Opinion ID: 692284
Heading Depth: 1
Heading Rank: 8

Heading: Abrams's Cross-Appeal Regarding the Award of Costs

Text: 68 In conjunction with his motion for an award of attorneys's fees under the NJLAD, Abrams sought an award of costs and out-of-pocket expenses totaling $39,834.92, for items such as deposition transcripts, trial transcripts, travel, photocopies, and other litigation expenses. The district court denied the bulk of these expenses and limited Abrams's recovery to $240.00, representing those items enumerated as taxable costs under 28 U.S.C. Sec. 1920. 22 The district court limited the allowable costs on the ground that Federal Rule of Civil Procedure 54(d)(1), which incorporates 28 U.S.C. Sec. 1920, limits the award of out-of-pocket expenses in a federal diversity action. The district court also concluded that Abrams had received sufficient remuneration for the litigation through the generous attorneys' fees award and that Lightolier should therefore not be responsible for any additional expenses. 23 We conclude that the district court applied the incorrect legal standard and will therefore vacate the award of costs and remand for application of the correct legal standard. 69 Abrams's request for costs presents an intriguing choice of law problem. Where there is a statutory provision shifting attorneys' fees and costs in a state statute creating the plaintiff's cause of action, a federal court exercising diversity or supplemental jurisdiction over that claim should, under Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), apply the state provision shifting fees and costs in the absence of a controlling federal statute, rule, or policy. E.g., Security Mut. Life Ins. Co. of New York v. Contemporary Real Estate Assoc., 979 F.2d 329 (3d Cir.1992); McAdam v. Dean Witter Reynolds, 896 F.2d 750, 774-75 (3d Cir.1990). On the other hand, under Hanna v. Plummer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), where there is a valid applicable Federal Rule of Civil Procedure, it is to be applied by a federal court even where the plaintiff's claim is based on state law. 70 Rule 54(d)(1) of the Federal Rules of Civil Procedure requires the clerk of the court to award certain litigation expenses to the prevailing party as a matter of course. These routine court costs are listed in 28 U.S.C. Sec. 1920, and this assessment as a matter of course is made whether the plaintiff's underlying claim is federal or state. Under the rules of Erie and Hanna v. Plummer, Rule 54(d)(1) will thus trump a state cost shifting provision with which it conflicts. Cf. Exxon Corp. v. Burglin, 42 F.3d 948, 950-52 (5th Cir.1995) (finding that Alaska procedural rule that allows at least minimal recovery of attorneys' fees in every civil appeal conflicts with Federal Rule of Appellate Procedure 38 which permits recovery of fees only when appellee successfully defends a frivolous appeal and holding that federal rule must therefore apply in diversity action). 71 There is, however, no federal statute or rule providing the rule of decision when a federal court is asked to award litigation expenses other than those enumerated as section 1920 costs. Rule 54(d)(2) recognizes the possibility of awards of attorney's fees and related non-taxable expenses and establishes a procedure for asserting a right to such an award. This rule does not provide a rule of decision, however. Rather, it and the accompanying advisory committee comment recognize that there must be another source of authority for such an award. 24 72 The reference in Rule 54(d)(2) to another source of authority is consistent with the general federal caselaw rule that there is no fee or cost shifting except as authorized by statute or rule. Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). That source of authority need not be federal law, however. Neither Alyeska nor Rule 54(d)(2), precludes a federal court from looking to state law to determine the rule of decision as to attorneys' fees in a state law case, and Erie requires it to do so. Accordingly, the district court should have looked to New Jersey law to determine what nontaxable expenses related to attorneys' fees were authorized in this case. 73 Section 10:5-27.1 of the New Jersey Statutes Annotated (West 1993), a provision of the NJLAD, provides: 74 In any action or proceeding brought under this act, the prevailing party may be awarded a reasonable attorney's fee as part of the cost, provided however, that no attorney's fee shall be awarded to the respondent unless there is a determination that the charge was brought in bad faith. 75 New Jersey thus authorizes an award of an attorney's fee as part of the cost, using the exact same wording as the federal civil rights fee shifting statute, 42 U.S.C. Sec. 1988, and the Title VII fee shifting provision, 42 U.S.C. Sec. 2000e-5(k). 76 We have found no helpful New Jersey Supreme Court or Appellate Division cases construing N.J.Stat.Ann. Sec. 10:5-27.1. However, these courts, as the District Court for the District of New Jersey has recently noted in a similar context, generally look to cases interpreting the federal civil rights laws in construing the [NJ]LAD. McKenna v. Pacific Rail Serv., 817 F.Supp. 498, 518-19 (D.N.J.1993), rev'd in part on other grounds, 32 F.3d 820 (3d Cir.1994). We predict that the Supreme Court of New Jersey would do so here, particularly in light of the virtual identity of the relevant texts. 