Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_10-cv-08125/USCOURTS-azd-3_10-cv-08125-6/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

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 Plaintiffs do not challenge the Clerk's calculation of taxable costs.

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Michael L. Taylor; Dilawar Khan; Volena

Glover-Hale; Manuel Montoya, on behalf

of themselves and other persons similarly

situated, 

Plaintiffs, 

vs.

AutoZone Inc., a Tennessee corporation;

AutoZone Inc., a Nevada corporation;

AutoZoners LLC,

Defendants. 

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CV 10-08125-PCT-FJM

ORDER

The court has before it plaintiffs' motion to review clerk's taxation of costs (doc. 292),

defendants' response (doc. 293), and plaintiffs' reply (doc. 294). In response to our order

dated June 8, 2012 (doc. 295), plaintiffs submitted declarations from the named plaintiffs and

plaintiffs' counsel (docs. 296, 299). Finally, we have before us plaintiffs' motion to seal (doc.

297).

As outlined in our June 8, 2012 order, we previously granted summary judgment to

defendants on plaintiffs' Fair Labor Standards Act ("FLSA") collective action. The Clerk

taxed $66,599.02 in costs against plaintiffs (doc. 291).1

 Plaintiffs move this court to review

the costs taxed against them. Because it was unclear whether it was plaintiffs or their counsel

Case 3:10-cv-08125-FJM Document 300 Filed 06/20/12 Page 1 of 5
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who would ultimately be responsible for the payment of costs, we ordered plaintiffs to submit

updated declarations, a declaration from counsel, and copies of their fee agreements. These

documents confirm that it is plaintiffs' counsel, not plaintiffs, who will be ultimately

responsible for the payment of costs.

Although Rule 54(d)(1), Fed. R. Civ. P. presumptively awards costs to the prevailing

party, we may in our discretion deny or modify the award. Plaintiffs, as the losing party, bear

the burden of proving why we should not award costs. The Ninth Circuit lists a number of

reasons why costs may be appropriately denied, including "(1) a losing party's limited

financial resources; (2) misconduct by the prevailing party;" (3) "the chilling effect of

imposing [] high costs on future civil rights litigants;" (4) "the issues in the case were close

and difficult;" (5) "the prevailing party's recovery was nominal;" (6) "the losing party

litigated in good faith;" and (7) "the case presented a landmark issue of national importance."

Champion Produce, Inc. v. Ruby Robinson Co., Inc., 342 F.3d 1016, 1022 (9th Cir. 2003)

(citations omitted).

Plaintiffs argue that we should refrain from taxing costs in this case because of (1) the

plaintiffs' limited financial resources, (2) the potential chilling effect on future litigants, (3)

the close and difficult issues in the case, and (4) the need for plaintiffs to file several motions

to compel during discovery. Although briefing on the motion for summary judgment

included lengthy submissions from both sides, we do not agree that the legal issue in the case

- whether or not plaintiffs were properly classified as managerial employees - was difficult.

This kind of case has been routinely decided by district and appellate courts by considering

established factors. That the question could be decided without a trial supports a finding that

the issues were neither close nor difficult. We are also not persuaded that plaintiffs' need to

file motions to compel in this action constitutes misconduct on the part of defendants to

justify setting aside a presumptive award of costs. Nor does the subject matter alone justify

rebuttal of the presumption. See Ass'n of Mexican-Am. Educators v. California, 231 F.3d

572, 593 (9th Cir. 2000) (presumption of awarding costs to prevailing party applies equally

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in civil rights actions).

We turn to the cornerstone of plaintiffs' argument: their limited financial resources and

the potential chilling effect on future FLSA litigants. The motion originally included

declarations from each of the four named plaintiffs highlighting each plaintiff's "limited

financial means." They lamented that if a large judgment was enforced against them, each

"would be forced to seek bankruptcy protection," and that such a judgment would have a

chilling effect "because the risk of losing would be financially disastrous." (docs. 284, 285,

286, 287). Plaintiffs argued that the "vast economic disparity" between them and defendants

was an "important and obvious ground for not imposing costs in this case." Mot. to Review

Costs at 4. Plaintiffs urged us not to affirm an award of costs against them that, even if

divided equally among them, "would amount to 33% of [their] annual pay." Reply at 6. In

short, plaintiffs' argument about their limited financial resources and the chilling effect of

imposing a large award of costs on future FLSA litigation centered around the assumption

that the $66,599.02 would come out of plaintiffs' pockets.

