Burton v. Vectrus Systems ( 2020 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 2, 2020
_________________________________
Christopher M. Wolpert
Clerk of Court
DARRELL BURTON; NORMAN
MASSENGALE,
Plaintiffs - Appellants,
v. No. 20-1068
(D.C. No. 1:18-CV-02648-MSK-KMT)
VECTRUS SYSTEMS CORPORATION; (D. Colo.)
VECTRUS, INC.; REBECCA
WARDELL,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT *
_________________________________
Before TYMKOVICH, Chief Judge, MURPHY and PHILLIPS, Circuit Judges.
_________________________________
The district court dismissed Plaintiffs’ complaint for failure to exhaust
administrative remedies and awarded costs to Defendants. Plaintiffs appeal the cost
award arguing that Defendants were not prevailing parties and the district court
abused its discretion. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
*
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
I. Background
Plaintiffs Darrell Burton and Norman Massengale filed this action alleging that
Defendants Vectrus Systems Corporation, Vectrus, Inc., and Rebecca Wardell
terminated their employment at an Air Force base in Spain in retaliation for their
whistleblowing. Plaintiffs’ operative complaint alleged a violation of 10 U.S.C.
§ 2409 1 and state-law claims. Defendants moved to dismiss under Federal Rule of
Civil Procedure 12(b)(6), arguing that (1) Plaintiffs’ claim under § 2409 should be
dismissed because they had not exhausted their administrative remedies by filing a
complaint with the Department of Defense Inspector General, and (2) the district
court should decline to exercise continuing jurisdiction over Plaintiffs’ state-law
claims. The district court granted Defendants’ motion, dismissed Plaintiffs’ case
without prejudice, and entered judgment in favor of Defendants.
Following entry of a final judgment, Defendants filed a bill of costs seeking
$10,217.95 related to deposition transcripts and travel expenses for an employee who
traveled from Kuwait to Colorado to be deposed. Plaintiffs objected. After a
hearing, the Clerk awarded Defendants $9,891.72 in costs. Plaintiffs then sought
review of the Clerk’s award of costs. With one exception not relevant here, the
1
Section 2409 provides that “[a]n employee of a contractor, subcontractor,
grantee, or subgrantee or personal services contractor may not be discharged,
demoted, or otherwise discriminated against as a reprisal for disclosing to a person or
body [as further] described [in the statute] . . . information that the employee
reasonably believes is evidence of [certain types of mismanagement or dangers to
public safety].” 10 U.S.C. § 2409(a)(1).
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district court affirmed the award of costs to Defendants. Plaintiffs filed a timely
appeal of that decision.
II. Discussion
Federal Rule of Civil Procedure 54(d)(1) provides that costs “should be
allowed to the prevailing party.” We review the district court’s award of costs for an
abuse of discretion. See Rodriguez v. Whiting Farms, Inc., 360 F.3d 1180, 1190
(10th Cir. 2004). We review de novo the district court’s construction of the Rule.
See Esposito v. United States, 368 F.3d 1271, 1275 (10th Cir. 2004).
Plaintiffs argue the district court erred as a matter of law in awarding
Defendants their costs because Defendants were not “prevailing parties” under
Rule 54(d)(1). Plaintiffs alternatively contend that the court abused its discretion in
awarding costs to Defendants.
A. Defendants Were Prevailing Parties Under Rule 54(d)(1)
“[T]he determination of who qualifies as a prevailing party is central to
deciding whether costs are available.” Barber v. T.D. Williamson, Inc., 254 F.3d
1223, 1233-34 (10th Cir. 2001) (internal quotation marks omitted). “Usually the
litigant in whose favor judgment is rendered is the prevailing party for purposes of
Rule 54(d)(1).” Id. at 1234 (alteration, brackets, and internal quotation marks
omitted). Here, the district court entered judgment in Defendants’ favor. See Aplt.
App. at 35.
Plaintiffs argue that “‘prevailing party’ is a legal term of art that requires much
more than prevailing on a motion to dismiss for failure to state a claim.” Aplt.
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Opening Br. at 5. Plaintiffs assert that Defendants, who were not awarded damages,
were not prevailing parties because they “left the courthouse emptyhanded.” Id. at 4.
We are not persuaded.
