Flowrider Surf, Ltd. v. Pacific Surf Designs, Inc.

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8 UNITED STATES DISTRICT COURT

9 SOUTHERN DISTRICT OF CALIFORNIA

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11 FLOWRIDER SURF, LTD., a Canadian Case No.: 3:15-cv-01879-BEN-BLM

corporation; and SURF WAVES, LTD., a

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company incorporated in the United ORDER DENYING PLAINTIFFS’

13 Kingdom,

(1) EX PARTE MOTION FOR

14 Plaintiffs,

LEAVE TO FILE A SUR-REPLY

15 v. TO DEFENDANT’S REPLY IN

SUPPORT OF DEFENDANT’S

16 PACIFIC SURF DESIGNS, INC., a

RENEWED MOTION FOR

Delaware corporation,

17 ATTORNEY’S FEES

Defendant.

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(2) MOTION TO RE-TAX COSTS

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[ECF No. 294, 296]

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Presently before the Court are Plaintiffs’ (1) Ex Parte Motion for Leave to File a

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Sur-Reply to Defendant’s Reply in Support of Their Renewed Motion for Attorneys’ Fees,

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ECF No. 294, and (2) Motion to Re-tax Costs, ECF No. 296. The Court DENIES

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Plaintiffs’ (1) Ex Parte Motion for Leave to File a Sur-Reply to Defendant’s Reply in

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Support of Their Renewed Motion for Attorneys’ Fees as moot, and (2) Motion to Re-tax

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Costs.

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On August 24, 2015, Plaintiffs commenced this patent infringement action alleging

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1 PSD willfully infringed the ‘589 and ‘016 Patents. See generally, ECF No. 1. On May 26,

2 2017, this Court (1) granted Defendant’s motion to dismiss Flowrider’s ‘589 Patent claim

3 for lack of subject matter jurisdiction; (2) denied Flowrider’s motion to substitute parties;

4 (3) dismissed FlowRider as well as the ‘589 Patent Claim for lack of standing without

5 prejudice; and (4) stayed the rest of the case while ‘016 Patent underwent inter partes

6 review with the Patent Trial and Appeal Board of the U.S. Patent Office (“PTAB”). ECF

7 No. 222. On January 19, 2018, Defendant notified the Court of the PTAB January 17,

8 2018 Final Written Decision in the inter partes review of the ‘016 Patent, in which the

9 PTAB found all asserted claims of the ‘016 Patent unpatentable. ECF No. 230. On May

10 7, 2018, based on the PTAB decision, judgment was entered against Plaintiffs, and

11 provided that “Plaintiff’s patent is unenforceable and judgment is entered for Defendant

12 for the entire action.” ECF No. 240.

13 On May 22, 2018, Defendant filed a Bill of Costs, seeking $30,634.31 in costs

14 against Plaintiffs. On August 13, 2019, a hearing for taxation of costs was held. On

15 October 22, 2019, John Morrill, Clerk of the Court, issued an Order Taxing Costs, taxing

16 $19,844.16 in favor of Defendant and against Plaintiffs. ECF No. 295. On October 29,

17 2019, Plaintiffs filed a Motion to Re-tax Costs.

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I. LEGAL STANDARD

19 “A review of the decision of the clerk in the taxation of costs may be taken to the

20 court on motion to re-tax by any party in accordance with Rule 54(d), Fed. R. Civ. P., and

21 Civil Local Rule 7.1.” S.D. Cal. Civ. R. 54.1(h). “‘Under the well-established Rule

22 54(d)(1) case law, the district court is charged with making a de novo review of the clerk’s

23 determination of the costs issue.’” Jardin v. DATAllegro, Inc., No. 08-CV-1462-IEG

24 WVG, 2011 WL 4835742, at *1 (S.D. Cal. Oct. 12, 2011) (quoting In re Paoli R.R. Yard

25 PCB Litig., 221 F.3d 449, 461 (3d Cir. 2000)). Rule 54(d) creates a presumption favoring

26 an award of costs to the prevailing party. See, e.g., Marx v. Gen. Revenue Corp., 568 U.S.

27 371, 375–76 (2013) (“describing the ‘venerable’ presumption that prevailing parties are

28 entitled to costs); see also Oracle USA, Inc. v. Rimini St., Inc., 879 F.3d 948, 966 (9th

1 Cir.), cert. granted, 139 S. Ct. 52, (2018), and rev’d in part, 139 S. Ct. 873 (2019) (noting

2 that Marx remains binding precedent on the Ninth Circuit). “The fact that a party does not

3 prevail on all of its claims does not, however, preclude it from being the prevailing party

4 for purposes of awarding costs under Rule 54(d).” Kemin Foods, L.C. v. Pigmentos

5 Vegetales Del Centro S.A. de C.V., 464 F.3d 1339, 1347–48 (Fed. Cir. 2006); see also

6 Hashimoto v. Dalton, 118 F.3d 671, 677 (9th Cir. 1997) (providing that “[a] litigant need

7 not prevail on every issue, or even on the ‘central issue’ in the case, to be considered the

8 prevailing party”).

