UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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Nos. 92-2312
92-2313
IN RE: TWO APPEALS ARISING OUT OF THE
SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.
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APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Raymond L. Acosta, U.S. District Judge]
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Before
Selya and Cyr, Circuit Judges,
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and Fuste,* District Judge.
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Paul K. Connolly, Jr., with whom Damian R. LaPlaca, LeBoeuf,
_____________________ _________________ ________
Lamb, Leiby & MacRae, Ralph W. Dau, Peter B. Ackerman, Jeffrey W.
____________________ ____________ _________________ __________
Kilduff, O'Melveny & Myers, Raul E. Gonzalez-Diaz, A.J. Bennazar-
_______ _________________ _____________________ ______________
Zequeira, Gonzalez & Bennazar, Andrew K. Epting, Jr., G. Trenholm
________ ___________________ _____________________ ___________
Walker, Wise & Cole, Homer L. Marlow, William G. Liston, Marlow,
______ ___________ _______________ _________________ _______
Shofi, Connell, Velerius, Abrams, Lowe & Adler, Deborah A. Pitts,
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Hancock, Rothert & Bunshoft, Bethany K. Culp, Patrick McCoy,
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Oppenheimer Wolff & Donnelly, Lon Harris, Harris & Green, Stuart
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W. Axe, Lester, Schwab, Katz & Dwyer, Adrian Mercado, Mercado &
______ _____________________________ ______________ _________
Soto, Virgilio Mendez Cuesta, Ernesto Rodriguez-Suris, and
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Latimer, Biaggi, Rachid, Rodriguez-Suris & Godreau were on
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consolidated briefs, for appellants.
Gary L. Bostwick, with whom R. Lance Belsome was on brief,
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for appellees Hotel Systems International, et al.
Alvaro Calderon, with whom Will Kemp and Monita F. Sterling,
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PSC Liaison, were on brief, for appellee Plaintiffs' Steering
Committee.
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*Of the District of Puerto Rico, sitting by designation.
SELYA, Circuit Judge. These consolidated appeals
SELYA, Circuit Judge.
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require us to grapple for the first time with a looming problem
in modern federal court practice: how, if at all, should
expenses indigenous to a court's handling of mass disaster
litigation be reallocated once the winners and losers have been
judicially determined? Here, the appellants, late-joined
defendants and defendants in cross-claim, prevailed in the
underlying litigation. Nonetheless, the district court,
coincident with the entry of judgment, effectively foreclosed
them from either seeking costs under Fed. R. Civ. P. 54(d) or
otherwise lobbying for reallocation of several hundreds of
thousands of dollars in court-ordered expense assessments.
Finding that the court's abrupt slamming of these doors was
improvident, we vacate the relevant portion of the judgment and
remand for further proceedings.
I. BACKGROUND
I. BACKGROUND
In 1987, the Judicial Panel on Multidistrict Litigation
appointed the Honorable Raymond L. Acosta, a United States
District Judge for the District of Puerto Rico, to handle some
270 cases arising out of the deadly fire that had earlier
engulfed the San Juan Dupont Plaza Hotel. See In re Fire
___ ___________
Disaster at Dupont Plaza Hotel, 660 F. Supp. 982 (J.P.M.L. 1987)
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(per curiam). Judge Acosta's stewardship proved "a model of
judicial craftsmanship and practical ingenuity." In re Nineteen
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Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire
_________________________________________________________________
Litig., 982 F.2d 603, 606 (1st Cir. 1992). Among the many
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2
successful innovations that brought the litigation to a
celeritous conclusion were (1) the creation of a Joint Document
Depository (JDD), which housed and copied for distribution all
discovery materials, see Pretrial Order No. 127 (Dec. 2, 1988),
___
at 66; (2) the appointment of liaison counsels (plaintiffs' and
defendants'), each of whom was responsible for dispersing filings
among his or her constituents, see id. at 61-63; and (3) the
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formation of a Joint Discovery Committee (JDC) dedicated to
devising means of expediting the litigation, see In re Recticel
___ ______________
Foam Corp., 859 F.2d 1000, 1001 (1st Cir. 1988) (describing
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operation of JDC). To fund these innovations, the district court
entered a series of case-management orders which imposed
mandatory assessments upon all litigants.1 In this way, the
court periodically requisitioned fresh monies as funds on hand
were depleted. The orders were silent as to (i) whether or not
the court planned to readjust defendants' contributions in light
of future developments, and (ii) the court's authority, if any,
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1Because the mechanics of the allocation process are not
critical for present purposes, we supply merely a thumbnail
sketch. The Plaintiffs' Steering Committee (PSC) and the
defendant San Juan Dupont Plaza Hotel Corporation were assessed a
total of $100,000 to defray the JDD's start-up costs. See
___
Pretrial Order No. 127, at 69-70. Thereafter, each litigant paid
for JDD-related services actually used. See id. at 70. To cover
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costs that were not offset by service charges (e.g., the JDD's
____
overhead expenses), the district court imposed mandatory
assessments. Initially, at least, the PSC bore 15% of the
incremental cost and the defendants, collectively, bore 85%. See
___
id. at 71. Within the defense collective, per-member assessments
___
were presumably equal.
3
to effectuate such reallocations.2
Roughly two years after the first shots in the
litigation had been fired, a group of defendants involved in the
hotel's ownership and operation settled with the plaintiffs (the
fire victims and their families) and cross-claimed for
indemnification against various insurers whose liability policies
had expired before the fire started (the pre-fire insurers). On
August 9, 1989, the plaintiffs followed the cross-claimants'
lead, adding the pre-fire insurers as direct defendants under
P.R. Laws Ann. tit. 26, 2001, 2003 (1976). Because discovery
had formally closed on December 15, 1988, see Pretrial Order No.
___
127, at 96-97, the pre-fire insurers' investigation of the newly
emergent claims against them necessarily centered around a review
of documents stored in the JDD.3
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2We add a small qualifier to this statement. Pretrial Order
No. 127 is a document in excess of 200 pages dealing with a
potpourri of matters. The portion of the order that discusses
defendants' assessments does not address either of the two points
mentioned in the text. However, in the portion of the document
that addresses assessments imposed on plaintiffs' attorneys to
fund the PSC and enable it to make its cost-sharing
contributions, the district court provides for possible
"reallocation of expenses based upon the actual, relative
recovery" achieved by the various plaintiffs. Id. at 39. At the
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very end of the document, the district court states that "[t]his
Order may be either amended or modified by the Court sua sponte
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or upon good cause shown." Id. at 205. None of the parties
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argue that either of the provisions we have identified relate to
the possible reallocation of cost-sharing assessments levied
against appellants (or any defendants, for that matter). And,
none of the other orders contain any language, general or
specific, similar to that which we have quoted.
3In one attempt to conduct some independent discovery, the
pre-fire insurers moved to reopen discovery for ninety days. The
docket sheet indicates that this motion was granted on March 19,
1991, albeit only for a three-day period.
4
The pre-fire insurers quickly filed dispositive
motions. The district court, faced with more pressing problems,
was slow in addressing the motions. Finally, the court granted
them on September 11, 1992, see In re San Juan Dupont Plaza Hotel
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Fire Litig., 802 F. Supp. 624 (D.P.R. 1992), aff'd, 989 F.2d 36
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(1st Cir. 1993), entered judgment in favor of the pre-fire
insurers on all claims, and decreed that the parties would bear
their own costs.
On appeal, seventeen pre-fire insurers complain that
the district court abused its discretion by summarily precluding
both an award of costs and a complete or partial refund of the
cost-sharing assessments.4 The fire victims, represented by the
Plaintiffs' Steering Committee (PSC), and two cross-claimants,
Hotel Systems International (HSI) and Dupont Plaza Associates
(Associates), filed opposition briefs and participated in oral
argument.
II. NATURE OF THE STAKES
II. NATURE OF THE STAKES
In the expectation that describing the disputed
expenditures in greater detail will help to put matters in the
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4The appellants are: Continental Insurance Company, Federal
Insurance Company, First State Insurance Company, Granite State
Insurance Company, Highlands Insurance Company, Industrial
Underwriters Insurance Company, International Insurance Company,
Landmark Insurance Company, Protective National Insurance Company
of Omaha, Puerto Rico American Insurance Company, Safety Mutual
Casualty Corporation, St. Paul Fire & Marine Insurance Company,
St. Paul Mercury Insurance Company, California Union Insurance
Company, Central National Insurance Company of Omaha, Insurance
Company of North America, and Pacific Employers Insurance
Company. The latter four carriers filed a separate notice of
appeal. Because the arguments are much the same, we treat the
two appeals as a unit.
5
proper perspective, we travel that route.
A. Court-Ordered Assessments.
A. Court-Ordered Assessments.
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The vast majority of appellants' outlays comprise
mandatory payments imposed by six orders of the district court.
See Pretrial Order No. 48 (Feb. 11, 1988); Pretrial Order No. 67
___
(Apr. 18, 1988); Pretrial Order No. 127, supra; Pretrial Order
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No. 135 (Jan. 17, 1989); Pretrial Order No. 212 (July 31, 1989);
Order No. 259 (Aug. 21, 1990). Although the first four orders
eventuated before appellants entered the fray, those orders
required appellants to pay the sums assessed therein shortly
after filing entries of appearance. See Pretrial Order No. 127,
___
at 71; Pretrial Order No. 135, at 9. Appellants paid the
assessments under protest.5 The compulsory payments total
$705,500. Eighty-three percent of this aggregate amount
$586,500 represents assessments levied under the four earliest
cost-sharing orders.
Appellants' tribute helped to fund the various
instrumentalities that Judge Acosta had set in place to expedite
the litigation. Thus, out of each insurer's total contribution
($41,500), $18,000 went toward defraying the JDD's operating
expenses, see Pretrial Order No. 127, at 72; $3,500 went toward
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defraying the JDC's expenses, see id.; and $10,000 went toward
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5We fully understand appellants' submissiveness, inasmuch as
refusal to pay would have resulted in sanctions, see Pretrial
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Order No. 127, at 72; Pretrial Order No. 135, at 10, and this
court had made no secret of its disinclination to review such
orders prior to entry of final judgment. See Recticel, 859 F.2d
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at 1006.
6
paying costs associated with the office of Defendants' Liaison
Person (DLP).6 See id.; Pretrial Order No. 212, at 1; Order No.
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259, at 1. The district court originally intended that the
remaining $10,000 would subsidize the construction of a new
courtroom and related facilities. See Pretrial Order No. 135, at
___
9. The idea was abandoned and the funds in question were
eventually utilized for operational costs of the JDD and DLP.
See In re San Juan Dupont Plaza Hotel Fire Litig., 142 F.R.D. 41,
___ _____________________________________________
46 n.20 (D.P.R. 1992). Therefore, the figures recited above,
insofar as they pertain to the JDD and DLP, are minimum
estimates.
B. Ordinary Costs.
B. Ordinary Costs.
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Presumably, the payments made pursuant to the cost-
sharing orders, though substantial, do not comprise the whole of
appellants' investment in this sprawling litigation. Their
successful defense doubtless required other, more commonplace
expenditures, such as photocopy costs of the type and kind
routinely associated with litigation. See, e.g., 28 U.S.C.
___ ____
1920 (1988) (listing fees and expenses taxable as costs).
III. WAIVER
III. WAIVER
Having described the expenses appellants seek to
recoup, we pause to address a threshold matter. The plaintiffs
submit that the pre-fire insurers waived any claim for expense
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6The DLP was responsible for receiving, on behalf of all
defendants, and disseminating, among all defense counsel, court
orders and discovery materials. See Pretrial Order No. 127, at
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62-63.
7
recovery by failing to file bills of costs after judgment
entered. See id. (requiring bill of costs to be filed). We
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demur: the doctrine of waiver presents no barrier to appellants'
attempt to recover court costs or request a reallocation of the
mandatory cost-sharing assessments.
To be sure, the failure seasonably to file a bill of
costs with the district court may, in certain circumstances,
constitute a waiver of a party's right to recoup costs under Rule
54(d). See Mason v. Belieu, 543 F.2d 215, 222 (D.C. Cir.)
