CLERK'S OPINION GRANTING IN PART AND DENYING IN PART MYLAN'S MOTION TO TAX COSTS
This matter comes before the Clerk on the motion of Defendants Mylan Pharmaceuticals Inc. and Mylan Inc. (collectively "Mylan," "Defendants") for the taxation of costs pursuant to Federal Rule of Civil Procedure 54(d) and Local Civil Rule 54.1. Plaintiffs Warner Chilcott Company, LLC, Warner Chilcott (US), LLC, and Mayne Pharma International Pty. Ltd. ("Mayne"), (collectively, "Warner Chilcott," "Plaintiffs") oppose this motion.
In these three consolidated actions, Warner Chilcott alleged that Mylan and ImpaX Laboratories, Inc. ("Impax") infringed its United States Patent No. 6,958,161 ("the '161 patent"), issued on October 25, 2005. The '161 patent relates to modified release preparations of doxycycline hyclate, marketed under the trademark of "Doryx." Mayne was assigned the '161 patent and Warner Chilcott has the exclusive rights to market and sell products covered by the '161 patent. The United States Food and Drug Administration ("FDA") approved Mayne's 75 and 100 mg. tablets for the treatment of various bacterial infections on May 6, 2005 and its 150 mg. tablets on June 20, 2008. In its complaints, Warner Chilcott has asserted that Mylan and Impax infringed the '161 patent by filing Abbreviated New Drug Applications ("ANDA") with the FDA for generic delayed-release tablets containing a 75, 100 and 150 mg. base of doxycycline hyclate before the expiration of the '161 patent.*fn1
After a seven-day bench trial, held on February 1 - 9, 2012, the Court entered Final Judgment [Dkt. Entry 302] on April 30, 2012, finding that Warner Chilcott's '161 patent was valid and that Mylan's and Impax's generic products did not infringe the '161 patent.*fn2 Warner Chilcott, Impax and Mylan filed notices of appeal to the Federal Circuit on May 1, May 23, and May 30, 2012, respectively [Dkt Entries 303, 316, 318], and this Court's judgment was affirmed on September 7, 2012 [Dkt. Entry 339]. Mylan filed its motion to tax costs on May 29, 2012 [Dkt. Entry 317] and Impax's companion motion followed on May 30, 2012 [Dkt. Entry 319]. The Clerk addresses Mylan's motion herein and will issue a separate opinion and order on Impax's motion.
Mylan seeks the taxation of costs as a "prevailing party" within the meaning of Fed. R. Civ. P. 54(d), which provides in pertinent part: "Unless a federal statute, these rules, or a court order provides otherwise, costs-other than attorney's fees-should be allowed to the prevailing party." Fed. R. Civ. P. 54(d) (1).
Specifically, Mylan requests the taxation of the fees of: trial and deposition transcripts ($62,003.05)*fn3 ; witnesses ($8,024.60)*fn4 ; exemplification and copies ($85,771.05); FedEx and courier services ($11,458.60); and computer-assisted legal research ($81,414.44), for a total of $248,671.74. [Dkt. Entry 331-3]. Plaintiffs object to taxation of almost all categories of costs.
Preliminarily, the Clerk dismisses as moot Plaintiffs' argument that the decision on this motion should be deferred pending appeal. The Court denied this request, opposed by Defendants, on July 9, 2012 [Dkt. Entry 336] and in any event, the Federal Circuit has rendered its decision on appeal, affirming this Court.
I.Standards for Awarding Costs
Under Fed. R. Civ. P. 54(d) (1), a prevailing party is entitled to costs unless the Court otherwise directs. In patent litigation matters, including declaratory judgment actions regarding the validity of a patent and infringement actions, the definition of a "prevailing party" is governed by Federal Circuit law. Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1181-82 (Fed. Cir. 1996). To be a prevailing party, a party must obtain relief on the merits of its claim that materially alters the legal relationship between the parties by modifying its opponent's behavior in a way that directly benefits that party. Id. at 1182 (citing Farrar v. Hobby, 506 U.S. 103, 111-113 (1992)).
