                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        NOV 8 2018
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

LAUREL J. MAU,                                  No.    14-17370
                                                       15-15109
      Plaintiff-counterclaim-
      defendant-Appellee,                       D.C. No.
                                                1:12-cv-00468-DKW-BMK
 v.

MITSUNAGA & ASSOCIATES, INC.,                   MEMORANDUM*

      Defendant-counter-claimant-
      Appellant.

                  Appeal from the United States District Court
                            for the District of Hawaii
                 Derrick Kahala Watson, District Judge, Presiding

                           Submitted October 11, 2018**
                               Honolulu, Hawaii

Before: WARDLAW, BERZON, and BENNETT, Circuit Judges.

      Mitsunaga & Associates, Inc. (“MAI”) appeals the district court’s orders (1)

denying MAI’s motion to tax costs and (2) denying MAI’s motion for attorneys’

fees and non-taxable costs. We affirm both orders.


      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      Laurel Mau (“Mau”) brought federal and state employment discrimination

and state-law tort claims against her former employer, MAI. MAI brought

counterclaims for alleged self-dealing and fraud. The jury returned verdicts in

favor of MAI on all of Mau’s claims, and in favor of Mau on all but one of MAI’s

counterclaims. As to that counterclaim (for breach of loyalty), the jury found in

favor of MAI and awarded $1 in damages.

      MAI moved for taxation of costs, which the district court denied. The court

concluded that MAI was not a “prevailing party” for purposes of Federal Rule of

Civil Procedure 54(d). In the alternative, the court determined that even if MAI had

prevailed, the court would exercise its discretion not to award costs.

      We “review a district court’s denial of costs for abuse of discretion.” Brown

v. Lucky Stores, Inc., 246 F.3d 1182, 1187 (9th Cir. 2001). We “review de novo the

legal analysis underlying the district court’s finding that [MAI] was [not] a

prevailing party.” Kimbrough v. California, 609 F.3d 1027, 1031 (9th Cir. 2010)

(quotation marks and citation omitted).

      By its terms, Rule 54(d) “creates a presumption in favor of awarding costs to

a prevailing party, but vests in the district court the discretion to refuse to award

costs.” Ass’n of Mex.-Am. Educators v. California, 231 F.3d 572, 591 (9th Cir.

2000) (en banc) (citation omitted). Here, MAI argues that the district court




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committed legal error in concluding that it did not “prevail” in its claims against

Mau in light of the “mixed” nature of the verdict.

         To be considered “prevailing,” a party must be able to identify a resolution

of the dispute that “changes the legal relationship between itself and the other

party.” Tex. State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792

(1989) (citation omitted). A party is considered “prevailing,” even when it receives

an award of only nominal damages. Cf. Farrar v. Hobby, 506 U.S. 103, 114

(1992). Because only MAI can identify a change in the legal relationship between

itself and Mau, only MAI was a prevailing party.

         That said, the district court did not abuse its discretion in concluding in the

alternative that it would deny costs to MAI even if MAI were considered a

prevailing party. The court reasoned that MAI should not recover costs because of

“the complexity of the case, Mau’s good faith in asserting her claims, the parties’

conduct during the course of litigation, and the nominal relief awarded to MAI .

. . .”

         Contrary to MAI’s argument, the district court did not err in considering

Mau’s good faith when denying the motion for costs. See Mex.-Am. Educators, 231

F.3d at 592 n.15 (citing Teague v. Bakker, 35 F.3d 978, 997 (4th Cir. 1994); White

& White, Inc. v. Am. Hosp. Supply Corp., 786 F.2d 728, 730 (6th Cir. 1986)). We

affirm the order denying MAI’s motion for costs.


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      We next consider MAI’s claim that the district court abused its discretion in

denying MAI’s motion for attorneys’ fees and non-taxable costs. The denial of

attorneys’ fees to a prevailing defendant under section 706(k) of Title VII (42

U.S.C. § 2000e-5(k)) is also reviewed for abuse of discretion. Corder v. Gates, 947

F.2d 374, 377 (9th Cir. 1991) (reviewing award of attorneys’ fees in § 1988 case).

      A defendant should only be awarded attorneys’ fees in a civil rights case

when the plaintiff’s claims are “frivolous, unreasonable, groundless, or . . . the

plaintiff continued to litigate after it clearly became so.” Christiansburg Garment

Co. v. EEOC, 434 U.S. 412, 122 (1978). Such fees are reserved for “exceptional

circumstances.” Saman v. Robbins, 173 F.3d 1150, 1157 (9th Cir. 1999).

      We have reviewed the record, and we agree with the district court that

Mau’s claims were not frivolous, unreasonable, or groundless and that this case

does not present the sort of “exceptional circumstances” justifying an award of

attorneys’ fees to a prevailing defendant.

      Finally, MAI argues that it was entitled to attorneys’ fees under Hawaii law

for its successful defense of Mau’s state-law discrimination claims. The district

court did not abuse its discretion in concluding that Mau litigated in good faith.

MAI is therefore not entitled to fees under Hawaii law.

AFFIRMED.




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