PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NANCY C. CHERRY,
Plaintiff-Appellee,

v.

CHAMPION INTERNATIONAL
                                                                   No. 98-1618
CORPORATION,
Defendant-Appellant.

EQUAL EMPLOYMENT ADVISORY
COUNCIL,
Amicus Curiae.

Appeal from the United States District Court
for the Western District of North Carolina, at Asheville.
Max O. Cogburn, Magistrate Judge.
(CA-97-145-1-C)

Argued: March 1, 1999

Decided: July 27, 1999

Before NIEMEYER and KING, Circuit Judges,
and LEE, United States District Judge
for the Eastern District of Virginia, sitting by designation.

_________________________________________________________________

Reversed and remanded by published opinion. Judge Niemeyer wrote
the opinion, in which Judge King and Judge Lee joined.

_________________________________________________________________

COUNSEL

ARGUED: David Edward Gevertz, PAUL, HASTINGS, JANOF-
SKY & WALKER, L.L.P., Atlanta, Georgia, for Appellant. George
Benjamin Hyler, Jr., HYLER, LOPEZ & WALTON, Asheville, North
Carolina, for Appellee. ON BRIEF: R. Lawrence Ashe, Jr., PAUL,
HASTINGS, JANOFSKY & WALKER, L.L.P., Atlanta, Georgia, for
Appellant. Michele M. Walton, HYLER, LOPEZ & WALTON,
Asheville, North Carolina, for Appellee. Ann Elizabeth Reesman,
Corrie L. Fischel, MCGUINESS & WILLIAMS, Washington, D.C.,
for Amicus Curiae.

_________________________________________________________________

OPINION

NIEMEYER, Circuit Judge:

The district court denied Champion International Corporation, the
prevailing defendant in this Title VII action, the costs ordinarily
awardable to prevailing parties under Federal Rule of Civil Procedure
54(d)(1) because of the plaintiff's "good faith, modest means, com-
parative lack of economic power, and the important public interest
served by encouraging others in similar circumstances to pursue col-
orable Title VII claims." Champion appeals, challenging these
grounds as improper ones for exercising discretion to deny it costs as
the prevailing party. For the reasons that follow, we reverse and
remand.

I

Nancy Cherry, who worked in the lumber yard at Champion's pulp
mill in Canton, North Carolina, filed this Title VII action against
Champion in May 1997, alleging that she had been the victim of eight
incidents of sexual harassment over a period of seven years. Cherry
also alleged that Champion intentionally inflicted emotional distress
upon her in violation of North Carolina common law.

On Champion's motion for summary judgment, the district court
found that only a claim based on the most recent incident, which
occurred in July 1995, was not time-barred. That incident involved
one of Cherry's male coworkers admonishing her to"get her butt
back" to a different work location and telling her she was trying "to
run everyone else's business except her own," and another male

                    2
coworker quipping, "Why don't you just bid out from down here?
You need to find a job that's for women. This is no place for you in
the Wood Yard." The district court granted Champion's summary
judgment motion on this incident because Champion promptly and
thoroughly responded to Cherry's complaint; Champion"did every-
thing within its power to stop the conduct plaintiff found offensive
and to provide her with other employment opportunities." On the state
law claim, the court determined that Cherry had failed to produce evi-
dence demonstrating either that the incident involved outrageous con-
duct or that it caused her severe emotional injury. In entering
summary judgment for Champion, the court ruled that"[h]aving
found that plaintiff pursued her claims in good faith, the parties shall
bear their own costs in this action."

Challenging the district court's taxation of costs, Champion filed
a motion pursuant to Federal Rule of Civil Procedure 54(d)(1),
requesting the court to reconsider that portion of its judgment requir-
ing the parties to bear their own costs and instead to award costs to
Champion. Champion had incurred $3,556 in costs, consisting of
$2,353 to transcribe depositions, including the deposition of Cherry;
$1,082 to videotape Cherry's deposition; and $121 in copying costs.

Following a hearing, the district court denied Champion's motion,
citing Cherry's "good faith [in bringing the action], modest means,
comparative lack of economic power, and the important public inter-
est served by encouraging others in similar circumstances to pursue
colorable Title VII claims." The court acknowledged that in 1996,
Cherry and her husband filed a joint income tax return, reporting
$104,000 in income, and in 1997, when Cherry was not working, she
stated that her husband earned approximately $70,000. Also, when
Cherry chose not to return to work after having been given a leave of
absence, she collected approximately $30,000 from her 401(k) sav-
ings plan and spent it on a truck and on motorcycles. The court noted,
however, that no evidence was presented that Cherry was currently
employed, and she testified that she had no assets independent of
assets jointly owned with her husband, which included a house. The
court concluded:

           In the case at hand, the only argument that plaintiff can
          afford to pay defendant's costs is that her husband earns a

                    3
          good living. While it is one thing for a potential litigant to
          weigh the risks of losing personal assets or income before
          filing a claim, it would be a formidable barrier to require a
          person who believes, in good faith, that she has been dis-
          criminated against in her workplace to put at jeopardy the
          resources of her family. Indeed, it would run contrary to
          one's natural instincts. Adding to the calculus is the dispar-
          ity in economic resources of the litigants from a person who
          earns nothing to a corporation that earns millions.

