Amicus Curiae Brief — Rimini St., Inc. v. Oracle USA, Inc., 139 S. Ct. 783 (2019) (No. 17-1625)

No. 17-1625

IN THE

Supreme Court of the United States

RIMINI STREET, INC. et ai.,

Petiti

v.

ORACLE USA, INC.,, et al.,

Respondents.

On Warr or CERTIORARI TO THE UNITED STATES

Court or APPEALS FoR THE Nintsa Circuit

BRIEF OF AMICUS CURIAE PROFESSOR

STEVEN BAICKER-MCKEE IN

SUPPORT OF RESPONDENTS

Ropert S. FRIEDMAN

Counsel of Record

DantEL L. Brown

Mark E. McGratu

Jean N. RipLey

SHEPPARD, MULLIN, RIcHTER

& Hampton LLP

30 Rockefeller Plaza

New York, NY 10112

(212) 653-8700

rfriedman@sheppardmullin.com

Counsel for Amicus Curiae

i

TABLE OF CONTENTS

Page

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TABLE OF CITED AUTHORITIES .............. ii

INTEREST OF AMICUS CURIAE ................ 1

SUMMARY OF ARGUMENT..................... 2

i cdeudouwenentacnewnbanetnunnecceues 3

|. The American Rule Does Not Govern The

Interpretation Of “Full Costs” Under

§ 505 Of The Copyright Act.................. 3

Il. In§505, Congress Exercised Its Authority To

Shift Attorney’s Fees and “Full Costs” ........ 6

Ill. Congress Properly Balanced Public

Policy Considerations When It Authorized

The Discretionary Award Of Full Costs

db sesncnsbadeneseksesecseescsd &

IV. “Full Costs” Under § 505 May Include

Costs Associated With E-Discovery.......... ll

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TABLE OF CITED AUTHORITIES

Page

CASES

Arlington Central School District Board of

Education v. Muprhy,

ic cvcdconcacdencceseccesctet a]

Ashcroft v. Iqbal,

vec Cistneseceseccnconcenes ll

Baker Botts, L.L.P. v. ASARCO LLC,

PE cecocecsccusseccccescees 3,4

Bell Atlantic Corp. v. Twombly,

EE Sn céecceccceccscescesenense ll

Coles v. Wonder,

283 F.3d 798 (6th Cir. 2002) ........... 6.00 eens 10

Crawford Fitting Co. v. J.T. Gibbons, Inc.,

I 00666000006 60-06ceescecvess a]

Cyan, Inc. v. Beaver County Employees,

Se I cu eWhedccccesbbecesteneesd 5

Fleischmann Distilling Corp. v.

Maier Brewing Co.,

Eo vktcckeccececsosevecceses 5-6

Fogerty v. Fantasy, Inc.,

Se TED sc cccccccccccscccsvecncceed 6,9

ut

Cited Authorities

Page

Hardt v. Reliance Standard Life Ins. Co.,

EE

In re Cardelucci,

285 F.3d 1231 (9th Cir. 2002) ...............5005: 7

Kirtsaeng v. John Wiley & Sona, Inc.,

579 U.S. _, 1368. Ct. 1979 (2016)............. 10

Merrill Lymch, Pierce, Fenner & Smith Inc. v.

Manning,

SPN a EES occ ccecccccececcccesses

Natural Resources Defense Council, Inc. v. —

484 F.2d 1331 (1st Cir. 1973)............00000:

Oracle USA, Inc. v. Rimini Street, Inc.,

209 F. Supp. 3d 1200 (D. Nev. 2016). ............

Patriotic Veterans, Inc. v. Indiana,

736 F.3d 1041 (7th Cir. 2013)...... 2.6.6... 6000s

Shame on You Productions, Inc. v. Banks,

893 F.3d 661 (9th Cir. 2018). .... 2.6... eee ees

West Virginia University Hospitals, Inc. v.

