Associates Against Outlier Fraud v. Huron Consulting Group, Inc.
Docket: No. 15-425-cv
Court: Court of Appeals for the Second Circuit; March 23, 2016; Federal Appellate Court
Associates Against Outlier Fraud, as Plaintiff-Relator, appeals a district court's cost award in a False Claims Act (FCA) case, contesting the order to pay defendants for deposition transcripts under Federal Rule of Civil Procedure 54(d)(1) and 28 U.S.C. 1920. The Plaintiff argues it should be exempt from this cost under 31 U.S.C. 3730(d)(4), which limits cost awards to prevailing defendants in FCA cases to those deemed 'clearly frivolous.' The district court granted summary judgment to defendants Huron Consulting Group and Empire HealthChoice Assurance in 2013, determining the Plaintiff failed to provide evidence of false claims. The Plaintiff's appeal was affirmed by the Second Circuit.
After the summary judgment, the district court awarded costs to the defendants, totaling $5,839.80 for Empire and $7,885.95 for Huron, primarily for deposition transcripts. The Plaintiff contested the cost award, reiterating the claim that the FCA's definition of 'expenses' encompasses 'costs,' necessitating the 'clearly frivolous' standard, which was not met in this case. The district court ruled that 'expenses' and 'costs' are distinct under the relevant rules, thereby affirming the cost awards.
On appeal, the Plaintiff further contends that deposition transcripts do not qualify as 'costs' under 28 U.S.C. 1920. The court explains that a district court has discretion in reviewing cost awards, which it will evaluate for abuse of discretion. However, legal determinations regarding the authority to award costs are reviewed de novo. The appellate court affirms the district court's decision.
The award of costs approved by the district court is governed by Federal Rule of Civil Procedure 54(d)(1), which allows for the recovery of costs other than attorney's fees to prevailing parties, unless otherwise specified by law or court order. The following subsection, Rule 54(d)(2)(A), outlines that claims for attorney's fees and related nontaxable expenses must be made via motion, unless required as part of the damages in trial. Under 28 U.S.C. 1920, recoverable costs include clerk and marshal fees, transcript fees, printing and witness fees, exemplification costs, docket fees, and compensation for court-appointed experts and interpreters.
The False Claims Act (FCA) permits the court to award reasonable attorney's fees and expenses to the defendant if the plaintiff's claim is deemed frivolous, vexatious, or primarily for harassment (31 U.S.C. 3730(d)(4)). The plaintiff contends that "expenses" in this provision encompass "costs" under Rule 54(d)(1), arguing against the imposition of such costs since their claim was not frivolous. However, the court distinguishes between "costs" and "expenses" as established in the Federal Rules of Civil Procedure. Taxable costs are limited to minor expenses, while nontaxable expenses include fees for attorneys and experts.
The court emphasizes that "costs," as defined in Rule 54(d)(1), refer specifically to expenses that can be taxed under 28 U.S.C. 1920, and do not equate to "expenses" in a general sense. This distinction is mirrored in the FCA, which differentiates between "fees and other expenses" and "costs" as outlined in 28 U.S.C. 1920. The court rejects the appellant's argument that Congress used these terms interchangeably, affirming the importance of interpreting each term consistently within the statutory context to give effect to all provisions and avoid misreading the statute.
31 U.S.C. § 3730(d)(4) does not impact the awarding of costs to prevailing parties under Rule 54(d)(1), aligning with the decisions of multiple circuit courts. This section does not apply to the recovery of costs by a prevailing defendant, as established in United States ex rel. Costner v. United States. It is not an explicit provision concerning costs, thus not limiting the district court's authority to award costs under Rule 54. The terms 'costs' and 'expenses' hold distinct meanings under Federal Rule of Civil Procedure 54(d), 28 U.S.C. § 1920, and the False Claims Act (FCA), making it clear that costs for deposition transcripts are allowable. The plaintiff's claim that 28 U.S.C. § 1920 does not encompass deposition transcript costs was forfeited since it was not raised in the lower court. Even if it had been properly presented, the argument lacks merit, as appellate courts have consistently interpreted § 1920 to allow taxation of deposition expenses when necessary for the case. The district court's award of costs is affirmed. Additionally, the court found no error in awarding costs for deposition transcripts to separate defendants Huron and Empire, as they were treated as distinct entities with separate legal representation. The plaintiff's objection to Local Civil Rule 54.1(c)(2) was also deemed without merit, as it aligns with 28 U.S.C. § 1920, reinforcing that local rules must comply with federal statutes and regulations.