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(vacating a cost award where plaintiffs had failed to file a bill
of costs), cert. denied, 429 U.S. 852 (1976). There is no waiver
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here, however, because the district court, by ordering,
coincident with the entry of judgment, that each party bear its
own costs, preempted appellants' opportunity to file a bill of
costs and did so despite D.P.R. Loc. R. 331.1, which allows
prevailing parties ten days after notice of judgment to file
bills of costs. In the face of this flat ruling, the subsequent
filing of an itemized bill of costs would have served no useful
purpose.7 The law does not require litigants to run fools'
errands. Thus, a party who forgoes an obviously futile task will
not ordinarily be held thereby to have waived substantial rights.
See Franki Found. Co. v. Alger-Rau & Assocs. Inc., 513 F.2d 581,
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7Similarly, given the clarity and definiteness of the trial
court's order, a post-trial motion for reconsideration was not
required as a condition precedent to taking an appeal. See
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Sherrill v. Royal Indus., Inc., 526 F.2d 507, 509 n.2 (8th Cir.
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1975); Franki Found. Co. v. Alger-Rau & Assocs. Inc., 513 F.2d
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581, 587 (3d Cir. 1975).
8
587 (3d Cir. 1975) (refusing to allow waiver to be grounded in a
party's dereliction of a futile task); see also Northern Heel
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Corp. v. Compo Indus., Inc., 851 F.2d 456, 461 (1st Cir. 1988)
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(stating, in a different context, that "[t]he law should not be
construed idly to require parties to perform futile acts or to
engage in empty rituals").
A somewhat closer question is whether appellants, by
failing to ask the district court, after judgment entered, to
readjust the mandatory assessments, thereby waived the right to
raise that issue here. We hold they have not. Our decision is
largely pragmatic. There is no rule specifically limiting the
time within which a party may make a request for an order
reallocating case-management expenses. Cf. White v. New
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Hampshire Dep't of Employment Sec., 455 U.S. 445, 455 (1982)
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(holding that no general federal rule governs the timing of post-
judgment motions for attorneys' fees under 42 U.S.C. 1988).
Should we refuse to entertain the issue, appellants would
presumably return to the district court and formally request a
reallocation. Thus, as a practical matter, to abstain from
considering the issue now would only prolong an already
protracted litigation. To the extent that an issue is one of law
rather than fact, can be resolved without doubt on the existing
record, and is likely to arise in other cases, an appellate court
may, in the interests of justice, choose to overlook a procedural
default. See Singleton v. Wulff, 428 U.S. 106, 121 (1976);
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United States v. La Guardia, 902 F.2d 1010, 1013 (1st Cir. 1990).
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9
Here, we think it best to exercise our discretion, meet the
problem head-on, and excuse appellants' failure to move for
reallocation below.
IV. ANALYSIS
IV. ANALYSIS
We turn now to the meat of the consolidated appeals.
Appellants ask us to order that they be afforded a fair
opportunity to recover their court costs and cost-sharing
assessments either under Fed. R. Civ. P. 54(d) or under some
other source of judicial power. We address these alternatives
separately.
A. Rule 54(d).
A. Rule 54(d).
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Appellants assert that the district court's unexplained
denial of costs constituted an abuse of discretion. Because they
prevailed on all claims below, their thesis runs, they are
presumptively entitled to recover their costs of suit under Fed.
R. Civ. P. 54(d) and these include the mandatory assessments.
In order to evaluate this multifaceted contention, we first
review the general operation of Rule 54(d), elucidating, in
particular, the leeway it gives trial courts to grant or deny
costs to prevailing parties. We then analyze the rule's
implications in the context of this case.
1. General Operation. Congress has enumerated the
1. General Operation.
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type of expenses that a federal court "may tax as costs." 28
U.S.C. 1920.8 Rule 54(d) works in tandem with the statute.
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8The section provides:
A judge . . . may tax as costs the following:
10
It provides, with exceptions not pertinent here, that "costs
shall be allowed as of course to the prevailing party unless the
court otherwise directs." Fed. R. Civ. P. 54(d). The combined
effect of the statute and rule is to cabin district court
discretion in two ways.
First, section 1920 has an esemplastic effect. It
fills the void resulting from Rule 54(d)'s failure to define the
term "costs," see Crawford Fitting Co. v. J. T. Gibbons, Inc.,
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482 U.S. 437, 441 (1987) (holding that "[section] 1920 defines
the term `costs' as used in Rule 54(d)"), and in that way
constrains the district court's power to determine which expense
categories constitute taxable costs. In other words, the statute
and rule, read together, signify that a district court lacks the
ability to assess "costs" under Rule 54(d) above and beyond those
that come within the statutory litany. See id.
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In light of the foregoing, we conclude that Rule 54(d)
confers no discretion on federal courts independent of the
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(1) Fees of the clerk and marshal;
(2) Fees of the court reporter for all or any
part of the stenographic transcript
necessarily obtained for use in the case;
(3) Fees and disbursements for printing and
witnesses;
(4) Fees for exemplification and copies of
papers 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 costs
of special interpretation services . . . .
28 U.S.C. 1920.
11
statute to tax various types of expenses as costs. See id.;
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accord Denny v. Westfield State College, 880 F.2d 1465, 1468 (1st
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Cir. 1989) (reasoning that, in light of Crawford, Rule 54(d) does
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not constitute a separate source of judicial discretion); Freeman
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v. Package Mach. Co., 865 F.2d 1331, 1346 (1st Cir. 1988)
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(similar). Rather, the discretion that Rule 54(d) portends is
solely a negative discretion, "a power to decline to tax, as
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costs, the items enumerated in 1920." Crawford, 482 U.S. at
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442; accord Rodriguez-Garcia v. Davila, 904 F.2d 90, 100 (1st
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Cir. 1990).
We further believe that this negative discretion the
power to deny recovery of costs that are categorically eligible
for taxation under Rule 54(d) operates in the long shadow of a
background presumption favoring cost recovery for prevailing
parties. This presumption emanates from the rule's language:
"costs shall be allowed as of course." Notwithstanding that the
rule permits a nisi prius court to deviate from this baseline,
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see, e.g., Phetosomphone v. Allison Reed Group, Inc., 984 F.2d 4,
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9 (1st Cir. 1993); Heddinger v. Ashford Memorial Community Hosp.,
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734 F.2d 81, 86 (1st Cir. 1984); Emerson v. National Cylinder Gas
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Co., 251 F.2d 152, 158 (1st Cir. 1958), awarding costs to a
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prevailing party is the norm. See Delta Air Lines, Inc. v.
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August, 450 U.S. 346, 352 (1981) (stating that "prevailing
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plaintiffs presumptively will obtain costs under Rule 54(d)");
Crossman v. Marcoccio, 806 F.2d 329, 331 (1st Cir. 1986)
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(observing that Rule 54(d) "generally permits prevailing parties
12
to recover their costs"), cert. denied, 481 U.S. 1029 (1987);
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Castro v. United States, 775 F.2d 399, 410 (1st Cir. 1985)
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(noting that a prevailing party "ordinarily is entitled" to
recoup the costs enumerated in section 1920).
This presumption, then, constitutes the second
constraint on a district court's ability to freewheel in the Rule
54(d) environment. After all, it is difficult to dispute the
proposition that a court's discretion in implementing a rule
which articulates a norm is more confined than a court's
discretion in applying a nondirective rule. See White & White,
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Inc. v. American Hosp. Supply Corp., 786 F.2d 728, 731-32 (6th
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Cir. 1986); Coyne-Delany Co. v. Capital Dev. Bd., 717 F.2d 385,
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392 (7th Cir. 1983).
Beyond the presumption favoring cost recovery for
prevailing parties, there is also fairly general agreement that a
district court may not exercise its discretion to disallow a
prevailing party's bill of costs in whole or in part without
articulating reasons. See Schwarz v. Folloder, 767 F.2d 125, 131
___ _______ ________
(5th Cir. 1985); Gilchrist v. Bolger, 733 F.2d 1551, 1557 (11th
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Cir. 1984); Baez v. United States Dep't of Justice, 684 F.2d 999,
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1004 & n.28 (D.C. Cir. 1982) (collecting cases from ten
circuits). The Sixth Circuit has gone so far as to catalogue the
justifications that it deems acceptable and unacceptable for
denying costs in the Rule 54(d) milieu. See White & White, 786
___ _____________
13
F.2d at 730.9 In the Seventh Circuit, costs may be denied only
when the losing party is indigent or "there has been some fault,
misconduct, default, or other action worthy of penalty" on the
winner's side. Burroughs v. Hills, 741 F.2d 1525, 1542 (7th Cir.
_________ _____
1984), cert. denied, 471 U.S. 1099 (1985).
_____ ______
To the present, this court has been more muted both
about a district judge's duty to explain a denial of costs and
about the reasons that may warrant such a denial.10 In
addressing those subjects today, we stop short of requiring
district courts to state reasons or make elaborate findings in
every case when acting under Rule 54(d). Instead, we hold that,
if the basis for denying costs is readily apparent on the face of
the record, a trial court need not explain its action merely for
explanation's sake.11 If, however, the situation is less than
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9The White & White court articulated four circumstances in
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which it believed costs might be denied (the taxable expenditures
are unnecessary or unreasonably large; the prevailing party
needlessly prolonged the proceedings; a prevailing plaintiff's
recovery is so insignificant that his or her victory amounts to a
defeat; the issues prove to be close and difficult), two
circumstances that a district court must ordinarily ignore (the
jury's seeming generosity; the prevailing party's ability to pay
his or her own costs), and two circumstances which, though
relevant, are insufficient, standing alone, to warrant an
exercise of negative discretion (a losing party's good faith; the
propriety with which the loser conducted the litigation). See
___
White & White, 786 F.2d at 730.
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10We have, however, reversed a district court's denial of
costs to a prevailing party when the court neglected to furnish
any valid explanation for the denial. See Templeman v. Chris
___ _________ _____
Craft Corp., 770 F.2d 245, 249 (1st Cir.), cert. denied, 474 U.S.
___________ _____ ______
1021 (1985).
11Although we do not impose an absolute duty to set forth
findings in all cases, we remind the district courts that
"reasonably complete findings at the trial court level invariably
14
obvious, the court must offer some statement as to why it denied
statutory costs to a prevailing party.
Adopting this rule balances the need for findings
against the proliferation of busywork that threatens to inundate
the district courts. It also parallels an approach that has
served us well in analogous contexts. See, e.g., Foster v. Mydas
___ ____ ______ _____
Assocs., Inc., 943 F.2d 139, 141-43 (1st Cir. 1991) (reaffirming,
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in the context of both 42 U.S.C. 1988 and Fed. R. Civ. P. 11,
that a district court, absent a readily apparent basis, must
articulate the reasons undergirding a fee award); Figueroa-Ruiz
_____________
v. Alegria, 905 F.2d 545, 549 (1st Cir. 1990) ("While we do not
_______
hold that the district court must make findings and give
explanations every time a party seeks sanctions under Rule 11, we
do require a statement when the reason for the decision is not
obvious or apparent from the record."); Figueroa-Rodriguez v.
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Lopez-Rivera, 878 F.2d 1488, 1491 (1st Cir. 1988) (discussing the
____________
need for findings when the reasons for invoking Fed. R. Civ. P.
16(f)'s sanction provisions are less than evident).
2. Application. Our overview completed, we now apply
2. Application.
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Rule 54(d) to the facts of this case. Appellants argue that the
district court erred by summarily precluding an award of costs
under Rule 54(d) without explanation and without even
entertaining a bill of costs. We think the contention has
partial merit.
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facilitate the appellate task." United States v. De Jesus, 984
_____________ _________
F.2d 21, 22 n.4 (1st Cir. 1993).
15
a.
a.
