Opinion
Sean William Crandall, Carey B. Wood, Christine J. Haw, Erin Melody-Rosenfeld, Jacob William Cutler, Tionna Dolin, Strategic Legal Practices APC, Los Angeles, CA, Dara Tabesh, Ecotech Law Group PC, San Francisco, CA, Steven Brower, Brower Law Group APC, Laguna Hills, CA, for Jerry Zomorodian.
Brian Takahashi, Richard L. Stuhlbarg, Stephen Jude Kelley, Theodore Dorenkamp, III, Bowman and Brooke LLP, Torrance, CA, for BMW of North America, LLC, et al.
Proceedings: IN CHAMBERS - ORDER RE PLAINTIFF’S MOTION TO RETAX COSTS [131]
The Honorable DOLLY M. GEE, UNITED STATES DISTRICT JUDGE
I.
BACKGROUND
On December 12, 2018, the jury returned a verdict awarding Plaintiff Jerry Zomorodian $176,976.60. [Doc. # 103.] On January 15, 2019 Zomorodian filed an application to the Clerk to tax costs against Defendant BMW of North America, LLC ("BMW") in the amount of $21,131.53. [Doc. # 107.] On July 12, 2019, the Clerk issued a Bill of Costs in the amount of $10,633.81. Bill of Costs [Doc. # 130]. The Clerk subtracted $1,320.79 for fees associated with expediting transcripts because they are not recoverable under Local Rule 54-3.5. See id. The Clerk also subtracted $9,176.93 because, under Local Rule 54-3.6, "[n]o witness expenses, including fees for expert witnesses, are allowable." Id. On July 18, 2019, Plaintiff filed the instant Motion to Retax Costs under Local Rule 54-8. [Doc. #131.] The matter is fully briefed. [Doc. ## 131-1 ("Mot."), 138 ("Opp."), 139 ("Reply").] For the following reasons, the Court GRANTS Plaintiff’s Motion to Retax Costs.
II.
LEGAL STANDARD
According to Federal Rule of Civil Procedure ("FCRP") 54(d), "[u]nless a federal statute, [the FRCP], or a court order provides otherwise, costs— other than attorney’s fees— should be allowed to the prevailing party." Fed.R.Civ.P. 54(d)(1). The prevailing party is the party in whose favor judgment is rendered. C.D. Cal. L.R. 54-1. On a motion to retax costs, the Court reviews the Clerk’s taxation of costs de novo. Rivera v. NIBCO, 701 F.Supp.2d 1135, 1137 (E.D. Cal. 2010). The review is limited to the record before the Clerk and encompasses only those items specifically identified in the motion. C.D. Cal. L.R. 54-8. There is a "presumption in favor of awarding costs to a prevailing party," but the district court retains "discretion to refuse to award costs." Ass’n of Mexican-Am. Educators v. California, 231 F.3d 572, 591 (9th Cir. 2000) (en banc ); Escriba v. Foster Poultry Farms, Inc., 743 F.3d 1236, 1249 (9th Cir. 2014) (district courts are afforded significant "flexibility in evaluating the suitability of awarding costs in a particular case.").
III.
DISCUSSION
Plaintiff argues that the Court should permit him to recover certain expenses that the Clerk disallowed because the Song-Beverly Act’s costs provision, rather than FRCP 54 and Local Rule 54, applies here. Mot. at 1. Defendant, on the other hand, argues that federal procedural law governs the taxation of costs in diversity cases, even if the underlying dispute arises under the Song-Beverly Act. Opp. at 5.
The Song-Beverly Act’s costs provision, California Civil Code section 1794(d), states that:
If the buyer prevails in an action under this section, the buyer shall be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses, including attorney’s fees based on actual time expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.
Cal. Civ. Code § 1794(d) (emphasis added). This provision is broader than the Local Rules and FRCP 54 because it permits prevailing parties to recover "expenses" as well as "costs." Karapetian v. Kia Motors Am., Inc., 970 F.Supp.2d 1032, 1036 (C.D. Cal. 2013) (citing Nightingale v. Hyundai Motor Am., 31 Cal.App.4th 99, 104, 37 Cal.Rptr.2d 149 (1994)). Furthermore, California courts have "repeatedly expressed ... the need to construe the Song-Beverly Act so as to implement the legislative intent to expand consumer protection and remedies." Daniel v. Ford Motor Co., 806 F.3d 1217, 1223 (9th Cir. 2015) (citing Mexia v. Rinker Boat Co., 174 Cal.App.4th 1297, 1311, 95 Cal.Rptr.3d 285 (2009)).
A. California Law Governs the Recovery of Costs and Expenses in this Case
It is well established that "[a] federal court follows federal procedural law and, where it applies, state substantive law." Kohlrautz v. Oilmen Participation Corp., 441 F.3d 827, 830 (9th Cir. 2006). The recovery of prevailing party "costs in federal district court" is generally considered a question of procedure, and "is normally governed by Federal Rule of Civil Procedure 54(d), even in diversity cases." Champion Produce, Inc. v. Ruby Robinson Co., Inc., 342 F.3d 1016, 1022 (9th Cir. 2003). Nonetheless, Plaintiff claims that Clausen v. M/V NEW CARISSA, 339 F.3d 1049 (9th Cir. 2003), obligates the Court to apply section 1794(d) to the costs inquiry. The Court agrees— Clausen requires a departure from the general rule in this case.