In Cantrell v. International Brotherhood of Electrical Workers, Local 2021,
69 F.3d 456, 458 (10th Cir. 1995) (en banc), we held that “in cases not involving a
settlement, when a party dismisses an action with or without prejudice, the district
court has discretion to award costs to the prevailing party under Rule 54(d).” 2 Our
decision in Cantrell makes clear that the defendant in such a case qualifies as a
“prevailing party” under Rule 54(d)(1) as a result of the dismissal of the action. See
id. at 457-59.
Plaintiffs do not attempt to distinguish Cantrell. And we fail to see how a
defendant is a prevailing party under Cantrell when a plaintiff voluntarily dismisses
an action without prejudice, but a defendant who successfully litigates a motion to
dismiss under Rule 12(b)(6) and obtains a dismissal without prejudice and a final
judgment in its favor is not.
Plaintiffs base their contention entirely on the Supreme Court’s decision in
Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health &
Human Resources, 532 U.S. 598 (2001). But the circumstances in Buckhannon
2
Prior to Cantrell, we had held that a defendant was not a prevailing party
under Rule 54(d)(1) if the plaintiff voluntarily dismissed the action with prejudice.
See 69 F.3d at 457. Cantrell overruled that prior holding. See id. at 458. Thus, even
before Cantrell this court held that a voluntary dismissal without prejudice triggers
prevailing-party status under Rule 54(d)(1).
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differed significantly from those in this case. The plaintiffs sued the state arguing
that a state statute violated federal law. See id. at 600-01. When the legislature
amended the statute to eliminate the challenged provision, the district court granted
the defendants’ motion to dismiss the case as moot. See id. at 601. The plaintiffs
then sought an award of attorney’s fees under fee-shifting provisions in two federal
statutes. 3 They argued they were prevailing parties “under the catalyst theory, which
posits that a plaintiff is a prevailing party if it achieves the desired result because the
lawsuit brought about a voluntary change in the defendant’s conduct.” Id. (internal
quotation marks omitted).
Rejecting that theory, the Court held “that a plaintiff [must] receive at least
some relief on the merits of his claim”—through a judgment or a consent decree—
“before he can be said to prevail.” Id. at 603 (internal quotation marks omitted). The
Court reasoned that a “material alteration of the legal relationship of the parties [was]
necessary to permit an award of attorney’s fees.” Id. at 604 (internal quotation marks
omitted). And “[a] defendant’s voluntary change in conduct . . . lacks the necessary
judicial imprimatur on the change.” Id. at 605. The Court concluded: “We cannot
3
Defendants suggest that the Court’s discussion of the meaning of “prevailing
party” in Buckhannon is irrelevant because that case involved an award of attorney’s
fees rather than costs. But the starting point for the Court’s analysis was the
dictionary definition of that term, see 532 U.S. at 603, which Defendants do not
distinguish from its use in Rule 54(d)(1). In any event, we need not address any
difference in the meaning of “prevailing party” with respect to an award of costs
versus an award of attorney’s fees because we conclude for other reasons that
Buckhannon does not support Plaintiffs’ position that Defendants were not prevailing
parties in this case.
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agree that the term prevailing party authorizes federal courts to award attorney’s fees
to a plaintiff who, by simply filing a nonfrivolous but nonetheless potentially
meritless lawsuit (it will never be determined), has reached the sought-after
destination without obtaining any judicial relief.” Id. at 606 (internal quotation
marks omitted).
Plaintiffs’ reliance on Buckhannon is misplaced. That case did not involve a
defendant seeking an award of costs after prevailing on a Rule 12(b)(6) motion. And
unlike Defendants here, the plaintiffs claiming to have prevailed in Buckhannon had
not received a court judgment in their favor. Moreover, despite Plaintiffs’ suggestion
otherwise, it does not follow that because an award of nominal damages is sufficient
for a plaintiff to be considered a prevailing party, see id. at 604, a defendant must
recover damages to have prevailed in an action. As Defendants note, under
Plaintiffs’ reasoning a defendant could never be a prevailing party unless it had
sought and obtained relief on a counterclaim. Finally, an interlocutory ruling
reversing a dismissal for failure to state a claim—which does not make a plaintiff a
prevailing party, see id. at 605—is not analogous to Defendants’ successful
prosecution of such a motion that resulted in a final judgment in their favor.
