9.5 Costs and Interest

Updated 2015 by Jeffrey S. Gutman

Costs may be recoverable under either Federal Rule of Civil Procedure 54(d) or a statute that expressly allows 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./1/ In cases against federal defendants, costs are permitted “only to the extent permitted by law.”/2/ A federal statute that is silent on costs would still permit recovery of Rule 54 costs./3/

Generally, a "prevailing party" for purposes of attorney fees is one for taxation of costs./4/ There is no time period in the rule by which the prevailing party must move for costs. The deadline is generally set by local rule./5/ In the absence of a local rule, the motion should be filed within a reasonable period of time after judgment is entered. The bill of costs must be verified./6/ The clerk of court has the initial responsibility for taxing costs./7/ The opposing party has fourteen days to oppose the motion, and the losing party has seven days to seek review by the court./8/

Although Rule 54(d) and various federal statutes may provide for costs, the court has some discretion in imposing responsibility for payment./9/ Specifically, most courts permit the consideration of the losing party's indigence in taxing costs./10/ The good faith of the losing party is not a reason to deny taxation of costs./11/ Thus, a legal services client who loses a case and is faced with a costs bill should appeal to the court’s discretion, but such indigence does not automatically exempt a losing party from paying costs./12/

The ordinary costs recoverable in federal litigation under Rule 54(d) are set forth in 28 U.S.C. § 1920./13/ The Supreme Court has viewed these costs as narrow in scope and, in sum, a fraction of the full expenses ordinarily incurred in federal litigation./14/ Even these modest 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 in the litigation, courts are divided on whether to award deposition costs only upon a showing that the deposition materially advanced the development of the litigation/15/ or whether the deposition seemed necessary at the time it was taken./16/ Furthermore, although 28 U.S.C. § 1920(3) authorizes the inclusion of witness fees in an award of costs, 28 U.S.C. § 1821 limits witness fees to $40 per day./17/

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 to 1991, 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."/18/ 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.”/19/

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 Section 1981. 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 and other costs unless stated clearly in the statute. A recent Supreme Court case dealt with whether a prevailing parent in an Individuals with Disabilities Education Act (IDEA) case may recover expert witness fees./20/ 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 would be 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 post-judgment interest, calculated according to the Treasury-bill method outlined in 28 U.S.C. § 1961./21/ The question of whether prejudgment interest is available, however, is more complex. Generally, in diversity cases, the availability of prejudgment interest depends on state law. In federal question cases, prejudgment interest is generally favored by federal policy./22/ 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./23/ 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 pre-judgment interest./24/ Most circuits, however, prohibit the award to plaintiffs who recover liquidated damages.

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1. In Marx v. General Revenue Corporation, 133 S. Ct. 1166 (2013), the Supreme Court ruled that the fees and costs provision in the Fair Debt Collection Practices Act, 15 U.S.C. § 1962k(a)(3), was not such a statute.

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

3United States ex rel. Lindenthal v. General Dynamics Corporation, 61 F.3d 1402, 1413-14 (9th Cir. 1995).

4. Dattner v. Conagra Foods, 458 F.3d 98, 100-02 (2d Cir. 2006) (per curiam) (citing Buckhannon Board & Care Home, Incorporated v. West Virginia Department of Health & Human Resources, 532 U.S. 598 (2001)).

5. White v. New Hampshire Department of Employment Security, 455 U.S. 445, 453 (1982).

6. 28 U.S.C. § 1924.

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

8. Id.

9. Rule 54(d)(1) states that costs "should be" allowed, but there is a strong presumption to tax costs for the prevailing party.

10. See Rivera v. City of Chicago, 469 F.3d 631, 634-37 (7th Cir. 2006).

11. Pacheco v. Mineta, 448 F.3d 783, 793-95 (5th Cir. 2006). 

12. Chapman v. AI Transport, 229 F.3d 1012, 1039 (11th Cir. 2000). 

13. 28 U.S.C. § 1920; Crawford Fitting Company v. J.T. Gibbons, Incorporated, 482 U.S. 437, 441-45 (1987).

14. Taniguchi v. Kan Pacific Saipan, Ltd., 132 S. Ct. 1997, 2006 (2012) (costs associated with "compensation of interpreters" in Section 1920(6) are limited to those providing oral translations, not those translating written documents).

15. See, e.g., Sea Coast Foods, Incorporated v. Lu-Mar Lobster & Shrimp, Incorporated, 260 F.3d 1054, 1061 (9th Cir. 2001); Stearns Airport Equipment Company v. FMC Corporation, 170 F.3d 518 (5th Cir. 1999); Cengr v. Fusibond Piping Systems, Incorporated, 135 F.3d 445 (7th Cir. 1998); Callicrate v. Farmland Industries, Incorporated, 139 F.3d 1336 (10th Cir. 1998); Soler v. Waite, 989 F.2d 251 (7th Cir. 1993).

16. Fogelman v. ARAMCO, 920 F.2d 278, 285-86 (5th Cir. 1991).

17. 28 U.S.C. §§ 1920; 1821. 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 Chemicals, Incorporated, 97 F.3d 460, 463 (11th Cir. 1996); Bankston v. Illinois, 60 F.3d 1249, 1257 (7th Cir. 1995).

18Chalmers v. City of Los Angeles, 796 F.2d 1205, 1216 n.7 (9th Cir. 1986).

19. West Virginia University Hospitals v. Casey, 499 U.S. 83, 102 (1991). See also Crawford Fitting Company, 482 U.S. 437 (1987) (holding that authority to award expert witness fees as costs under Rule 54(d) was limited by 28 U.S.C. §§ 1828 and 1920).

20Arlington Central School Board v. Murphy, 548 U.S. 291 (2006).

21. 28 U.S.C. § 1961. The statute states that interest is calculated from the date of judgment at “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 Treasury-bill rate and how to apply it can be found at United States Courts, Post Judgment Interest Rates (n.d.).

22. 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).

23. 29 U.S.C. § 626(b).

24. 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 America, Incorporated, 41 F.3d 1132 (7th Cir. 1994). But see Rhodes v. Guiberson Oil Tools, 82 F.3d 615 (5th Cir. 1996) (decision to award prejudgment interest is within sound discretion of district court).

Updated 2015 by Jeffrey S. Gutman