Court Opinion

ID: 4582883
Source: CourtListenerOpinion
Date Created: 2020-11-02 18:00:33.638309+00
Date Added: 2024-06-11T13:47:19.241898
License: Public Domain

FILED
                                                                      United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                          Tenth Circuit

                            FOR THE TENTH CIRCUIT                          November 2, 2020
                        _________________________________
                                                                         Christopher M. Wolpert
                                                                             Clerk of Court
 DARRELL BURTON; NORMAN
 MASSENGALE,

       Plaintiffs - Appellants,

 v.                                                          No. 20-1068
                                                (D.C. No. 1:18-CV-02648-MSK-KMT)
 VECTRUS SYSTEMS CORPORATION;                                 (D. Colo.)
 VECTRUS, INC.; REBECCA
 WARDELL,

       Defendants - Appellees.
                      _________________________________

                            ORDER AND JUDGMENT *
                        _________________________________

Before TYMKOVICH, Chief Judge, MURPHY and PHILLIPS, Circuit Judges.
                 _________________________________

      The district court dismissed Plaintiffs’ complaint for failure to exhaust

administrative remedies and awarded costs to Defendants. Plaintiffs appeal the cost

award arguing that Defendants were not prevailing parties and the district court

abused its discretion. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

      *
        After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,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.
I.    Background

      Plaintiffs Darrell Burton and Norman Massengale filed this action alleging that

Defendants Vectrus Systems Corporation, Vectrus, Inc., and Rebecca Wardell

terminated their employment at an Air Force base in Spain in retaliation for their

whistleblowing. Plaintiffs’ operative complaint alleged a violation of 10 U.S.C.

§ 2409 1 and state-law claims. Defendants moved to dismiss under Federal Rule of

Civil Procedure 12(b)(6), arguing that (1) Plaintiffs’ claim under § 2409 should be

dismissed because they had not exhausted their administrative remedies by filing a

complaint with the Department of Defense Inspector General, and (2) the district

court should decline to exercise continuing jurisdiction over Plaintiffs’ state-law

claims. The district court granted Defendants’ motion, dismissed Plaintiffs’ case

without prejudice, and entered judgment in favor of Defendants.

      Following entry of a final judgment, Defendants filed a bill of costs seeking

$10,217.95 related to deposition transcripts and travel expenses for an employee who

traveled from Kuwait to Colorado to be deposed. Plaintiffs objected. After a

hearing, the Clerk awarded Defendants $9,891.72 in costs. Plaintiffs then sought

review of the Clerk’s award of costs. With one exception not relevant here, the

      1
        Section 2409 provides that “[a]n employee of a contractor, subcontractor,
grantee, or subgrantee or personal services contractor may not be discharged,
demoted, or otherwise discriminated against as a reprisal for disclosing to a person or
body [as further] described [in the statute] . . . information that the employee
reasonably believes is evidence of [certain types of mismanagement or dangers to
public safety].” 10 U.S.C. § 2409(a)(1).
                                           2
district court affirmed the award of costs to Defendants. Plaintiffs filed a timely

appeal of that decision.

II.   Discussion

      Federal Rule of Civil Procedure 54(d)(1) provides that costs “should be

allowed to the prevailing party.” We review the district court’s award of costs for an

abuse of discretion. See Rodriguez v. Whiting Farms, Inc., 360 F.3d 1180, 1190

(10th Cir. 2004). We review de novo the district court’s construction of the Rule.

See Esposito v. United States, 368 F.3d 1271, 1275 (10th Cir. 2004).

      Plaintiffs argue the district court erred as a matter of law in awarding

Defendants their costs because Defendants were not “prevailing parties” under

Rule 54(d)(1). Plaintiffs alternatively contend that the court abused its discretion in

awarding costs to Defendants.

      A.      Defendants Were Prevailing Parties Under Rule 54(d)(1)

      “[T]he determination of who qualifies as a prevailing party is central to

deciding whether costs are available.” Barber v. T.D. Williamson, Inc., 254 F.3d

1223, 1233-34 (10th Cir. 2001) (internal quotation marks omitted). “Usually the

litigant in whose favor judgment is rendered is the prevailing party for purposes of

Rule 54(d)(1).” Id. at 1234 (alteration, brackets, and internal quotation marks

omitted). Here, the district court entered judgment in Defendants’ favor. See Aplt.

App. at 35.

      Plaintiffs argue that “‘prevailing party’ is a legal term of art that requires much

more than prevailing on a motion to dismiss for failure to state a claim.” Aplt.