9 The losing party carries the burden of overcoming the presumption favoring an

10 award of costs to the prevailing party by affirmatively showing a valid reason that the

11 prevailing party is not entitled to costs. Save Our Valley v. Sound Transit, 335 F.3d 932,

12 944-45 (9th Cir. 2003). In reviewing costs assessments, district courts consider (1) whether

13 the costs are allowable and (2) whether the amount assessed for each item is reasonable.

14 Majeske v. City of Chicago, 218 F.3d 816, 824 (7th Cir. 2000); see also Yumi Ito v. Tokio

15 Marine & Fire Ins. Co., LTD., No. CV036835JFWJTLX, 2007 WL 9735847, at *1 (C.D.

16 Cal. Mar. 22, 2007) (citing to Majeske for the same proposition). District courts also

17 consider whether the award of costs is just.

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II. DISCUSSION

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Plaintiffs have moved the Court for two forms of relief. First, Plaintiffs filed an Ex

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Parte Motion for Leave to File a Sur-Reply to Defendant’s Reply in Support of Their

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Renewed Motion for Attorneys’ Fees. ECF No. 294. Given the Court has ruled on

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Defendant’s Renewed Motion for Attorneys’ Fees, the issue is moot.

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Second, Plaintiffs move to re-tax costs, arguing that (1) prevailing party status is

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determined by federal circuit law, not the local rules, ECF No. 296-1 at 1:25-27; (2)

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Defendant is not the prevailing party on the ‘589 Patent given a defendant is not considered

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the prevailing party when dismissal without prejudice is the result of lack of subject matter

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jurisdiction, id. at 2:13-17; and (3) Defendant has not demonstrated an entitlement to costs

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1 for the ‘016 Patent, including but not limited to the depositions and file wrappers, id. at

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3:8-18. Defendant responds that (1) Defendant is the prevailing party in the action under

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federal common law, ECF No. 299 at 2:18-25, and (2) costs were properly taxable under

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28 U.S.C. § 1919 and Local Rule 54.1, id. at 4:13-15 and 5:6-8. Upon careful consideration

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of the numerous briefs, objections, and responses exchanged in this case, the Court affirms

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the Clerk’s order taxing costs and denies Plaintiffs’ Motion to Re-tax Costs.

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Plaintiffs also argue that “[w]hether a party is prevailing within the meaning of Rule

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54 is a matter of Federal Circuit law.” While “[w]hether a party is prevailing within the

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meaning of Rule 54 is a matter of Federal Circuit law[,] . . . [t]he district court’s actual

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decision regarding an award of costs, however, is reviewed under the law of the regional

11 circuit.” Power Mosfet Techs., L.L.C. v. Siemens AG, 378 F.3d 1396, 1407 (Fed. Cir.

12 2004). In other words, this Court’s decision regarding awarding costs is reviewed under

13 regional Ninth Circuit law. Id. at 1407. Regardless, this Court concludes that under both

14 Federal Circuit and Ninth Circuit law, the Clerk properly taxed costs. Thus, while Plaintiffs

15 argue that “the costs clerk determined taxable costs based solely on the application of Local

16 Rule 54.1 without regard to Federal Rule of Civil Procedure 54 or the Federal Circuit’s

17 binding interpretation of it,” ECF No. 296-1 at 2:7-12, the Court concludes that the Clerk

18 properly taxed costs under both Federal and Ninth Circuit law.

19 1. This Court Properly Determined Defendant is the Prevailing Party

Even if the Dismissal Was for Lack of Standing or Jurisdiction.

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21 Plaintiffs rely on cases from 2001, 2002, 2003, 2014, and 2017 to argue that a

22 defendant is not considered a prevailing party when dismissed without prejudice due to a

23 lack of subject matter jurisdiction. ECF No. 296-1 at 2:13-26. Defendant correctly notes

that the majority of the cases relied on by Plaintiffs were either clarified or overruled

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entirely by later cases. ECF No. 299 at 3:3-5.

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District “courts [have] the discretion to award costs to prevailing parties,” and “Rule

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54(d)(1) codifies a venerable presumption that prevailing parties are entitled to costs.”