In denying Champion's motion for costs, the district court noted that
even were it to grant Champion's motion, it would be necessary, pur-
suant to 28 U.S.C. § 1920(2), "to reduce any [such] award of costs by
the cost of the stenographic transcription" of Cherry's deposition
because it had also been videotaped.

On appeal, Champion argues that the district court ignored the pre-
sumption of an entitlement to the recovery of costs that Rule 54(d)(1)
affords the prevailing party by requiring Champion to demonstrate
why the presumption should be given effect, rather than requiring
Cherry to demonstrate why the presumption should not be given
effect. On the substantive application of the rule, Champion asserts
that the district court (1) effectively created a"dependent-spouse"
exception to Rule 54(d)(1) by considering only Cherry's individual
assets in determining her ability to satisfy Champion's bill of costs,
and (2) impermissibly compared the parties' wealth in denying its
motion. Finally, Champion argues that the district court erred in con-
cluding alternatively that 28 U.S.C. § 1920(2) precludes a prevailing
defendant from recovering both stenographic and videotaping deposi-
tion costs.

II

Rule 54, entitled "Costs Other than Attorneys' Fees," provides in
pertinent part:

          Except when express provision therefor is made either in a
          statute of the United States or in these rules, costs other than
          attorneys' fees shall be allowed as of course to the prevail-
          ing party unless the court otherwise directs.

                    4
Fed. R. Civ. P. 54(d)(1). By mandating that, subject to court interven-
tion, costs be allowed to a prevailing party "as of course," the rule
creates the presumption that costs are to be awarded to the prevailing
party. See Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1981);
Teague v. Bakker, 35 F.3d 978, 995-96 (4th Cir. 1994) (citations
omitted). To overcome the presumption, a district court "must justify
its decision [to deny costs] by `articulating some good reason for
doing so.'" Teague, 35 F.3d at 996 (quoting Oak Hall Cap and Gown
Co. v. Old Dominion Freight Line, Inc., 899 F.2d 291, 296 (4th Cir.
1990)). Costs may be denied to the prevailing party only when there
would be an element of injustice in a presumptive cost award. See
Delta Air Lines, 450 U.S. at 355 n.14. Thus, while Rule 54(d)(1)
intends the award of costs to the prevailing party as a matter of
course, the district court is given discretion to deny the award, and we
review such exercise of discretion for abuse. See Teague, 35 F.3d at
996.

As with any exercise of discretion by the district court, when it is
within the bounds of the discretion conferred, we may not question
it. But the definition of those bounds is a question of law, and when
a court traverses them, it abuses its discretion. See Koon v. United
States, 518 U.S. 81, 100 (1996) (stating that"[a] district court by defi-
nition abuses its discretion when it makes an error of law" (citation
omitted)).

The discretion conferred by Rule 54(d)(1), while only defined in
the rule as a general reservation, "unless the court otherwise directs,"
has been defined more specifically by courts: "only misconduct by the
prevailing party worthy of a penalty . . . or the losing party's inability
to pay will suffice to justify denying costs." Congregation of the Pas-
sion, Holy Cross Province v. Touche, Ross & Co., 854 F.2d 219, 222
(7th Cir. 1988) (citations omitted); see also Schwarz v. Folloder, 767
F.2d 125, 131 (5th Cir. 1985) (describing the denial of costs as "in the
nature of a penalty" (internal quotation marks and citation omitted));
Serna v. Manzano, 616 F.2d 1165, 1167 (10th Cir. 1980) (same). We
have recognized additional factors to justify denying an award of
costs, such as their excessiveness in a particular case, the limited
value of the prevailing party's victory, or the closeness and difficulty
of the issues decided. See Teague, 35 F.3d at 996. Although the losing
party's good faith in pursuing an action is a "virtual prerequisite" to

                     5
receiving relief from the normal operation of Rule 54(d)(1), that
party's good faith, standing alone, is an insufficient basis for refusing
to assess costs against that party. See id. With these principles in
hand, we turn to the district court's denial of costs in this case.

