Court Opinion

ID: 9353062
Source: CourtListenerOpinion
Date Created: 2023-01-10 20:00:21.433562+00
Date Added: 2024-06-11T17:07:22.304456
License: Public Domain

Appellate Case: 20-1387            Document: 010110795402   Date Filed: 01/10/2023     Page: 1
                                                                                    FILED
                                                                        United States Court of Appeals
                           UNITED STATES COURT OF APPEALS                       Tenth Circuit

                                 FOR THE TENTH CIRCUIT                        January 10, 2023
                             _________________________________
                                                                            Christopher M. Wolpert
                                                                                Clerk of Court
  UNITED STATES OF AMERICA,

         Plaintiff - Appellee,

  v.                                                        Nos. 20-1387 & 21-1301
                                                     (D.C. No. 1:17-CV-00452-CMA-GPG)
  $114,700.00 IN UNITED STATES                                     (D. Colo.)
  CURRENCY,

         Defendant.

  ------------------------------

  RICHARD SCHWABE,

         Claimant - Appellant.
                         _________________________________

                                 ORDER AND JUDGMENT*
                             _________________________________

 Before CARSON, BRISCOE, and ROSSMAN, Circuit Judges.
                   _________________________________

        The Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”) provides

 prevailing parties an award of “attorney fees and other litigation costs reasonably

 incurred” in forfeiture proceedings. 28 U.S.C. § 2465(b)(1)(A). But district courts

 maintain discretion to determine which costs attorneys have reasonably incurred.

 Here, the district court acted within its discretion to reduce a prevailing party’s

        *
          This order and judgment is not binding precedent, except under the doctrines
 of law of the case, res judicata, and collateral estoppel. It may be cited, however, for
 its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Appellate Case: 20-1387    Document: 010110795402         Date Filed: 01/10/2023   Page: 2

 requested award. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm the

 district court’s award of attorneys’ fees and costs. We do, however, remand to

 correctly categorize attorneys’ travel costs as attorneys’ fees.

                                             I.

       An informant alerted drug enforcement of a marijuana grow in Silt, Colorado.

 Officers went to the property to investigate and discovered two illegal marijuana

 grows—one with 42 plants and one with 175 plants. The smaller grow belonged to

 Richard Schwabe, whom officers arrested for the cultivation of more than 30

 marijuana plants and possession with intent to distribute marijuana.

       The officers then acquired a search warrant and lawfully searched the property.

 They found marijuana, marijuana trimmings, odor-concealing stink bags, a copy of

 the “Marijuana Grower’s Handbook,” and innumerable envelopes. Additionally, they

 found $114,700 in cash—$95,200 in a safe, $14,000 in a lockbox, and $5,500 in a

 Ziploc bag on a table.

       Later, the government filed a complaint for forfeiture in rem arguing that the

 seized $114,700 constituted proceeds from marijuana sales forfeitable under 21

 U.S.C. § 881(a)(6). Schwabe opposed forfeiture, claiming it was income he earned

 and saved over decades. He also asserted 14 affirmative defenses, nine of which the

 government moved to strike as legally deficient. In response, Schwabe abandoned

 six of the challenged defenses, and the district court struck the other three. Schwabe

 also moved: 1) to dismiss the complaint because the civil forfeiture statute’s

 preponderance-of-the-evidence standard violates due process; 2) to quash two third-

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 party bank subpoenas; and 3) to suppress the fruits of the officer’s search. The

 district court denied them all.

       The case proceeded to trial and Schwabe came away with a partial victory.

 The jury found that only $21,000 was subject to forfeiture, leaving Schwabe with the

 remaining $93,700. During the trial, however, the district court admonished

 Schwabe’s counsel numerous times for an overall lack of professionalism.

       After trial, Schwabe moved for $520,762.50 in attorneys’ fees under 28 U.S.C.

