Court Opinion

ID: 9461690
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:22:49.197251+00
Date Added: 2024-06-11T17:37:13.669233
License: Public Domain

TIMBERS, Circuit Judge
(dissenting):
There are few areas where I had supposed it was more axiomatic that the exercise of discretion by- a trial judge should not be disturbed absent the clearest showing of abuse than in the taxation of costs. To the extent that the majority substitutes its discretion for that of the trial judge who had disallowed expenses of $617,765 incurred by Toolco in providing quarterly audit reports to TWA concerning Toolco’s net worth, I respectfully dissent.
With respect to Judge Metzner’s disal-lowance of this item of costs,1 there not only was no showing of abuse of discretion, but in my view the record demonstrates with abundant clarity that the judge’s action represents a classic exercise of sound discretion by a thoroughly experienced trial judge in the context of exceedingly complex litigation with which he has lived for a decade and a half.
I agree with the majority that allowance or disallowance of this item of costs was within the discretion of the district court. The narrow issue before us therefore is whether the record demonstrates “the court’s wise exercise of its discretion”, as the majority correctly states. P. 177 supra. The crux of the majority’s reversal of Judge Metzner’s disallowance of the expenses of the quarterly audit reports appears to be its belief that “[t]he district court sets forth no criterion for the disallowance of this item of costs.” P. 178 supra. With deference, I disagree. Viewed as a whole, the record clearly supports the district court’s exercise of discretion.
During the period from May 20 to June 3, 1970, Judge Metzner conducted three hearings with respect to the appropriate means by which Toolco, pending appeal, might secure the $145,448,141.07 judgment which had been entered against it. On June 10, 1970, the judge entered an order directing Toolco to post security in the form of a $75 million bond, with the balance of the judgment to be secured “along the lines suggested [by Toolco] as to the maintenance of Toolco’s net worth at three times the amount of such balance.” Thereafter, counsel for Toolco and counsel for TWA arranged for Toolco to post a $75 million supersedeas bond and for Toolco to maintain its net worth at $335 million. On June 16, 1970, the judge entered an order embodying this arrangement. In *180accordance with Toolco’s previous offers, the order directed Toolco to furnish TWA with certified quarterly audits to demonstrate that Toolco’s net worth was so maintained. On June 25, 1970, the judge modified his prior order and permitted Toolco to substitute a $75 million letter of credit for the supersedeas bond.
If this were all that the record showed, I would agree with the majority that the expenses of the quarterly audit reports might appropriately be held to be costs reasonably incidental to securing TWA’s judgment and therefore properly chargeable to TWA upon the ultimate reversal by the Supreme-Court. Berner v. British Commonwealth Pacific Airlines, Ltd., 362 F.2d 799 (2 Cir. 1966). But the record discloses other critical facts which in my view have a direct bearing on the district court’s exercise of discretion in disallowing this item of costs.
The district court’s order of June 10, 1970 emerged only after intense acrimony between the parties and counsel regarding the security to be provided. Toolco repeatedly rejected suggestions by the court and by TWA with respect to means by which Toolco might secure the judgment at little or no cost to it and with minimal disruption of its business. For example, Toolco rejected suggestions that Hughes, the sole stockholder of Toolco, subject himself to the jurisdiction of the court for the sole purpose of guaranteeing payment of the judgment; that Hughes pledge his stock in Toolco to TWA, coupled with a court ordered restriction on the payment of dividends by Toolco to Hughes or any other material disposition of Toolco assets to Hughes or otherwise; that Toolco deposit marketable securities or other cash equivalents to secure the judgment; or that Toolco give TWA liens on certain of Toolco’s properties. Each of these suggestions was rejected by Toolco in favor of the obviously more costly program of net worth maintenance upon which Toolco insisted. In short, Toolco demanded, as a condition to its securing a judgment against it for violation of the antitrust laws of the United States, that it be permitted to do “business as usual”, including the acquisition of the Dunes Hotel in Las Vegas, Nevada, for $35 million cash and the expenditure of millions of dollars for other acquisitions.
A fair reading of the transcript of November 15, 1973 where TWA’s exceptions to the Clerk’s taxation of costs were considered, and the district court’s order of January 10, 1974 disallowing the audit expenses, far from setting forth “no criterion for the disallowance of this item of costs” as the majority suggests, p. 178 supra, demonstrates that the district court based its disallowance of the audit expenses on its finding that such expenses were unnecessary and unreasonable in light of the other less costly alternatives which had been suggested to Toolco but categorically rejected by it.
The majority in effect has substituted its discretion for that of the trial judge who disallowed the audit expenses upon the express finding that “[tjhese audits were accepted by the court at the request of defendant as a less drastic but more costly form of protection of the judgment recovered by the plaintiff . . Since the defendant needed and was using millions of dollars to buy a hotel and an airline, and making alterations to hotels at the time it was called on to bond the judgment, it should bear the cost of allowing business to go on as usual.” Opinion and Order of Judge Metzner dated January 10, 1974.
The majority’s brushing off this finding of the district court results in placing the imprimatur of this Court on permitting a party called upon to bond a judgment to conduct business as usual pending appeal and then to saddle his opponent with the expenses of doing so — in the teeth of an express finding by the district court that such expenses were unnecessarily costly, clearly avoidable and therefore not properly chargeable as taxable costs.
Finally, the unfortunate precedent which the majority establishes in this most unappealing case strikes me as ignoring the admonition of the Supreme *181Court in Farmer v. Arabian American Oil Company, 379 U.S. 227, 235 (1964), that:
“Items proposed by winning parties as costs should always be given careful scrutiny. Any other practice would be too great a movement in the direction of some systems of jurisprudence that are willing, if not indeed anxious, to allow litigation costs so high as to discourage litigants from bringing lawsuits, no matter how meritorious they might in good faith believe their claims to be.”2
I respectfully dissent.

. I agree with the majority’s disposition of the other two challenged items of costs involved on this appeal, i. e. the affirmance of the district court’s allowance of a setoff to TWA of $4,602.65 deposition expenses incurred by it as a result of Hughes’ contumacy, and the allowance to Toolco of $66,040.40 expenses incurred by it in obtaining the $75 million letter of credit.

. The Supreme Court in Fanner reversed an en banc decision of the Court of Appeals for the Second Circuit, 324 F.2d 359, and affirmed the District Court’s exercise of discretion in the taxation of costs. 31 F.R.D. 191 (Weinfeld, J.). Judge Smith, speaking for three of the dissenters in the Court of Appeals, summarized their rationale in noting that the decision of the majority
“ . . . abandons the traditional scheme of costs in American courts to turn in the direction of the English practice of making the unsuccessful litigant pay his opponent’s litigation expense as well as his own. It has not been accident that the American litigant must bear his own cost of counsel and other trial expense save for minimal court costs, but a deliberate choice to ensure that access to the courts be not effectively denied those of moderate means.” 324 F.2d at 365.