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Marx, 568 U.S. at 377; see also Fed. R. Civ. P. 54(d)(1) (providing that courts award costs,

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1 other than attorney’s fees, should be awarded to the prevailing party in a case “[u]nless a

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federal statute, these rules, or a court order provides otherwise”). Generally, when a court

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dismisses a case, the defendant qualifies as the prevailing party for purposes of recovering

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costs under Rule 54 of the Federal Rules of Civil Procedure (“Rule 54”). See, e.g., Raniere

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v. Microsoft Corp., 887 F.3d 1298, 1300-09 (Fed. Cir. 2018) (affirming the district court’s

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award of costs after the plaintiff’s lawsuit for patent infringement was dismissed for lack

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of standing); Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990), partially

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superseded by statute on other grounds (“district courts may award costs after an action is

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dismissed for want of jurisdiction”); Power Mosfet Techs., L.L.C. v. Siemens AG, 378 F.3d

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1396, 1416-17 (Fed. Cir. 2004) (holding that “IR, which had all claims against it dismissed

11 with prejudice, is therefore a prevailing party” but affirming the district court’s denial of

12 costs because the court did not abuse its discretion, and “the district court still retains

13 discretion over the award of costs under Rule 54”); Sequa Corp. v. Cooper, 245 F.3d 1036,

14 1037 (8th Cir. 2001) (concluding that a voluntary dismissal without prejudice under Rule

15 41(a)(1)(i) does not deprive a District Court of its authority to award costs).

16 While courts previously evaluated the basis for the dismissal in deciding whether to

17 award costs, such authority has largely been overruled. See, e.g., Raniere, 887 F.3d at 1306

18 (providing that “[e]ven if the district court’s decision to dismiss with prejudice for lack of

19 standing is not based on the substantive merits of a plaintiff’s case, . . a merits decision is

20 not required”). Thus, even though “a dismissal for lack of standing is generally to be

21 without prejudice because it is not an adjudication on the merits,” courts will still award

22 the defendant costs as a prevailing party in such a case. See id. at 1304 (citing Univ. of

23 Pittsburgh v. Varian Med. Sys., Inc., 569 F.3d 1328, 1332 (Fed. Cir. 2009)). Here, this

24 Court dismissed the claims related to the ‘589 Patent without prejudice after it determined

25 that Plaintiffs lacked standing to pursue those claims, and as a result, the Court lacked

26 subject-matter jurisdiction.

27 Defendant correctly notes that to be deemed the prevailing party, Defendant “need

28 only have prevented plaintiff from receiving some judicial imprimatur, i.e., prevailing on

1 the merits of the case.” ECF No. 299 at 2:13-18; see also Raniere, 887 F.3d at 1306 (noting

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that the defendants won by securing dismissal of the plaintiff’s case, which prevented the

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plaintiff from “from achieving a material alteration of the relationship between them, based

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on a decision marked by ‘judicial imprimatur’”). Thus, contrary to Plaintiffs’ argument,

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even where a court dismisses a case for lack of subject matter jurisdiction, the court may

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deem the defendant the prevailing party. Amphastar Pharm. Inc. v. Aventis Pharma SA,

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856 F.3d 696, 709-11 (9th Cir. 2017). In fact, and as discussed below, all of Plaintiffs’

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authority for its position are from 2001, 2002, 2003, 2014, and 2017 and omits more recent

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authority.

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For their argument that Defendant is not the prevailing party, Plaintiffs largely rely

11 on SPH Am., LLC v. AT&T Mobility LLC, No. 3:13-CV-2318-CAB-KSC, 2017 WL

12 3021025, at *2 (S.D. Cal. July 14, 2017) and Buckhannon Bd. & Care Home, Inc. v. W.

13 Virginia Dep’t of Health & Human Res., 532 U.S. 598, 600 (2001). However, as discussed

14 below, SPH was arguably overruled by Raniere v. Microsoft Corp., 887 F.3d 1298, 1309

15 (Fed. Cir. 2018), and Buckhannon was later clarified by the Supreme Court in CRST Van

16 Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642, 1644 (2016), which held that a ruling on the

17 merits is no longer required to determine a defendant is a prevailing party. The other two

18 Federal Circuit cases upon which Plaintiffs rely also predate the Supreme Court’s ruling in

19 CRST. As such, Plaintiffs fail to cite any binding precedent to support their argument that

20 Defendants are not a prevailing party.

21 In 2001, the United States Supreme Court held that the term prevailing party did not

22 include “a party that has failed to secure a judgment on the merits . . . but has nonetheless

23 achieved the desired result because the lawsuit brought about a voluntary change in the

24 defendant’s conduct.” Buckhannon Bd., 532 U.S. at 600. The Supreme Court held that the

25 term “prevailing party” does not authorize “federal courts to award attorney’s fees to a

26 plaintiff who, by simply filing a nonfrivolous but nonetheless potentially meritless lawsuit

27 (it will never be determined), has reached the ‘sought-after destination’ without obtaining

28 any judicial relief.” Id. at 606.