 § 2465(b)(1)(A). But the district court determined that attorney Edward Burch and

 his co-counsel, David Michael, exercised unsound billing judgment for themselves

 along with attorneys Hagin Emison and Sara Zalkin. The district court based this

 finding on Burch’s “relatively modest skillset” and that counsel spent time on

 “frivolous legal work,” excessive time on particular tasks, and grossly excessive time

 seeking attorneys’ fees. To adjust, the court first went motion by motion, removing

 specific hours. It then reduced Burch’s hourly rate from $600.00 to $275.00 along

 with similar reductions for Schwabe’s other attorneys. It then lessened Schwabe’s

 fee award by 18% to account for his partial victory and an additional 7% to remove

 billing for non-substantive legal work. The district court ultimately awarded

 Schwabe $133,539.00 in attorneys’ fees.

       Schwabe also moved for $18,625.66 in costs. But the Clerk of Court analyzed

 Schwabe’s request and determined that only $7,901.48 constituted awardable costs

 under 28 U.S.C. §§ 1821 and 1920. And after reducing that amount to reflect

 Schwabe’s partial recovery and deducting the costs awarded to the government, the

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 Clerk awarded Schwabe $5,558.58, taxed as costs to the government. The district

 court affirmed the Clerk’s award. Schwabe appeals both the fee award and the cost

 award. We consolidated his appeals.

                                            II.

       We review an award of attorneys’ fees for abuse of discretion. Flitton v.

 Primary Residential Mortg., Inc., 614 F.3d 1173, 1176 (10th Cir. 2010) (citing

 Starrett v. Wadley, 876 F.2d 808, 825 (10th Cir. 1989)). But we review any factual

 findings underlying the fee award for clear error and questions of law related to the

 fee award de novo. Robinson v. City of Edmond, 160 F.3d 1275, 1280 (10th Cir.

 1998). We also apply abuse-of-discretion review to cost awards. In re Williams Sec.

 Litig — WCG Subclass, 558 F.3d 1144, 1148 (10th Cir. 2009).

                                            III.

       The district court did not abuse its discretion by awarding Schwabe less fees

 than he requested. But it did wrongly categorize travel expenses as costs rather than

 attorneys’ fees.

                                            A.

       When a claimant “substantially prevails” against the United States in a civil

 forfeiture proceeding, “the United States shall be liable for . . . reasonable attorney

 fees and other litigation costs reasonably incurred by the claimant.” 28 U.S.C.

 § 2465(b)(1)(A). To determine a reasonable fee, “a court will . . . first calculate the

 lodestar—the total number of hours reasonably expended multiplied by a reasonable

 hourly rate—and then adjust the lodestar upward or downward to account for the

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 particularities of the suit and its outcome.” Zinna v. Congrove, 680 F.3d 1236, 1242

 (10th Cir. 2012) (quoting Phelps v. Hamilton, 120 F.3d 1126, 1131 (10th Cir. 1997)

 (cleaned up)).

       But “[i]f the court enters judgment in part for the claimant and in part for the

 [g]overnment, the court shall reduce the award of costs and attorney fees

 accordingly.” 28 U.S.C. § 2465(b)(2)(D). This partial success “requires more than

 just determining ‘the product of hours reasonably expended on the litigation as a

 whole times a reasonable hourly rate’ because such ‘may be an excessive amount.’”

 Browder v. City of Moab, 427 F.3d 717, 722 (10th Cir. 2005) (quoting Hensley v.

 Eckerhart, 461 U.S. 424, 436 (1983)). Though “[t]he record ought to assure us that

 the district court did not ‘eyeball’ the fee request and cut it down by an arbitrary

 percentage . . . .” Id. (quoting Robinson v. City of Edmond, 160 F.3d 1275, 1281

 (10th Cir. 1998)).

                                            1.

       Here, the district court began by calculating the lodestar. Schwabe’s counsel

 asserted they collectively spent 862.6 hours for this case. But the district court

 determined that Schwabe’s counsel did not exercise proper billing judgment and

 reduced the award to 627 hours. Schwabe’s counsel argues this was error. We

 disagree.

       A district court has broad discretion to determine the number of hours that “in

 its experience, should have been expended on the specific case, given the

 maneuverings of each side and the complexity of the facts, law, and litigation.” Case

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 v. Unified Sch. Dist. No. 233, 157 F.3d 1243, 1250 (10th Cir. 1998) (citing Ramos v.

