Award of Costs to Prevailing Party, Defined and Explained
Fed.R.Civ.P. 54(d)(1) provides that 'costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs.3 min read
Fed.R.Civ.P. 54(d)(1) provides, in pertinent part, that 'costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs.' Fed.R.Civ.P. 54(d)(1).
Presumption of Favor
Rule 54(d)(1) creates a presumption in favor of awarding costs to the prevailing party. See Klein v. Grynberg, 44 F.3d 1497, 1506 (10th Cir.'95); Congregation of the Passion v. Touche, Ross & Co., 854 F.2d 219, 22 (7th Cir.'88). This presumption is supported by the explicit language of Rule 54(d)(1), which makes the award of costs to a prevailing party automatic in the absence of an express direction to the contrary by the district court. See Fed.R.Civ.P. 54(d)(1) (providing that costs 'shall be allowed as of course . . . unless the court otherwise directs'); see also Chicago College of Osteopathic Medicine v. George A. Fuller Co., 801 F.2d 908, 10 (7th Cir.'86); Subscription Television, Inc. v. Southern Cal. Theatre Owners Ass'n, 576 F.2d 230, 34 (9th Cir.'78).
Overcoming the Presumption of Favor
The 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. See Delta Airlines, Inc. v. Colbert, 692 F.2d 489, 90 (7th Cir.'82); Popeil Bros., Inc. v. Schick Electric, Inc., 516 F.2d 772, 775-6 (7th Cir.'75). The loser bears this burden because the denial of costs is by nature a penalty. See Smith v. Southeastern Penn. Transp. Auth., ___ F.3d ___, No. 94-1634 1995 WL 53174, *2 (3d Cir., Feb. 10, '95) (per curiam); Serna v. Manzano, 616 F.2d 1165, 67 (10th Cir.'80). A district court therefore generally must award costs unless the prevailing party is guilty of some fault, misconduct, or default worthy of punishment. See Delta Airlines, at 490.
Good Faith
Most courts have rejected arguments that good faith in prosecuting the underlying action should defeat the presumption in favor of awarding costs. All parties to a federal action have an obligation to act in good faith and with proper purpose. See, e.g., Fed.R.Civ.P. 11; Model Rules of Professional Conduct Rule 3.1 (1994). It follows that noble intentions alone do not relieve an unsuccessful litigant of the obligation under Rule 54(d) to compensate his opponent for reasonable costs. 'If the awarding of costs could be thwarted every time the unsuccessful party is a normal, average party and not a knave, Rule 54(d)(1) would have little substance remaining.' Popeil Bros., at 776.
Difficulty
Difficulty alone does not justify penalizing the prevailing parties. Cf. Klein v. Grynberg, 44 F.3d at 1507 ('We find no justification to penalize [the prevailing party] because this litigation was complex or lengthy.'). But see White & White, Inc. v. American Hosp. Supply Corp., 786 F.2d 728, 733 (6th Cir.'86) (holding that length and difficulty of a case may be a factor in the decision to deny costs).
Impropritety
The district court generally must award costs unless equity demands otherwise due to some impropriety on the part of the prevailing party during the course of the litigation. See Smith, ______ F.3d at ______, 1995 WL 53174 at *2 (citing ADM Corp. v. Speedmaster Packaging Corp., 525 F.2d 662, 65 (3d Cir.'75), and Chicago Sugar Co. v. American Sugar Refining Co., 176 F.2d 1, 11 (7th Cir.'49), cert. denied, 338 U.S. 948 ('50)).
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