1 Fifteen years later, the Court clarified Buckhannon in the case of CRST Van

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Expedited, Inc. v. E.E.O.C., which involved “the interpretation of a statutory interpretation

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allowing district courts to award attorney’s fees to defendants in employment

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discrimination cases.” 136 S. Ct. at 1644. The United States Supreme Court reversed the

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Eighth Circuit Court of Appeals, which had held that a Title VII defendant “prevails only

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by obtaining a ‘ruling on the merits.’” Id. at 1646. Instead, the Court held “that a favorable

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ruling on the merits is not a necessary predicate to find that a defendant has prevailed.”

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Notably, the CRST Court indicated that it “has not articulated a precise test for when a

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defendant is a prevailing party.” Id. Even though CRST considered the fee-shifting

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provision of Title VII, the Supreme Court was careful to advise that “Congress has included

11 the term ‘prevailing party’ in various fee-shifting statues, and it has been the Court’s

12 approach to interpret the term in a consistent manner.” Id. at 1646. Further, the CRST

13 listed numerous reasons why defendants who prevail for various non-meritorious reasons

14 should still equitably be deemed prevailing parties and explicitly included the example of

15 a defendant who had prevailed for jurisdictional reasons. Id. at 1651-54.

16 One year after CRST, the Southern District of California issued SPH Am., LLC v.

17 AT&T Mobility LLC, a case upon which Plaintiffs strongly rely. 2017 WL 3021025.

18 However, in 2018, the SPH decision was called into question, if not entirely overruled, by

19 the Federal Circuit case of Raniere, 887 F.3d at 1309. In Raniere, the United States District

20 Court for the Northern District of Texas dismissed the plaintiff’s lawsuit for patent

21 infringement with prejudice due to lack of standing. 887 F.3d at 1300-02. The Raniere

22 plaintiffs contended, like Plaintiffs here, “that dismissal with prejudice for lack of standing

23 is not an adjudication on the merits . . . required to find that a defendant is a ‘prevailing

24 party.’” Id. at 1303. The Federal Circuit disagreed with this argument, “particularly in

25 light of the Supreme Court’s decision in CRST, which held that favorable judgment on the

26 merits is not necessary for a defendant to be deemed a prevailing party for purposes of

27 statutory fee-shifting.” Id. The court noted that Buckhannon had been interpreted to

28 require that “in determining whether a party is a prevailing party in patent litigation,” courts

1 should “apply the general principle that ‘to be a prevailing party, one must receive at least

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some relief on the merits, which alters . . . the legal relationship of the parties.” Id. at 1304.

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The court clarified that “relief on the merits” meant that “the party obtain[ed] a court order

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materially changing the legal relationship of the parties.” Id. It also noted that “the Ninth

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Circuit [has] concluded that CRST overruled its earlier holding in Branson v. Nott, 62 F.3d

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287 (9th Cir. 1995), which had held that when a defendant wins based on a dismissal for

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lack of subject matter jurisdiction, that defendant is not a prevailing party under 42 U.S.C.

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§ 1988.” Id. at 1306 (citing Amphastar Pharm. Inc. v. Aventis Pharma SA, 856 F.3d 696,

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709-10 (9th Cir. 2017)). After the Raniere court’s extensive analysis of Federal Circuit,

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Ninth Circuit, and Supreme Court cases, it concluded that the district court did not err in

11 finding the defendants-appellees were the prevailing parties where the plaintiff had been

12 dismissed due to lack of standing. Id. at 1303-08. Thus, the Raniere court affirmed “the

13 district court’s award of attorney fees and costs under 35 U.S.C. § 285.” Id. at 1309.

14 More recently, in B.E. Technology, L.L.C. v. Facebook, Inc., 940 F.3d 675, 678-79

15 (Fed. Cir. 2019), the Federal Circuit also held that “a defendant can be deemed a prevailing

16 party even if the case is dismissed on procedural grounds rather than on the merits.” The

17 B.E. Technology defendant, Facebook, obtained a dismissal for mootness after the PTAB

18 found the claims unpatentable. Id. In affirming the district court’s award of costs to the

19 defendant under Rule 54(d), the court pointed out “[t]hat the merits of the decision

20 cancelling the claims occurred in the PTO rather than the district court does not change the

21 fact that the district court dismissed the claims it had before it, albeit for mootness.” Id. at

22 679. “It thereby placed a judicial imprimatur upon B.E.’s claim for patent infringement.”

23 Id. As a result, just like Defendant in this case, Facebook was determined to be the

24 prevailing party in B.E. Technology after the court dismissed the case as moot following

25 the PTAB’s invalidation of the plaintiff’s patent claims on inter partes review. Id.

