Opinion ID: 4531407
Heading Depth: 2
Heading Rank: 4

Heading: Application of Shady Grove

Text: The inescapable conclusion we draw from Shady Grove is that Colorado’s general laws for assessing costs do not apply in this case. Under step one of the Supreme Court majority’s analysis, the question is whether the state laws “answer the same question” as the Federal Rule. Shady Grove, 559 U.S. at 399 (majority opinion); see also id. at 400 (“[T]he question before us is whether [the state laws] concern[] a subject separate from the subject of [the Federal Rule].”). They certainly do. Rule 54(d) and Colorado’s §§ 13-16-104 and -105 tell the courts what costs can be awarded to a prevailing party. The subjects of the Federal Rule and the state statutes are the same. We cannot artificially divide each Colorado statute and say that the statute (1) addresses the same subject matter as the Federal Rule when it allows those costs permitted by the Federal 13 Rule and (2) then addresses a different subject when it allows costs for other expenses incurred by litigants that are impermissible under the Rule. Both of these “components” of the Colorado statute would still answer the same question as Rule 54(d). See id. at 401 (“Rule 23 permits all class actions that meet its requirements, and a State cannot limit that permission by structuring one part of [its class-action] statute to track Rule 23 and enacting another part that imposes additional requirements. Both of [the New York statute’s] subsections undeniably answer the same question as Rule 23: whether a class action may proceed for a given suit.”). And the answers to the costs question given by the Federal Rule and the Colorado statutes cannot be reconciled. If, say, Rule 54(d) or 28 U.S.C. § 1920 had stated that the district court should ordinarily award certain types of costs but made clear that other, unspecified types could also be awarded in the court’s discretion (which is how the Colorado courts read § 13-16-122), we see no reason why the district court could not look to state law to guide its discretion. But that is not the Federal Rule. Crawford Fitting and Taniguchi have held that the only costs that can be awarded under Rule 54(d) are those specified in § 1920, and neither attorney travel nor computerized legal research is so specified. Allowing for a discretionary award of costs unavailable under Rule 54(d) would run contrary to the Supreme Court’s interpretation of that Rule. The second part of the Shady Grove analysis is determining whether application of Rule 54(d) to override the Colorado costs statutes is valid under the Rules Enabling Act and constitutional, or instead is ultra vires. Under the approach of the Shady Grove plurality, that application clearly passes muster. The relevant restriction in the Act is that 14 a Rule “not abridge, enlarge or modify any substantive right.” 28 U.S.C. § 2072(b). Following Sibbach, the plurality stated that the restriction means only that the Rule “must really regulate procedure,— the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them.” Shady Grove 559 U.S. at 407 (plurality opinion of Scalia, J.). (brackets and internal quotation marks omitted). As noted by the plurality, the Supreme Court has thus far “rejected every statutory challenge to a Federal Rule that has come before [it].” Id. Turning to this case, we need not belabor whether Rule 54(d) is a procedural rule. We are aware of no authority suggesting that it is not. Awarding costs has for centuries been part of “the judicial process for enforcing rights and duties recognized by substantive law.” Sibbach, 312 U.S. at 14; see 10 Moore, supra § 54.103[2] at 184 (“The issue of what costs may be awarded incident to the judgment is a procedural issue . . . .”). And because Rule 54(d) is a procedural rule, it unquestionably is within Congress’s constitutional powers. See Hanna v. Plumer, 380 U.S. 460, 472 (1965) (the Constitution conveys “a power to regulate matters which, though falling within the uncertain area between substance and procedure, are rationally capable of classification as either”).) Under the approach of the plurality in Shady Grove, Rule 54(d) undoubtedly prevails. Justice Stevens chose a different tack, although his approach led to the same result in Shady Grove and leads to the same result here. In his view, whether application of a Federal Rule violates the Rules Enabling Act requirement that “rules shall not abridge, enlarge or modify any substantive right,” 28 U.S.C. § 2072(b), can depend on the state 15 law that the Rule would otherwise displace. He wrote that the Rules Enabling Act forbids preemption of a state law that “is procedural in the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right.” 559 U.S. at 423 (Stevens, J., concurring). In Shady Grove he decided that the state class-action provision regarding claims for penalties was not such a law. He noted that it was not tied to a state right or remedy because it applied to “claims based on federal law or the law of any other State.” Id. at 432. He said that “[i]t is therefore hard to see how [the New York statute] could be understood as a rule that, though procedural in form, serves the function of defining New York’s rights or remedies.” Id. That identical reasoning applies here. Nothing about the Colorado statutes indicates a judgment about the scope of state-created rights or remedies. Sections 13-16104 and -105 are general cost-shifting statutes that apply in every case, even to “claims based on federal law or the law of any other State.” Id.; see Archer v. Farmer Bros. Co., 90 P.3d 228, 229, 232 (Colo. 2004) (affirming award of costs under C.R.C.P. 54(d) and § 13-16-105 to defendants who prevailed on claims under federal Age Discrimination in Employment Act and Americans with Disabilities Act as well as state-law claims). Again, “[i]t is therefore hard to see how [the Colorado statutes] could be understood as . . . rule[s] that, though procedural in form, serve[] the function of defining [Colorado’s] rights or remedies.” Id. Justice Stevens’s analysis might well reach a different conclusion if the Colorado statute were restricted to costs in specific areas, such as in 16 civil-rights or employment-discrimination claims. Then it could be viewed as part of the state remedy. But that is not our case. This court has held that Justice Stevens’s concurrence states Supreme Court law under the rule stated in Marks v. United States, 430 U.S. 188, 193 (1977) (“When a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds.” (internal quotation marks and citation omitted)). See Los Lobos Renewable Power, LLC v. Americulture, Inc., 885 F.3d 659, 668 n.3 (10th Cir. 2018); James River Ins. Co. v. Rapid Funding, LLC, 658 F.3d 1207, 1217–18 (10th Cir. 2011); Garman, 630 F.3d at 983 n.6. Others, including then-Judge Kavanaugh, think that the view of the plurality opinion governs on step two of the analysis because it merely restates law settled by Sibbach and no other Justice (including the dissenters) expressed agreement with the concurrence. See Abbas v. Foreign Policy Group, LLC, 783 F.3d 1328, 1336–37 (D.C. Cir. 2015). But we need not confront this disagreement. Simply put, a challenge in this case under the Rules Enabling Act fails under any available Supreme Court doctrine. Because Rule 54(d) falls well within the statutory authorization of the Rules Enabling Act and its displacement of Colorado state law would not impair any state substantive right, we hold that a federal court exercising diversity jurisdiction has no power to award costs under §§ 13-16-104 or -105. 17