Casey,

eo cu cuceeuuddeusceceeee

w

Cited Authorities

Page

STATUTES AND RULES

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Ge lies i ccecetsndanecnepats 3, 6,7

Ne. 5 ccccccsovaenescardiaenenbysiad 6

Pub. L. No. 93-600, 88 Stat. 1955 ..........0000eeees 6

Vv

Cited Authorities

Page

OTHER AUTHORITIES

Bernard Marr, Big Data: 20 Mind-Boggling

Facts Everyone Must Read, Forses

SREP aS 60 cc ccccrsctctsnsecbesscocecs 11

Robert V. Percival & Geoffrey P. Miller,

The Role of Attorney Fee Shifting

in Public Interest Litigation, 47 Law &

ConTEeMP. Props. 233 (1984)... 2... 6.62 c eee eeweees 5

CS Ey EE Re APOE 5

Steven Baicker-McKee, The Award of

E-Discovery Costs to the Prevailing Party:

The Analog Solution in a Digital World,

63 Clev. St. L. Rev. 397 (2015) ............. 4, 11,12

1

INTEREST OF AMICUS CURIAE’

Amicus curiae, Professor Steven Baicker-McKee,

is an Associate Dean, the Joseph A. Katarincic Chair

of Legal Process and Civil Procedure, and an Associate

Professor of Law at Duquesne University, School of Law.

Professor Baicker-McKee is also an author of the Federal

Civil Rules Handbook, the most widely-subscribed

treatise on federal court practice and procedure. Professor

Baicker-McKee’s interest in this case stems from his

experience as a practitioner as well as his academic work

relating to electronic discovery and fee- and cost-shifting.

The purpose of this brief is to demonstrate that, from

a policy and statutory construction perspective, courts

should construe § 505 of the Copyright Act to permit the

award of “full costs,” including taxable and nontaxable

costs.

* Pursuant to Rule 37.6, no counsel for any party authored this

brief in whole or in part, nor did any party to the action before the

Court, or any person or entity other than the undersigned, make

a monetary contribution to the preparation or submission of this

brief. Counsel for all parties have blanket consented to the filing

of amicus curiae briefs.

2

SUMMARY OF ARGUMENT

The “American Rule” is a traditional baseline for

litigation in the United States where each party covers its

legal fees. Although the rule developed in response to a

variety of factors in a developing American legal system,

the enduring principle behind the American Rule is one

of access to justice—a system that imposes the winning

party’s legal fees on the losing party might create a

barrier to the courts for a plaintiff with a good faith,

but uncertain, claim who fears the devastating effects of

bearing the defendant’s legal fees should the plaintiff lose.

The American Rule is not absolute. The parties may

contractually agree to shift attorney’s fees and Congress

may enact statutes that shift attorney’s fees. There are

a variety of competing policy concerns that Congress

considers when passing a statute that shifts attorney’s

fees. Some fee-shifting provisions seek to foster access

to justice just like the American Rule does, by providing

that a prevailing plaintiff may recover its attorney’s fees,

making that plaintiff closer to whole. Other provisions

seek to deter bad faith litigation by allowing the court to

allocate attorney’s fees as it sees fit. When Congress enacts

a statute that includes a provision shifting attorney’s fees

or other litigation expenses, the courts uphold and enforce

that provision.

Congress did just that in § 505 of the Copyright

Act, which provides discretion for a trial court to shift

attorney’s fees and “full costs.” The issue before this

Court is whether Congress meant for the term “full

costs” to mean literally what the phrase says, or meant

it instead to mean “taxable costs,” the costs that are

available to every prevailing party under Federal Rule of

3

Civil Procedure 54(d) and 28 U.S.C. § 1920. The explicit

shifting of attorney’s fees in § 505 proves that Congress

intended to take covered claims outside the American Rule

and to allow for greater shifting of the litigation burden.

Congress’s use of the term “full costs” instead of the well-

known phrase “taxable costs” is a clear indication that

Congress also intended to authorize the courts to shift

costs beyond those already subject to shifting under Rule

54(d). There is no textual or policy reason not to enforce

Congress’s clear intent here—this amicus respectfully

submits that § 505 provides the district courts with

discretion to shift the full costs of litigation, including

e-discovery costs, as it sees fit and in conformity with the

factors this Court has established for the exercise of that

discretion. In that manner, the courts can avoid creating a

chilling effect on good faith litigation and can also police

bad faith litigation tactics.