In Clausen, the Ninth Circuit held that the Oregon Oil Spill Act’s costs provision was substantive in nature and affirmed the district court’s decision to award costs under Oregon, rather than federal, law. Id. at 1064-66. The Oregon statute awarded a prevailing plaintiff "costs of any kind," including expenses like expert witness fees, "as one element of its compensatory damages" recovery. Id. at 1064 (emphasis removed). The court reasoned that the Oregon Legislature’s decision to craft a statute that included costs and expenses as a part of a prevailing plaintiff’s damages was an "express indication" of the Legislature’s " ‘special interest in providing litigants’ with full compensation for reasonable sums expended in pursuit of an Oil Spill Act claim." Id. at 1065 (citing Chevalier v. Reliance Ins. Co. of Ill., 953 F.2d 877, 886 (5th Cir. 1992)). The court also noted that following state legislative intent in awarding costs to prevailing plaintiffs is consistent with federal practice in other circuits. See id. (citing Freeman v. Package Machinery Co., 865 F.2d 1331, 1347-48 (1st Cir. 1988) (Massachusetts cost-shifting provision "constitutes part of the substantive remedy created by state law" and as such, trumps federal law) and Bright v. Land O’Lakes, Inc., 844 F.2d 436, 443-44 (7th Cir. 1988) (despite "the general rule ... that the prevailing party can only recover amounts prescribed" by federal law, because the Wisconsin law at issue authorized "fee shifting of actual costs to a prevailing plaintiff," Wisconsin law applied).
The Clausen court also reasoned that the costs recovery analysis under the Oil Spill Act was a question of substantive law because the statute defined damages to include "costs of any kind," and because measuring damages is traditionally a question of state substantive law. Id. at 1065-66 (citing Barbier v. Shearson Lehman Hutton Inc., 948 F.2d 117, 122 (2d Cir. 1991)). That rationale does not apply here, however, because the Song-Beverly Act does not require courts to award costs as a subset of damages. Rather, it permits prevailing buyers to recover costs and expenses as a part of their overall "judgment," a term that section 1794 uses separately from "damages." Compare Cal. Civ. Code § 1794(b) ("The measure of the buyer’s damages in an action under this section shall include the rights of replacement or reimbursement as set forth in subdivision (d) ....) (emphasis added) with Cal. Civ. Code § 1794(d) ("If the buyer prevails in an action under this section, the buyer shall be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses ....) (emphasis added).
The California Legislature has demonstrated a similar "special interest" in permitting prevailing Song-Beverly plaintiffs to recover costs and expenses under section 1794. As the California Court of Appeal has noted:
The Legislature added the "costs and expenses" language to section 1794 in 1978. (Stats. 1978, ch. 991, § 10, p. 3065.) An analysis by the Assembly Committee on Labor, Employment, and Consumer Affairs states: "Indigent consumers are often discouraged from seeking legal redress due to court costs. The addition of awards of ‘costs and expenses’ by the court to the consumer to cover such out-of-pocket expenses as filing fees, expert witness fees, marshal’s fees, etc., should open the litigation process to everyone." ... The legislative history indicates the Legislature exercised its power to permit the recovery of expert witness fees by prevailing buyers under the Act ....
Jensen v. BMW of N. Am., Inc., 35 Cal.App.4th 112, 138, 41 Cal.Rptr.2d 295 (1995), as modified on denial of reh’g (June 22, 1995) (citing Assem. Com. on Labor, Employment & Consumer Affairs, Analysis of Assem. Bill No. 3374 (May 24, 1978) p. 2.)); see also Robertson v. Fleetwood Travel Trailers of California, Inc., 144 Cal.App.4th 785, 817, 50 Cal.Rptr.3d 731 (2006) ("By permitting prevailing buyers to recover ... costs and expenses, our Legislature has provided injured consumers strong encouragement to seek legal redress in a situation in which a lawsuit might not otherwise have been economically feasible.").
Since Clausen requires that such an express legislative intent as reflected in section 1794(d) be upheld as substantive law, the Court shall apply section 1794(d) instead of FRCP 54. Defendant cites three cases in support of the opposite conclusion, but none is persuasive. First, it cites Garcia v. FCA U.S. LLC, 2018 WL 1184949, at *8 (E.D. Cal. Mar. 7, 2018), and Hall v. FCA U.S. LLC, 2018 WL 2298431, at *8 (E.D. Cal. May 21, 2018), as examples of Song-Beverly cases in which the court applied federal law in analyzing which costs were recoverable. Opp. at 6-8. But these cases do not discuss Clausen or its reasoning whatsoever.
