Corson v. Jamhi Health & Wellness, Inc.

JONATHAN CORSON, Plaintiff, v. JAMHI HEALTH AND WELLNESS, INC., Defendant.

No. 1:19-cv-016-HRH

United States District Court, D. Alaska

April 21, 2022

ORDER

H RUSSEL HOLLAND, UNITED STATES DISTRICT JUDGE

Motion for Attorney Fees and Costs^[1]

Defendant JAHMI Health and Wellness, Inc., moves for an award of attorney fees and costs.^[2] This motion is opposed.^[3] Oral argument has not been requested and is not deemed necessary.

Background

Defendant JAHMI Health and Wellness, Inc., is a not-for-profit corporation in Juneau, Alaska, that provides community housing and mental health treatment services to adults with severe mental illness and co-occurring substance use disorders.^[4] Between September 10, 2018, and April 1, 2019, plaintiff Jonathan Corson was employed as the organization's assistant residential services director.^[5]

In September of 2019, plaintiff filed a complaint in Alaska Superior Court alleging that he was wrongfully terminated in violation of federal and state laws.^[6] He brought five causes of action: retaliatory discharge in violation of the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, for “exposing and making a good faith report of fraudulent contracting practices”; wrongful termination in violation of Alaska Statute § 18.80.220; wrongful termination in violation of public policy; breach of the covenant of good faith and fair dealing; and “punitive damages” (notwithstanding that punitive damages are a remedy, not a cause of action).^[7] The case was removed to federal court in November of 2019 on the basis of federal question jurisdiction, and the court exercised supplemental jurisdiction over plaintiff's state law claims.^[8] Fact discovery remained open through the end of June 2021.^[9]

In September 2021, defendant moved for summary judgment and the court granted defendant's motion on all of plaintiff's federal and state claims in February 2022.^[10] The court entered judgment in favor of the defendant, but did not award a money judgment to the defendant.^[11]

Defendant devoted a total of $36, 106.00 in attorney fees and $1, 261.00 in costs in defense of this case.^[12] The transactions billed as costs include photocopies, deposition transcripts, and court fees to the United States District Court and the Alaska Court Sys-tem.^[13] Defendant does not specify the portion of attorney fees incurred in defense of the federal claim and the portion incurred in defense of the state claims.^[14]

Defendant now moves for a combined award of $22, 420.20 for fees and costs for work spent in defense of plaintiff's federal and state claims pursuant to Rule 54 of the Federal Rules of Civil Procedure, Local Rule of Civil Procedure 54.3, ^[15] Rule 82 of the Alaska Rules of Civil Procedure, and 31 U.S.C. § 3730(d)(4).^[16]

Discussion

Rule 54(d)(1), Federal Rules of Civil Procedure, provides that a prevailing party may recover costs, unless a federal statute the Federal Rules of Civil Procedure, or a court order provides otherwise. Upon submission of a motion, attorney fees and related nontaxable expenses are also recoverable. Fed.R.Civ.P. 54(d)(2). The motion must state the amount requested and specify the judgment and legal grounds entitling the movant to an award, whether it be a statute, contractual provision, Alaska Rule of Civil Procedure (“Alaska Rule”) 82, or other grounds. Fed.R.Civ.P. 54(d)(2)(B)(ii)-(iii) and L. Civ. R. 54.2(a)-(b).

Rule 82(a), Alaska Rules of Civil Procedure, provides that the prevailing party in a civil case shall be awarded attorney fees calculated under this rule, “[e]xcept as otherwise provided by law or agreed to by the parties.” Subsection (b)(2) further provides that in a case that resolves short of trial where the prevailing party recovers no money judgment, the prevailing party shall recover 20 percent of attorney fees necessarily incurred. This fee award can be altered following consideration of various factors. Alaska Rule 82(b)(3).

Title 31, Section 3730(d)(4), of the False Claims Act provides that in qui tam cases where the government does not prosecute the action, but the person who brought the action conducts it, the court can “award to the defendant its reasonable attorneys' fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.”

Costs and attorney fees are distinct under Rule 54, Alaska Rule 82, and the FCA. Notwithstanding, defendant moves for a combined award of fees and costs, even though defendant also states that either $1, 261.00 or $756.50 of the total requested award is for costs alone.^[17] The parties conflate the requests for attorney fees and costs and improperly analyze both requests under standards applicable only to a determination of an attorney fees award. Neither party specifically briefs the costs issue. However, plaintiff generally argues that fees and costs should not be awarded because the case was not obvious or wholly without merit, not vexatiously filed, and was complex; the defendant incurred unreasonable fees; a large award could deter other potential FCA litigants; and a large award could have an onerous impact on plaintiff's personal finances.^[18] Neither party disputes that defendant is the prevailing party.