                                           3
Opening Br. at 5. Plaintiffs assert that Defendants, who were not awarded damages,

were not prevailing parties because they “left the courthouse emptyhanded.” Id. at 4.

We are not persuaded.

      In Cantrell v. International Brotherhood of Electrical Workers, Local 2021,

69 F.3d 456, 458 (10th Cir. 1995) (en banc), we held that “in cases not involving a

settlement, when a party dismisses an action with or without prejudice, the district

court has discretion to award costs to the prevailing party under Rule 54(d).” 2 Our

decision in Cantrell makes clear that the defendant in such a case qualifies as a

“prevailing party” under Rule 54(d)(1) as a result of the dismissal of the action. See

id. at 457-59.

      Plaintiffs do not attempt to distinguish Cantrell. And we fail to see how a

defendant is a prevailing party under Cantrell when a plaintiff voluntarily dismisses

an action without prejudice, but a defendant who successfully litigates a motion to

dismiss under Rule 12(b)(6) and obtains a dismissal without prejudice and a final

judgment in its favor is not.

      Plaintiffs base their contention entirely on the Supreme Court’s decision in

Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health &

Human Resources, 532 U.S. 598 (2001). But the circumstances in Buckhannon

      2
        Prior to Cantrell, we had held that a defendant was not a prevailing party
under Rule 54(d)(1) if the plaintiff voluntarily dismissed the action with prejudice.
See 69 F.3d at 457. Cantrell overruled that prior holding. See id. at 458. Thus, even
before Cantrell this court held that a voluntary dismissal without prejudice triggers
prevailing-party status under Rule 54(d)(1).
                                           4
differed significantly from those in this case. The plaintiffs sued the state arguing

that a state statute violated federal law. See id. at 600-01. When the legislature

amended the statute to eliminate the challenged provision, the district court granted

the defendants’ motion to dismiss the case as moot. See id. at 601. The plaintiffs

then sought an award of attorney’s fees under fee-shifting provisions in two federal

statutes. 3 They argued they were prevailing parties “under the catalyst theory, which

posits that a plaintiff is a prevailing party if it achieves the desired result because the

lawsuit brought about a voluntary change in the defendant’s conduct.” Id. (internal

quotation marks omitted).

       Rejecting that theory, the Court held “that a plaintiff [must] receive at least

some relief on the merits of his claim”—through a judgment or a consent decree—

“before he can be said to prevail.” Id. at 603 (internal quotation marks omitted). The

Court reasoned that a “material alteration of the legal relationship of the parties [was]

necessary to permit an award of attorney’s fees.” Id. at 604 (internal quotation marks

omitted). And “[a] defendant’s voluntary change in conduct . . . lacks the necessary

judicial imprimatur on the change.” Id. at 605. The Court concluded: “We cannot

       3
         Defendants suggest that the Court’s discussion of the meaning of “prevailing
party” in Buckhannon is irrelevant because that case involved an award of attorney’s
fees rather than costs. But the starting point for the Court’s analysis was the
dictionary definition of that term, see 532 U.S. at 603, which Defendants do not
distinguish from its use in Rule 54(d)(1). In any event, we need not address any
difference in the meaning of “prevailing party” with respect to an award of costs
versus an award of attorney’s fees because we conclude for other reasons that
Buckhannon does not support Plaintiffs’ position that Defendants were not prevailing
parties in this case.
                                             5
agree that the term prevailing party authorizes federal courts to award attorney’s fees

to a plaintiff who, by simply filing a nonfrivolous but nonetheless potentially

meritless lawsuit (it will never be determined), has reached the sought-after

destination without obtaining any judicial relief.” Id. at 606 (internal quotation

marks omitted).

      Plaintiffs’ reliance on Buckhannon is misplaced. That case did not involve a

defendant seeking an award of costs after prevailing on a Rule 12(b)(6) motion. And

unlike Defendants here, the plaintiffs claiming to have prevailed in Buckhannon had

not received a court judgment in their favor. Moreover, despite Plaintiffs’ suggestion

otherwise, it does not follow that because an award of nominal damages is sufficient

for a plaintiff to be considered a prevailing party, see id. at 604, a defendant must

recover damages to have prevailed in an action. As Defendants note, under

Plaintiffs’ reasoning a defendant could never be a prevailing party unless it had

sought and obtained relief on a counterclaim. Finally, an interlocutory ruling

reversing a dismissal for failure to state a claim—which does not make a plaintiff a

prevailing party, see id. at 605—is not analogous to Defendants’ successful

prosecution of such a motion that resulted in a final judgment in their favor.