Plaintiffs did not divulge to the Court, until ordered to do so, that counsel will foot the

bill. With this information come to light, we find that plaintiffs' personal financial situation

does not support setting aside the presumptive award of costs. See Jardin v. DATAllegro,

Inc., 08-CV-1462-IEG (WVG), 2011 WL 4835742, at *4 (S.D. Cal. Oct. 12, 2011) (denying

motion to deny costs in part because plaintiff "has not argued that he—as opposed to his

counsel, pursuant to a fee agreement—will have to pay the cost award himself"). Moreover,

the chilling effect on future FLSA litigants is minimal at best. Tibble v. Edison Int'l, CV-07-

5359-SVW (AGRx), 2011 WL 3759927, at *3 (C.D. Cal. Aug. 22, 2011) (chilling effect

minimal because plaintiffs not liable for costs under the fee arrangement). Indeed, potential

FLSA litigants of "limited financial means" reading our ruling may be encouraged to seek

counsel to pursue their claims, knowing that they may be able to enter an agreement where

they will not be personally responsible for costs should their claims fail. After considering

all of the Champion Produce factors, we conclude that plaintiffs have not shown that Rule

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54(d)(1), Fed. R. Civ. P.'s presumptive award of costs should be set aside.

Ultimately, plaintiffs' references to bankruptcy, their limited resources, and the

disparity of wealth between the parties are hypothetical concerns. Of great concern,

however, is that plaintiffs' arguments and original declarations, which strongly implied that

plaintiffs would be responsible for payment of costs, were misleading to the Court. These

kinds of documents are crafted by lawyers, not clients. Accordingly, plaintiffs' counsel will

show cause why they should not be required to pay defendants' attorneys' fees and costs

incurred in defending plaintiffs' motion to review clerk's taxation of costs as a sanction.

Finally, plaintiffs move to file copies of their fee agreements under seal. Although

there is a strong presumption in favor of public access to court records, documents attached

to a non-dispositive motion may be sealed if the moving party shows good cause. Kamakana

v. City & Cnty. of Honolulu, 447 F.3d 1172, 1180 (9th Cir. 2006). Plaintiffs have offered

no specific reasons to seal the agreements, suggesting only that these documents are usually

kept private. The fee agreements do contain plaintiffs' social security numbers, phone

numbers, and addresses, information that we agree should be kept private. However, while

plaintiffs' counsel see no necessity for the fee agreements to become public, we do.

Specifically, plaintiffs' counsel declared under penalty of perjury in the declaration we

ordered him to file that "[n]one of the representation agreements specifically address the

payment of Defendants' costs." Samson Decl. ¶ 3 (doc. 296, ex. 1). This statement is

contradicted both by the fee agreements and the remainder of the declaration. As plaintiffs'

counsel recognizes, the fee agreements state that if plaintiffs' claims are unsuccessful,

plaintiffs are "not responsible for the payment of any attorney fees, costs or expenses."

Samson Decl. ¶ 3 (emphasis added). Despite the absence of the word "defendants," the

language of the provision appears plain to us. Indeed, plaintiffs themselves understand the

agreement as requiring their lawyers to pay the costs taxed against them. Samson Decl., ex.

B.

Despite our June 8, 2012 order requiring plaintiffs' counsel to "affirmatively stat[e]

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who is responsible for payment of the costs. . . under the fee arrangement," Order at 3 (doc.

295), plaintiffs' counsel appears content to rely on semantics to deny that the fee agreements

address the issue of who pays defendants' costs. Under these circumstances, we do not find

there is good cause to seal the agreements, other than to redact the social security numbers,

addresses, and phone numbers of the plaintiffs. 

IT IS ORDERED DENYING plaintiffs' motion to review clerk's taxation of costs

(doc. 292). The Clerk's taxation judgment of $66,599.02 against plaintiffs (doc. 291) is

AFFIRMED.

IT IS ORDERED GRANTING IN PART plaintiffs' motion to seal (doc. 297).

Pursuant to LRCiv 5.6(e), the lodged document (doc. 298) will not be filed. Instead, within

five days of the date of this order plaintiffs shall file copies of the fee agreements with their

social security numbers, telephone numbers, and addresses redacted.

 IT IS FURTHER ORDERED that within fourteen (14) days of the date of this order,

plaintiffs' counsel shall file a memorandum showing cause why they should not be required

to pay defendants' fees and costs in responding to the motion to review taxation of costs.

Defendants shall file a response within fourteen (14) days of the filing of the memorandum.

The response shall include an itemization of attorney's fees incurred in connection with

plaintiffs' motion for review of taxation of costs along with any supporting documentation.

Plaintiffs counsel will then have seven (7) days to reply if desired. Their reply should

include any objections to the reasonableness of the fees. The memorandum, response, and

reply shall each be limited to ten pages.

DATED this 20th day of June, 2012.

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