__
To the extent that the district court's order prevents
appellants from reclaiming their mandatory cost-sharing
assessments through the medium of Rule 54(d), we discern no
error. As evidenced by the record, these payments were primarily
directed into the operating budgets of the JDD and DLP. In a
prior ruling, the district court explained that the assessments
helped subsidize such general overhead expenses as rent,
utilities, telephone charges, and staff salaries. See Hotel Fire
___ __________
Litig., 142 F.R.D. at 46 & n.19. We agree with Judge Acosta that
______
28 U.S.C. 1920 does not identify "[t]hese general litigation
expenses . . . as taxable." Id. at 46; see also Wahl v. Carrier
___ ___ ____ ____ _______
Mfg. Co., 511 F.2d 209, 217 (7th Cir. 1975) (disallowing similar
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overhead expenses); 6 James W. Moore et al., Moore's Federal
________________
Practice 54.77[8], at 54-480 (2d ed. 1993) (stating that
________
"general overhead expense[s] . . . are not costs within [section
1920] and Rule 54(d)"). Nor can parties dissect case-management
assessments in an attempt to trace every last penny and thereby
attribute fractional shares to expenses which, if freely incurred
by an individual litigant, might qualify as taxable costs.
We will not paint the lily. Rule 54(d) cannot be
stretched beyond the parameters defined in section 1920. See
___
Denny, 880 F.2d at 1468; Templeman v. Chris Craft Corp., 770 F.2d
_____ _________ _________________
245, 249-50 (1st Cir.), cert. denied, 474 U.S. 1021 (1985); Bosse
_____ ______ _____
v. Litton Unit Handling Sys., 646 F.2d 689, 695 (1st Cir. 1981).
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Accordingly, district courts possess no authority under Rule
16
54(d) to tax as costs case-management charges of a type or kind
unenumerated in 28 U.S.C. 1920, including, without limitation,
general overhead expenses paid pursuant to case-management orders
in mass disaster litigation. It follows inexorably that the
court below correctly treated these expenditures as lying outside
the stunted reach of Rule 54(d).
b.
b.
__
The district court's September 11, 1992 final judgment
regarding the claims against the pre-fire insurers also barred
recovery of any ordinary costs incurred by appellants. The
district court gave no explanation for its curt preclusion of
taxable costs, and none is evident from the record. Moreover, by
acting in so peremptory a manner, the court foreclosed appellants
from requesting ordinary costs in the ordinary fashion. See
___
generally D.P.R. Loc. R. 331.1 (allowing prevailing party ten
_________
days from entry of judgment in which to file a verified bill of
costs). On this record, we think that the district court abused
its discretion by depriving appellants of an opportunity to seek
ordinary costs, presumptively taxable under Rule 54(d), without a
word of explanation.12
c.
c.
__
To sum up, Rule 54(d) provides appellants only limited
comfort; upon the filing of bills of costs, the pre-fire insurers
____________________
12Appellants indicate that they incurred some taxable
photocopy expenses. See generally Rodriguez-Garcia, 904 F.2d at
___ _________ ________________
100 (holding certain photocopying expenses recoverable under Rule
54(d)). We have adequate reason to believe that they may also
have incurred other expenses taxable as costs.
17
will recover any itemized expenses that are statutorily
allowable, unless the district court offers a sound reason for
denying costs. However, to the extent that appellants invoke the
rule as a means of retrieving the big-ticket items that
constitute the centerpiece of these appeals the court-ordered
cost-sharing assessments they are fishing in an empty stream.
B. Reallocation of Court-Ordered Assessments.
B. Reallocation of Court-Ordered Assessments.
_________________________________________
Appellants also argue that, even if the mandatory
assessments fall outside Rule 54(d)'s domain, they may still be
reallocated. This asseveration supposes a federal court power,
unrelated to Rule 54(d), to redistribute, after judgment, an
initial division of discovery expenses among all parties, despite
the absence of an explicit reservation of the right to do so.
We think appellants' premise is sound. We hold that a
district court possesses the authority to reallocate court-
imposed case-management expenses if, in the exercise of its
considered judgment, it determines that equity and the interests
of justice so require. In the sections that follow, we trace the
derivation of that power, propose broad guidelines for its use,
and discuss what remains to be done in this instance.
1. Source of Power. The exigencies of complex,
1. Source of Power.
_________________
multidistrict litigation change the ordnance with which courtroom
battles are fought. Traditional procedures for serving papers
and gathering information must often give way to innovations
promoting economy and efficiency. See Manual for Complex
___ ____________________
Litigation 20.22, at 15 (2d ed. 1985). Moreover, the sheer
__________
18
number of parties and issues produces a "critical need for early,
active involvement by the judiciary." Id. 20.1, at 5. To
___
facilitate this involvement, explicit grants of authority
contained in the Civil Rules, which supplement the trial court's
inherent power to manage litigation, "enable the judge to
exercise substantial control and supervision over the conduct of
the litigation." Id. at 6.
___
Recent amendments to the Civil Rules have augmented the
trial judge's arsenal of case-management weapons. For example,
the 1983 overhaul of Rule 16 "encourage[s] pretrial management
that meets the needs of modern litigation." Fed. R. Civ. P. 16
advisory committee's notes. The drafters thought that cases
would be disposed of "more efficiently and with less cost and
delay" if "a trial judge intervene[s] personally at an early
stage to assume judicial control over a case." Id.; see also
___ ___ ____
Figueroa-Rodriguez, 878 F.2d at 1490 (acknowledging that in a
__________________
time "of increasingly complicated cases and burgeoning filings,
judges must have at their fingertips smooth-running, productive
machinery for conducting litigation and managing caseloads").
In this multidistrict litigation, involving upward of
2000 parties and raising a googol of issues, Judge Acosta's power
to mandate contributions to, inter alia, a central discovery
_____ ____
depository can scarcely be doubted. See Recticel, 859 F.2d at
___ ________
1001, 1004; see also David F. Herr, Multidistrict Litigation
___ ____ _________________________
9.7.3, at 205 (1986) (recognizing "the potential use of a
document depository as a means of facilitating efficiency").
19
While no procedural rule directly addresses pretrial cost-sharing
orders per se, Rule 26(f) expressly authorizes trial judges,
___ __
following discovery conferences, to enter orders for "the
allocation of expenses[] as are necessary for the proper
management of discovery." Fed. R. Civ. P. 26(f).13 We believe
that this rule is flexible enough to serve as the source of
judicial authority for imposing cost-sharing orders in complex
cases.14
The expense allocation orders Rule 26(f) authorizes
"may be altered or amended whenever justice so requires." Fed.
R. Civ. P. 26(f). For that reason, as well as on the basis of
common sense, a trial judge's power to promulgate cost-sharing
orders must carry with it the power to readjust such orders as
changed circumstances require. Indeed, in denying a petition for
mandamus addressed to the propriety of the very cost-sharing
orders here at issue, we acknowledged the district court's power
to "reshape and refashion its cost-sharing orders as new
information comes to light, or as information already known takes
on added significance." Recticel, 859 F.2d at 1004. We reaffirm
________
____________________
13Fed. R. Civ. P. 26(f) was adopted in 1980 in the hope that
judicial intervention would curb discovery abuse. See Fed. R.
___
Civ. P. 26(f) advisory committee's notes. Among other things,
the rule interjects the trial court in developing "a reasonable
program or plan for discovery." Id.
___
14This court has already remarked the striking similarity
between ordinary discovery orders and the case-management orders
that Judge Acosta tailored for use in this litigation. See
___
Recticel, 859 F.2d at 1002-03.
________
20
this message today,15 confident that our reading of Rule 26(f)
does not loose some strange new beast to prey on unsuspecting
litigants. In the last analysis, a district court's intrinsic
power to alter its own directives is a familiar one, applicable
to many other sorts of pretrial orders. See, e.g., Poliquin v.
___ ____ ________
Garden Way, Inc., ___ F.2d ___, ___ (1st Cir. 1993) [Nos. 92-
_________________
1115, 92-1116, slip op. at 20] (noting that pretrial protective
orders are "always subject to the inherent power of the district
court to relax or terminate the order, even after judgment").
Consequently, we hold that, despite the absence of any
language in a cost-sharing order reserving a trial judge's right
to rearrange the burdens therein imposed at a later date, "it is
certain beyond peradventure that [a] district court can . . .
entertain motions for the reallocation of expenses." Recticel,
________
859 F.2d at 1004-05. This power is the logical (and, we think,
necessary) extension of the court's authority to fashion pretrial
cost-sharing orders in the first place.
To say that the power to reallocate assessments under
cost-sharing orders can fairly be implied from the Civil Rules is
____________________
15While we emphasize that the power we describe here is an
implied power derived from the Civil Rules, we note that the
Supreme Court has, in limited circumstances, sanctioned federal
court resort to an intrinsic power analogous to its statutory
prerogative to assess costs and attorneys' fees. See Chambers v.
___ ________
NASCO, Inc., 111 S. Ct. 2123, 2133 (1991) (discussing federal
____________
courts' inherent power to shift fees in certain circumstances);
Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240,
___________________________ _________________
258-59 (1975) (similar). Be that as it may, we need not decide
today whether, apart from the power derived from the Civil Rules,
a district court possesses the inherent power to effectuate
reallocation of cost-sharing assessments previously imposed.
21
not to say that the district court's exercise of that power is
unbridled. In our view, the power is coupled with an interest in
fairness and its exercise must, therefore, comport with first
principles of equity. It is to this unexplored terrain that we
now turn.
2. The Standards Governing Reallocation. Although
2. The Standards Governing Reallocation.
_____________________________________
cost-sharing orders are sui generis, they almost always
___ _______
constitute a way of fueling an array of hand-crafted procedural
devices designed to sort and resolve myriad claims in an
equitable, efficient, comparatively inexpensive manner. A
subsequent decision to readjust the burdens imposed by such
orders, and the specific redistribution that results, must remain
faithful to that aim.16 The power to readjust, then, must be
exercised in accordance with a set of equitable principles,
shaped by the circumstances indigenous to the litigation but
rooted in the concept that court-imposed burdens should, in the
end, balance derived benefits. In the paragraphs that follow, we
touch lightly upon certain fundamental principles that should
inform the determination of whether a post-judgment reallocation
of court-ordered expenses is advisable, and if so, to what
____________________
16We limit our discussion to cases where, as here, mandatory
cost-sharing orders are largely silent on the matter of an
eventual redistribution of expenses. A district court may, of
course, build into a cost-sharing order a mechanism for eventual
redistribution, the structure and propriety of which would have
to be considered on its own merits against the backdrop of the
particular litigation. Indeed, the court below formulated such a
mechanism, but limited its operation to cost-sharing assessments
levied against plaintiffs' attorneys. See Pretrial Order No.
___
127, at 39-40; see also supra note 2.
___ ____ _____
22
extent.
a.
a.
__
Upon motion, a district court should consider
reallocating costs after entry of judgment when, with the acuity
of hindsight, it determines that a party or group of parties has
significantly failed to derive the expected benefits from burdens
imposed under cost-sharing orders entered earlier in the
litigation, or has derived those benefits to a significantly
greater or lesser extent than other similarly situated parties.
This rule dominates the constellation of factors bearing on the
decision to reallocate.
b.
b.
__
In contrast to the well-recognized presumption that
prevailing parties should recover their taxable costs under Rule
54(d), there is no basis for a parallel presumption that the
winners' case-management expenses should be borne by the losers.
Thus, a prevailing party will not automatically receive a
favorable reallocation, but must persuade the court of an
entitlement to one. This conclusion flows naturally from the
idea that derived benefit is the shining star in the readjustment
galaxy: when all is said and done, the benefit a party secures
from forced contributions to joint ventures in complex litigation
may be unrelated, or vastly disproportionate, to the party's
success on the merits.
c.
c.
__
To say that prevailing parties are not presumptively
23
entitled to a favorable reallocation of cost-sharing assessments
is not to say that either the fact or the scope of a litigant's
victory is irrelevant to a district court's reassessment of the
matter. The inherent clarity of a case and the ease with which
it can be decided without resort to heroic measures ordinarily
affect the degree of benefit the prevailing party obtains from
the availability of innovative procedural mechanisms. Hence, the
extent to which a litigant achieves a swift, across-the-board
success not correlated with case-management tools must
necessarily inform the district court's reallocation decision.
The presence of knotty issues, fought, in the Stalingrad
tradition, from rock to rock and tree to tree, often cuts the
other way. Close cases, particularly those that are fact-
dominated, tend to be cases in which all parties derive
considerable benefit from the availability of sophisticated case-
management tools.
d.
d.
