & Wire Co., 717 F.2d 1160, 1165 (7th Cir. 1983) (“[I]t is within the discretion of the court to consider a plaintiff’s indigency in denying costs under Rule 54(d)”); Flint v. Haynes, 651 F.2d 970, 973 (4th Cir. 1981) (imposing costs on indigent inmates); see also Olson v. Coleman, 997 F.2d 726, 728-29 (10th Cir. 1993) (citing Duhart v. Carlson, 469 F.2d 471, 478 (10th Cir. 1972) (noting that while Flint held that costs may be imposed against an indigent plaintiff, Duhart concluded that costs could be assessed against an indigent plaintiff if the court found that the case was malicious or frivolous).

258. See, e.g., Sea Coast Foods, Inc. v. Lu-Mar Lobster & Shrimp, Inc., 260 F.3d 1054, 1061 (9th Cir. 2001); Stearns Airport Equip. Co. v. FMC Corp., 170 F.3d 518 (5th Cir. 1999); Cengr v. Fusibond Piping Sys., 135 F.3d 445 (7th Cir. 1998); Callicrate v. Farmland Indus., 139 F.3d 1336 (10th Cir. 1998); Soler v. Waite, 989 F.2d 251 (7th Cir. 1993). But see Wash. State Dep’t of Transp. v. Wash. Natural Gas Co., 59 F.3d 793 (9th Cir. 1995).

259. See, e.g., Pinkham v. Camex Inc., 84 F.3d 292, 295 (8th Cir. 1996) (per curiam) (“[E]xpert fees in excess of the 28 U.S.C. § 1821(b) $40 limit are not recoverable.”); Morrison v. Reichhold Chems. Inc., 97 F.3d 460, 463 (11th Cir. 1996); Bankston v. Illinois, 60 F.3d 1249, 1257 (7th Cir. 1995).

260. Chalmers v. City of Los Angeles, 796 F.2d 1205, 1216, n. 7 (9th Cir. 1986).

261. W. Va. Univ. Hosp. V. Casey, 499 U.S. 83, 102 (1991). See also Crawford Fitting Co. v. J.T. Gibbons Inc., 482 U.S. 437 (1987) (holding that the authority to award expert witness fees as costs under Rule 54(d) was limited by 28 U.S.C. §§ 1828 and 1920).

262. But see e.g., Harris v. Marhoefer, 24 F.3d 16, 20 (9th Cir. 1994) (plaintiff entitled to recover, as part of discovery expenses, fees paid to take the deposition of opponent’s expert).

263. Arlington Central Sch. Bd. v. Murphy, 2006 U.S. LEXIS 5162 (U.S. Jun. 26, 2006).

264. The statute provides that interest is calculated from the date of judgment “a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding.” The current T-bill rate and how to apply it can be found at http://www.uscourts.gov/postjud/postjud.html.

265. See Kansas v. Colorado, 533 U.S. 1 (2001); Burnett v. Grattan, 468 U.S. 42 (1984); Wilson v. Garcia, 471 U.S. 261 (1985); Sullivan v. Little Hunting Park, 396 U.S. 229 (1969).

266. 29 U.S.C. § 626(b).

267. Sharkey v. Lasmo (AUL Ltd.), 214 F.3d 371 (2d Cir. 2000); Simpson v. Ernst & Young, 100 F.3d 436 (6th Cir. 1996); Downes v. Volkswagen of Am. Inc., 41 F.3d 1132 (7th Cir. 1994). But see Rhodes v. Guiberson Oil Tools, 82 F.3d 615 (5th Cir. 1996) (holding that the decision whether to award prejudgment interest is within the sound discretion of the district court).

Updated 2006