Recovering Litigation Costs in Illinois State Court – What About Westlaw Research?

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In a small dollar case, a plaintiff’s recoverable “costs” typically include filing fees and service fees. See Household Int’l v. Liberty Mutual, 195 Ill. 2d 578 (2001).  This amount is usually negligible (usually less than $500) and not worth fighting over. However, where a fee-shifting provision in a contract provides for prevailing party “litigation expenses” or “costs of collection” (as many commercial contracts do) and the case drags on one or more years, the litigation costs can be substantial.

In Illinois, “[c]osts are allowances in the nature of incidental damages awarded by law to reimburse the prevailing party, to some extent at least, for the expenses necessarily incurred in the assertion of his rights in court.” Galowich v. Beech Aircraft Corp., 92 Ill. 2d 157, 165-66 (1982).

Code sections 5-108 and 5-109 – allow the a winning party to recover costs. The First District, in  analyzing a Federal Truth in Lending claim, held that any expenses paid to a third party including expert witness expenses, special process server expenses, deposition expenses, filing and messenger fees and computerized legal research costs can all be recovered by the prevailing plaintiff. Johnson v. Thomas, 342 Ill.App.3d 382, 401-402 (1st Dist. 2003).

By contrast, “overhead expenses” – costs a lawyer incurs independent of a specific case – are generally not recoverable.  Overhead costs include: telephone charges, in-house delivery charges, in-house photocopying, check processing, newspaper subscriptions, and in-house paralegal and secretarial assistance. Id. at 401-402.

The reason: overhead costs, at least in theory, are already reflected in an attorney’s hourly rate. See Harris Trust & Savings Bank, 230 Ill. App. 3d 591, 599 (1st Dist. 1992).

Whether a prevailing party can recover for computerized legal research expenses will turn on the winning side’s billing method.  Where the attorney’s fee is contingent or fixed – computer research expenses are not allowed.  The theory being that the computer research benefitted the contingent fee lawyer by reducing his research time and increasing his efficiency.  Because of this, the contingent lawyer should not be able to shift the computer research costs to a losing party. 

In contrast, for an attorney charging by the hour, the saved time resulting from computer research actually works against him – he will bill for fewer hours than if he researched the “old fashioned way” (does anyone remember Shepardizing?). 

With hourly billing, “the attorney should not be required to absorb the additional expense engendered by computer research fees in light of the diminished billable hours that result from such computer assistance”. Id.

Johnson does caution that computer research expenses are properly denominated “fees”; not costs. This is because computer research is part of the attorney’s overall effort in prosecuting or defending his client’s case. Id. So, if the statute or contract allows for recovery of fees and costs, computerized research expenses will be recoverable.  Conversely, if the contract only provides for winning party “costs”, computer research charges can’t be recovered under Johnson‘s rationale.

The take-away: I’ve been involved in more than a few multi-year cases where the litigation expenses (aside from the attorneys’ fees) exceeded $10,000.  As a consequence, a working knowledge of what litigation expenses an Illinois court will and will not permit is essential for practitioners engaged in protracted commercial litigation.  

 

Recovering Litigation Costs in Federal Court (Northern District of Illinois)

Federal court litigants in Illinois should be versed in 28 U.S.C. §1920, FRCP 54 and Northern District Local Rule 54.1 – both of which govern recoverable costs and the procedures for recovering those costs in Federal court.  Broadly, the prevailing party has 30 days from date of judgment to file a Bill of Costs.  Failing that, all of his costs – except for “clerk” costs (28 U.S.C. § 1920) – are waived. LR 54.1(a).

FRCP 54 creates a strong presumption that the prevailing party may recover reasonable and necessary litigation costs from the losing party.  Huerta v. Village of Carol Stream, 2013 WL 427140 (N.D.Ill. 2013).  28 U.S.C. §1920 provides that a winning party can recover: (1) clerk and marshal fees [filing and service fees, e.g.]; (2) fees for transcripts necessarily obtained for use in a case; (3) printing and witness fees; (4) exemplification/certification costs for materials necessarily used in a case; (5) docket fees; and (6) court-appointed experts and interpreters’ fees.  Id.  The prevailing party has the burden of showing that the requested costs are necessary and reasonable and once that burden is met, the losing party must show that the costs are not appropriate.  Beamon v. Marshall & Isley Trust Co., 411 F.3d 854 (7th Cir. 2005). 