 Lamm, 713 F.2d 546, 554 (10th Cir. 1983)). Counsel for the party claiming fees

 bears the burden to prove the hours they expended “by submitting meticulous,

 contemporaneous time records that reveal, for each lawyer” the amount of time

 expended and their “specific tasks.” Id. (citing Ramos, 713 F.2d at 553). A district

 court may reduce the hours if they are “sloppy and imprecise” or if they are

 “unnecessary, irrelevant and duplicative.” Id. (first quoting Jane L. v. Bangerter, 61

 F.3d 1505, 1510 (10th Cir. 1995); and then quoting Carter v. Sedgwick Cnty., Kan.,

 36 F.3d 952, 956 (10th Cir. 1994)).

       The district court determined that Schwabe’s counsel engaged in unnecessary,

 irrelevant, and duplicative efforts throughout its answer; motion-to-strike response;

 and motions to quash, dismiss, and suppress. The district court reduced claimed

 hours for the answer and motion-to-strike response after it found most of the

 affirmative defenses rested on a thin legal basis. It excluded more hours when

 Schwabe moved to quash third-party bank subpoenas as irrelevant. The subpoenas,

 however, were highly relevant, revealing information about Schwabe’s income. The

 district court then subtracted more hours for the motion to dismiss. Schwabe’s

 argument hinged on a statement by one Justice on the denial of certiorari—a thin

 legal foundation. The district court then trimmed hours from Schwabe’s motion to

 suppress after citing duplicative efforts and the relative simplicity of the facts and

 legal principles. We agree with the district court. Each of Schwabe’s submissions

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 contained unnecessary, irrelevant, or duplicative efforts. Thus, the district court did

 not abuse its discretion by cutting the total hours.

       The district court also denied every hour Schwabe claimed for the motion for

 attorneys’ fees because it found Schwabe’s total to be outrageously excessive. “An

 award of reasonable attorneys’ fees may include compensation for work performed in

 preparing and presenting the fee application.” Mares v. Credit Bureau of Raton, 801

 F.2d 1197, 1205 (10th Cir. 1986). Of course, “not every hour expended on a fee

 request is necessarily reasonable or compensable . . . . [t]he same standards employed

 in evaluating time expended in trial and trial preparation apply, to the extent

 appropriate in a given case.” Id. at 1205. “[T]he general rule is that at least some

 compensation is generally allowable for work reasonably expended on the fee

 application . . . although hours not spent representing the client are at best on the

 borderline of what Congress intended to be compensable.” Id. at 1206. But we have

 suggested that if an attorneys’ fee request “is outrageously excessive, the court may

 respond by awarding no fees at all” to disincentivize future attempts to secure

 unreasonable compensation. Case, 157 F.3d at 1254 (collecting cases). Schwabe’s

 counsel insists that more than three weeks was necessary because they were, in

 effect, arguing the merits of a new trial motion. But Schwabe’s argument does little

 to overcome the district court’s reasonable conclusion that Schwabe’s requested fees

 bore no reasonable relationship to the services his attorneys rendered. The district

 court did not abuse its discretion when it concluded that three full work weeks is an

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 outrageously excessive amount of time to spend on a motion for attorneys’ fees and

 denied Schwabe’s fee request accordingly.

          Because we find that the district court did not abuse its discretion by trimming

 hours based on its assessment of specific filings, we affirm the district courts

 reduction of hours for Schwabe’s counsel. Burch’s claimed hours are reduced from

 763.25 by 205 to 558.25. Michael’s hours are reduced from 52 by 19.5 to 32.5.

 Emison’s hours are reduced from 40 by 10 to 30. And Zalkin’s hours remain at 6.25.

 We agree with the district court’s total hours reduction from 861.5 by 234.5 to 627

 hours.

                                              2.

          Next, Schwabe asserts the district court abused its discretion in calculating the

 reasonable rate of his counsel. He says it disregarded the factors in Johnson v.

 Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).1 He contends the

 district court ignored several Johnson factors. But we have explained “that the

 lodestar determination is primary and that the propriety of such a determination is not

 automatically called into doubt merely because the trial court did not expressly

          1
           The Johnson factors are (1) the time and labor required, (2) the novelty and
 difficulty of the questions, (3) the skill requisite to perform the legal service properly,
 (4) the preclusion of other employment by the attorney due to acceptance of the case,
 (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations
 imposed by the client or the circumstances, (8) the amount involved and the results
 obtained, (9) the experience, reputation, and ability of the attorneys, (10) the
 “undesirability” of the case, (11) the nature and length of the professional
 relationship with the client, (12) awards in similar cases. See Johnson, 488 F.2d at
 717–19; Mkt. Ctr. E. Retail Prop. v. Lurie, 730 F.3d 1239, 1246–47 (10th Cir. 2013).
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 discuss the Johnson factors.” Anchondo v. Anderson, Crenshaw & Assocs., LLC,

 616 F.3d 1098, 1104 (10th Cir. 2010). Thus, any failure to consider the Johnson

 factors is not an abuse of discretion without more. Schwabe’s argument fails on that

 point.

          The district court did consider several factors. The district court did “base its

 hourly rate award on what the evidence shows the market commands for . . .

 analogous litigation.” United Phosphorous, Ltd. v. Midland Fumigant, Inc., 205 F.3d

 1219, 1234 (10th Cir. 2000) (quoting Case, 157 F.3d at 1255). And the party

 requesting the fees bears “the burden of showing that the requested rates are in line

 with those prevailing in the community for similar services by lawyers of reasonably

 comparable skill, experience, and reputation.” Id. (quoting Ellis v. Univ. of Kan.

 Med. Ctr., 163 F.3d 1186, 1203 (10th Cir. 1998)).

          To determine the proper hourly rate, the district court relied heavily upon the

 opinion of the government’s expert Ms. Nancy Cohen over Schwabe’s expert Mr.

 David Lane. And the district court was within its discretion to do so. Ms. Cohen is

 well-qualified—a partner at a reputable firm in Denver with 38 years of experience, a

 member of the Colorado Supreme Court Advisory Counsel, and a member of the

 Colorado Supreme Court Standing Committee on the Colorado Rules of Professional

 Conduct. She observed that “Burch’s skills at trial were not of a lawyer who had

 been practicing law for 12 years” and he “prevailed at trial despite his performance.”

 United States v. $114,700.00 in United States Currency, No. 17-CV-00452-CMA-

 GPG, 2020 WL 5076762, at *6. (D. Colo. Aug. 26, 2020). The lower court agreed

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  and found that the quantitative results happened for reasons outside of Burch’s

  “relatively modest skillset,” not because of it. Id.

        Beyond Burch’s skillset, Ms. Cohen opined that local counsel could have

  handled this case. And Schwabe’s expert agreed. During this dispute, 30 civil

  forfeiture cases were pending in the District of Colorado litigated by local counsel.

  Schwabe had no reason to fly in counsel from a location with a higher cost of living.

  Ms. Cohen also observed that the case was straightforward involving just one asset

  and one claim. Lastly, Schwabe’s fees expert—who has “tried well over 225 jury

  trials over 40 years”—charges nearly the same rate that Burch sought in this case. Id.

  But Burch has only 12 years of experience. Id. Each fact supports the reasoned

  lodestar determination of the district court.

        We find that the district court acted within its discretion when it reduced the

  hourly rates of Schwabe’s counsel. Burch’s $275.00 reduced hourly rate multiplied

  by his reduced hours leaves $153,518.75 in fees. Michael’s $450.00 reduced hourly

  rate multiplied by the reduced hours leaves $14,625.00 in fees. Emison’s $250.00

  reduced hourly rate multiplied by the reduced hours leaves $7,500.00 in fees. And

  Zalkin’s $250.00 hourly rate multiplied by 6.25 hours leaves $1,281.25 in fees. The

  total fees after the rate reduction are $177,206.25.

                                              3.

        The district court capped its analysis by applying a 25% across-the-board

  reduction to the remaining fees. Adhering to § 2465(b)(2)(D), the district court

  accounted for Schwabe’s partial victory by subtracting 18% of the proceeds. But the

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  district court also applied a 7% reduction after discovering a pattern of billing for

  non-legal work. As a general matter, “[i]t is essential that the judge provide a

  reasonably specific explanation for all aspects of a fee determination.” Perdue v.