Plaintiffs nonetheless assert that “a Rule 12(b)(6) motion cannot be said to be
a determination on the merits” and that “Defendants did not win an enforceable
judgment.” Aplt. Opening Br. at 8-9 (internal quotation marks omitted). But they
cite no persuasive authority for either of these propositions. See Rapid Transit Lines,
Inc. v. Wichita Developers, Inc., 435 F.2d 850, 852 (10th Cir. 1970) (declining to
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address argument not supported by pertinent authority). And their contentions are
otherwise perfunctory and insufficiently framed and developed to invoke appellate
review. See Murrell v. Shalala, 43 F.3d 1388, 1389 n.2 (10th Cir. 1994). Finally, we
note that Plaintiffs once again fail to square their assertions with our holding in
Cantrell that a plaintiff’s voluntary dismissal without prejudice is sufficient for an
award of costs to the defendant as a prevailing party under Rule 54(d)(1).
The district court did not err in holding that Defendants were prevailing parties
in this case and therefore eligible for an award of costs under Rule 54(d)(1).
B. The District Court Did Not Abuse its Discretion in Awarding
Defendants Their Costs
“Rule 54 creates a presumption that the district court will award the prevailing
party costs,” and “[t]he burden is on the non-prevailing party to overcome this
presumption.” Rodriguez, 360 F.3d at 1190. Moreover, “the denial of costs is in the
nature of a severe penalty, and there must be some apparent reason to penalize the
prevailing party if costs are to be denied.” Id. (internal quotation marks omitted).
Plaintiffs advance three reasons why the district court abused its discretion in
awarding costs to Defendants. First, they contend it was unnecessary for a Vectrus
employee to incur expenses traveling from Kuwait to Colorado to be deposed by
Plaintiffs when the deposition could have been taken by video. Plaintiffs maintain
“[t]here is simply no reason why this deposition could not have occurred remotely.”
Aplt. Opening Br. at 9. But the court concluded it was not unreasonable for the Clerk
to find that the witness’s travel expenses were an appropriately incurred cost in light
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of the “[t]he difference in time zones between Denver and Kuwait” which would
“impose[] considerable burdens on one side or the other if a deposition is to be taken
remotely.” Aplt. App. at 67. And it found that “Plaintiffs must have eventually
agreed to depose [the witness] in person in Denver” because the record did not show
otherwise. Id. Finally, although Plaintiffs assert that they derived no benefit from
the travel costs incurred, the district court held that they “certainly enjoyed the
benefit of conducting an in-person deposition, rather than a remote one.” Id. We see
no abuse of discretion.
Second, Plaintiffs contend that the district court abused its discretion in
awarding Defendants costs due to the economic disparity between the parties. The
district court recognized that a party’s indigence is one factor a court may weigh in
exercising its discretion to award costs. See Rodriguez, 360 F.3d at 1190. But a
finding of indigency does not preclude a cost award. See id. (affirming cost award
against indigent plaintiffs where district court “concluded there was no reason
defendants should be penalized” (internal quotation marks omitted)). And here, the
district court held that Plaintiffs “ma[d]e no factual showing to establish such
indigence.” Aplt. App. at 63. Again, we see no abuse of discretion.
Finally, Plaintiffs allege “[t]here are sufficient grounds for the District Court
to have ‘penalized’ Defendants.” Aplt. Opening Br. at 10. But the district court
found nothing in the record warranting a denial of costs. Rather, it held that
Plaintiffs chose to proceed despite “many advisements and opportunities to
reconsider their legal arguments and strategies and refine them accordingly.” Aplt.
8
App. at 65. The court pointed to Plaintiffs’ original § 2409 claim, which they filed in
district court in Florida, then voluntarily dismissed after Defendants raised the same
exhaustion argument that they prevailed on in this action. In addition, before moving
to dismiss in this case, Defendants filed a motion for sanctions under Federal Rule of
Civil Procedure 11 in which they again advised Plaintiffs that their complaint was
defective. The district court concluded that Defendants “demonstrated remarkable
patience even as the Plaintiffs have struggled to assemble a lawsuit capable of
sustaining itself,” id. at 63, and that “[a]n award of costs . . . is entirely reasonable
given the circumstances of this case,” id. at 65.
Plaintiffs have not demonstrated that the district court abused its discretion in
awarding Defendants their costs as the prevailing parties in this action.
III. Conclusion
The district court’s order awarding costs to Defendants is affirmed.
Entered for the Court
Michael R. Murphy
Circuit Judge
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