ARGUMENT

I. The American Rule Does Not Govern The

Interpretation Of “Full Costs” Under § 505 Of The

Copyright Act.

The American Rule provides that prevailing parties

are generally not entitled to recover their attorney’s fees in

the absence of a statute providing for such or the agreement

of the parties. See, e.g., Baker Botts, L.L.P. v. ASARCO

LLC, 135 8. Ct. 2158, 2164 (2015) (“Our basic point of

reference when considering the award of attorney’s fees is

the bedrock principle known as the American Rule: Each

litigant pays his own attorney’s fees, win or lose, unless a

statute or contract provides otherwise.”) (quoting Hardt

v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252-253

4

(2010)) (internal quotation marks omitted). “Although the

American Rule developed in part as a reaction to statutes

setting rates for legal services, one of the policy concerns

behind the American Rule is the notion that we are better

off with easier access to the courts for plaintiffs with

limited resources.” Steven Baicker-McKee, The Award of

E-Discovery Costs to the Prevailing Party: The Analog

Solution in a Digital World, 63 Clev. St. L. Rev. 397, 419

(2015) (“Baicker-McKee”).'

However, in balancing the access-to-justice

considerations inherent to the American Rule with

competing policy considerations, Congress has the

authority to pass laws creating, permitting, or even

mandating, that the courts shift attorney’s fees and costs.

See Baker Botts, 135 S. Ct. at 2164 (recognizing that the

American Rule yields when “a statute or contract provides

otherwise”). Indeed, Congress has permitted fee- and

cost-shifting in many situations, from civil rights statutes,

42 U.S.C. § 1988(b), to the Clean Air Act, 42 U.S.C. § 7604,

to the Defend Trade Secrets Act, 18 U.S.C. § 1836. There

are over 200 federal statutes alone that permit the shifting

of attorney’s fees. See Baicker-McKee, at 419. In these

instances, Congress has balanced the possible chilling

effects of fee-shifting on good faith claims underlying the

American Rule with a variety of competing public policy

1. The analysis of cases and statutes shifting attorney’s fees

are relevant to the question before the Court because there are

similar policy considerations underlying Congress's decision to shift

attorney’s fees and “full costs.” Thus, Congress’s decision to shift

attorney’s fees in § 505 provides important insight into Congress’s

intent in authorizing the shifting of “full costs,” reflecting a balancing

of the various competing concerns regarding the assignment of

litigation burdens.

5

concerns, such as providing for a more fulsome recovery

to a deserving plaintiff or discouraging frivolous claims.

For example, in suits brought under § 7604 of the

Clean Air Act, courts are permitted to award the “costs

of litigation,” including reasonable attorney’s and expert

witness fees, to any party “whenever the court determines

such award is appropriate.” 42 U.S.C. § 7604. In providing

for such awards, Congress necessarily considered the

access-to-justice policy considerations inherent to the

American Rule. However, Congress ultimately determined

that the inclusion of this provision would serve two policy

considerations: (1) encouraging meritorious actions by

creating the potential for a fee- and cost-award, and (2)

deterring potentially frivolous or harassing actions. See

Natural Res. Def. Council, Inc. v. E.P_A., 484 F.2d 1331,

1337-38 (1st Cir. 1973) (discussing the Congressional

intent contained in S. Rep. No. 91-1196).? In such instances,

Congress has concluded that the American Rule should

yield. See Robert V. Percival & Geoffrey P. Miller, The Role

of Attorney Fee Shifting in Public Interest Litigation, 47

Law & Contemp. Props. 233, 237-41 (1984) (discussing why

Congress has enacted fee-shifting statutes to encourage

public interest litigation). Such policy determinations

are within the exclusive purview of Congress. See Cyan,

Inc. v. Beaver Cnty. Emps, 138 S. Ct. 1061, 1078 (2018);

Fleischmann Distilling Corp. v. Maier Brewing Co., 386

U.S. 714, 721 (1967) (holding “acceptance of petitioners’

2. As set forth by the First Circuit in Natural Resources

Defense Council, the Senate committee recognized that “[{w|ithout

the possibility of fees many meritorious actions would never be

brought,” but “many Senators . . . expressed concern that some would

abuse the citizen suit provision by bringing frivolous or harassing

actions.” 484 F.2d at 1337.

