       In the United States Court of Federal Claims
                                       No. 10-192T

                                (Filed: November 17, 2017)

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SALEM FINANCIAL, INC.,              *
                                    *
                                    *
                    Plaintiff,                    Taxation of Costs; Fees of the Reporter
                                    *
                                    *             for Trial Transcripts; Fees for Witnesses;
 v.                                 *             Costs for Duplication of Papers; Costs
                                    *             Incident to Taking Depositions.
THE UNITED STATES,                  *
                                    *
                    Defendant.      *
                                    *
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Rajiv Madan, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, D.C., for Plaintiff.

Dennis M. Donohue, Chief Senior Litigation Counsel, Tax Division, U.S. Department of
Justice, Washington, D.C., for Defendant.

            OPINION AND ORDER REGARDING TAXATION OF COSTS

WHEELER, Judge.

        In this complex tax refund case, the Court initially found in favor of the Government
and awarded it costs as the prevailing party. Salem Fin. v. United States, 112 Fed. Cl. 543,
594 (2013). After an appeal and remand back to this Court, the Court ordered the Clerk to
enter final judgment in favor of the Government on August 22, 2017, reflecting that Salem
(1) was not entitled to a tax refund of any foreign tax credit amounts; and (2) was entitled
to recover $249,632,780.00, plus applicable overpayment interest, with respect to the loan
interest issue and corresponding penalty amounts—$136,799,819.76 of which had been
previously refunded to Salem in July 2014. See Dkt. No. 250. The Court also directed the
Clerk to dismiss Salem’s remaining claims. The Clerk entered judgment accordingly on
August 25, 2017. Dkt. No. 251. The Court allowed the Government to recover reasonable
costs under Rule 54(d), Rules of the Court of Federal Claims (“RCFC”), as the prevailing
party.
       On September 25, 2017, the Government filed its Bill of Costs in the amount of
$250,660.31. Dkt. No. 252. On October 26, 2017, Salem filed its objections, Dkt. No. 253,
and on October 30, 2017, the Government filed its reply. Dkt. No. 254. In the course of
this supplemental briefing, the Government reduced its costs to $245,692.75. Id. at Ex. 1.

       RCFC 54(d) provides that the Court may tax costs in favor of the prevailing party
“to the extent permitted by law.” Cost awards are governed by 28 U.S.C. §§ 1821 and
1920. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987). The
prevailing party has the burden to establish to the Court’s satisfaction that the requested
costs are taxable. Green Constr. Co. v. Kansas Power & Light Co., 153 F.R.D. 670, 675
(D. Kan. 1994). To tax a requested cost, the Court must find that the prevailing party has
claimed a necessary litigation expense and that the amount to be taxed is reasonable. Soler
v. Waite, 989 F.2d 251, 255 (7th Cir. 1993). The Court has broad discretion to determine
the appropriate award of costs. See Otay Mesa Prop., L.P. v. United States, 127 Fed. Cl.
146, 149 (2016); Tempest Publ’g, Inc. v. Hacienda Records and Recording Studio, Inc.,
141 F. Supp. 3d. 712, 725 (S.D. Tex. 2015).

      The following is a summary of the Bill of Costs as requested by the Government
and evaluated by the Court.

       A. Fees of the Reporter for Trial Transcripts

       Under 28 U.S.C. § 1920(2), the Government requests fees of the reporter for
transcripts of court proceedings. The Court may tax the cost of transcripts of court
proceedings where: (1) the transcripts were necessarily obtained for use in the case; and
(2) the cost is reasonable. 28 U.S.C. § 1920(2); Chore-Time Equip., Inc. v. Cumberland
Corp., 713 F.2d 774, 781–82 (Fed. Cir. 1983).

       The Government requests $45,743.25 for reporter fees for daily trial transcripts and
$6,127.80 for the cost of other transcripts related to non-trial court proceedings in this
matter. Dkt. No. 252-1, at 2. The Government represents that all of these fees and costs
were necessary for the litigation of this case and have supported the requested amounts
with itemized invoices from the court reporting company. Dkt. No. 252, at Ex. 2.0, 2.1.

