Split Pivot, Inc. v. Trek Bicycle Corp.

154 F. Supp. 3d 769, 2015 U.S. Dist. LEXIS 173563, 2015 WL 9593630
CourtDistrict Court, W.D. Wisconsin
DecidedDecember 31, 2015
Docket12-cv-639-wmc
StatusPublished
Cited by6 cases

This text of 154 F. Supp. 3d 769 (Split Pivot, Inc. v. Trek Bicycle Corp.) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Split Pivot, Inc. v. Trek Bicycle Corp., 154 F. Supp. 3d 769, 2015 U.S. Dist. LEXIS 173563, 2015 WL 9593630 (W.D. Wis. 2015).

Opinion

OPINION & ORDER

WILLIAM M. CONLEY, District Judge

In this patent infringement action, plaintiff Split Pivot, Inc., alleged that defendant Trek Bicycle Corporation (“Trek”) had infringed its U.S. Patent Nos. 7,717,212 and 8,002,301. Following cross-motions for summary judgment, the court granted Trek judgment for non-infringément as a matter of law on the undisputed facts. Split Pivot, Inc. v. Trek Bicycle Corp., 987 F.Supp.2d 838 (W.D.Wis.2013). The Federal Circuit affirmed this judgment without opinion on December 8, 2014. Split Pivot, Inc. v. Trek Bicycle Corp., 585 Fed.Appx. 1011. Remaining before the court for decision are Split Pivot’s objections to Trek’s bill of costs.1 (Dkt. # 242). For the reasons explained below, the- costs awarded by the clerk will be reduced by $225,082.73 for a total award of $40,453.19.

BACKGROUND

After originally prevailing in this action, Trek sought' $318,033.46 in costs. (Dkt. #222.) On September 12, 2014, the Clerk of- Court taxed costs against Split Pivot in the amount of $265,535.92. (Dkt. # 236.) In doing so, the Clerk made the following specific reductions in Trek’s requested costs:

• $2,321.40 for deposition exhibits. The Clerk found it was “objectively unreasonable to force plaintiff to pay $2j321.40 for a copy of a book when . defendant is the party who put the book into evidence.”2
• $48,459.47 for bicycles manufactured by Trek for use as exemplification exhibits at trial. The Clerk found that Trek had not established that those exhibits were “necessary, that the costs sought were actually in.curred or that the bicycles could, not have been returned to inventory and sold.”
• $4,038.07 for claimed electronic discovery costs. The Clerk found that Trek could not “recover the cost of training, consulting fees, or charges for hard and USB drivés provided by the vendor.”

At the same time, the Clerk allowed a number of other costs over Split Pivot’s objections. For instance, the Clerk awarded Trek its costs for videotaping depositions consistent with Little v. Mitsubishi Motors North America, Inc., 514 F.3d 699, 701 (7th Cir.2008). The Clerk also concluded that Trek had provided sufficient records to support its request for copying costs and awarded Trek the majority of its costs for electronic discovery, citing Novozymee A/S v. Danisco A/S, No. 10-cv-251-bbc, at dkt. #1006 (W.D.Wis. Mar. 11, 2013). With the exception of the latter [772]*772costs, which will be reduced to include the electronic equivalent of making copies consistent with now prevailing case law in this and other circuits, the clerk’s award will be upheld.

OPINION

Federal Rule of Civil Procedure 54(d) states that “[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney’s fees—should be allowed to the prevailing party.” This “creates a presumption that the prevailing party should recover costs.” McGill v. Faulkner, 18 F.3d 456, 458 (7th Cir.1994). In light of this presumption, “a denial of costs to a prevailing party must be accompanied by an explanation of the district court’s ‘good reasons’ for this denial.” Krocka v. City of Chi., 203 F.3d 507, 518 (7th Cir.2000). There is no dispute that Trek is the prevailing party in this litigation. Thus, the court must consider: (1) whether the costs to which Split Pivot objects are taxable under 28 U.S.C. § 1920; and (2) whether the amounts are “reasonable and necessary.” Northbrook Excess & Surplus Ins. Co. v. Procter & Gamble Co., 924 F.2d 633, 642 (7th Cir.1991).

I. Claim of Indigency

As a preliminary matter, Split Pivot argues that the court should decline to tax any costs against it due to indigency. While the presumption in favor of costs “may be overcome by a showing of indi-gency,” it is “within the discretion of the district court to consider a plaintiffs indigency in denying costs under Rule 54(d).” Badillo v. Cent. Steel & Wire Co., 717 F.2d 1160, 1165 (7th Cir.1983). The Seventh Circuit directs that this be done in a two-step process. “First, the district court must make a threshold factual finding that the losing party is ‘incapable of paying the court-imposed costs at this time or in the future.’ ” Rivera v. City of Chi., 469 F.3d 631, 635 (7th Cir.2006) (quoting McGill v. Faulkner, 18 F.3d 456, 460 (7th Cir.1994)). “Second, the district court should consider the amount of costs, the good faith of the losing party, and the closeness and difficulty of the issues raised by a case when using its discretion to deny costs.” Id.

Trek argues that the indigency exception does not apply to corporate defendants like Split Pivot at all, citing Fehribach v. Ernst & Young LLP, 493 F.3d 905 (7th Cir.2007). In Fehribach, the trustee of Taurus Foods, Inc., argued that the district court should not have taxed costs because it was indigent, as demonstrated by its entry into bankruptcy. In rejecting the trustee’s argument, the Seventh Circuit stated that “to allow [corporations] to escape paying costs on grounds of indigen-cy would blur the distinction between individuals and corporations.” Id. at 913. “For these reasons, it is indeed better to award costs as of course (which is what [Rule 54(d)] says) and leave to bankruptcy the question whether collection is possible.” Id. (internal quotation marks omitted) (quoting Rivera, 469 F.3d at 637 (Easterbrook, J., concurring)).

At least one district court in this circuit has interpreted the Fehribach holding as foreclosing entirely the application of the indigence exception to corporations. See Bus. Sys. Eng’g, Inc. v. Int’l Bus. Machs. Corp., 249 F.R.D. 313, 316 (N.D.Ill.2008). Whether this is a correct reading or not, Fehribach at least stands for the proposition that'a post-litigation award of costs.is the wrong time and place to take up the question of a corporation’s indigency in the ordinary course.

Here, Split Pivot represents that it has incurred significant expenses throughout this litigation that far outstrip its revenues and will likely be forced to declare [773]*773bankruptcy should the court tax costs. In light of Fehribach, which -after' all concerned a situation where the corporation was already in bankruptcy, there would appear little basis to absolve.

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154 F. Supp. 3d 769, 2015 U.S. Dist. LEXIS 173563, 2015 WL 9593630, Counsel Stack Legal Research, https://law.counselstack.com/opinion/split-pivot-inc-v-trek-bicycle-corp-wiwd-2015.