__
When a district court considers a party's request to
reallocate sums previously assessed, the requestor's ability to
shoulder the expense is immaterial. Cost-sharing orders are
attempts to distribute systemic costs in an equitable manner;
they should not be transmogrified into a method of forcing deep
pockets, whenever and for whatever reason they appear in a suit,
to bear the crushing financial burdens of complex litigation.
Equity in readjusting cost-sharing orders depends upon who, in
the end, garnered a disproportionate slice of the benefits the
24
orders sought to provide, not upon who can best afford to
pay.17 Although the operative considerations are not entirely
the same, this principle parallels the Sixth Circuit's
longstanding view that a prevailing party's ability to pay his or
her own costs is an improper basis for refusing to tax costs
against the loser under Rule 54(d). See White & White, 786 F.2d
___ _____________
at 730; Lewis v. Pennington, 400 F.2d 806, 819 (6th Cir.), cert.
_____ __________ _____
denied, 393 U.S. 983 (1968).
______
e.
e.
__
Cost-sharing orders are designed to inure to the
benefit of all contributing parties. A case's history and
particular circumstances may reveal that some parties carried
heavy, even excessive, loads, while other parties enjoyed a
relatively free ride. Reallocating cost-sharing assessments
affords a way of balancing case-specific inequities. For
example, a party's interjection of unmeritorious issues that
unnecessarily lengthen the litigation might favor the conclusion
that others have paid too much and the interjector has paid too
____________________
17We recognize that the presence of an indigent party may
affect the reallocation decision. Cf., e.g., Neitzke v.
___ ____ _______
Williams, 490 U.S. 319, 324 (1989) (discussing Congress's desire
________
to "ensure that indigent litigants have meaningful access to the
federal courts"); Adkins v. E. I. DuPont de Nemours & Co., 335
______ _______________________________
U.S. 331, 339 (1948) (refusing to require litigants "to
contribute to payment of costs[] the last dollar they have or can
get" before becoming entitled to forma pauperis standing);
_____ ________
Aggarwal v. Ponce Sch. of Medicine, 745 F.2d 723, 728 (1st Cir.
________ _______________________
1984) (warning that courts must go slowly in allowing "toll-
booths [to] be placed across the courthouse doors"); Burroughs,
_________
741 F.2d at 1542 (allowing a district court to deny costs under
Rule 54(d) when the losing party is indigent). We do not probe
the point, however, because no party involved in these appeals
has asserted such a claim.
25
little. Cf. Lichter Found., Inc. v. Welch, 269 F.2d 142, 146
___ _____________________ _____
(6th Cir. 1959) (approving denials of costs to prevailing parties
under Rule 54(d) on this basis). A cost-readjustment analysis,
like all decisions grounded in equity, must leave room for such
case-specific factors.
f.
f.
__
We believe that we have said enough to erect a flexible
framework for reallocation analysis and, hopefully, to provide a
modicum of general guidance to the district courts. We caution
that the relative weight and impact of relevant considerations
will vary from situation to situation, and, moreover, that, given
the virtually limitless number of permutations likely to be
encountered in civil litigation, our compendium of factors is not
all-encompassing.
3. Remedy. The question of remedy remains. It is
3. Remedy.
______
clear that an appellate court is not the most propitious forum
for shaking up a preexisting expense allocation. By definition,
cost-sharing orders originate with the district court as a
component of the court's case-management function. Given the
district judge's intimate knowledge of the circumstances under
which the imposts were conceived, his familiarity with the nature
and purposes of the assessments, his front row seat throughout
the litigation, and his matchless ability to measure the benefits
and burdens of cost-sharing to the parties in light of the
litigation's progress and stakes, we are convinced that the
district judge has the coign of vantage best suited to
26
determining, in the first instance, whether, and if so, how, the
initial cost-sharing orders should be modified. We are keenly
aware that this litigation has exhibited a capacity to chew up
endless amounts of judicial resources and we are extremely
reluctant to prolong matters. Here, however, the necessity for
remanding is plain: not only is the trial judge best equipped to
address the remaining problems, but also, as we explain below,
there is at least a prima facie case for some reallocation of the
_____ _____
assessments. Indeed, the collocation of circumstances strongly
suggests that the pre-fire insurers did not reap in full the
benefits associated with several of the procedural innovations
they helped to fund. We run the gamut.
More than half of each appellant's assessment
supplemented the budgets of the JDC and JDD, facilities devoted
to the economical coordination and speedy completion of
discovery. Because the pre-fire insurers defeated all adverse
claims through dispositive motions short of trial, on purely
legal grounds, the benefit they derived from these innovations
was most likely minimal. The near-complete closure of discovery
prior to appellants' appearance in the litigation, see supra p. 4
___ _____
& note 3, rendered the JDC, established to stimulate expeditious
resolution of discovery disputes, of dubious value to appellants.
As for the JDD, the documents housed there were of questionable
relevance vis-a-vis appellants because they were gathered during
earlier litigation phases that settled a host of different
issues. To be sure, appellants probably derived some benefit
27
from the facilities they helped to fund. Certainly, they were
free to peruse whatever useful evidence the JDD did contain.18
What is more, the DLP presumably facilitated the movement of
papers to appellants' behoof; and appellants probably saved money
through the avoidance of unnecessary duplication. But, it is
difficult to fathom how contributions on a par with those of all
other defendants to fact gathering largely irrelevant to the
claims against appellants constituted the "most efficient use of
. . . [appellants'] resources." Pretrial Order No. 127, at i.
The early stage at which the district court dismissed
all claims against appellants also creates doubt as to whether
the substantial assessments, geared largely toward efficient fact
gathering, inured to appellants' benefit to any meaningful
degree. The pre-fire insurers prevailed on all claims, as a
matter of law, without going to trial. The district court,
having determined that no issue of fact needed debate and that
appellees' arguments had no basis in law, see Hotel Fire Litig.,
___ _________________
802 F. Supp. at 635, 644, might be hard-pressed to conclude that
appellants' huge expenditures, diverted to facilities designed,
in large part, to collect, sort, and maintain factual documents,
were integral to, or even marginally connected with, the pursuit
of their cause.
In sum, it appears from the record before us that
appellants have a colorable basis for arguing that they derived
____________________
18Nevertheless, thirteen appellants contend that they
utilized no evidence contained in the JDD to support their
__
dispositive motions.
28
minimal benefits from the assessments. Nonetheless, this
hypothesis remains unproven. There may be more here than meets
the eye; for one thing, the appellate record does not speak in
any detail to the equities. Although an appellate court may
decline to remand where remanding would be an empty exercise,
see, e.g., Societe des Produits Nestle, S.A. v. Casa Helvetia,
___ ____ __________________________________ ______________
Inc., 982 F.2d 633, 642 (1st Cir. 1992) (declining to remand
____
where, once the court of appeals decided the correct rule of law,
the district court's preexisting findings of fact rendered the
result obvious), that is not the case here. Rather, there are
pregnant questions to be mulled on remand questions on which
the trial judge's viewpoint is especially important. We
conclude, therefore, that the case must be returned to the
district court for further proceedings before Judge Acosta. We
intimate no opinion as to the appropriate outcome of those
proceedings.
V. BANKRUPTCY OF AN AFFILIATED ENTITY
V. BANKRUPTCY OF AN AFFILIATED ENTITY
We are not yet at journey's end. Two appellees,
Associates and HSI, invoke the so-called automatic stay
provision, 11 U.S.C. 362 (1988), in an endeavor to persuade us
that an affiliated firm's bankruptcy should have resulted in a
stay of proceedings on appeal. We are not convinced.
The essential facts are as follows. On August 5, 1991,
Holders Capital Corporation (HoCap) filed for bankruptcy.
Because HSI is a wholly owned subsidiary of HoCap and Associates
is a limited partnership whose general partner is also a wholly
29
owned subsidiary of HoCap, both appellees assert that continued
prosecution of the pre-fire insurers' appeals, as against them,
constitutes an impermissible attempt to obtain possession of the
debtor's property in violation of 11 U.S.C. 362(a)(3).
This assertion need not detain us. As a general rule,
section 362(a)'s automatic stay provisions apply only to the
debtor in bankruptcy. See Austin v. Unarco Indus., Inc., 705
___ ______ ____________________
F.2d 1, 4 (1st Cir.), cert. dismissed, 463 U.S. 1247 (1983); see
_____ _________ ___
generally
_________
In re Western Real Estate Fund, Inc., 922 F.2d 592, 600 (10th
______________________________________
Cir. 1990), modified on other grounds, 932 F.2d 898 (10th Cir.
________ __ _____ _______
1991). As entities legally distinct from HoCap, see Parkview-
___ _________
Gem, Inc. v. Stein, 516 F.2d 807, 811 (8th Cir. 1975) (holding
_________ _____
that where debtor, qua lessee, had previously assigned all
___
leasehold rights to a subsidiary, the lessor's action to
terminate the lease could not be enjoined because, despite the
fact that the termination would likely have "an adverse [e]ffect
upon the debtor," no claim was asserted against the debtor); In
__
re Bank Ctr., Ltd., 15 B.R. 64, 65 (Bankr. W.D. Pa. 1981)
____________________
(refusing to stay an action against the partner of a bankrupt
partnership because a "partner is a separate entity from the
partnership"), the two corporate appellees are not presumptively
entitled to the protection of any automatic stay which may be
extant in the HoCap bankruptcy proceeding. Since these appeals
implicate no attempt to assert, enforce or recover any claim
against HoCap or its property, the appeals may proceed.
30
See 11 U.S.C. 362(a)(3) (staying actions to "obtain possession
___
of" or "exercise control over" the bankrupt estate); see also
___ ____
Fragoso v. Lopez, F.2d , (1st Cir. 1993), [No. 92-
_______ _____ ____ ____ ____
2046, slip op. at 14] (noting federal court reluctance to refrain
from "deciding legal issues pertaining to a party involved in a
federal bankruptcy proceeding"); Picco v. Global Marine Drilling
_____ ______________________
Co., 900 F.2d 846, 850 (5th Cir. 1990) ("The automatic stay of
___
the bankruptcy court does not divest all other courts of
jurisdiction to hear every claim that is in any way related to
the bankruptcy proceeding.").
VI. CONCLUSION
VI. CONCLUSION
We need go no further. We hold that the district court
erred in precluding, without explanation, the taxation of
ordinary costs under Rule 54(d) in favor of appellants (who were
the prevailing parties). Hence, we remand to allow appellants an
opportunity to file bills of costs in the usual form. The lower
court did not err, however, in refusing to treat case-management
expenditures as taxable costs within the purview of Rule 54(d)
and its statutory helpmeet, 28 U.S.C. 1920.
We also hold that the district court possesses the
implied power, under Fed. R. Civ. P. 26(f), to revisit the
initial allocations of case-management expenses and readjust the
same as equity may require. Because the lower court did not
afford appellants a fair opportunity to seek such a reallocation,
we remand for that purpose as well. Appellants shall file their
motions to reallocate with the district court no later than
31
thirty days from the date our mandate issues.19
Vacated and remanded; one-half costs to appellants.
Vacated and remanded; one-half costs to appellants.
__________________________________________________
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_________________________
Nos. 92-2312
92-2313
IN RE: TWO APPEALS ARISING OUT OF THE
SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.
_________________________
____________________
19In this connection we urge the district courts within this
circuit to consider framing local rules to the effect that,
henceforth, any application for reallocation of court-imposed
cost-sharing expenses must be filed within thirty days of the
entry of final judgment. Cf. White, 455 U.S. at 454 (observing
___ _____
that district courts are free "to adopt local rules establishing
timeliness standards for the filing of claims for attorney's
fees"); Obin v. District No. 9, Int'l Ass'n of Machinists &
____ _______________________________________________
Aerospace Workers, 651 F.2d 574, 583 (8th Cir. 1981)
___________________
(recommending a rule that claims for attorneys' fees must be
filed within twenty-one days after entry of judgment).
32
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Raymond L. Acosta, U.S. District Judge]
___________________
_________________________
Before
Selya and Cyr, Circuit Judges,
______________
and Fuste,* District Judge.