In federal court, Rule 54(d) prescribes that an award of costs is governed by federal law, even where there are state law claims. Physician's Surrogacy, Inc. v. German, 311 F.Supp.3d 1190, 1198 n.5 (S.D. Cal. Apr. 19, 2018) (citing In re Merrill Lynch Relocation Mgmt., Inc., 812 F.2d 1116, 1120 n.2 (9th Cir. 1987), and United Cal. Bank v. THC Fin. Corp., 557 F.2d 1351, 1361 (9th Cir. 1977)). While Section 3730(d)(4) of the FCA expressly permits a prevailing defendant in a qui tam action to recover “its reasonable attorneys' fees and expenses, ” it does not reference costs; costs are not a subset of expenses. United States ex rel. Lindenthal v. Gen. Dynamics Corp., 61 F.3d 1402, 1413 (9th Cir. 1995). Rule 54 therefore dictates whether a prevailing defendant can be awarded costs in this case. Id. at 1413-14. See also Assoc. Against Outlier Fraud v. Huron Consulting Grp., Inc., 817 F.3d 433, 437 (2d Cir. 2016); United States ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161, 1172 (10th Cir. 2009); United States ex rel. Costner v. United States, 317 F.3d 889, 891 (8th Cir. 2003) (all noting that Section 3730(d)(4) of the FCA does not govern the recovery of costs by a prevailing defendant and recognizing the court's authority to award costs under Rule 54).

Courts have discretion under Rule 54 to award costs to prevailing defendants. Lindenthal, 61 F.3d at 1413-14. Rule 54(d) presumes that costs will be awarded to the prevailing party, but “[t]he unsuccessful litigant can overcome this presumption ... by pointing to some impropriety on the part of the prevailing party that would justify a denial of costs, ” such as “fault, misconduct, or default worthy of punishment.” United States ex rel. Haight v. Catholic Healthcare W., No. CV-01-2253-PHX-FJM, 2008 WL 607150, at *2 (D. Ariz. Feb. 29, 2008) (quoting Lindenthal, 61 F.3d at 1414). Absent such a showing by the losing party, the court should award costs. Id. The court need not “specify reasons for its decision to abide the presumption and tax costs to the losing party, ” but “need only find that the reasons for denying costs are not sufficiently persuasive to overcome the presumption in favor of an award.” Save Our Valley v. Sound Transit, 335 F.3d 932, 945 (9th Cir. 2003) (emphasis omitted).^[19]

In the District of Alaska, only those items listed in Local Rule 54.1(e) can be awarded as costs. These include:

(1) marshal fees ... and other reasonable service of process fees;

(2) transcripts when prepared pursuant to stipulation or order;

(3) reasonable deposition costs, including transcript and interpreter's fee; (4) non-party witness fees, mileage, and subsistence, including parties subpoenaed by adverse parties ...

(5) interpreter fees;

(6) reasonable cost of copying and exhibit preparation, excluding demonstrative exhibits;

(7) docket fees ...

(8) fees for masters, receivers, and commissioners ordered by the court;

(9) state court filing fees for removal jurisdiction actions;

(10) postage; and

(11) other costs specifically required by court order.

Local Rule 54.1(e).

In this case, defendant prevailed on summary judgment and the court entered judgment in its favor. Defendant is the prevailing party and is therefore presumptively entitled to an award of costs. But defendant is not entitled the full amounts requested.

Defendant requests an award of costs totaling either $756.50 or $1, 261.00 for money spent on photocopies, deposition transcripts, and various court fees. An award of costs for expenses incurred for photocopies, deposition transcripts, “[c]ourt fees for file for removal Alaska Court System, ” and “[c]ourt fees to United States District Court for removal to Federal Court”^[20] is proper under Local Rule 54.1(e)(3), (6), (7), and (9) because these costs are specifically listed in these sections of the rule. Combined, these costs total $1, 226.00. There is one additional court fee listed in the cost transaction list. It was paid to the Alaska Court System and the nature of the fee is unspecified. An award of costs for this court fee is not proper because it is not clear if this cost was a docket fee or other taxable cost listed in Local Rule 54.1(e).

Plaintiff points to no impropriety on the part of defendant that justifies a denial of these costs. While plaintiff makes various arguments against an award of costs and fees in general, the court finds that any potential reasons for denying costs...