Costs Case
Analysis
Nov.
29, 2006
Although
the court rejected the city of Chicago's argument that the indigence
exception to FRCP 54(d)(1) should be abolished, the court makes
it decidedly more difficult for losing parties claiming indigence
to avoid the imposition of costs.
The
opinion requires the court to find, not only that the losing party
is unable to pay costs, but that it will be unable to pay in the
future.
In
doing so, the court cited with approval, and compared, two unpublished
district court opinions: Den-son v. Northeast Illinois Regional
Commuter Railroad Corp., 2003 WL 21506946 (N.D.Ill. June 27, 2003);
and Cross v. Roadway Express, 1994 WL 592168 (N.D.Ill. Oct. 26,
1994).
In
Denson, the losing party was unemployed, had no savings, and supported
two children and a grandchild on supplemental security income
benefits. While that scenario may seem a slam dunk for invoking
the indigence exception and not awarding costs, the district court
awarded costs, although it stayed execution of the judgment until
the plaintiff's circumstances changed.
In
Cross, the losing party was an unemployed single parent to three
children, who suffered from mental health issues, and lived on
Social Security benefits. There, the district court found that
the plaintiff met the burden of showing both present indigence
and no future ability to pay, and denied costs.
The
majority of losing parties who seek to avoid the imposition costs
fall far closer to Denson than to Cross. In light of this decision,
prevailing parties have a good argument that costs should be imposed
in many such cases, even if the judgment is stayed indefinitely,
and even in perpetuity.
As
a final matter, it should be noted that there never was even any
persuasive authority to support the city's argument, something
the court failed to recognize.
The
court cites the Sixth Circuit case of McDonald v. Petree, 409
F.3d 724 (6th Cir. 2005), as holding that districts courts are
expressly prohibited from considering a losing party's indigence
when awarding costs in that circuit.
However,
what McDonald, and previous Sixth Circuit cases, such as White
& White, Inc., v. American Hosp. Supply Corp., 786 F.2d 728
(6th Cir. 1986), actually hold, is something different. They hold
that "the ability of the prevailing party to pay his or her
costs" is an inappropriate factor to consider (emphasis added).
White, 786 F.2d at 730; McDonald, 409 F.3d at 732.
So,
notwithstanding the lead opinion's assumption, and Judge Easterbrook's
lengthy concurrence as to why the non-prevailing party's indigence
should be irrelevant, there is not actually an intercircuit split
of authority on this issue.
Thus,
any attorney thinking that there may be a basis for the U.S. Supreme
Court to grant review on this issue will have to find another
reason to justify certiorari.
-
David Ziemer
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David
Ziemer can be reached by email.