       In general, transcript and reporter fees supported by itemized invoices from the
reporting company speak to the reasonableness of those charges. Nevertheless, “the
expense of additional copies of transcripts in electronic or condensed format or of premium
delivery must be justified on grounds of necessity; if incurred for the convenience of
counsel, such costs are not taxable.” Dalles Irrigation Dist. v. United States, 91 Fed. Cl.
689, 712 (2010). The Government states that the Court’s reporting company automatically
charged a delivery fee for all transcripts it provided, and thus these mandatory delivery fees
should be deemed necessary and reasonable. Dkt. No. 252-1, at 3. The Government further



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argues that the daily transcripts were “critical in helping the parties to focus the issues and
avoid repetitive testimony.” Id.

       Given the overall length of trial (21 days), and the complexity of this case, the Court
agrees that the ability to review these daily transcripts was necessary to ensure the efficient
and timely presentation of the case, and not something simply for the convenience of
counsel. See First Fed. Sav. & Loan Ass’n of Rochester v. United States, 88 Fed. Cl. 572,
600 (2009) (finding that trial transcripts in electronic and condensed versions were not just
for convenience of counsel as they allowed counsel for both parties to provide efficient
service to their clients and improved presentations to the court); see also Otay Mesa, 127
Fed. Cl. at 149–50 (same). Accordingly, the full amount of $51,871.05 is allowed as
taxable for fees of the reporter for transcripts of trial and non-trial court proceedings.

        B. Fees for Witnesses

        Under 28 U.S.C. § 1920(3), the Government asks the Court to tax $42,759.48 for
all three categories of fees available for witness expenses: travel fees under 28 U.S.C.
§§ 1821(a)(1) and (c)(4), statutory attendance fees under 28 U.S.C. § 1821(b), 1 and
subsistence expenses under 28 U.S.C. § 1821(d). See Dkt. No. 252-1, at 3–6.

        Pursuant to 28 U.S.C. §§ 1920(3) and 1821(c)(4), a witness’s “normal travel
expenses” are taxable as costs if the witness is attending a court proceeding or having a
deposition taken. See, e.g., Otay Mesa, 127 Fed. Cl. at 150; West Wind Africa Line, Ltd.
v. Corpus Christi Marine Servs. Co., 834 F.2d 1232, 1237 (5th Cir. 1988). The Court has
the discretion to tax witness travel expenses so long as the amount awarded does not exceed
the amount allowed by the applicable statute. 28 U.S.C. § 1821; see 10 Charles Alan
Wright et al., Federal Practice and Procedure § 2678 (3d ed. 2011). In addition to taxation
for travel costs, 28 U.S.C. § 1821(b) mandates that “[a] witness shall be paid an attendance
fee of $40 per day for each day’s attendance,” and section 1821(d)(2) allows taxation for
subsistence fees for a witness’s required overnight stay “in an amount not to exceed the
maximum per diem allowance prescribed by [GSA].”

        The Government requests a total of $42,759.48 for the above-mentioned categories
of witness fees related to depositions and trial expenses for expert witnesses testifying on
the Government’s behalf. Dkt. No. 252-1, at 3; see also Dkt. No. 252, at Ex. 3.0, 3.1, 3.2.
Of this total, $39,119.88 accounts for expert witness fees incurred both for the experts
viewing each day of the trial as well as for the days each expert actually testified. The
Government argues that both categories of trial costs are justified, because viewing all of
the trial testimony was essential and necessary for the expert witnesses to be able to give
accurate and complete testimony based upon evidence deduced from previous days of trial.
Dkt. No. 252-1, at 5. Salem contends that the Government should be allowed costs only

1
 While the Government does not mention the $40 statutory attendance fees explicitly in its Bill of Costs
Memorandum, these fees are included in its cost charts and final calculations. See Dkt. No. 252, at Ex. 3.0.