In denying Champion's motion for costs, the district court relied
upon (1) Cherry's good faith; (2) her inability to pay costs because
she was unemployed and all of her property was owned jointly with
her husband; (3) her comparative lack of economic power in relation
to a "corporation that earns millions"; and (4) the public interest in
encouraging Title VII suits. We consider these in order.

On the district court's first ground, Cherry's good faith in bringing
her lawsuit cannot entitle her to relief from the presumptive taxation
of costs provided by Rule 54(d)(1). Were this to be a proper indepen-
dent basis for denial of costs, it would "frustrate" the operation of
Rule 54(d)(1) because the losing party in most cases has acted in good
faith. See Teague, 35 F.3d at 996. Cherry's good faith, however, is a
prerequisite for her claim to relief from the presumptive application
of Rule 54(d)(1). Because nothing suggests that the district court
clearly erred in finding that Cherry brought her suit in good faith, we
can proceed to consider whether the district court adequately justified
its intervention to alter the rule's presumption by reliance on the other
grounds stated.

The court's second ground was based on Cherry's modest means:
that she had no independent income and owned no property in her
own name. These observations, however, do not address whether
Cherry was of such modest means that it would be unjust or inequita-
ble to enforce Rule 54(d)(1) against her. The income from which
Cherry and her husband lived was between $70,000 and $100,000 per
year, providing Cherry with sufficient money to satisfy her personal
needs. In addition, when she received $30,000 from her 401(k) plan
in 1996, she was able to spend it on discretionary items such as a
truck and motorcycles. To provide relief to Cherry in this context
would be inequitable. While Cherry has sufficient access to marital
property to provide herself with money as needed to pay her normal
expenses and to be able to spend all of her 401(k) money on discre-
tionary items, she wishes to shield herself from obligations such as
court costs by claiming that all her money is jointly held and therefore

                     6
is not available for the payment of costs. The district court erred in
failing to recognize the inequity inherent in this position. Evaluated
objectively, Cherry had the effective ability to satisfy Champion's bill
of costs.

We also observe that any ruling exempting an unsuccessful plain-
tiff with Cherry's financial resources from satisfying court costs
would create a perplexing exception to Rule 54(d), one unavailable
to in forma pauperis plaintiffs proceeding under 28 U.S.C. § 1915.
While a non-prisoner in forma pauperis plaintiff remains exempt
from paying filing fees or providing security for costs, see 28 U.S.C.
§ 1915(a)(1), the in forma pauperis plaintiff nonetheless remains lia-
ble for paying the prevailing adversary's costs, see 28 U.S.C.
§ 1915(f)(1) (stating that when a party proceeds in forma pauperis,
"[j]udgment may be rendered for costs at the conclusion of the suit
or action as in other proceedings"). In Flint v. Haynes, 651 F.2d 970
(4th Cir. 1981), for instance, we held that "a district court is empow-
ered to award costs even when it has previously granted a litigant the
benefits" of in forma pauperis status. Id. at 972. We explained:

          [W]hen costs are assessed only in extreme or exceptional
          cases, those persons granted leave to proceed in forma
          pauperis have virtually nothing to lose and everything to
          gain, and the purpose of § 1915 -- equal access for the poor
          and the rich -- is distorted. Non-indigents who contemplate
          litigation are routinely forced to decide whether their claim
          is worth it. We see no reason to treat indigents differently
          in this respect.

Id. at 973 (internal quotation marks and citations omitted). We find
nothing in Rule 54(d) supporting the counterintuitive notion that liti-
gants with "modest means" should be treated more leniently than in
forma pauperis litigants regarding assessments of costs.

We also find the district court's reliance on its third ground, the
parties' comparative economic power, to be error. Such a factor
would almost always favor an individual plaintiff such as Cherry over
her employer defendant. Moreover, the plain language of Rule 54(d)
does not contemplate a court basing awards on a comparison of the
parties' financial strengths. To do so would not only undermine the

                    7
presumption that Rule 54(d)(1) creates in prevailing parties' favor,
but it would also undermine the foundation of the legal system that
justice is administered to all equally, regardless of wealth or status.
See Flint, 651 F.2d at 973.

For its final ground, the district court refused to award Champion
costs because to deny the presumption of Rule 54(d)(1) would serve
the public interest by encouraging individuals to pursue Title VII
actions. In taking the nature of the underlying litigation into account,
the district court again misconstrued the rule. The language of Rule
54(d)(1) does not provide that the presumptive award of costs may be
defeated because of the nature of the underlying litigation. On the
contrary, it provides that "[e]xcept when express provision therefor is
made either in a statute of the United States or in these rules," the
cost-shifting to the prevailing party otherwise applies to all cases,
including Title VII cases. Because any public interest exception thus
must be contained explicitly in a statute or rule, Rule 54(d)(1) should
not be interpreted to include a public interest exception as defined by
the judiciary on a case by case basis.