  Kenny A. ex rel. Winn, 559 U.S. 542, 558 (2010). A court, however, need not

  explain each disallowed hour nor “announce what hours are permitted for each legal

  task.” Mares v. Credit Bureau of Raton, 801 F.2d 1197, 1202 (10th Cir. 1986).

  Instead, it may apply “[a] general reduction of hours claimed . . . so long as there is

  sufficient reason for its use.” Id. at 1203.

        Schwabe, however, contends that the 25% blanket reduction along with the

  hourly rate reduction is dramatic and inconsistent with case law. To support the

  claim, Schwabe cites United States v. $28,000.00 in U.S. Currency, 802 F.3d 1100

  (9th Cir. 2015), for the proposition that the court must choose either an hour-by-hour

  analysis or a percentage cut. Schwabe cites nothing from this court imposing such a

  requirement. And even the Ninth Circuit case—of course, not controlling here—

  leaves courts with the option of applying a percentage cut. Id. at 1108.

        While the district court’s compound reductions may have been heavy, nothing

  reveals them to be an abuse of discretion. This Court’s precedent is clear that district

  courts may adjust the lodestar “downward to account for the particularities of the suit

  and its outcome.” Zinna, 680 F.3d at 1242 (quoting Phelps, 120 F.3d at 1131). The

  district court reduced Schwabe’s counsels’ award by 18%—the proportion of the

  Schwabe’s money forfeited to the government as proceeds of drug trafficking.

  Nothing requires courts to identify and justify each disallowed hour. Mares, 801

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  F.2d at 1202. The district court found that Schwabe’s counsels’ “time sheets are

  littered with block billing and paralegal work that should not be charged at the lawyer

  hourly rates.” $114,700.00, 2020 WL 5076762, at *7 (cleaned up). Rather than

  scour the time sheets for all the instances of non-legal work, the court validly applied

  a 7% reduction. The 25% fee reduction for partial success and non-legal work was

  appropriate.

           We find no reversible error in the final amount calculated by the district court

  including the 25% across-the-board reduction. The district court did not abuse its

  discretion by reducing Burch’s fee from $153,518.75 to $115,139.00, Michael’s fee

  from $14,625.00 to $10,968.75, Emison’s fee from $7,500.00 to $6,150.00, and

  Zalkin’s fee from $1,562.50 to $1,281.25.

                                               4.

           The District Court did, however, err when it determined that travel expenses

  are costs. Travel expenses are attorneys’ fees. See Bee v. Greaves, 910 F.2d 686,

  690 (10th Cir. 1990). They may be recovered as such so long as they are reasonable

  for the local market. Id. As far as Schwabe knew, the travel expenses were still

  pending before the district court when he filed this appeal. We remand only to

  consider travel expenses as potential attorneys’ fees. Any changes to either the

  attorneys’ fee or costs shall be subject only to this adjustment.

                                               B.

           The district court did not abuse its discretion by limiting Schwabe’s requested

  costs.

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        The district court possesses “broad discretion” in awarding costs. U.S. Indus.,

  Inc. v. Touche Ross & Co., 854 F.2d 1223, 1247 (10th Cir. 1988); see also Callicrate

  v. Farmland Indus., Inc., 139 F.3d 1336, 1339 (10th Cir. 1998) (“The taxing of costs

  rests in the sound judicial discretion of the district court.”). As a result, we review

  costs awards only for an abuse of that discretion. See Touche Ross, 854 F.2d at

  1245. A district court abuses its discretion where it (1) commits legal error, (2) relies

  on clearly erroneous factual findings, or (3) where no rational basis exists in the

  evidence to support its ruling. See Elephant Butte Irrigation Dist. v. U.S. Dep’t of

  the Interior, 538 F.3d 1299, 1301 (10th Cir. 2008) (citing Nova Health Sys. v.

  Edmondson, 460 F.3d 1295, 1299 (10th Cir. 2006)).

        Section 2465(b)(1)(A) allows prevailing parties to claim both “reasonable

  attorney fees and other litigation costs reasonably incurred” in forfeiture proceedings.