26 In this case, on May 26, 2017, this Court dismissed Plaintiff’s ‘589 Patent

27 infringement claim for lack of standing, without prejudice, and stayed the rest of the case

28 while the ‘016 Patent underwent inter partes review with the PTAB of the U.S. Patent

1 Office. ECF No. 222. Thus, just like plaintiffs in SPH, Raniere, and B.E. Technology,

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Plaintiffs in this case had their patent infringement case dismissed. This Court is bound by

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Raniere and B.E. Technology. As Defendant points out, under those more recent

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authorities, the Clerk’s order does not conflict with federal rules or case law interpreting

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those rules, and costs were properly taxed under Local Rule 54.1. As such, this Court

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affirms the Clerk’s award of costs to Defendant.

7 2. The District Court Properly Taxed Costs Under Rule 54 of the

Federal Rules of Civil Procedure, Local Rule 54.1, and 28 U.S.C. §

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1919.

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Plaintiffs also argue that “the costs clerk determined taxable costs based solely on

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the application of Local Rule 54.1 without regard to Federal Rule of Civil Procedure 54 or

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the Federal Circuit’s binding interpretation of it.” ECF No. 296-1 at 2:8-11 (citing ECF

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No. 295 at 1:26-28 (“the Local Rule does not distinguish for claims dismissed for lack of

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subject matter jurisdiction”). Defendant responds by noting that district courts have the

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discretion to adopt local rules, and in this case, “Local Rule 54.1 properly allows for costs

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to the prevailing party.” ECF No. 299 at 4:2-5 (citing Hollingsworth v. Perry, 558 U.S.

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183, 191 (2010)).

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a. Local Rule 54.1

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“A judge may regulate practice in any manner consistent with federal law, rules

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adopted under 28 U.S.C. §§ 2072 and 2075, and the district’s local rules.” Fed. R. Civ. P.

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83. The Southern District’s Local Rules provide: “The defendant is the prevailing party

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upon any termination of the case without judgment for the plaintiff except a voluntary

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dismissal under Fed. R. Civ. P. 41(a).” S.D. Cal. Civ. R. 54.1(f). It elaborates that “[a]

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review of the decision of the clerk in the taxation of costs may be taken to the court on

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motion to re-tax by any party in accordance with Rule 54(d), Fed. R. Civ. P., and Civil

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Local Rule 7.1.” S.D. Cal. Civ. R. 54.1(h). As discussed, this local rule, which provides

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that the defendant a defendant is the prevailing party whenever a case terminates without

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judgment for the plaintiff except for cases of voluntary dismissal, in no way conflicts with

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1 the law of the Federal Circuit or Ninth Circuit. E.g., Raniere, 887 F.3d at 1300-09; Cooter,

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496 U.S. at 395; Amphastar, 856 F.3d at 709-11.

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b. 28 U.S.C. § 1919.

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5 Plaintiffs argue, inter alia, that Defendant cannot recover costs relating to the (1)

6 ‘589 Patent “because the dismissed claim was subsequently re-filed against the same

7 defendant,” ECF No. 300 at 1:22-26, and (2) ‘016 Patent because Defendant failed to

8 explain the how the costs it seeks qualify as “just costs” under section 1919 or apportion

9 which costs related to the ‘016 Patent, id. at 1:26-28. Defendant responds that the authority

10 upon which Plaintiffs rely is inapplicable to the case. ECF No. 302 at 3:1-11.

11 “Whenever any action or suit is dismissed in any district court . . . for want of

12 jurisdiction, such court may order the payment of just costs.” 28 U.S.C. § 1919. “Unlike

13 Rule 54(d)(1) (‘costs—other than attorney’s fees—should be allowed to the prevailing

14 party’), a cost award under § 1919 does not turn on prevailing party status and lies within

15 the sound discretion of the district court.” Otay Land Co. v. United Enterprises Ltd., 672

16 F.3d 1152, 1156 (9th Cir. 2012). “In determining ‘just costs’ under 28 U.S.C. § 1919, a

17 district court should consider what is most fair and equitable under the totality of the

18 circumstances.” Id. at 1157. “Although ‘just costs’ is a unitary standard, it involves a two

19 step analysis—[1] whether an award of costs is just and equitable and, [2] if so, the

20 appropriate amount of costs.” Id. “In determining ‘just costs’ under 28 U.S.C. § 1919, a

21 district court should consider what is most fair and equitable under the totality of the

22 circumstances.” Id. at 1157.