While the threshold issue of deciding prevailing party status is a matter of Federal Circuit law, the second inquiry, that of whether and how much to award, is a matter of regional circuit law. Id. at 1183. Therefore, the decision of whether to award costs to the prevailing party is a matter of Third Circuit law here.
In this Circuit, there is such a strong presumption that costs should be awarded to the prevailing party that, " '[o]nly if the losing party can introduce evidence, and the district court can articulate reasons within the bounds of its equitable power, should costs be reduced or denied to the prevailing party.' " Reger v. Nemours Found., Inc., 599 F.3d 285, 288 (3d Cir. 2010) (quoting In re Paoli RR Yard PCB Litig., 221 F.3d 449, 468 (3d Cir. 2000)). The rationale behind this presumption is that the denial of costs is tantamount to a penalty. Id. at 288-289 (citing ADM Corp. v. Speedmaster Packaging Corp., 525 F.2d 662, 665 (3d Cir 1975)).
Despite this strong presumption, courts do not have unfettered discretion to grant costs under Rule 54(d). The United States Supreme Court has ruled that absent express statutory authorization, courts may reimburse only those costs which are enumerated in 28 U.S.C. § 1920. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441 (1987). Title 28 U.S.C. § 1920 provides for the taxation of the following costs:
(1) Fees of the clerk and marshal;
(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
The Supreme Court recently reinforced its Crawford Fitting holding in Taniguchi v. Kan Pacific Saipan, Ltd., 132 S.Ct. 1997 (2012), whereby it limited the provision in §1920 (6) for the "compensation of interpreters" to the cost of oral translation. In denying the cost of document translation, the Court noted that its decision was "in keeping with the narrow scope of taxable costs." Id. at 2006.
In addition to Rule 54(d) and 28 U.S.C. § 1920, the Clerk's decision is guided by Local Civil Rule 54.1, which "establishes the general procedures to be followed in those cases where a party is entitled to recover costs" under § 1920. Lite, N.J. Federal Practice Rules, Comment 2 to Rule 54.1 (Gann 2013 ed.) at 234.
Therefore, while a prevailing party is entitled to costs under Rule 54(d), "those costs often fall well short of the party's actual litigation expenses." In re Paoli, 221 F.3d at 458.
Furthermore, despite the presumption of granting costs to a prevailing party, that party must provide sufficient information to carry its burden of showing that the costs sought fall within the limits of § 1920. Romero v. CSX Transp., Inc. 270 F.R.D. 199, 201-202 (D.N.J. 2010).
Mylan is the prevailing party in this matter and Plaintiffs do not dispute this. Even though final judgment was entered in Warner Chilcott's favor on the issue of validity, their '161 patent previously enjoyed a presumption of validity and therefore, the court's determination on validity did not materially alter the parties' relationship in a way that benefitted Plaintiffs.
United Access Technologies, LLC v. Earthlink, Inc., Civil Action No. 02-272-MPT, 2012 WL 2175786, at *4 (D. Del. June 14, 2012). Conversely, "[w]hen a finding of noninfringement occurs, the result is '[a] judicial declaration that one is free from another's right to exclude,' thereby 'alter[ing] the legal relationship between the parties.'" Id. (quoting Manildra Milling, 76 F.3d at 1183). Accordingly, the entry of final judgment in Mylan's favor on the issue of infringement conferred prevailing party status on Mylan.
Additionally, Mylan has followed the procedural requirements set forth in L. Civ. R. 54.1 and 28 U.S.C. § 1924 by timely filing and serving a verified Bill of Costs with copies of invoices appended [Dkt. Entries 317, 331]. As such, the Clerk will now examine the specific costs of which Defendants seek taxation, as outlined in the Declaration of Joshua Mack, Esq. ("Mack Decl.") [Dkt. Entry 317-2].
II.Fees for Transcripts, § 1920 (2)
Mylan seeks reimbursement of the $13,744.50 cost of the trial transcripts which it states were used for several purposes, including post-trial briefing. Plaintiffs do not object.