6

argument would require us to ascribe to Congress a

purpose to vary the meaning of that term without either

statutory language or legislative history to support the

unusual construction.”), superseded by statute, Pub. L.

No. 93-600, 88 Stat. 1955.

iti , while Federal Rule of Civil Procedure

54(d) and 28 U.S.C. § 1920 establish the shifting of “taxable

costs” to the prevailing party as the default, there are

many provisions in the Federal Rules of Civil Procedure

and in statutes that modify this default cost transfer. For

example, Rule 68 provides that a defendant who loses at

trial—z.e., who is not the prevailing party—may recover its

costs if the plaintiff declined an offer of judgment for more

than the plaintiff ultimately recovered at trial. Fed. R. Civ.

P. 68. Likewise, under a variety of circumstances, Rule

37 authorizes the shifting of costs, including attorney’s

fees and non-taxable costs, to the party prevailing on a

discovery motion. See., e.g., Fed. R. Civ. P. 37(a)(5). Rule 11

and Rule 26(g) similarly authorize courts to exercise their

discretion to shift costs and attorney’s fees. Fed. R. Civ. P.

11(@); Fed. R. Civ. P. 26(g). Thus, it is beyond peradventure

that Congress has the authority to vest the courts with

discretion to award attorney’s fees and broad costs.

Il. In § 505, Congress Exercised Its Authority To Shift

Attorney’s Fees and “Full Costs.”

By enacting § 505, Congress created an exception to

the American Rule. Fogerty v. Fantasy, Inc., 510 U.S.

517, 533-34 (1994). This Court stated that Ҥ 505 is one

situation in which Congress has modified the American

Rule to allow an award of attorney’s fees in the court's

discretion.” Jd. Congress also authorized the shifting of

7

“full costs” in § 505. The central issue before this Court,

therefore, is the meaning of that term—does “full costs”

mean only the taxable costs allowed under Rule 54(d) and

28 U.S.C. § 1920, or something broader.

Petitioners would have the court construe the term

“full costs” to mean only the costs awardable under

§ 1920, not full costs. (See generally Brief of Petitioners,

dated November 13, 2018.) From a statutory construction,

textual perspective, that argument is well rebutted in

Respondents’ brief, and this brief will avoid repeating it.

(See, generally Brief of Respondents, dated December

13, 2018 (“Respondents’ Brief”).) This brief will, however,

make certain observations about the construction of that

term.

First, construing “full costs” to mean the same thing

as taxable costs necessarily presumes that Congress did

not know the difference between the two terms or was

sloppy in its drafting. Courts generally presume the

opposite—that Congress chooses its words carefully. See

Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning,

136 S. Ct. 1562, 1579 (2016) (stating “when Congress

enacts a statute that uses different language from a prior

statute, we normally presume that Congress did so to

convey a different meaning”); Jn re Cardelucci, 285 F.3d

1231, 1234 (9th Cir. 2002) (“This Court assume{s] that

Congress carefully select{s] and intentionally adopt(s}

the language used in a statute”) (internal citation and

quotation marks omitted); see also Patriotic Veterans,

Inc. v. Indiana, 736 F.3d 1041, 1047 (7th Cir. 2013) (“The

preeminent canon of statutory interpretation requires

that courts presume that [the] legislature says in a statute

what it means and means in a statute what it says there.”)

(internal citations and quotation marks omitted).

8

In the Brief of Amicus Curiae Professor Patrick T.