23 In their objection, Plaintiffs argue that Defendant’s “reliance on 28 U.S.C. § 1919 is

24 improper.” ECF No. 300 at 1:22-23. Plaintiffs contend that “[c]osts relating to U.S. Patent

25 No. 6,491,589 cannot be recovered under Section 1919 because the dismissed claim was

26 subsequently re-filed against the same defendant.” ECF No. 300 at 1:23-25 (citing

27 Callicrate v. Farmland Indus., 139 F.3d 1336, 1342-43 (10th Cir. 1998); Plata v. Darbun

28 Enters., Inc., No. 09-CV-0044-IEG CAB, 2010 WL 3184298, at *5 (S.D. Cal. Aug. 11,

1 2010)).

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In Otay Land, the Court declined to follow Callicrate. 672 F.3d at 1159-60 (“If the

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costs in question are ‘just’ in the federal case, we see no need to defer to future proceedings

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in state court” and “presume that state courts will exercise their available discretion to

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prevent” double recovery). In Callicrate v. Farmland Industries, 139 F.3d 1336, 1342-43

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(10th Cir. 1998), the Tenth Circuit upheld certain costs as to a defendant against whom

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litigation had concluded after a dismissal for want jurisdiction; however, it reversed the

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award of certain deposition costs as to another defendant that was a party to a subsequently

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filed state court action litigating the state law claims against him. The court reasoned that

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whenever the claims pertaining to the state court action concluded in that court, the state

11 court cold award costs at that point. Id. at 1342. In this case, this action has concluded,

12 and the only extent to which costs might be improper would be if Defendant sought costs

13 for which it seeks to recover in this case in the Whitewater Case as well. However, that

14 would be the subject of a separate motion that Plaintiffs can file at a later date, provided

15 they provide proof of the dates the costs were incurred and show that those costs were

16 already awarded in this case. In Plata, the Court likewise granted the Defendant’s motion

17 for costs with respect to some, but not all, costs. 2010 WL 3184298 at *5. Citing to the

18 Callicrate court, the Plata court held that costs related to pending state law litigation could

19 be awarded by the state court at the conclusion of the case. Id.

20 This Court shares the view of the Otay court that Callicrate and Plata are

21 distinguishable because both cases involved diversity jurisdiction. As a result, when the

22 cases were dismissed for lack of federal jurisdiction, the plaintiffs could re-file the state

23 law claims in state court. As the Otay court noted, however, the plaintiffs “may not refile

24 its two dismissed federal claims in state court, nor may it refile the federal claims [in federal

25 court] unless they are ripe.” Otay, 672 F.3d at 1159. Here, there are no state law claims.

26 3. The Items Taxed Were Properly Taxed

27 Plaintiffs also argue that to the extent Defendant seeks costs under section 1919

28 relating to the ‘016 Patent, Defendant has failed to (1) “explain how the costs it seeks

1 qualify as ‘just costs’ under Section 1919” and (2) “apportion which costs—if any—are

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attributed solely to the ‘016 Patent claims.” ECF No. 300 at 1 25-28. Defendant responds

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that “the interests of justice support taxing costs against plaintiff for continuing to pursue

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claims based on the ‘589 patent when FlowRider knew it had transferred the rights to the

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patent.” ECF No. 299 at 5:6-8.

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On a motion to re-tax costs, “a district court must ‘specify reasons’ for its refusal to

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tax costs to the losing party,” Assoc. of Mexican–American Educators v. California, 231

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F.3d 572, 591 (9th Cir.2000), but does not need to “specify reasons for its decision to abide

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the presumption and tax costs to the losing party,” Save Our Valley v. Sound Transit, 335

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F.3d 932, 945 (9th Cir. 2003). In fact, “[a] district court deviates from normal practice

11 when it refuses to tax costs to the losing party, and that deviation triggers the requirement

12 to ‘specify reasons.’” Save Our Valley, 335 F.3d at 945.

13 In Save Our Valley, the Ninth Circuit reiterated “that a district court need not give

14 affirmative reasons for awarding costs; instead, it need only find that the reasons for

15 denying costs are not sufficiently persuasive to overcome the presumption in favor of an

16 award.” Id. at 945. Save Our Valley involved a plaintiff-community group that challenged

17 the defendant-regional transit authority’s plan to build a light-rail line by filing a suit under

18 42 U.S.C. section 1983, “alleging that the street-level alignment . . . will cause

19 disproportionate adverse impacts to minority residents.” Id. at 934. The district court

20 granted summary judgment to the defendant and affirmed, without explanation, the clerk’s

21 taxation of costs against the plaintiff as the losing party. On appeal, the Ninth Circuit held

22 that district courts need not provide reasons for awarding costs; rather, “[t]he presumption

23 [in favor of awarding costs to the losing party] provides all the reason a court needs for

24 awarding costs, and when a district court states no reason for awarding costs, we will

25 assume it acted based on that presumption.” Id. at 945. The court noted that only on rare

26 occasions, “where severe injustice will result from an award of costs, does a district court

27 abuse its discretion by failing to conclude that the presumption has been rebutted.” Id.