A prevailing Federal court party’s private process server fees are also recoverable, so long as they don’t exceed the applicable marshall’s fees ($55/hour pursuant to 28 C.F.R. § 0.0114(a)(3); see Huerta, 2013 WL 427140, *3.  As for deposition costs, whether transcript costs are allowed depends on whether it was reasonably and necessarily “related to an issue that was present in the case at the time the deposition was taken.”  Independence Tube Corp. v. Copperweld Corp., 543 F.Supp. 706, 718 (N.D.Ill. 1982).  If so, the victor gets the cost of the original transcript, one copy and an additional copy – so long as the additional copy is tendered to the court.  LR 54.1(b).  The prevailing party can recover up to $3.65 per deposition page.  Huerta, at *3; citing Maximum Transcript Rates, http://www.ilnd.uscourts.gov/home/clerksoffice/CLERKS_OFFICE/CrtReporter/trnscrpt.htm

 However, shipping and handling costs are “ordinary business expenses” and not recoverable.  Bogan v. City of Chi., 2010 U.S.Dist. LEXIS 64187 (N.D.Ill. 2010).

The take-away:  If litigating in Federal court, the recent Huerta case provides a lucid and detailed treatment of allowable and dis-allowable litigation costs.  If presenting or opposing a Bill of Costs, this case and the applicable rules it references should prove useful in supporting your arguments.  Also, effective, May 23, 2013, LR 54.1(b) was amended to provide that court reporter appearance fees may be awarded but those rates shall not exceed the rates published on the Court website.  

References:

Huerta opinion: http://www.abisoft.org/opinions/2013/1_09-cv-01492_20130204.pdf

Local Rule 54.1http://www.ilnd.uscourts.gov/legal/newrules/New00039.htm

Local Rule 54 (amendment May 23, 2013) http://www.ilnd.uscourts.gov/home/clerksoffice/rules/admin/pdf-orders/General%20Order%2013-0011%20-%20Local%20Rule%2054.1.pdf

FRCP 54: http://www.law.cornell.edu/rules/frcp/rule_54

28 U.S.C. §1920: http://www.law.cornell.edu/uscode/text/28/1920

When Private Facebook Posts Come Back to Haunt You

To paraphrase that post-“Black Album” Metallica song (and a pretty tired proverb at that) – be careful what you wish for ’cause you just might get it.  I came across this gem recently courtesy of Eric Meyer’s (of Dilworth Paxson, LLP) informative and humorous employment blog: http://www.theemployerhandbook.com/about_me.html

The National Labor Relations Board (NLRB) recently issued an Advice Memorandum (see link below) recommending dismissal of an employee’s claim that her employer violated the National Labor Relations Act’s (NLRA) protected “concerted activity” sections when the employer fired the employee for making disparaging comments about the employer on Facebook.

The employee, who worked for Skinsmart – a dermatology clinic – was on a private Facebook “group message” with several former and current Skinsmar employees.  During the course of the exchange, the employee said, among other things, that a supervisor should “back the freak off”, the employer is “full of shit” and (the killer) “FIRE ME…..Make my day.”  The next day, one of the employees who participated in the Facebook exchange, showed the comments to the employer (with friends like these….).  The employer wasn’t amused and summarily fired the Facebooking (now former) employee.  (Somewhere Monsieur Eastwood is smiling.)  The employee, apparently having a change of heart, then lodged an unfair labor practice charge with the NLRB.

In recommending dismissal of the employee’s claim, the NLRB found that the employee’s inflammatory comments were akin to “griping” and were not protected group activity.  The NLRA specifically protects employees’ rights to organize and engage in concerted activity – so long as the activity involves shared concerns about working conditions or where the activity takes place in the context of preparing for group action or bringing group complaints to management’s attention.  Meyers Industries, 281 NLRB 882 (1986), NLRA §§ 7, 8(a)(1).  Here, the NLRB ruled that the employee’s request that her employer “fire her” and “make my day” was nothing more than unprotected individual griping and simply “reflected [the employee’s] personal contempt for her [employer].”  See Advice Memorandum, p. 3.

The take-away: First – be careful what you post on Facebook: you never know who is watching or who may “share” your impulsive (or not) posts; Second – if you are going to participate in a group message with current and/or former employees, your comments will only be protected if they truly involve working conditions or truly group complaints to be expressed to management; and Third – if you’re going to trash your employer, do it off-line.

Reference:

http://www.employerlaborrelations.com/files/2013/05/Tasker-Healthcare-Group-dba-Skinsmart-Dermatology.pdf