Electronic Specialty Co. v. International Controls Corp.

47 F.R.D. 158, 13 Fed. R. Serv. 2d 1209, 1969 U.S. Dist. LEXIS 13555
CourtDistrict Court, S.D. New York
DecidedApril 17, 1969
DocketNo. 68 Civ. 3434
StatusPublished
Cited by43 cases

This text of 47 F.R.D. 158 (Electronic Specialty Co. v. International Controls Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electronic Specialty Co. v. International Controls Corp., 47 F.R.D. 158, 13 Fed. R. Serv. 2d 1209, 1969 U.S. Dist. LEXIS 13555 (S.D.N.Y. 1969).

Opinion

DECISION AND ORDER

LASKER, District Judge.

Pursuant to Rule 54(d), Federal Rules of Civil Procedure, plaintiffs moved for a review of the taxation of costs by the clerk of this court and for an order disallowing costs in toto. The defendant cross-moved, pursuant to Rule 54(d), for an order allowing certain items in defendant’s bill of costs which were disallowed by the clerk of this court.

This action arose under Sections 10 (b), 14(d) (1) and 14(e) of the Securities Act of 1934. It was commenced on August 27, 1968, at which time plaintiffs sought to enjoin consummation of defendant’s then pending tender offer and to require defendant to return all shares which had been tendered to it. Judge Wyatt denied a motion for a temporary restraining order, and on September 12, 1968, after a three-day evidentiary hearing, Judge McLean denied plaintiffs' motion for a preliminary injunction.

On November 12, 1968, a twelve-day hearing commenced on a motion by plaintiffs to enjoin defendant, International Controls Corp. (“ICC”), from voting its Electronic Specialty Co. (“ELS”) stock at any regular or special meeting of the stockholders of ELS, or to divest defendant of its ELS common stock and deben[160]*160tures, and on defendant’s motion for summary judgment. While denying plaintiffs’ request for divestiture or for an injunction against the voting of ELS stock, the District Court did find violations of the Act and issued a preliminary injunction against defendant’s violating the 1934 Act in the future in connection with any tender offer for securities of Electronic Specialty Co. It also granted summary judgment against one of the plaintiffs. Both parties then appealed to the Court of Appeals for a review of the decision. On January 24, 1969, that Court affirmed the District Court’s denial of the relief sought by plaintiffs, but reversed the District Court’s order granting the preliminary injunction against future violations of the Act with directions to dismiss the complaint. (409 F.2d 937 (2d Cir., Jan. 24, 1969)).

I. PLAINTIFFS’ MOTION FOR DIS-ALLOWANCE OF COSTS IN TOTO

Under Rule 54(d), the prevailing party is generally allowed costs.1 The plaintiffs, while admitting that the defendant is the prevailing party, nevertheless request the court to exercise its discretion and not to follow the general rule. Although the court has discretionary authority to deny costs to the prevailing party,2 the facts here do not warrant the exercise of that discretion. There is no doubt that the plaintiffs brought this action in good faith, but this alone will not alter the general rule, especially where the losing party is financially able to bear the costs of the litigation.

The cases cited by plaintiffs involve culpable actions by the prevailing party which justify the “penalty” of the denial of costs. No such actions are present here. Ledge Hill Farms, Inc. v. W. R. Grace & Co., 230 F.Supp. 638 (SDNY, 1964), is also distinguishable from the present case. There, the defendant was found to have violated Section 2(e) of the Robinson-Patman Act, but was held to be the prevailing party when thé plaintiff was found to have suffered no damages. No such violation by the prevailing party was present here.

In their moving papers, the plaintiffs express concern that if the defendant is awarded costs, it will not seek to collect the proportionate share from Electronic Specialty Co. Since defendant now owns a controlling interest in ELS, it is in the interest of justice for defendant to seek no more than one-third of the awarded costs from each plaintiff, despite the general rule that where there are several plaintiffs who join together each is individually liable for all the costs and not merely for his pro rata share.

The plaintiffs’ motion is therefore denied, subject to the above allocation provision.

II. DEFENDANT’S MOTION FOR ALLOWANCE OF CERTAIN COSTS DISALLOWED BY THE CLERK

A. TRANSCRIPTS OF HEARINGS Defendant claimed $21.90 and $291.95 for the cost of transcripts of hearings before Judges Wyatt and McLean, respectively, and $3,179.50 for the transcript of hearing before the present Judge. The clerk of the court disallowed the first two, and reduced the third figure to $2,470.80, based on the regular rate for an original plus one copy.

The cost of transcripts of testimony taken at trial (hearings here) may be taxed against the losing party when, in the court’s judgment, such transcripts [161]*161are necessary for use in the case. Title 28 U.S.C. § 1920(2) specifically authorizes the taxation of such costs, stating that the judge or clerk may tax as costs "“fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case.” The major consideration, therefore, is whether the transcript was “necessarily obtained for use in the case.” Berner v. British Commonwealth Pacific Airlines, 362 F.2d 799 (2d Cir., 1966); Bank of America v. Loew’s International Corp., 163 F.Supp. 924 (SDNY, 1958).

The taxation of costs for the transcript of the hearing before Judge McLean is proper, since it was necessary for “use in the case.” Portions of the transcript were freely introduced into the later hearing.

The transcript of the hearing before the present Judge was, in a similar manner, “necessarily obtained for use in the case.” The hearing was a lengthy and complex one, and its complexity could reasonably have been anticipated before the hearing commenced. Berner v. British Commonwealth Pacific Airlines, supra. Witnesses were often questioned regarding testimony previously given on matters of a specialized and detailed nature. The transcript was also made necessary by the fact that the parties were required to submit proposed findings of fact and conclusions of law at the close of the hearing. The above factors demonstrate that the transcript was necessary to an effective performance of counsel and not merely for their convenience. Bennett Chemical Co. v. Atlantic Commodities, Ltd., 24 F.R.D. 200 (SDNY, 1959). The court found the transcript helpful during the hearing, as well as after the hearing ended. Prashker v. Beech Aircraft Corp., 24 F.R.D. 305 (D. Del., 1959).

The court further concludes that the costs for the transcripts of the hearings should be assessed at the daily rate, since time was of the essence throughout this litigation because of the impending stockholders’ meeting of ELS (December 30, 1968) and the desire of the parties to expedite appeal. Therefore, costs of the two hearing transcripts of $291.95 and $3,179.50 are taxed in full in favor of the prevailing party, for a total of $3,471.45.

B. FEES AND DISBURSEMENTS OF WITNESSES

Witness fees are properly includable as costs of trial, pursuant to Title 28 U.S.C. § 1920(3). Defendant claims costs for the appearance of two witnesses, consisting of $8.00 each for witness fees ($4.00 per day for two days), $16.00 each for daily subsistence ($8.00 per day. for two days), and travel expense of $336.00 and $36.80.

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Bluebook (online)
47 F.R.D. 158, 13 Fed. R. Serv. 2d 1209, 1969 U.S. Dist. LEXIS 13555, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electronic-specialty-co-v-international-controls-corp-nysd-1969.