Fees for recorded transcripts are taxable under § 1920 (2) if the transcripts were necessarily obtained for use in the case. Local Civil Rule 54.1(g) (6) specifies:
The cost of a reporter's transcript is allowable only (A) when specifically requested by the Judge, master, or examiner, or (B) when it is of a statement by the Judge to be reduced to a formal order, or (C) if required for the record on appeal. . . Copies of transcripts for an attorney's own use are not taxable in the absence of a prior order of the Court. All other transcripts of hearings, pretrials and trials will be considered by the Clerk to be for the convenience of the attorney and not taxable as costs.
The comments to L. Civ. R. 54.1 further provide:
In submitting a Bill of Costs to the Clerk which includes a request to tax costs of transcripts, it is essential to specify how the transcript was used. Absent evidence of a request from the Court for the transcript or proof by way of supporting affidavit that the transcript was used in a way that gives rise to an entitlement to a costs award, it is the practice of the Clerk to deny the request.
Lite, N.J. Federal Practice Rules, Comment 4d. to Rule 54.1 (Gann 2013 ed.) at 245.
In the Final Pretrial Order, the Court required that counsel submit trial briefs and post-trial proposed findings of fact and conclusions of law with annotations to the trial transcripts. [Dkt. Entry 252-2 at 294]. Thus, the trial transcripts were requested by Magistrate Judge Mark Falk, as specified in L. Civ. R. 54.1(g) (6). Moreover, the Clerk has previously found that trial transcripts are taxable when used to prepare findings of fact and conclusions of law, particularly in a complex case such as this. Merck Sharp & Dohme Pharms., SRL v. Teva Pharms., USA, Inc., Civ. A. No. 07-1596, 2010 WL 1381413, at *3 (D.N.J. Mar. 30, 2010).
The trial transcripts were necessarily obtained for use in this case and therefore, the Clerk grants this $13,744.50 cost.
Mylan also requests, pursuant to § 1920 (2), the costs of the written transcripts of 21 depositions, as well as the videotaped version of some of those depositions, which total $48, 258.55. Warner Chilcott objects to granting any costs of six of the depositions and maintains that in general, the transcript costs are over-inclusive as to services. Local Civil Rule 54.1(g) (7) limits the taxation of the costs of deposition transcripts to those "used at the trial":
In taxing costs, the Clerk shall allow all or part of the fees and charges incurred in the taking and transcribing of depositions used at the trial under Fed. R. Civ. P. 32. Fees and charges for the taking and transcribing of any other deposition shall not be taxed as costs unless the Court otherwise orders (emphasis added).
However, 28 U.S.C. § 1920 more broadly allows for the taxation of "[f]ees for printed or electronically recorded transcripts necessarily obtained for use in the case." 28 U.S.C. § 1920 (2) (emphasis added). In the case of In re Baby Food Antitrust Litigation, the Third Circuit held that a local court rule must yield to a federal rule where the two conflict, and interpreted "necessarily obtained" as allowing for the taxation of the cost of depositions used in deciding summary judgment motions. 166 F.3d 112, 138 (3d Cir. 1999).
Even before the ruling in In re Baby Food, this Court held that it has broad discretion to tax deposition costs under 28 U.SC. § 1920. Hurley v. Atlantic City Police Dep't, Civ. A. Nos. 93-260, 94-1122, 1996 WL 549298, at *5 (D.N.J. Sept. 17, 1996). In Hurley, this Court stated that the failure of the prevailing party to introduce depositions into evidence at trial did not preclude a finding that they were "used" at trial. It went on to explain, "[a]n attorney needs deposition transcripts to prepare for both direct and cross-examination even if the transcripts are not directly introduced into evidence during the trial." Id.
This Court has stated even more expansively that "[f]or the costs to be taxable, the depositions need not have been used at trial, and must only 'appear reasonably necessary to the parties in light of a particular situation existing at the times they were taken.'" Thabault v. Chait, Civ. A. No. 85-2441, 2009 WL 69332, at *7 (D.N.J. Jan. 7, 2009) (quoting Datascope Corp. v. SMEC, Inc., No. 81-3948, 1988 WL 98523, at *3 (D.N.J. Sept. 15, 1988). See also, Smith v. Crown Equip. Corp., No. Civ. A. 97-541, 2000 WL 62314, at *3 (E.D. Pa. Jan. 13, 2000).