______________
_________________________
Paul K. Connolly, Jr., with whom Damian R. LaPlaca,
_______________________ __________________
LeBoeuf, Lamb, Leiby & MacRae, Ralph W. Dau, Peter B. Ackerman,
______________________________ ____________ __________________
Jeffrey W. Kilduff, O'Melveny & Myers, Raul E. Gonzalez-Diaz,
___________________ __________________ ______________________
A.J. Bennazar-Zequeira, Gonzalez & Bennazar, Andrew K. Epting,
______________________ ____________________ __________________
Jr., G. Trenholm Walker, Wise & Cole, Homer L. Marlow, William G.
___ __________________ ___________ _______________ __________
Liston, Marlow, Shofi, Connell, Velerius, Abrams, Lowe & Adler,
______ ________________________________________________________
Deborah A. Pitts, Hancock, Rothert & Bunshoft, Bethany K. Culp,
________________ ____________________________ ________________
Patrick McCoy, Oppenheimer Wolff & Donnelly, Lon Harris, Harris &
_____________ ____________________________ __________ ________
Green, Stuart W. Axe, Lester, Schwab, Katz & Dwyer, Adrian
_____ ______________ _______________________________ ______
Mercado, Mercado & Soto, Virgilio Mendez Cuesta, Ernesto
_______ _________________ _________________________ _______
Rodriguez-Suris, and Latimer, Biaggi, Rachid, Rodriguez-Suris &
_______________ ___________________________________________
Godreau were on consolidated briefs, for appellants.
_______
Gary L. Bostwick, with whom R. Lance Belsome was on
_________________ _________________
33
brief, for appellees Hotel Systems International, et al.
Alvaro Calderon, with whom Will Kemp and Monita F.
________________ _________ __________
Sterling, PSC Liaison, were on brief, for appellee Plaintiffs'
________
Steering Committee.
_________________________
June 4, 1993
_________________________
_______________
*Of the District of Puerto Rico, sitting by designation.
34
SELYA, Circuit Judge. These consolidated appeals
SELYA, Circuit Judge.
______________
require us to grapple for the first time with a looming problem
in modern federal court practice: how, if at all, should
expenses indigenous to a court's handling of mass disaster
litigation be reallocated once the winners and losers have been
judicially determined? Here, the appellants, late-joined
defendants and defendants in cross-claim, prevailed in the
underlying litigation. Nonetheless, the district court,
coincident with the entry of judgment, effectively foreclosed
them from either seeking costs under Fed. R. Civ. P. 54(d) or
otherwise lobbying for reallocation of several hundreds of
thousands of dollars in court-ordered expense assessments.
Finding that the court's abrupt slamming of these doors was
improvident, we vacate the relevant portion of the judgment and
remand for further proceedings.
I. BACKGROUND
I. BACKGROUND
In 1987, the Judicial Panel on Multidistrict Litigation
appointed the Honorable Raymond L. Acosta, a United States
District Judge for the District of Puerto Rico, to handle some
270 cases arising out of the deadly fire that had earlier
engulfed the San Juan Dupont Plaza Hotel. See In re Fire
___ ____________
Disaster at Dupont Plaza Hotel, 660 F. Supp. 982 (J.P.M.L. 1987)
_______________________________
(per curiam). Judge Acosta's stewardship proved "a model of
judicial craftsmanship and practical ingenuity." In re Nineteen
______________
Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire
_________________________________________________________________
Litig., 982 F.2d 603, 606 (1st Cir. 1992). Among the many
______
successful innovations that brought the litigation to a
celeritous conclusion were (1) the creation of a Joint Document
35
Depository (JDD), which housed and copied for distribution all
discovery materials, see Pretrial Order No. 127 (Dec. 2, 1988),
___
at 66; (2) the appointment of liaison counsels (plaintiffs' and
defendants'), each of whom was responsible for dispersing filings
among his or her constituents, see id. at 61-63; and (3) the
___ ___
formation of a Joint Discovery Committee (JDC) dedicated to
devising means of expediting the litigation, see In re Recticel
___ ______________
Foam Corp., 859 F.2d 1000, 1001 (1st Cir. 1988) (describing
___________
operation of JDC). To fund these innovations, the district court
entered a series of case-management orders which imposed
mandatory assessments upon all litigants.20 In this way, the
court periodically requisitioned fresh monies as funds on hand
were depleted. The orders were silent as to (i) whether or not
the court planned to readjust defendants' contributions in light
of future developments, and (ii) the court's authority, if any,
to effectuate such reallocations.21
____________________
20Because the mechanics of the allocation process are not
critical for present purposes, we supply merely a thumbnail
sketch. The Plaintiffs' Steering Committee (PSC) and the
defendant San Juan Dupont Plaza Hotel Corporation were assessed a
total of $100,000 to defray the JDD's start-up costs. See
___
Pretrial Order No. 127, at 69-70. Thereafter, each litigant paid
for JDD-related services actually used. See id. at 70. To cover
___ ___
costs that were not offset by service charges (e.g., the JDD's
____
overhead expenses), the district court imposed mandatory
assessments. Initially, at least, the PSC bore 15% of the
incremental cost and the defendants, collectively, bore 85%. See
___
id. at 71. Within the defense collective, per-member assessments
___
were presumably equal.
21We add a small qualifier to this statement. Pretrial
Order No. 127 is a document in excess of 200 pages dealing with a
potpourri of matters. The portion of the order that discusses
defendants' assessments does not address either of the two points
mentioned in the text. However, in the portion of the document
that addresses assessments imposed on plaintiffs' attorneys to
fund the PSC and enable it to make its cost-sharing
contributions, the district court provides for possible
36
Roughly two years after the first shots in the
litigation had been fired, a group of defendants involved in the
hotel's ownership and operation settled with the plaintiffs (the
fire victims and their families) and cross-claimed for
indemnification against various insurers whose liability policies
had expired before the fire started (the pre-fire insurers). On
August 9, 1989, the plaintiffs followed the cross-claimants'
lead, adding the pre-fire insurers as direct defendants under
P.R. Laws Ann. tit. 26, 2001, 2003 (1976). Because discovery
had formally closed on December 15, 1988, see Pretrial Order No.
___
127, at 96-97, the pre-fire insurers' investigation of the newly
emergent claims against them necessarily centered around a review
of documents stored in the JDD.22
The pre-fire insurers quickly filed dispositive
motions. The district court, faced with more pressing problems,
was slow in addressing the motions. Finally, the court granted
them on September 11, 1992, see In re San Juan Dupont Plaza Hotel
___ _________________________________
Fire Litig., 802 F. Supp. 624 (D.P.R. 1992), aff'd, 989 F.2d 36
___________ _____
(1st Cir. 1993), entered judgment in favor of the pre-fire
____________________
"reallocation of expenses based upon the actual, relative
recovery" achieved by the various plaintiffs. Id. at 39. At the
___
very end of the document, the district court states that "[t]his
Order may be either amended or modified by the Court sua sponte
___ ______
or upon good cause shown." Id. at 205. None of the parties
___
argue that either of the provisions we have identified relate to
the possible reallocation of cost-sharing assessments levied
against appellants (or any defendants, for that matter). And,
none of the other orders contain any language, general or
specific, similar to that which we have quoted.
22In one attempt to conduct some independent discovery, the
pre-fire insurers moved to reopen discovery for ninety days. The
docket sheet indicates that this motion was granted on March 19,
1991, albeit only for a three-day period.
37
insurers on all claims, and decreed that the parties would bear
their own costs.
On appeal, seventeen pre-fire insurers complain that
the district court abused its discretion by summarily precluding
both an award of costs and a complete or partial refund of the
cost-sharing assessments.23 The fire victims, represented by
the Plaintiffs' Steering Committee (PSC), and two cross-
claimants, Hotel Systems International (HSI) and Dupont Plaza
Associates (Associates), filed opposition briefs and participated
in oral argument.
II. NATURE OF THE STAKES
II. NATURE OF THE STAKES
In the expectation that describing the disputed
expenditures in greater detail will help to put matters in the
proper perspective, we travel that route.
A. Court-Ordered Assessments.
A. Court-Ordered Assessments.
_________________________
The vast majority of appellants' outlays comprise
mandatory payments imposed by six orders of the district court.
See Pretrial Order No. 48 (Feb. 11, 1988); Pretrial Order No. 67
___
(Apr. 18, 1988); Pretrial Order No. 127, supra; Pretrial Order
_____
No. 135 (Jan. 17, 1989); Pretrial Order No. 212 (July 31, 1989);
____________________
23The appellants are: Continental Insurance Company,
Federal Insurance Company, First State Insurance Company, Granite
State Insurance Company, Highlands Insurance Company, Industrial
Underwriters Insurance Company, International Insurance Company,
Landmark Insurance Company, Protective National Insurance Company
of Omaha, Puerto Rico American Insurance Company, Safety Mutual
Casualty Corporation, St. Paul Fire & Marine Insurance Company,
St. Paul Mercury Insurance Company, California Union Insurance
Company, Central National Insurance Company of Omaha, Insurance
Company of North America, and Pacific Employers Insurance
Company. The latter four carriers filed a separate notice of
appeal. Because the arguments are much the same, we treat the
two appeals as a unit.
38
Order No. 259 (Aug. 21, 1990). Although the first four orders
eventuated before appellants entered the fray, those orders
required appellants to pay the sums assessed therein shortly
after filing entries of appearance. See Pretrial Order No. 127,
___
at 71; Pretrial Order No. 135, at 9. Appellants paid the
assessments under protest.24 The compulsory payments total
$705,500. Eighty-three percent of this aggregate amount
$586,500 represents assessments levied under the four earliest
cost-sharing orders.
Appellants' tribute helped to fund the various
instrumentalities that Judge Acosta had set in place to expedite
the litigation. Thus, out of each insurer's total contribution
($41,500), $18,000 went toward defraying the JDD's operating
expenses, see Pretrial Order No. 127, at 72; $3,500 went toward
___
defraying the JDC's expenses, see id.; and $10,000 went toward
___ ___
paying costs associated with the office of Defendants' Liaison
Person (DLP).25 See id.; Pretrial Order No. 212, at 1; Order
___ ___
No. 259, at 1. The district court originally intended that the
remaining $10,000 would subsidize the construction of a new
courtroom and related facilities. See Pretrial Order No. 135, at
___
9. The idea was abandoned and the funds in question were
____________________
24We fully understand appellants' submissiveness, inasmuch
as refusal to pay would have resulted in sanctions, see Pretrial
___
Order No. 127, at 72; Pretrial Order No. 135, at 10, and this
court had made no secret of its disinclination to review such
orders prior to entry of final judgment. See Recticel, 859 F.2d
___ ________
at 1006.
25The DLP was responsible for receiving, on behalf of all
defendants, and disseminating, among all defense counsel, court
orders and discovery materials. See Pretrial Order No. 127, at
___
62-63.
39
eventually utilized for operational costs of the JDD and DLP.
See In re San Juan Dupont Plaza Hotel Fire Litig., 142 F.R.D. 41,
___ _____________________________________________
46 n.20 (D.P.R. 1992). Therefore, the figures recited above,
insofar as they pertain to the JDD and DLP, are minimum
estimates.
B. Ordinary Costs.
B. Ordinary Costs.
______________
Presumably, the payments made pursuant to the cost-
sharing orders, though substantial, do not comprise the whole of
appellants' investment in this sprawling litigation. Their
successful defense doubtless required other, more commonplace
expenditures, such as photocopy costs of the type and kind
routinely associated with litigation. See, e.g., 28 U.S.C.
___ ____
1920 (1988) (listing fees and expenses taxable as costs).
III. WAIVER
III. WAIVER
Having described the expenses appellants seek to
recoup, we pause to address a threshold matter. The plaintiffs
submit that the pre-fire insurers waived any claim for expense
recovery by failing to file bills of costs after judgment
entered. See id. (requiring bill of costs to be filed). We
___ ___
demur: the doctrine of waiver presents no barrier to appellants'
attempt to recover court costs or request a reallocation of the
mandatory cost-sharing assessments.
To be sure, the failure seasonably to file a bill of
costs with the district court may, in certain circumstances,
constitute a waiver of a party's right to recoup costs under Rule
54(d). See Mason v. Belieu, 543 F.2d 215, 222 (D.C. Cir.)