We further emphasize that Title VII, like many federal statutes,
already contains incentives to serve the public interest as identified by
Congress. For example, it provides that "the court, in its discretion,
may allow the prevailing party . . . a reasonable attorney's fee (includ-
ing expert fees) as part of the costs." 42 U.S.C.§ 2000e-5(k). That
provision entitles prevailing plaintiffs to fee awards unless "special
circumstances would render such an award unjust," Newman v. Piggie
Park Enterprises, 390 U.S. 400, 402 (1968), and thereby "advances
the congressional purpose to encourage suits by victims of discrimi-
nation while deterring frivolous litigation," Roadway Express, Inc. v.
Piper, 447 U.S. 752, 762 (1980). But it is not for the district courts
to add a similar type of provision as an exception to Rule 54(d)(1).

In summary, we conclude that the district court abused its discre-
tion in relying on the factors that it did in denying Champion the pre-
sumptive award of costs under Rule 54(d)(1).

III

Because of our holding on the general award of costs, we must
consider the district court's alternative ruling that 28 U.S.C. § 1920(2)

                     8
precludes Champion, as the prevailing party, from recovering both
videotaping and stenographic costs. Section 1920 permits the taxing
as costs of "[f]ees of the court reporter for all or any part of the steno-
graphic transcript necessarily obtained for use in the case." 28 U.S.C.
§ 1920(2). Even though that provision does not make explicit mention
of costs associated with videotaping a deposition, we agree with the
Tenth Circuit's conclusion that "section 1920(2) implicitly permits
taxation of the costs of video depositions." Tilton v. Capital Cit-
ies/ABC, Inc., 115 F.3d 1471, 1477 (10th Cir. 1997); accord Morrison
v. Reichhold Chemicals, Inc., 97 F.3d 460, 464-65 (11th Cir. 1996).
This conclusion readily follows from Federal Rule of Civil Procedure
30(b)(2), which provides the party taking a deposition with the choice
of alternative means for recording the testimony, including "by sound,
sound-and-visual, or stenographic means."

But that conclusion does not necessarily entitle Champion to
recover the costs of both transcribing and videotaping Cherry's depo-
sition. Indeed, we believe that unless Champion demonstrates that
both costs were "necessarily obtained for use in the case," 28 U.S.C.
§ 1920(2), only its transcription costs are recoverable. See Tilton, 115
F.3d at 1478 (adopting similar standard and stating that the district
court must find an independent, legitimate use for both the transcrip-
tion and the video recording before both sets of costs can be recov-
ered under 28 U.S.C. § 1920(2)); cf. Morrison, 97 F.3d at 465
(holding that "when a party notices a deposition to be recorded by
nonstenographic means, or by both stenographic and nonstenographic
means, and no objection is raised at that time by the other party to the
method of recordation pursuant to Federal Rule of Civil Procedure
26(c), it is appropriate under § 1920 to award the cost of conducting
the deposition in the manner noticed").

Champion asserts that videotaping Cherry's deposition was neces-
sary to enhance its chances of effectively impeaching Cherry at trial.
While that may be so, § 1920(2), read in conjunction with Rule
30(b)(2), requires more. The concept of necessity for use in the case
connotes something more than convenience or duplication to ensure
alternative methods for presenting materials at trial. See Fogleman v.
ARAMCO (Arabian American Oil Co.), 920 F.2d 278, 285 (5th Cir.
1991) (stating that deposition costs reasonably incurred for trial prep-
aration or for use at trial, "rather than for the mere convenience of

                     9
counsel," constitute taxable costs under 28 U.S.C. § 1920(2)). While
there surely are circumstances when both a videotape and a transcript
of a deposition may be necessary, Champion has not made the show-
ing why either a transcript or a videotape would not have been suffi-
cient for the need it identified. We cannot conclude that the district
court abused its discretion in concluding, based upon the circum-
stances of this case, that it would deny both the cost to videotape and
the cost to transcribe Cherry's deposition testimony. Accordingly, we
will allow only transcription costs.

For the reasons given, we reverse the district court's judgment
denying Champion costs and remand with instructions that the district
court enter judgment in favor of Champion for deposition transcrip-
tion costs in the amount of $2,353.18 and copying costs in the amount
of $120.60, for a total cost award of $2,473.78.

REVERSED AND REMANDED WITH INSTRUCTIONS

                    10