Gillen in Support of Petitioners, Professor Gillen attempts

to minimize the statutory language of § 505 by describing

its reference to “full costs” as “bare.” In this context,

“bare” is a synonym for “clear.” There is no reason to

ignore Congress’s straightforward plain language, nor is

Eussenneiennteatiaaioamainessainnitameds

for why Congress would have used “full costs” when

it meant “taxable costs,” particularly when Rule 54(d)

already provided authorization for the shifting of taxable

costs.

Second, the authorization of the discretionary award

of attorney’s fees to the prevailing party in § 505 evidences

Congress’s determination that trial courts should balance

the access-to-justice policies underlying the American

Rule against the policy considerations supporting fee-

shifting. Construing “full costs” to mean something less

than full costs would be inconsistent with Congress’s

manifested intent to vest discretion in the trial court to

allocate the litigation burden as it sees fit.’

IIL Congress Properly Balanced Public Policy

Considerations When It Authorized The

Discretionary Award Of Full Costs Under § 505.

As discussed above, central to the American Rule is

litigants from bringing meritorious claims. As a starting

3. Respondents have set forth why Petitioners’ reliance on

Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437 (1987), West

Virginia University Hospitals, Inc. v. Casey, 499 U.S. 83 (1991), and

Arlington Central School District Board of Education v. Muprhy,

548 U.S. 291 (2006), is misplaced.

9

point, these concerns are not implicated in this case

because Respondents were the plaintiffs below, not the

defendants. The trial court’s exercise of its discretion to

award attorney’s fees or full costs against the defendants

under § 505 therefore does not implicate access-to-justice

concerns.

The discretionary nature of § 505 further ameliorates

the access-to-justice concerns. Section 505 provides that

“the court in its discretion may allow the recovery of

full costs by or against any party other than the United

States or an officer thereof.” 17 U.S.C. § 505 (emphasis

added); Fogerty v. Fantasy, Inc. 510 U.S. 517, 533 (1994)

(recognizing that the award of reasonable attorney’s

fees to the prevailing party is discretionary). Based on

the plain language of the statute, neither the plaintiff

nor the defendant is automatically awarded full costs

upon prevailing in the litigation. Rather, trial courts are

granted the discretion to determine the proper allocation

of fees and costs in order to govern the conduct of litigants.

This discretion provides courts with sufficient leeway to

manage the conduct of litigants while at the same time

ensuring that § 505 is not used inequitably against an

honest, good faith claimant.

Moreover, this Court has provided guidance as to

how courts should exercise the discretion under § 505. In

Fogerty, this Court enumerated the following non-exclusive

factors that “may be used to guide courts’ discretion”:

“frivolousness, motivation, objective unreasonableness

(both in the factual and legal components of the case)

and the need in particular circumstances to advance

considerations of compensation and deterrence.” 510

U.S. at 534 n.19 (internal quotation marks omitted). In

10

Kirtsaeng v. John Wiley & Sons, Inc., 579 U.S. __, 136

S. Ct. 1979, 1985 (2016), this Court further recognized

“the broad leeway § 505 gives to district courts” while also

recognizing that Fogerty “established several principles

and criteria to guide their decisions.” The trial court should

afford substantial weight to the objective reasonableness

of the parties’ positions in the determination of whether

to award attorney’s fees under § 505. Jd. By exercising

their discretion as guided by the factors this Court has

established, trial courts can avoid creating a chilling effect

on plaintiffs with meritorious claims.

At the same time, § 505 provides the courts with

discretion to police bad faith conduct. For example, the

court’s award of both attorney’s fees and costs in this

instance was premised in large part upon a finding that

Petitioners engaged in “significant litigation misconduct”

(and even then the court did not award all of the costs

that Respondents sought). Oracle USA, Inc. v. Rimini

Street, Inc., 209 F. Supp. 3d 1200, 1215 (D. Nev. 2016);

see also Coles v. Wonder, 283 F.3d 798, 803-4 (6th Cir.