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for the days in which the experts actually testified, because having the witnesses sit through
each day of the trial was a “strategic decision” made by the Government for the
convenience of its own counsel. Dkt. No. 253, at 7. Salem does not dispute costs with
respect to witness fees for depositions and opines that the Government is entitled to tax
only $17,362.02 to cover the appropriate costs for the days the expert witnesses actually
testified. Id.

       The Court agrees with the Government that it was more than just a convenience and
strategic decision to have its expert witnesses view trial testimony even on the days when
the witnesses did not testify. It was important for the witnesses to be able to observe the
demeanor and interactions of other witnesses in order to provide the most accurate and
complete testimony themselves—testimony this Court found to be particularly useful.
Thus, the Court finds that the full amount of $42,759.48 is taxable as reasonable and
necessary witness travel, attendance, and subsistence costs.

       C. Costs for Duplication of Papers

         In its revised Bill of Costs, the Government requests $43,015.52 for the duplication
of papers. Dkt. No. 254, at Ex. 1. Broken down, the Government requests $30,380.52 for
making copies of trial exhibits and renting a copier for trial, and an additional $12,635.00
for making electronic, hyperlinked copies of its post-trial briefs. Id. at 9–10; Dkt. No. 252-
1, at 7.

       The Court may tax costs for duplication of papers necessarily obtained for use in
the case under 28 U.S.C. § 1920(4). See Fogleman v. ARAMCO, 920 F.2d 278, 285–86
(5th Cir. 1991). Documents filed with the Court are presumed to have been necessarily
obtained for use in the case. See Friedlander v. Nims, 583 F. Supp. 1087, 1088 (N.D. Ga.
1984); Taxation of Costs, Arizona Pub. Serv. Co. v. United States, No. 03-cv-2832 (Fed.
Cl. December 10, 2010), ECF No. 105. The Court permits costs to be taxed for up to five
copies of each pleading, dispositive brief, or other document that is filed with the Court,
and requires that a claim be substantiated with the “number of copies, total pages, and costs
per page.” RCFC App., Form 4, Bill of Costs. The Court now addresses each category of
requested costs in turn.

          1. Copies for Trial Exhibits

       The Government originally sought reimbursement for the cost of creating five sets
of exhibit binders as well as loose copies to be used as potential exhibits in trial. Dkt. No.
252-1, at 6–7. The five sets of binders included two sets for the Court, one set for Salem,
one set for the Government’s use in court, and one set for the Government’s use in its office
between trial days. Id. at 7. Salem objects to taxing costs for the fifth binder, and the
Government agrees in its revised Bill of Costs to request costs for only four. Dkt. No. 254,
at 9–10. The revised amount the Government requests for such copies is $29,768.34. The


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Court finds these costs to be necessary, reasonable, and adequately supported by itemized
invoices.2 Dkt. No. 252, at Ex. 4.0, 4.1.

        The Government further seeks reimbursement of $612.18 for renting a copier during
the duration of the trial to produce additional exhibits as necessary during the course of the
trial. Dkt. No. 252-1, at 7. Salem does not challenge this cost, and the Court likewise finds
this expense to be necessary and reasonable. Accordingly, the Court allows a total of
$30,380.52 as reasonable and necessary costs for copies of trial exhibits.

            2. Electronic and Hyperlinked Briefs

        Additionally, the Government requests $12,635.00 for costs related to making
electronic and hyperlinked copies of its post-trial briefs. Id. at 7–8. While not mandated
by the Court, the Government argues that these electronic briefs allowed the Court “to more
easily navigate [the] case’s voluminous post-trial paper” trail. Dkt. No. 254, at 7; see also
Dkt. No. 252-1, at 7–8. While the Court appreciates the Government’s intentions, the filing
of electronic briefs was neither mandatory nor necessary for the Court to reach its
disposition in this case. As such, the Court disallows costs for the Government’s electronic
post-trial briefing.