  Section 1920 catalogues taxable costs such as fees for clerks, marshals, transcripts,

  printing, witnesses, copies; certain docket fees; and compensation for certain court

  appointed experts. This list is exhaustive to cost awards unless a statute explicitly

  provides for more. Rimini St., Inc. v. Oracle USA, Inc., 139 S. Ct. 873, 877 (2019)

  (holding that “full” did not expand the meaning of “costs” beyond § 1920’s cabined

  list). Section 2465(b)(2)(D) also requires courts to “reduce the award of costs” “[i]f

  the court enters judgment in part for the claimant and in part for the [g]overnment.”

  Lastly, Rule 54(d)(1) of the Federal Rule of Civil Procedure gives courts discretion to

  award the government partial costs unless the specific cost-shifting statute “provides

  otherwise.” Marx v. Gen. Revenue Corp., 568 U.S. 371, 377 (2013).

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        Schwabe requested $18,997.22 in costs. But the district court awarded only

  $5,558.58. It excluded $9,511.62 of expenses for falling outside § 1920’s cost

  definition. It disallowed another $1,416.13 as transcript duplications and court-

  reporter fees. It then deducted $167.99 as unallowed witness fees which left

  $7,901.48. And because Schwabe was only partially victorious, the court had to

  “reduce the award of costs . . . accordingly.” § 2465(b)(2)(D). The court reduced

  $7,901.48 by 18.3%—the government’s achieved forfeiture percentage—resulting in

  $6,454.72. And because of the partial success, the district court further concluded

  that the government was entitled to a portion of its costs under Rule 54(d)(1). The

  court calculated the government’s costs at $4,894.30. Because the government only

  attained a 18.3% victory, the district court awarded the government that percentage

  of its costs totaling $896.14. This, in effect, further offset Schwabe’s award. The

  district court awarded a final amount of $5,558.58 in costs.

        Schwabe contests this cost award on three separate grounds. First, he argues

  that the district court wrongly limited § 2465(b)(1)(A)’s “other litigation costs” to the

  taxable costs allowed under § 1920. But this modifier is no different from the

  modifier “full” in Remini. “[O]ther litigation” also offers no explicit expansion of

  the types of costs which a prevailing party may collect. So just as the modifier in

  Remini, § 1920 limits the term to the six enumerated taxable cost categories. The

  district court made no legal error here. Schwabe’s second and third arguments are

  similar. He believes the government’s partial success should allow for neither a

  reduction of his cost award nor a partial award to the government. Section

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  2465(b)(2)(D), however, explicitly compels courts to reduce a cost award for partial

  success. The district court simply followed this legislative mandate.

        Reaching a conclusion on the government’s partial award—$896.14—is not as

  obvious, however. Nothing in § 2465 requires a court to offset the government’s

  cost. But the Marx Court established that a court may award costs to any prevailing

  party under Rule 54(d)(1) unless a cost-shifting statute “provides otherwise.” Marx,

  568 U.S. at 377. Here, the district court entered judgment to the government for

  $21,000, so it did not abuse its discretion in concluding that—just like Schwabe—

  the government is a partially prevailing party. And § 2465 does not prevent a court

  from awarding proportionate costs.2 Thus, the district court was within its latitude to

  offset the government’s costs. The district court did not abuse its discretion by

  awarding $5,558.58 in costs to Schwabe. We therefore affirm the court’s reasoning

  but reiterate that the ultimate cost award will be affected by the recategorization of

  the travel expenses as attorneys’ fees.

                                             C.

        Two pending motions remain. First, Schwabe submitted a motion to file a

  supplemental appendix on the cost issue. The government does not oppose it. We

  grant the motion. The other is a motion to supplement the record on appeal. The

  government opposes this motion. Schwabe should have first asked the district court

  to supplement the record. Fed. R. App. P. 10(e)(1). But he did not. And we only

        2
          But the district court would have likewise acted within its discretion had it
  rejected the government’s request for costs.
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  supplement the record if something “material to either party is omitted from or

  misstated in the record by error or accident.” Fed. R. App. P. 10(e)(2). This

  proposed supplement contains little material information and was not omitted by

  error or accident. We deny this motion.

                                             Entered for the Court

                                             Joel M. Carson III
                                             Circuit Judge

                                            16