      Plaintiffs nonetheless assert that “a Rule 12(b)(6) motion cannot be said to be

a determination on the merits” and that “Defendants did not win an enforceable

judgment.” Aplt. Opening Br. at 8-9 (internal quotation marks omitted). But they

cite no persuasive authority for either of these propositions. See Rapid Transit Lines,

Inc. v. Wichita Developers, Inc., 435 F.2d 850, 852 (10th Cir. 1970) (declining to

                                            6
address argument not supported by pertinent authority). And their contentions are

otherwise perfunctory and insufficiently framed and developed to invoke appellate

review. See Murrell v. Shalala, 43 F.3d 1388, 1389 n.2 (10th Cir. 1994). Finally, we

note that Plaintiffs once again fail to square their assertions with our holding in

Cantrell that a plaintiff’s voluntary dismissal without prejudice is sufficient for an

award of costs to the defendant as a prevailing party under Rule 54(d)(1).

      The district court did not err in holding that Defendants were prevailing parties

in this case and therefore eligible for an award of costs under Rule 54(d)(1).

      B.     The District Court Did Not Abuse its Discretion in Awarding
             Defendants Their Costs

      “Rule 54 creates a presumption that the district court will award the prevailing

party costs,” and “[t]he burden is on the non-prevailing party to overcome this

presumption.” Rodriguez, 360 F.3d at 1190. Moreover, “the denial of costs is in the

nature of a severe penalty, and there must be some apparent reason to penalize the

prevailing party if costs are to be denied.” Id. (internal quotation marks omitted).

      Plaintiffs advance three reasons why the district court abused its discretion in

awarding costs to Defendants. First, they contend it was unnecessary for a Vectrus

employee to incur expenses traveling from Kuwait to Colorado to be deposed by

Plaintiffs when the deposition could have been taken by video. Plaintiffs maintain

“[t]here is simply no reason why this deposition could not have occurred remotely.”

Aplt. Opening Br. at 9. But the court concluded it was not unreasonable for the Clerk

to find that the witness’s travel expenses were an appropriately incurred cost in light

                                            7
of the “[t]he difference in time zones between Denver and Kuwait” which would

“impose[] considerable burdens on one side or the other if a deposition is to be taken

remotely.” Aplt. App. at 67. And it found that “Plaintiffs must have eventually

agreed to depose [the witness] in person in Denver” because the record did not show

otherwise. Id. Finally, although Plaintiffs assert that they derived no benefit from

the travel costs incurred, the district court held that they “certainly enjoyed the

benefit of conducting an in-person deposition, rather than a remote one.” Id. We see

no abuse of discretion.

      Second, Plaintiffs contend that the district court abused its discretion in

awarding Defendants costs due to the economic disparity between the parties. The

district court recognized that a party’s indigence is one factor a court may weigh in

exercising its discretion to award costs. See Rodriguez, 360 F.3d at 1190. But a

finding of indigency does not preclude a cost award. See id. (affirming cost award

against indigent plaintiffs where district court “concluded there was no reason

defendants should be penalized” (internal quotation marks omitted)). And here, the

district court held that Plaintiffs “ma[d]e no factual showing to establish such

indigence.” Aplt. App. at 63. Again, we see no abuse of discretion.

      Finally, Plaintiffs allege “[t]here are sufficient grounds for the District Court

to have ‘penalized’ Defendants.” Aplt. Opening Br. at 10. But the district court

found nothing in the record warranting a denial of costs. Rather, it held that

Plaintiffs chose to proceed despite “many advisements and opportunities to

reconsider their legal arguments and strategies and refine them accordingly.” Aplt.

                                            8
App. at 65. The court pointed to Plaintiffs’ original § 2409 claim, which they filed in

district court in Florida, then voluntarily dismissed after Defendants raised the same

exhaustion argument that they prevailed on in this action. In addition, before moving

to dismiss in this case, Defendants filed a motion for sanctions under Federal Rule of

Civil Procedure 11 in which they again advised Plaintiffs that their complaint was

defective. The district court concluded that Defendants “demonstrated remarkable

patience even as the Plaintiffs have struggled to assemble a lawsuit capable of

sustaining itself,” id. at 63, and that “[a]n award of costs . . . is entirely reasonable

given the circumstances of this case,” id. at 65.

       Plaintiffs have not demonstrated that the district court abused its discretion in

awarding Defendants their costs as the prevailing parties in this action.

III.   Conclusion

       The district court’s order awarding costs to Defendants is affirmed.

                                              Entered for the Court

                                              Michael R. Murphy
                                              Circuit Judge

                                             9