Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-00886/USCOURTS-caed-2_02-cv-00886-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

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DAVID C. HOBSON and D.C.

HOBSON, D.D.S., M.S., a

Professional Corporation,

NO. CIV. S-02-0886 WBS PAN

Plaintiffs, 

v. ORDER RE: COSTS

ORTHODONTIC CENTERS OF

AMERICA, INC. and ORTHODONTIC

CENTERS OF CALIFORNIA, INC.,

Defendants.

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On November 30, 2004, the court issued an order

declaring David C. Hobson and D.C. Hobson, D.D.S., M.S., a

Professional Corporation (collectively “Hobson”) the prevailing

party for purposes of costs recovery. Hobson has submitted an

amended bill of costs totaling $96,727.79. Defendants object to:

(1) costs for subpoenaing records from third-parties; (2) costs

for the videotaping of depositions; (3) the costs for the

subpoena and witness fee of Michael Ueltzen; (4) costs associated

with photocopying exhibits related to experts’ depositions; (5)

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expert witness costs above those allowed by 28 U.S.C. §§ 1920 &

1821; (6) costs to prepare and present video deposition

transcripts at trial; (7) costs for courier services; (8) costs

associated with on-line research charges; (9) costs associated

with the mediation before retired Judge Ramirez; and (10) travel

costs for Hobson’s attorneys. 

Federal Rule of Civil Procedure 54(d)(1) and Local Rule

54-292(f) generally govern the taxation of costs to losing

parties, subject to limits set under 28 U.S.C. § 1920. See 28

U.S.C. § 1920 (enumerating taxable costs); Fed. R. Civ. P.

54(d)(1) (“costs other than attorneys’ fees shall be allowed as

of course to the prevailing party unless the court otherwise

directs . . . .”); L.R. 54-292(f). However, 28 U.S.C. § 1920

does not limit cost recovery where there is explicit contractual 

authorization to shift additional costs. Crawford Fitting, Co.

v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987). Instead, the

prevailing party may recover whatever costs the contract

authorizes him to recover. See TCBY Sys., Inc. v. RSP Co., Inc.,

33 F.3d 925 (8th Cir. 1994)(remanded to district court to

determine whether prevailing party’s expert witness fees, travel

costs and other similar expenses were “reasonable costs” that

could be recovered independently of § 1920 in accordance with the

language of the parties’ franchise agreement). 

Paragraph 8.10 of the parties’ Business Services

Agreement states

If legal action is commenced by either party to enforce

or defend its rights under this Agreement, the

prevailing party in such action shall be entitled to

recover its costs and reasonable attorney’s fees in

addition to any other relief granted.

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(emphasis added). The paragraph expressly authorizes the

prevailing party in any legal action between the parties to

“recover its costs.” The contractual language does not limit 

recoverable costs to those recoverable under 28 U.S.C. § 1920. 

Rather, the broad language must be interpreted to embrace any

costs reasonably incurred in the legal action. See TCBY Sys.,

Inc., 33 F.3d at 931(“reasonable costs” language in franchise

agreement was sufficiently express to avoid § 1920's limitation). 

Therefore, Hobson may recover his reasonable costs above and

beyond those authorized by 28 U.S.C. § 1920. 

Most of defendants’ objections go to whether Hobson’s

costs are recoverable under 28 U.S.C. § 1920. For reasons noted

above, these objections fail. However, some of defendants’

objections can be read to question the reasonableness of the

costs incurred. To this extent, the court will address them

individually. 

First, defendants object to the taxation of costs

Hobson incurred for videotaping depositions on the grounds that

such costs are duplicative of those charged to procure

stenographic transcripts. Circuit courts disagree about whether

district courts may tax costs for both stenographic transcripts

and videotape depositions under 28 U.S.C. § 1920. Compare Mota

v. Univ. of Tex. Houston Health Sci. Ctr., 261 F.3d 512, 529 (5th

Cir. 2001)(abuse of discretion to tax cost of videotape

deposition) and Barber v. Ruth, 7 F.3d 636, 645 (7th Cir.

1993)(same) with Arcadian Fertilizer, L.P. v. MPW Indus. Serv.,

Inc., 249 F.3d 1293, 1297 n.5 (11th Cir. 2001)(videotaped

depositions may be taxed). In light of these conflicting

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interpretations of § 1920, the court does not find it

unreasonable to allow such costs independently of the statute. 

Nor can the court say it was unreasonable to incur costs to

prepare the video deposition transcripts for presentation in

trial in the event the witnesses were unavailable to testify. 

Defendants also object to the taxation of $48.63 in

expenses for the subpoena and witness fee of Michael Ueltzen. 

Hobson’s counsel incurred these costs in an effort to have Mr.

Ueltzen testify regarding his inability to explain some of OCA’s

allocations of corporate office expenses. The allocation of such

expenses was central to the case. The court eventually excluded

Mr. Ueltzen’s testimony from Hobson’s case in chief. But these

costs were incurred before the testimony was excluded. 

Therefore, the costs are not unreasonable.

Lastly, defendants object to taxing witness fees for

Professor Robert Gartrell and Debbie Best because they did not

testify at trial. However, Mr. Gartrell was to be a rebuttal

witness to Mr. Ueltzen whom defendants elected not to call as a

witness. Because Hobson could not have foreseen that OCA would

not call Mr. Ueltzen, it was not unreasonable to retain Mr.

Gartrell for his expertise.

Similarly, Ms. Best’s services were retained before

trial in order to evaluate the merits of one of Hobson’s claims. 

After Ms. Best had produced an expert report and testified at her

deposition, Hobson ultimately chose to forego that claim. The

fact that Ms. Best’s services led Hobson to focus on other

stronger claims at trial does not make the retention of Ms.

Best’s services unreasonable. Hobson cannot be faulted for

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1 Defendants do not challenge the reasonableness of

expert witness fees expended on Jeffery Rogers from Perry-Smith

L.L.P. They only argue that they are not recoverable under 28

U.S.C. § 1920.

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taking expert opinion into account before making an argument at

trial. Therefore, these expert witness fees are reasonable.1 

After reviewing the bill, the court finds all other

costs to be reasonable as well and allows:

Fees of the Clerk $ 150.00

Fees for Service of Summons & Subpoena $ 2,146.89

Court Reporter Fees $16,409.57

Witness Fees $ 97.26

Fees for exemplifications and copies $ 1,949.48

Other costs $75,974.59

TOTAL: $96,727.79

IT IS SO ORDERED.

Dated: April 20, 2005

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