Second, Defendant cites Drumm v. Morningstar, Inc., 695 F.Supp.2d 1014, 1026-27 (N.D. Cal. 2010), which does analyze Clausen, for the proposition that state statutes that do not include costs as an "element of damages" must yield to federal procedural law in diversity cases. Opp. at 9. Drumm dealt with the recovery of costs under California Labor Code section 218.5, which "simply requires a court to award reasonable attorney’s fees and costs to the prevailing party" (as opposed to the Oregon Oil Spill Act, which included costs as an element of damages). Drumm, 695 F.Supp.2d at 1027. The statutes’ damages provisions are different, but Drumm did not discuss whether the California Legislature has expressly indicated that prevailing parties under the California Labor Code should receive "full compensation for reasonable sums expended in pursuit of" those claims. Clausen, 339 F.3d at 1065. California’s Legislature has expressed such an intent with respect to the Song-Beverly Act. Drumm’s analysis of how Clausen interacts with another statute without such a clear legislative intent to expand the availability of costs and expenses, therefore, is not persuasive here. The Court concludes that section 1794 controls Plaintiff’s recovery of costs in this case.
Plaintiff also cites a recent opinion in which a district court relied in Clausen to state that the Clerk’s decision to apply federal law in taxing costs in a Song-Beverly case "reflect[ed] an incorrect application of the Erie doctrine." Petropoulos v. FCA U.S. LLC, 2019 WL 2289399, at *4 (S.D. Cal. May 29, 2019). While the Court ultimately agrees with the Petropoulos court’s conclusion, certain procedural differences in that case render the decision less persuasive than Plaintiff presents it to be. Namely, the parties stipulated that section 1794 controlled the costs inquiry, and the defendant in that case did not argue against the notion that California substantive law controlled the award of costs. See id. Nonetheless, the Petropoulos court appeared to independently analyze Clausen and determined that it requires a costs analysis under section 1794. Petropoulos is therefore at least minimally instructive.
B. What Costs and Expenses are Recoverable Under Section 1794(d)
Plaintiff argues that, under section 1794(d), he should recover expenses related to the following items, which the Clerk subtracted from the Bill of Costs: (1) $1,320.79 in expenses for obtaining expedited expert deposition transcripts, and (2) $9,176.93 in expert witness fees. Mot. at 10-11; Bill of Costs.
California law provides that prevailing plaintiffs can recover expert witness fees under section 1794(d). Jensen, 35 Cal.App.4th at 138, 41 Cal.Rptr.2d 295 ("The addition of awards of ‘costs and expenses’ by the court to the consumer to cover such out-of-pocket expenses as filing fees, expert witness fees, marshal’s fees, etc., should open the litigation process to everyone.") (emphasis added). Plaintiff argues that the Court should exercise its discretion to reduce Plaintiff’s recovery for expert witness fees because they are unreasonable. Opp. at 14. The decision to engage an expert witness is not, in and of itself, unreasonable, and Defendant does not make any substantive argument against the reasonableness of hiring this particular expert or the fees the expert charged. See id. Plaintiff shall therefore recover the $9,176.93 in expert witness fees that the Clerk excluded.
Plaintiff shall also recover the $1,320.79 that he spent to obtain expedited expert deposition transcripts. Plaintiff represents that the parties initially met and conferred to set expert deposition dates far enough in advance of trial that expedited transcripts would likely be unnecessary. Haw. Decl. [Doc. # 139] at ¶ 3. Despite those efforts, Defendant’s expert was ultimately unavailable until six days before trial. Id. Plaintiff claims that in order to have transcripts ready to review before trial, he needed to order expedited copies. Id. While expedited transcripts may not be a reasonable expense in every case, the Court concludes that, under these circumstances, Plaintiff, through no fault of his own, reasonably incurred the expense associated with expedited transcripts.
Defendant also contends that Plaintiff, in effect, has waived his right to move to retax costs by failing to squarely raise "the argument on these expenses" in his motion for attorneys’ fees. See Opp. at 11. Defendant cites no authority in support of this argument. Moreover, Plaintiff is moving only to retax the costs that the Clerk excluded in the Bill of Costs, not any aspect of the fees addressed in the Court’s Order on Plaintiff’s motion for attorneys’ fees [Doc. # 136]. Indeed, the Local Rules prevent Plaintiff from moving to retax costs until after the Clerk has issued a Bill of Costs, which did not happen until July 12, 2019. C.D. Cal. L.R. 54-8. Plaintiff’s failure to raise cost-related arguments in his motion for attorneys’ fees, which he filed on January 15, 2019, therefore cannot operate as a waiver of his right to do so in the instant motion.
IV.
CONCLUSION
In light of the foregoing, the Court GRANTS Plaintiff’s Motion to Retax Costs. Plaintiff shall recover from Defendant the $10,497.72 that the Clerk reduced from the Bill of Costs. Plaintiff shall also recover the $10,633.81 that the Clerk initially taxed, for total costs and expenses in the amount of $21,131.53.
IT IS SO ORDERED.