___ _____ ______
(vacating a cost award where plaintiffs had failed to file a bill
of costs), cert. denied, 429 U.S. 852 (1976). There is no waiver
_____ ______
40
here, however, because the district court, by ordering,
coincident with the entry of judgment, that each party bear its
own costs, preempted appellants' opportunity to file a bill of
costs and did so despite D.P.R. Loc. R. 331.1, which allows
prevailing parties ten days after notice of judgment to file
bills of costs. In the face of this flat ruling, the subsequent
filing of an itemized bill of costs would have served no useful
purpose.26 The law does not require litigants to run fools'
errands. Thus, a party who forgoes an obviously futile task will
not ordinarily be held thereby to have waived substantial rights.
See Franki Found. Co. v. Alger-Rau & Assocs. Inc., 513 F.2d 581,
___ _________________ ________________________
587 (3d Cir. 1975) (refusing to allow waiver to be grounded in a
party's dereliction of a futile task); see also Northern Heel
___ ____ ______________
Corp. v. Compo Indus., Inc., 851 F.2d 456, 461 (1st Cir. 1988)
_____ __________________
(stating, in a different context, that "[t]he law should not be
construed idly to require parties to perform futile acts or to
engage in empty rituals").
A somewhat closer question is whether appellants, by
failing to ask the district court, after judgment entered, to
readjust the mandatory assessments, thereby waived the right to
raise that issue here. We hold they have not. Our decision is
largely pragmatic. There is no rule specifically limiting the
time within which a party may make a request for an order
reallocating case-management expenses. Cf. White v. New
___ _____ ___
____________________
26Similarly, given the clarity and definiteness of the trial
court's order, a post-trial motion for reconsideration was not
required as a condition precedent to taking an appeal. See
___
Sherrill v. Royal Indus., Inc., 526 F.2d 507, 509 n.2 (8th Cir.
________ __________________
1975); Franki Found. Co. v. Alger-Rau & Assocs. Inc., 513 F.2d
_________________ _________________________
581, 587 (3d Cir. 1975).
41
Hampshire Dep't of Employment Sec., 455 U.S. 445, 455 (1982)
____________________________________
(holding that no general federal rule governs the timing of post-
judgment motions for attorneys' fees under 42 U.S.C. 1988).
Should we refuse to entertain the issue, appellants would
presumably return to the district court and formally request a
reallocation. Thus, as a practical matter, to abstain from
considering the issue now would only prolong an already
protracted litigation. To the extent that an issue is one of law
rather than fact, can be resolved without doubt on the existing
record, and is likely to arise in other cases, an appellate court
may, in the interests of justice, choose to overlook a procedural
default. See Singleton v. Wulff, 428 U.S. 106, 121 (1976);
___ _________ _____
United States v. La Guardia, 902 F.2d 1010, 1013 (1st Cir. 1990).
_____________ __________
Here, we think it best to exercise our discretion, meet the
problem head-on, and excuse appellants' failure to move for
reallocation below.
IV. ANALYSIS
IV. ANALYSIS
We turn now to the meat of the consolidated appeals.
Appellants ask us to order that they be afforded a fair
opportunity to recover their court costs and cost-sharing
assessments either under Fed. R. Civ. P. 54(d) or under some
other source of judicial power. We address these alternatives
separately.
A. Rule 54(d).
A. Rule 54(d).
__________
Appellants assert that the district court's unexplained
denial of costs constituted an abuse of discretion. Because they
prevailed on all claims below, their thesis runs, they are
presumptively entitled to recover their costs of suit under Fed.
42
R. Civ. P. 54(d) and these include the mandatory assessments.
In order to evaluate this multifaceted contention, we first
review the general operation of Rule 54(d), elucidating, in
particular, the leeway it gives trial courts to grant or deny
costs to prevailing parties. We then analyze the rule's
implications in the context of this case.
1. General Operation. Congress has enumerated the
1. General Operation.
__________________
type of expenses that a federal court "may tax as costs." 28
U.S.C. 1920.27 Rule 54(d) works in tandem with the statute.
It provides, with exceptions not pertinent here, that "costs
shall be allowed as of course to the prevailing party unless the
court otherwise directs." Fed. R. Civ. P. 54(d). The combined
effect of the statute and rule is to cabin district court
discretion in two ways.
First, section 1920 has an esemplastic effect. It
fills the void resulting from Rule 54(d)'s failure to define the
term "costs," see Crawford Fitting Co. v. J. T. Gibbons, Inc.,
___ _____________________ ____________________
____________________
27The section provides:
A judge . . . may tax as costs the following:
(1) Fees of the clerk and marshal;
(2) Fees of the court reporter for all or any
part of the stenographic transcript
necessarily obtained for use in the case;
(3) Fees and disbursements for printing and
witnesses;
(4) Fees for exemplification and copies of
papers 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 costs
of special interpretation services . . . .
28 U.S.C. 1920.
43
482 U.S. 437, 441 (1987) (holding that "[section] 1920 defines
the term `costs' as used in Rule 54(d)"), and in that way
constrains the district court's power to determine which expense
categories constitute taxable costs. In other words, the statute
and rule, read together, signify that a district court lacks the
ability to assess "costs" under Rule 54(d) above and beyond those
that come within the statutory litany. See id.
___ ___
In light of the foregoing, we conclude that Rule 54(d)
confers no discretion on federal courts independent of the
statute to tax various types of expenses as costs. See id.;
___ ___
accord Denny v. Westfield State College, 880 F.2d 1465, 1468 (1st
______ _____ _______________________
Cir. 1989) (reasoning that, in light of Crawford, Rule 54(d) does
________
not constitute a separate source of judicial discretion); Freeman
_______
v. Package Mach. Co., 865 F.2d 1331, 1346 (1st Cir. 1988)
___________________
(similar). Rather, the discretion that Rule 54(d) portends is
solely a negative discretion, "a power to decline to tax, as
________
costs, the items enumerated in 1920." Crawford, 482 U.S. at
________
442; accord Rodriguez-Garcia v. Davila, 904 F.2d 90, 100 (1st
______ ________________ ______
Cir. 1990).
We further believe that this negative discretion the
power to deny recovery of costs that are categorically eligible
for taxation under Rule 54(d) operates in the long shadow of a
background presumption favoring cost recovery for prevailing
parties. This presumption emanates from the rule's language:
"costs shall be allowed as of course." Notwithstanding that the
rule permits a nisi prius court to deviate from this baseline,
____ _____
see, e.g., Phetosomphone v. Allison Reed Group, Inc., 984 F.2d 4,
___ ____ _____________ ________________________
9 (1st Cir. 1993); Heddinger v. Ashford Memorial Community Hosp.,
_________ ________________________________
44
734 F.2d 81, 86 (1st Cir. 1984); Emerson v. National Cylinder Gas
_______ _____________________
Co., 251 F.2d 152, 158 (1st Cir. 1958), awarding costs to a
___
prevailing party is the norm. See Delta Air Lines, Inc. v.
___ _______________________
August, 450 U.S. 346, 352 (1981) (stating that "prevailing
______
plaintiffs presumptively will obtain costs under Rule 54(d)");
Crossman v. Marcoccio, 806 F.2d 329, 331 (1st Cir. 1986)
________ _________
(observing that Rule 54(d) "generally permits prevailing parties
to recover their costs"), cert. denied, 481 U.S. 1029 (1987);
_____ ______
Castro v. United States, 775 F.2d 399, 410 (1st Cir. 1985)
______ ______________
(noting that a prevailing party "ordinarily is entitled" to
recoup the costs enumerated in section 1920).
This presumption, then, constitutes the second
constraint on a district court's ability to freewheel in the Rule
54(d) environment. After all, it is difficult to dispute the
proposition that a court's discretion in implementing a rule
which articulates a norm is more confined than a court's
discretion in applying a nondirective rule. See White & White,
___ _______________
Inc. v. American Hosp. Supply Corp., 786 F.2d 728, 731-32 (6th
____ ____________________________
Cir. 1986); Coyne-Delany Co. v. Capital Dev. Bd., 717 F.2d 385,
________________ ________________
392 (7th Cir. 1983).
Beyond the presumption favoring cost recovery for
prevailing parties, there is also fairly general agreement that a
district court may not exercise its discretion to disallow a
prevailing party's bill of costs in whole or in part without
articulating reasons. See Schwarz v. Folloder, 767 F.2d 125, 131
___ _______ ________
(5th Cir. 1985); Gilchrist v. Bolger, 733 F.2d 1551, 1557 (11th
_________ ______
Cir. 1984); Baez v. United States Dep't of Justice, 684 F.2d 999,
____ ______________________________
1004 & n.28 (D.C. Cir. 1982) (collecting cases from ten
45
circuits). The Sixth Circuit has gone so far as to catalogue the
justifications that it deems acceptable and unacceptable for
denying costs in the Rule 54(d) milieu. See White & White, 786
___ _____________
F.2d at 730.28 In the Seventh Circuit, costs may be denied
only when the losing party is indigent or "there has been some
fault, misconduct, default, or other action worthy of penalty" on
the winner's side. Burroughs v. Hills, 741 F.2d 1525, 1542 (7th
_________ _____
Cir. 1984), cert. denied, 471 U.S. 1099 (1985).
_____ ______
To the present, this court has been more muted both
about a district judge's duty to explain a denial of costs and
about the reasons that may warrant such a denial.29 In
addressing those subjects today, we stop short of requiring
district courts to state reasons or make elaborate findings in
every case when acting under Rule 54(d). Instead, we hold that,
if the basis for denying costs is readily apparent on the face of
the record, a trial court need not explain its action merely for
____________________
28The White & White court articulated four circumstances in
_____________
which it believed costs might be denied (the taxable expenditures
are unnecessary or unreasonably large; the prevailing party
needlessly prolonged the proceedings; a prevailing plaintiff's
recovery is so insignificant that his or her victory amounts to a
defeat; the issues prove to be close and difficult), two
circumstances that a district court must ordinarily ignore (the
jury's seeming generosity; the prevailing party's ability to pay
his or her own costs), and two circumstances which, though
relevant, are insufficient, standing alone, to warrant an
exercise of negative discretion (a losing party's good faith; the
propriety with which the loser conducted the litigation). See
___
White & White, 786 F.2d at 730.
_____________
29We have, however, reversed a district court's denial of
costs to a prevailing party when the court neglected to furnish
any valid explanation for the denial. See Templeman v. Chris
___ _________ _____
Craft Corp., 770 F.2d 245, 249 (1st Cir.), cert. denied, 474 U.S.
___________ _____ ______
1021 (1985).
46
explanation's sake.30 If, however, the situation is less than
obvious, the court must offer some statement as to why it denied
statutory costs to a prevailing party.
Adopting this rule balances the need for findings
against the proliferation of busywork that threatens to inundate
the district courts. It also parallels an approach that has
served us well in analogous contexts. See, e.g., Foster v. Mydas
___ ____ ______ _____
Assocs., Inc., 943 F.2d 139, 141-43 (1st Cir. 1991) (reaffirming,
_____________
in the context of both 42 U.S.C. 1988 and Fed. R. Civ. P. 11,
that a district court, absent a readily apparent basis, must
articulate the reasons undergirding a fee award); Figueroa-Ruiz
_____________
v. Alegria, 905 F.2d 545, 549 (1st Cir. 1990) ("While we do not
_______
hold that the district court must make findings and give
explanations every time a party seeks sanctions under Rule 11, we
do require a statement when the reason for the decision is not
obvious or apparent from the record."); Figueroa-Rodriguez v.
__________________
Lopez-Rivera, 878 F.2d 1488, 1491 (1st Cir. 1988) (discussing the
____________
need for findings when the reasons for invoking Fed. R. Civ. P.
16(f)'s sanction provisions are less than evident).
2. Application. Our overview completed, we now apply
2. Application.
___________
Rule 54(d) to the facts of this case. Appellants argue that the
district court erred by summarily precluding an award of costs
under Rule 54(d) without explanation and without even
entertaining a bill of costs. We think the contention has
____________________
30Although we do not impose an absolute duty to set forth
findings in all cases, we remind the district courts that
"reasonably complete findings at the trial court level invariably
facilitate the appellate task." United States v. De Jesus, 984
_____________ _________
F.2d 21, 22 n.4 (1st Cir. 1993).
47
partial merit.
a.
a.
