United States District Court, D. Nevada
Anabel Ruiz, et al., individually and on behalf of other persons similarly situated, Plaintiffs,
APCO Construction et al., Defendants.
ATTORNEY FEES AND COSTS
JENNIFER A. DORSEY, District Judge.
Plaintiffs Alfredo Damudio, Juan Magallenes, and Vicente Cuevas alleged they were employees of All-American and Associates who performed work on the Atrium project, a City of Las Vegas public-works construction project. All-American failed to pay them, and they sought to hold APCO Construction-the general contractor who subcontracted with their employer All-American-responsible for their unpaid wages under the Federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"), the Nevada labor code, and Nevada common law. The court granted summary judgment in APCO's favor on the two FLSA claims, declined to exercise supplemental jurisdiction over plaintiffs' remaining state law claims, and dismissed them without prejudice, subject to re-filing in Nevada State Court. Doc. 133. APCO now moves for an award of attorney fees and costs, Doc. 136; plaintiffs oppose the request for fees and object to APCO's bill of costs. Doc. 137. I find that APCO has failed to demonstrate that its fees should be shifted to the plaintiffs, and I deny its motion for attorneys fees. I sustain in part, and overrule in part, plaintiffs' objections to APCO's bill of costs.
A. APCO's Motion for Attorney Fees
APCO moves for $99, 865.50 in attorney's fees and $4, 574.35 in electronic research costs it incurred in defending this action. Doc. 136 at 1. It argues that plaintiffs' suit was instituted and prosecuted in bad faith because: (1) APCO had informed plaintiffs of Nevada state administrative proceedings to settle some of the labor claims brought against All-American which APCO ultimately paid, id. at 2-3; (2) plaintiffs knew APCO was not their employer at the Atrium Project site, id. at 2-3; and (3) the only reason APCO was sued "was to expand the amount of money Plaintiffs could recover by relying on the penalty and fee provisions of the FLSA." Id. at 5. APCO notes that it participated in a settlement conference with Magistrate Judge Foley on May 31, 2012, but "Plaintiffs were unwilling to settle without payment of penalties and legal fees to which they were not entitled under the prevailing wage laws of Nevada or the FLSA." Id. at 12, Affidavit of Christopher H. Byrd. APCO claims that this conduct warrants an award of fees under 28 U.S.C. § 1927, Federal Rule of Civil Procedure 54(d)(2), and the court's inherent power to sanction attorneys for litigation conduct. Id. at 7.
Rule 54(d)(2) allows a party who prevails in a case brought to judgment to seek attorney fees by specifying "the judgment and the statute, rule, or other grounds entitling the movant to the award." 28 U.S.C. § 1927 states that "[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." The Ninth Circuit conducts a subjective inquiry into the viability of § 1927 sanctions; while knowing or reckless litigation conduct is sanctionable,  merely negligent conduct is not. "For sanctions to apply, if a filing is submitted recklessly, it must be frivolous, while if it is not frivolous, it must be intended to harass." Section 1927 sanctions are only available "once a lawsuit has begun" and do not properly apply to an initial pleading.
Additionally, the court may reach all stages of the litigation process under its inherent power to manage its docket "so as to achieve the orderly and expeditious disposition of cases." These sanctions can include imposing attorney's fees where a party has "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." "Because of their very potency, inherent powers must be exercised with restraint and discretion."
APCO has not demonstrated that plaintiffs' prosecution of this action against APCO was in bad faith, vexatious, wanton, or oppressive. As plaintiffs point out in their response, they were given leave to file an amended complaint to name APCO. Doc. 138 at 3. Rule 15(a) allows the court to deny leave to amend when it determines the amendment is sought in bad faith, prejudices the opposing party, or is futile. The court noted in its leave order that "Proposed-Defendant APCO... may also be joined because the right to relief asserted against it arises out of the series of projects on which All-American... was acting as APCO Construction's subcontractor when it allegedly failed to properly pay its employees, " and that APCO "could be held liable for the monies owed on its project." Doc. 41 at 3. APCO never moved to dismiss the claim under Rule 12; instead, it answered, participated in a settlement conference, and ultimately moved for summary judgment. Thus, even though plaintiffs were ultimately unsuccessful in their pursuit of their claims against APCO, the record does not support the conclusion that the claims are the product of a vexatious or unreasonable prosecution to warrant an award of attorney fees.
Nor does plaintiffs' refusal to resolve their claims at settlement conference demonstrate bad faith worthy of sanctions. At the time of the conference, plaintiffs' FLSA claims were still pending. The decision not to settle is not alone evidence of recklessness or harassment. An award of § 1927 sanctions is simply unwarranted here. The motion for attorneys fees is denied.
B. APCO's Award of Costs
APCO submitted a bill of costs seeking $62.78 for printing and $324.27 for copying, for a total of $387.05. Doc. 135 at 1-3. Plaintiffs timely objected. Doc. 137. The filing of the objection turned APCO's bill of costs into a motion and the objection is treated as plaintiffs' response.
Under Rule 54(d)(1), a party who prevails in a case brought to judgment should be permitted to recover costs other than attorney fees "[u]nless a federal statute, these rules, or a court order provides otherwise." 28 U.S.C. § 1920 provides that taxable costs include "Fees and disbursements for printing, " and "Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." There is a strong presumption that costs should be awarded, and "a district court need not give affirmative reasons for awarding costs; instead, it need only find that the reasons for denying costs are not sufficiently persuasive to overcome the presumption in favor of an award." Reasons supporting denial can include, inter alia, mere partial victory by the prevailing party or the prevailing party's failure to comply with the local rules. The losing party has the burden of showing why the court should disallow requested costs.
1. Prevailing Party Status
Plaintiffs first argue generally that APCO is not entitled to an award of costs because it was the prevailing party on only two of its nine claims, and thus is not the prevailing party under Rule 54(d). Doc. 137 at 2. A prevailing party exists in a lawsuit whenever there has been a "material alteration of the legal relationship between the parties." The Ninth Circuit, has found that even where some of a party's claims are dismissed without prejudice to the party's right to seek relief in state court, it was not an abuse of discretion to award costs to ...