Plaintiffs object to taxing any costs of the depositions of James McGinity, Daniel Snider, Wayne Talton, David Wargo and the October 27, 2011 deposition of Dr. Martyn Davies. Pls.' Br. at 7-8, [Dkt. Entry 327]. They assert, "[n]one of the depositions of these witnesses were used at trial for impeachment purposes, and they were not entered into evidence, or even designated for trial. Mylan did not attempt to explain how the depositions of these witnesses were used during the litigation . . . ." Id. at 7.
Mylan replies that every deposition is important to the preparation for trial in compleX litigation such as this, Defs.' Reply at 4, but fails to identify the particular significance of these contested depositions. However, the Final Pre-Trial Order identifies James McGinity as Plaintiffs' expert witness on the issue of validity and David Wargo as a fact witness of Mylan. [Dkt. Entry 252 at 276, 271]. Also, Mylan, along with then co-defendants Impax and Sandoz, cites the October 27 deposition of Dr. Davies in its statement of contested facts in the Final Pre-Trial Order. Id. at 215, 216. Accordingly, the Clerk determines that these depositions were necessary for use in the case and taxes them to the extent allowed pursuant to the discussion below.
On the other hand, after reviewing the docket, the Clerk is at a loss to determine the roles of Daniel Snider and Wayne Talton in this litigation. As stated in Romero, Defendants have "provided the Court with no information upon which the Court may differentiate between those depositions which were taken merely for investigatory purposes and those which appeared to [Defendants] to be necessary for use in the case." 270 F.R.D. at 202. Therefore, the Clerk must deny all costs of the Snider and Talton depositions.
With regard to the remaining depositions, Warner Chilcott maintains that the only fees recoverable under § 1920 (2) and L. Civ. R. 54.1(g) (7) are the costs of the preparation of the transcript and the reporter. Other costs of expedited transcripts, litigation support services, DVD's, shipping and videotapes are, in their view, for the convenience of counsel and, according to Plaintiffs, their $30,490.80 cost is not taxable. Pls.' Br. at 8-12. The Clerk notes that Plaintiffs do not object to the cost of exhibits charged in the deposition invoices.
The Clerk agrees with Plaintiffs. First, on the issue of videotapes, all of those included by the movants duplicate the written transcripts taken in this case. The costs recoverable under § 1920 (2) may include the cost of videotaping depositions "as long as the use of the videotape was reasonably necessary to the trial." Garonzik v. Whitman Diner, 910 F. Supp. 167, 171 (D.N.J. 1995) (taxing the cost of videotapes presented as evidence and displayed to the court). However, when § 1920 (2) was amended in 2008 to include electronically recorded transcripts, the conjunction "or" was inserted, not "and." As such, the Clerk generally does not allow recovery of the costs of both the printed transcripts and the videotapes in the absence of a showing that both were necessarily obtained for use in the case. Merck Sharp & Dohme Pharm., 2010 WL 1381413 at *3 (citing Cherry v. Champion Int'l Corp., 186 F.3d 442 (4th Cir. 1999)).
Necessity for use at trial means more than the convenience of the party or duplication. Cherry, 186 F.3d at 449.
The costs of videotaping depositions were disallowed by this Court when the videotapes were not played for the court or used to decide the summary judgment motion or for any other purpose. Pharm. Resources, Inc. v. Roxane Labs., Inc., Civ. A. No. 03-3357, 2008 WL 2951173, at *5 (D.N.J. July 25, 2008).
Similar to the Pharm. Resources case, and in contrast to the Garonzik case, Mylan has made no showing of the use of these videotapes which duplicate the written transcripts. Defendants have failed their burden of showing that the videotapes were "necessarily obtained for use in the case," as required under § 1920 (2). Accordingly, all costs incurred in videotaping these depositions are denied.