__
To the extent that the district court's order prevents
appellants from reclaiming their mandatory cost-sharing
assessments through the medium of Rule 54(d), we discern no
error. As evidenced by the record, these payments were primarily
directed into the operating budgets of the JDD and DLP. In a
prior ruling, the district court explained that the assessments
helped subsidize such general overhead expenses as rent,
utilities, telephone charges, and staff salaries. See Hotel Fire
___ __________
Litig., 142 F.R.D. at 46 & n.19. We agree with Judge Acosta that
______
28 U.S.C. 1920 does not identify "[t]hese general litigation
expenses . . . as taxable." Id. at 46; see also Wahl v. Carrier
___ ___ ____ ____ _______
Mfg. Co., 511 F.2d 209, 217 (7th Cir. 1975) (disallowing similar
_________
overhead expenses); 6 James W. Moore et al., Moore's Federal
________________
Practice 54.77[8], at 54-480 (2d ed. 1993) (stating that
________
"general overhead expense[s] . . . are not costs within [section
1920] and Rule 54(d)"). Nor can parties dissect case-management
assessments in an attempt to trace every last penny and thereby
attribute fractional shares to expenses which, if freely incurred
by an individual litigant, might qualify as taxable costs.
We will not paint the lily. Rule 54(d) cannot be
stretched beyond the parameters defined in section 1920. See
___
Denny, 880 F.2d at 1468; Templeman v. Chris Craft Corp., 770 F.2d
_____ _________ _________________
245, 249-50 (1st Cir.), cert. denied, 474 U.S. 1021 (1985); Bosse
_____ ______ _____
v. Litton Unit Handling Sys., 646 F.2d 689, 695 (1st Cir. 1981).
_________________________
Accordingly, district courts possess no authority under Rule
54(d) to tax as costs case-management charges of a type or kind
48
unenumerated in 28 U.S.C. 1920, including, without limitation,
general overhead expenses paid pursuant to case-management orders
in mass disaster litigation. It follows inexorably that the
court below correctly treated these expenditures as lying outside
the stunted reach of Rule 54(d).
b.
b.
__
The district court's September 11, 1992 final judgment
regarding the claims against the pre-fire insurers also barred
recovery of any ordinary costs incurred by appellants. The
district court gave no explanation for its curt preclusion of
taxable costs, and none is evident from the record. Moreover, by
acting in so peremptory a manner, the court foreclosed appellants
from requesting ordinary costs in the ordinary fashion. See
___
generally D.P.R. Loc. R. 331.1 (allowing prevailing party ten
_________
days from entry of judgment in which to file a verified bill of
costs). On this record, we think that the district court abused
its discretion by depriving appellants of an opportunity to seek
ordinary costs, presumptively taxable under Rule 54(d), without a
word of explanation.31
c.
c.
__
To sum up, Rule 54(d) provides appellants only limited
comfort; upon the filing of bills of costs, the pre-fire insurers
will recover any itemized expenses that are statutorily
allowable, unless the district court offers a sound reason for
____________________
31Appellants indicate that they incurred some taxable
photocopy expenses. See generally Rodriguez-Garcia, 904 F.2d at
___ _________ ________________
100 (holding certain photocopying expenses recoverable under Rule
54(d)). We have adequate reason to believe that they may also
have incurred other expenses taxable as costs.
49
denying costs. However, to the extent that appellants invoke the
rule as a means of retrieving the big-ticket items that
constitute the centerpiece of these appeals the court-ordered
cost-sharing assessments they are fishing in an empty stream.
B. Reallocation of Court-Ordered Assessments.
B. Reallocation of Court-Ordered Assessments.
_________________________________________
Appellants also argue that, even if the mandatory
assessments fall outside Rule 54(d)'s domain, they may still be
reallocated. This asseveration supposes a federal court power,
unrelated to Rule 54(d), to redistribute, after judgment, an
initial division of discovery expenses among all parties, despite
the absence of an explicit reservation of the right to do so.
We think appellants' premise is sound. We hold that a
district court possesses the authority to reallocate court-
imposed case-management expenses if, in the exercise of its
considered judgment, it determines that equity and the interests
of justice so require. In the sections that follow, we trace the
derivation of that power, propose broad guidelines for its use,
and discuss what remains to be done in this instance.
1. Source of Power. The exigencies of complex,
1. Source of Power.
_________________
multidistrict litigation change the ordnance with which courtroom
battles are fought. Traditional procedures for serving papers
and gathering information must often give way to innovations
promoting economy and efficiency. See Manual for Complex
___ ____________________
Litigation 20.22, at 15 (2d ed. 1985). Moreover, the sheer
__________
number of parties and issues produces a "critical need for early,
active involvement by the judiciary." Id. 20.1, at 5. To
___
facilitate this involvement, explicit grants of authority
contained in the Civil Rules, which supplement the trial court's
50
inherent power to manage litigation, "enable the judge to
exercise substantial control and supervision over the conduct of
the litigation." Id. at 6.
___
Recent amendments to the Civil Rules have augmented the
trial judge's arsenal of case-management weapons. For example,
the 1983 overhaul of Rule 16 "encourage[s] pretrial management
that meets the needs of modern litigation." Fed. R. Civ. P. 16
advisory committee's notes. The drafters thought that cases
would be disposed of "more efficiently and with less cost and
delay" if "a trial judge intervene[s] personally at an early
stage to assume judicial control over a case." Id.; see also
___ ___ ____
Figueroa-Rodriguez, 878 F.2d at 1490 (acknowledging that in a
__________________
time "of increasingly complicated cases and burgeoning filings,
judges must have at their fingertips smooth-running, productive
machinery for conducting litigation and managing caseloads").
In this multidistrict litigation, involving upward of
2000 parties and raising a googol of issues, Judge Acosta's power
to mandate contributions to, inter alia, a central discovery
_____ ____
depository can scarcely be doubted. See Recticel, 859 F.2d at
___ ________
1001, 1004; see also David F. Herr, Multidistrict Litigation
___ ____ ________________________
9.7.3, at 205 (1986) (recognizing "the potential use of a
document depository as a means of facilitating efficiency").
While no procedural rule directly addresses pretrial cost-sharing
orders per se, Rule 26(f) expressly authorizes trial judges,
___ __
following discovery conferences, to enter orders for "the
allocation of expenses[] as are necessary for the proper
51
management of discovery." Fed. R. Civ. P. 26(f).32 We believe
that this rule is flexible enough to serve as the source of
judicial authority for imposing cost-sharing orders in complex
cases.33
The expense allocation orders Rule 26(f) authorizes
"may be altered or amended whenever justice so requires." Fed.
R. Civ. P. 26(f). For that reason, as well as on the basis of
common sense, a trial judge's power to promulgate cost-sharing
orders must carry with it the power to readjust such orders as
changed circumstances require. Indeed, in denying a petition for
mandamus addressed to the propriety of the very cost-sharing
orders here at issue, we acknowledged the district court's power
to "reshape and refashion its cost-sharing orders as new
information comes to light, or as information already known takes
on added significance." Recticel, 859 F.2d at 1004. We reaffirm
________
this message today,34 confident that our reading of Rule 26(f)
____________________
32Fed. R. Civ. P. 26(f) was adopted in 1980 in the hope that
judicial intervention would curb discovery abuse. See Fed. R.
___
Civ. P. 26(f) advisory committee's notes. Among other things,
the rule interjects the trial court in developing "a reasonable
program or plan for discovery." Id.
___
33This court has already remarked the striking similarity
between ordinary discovery orders and the case-management orders
that Judge Acosta tailored for use in this litigation. See
___
Recticel, 859 F.2d at 1002-03.
________
34While we emphasize that the power we describe here is an
implied power derived from the Civil Rules, we note that the
Supreme Court has, in limited circumstances, sanctioned federal
court resort to an intrinsic power analogous to its statutory
prerogative to assess costs and attorneys' fees. See Chambers v.
___ ________
NASCO, Inc., 111 S. Ct. 2123, 2133 (1991) (discussing federal
____________
courts' inherent power to shift fees in certain circumstances);
Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240,
___________________________ ________________
258-59 (1975) (similar). Be that as it may, we need not decide
today whether, apart from the power derived from the Civil Rules,
a district court possesses the inherent power to effectuate
52
does not loose some strange new beast to prey on unsuspecting
litigants. In the last analysis, a district court's intrinsic
power to alter its own directives is a familiar one, applicable
to many other sorts of pretrial orders. See, e.g., Poliquin v.
___ ____ ________
Garden Way, Inc., ___ F.2d ___, ___ (1st Cir. 1993) [Nos. 92-
________________
1115, 92-1116, slip op. at 20] (noting that pretrial protective
orders are "always subject to the inherent power of the district
court to relax or terminate the order, even after judgment").
Consequently, we hold that, despite the absence of any
language in a cost-sharing order reserving a trial judge's right
to rearrange the burdens therein imposed at a later date, "it is
certain beyond peradventure that [a] district court can . . .
entertain motions for the reallocation of expenses." Recticel,
________
859 F.2d at 1004-05. This power is the logical (and, we think,
necessary) extension of the court's authority to fashion pretrial
cost-sharing orders in the first place.
To say that the power to reallocate assessments under
cost-sharing orders can fairly be implied from the Civil Rules is
not to say that the district court's exercise of that power is
unbridled. In our view, the power is coupled with an interest in
fairness and its exercise must, therefore, comport with first
principles of equity. It is to this unexplored terrain that we
now turn.
2. The Standards Governing Reallocation. Although
2. The Standards Governing Reallocation.
_____________________________________
cost-sharing orders are sui generis, they almost always
___ _______
constitute a way of fueling an array of hand-crafted procedural
____________________
reallocation of cost-sharing assessments previously imposed.
53
devices designed to sort and resolve myriad claims in an
equitable, efficient, comparatively inexpensive manner. A
subsequent decision to readjust the burdens imposed by such
orders, and the specific redistribution that results, must remain
faithful to that aim.35 The power to readjust, then, must be
exercised in accordance with a set of equitable principles,
shaped by the circumstances indigenous to the litigation but
rooted in the concept that court-imposed burdens should, in the
end, balance derived benefits. In the paragraphs that follow, we
touch lightly upon certain fundamental principles that should
inform the determination of whether a post-judgment reallocation
of court-ordered expenses is advisable, and if so, to what
extent.
a.
a.
__
Upon motion, a district court should consider
reallocating costs after entry of judgment when, with the acuity
of hindsight, it determines that a party or group of parties has
significantly failed to derive the expected benefits from burdens
imposed under cost-sharing orders entered earlier in the
litigation, or has derived those benefits to a significantly
greater or lesser extent than other similarly situated parties.
This rule dominates the constellation of factors bearing on the
____________________
35We limit our discussion to cases where, as here, mandatory
cost-sharing orders are largely silent on the matter of an
eventual redistribution of expenses. A district court may, of
course, build into a cost-sharing order a mechanism for eventual
redistribution, the structure and propriety of which would have
to be considered on its own merits against the backdrop of the
particular litigation. Indeed, the court below formulated such a
mechanism, but limited its operation to cost-sharing assessments
levied against plaintiffs' attorneys. See Pretrial Order No.
___
127, at 39-40; see also supra note 2.
___ ____ _____
54
decision to reallocate.
b.
b.
__
In contrast to the well-recognized presumption that
prevailing parties should recover their taxable costs under Rule
54(d), there is no basis for a parallel presumption that the
winners' case-management expenses should be borne by the losers.
Thus, a prevailing party will not automatically receive a
favorable reallocation, but must persuade the court of an
entitlement to one. This conclusion flows naturally from the
idea that derived benefit is the shining star in the readjustment
galaxy: when all is said and done, the benefit a party secures
from forced contributions to joint ventures in complex litigation
may be unrelated, or vastly disproportionate, to the party's
success on the merits.
c.
c.
__
To say that prevailing parties are not presumptively
entitled to a favorable reallocation of cost-sharing assessments
is not to say that either the fact or the scope of a litigant's
victory is irrelevant to a district court's reassessment of the
matter. The inherent clarity of a case and the ease with which
it can be decided without resort to heroic measures ordinarily
affect the degree of benefit the prevailing party obtains from
the availability of innovative procedural mechanisms. Hence, the
extent to which a litigant achieves a swift, across-the-board
success not correlated with case-management tools must
necessarily inform the district court's reallocation decision.