2002) (upholding award of attorney’s fees and taxable

and non-taxable costs where the trial court found that

the plaintiffs’ claims were “objectively unreasonable” and

their motivations in filing suit were “suspect”); Shame on

You Prods., Inc. v. Banks, 893 F.3d 661, 668-69 (9th Cir.

2018) (upholding award of attorney’s fees where the trial

court found that the plaintiffs’ claims were objectively

unreasonable and that they acted in bad faith by, among

other things, disobeying a court order to produce certain

documents). Thus, there is ample evidence that Congress

intended to authorize courts to shift the full litigation

burden under § 505, not just taxable costs, and there is

no policy or textual reason for the courts to countermand

Congress’s intent in this regard.

1]

IV. “Full Costs” Under § 505 May Include Costs

Associated With E-Discovery.

The development of electronic devices and the

development of applications and software programs has

resulted in a tremendous growth of data being created

and collected. For example, more data was created in

2014 and 2015 than in the history of the world, and it was

estimated that the amount of data would grow from 4.4

zettabytes (4.4 trillion gigabytes) in 2015 to 44 zettabytes

(44 trillion gigabytes) in 2020. Bernard Marr, Big Data:

20 Mind-Boggling Facts Everyone Must Read, Forses,

(Sept. 30, 2015), available at https://www.forbes.com/sites/

bernardmarr/%202015/09/30/big-data-20-mind-boggling-

facts-everyone-must-read/#53721b0317b1 (last visited

Dec. 19, 2018). The proliferation of data has substantially

increased the costs of litigation in the United States, and

it has been estimated that parties spent $2.8 billion on

electronic discovery in 2009. See Baicker-McKee, at 398

& nB8. These costs include the preservation, collection,

processing, review, and production of the data, which

often involves the use of experts to ensure the integrity

of the data and to prevent any spoliation of the data. See

id. at 400-403.

The increase in discovery costs underlies this Court’s

decisions in Bell Atlantic Corp. v. Twombly, 550 U.S.

544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2010). In

Twombly, this Court noted that “discovery accounts for

as much as 90 percent of litigation costs when discovery

is actively employed.” 550 U.S. at 559 (citation omitted).

Recognizing the impact of those costs on the parties, this

Court stated “the threat of discovery expense will push

cost-conscious defendants to settle even anemic cases

before reaching those proceedings.” /d.

12

Because it is estimated that less than seven percent of

cases in federal courts are tried or resolved on summary

judgment motions, statutes like § 505 of the Copyright Act

implicate a small percentage of cases in which applications

for full costs are made. See Baicker-McKee, at 422-23,

n.174-75. The same policy concerns that lead Congress,

in appropriate circumstances, to authorize attorney’s

fee-shifting apply with equal force to e-discovery costs.

Weighing public policy considerations in the era of

escalating discovery costs calls for a literal reading of

§ 505. Allowing a good faith litigant the opportunity

to recover its discovery costs allows the trial court to

thoughtfully balance the competing concerns regarding

the burden of litigation.

13

CONCLUSION

“Access to justice” encompasses two concerns—«access

to the judicial system, and justice from the legal system.

Providing discretion to the trial court to shift fees and

full litigation costs in appropriate circumstances allows

the court to promote both of these important concerns.

Congress chose to authorize such discretionary fee- and

cost-shifting in § 505. Reading § 505 as it is written, to

encompass “full” litigation costs, is faithful to the text of

the statute and promotes access to the judicial system and

justice from the judicial system. As applied in this case,

it allowed the trial court to more fully make the plaintiffs

whole and deter bad faith litigation conduct. There is no

textual or policy reason to rewrite the clear language in

§ 505 to narrow the scope of the term “full costs.”

Dated: December 20, 2018

Respectfully submitted,

Rosert S. FRIEDMAN

Counsel of Record

Danie. L. Brown

Mark E. McGraru

JEAN N. RIPLEY

SHEPPARD, MULLIN, RICHTER

& Hampton LLP

30 Rockefeller Plaza

New York, NY 10112

(212) 653-8700

rfriedman@sheppardmullin.com

Counsel for Amicus Curiae