28 The court explicitly “decline[d] to adopt a rule that would place on district courts the

1 burden of justifying routine awards of costs against losing parties in civil rights cases.” Id.

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at 946. In sum, the lost party carries the burden of overcoming the presumption favoring

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an award of costs to the prevailing party by affirmatively showing a valid reason that the

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prevailing party is not entitled to costs. Id. at 944-45. In this case, the Court concludes

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that it is well within its discretion to affirm the Court’s taxation of costs.

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a. The Depositions

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The clerk may tax as costs “[f]ees for printed or electronically recorded transcripts

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necessarily obtained for use in the case.” 28 U.S.C. § 1920(2). “The court has discretion

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to tax the costs of transcripts from court proceedings when (1) the transcripts are

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necessarily obtained for use in the case, and (2) the cost is reasonable.” ACE Const., Inc.

11 v. United States, 81 Fed. Cl. 161, 170 (2008); see also Kemart Corp. v. Printing Arts

12 Research Labs., Inc., 232 F.2d 897, 905 (9th Cir. 1956) (upholding the trial court’s

13 discretion to award the costs of trial transcripts). Generally, “[d]eposition costs are taxable

14 if they are reasonably necessary for trial.” Evanow v. M/V Neptune, 163 F.3d 1108, 1118

15 (9th Cir. 1998) (holding that “the trial court did not abuse its discretion in awarding these

16 [deposition] costs”).

17 Plaintiffs again offer non-binding precedent, citing to a 1987 case from the Western

18 District of North Carolina, S.G.C. v. Penn-Charlotte Assocs., 116 F.R.D. 284, 288

19 (W.D.N.C. 1987), to argue that “[w]hen seeking to recover deposition costs, the burden is

20 on the moving party ‘to offer some explanation as to why the costs of the depositions

21 petitioned for should be allowed.’” ECF No. 296 at 3:22-26. This authority conflicts with

22 more recent, binding authority providing that the “losing party must show why costs should

23 not be awarded.” Save Our Valley, 335 F.3d at 945.

24 “Whether a transcript or deposition is necessary must be determined in light of

25 the facts known at the time the expense was incurred.” Ruff v. Cty. of Kings, 700 F. Supp.

26 2d 1225, 1247 (E.D. Cal. 2010) (internal quotations omitted); accord Allison v. Bank One-

27 Denver, 289 F.3d 1223, 1249 (10th Cir. 2002), as amended on denial of reh’g (June 19,

28 2002) (holding that “[a]s long as the taking of the deposition appeared to be reasonably

1 necessary at the time it was taken, barring other appropriate reasons for denial, the taxing

2

of such costs should be approved”); Cengr v. Fusibond Piping Sys., Inc., 135 F.3d 445, 455

3

(7th Cir. 1998) (providing that “[t]he proper inquiry is whether the deposition was

4

‘reasonably necessary’ to the case at the time it was taken, not whether it was used in a

5

motion or in court”). Here, Plaintiffs take issue with the eight deponents for whom

6

Defendant seeks costs, arguing those deponents provide no testimony regarding the ‘016

7

Patent:

8

Deponent: Date of Deposition:

9

Yong Yeh March 21-23, 2017. See ECF No. 250-1 at 2:21-3:3.

10

Andrew Thatcher March 27, 2017. See ECF No. 250-1 at 2:11-13.

11

Thomas Lochtefeld March 28, 2017. See ECF No. 250-1 at 2:16-18.

12

Luc Benac April 5-6, 2017. See ECF No. 250-1 at 3:22-23-4:1-2.

13

David Keim April 7, 2017. See ECF No. 250-1 at 2:14-15.

14

Richard Alleshouse April 18-19, 2017. See ECF No. 250-1 at 3:13-21.

15

Bruce McFarland April 21, 2017. See ECF No. 250-1 at 2:19-20.

16

Marshall Myrman April 25, 2017. See ECF No. 250-1 at 2:8-10.

17

The Court finds that during the time period of March 2017 through April 2017, (1)

18

the claims related to both the ‘589 Patent and ‘016 Patent were still pending in this case;

19

(2) the ’589 Claim was not dismissed until May 26, 2017, more than one month after the

20

latest deposition; and (3) the subsequently filed Whitewater Case was not filed until June

21

2, 2017, also well after the above depositions were taken. Given the above depositions

22

were taken while both patents were at issue in this case, the Court finds that they were

23

necessarily obtained for use in this case. Notably, Plaintiffs do not dispute the cost of the

24

transcripts themselves, and as such, only take issue with the propriety of taxing the costs

25

but not the amount of the costs.