The presence of knotty issues, fought, in the Stalingrad
tradition, from rock to rock and tree to tree, often cuts the
55
other way. Close cases, particularly those that are fact-
dominated, tend to be cases in which all parties derive
considerable benefit from the availability of sophisticated case-
management tools.
d.
d.
__
When a district court considers a party's request to
reallocate sums previously assessed, the requestor's ability to
shoulder the expense is immaterial. Cost-sharing orders are
attempts to distribute systemic costs in an equitable manner;
they should not be transmogrified into a method of forcing deep
pockets, whenever and for whatever reason they appear in a suit,
to bear the crushing financial burdens of complex litigation.
Equity in readjusting cost-sharing orders depends upon who, in
the end, garnered a disproportionate slice of the benefits the
orders sought to provide, not upon who can best afford to
pay.36 Although the operative considerations are not entirely
the same, this principle parallels the Sixth Circuit's
longstanding view that a prevailing party's ability to pay his or
her own costs is an improper basis for refusing to tax costs
____________________
36We recognize that the presence of an indigent party may
affect the reallocation decision. Cf., e.g., Neitzke v.
___ ____ _______
Williams, 490 U.S. 319, 324 (1989) (discussing Congress's desire
________
to "ensure that indigent litigants have meaningful access to the
federal courts"); Adkins v. E. I. DuPont de Nemours & Co., 335
______ _______________________________
U.S. 331, 339 (1948) (refusing to require litigants "to
contribute to payment of costs[] the last dollar they have or can
get" before becoming entitled to forma pauperis standing);
_____ ________
Aggarwal v. Ponce Sch. of Medicine, 745 F.2d 723, 728 (1st Cir.
________ _______________________
1984) (warning that courts must go slowly in allowing "toll-
booths [to] be placed across the courthouse doors"); Burroughs,
_________
741 F.2d at 1542 (allowing a district court to deny costs under
Rule 54(d) when the losing party is indigent). We do not probe
the point, however, because no party involved in these appeals
has asserted such a claim.
56
against the loser under Rule 54(d). See White & White, 786 F.2d
___ ______________
at 730; Lewis v. Pennington, 400 F.2d 806, 819 (6th Cir.), cert.
_____ __________ _____
denied, 393 U.S. 983 (1968).
______
e.
e.
__
Cost-sharing orders are designed to inure to the
benefit of all contributing parties. A case's history and
particular circumstances may reveal that some parties carried
heavy, even excessive, loads, while other parties enjoyed a
relatively free ride. Reallocating cost-sharing assessments
affords a way of balancing case-specific inequities. For
example, a party's interjection of unmeritorious issues that
unnecessarily lengthen the litigation might favor the conclusion
that others have paid too much and the interjector has paid too
little. Cf. Lichter Found., Inc. v. Welch, 269 F.2d 142, 146
___ ____________________ _____
(6th Cir. 1959) (approving denials of costs to prevailing parties
under Rule 54(d) on this basis). A cost-readjustment analysis,
like all decisions grounded in equity, must leave room for such
case-specific factors.
f.
f.
__
We believe that we have said enough to erect a flexible
framework for reallocation analysis and, hopefully, to provide a
modicum of general guidance to the district courts. We caution
that the relative weight and impact of relevant considerations
will vary from situation to situation, and, moreover, that, given
the virtually limitless number of permutations likely to be
encountered in civil litigation, our compendium of factors is not
all-encompassing.
3. Remedy. The question of remedy remains. It is
3. Remedy.
______
57
clear that an appellate court is not the most propitious forum
for shaking up a preexisting expense allocation. By definition,
cost-sharing orders originate with the district court as a
component of the court's case-management function. Given the
district judge's intimate knowledge of the circumstances under
which the imposts were conceived, his familiarity with the nature
and purposes of the assessments, his front row seat throughout
the litigation, and his matchless ability to measure the benefits
and burdens of cost-sharing to the parties in light of the
litigation's progress and stakes, we are convinced that the
district judge has the coign of vantage best suited to
determining, in the first instance, whether, and if so, how, the
initial cost-sharing orders should be modified. We are keenly
aware that this litigation has exhibited a capacity to chew up
endless amounts of judicial resources and we are extremely
reluctant to prolong matters. Here, however, the necessity for
remanding is plain: not only is the trial judge best equipped to
address the remaining problems, but also, as we explain below,
there is at least a prima facie case for some reallocation of the
_____ _____
assessments. Indeed, the collocation of circumstances strongly
suggests that the pre-fire insurers did not reap in full the
benefits associated with several of the procedural innovations
they helped to fund. We run the gamut.
More than half of each appellant's assessment
supplemented the budgets of the JDC and JDD, facilities devoted
to the economical coordination and speedy completion of
discovery. Because the pre-fire insurers defeated all adverse
claims through dispositive motions short of trial, on purely
58
legal grounds, the benefit they derived from these innovations
was most likely minimal. The near-complete closure of discovery
prior to appellants' appearance in the litigation, see supra p. 4
___ _____
& note 3, rendered the JDC, established to stimulate expeditious
resolution of discovery disputes, of dubious value to appellants.
As for the JDD, the documents housed there were of questionable
relevance vis-a-vis appellants because they were gathered during
earlier litigation phases that settled a host of different
issues. To be sure, appellants probably derived some benefit
from the facilities they helped to fund. Certainly, they were
free to peruse whatever useful evidence the JDD did contain.37
What is more, the DLP presumably facilitated the movement of
papers to appellants' behoof; and appellants probably saved money
through the avoidance of unnecessary duplication. But, it is
difficult to fathom how contributions on a par with those of all
other defendants to fact gathering largely irrelevant to the
claims against appellants constituted the "most efficient use of
. . . [appellants'] resources." Pretrial Order No. 127, at i.
The early stage at which the district court dismissed
all claims against appellants also creates doubt as to whether
the substantial assessments, geared largely toward efficient fact
gathering, inured to appellants' benefit to any meaningful
degree. The pre-fire insurers prevailed on all claims, as a
matter of law, without going to trial. The district court,
having determined that no issue of fact needed debate and that
____________________
37Nevertheless, thirteen appellants contend that they
utilized no evidence contained in the JDD to support their
__
dispositive motions.
59
appellees' arguments had no basis in law, see Hotel Fire Litig.,
___ _________________
802 F. Supp. at 635, 644, might be hard-pressed to conclude that
appellants' huge expenditures, diverted to facilities designed,
in large part, to collect, sort, and maintain factual documents,
were integral to, or even marginally connected with, the pursuit
of their cause.
In sum, it appears from the record before us that
appellants have a colorable basis for arguing that they derived
minimal benefits from the assessments. Nonetheless, this
hypothesis remains unproven. There may be more here than meets
the eye; for one thing, the appellate record does not speak in
any detail to the equities. Although an appellate court may
decline to remand where remanding would be an empty exercise,
see, e.g., Societe des Produits Nestle, S.A. v. Casa Helvetia,
___ ____ __________________________________ ______________
Inc., 982 F.2d 633, 642 (1st Cir. 1992) (declining to remand
____
where, once the court of appeals decided the correct rule of law,
the district court's preexisting findings of fact rendered the
result obvious), that is not the case here. Rather, there are
pregnant questions to be mulled on remand questions on which
the trial judge's viewpoint is especially important. We
conclude, therefore, that the case must be returned to the
district court for further proceedings before Judge Acosta. We
intimate no opinion as to the appropriate outcome of those
proceedings.
V. BANKRUPTCY OF AN AFFILIATED ENTITY
V. BANKRUPTCY OF AN AFFILIATED ENTITY
We are not yet at journey's end. Two appellees,
Associates and HSI, invoke the so-called automatic stay
provision, 11 U.S.C. 362 (1988), in an endeavor to persuade us
60
that an affiliated firm's bankruptcy should have resulted in a
stay of proceedings on appeal. We are not convinced.
The essential facts are as follows. On August 5, 1991,
Holders Capital Corporation (HoCap) filed for bankruptcy.
Because HSI is a wholly owned subsidiary of HoCap and Associates
is a limited partnership whose general partner is also a wholly
owned subsidiary of HoCap, both appellees assert that continued
prosecution of the pre-fire insurers' appeals, as against them,
constitutes an impermissible attempt to obtain possession of the
debtor's property in violation of 11 U.S.C. 362(a)(3).
This assertion need not detain us. As a general rule,
section 362(a)'s automatic stay provisions apply only to the
debtor in bankruptcy. See Austin v. Unarco Indus., Inc., 705
___ ______ ____________________
F.2d 1, 4 (1st Cir.), cert. dismissed, 463 U.S. 1247 (1983); see
_____ _________ ___
generally
_________
In re Western Real Estate Fund, Inc., 922 F.2d 592, 600 (10th
______________________________________
Cir. 1990), modified on other grounds, 932 F.2d 898 (10th Cir.
________ __ _____ _______
1991). As entities legally distinct from HoCap, see Parkview-
___ _________
Gem, Inc. v. Stein, 516 F.2d 807, 811 (8th Cir. 1975) (holding
_________ _____
that where debtor, qua lessee, had previously assigned all
___
leasehold rights to a subsidiary, the lessor's action to
terminate the lease could not be enjoined because, despite the
fact that the termination would likely have "an adverse [e]ffect
upon the debtor," no claim was asserted against the debtor); In
__
re Bank Ctr., Ltd., 15 B.R. 64, 65 (Bankr. W.D. Pa. 1981)
____________________
(refusing to stay an action against the partner of a bankrupt
partnership because a "partner is a separate entity from the
partnership"), the two corporate appellees are not presumptively
61
entitled to the protection of any automatic stay which may be
extant in the HoCap bankruptcy proceeding. Since these appeals
implicate no attempt to assert, enforce or recover any claim
against HoCap or its property, the appeals may proceed.
See 11 U.S.C. 362(a)(3) (staying actions to "obtain possession
___
of" or "exercise control over" the bankrupt estate); see also
___ ____
Fragoso v. Lopez, F.2d , (1st Cir. 1993), [No. 92-
_______ _____ ____ ____ ____
2046, slip op. at 14] (noting federal court reluctance to refrain
from "deciding legal issues pertaining to a party involved in a
federal bankruptcy proceeding"); Picco v. Global Marine Drilling
_____ _______________________
Co., 900 F.2d 846, 850 (5th Cir. 1990) ("The automatic stay of
___
the bankruptcy court does not divest all other courts of
jurisdiction to hear every claim that is in any way related to
the bankruptcy proceeding.").
VI. CONCLUSION
VI. CONCLUSION
We need go no further. We hold that the district court
erred in precluding, without explanation, the taxation of
ordinary costs under Rule 54(d) in favor of appellants (who were
the prevailing parties). Hence, we remand to allow appellants an
opportunity to file bills of costs in the usual form. The lower
court did not err, however, in refusing to treat case-management
expenditures as taxable costs within the purview of Rule 54(d)
and its statutory helpmeet, 28 U.S.C. 1920.
We also hold that the district court possesses the
implied power, under Fed. R. Civ. P. 26(f), to revisit the
initial allocations of case-management expenses and readjust the
same as equity may require. Because the lower court did not
afford appellants a fair opportunity to seek such a reallocation,
62
we remand for that purpose as well. Appellants shall file their
motions to reallocate with the district court no later than
thirty days from the date our mandate issues.38
Vacated and remanded; one-half costs to appellants.
Vacated and remanded; one-half costs to appellants.
__________________________________________________
____________________
38In this connection we urge the district courts within this
circuit to consider framing local rules to the effect that,
henceforth, any application for reallocation of court-imposed
cost-sharing expenses must be filed within thirty days of the
entry of final judgment. Cf. White, 455 U.S. at 454 (observing
___ _____
that district courts are free "to adopt local rules establishing
timeliness standards for the filing of claims for attorney's
fees"); Obin v. District No. 9, Int'l Ass'n of Machinists &
____ _______________________________________________
Aerospace Workers, 651 F.2d 574, 583 (8th Cir. 1981)
___________________
(recommending a rule that claims for attorneys' fees must be
filed within twenty-one days after entry of judgment).
63