Plaintiffs correctly state that recoverable costs under § 1920 (2) include the cost of reporters in addition to the cost of the preparation of transcripts, L. Civ. R. 54.1(g) (7), and therefore, the Clerk taxes all fees for original transcripts and reporter appearance. However, the remaining fees for immediate rough ASCII and ASCII disks, condensed transcript, word index, Realtime, med/tech copies, "invoice processing fee" (essentially, a late payment fee), and expedited services (early morning pages, expedited copies and exhibits, Sunday surcharge), are not taxable because they are not among those listed in § 1920 and are considered to be for the convenience of counsel.
The costs of shipping and handling are not recoverable in this district. Boyadjian v. Cigna Cos., 994 F. Supp. 278, 281 (D.N.J. 1998) (denying costs of postage because they are not listed in § 1920); Bollitier v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers, 735 F. Supp. 623, 629 (D.N.J. 1989) (denying taxation of costs of mailing); Hurley, 1996 WL 549298, at *4 (D.N.J. Sept. 17, 1996) (postage, delivery and messenger services fall under attorney's fees, not § 1920).
With regard to ASCII, several courts have denied the taxation of the costs of ASCII disks as being duplicative and merely for the convenience of counsel, particularly where regular deposition copy was also received. Harkins v. Riverboat Servs., Inc., 286 F. Supp. 2d 976, 980-81 (N.D. Ill. 2003); Nugget Distrib. Coop. of Am., Inc. v. Mr. Nugget Inc., 145 F.R.D. 54, 58 (E.D. Pa. 1992); Feinshreiber v. United States, No. 01-3628-Civ, 2002 WL 31084156, at *2 (S.D. Fla. Aug. 12, 2002).
The same is true with regard to the other fees for rough drafts, condensed transcripts, Realtime technology, and word indices, included in the movant's invoices. Absent a showing of necessity, these types of litigation support costs are deemed to be for the convenience of counsel and therefore not taxable under § 1920 (2). See e.g., Lewis v. D.R. Horton, Inc., 375 F. App'x 818, 828-30 (10th Cir. 2010) (affirming district court's cost award in which it deducted deposition costs of condensed transcript and computerized transcripts); Kidd v. Mando Am. Corp., 870 F. Supp. 2d 1297, 1299 (M.D. Ala. 2012) (deposition costs of condensed transcript, rough ASCII transcripts and depo drive not shown to be necessary were not taxable); United States ex rel. Davis v. U.S. Training Center, Inc., 829 F. Supp. 2d 329, 339 (E.D. Va. 2011) (denying costs of transcript drafts and realtime transcript services); Burton v. R.J. Reynolds Tobacco Co., 395 F.Supp.2d 1065, 1080 (D. Kan. 2005) (disallowing charges for keyword indices, ASCII disks, minuscripts, postage and delivery); Suchite v. Kleppin, No. 10-21166-CIV, 2012 WL 1933555, at *5 (S.D. Fla. Mar. 23, 2012) (added cost of condensed transcript is not taxable); Vistein v. Am. Registry of Radiologic Technologists, No. 1:05 CV 2441, 2010 WL 918081 (N.D. Ohio Mar. 10, 2010) (denying cost of keyword indices).
Finally, the inflated costs for expedited services have also been disallowed as a convenience of counsel rather than a necessary cost of suit. See, e.g., Suchite, 2012 WL 1933555 at *5; Feinshreiber, 2002 WL 31084156, at *2 (applying a more reasonable rate than requested expedited deposition transcript rate and allowing only $184.80 instead of $477.60). Rather than disallow the entire cost of expedited transcripts, as Plaintiffs urge, the Clerk reduces the rate to the regular prevailing rate. The invoices of Ellen Grauer Court Reporting indicate a rate for "1 Certified Deposition" of $3.50 per page, and the TSG Reporting invoices show a rate of $3.25 per page for "Certified Transcript." All expedited transcript costs were charged by either Ellen Grauer Court Reporting or Elisa Dreier Reporting Corp., whose regular rate is not discernible from the record. Therefore, the Clerk will tax all expedited transcripts at the rate of $3.50 per page.
Applying all of the foregoing, the Clerk taxes the following transcript costs, in the order in which they appear in Exhibit D to the Mack Declaration [Dkt. Entry 317-3]:
Certified Transcript $776.75 Exhibits $183.50
1 Certified Deposition ...