77 In West Virginia University Hospitals, Inc. v. Casey, 499 U.S. 83, 111 S.Ct. 1138, 113 L.Ed.2d 68 (1991), the Supreme Court of the United States held that the word costs in section 1988 referred to the taxable costs referenced in Rule 54(d)(1) and enumerated in 28 U.S.C. Sec. 1920. We predict that the Supreme Court of New Jersey would read cost in N.J.Stat.Ann. Sec. 10.5-27.1 to refer to the costs recoverable by the prevailing party as a matter of course (assuming no judicial directive to the contrary), 25 i.e. those costs enumerated in N.J.Stat.Ann. Sec. 22A:2-8 (West 1969). That statute provides no authority for an award of out-of-pocket litigation expense other than a specified list of items similar to those listed in 28 U.S.C. Sec. 1920. 26 Florczak v. United Jersey Bank, 248 N.J.Super. 651, 591 A.2d 1023, 1024 (App.Div.1991). 78 This leaves us with the issue of whether the New Jersey Supreme Court would interpret the phrase a reasonable attorney's fee broadly enough to include the expenses which Abrams claimed but was denied by the district court. Some, like his claim for his own personal expenses in traveling to attend the deposition of another witness, clearly cannot be squeezed into that rubric. See A.J. Tenwood Assoc. v. Orange Senior Citizens Housing Co., 200 N.J.Super. 515, 491 A.2d 1280, 1288 (App.Div.), certif. denied, 101 N.J. 325, 501 A.2d 976 (1985). In considering Abrams's other claims, however, we believe that the New Jersey Supreme Court would look to the United States Supreme Court's construction of attorney's fees in section 1988. 79 In Missouri v. Jenkins, 491 U.S. 274, 109 S.Ct. 2463, 105 L.Ed.2d 229 (1989), the Court was presented with the issue of whether a fee for the work of law clerks and paralegals could be part of a reasonable attorney's fee within the meaning of section 1988 and, if so, whether the fee should be at the market rate charged to private clients or limited to the out-of-pocket cost to the attorney. The Court held in part: 80 Clearly, a reasonable attorney's fee cannot have been meant to compensate only work performed personally by members of the bar. Rather, the term must refer to a reasonable fee for the work product of an attorney. Thus, the fee must take into account the work not only of attorneys, but also of secretaries, messengers, librarians, janitors, and others whose labor contributes to the work product for which an attorney bills her client; and it must also take account of other expenses and profit. The parties have suggested no reason why the work of paralegals should not be similarly compensated, nor can we think of any. 81 Missouri v. Jenkins, 491 U.S. at 285, 109 S.Ct. at 2470. The Court further held that recovery should be at the market rate billed to private fee-paying clients so long as the rate used to compensate the attorney was the community rate charged by an attorney who billed separately for the work of paralegals and law clerks. Id. at 288-89, 109 S.Ct. at 2471-72. The Court thereby avoided the possibility of double payment that would occur if these other costs were subsumed, for example as part of ordinary overhead, in the attorney's hourly rate. 82 The types of expenses available as part of a reasonable attorney's fee is not, however, limitless. We know from West Virginia University Hospitals that the reading given attorney's fee in Jenkins, does not include fees paid for expert witnesses and other expenses that have traditionally been considered a category of litigation expenses distinct from fees payable for the legal services of the litigating attorney. Thus, it includes only those litigation expenses that are incurred in order for the attorney to be able to render his or her legal services. Under these rules, the following are generally recoverable under section 1988 when it is the custom of attorneys in the local community to bill their clients separately for them: 83 (a) reproduction expenses; 84 (b) telephone expenses of the attorney; 85 (c) travel time and expenses of the attorney; 86 (d) postage. 87 Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir.1994); Associated Builders & Contractors of La., Inc. v. Orleans Parish School Bd., 919 F.2d 374, 380 (5th Cir.1990); Ramos v. Lamm, 713 F.2d 546, 559 (10th Cir.1983); Northcross v. Board of Educ., 611 F.2d 624, 639 (6th Cir.1979), cert. denied, 447 U.S. 911, 100 S.Ct. 2999, 64 L.Ed.2d 862 (1980), and cert. denied, 447 U.S. 911, 100 S.Ct. 3000, 64 L.Ed.2d 862 (1980); Dickinson v. Indiana State Election Bd., 817 F.Supp. 737, 752 (S.D.Ind.1992). 88 We predict the Supreme Court of New Jersey would adopt this same approach. Some of the out-of-pocket expenses for which Abrams sought reimbursement consisted of these types of recoverable expenses. The district court therefore erred in denying recovery because these items were not listed in 28 U.S.C. Sec. 1920. 27 We therefore vacate the award of costs and remand to the district court for reconsideration.