21 February 2012

SCOTUS Takes Up $5,257.20 Bill of Costs Dispute

When somebody wins a lawsuit, even if no attorneys' fees are awarded, the prevailing party can submit a "Bill of Costs" for certain recoverable out of pocket costs involved in litigating the case, like court filing fees and process server charges. It so happens that I filed one in a case just today, so the issues are fresh in my mind. One of the items allowed as a recoverable cost in federal court is the charge incurred for "interpretation" costs.

Normally, the lion's share of "interpretation" costs is the costs of having a real time foreign language intepreter present in open court to help a non-English speaking witness or party communicate with other participants in the court process, like the judge, the jury, or opposing counsel.

But, there is a split of authority between the federal circuit courts on whether the costs of translating documents in a civil case, and not just interpretation of spoken statements by witnesses and parties counts as a recoverable cost.

The reality in federal court and in state courts of general jurisdiction is that recoverable costs are typically minimal relative to the amount in dispute on the merits. The case before the U.S. Supreme Court on the Bill of Costs issue involves a hotel was sued for a serious personal injury suffered by a professional baseball player from Japan that undoubtedly involved tens or hundreds of thousands of dollars of attorneys' fee expenses for each party, and probably hundreds of thousands or millions of dollars in potential money damages.

But, like many U.S. Supreme Court cases, the clear conflict of authority between circuits on a legally narrow and factually very clean issue of federal law applicable in a large number of cases nationally made it attractive to the U.S. Supreme Court. The odds are good that this case will have shorter briefs than any of the other cases decided on the merits this term.

Of course, it is insane in the context of this particular case for either party to litigate the issue all the way to the U.S. Supreme Court. Even a very narrow and simple appellate issue like this one, taken so far up the appellate process, will easily cost both side more in attorneys' fees (or would if the clients were actually paying for this appellate litigation) than the less than $6,000 at stake, and neither party will recover their attorneys' fees from the other in this appellate litigation.

The impact on litigation economics, in the vast majority of cases, are usually modest as well. Many cases have no document translation costs, and costs are typically chump change. Notably, no many Plaintiffs' or Defendants' attorneys' organization filed an amicus brief in the case. The costs in the Bill of Cost that I prepared today were less than 0.5% of the amount in controversy in the case, and while that is on the low end, that wouldn't be particularly unusual is a medium sized civil lawsuit. As the Justices in the oral arguments in the case noted, however, in some jurisdictions, like Puerto Rico, the impact of a ruling on the recoverability of document translation costs can be considerable.

Presumably, the law firms involved are financing this effort because they or their clents have a much greater long term stake in the legal issue involved over many cases, and also because taking a case all of the way to the U.S. Supreme Court, even on a petty issue, provides reputational capital to both of the firms involved in the case, proving to future clients and future adverse parties in negotiations that you are willing to go to any lengths of fight even minor issues. Also, lawyers for both sides probably don't grudge an excuse to take a trip to Washington D.C., and the underlying issue isn't the kind of thing that is likely to create deep bad blood between the firms in their ongoing dealing with each other.

The party appealing the ruling is a personal injury law firm probably paid on a contigent fee basis. The party securing the favorable ruling is probably an insurance defense firm that has a long term interest in securing larger bill of cost recoveries for the insurance company (which may have a national customer basis that includes Chicago where a less favorable rule for prevailing defendants exists) when they win defense cases for their clients. The case also arises in Saipan, a U.S. territory, where document translation expenses are a significant and recurring part of both party's practices.

For what it is worth, on the merits, I think the trial court probably made the right call in ruling that the costs of document translation related to litigation are recoverable costs, and Judge Posner, in Chicago, whose Seventh Circuit is the only outlier on this score, probably made the wrong ruling on this point of law. Costs are supposed to cover out of pocket expenses that are reasonable and necessary to the litigation other than attorneys' fees, and although the statute specifically identifies particular expenses rather than using this general definition, litigation specific document translation costs are at least as good a fit for this category of expenses as expert witness fees, courtrooom interpreters, and certain expenses involved in complying with electronic discovery orders in large computer systems which are also allowed as recoverable costs. There is no compelling reason to find that document translation costs are less like expert witness fees and more like attorneys' fees that prevailing parties must bear in most situations under the American rule that states that each party bears their own attorneys' fees absent a clear exception to the contrary. The oral arguments in the case reflect that fact that this is a likely outcome.

The case is Kouichi Taniguchi v. Kan Pacific Saipan, Ltd, and oral argument transcripts in the case can be found here.

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