26

Finally, the court notes that Plaintiffs argue that “[s]hould Plaintiffs prevail on its

27

infringement claims for the ‘589 Patent, it would be the prevailing party and be entitled to

28

1 reimbursement for these depositions.” ECF No. 296-1 at 7:2-4 (citing 28 U.S.C. § 1920).

2

As a result, if Plaintiffs have already paid Defendant for the transcripts, Plaintiffs would

3

not be made whole if they seek recovery of costs in the ‘589 Patent case. ECF No. 296-1

4

at 7:4-9. However, Plaintiffs did not prevail, and as such, not only is this argument moot,

5

Tur, 562 F.3d at 1214; but Defendant would also be entitled to these costs anyways—either

6

now, in this case, or later, in the Whitewater Case. The Court finds that judicial economy

7

merits affirming the Clerk’s award of costs in this case. Should Defendant seek to recover

8

for the same depositions in the Whitewater Case, then, Plaintiffs would have a legitimate

9

objection that the costs should be denied on the grounds of double recovery.

10 b. The Patent File Wrappers

11 The Clerk granted $447.99 for two (2) different versions of the file wrapper for the

12 ‘589 Patent. ECF No. 243-3 at 2; see also ECF No. 295 at 3 (granting costs for “patent file

13 wrappers as requested for the amount charged”). Plaintiff does not dispute that copying

14 costs, including patent file wrappers may be recovered if “necessarily obtained for use in

15 the case.” ECF No. 296-1 at 7:10-16 (citing 28 U.S.C. § 1920(4); L.R. 54.1(b)(6)(a)).

16 Plaintiffs argue that Defendant “does not and cannot contend that the file wrapper for the

17 ‘589 Patent was ‘necessarily obtained’ for use in the case or claims relating to the ‘016

18 Patent,” and as such, is not entitled to recover those costs. ECF No. 296-1 at 7:17-20.

19 Defendant does not address this argument in its opposition.

20 Here, the invoices for the patent wrappers show that they were incurred on February

21 17, 2016 and February 10, 2017 for the ‘589 Patent. See ECF No. 243-6, Ex. D. Thus, just

22 as with the depositions, because these costs were incurred (1) while both patents were still

23 at issue in this case and (2) before the dismissal of the ‘589 Patent, the Court finds that the

24 cost was necessary to this case at the time it was occurred. Thus, the Court affirms the

25 clerk’s award of costs for the patent wrappers. Awarding costs to Defendant is just.

26 Plaintiffs objected to Defendant’s Opposition (1) as untimely under Local Rule

27 54(1)(h)(2), arguing it was due on November 1, 2019 rather than November 18, 2019, when

28 it was filed, ECF No. 300 at 1:4-6, and (2) was filed by attorneys from the law firm of

| Thomas, Whitelaw & Kolegraff, LLP (“TWK”) who had not yet appeared on Defendant’s

2 behalf in this case, and as such, are not authorized to act on Defendant’s behalf, id. at 1:7-

31113. Local Rule 7.1 provides that “each party opposing a motion . . . must file that

4 opposition . . . not later than fourteen (14) calendar days prior to the noticed hearing.” S.D.

5 Cal. Civ. R. 7.1(e)(2). Here, the hearing on the Motion to Re-tax Costs was originally

© || scheduled for December 2, 2019, meaning that the Opposition needed to be filed, pursuant

7 to Rules 54.1 and 7.1 of the Local Rules, by Monday, November 18, 2019. Defendant

8 submitted its opposition on November 18, 2019, and as such, on time.

9 Concerning the notion that the attorney filing the Opposition had not yet filed a

10 || formal appearance, there are two problems with disregarding the Opposition brief. First,

11 || federal courts bear in mind “the public policy favoring disposition of cases on their merits.”

12 || Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986).

13 Second, the record indicates that while Troutman & Sanders LLP represented

14 || Defendant, TWK filed the actual Opposition brief prior to making its formal appearance.

13 Nonetheless, the Court also finds that the error does not prejudice Plaintiffs as binding

16 || circuit court authority warrants denying the re-tax motion. Thus, the Court has properly

17 || considered Plaintiffs’ objections and overrules them in favor of deciding this motion on

18 || the merits.

19 || II. CONCLUSION

20 For the above reasons, the Court DENIES Plaintiffs’: (1) Ex Parte Motion for Leave

21 File a Sur-Reply to Defendant’s Reply in Support of Their Renewed Motion for

22 Attorneys’ Fees, ECF No. 294; and (2) Motion to Re-tax Costs, ECF No. 296.

23 IT IS SO ORDERED.

24 || DATED: September 30, 2020

25 HON. ROGER T. BENITEZ

36 United States District Judge

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