       In sum, the Court allows $30,380.52 as reasonable and necessary costs for the
duplication of papers, and disallows $12,635.00.

        D. Costs Incident to Taking Depositions

        Under 28 U.S.C. § 1920(2), the Government requests $108,046.70 for costs related
to the taking of 61 depositions. Dkt. No. 252-1, at 8. Of this total, the Government claims
$44,728.97 for videography services used during all but one of the depositions, and
$6,053.08 for realtime transcript services provided by the deposition’s stenographers in 22
of the 61 depositions. Id. at 9–10. Salem challenges the videography and realtime services
costs, but does not contest the remaining $57,264.65.

       As noted above, “the expense of additional copies of transcripts in electronic or
condensed format or of premium delivery must be justified on grounds of necessity; if
incurred for the convenience of counsel, such costs are not taxable.” Dalles Irrigation Dist.,
91 Fed. Cl. at 712 (citing Asphalt Supply Svc. v. United States, 75 Fed. Cl. 598, 602–03
(2007)). Nevertheless, the Court does give “some deference with respect to the ordering
of transcripts of hearings to the litigation judgments made by the experienced trial
counsel . . . .” First Fed. Sav. & Loan Ass’n of Rochester, 88 Fed. Cl. at 600 (finding all

2
 There appears to be a minor disagreement between the parties over the total cost of making the fifth trial
exhibit binder. The Government believes this cost to be $4,967.56, while Salem believes the cost should
be $6,947.18. After reviewing the relevant invoices, the Court finds the Government’s calculation to be
correct. See Dkt. No. 252, at Ex. 4.0, 4.1.


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plaintiff’s claimed costs incident to the taking of depositions, including those for
appearance fees, and additional copies in electronic and condensed formats, as taxable).
The Court will first address the undisputed costs, and then turn to the challenged costs.

           1. Undisputed Costs

       The parties do not dispute $57,264.65 worth of costs related to the taking of
depositions in this case. The Court has evaluated the Government’s documentation to
support the claimed deposition costs, and in keeping with the analysis of the Government’s
costs for fees of the reporter of trial transcripts, allows this undisputed $57,264.65 for costs
related to the transcribing of depositions. See Dkt. No. 252, at Ex. 5.0, 5.1, 5.2.

           2. Videography and Realtime Transcript Services

       The parties do, however, dispute costs for videography and realtime transcript
services associated with the taking of depositions. The Government argues that it is entitled
to videography costs for each of the 58 videotaped depositions to which it seeks
reimbursement, while Salem contends that the Government is entitled only to videography
costs for the eleven videotaped depositions the Court admitted as testimony during trial.
See Dkt. No. 252-1, at 9–10; Dkt. No. 253, at 3–4. The Court agrees with Salem. While
the videotaped depositions did offer an opportunity for heightened analysis of witness
credibility, this Court strongly prefers live, in-person testimony and does not view
videotaped depositions as a necessity. As such, the Court allows $5,384.79 for the eleven
videotaped depositions that were admitted as testimony and disallows the remaining
$39,344.18 related to videography services.

        Regarding realtime transcript services, the Government argues that it is entitled to
$6,053.08 for services provided by the deposition’s stenographers in 22 of the 61
depositions, noting that these particular depositions were “the most critical” depositions.
Dkt. No. 252-1, at 9–10. However, the Government has failed to prove that obtaining and
reviewing these instant transcripts was necessary for the Government to further its abilities
to try the case. Moreover, counsel could have simply taken notes during the depositions
instead of relying on an immediate review of the transcripts, regardless of the complexity
of the case. Accordingly, the Court disallows costs for the Government’s use of realtime
transcript services during the taking of depositions.

       In sum, the Court allows $62,649.44 as reasonable and necessary costs incident to
taking depositions, and disallows $45,397.26.

                                         Conclusion

      Based on the foregoing, the Court taxes costs in favor of the Government and against
Salem as follows:


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                                                  COSTS ALLOWED
    Fees of the Reporter for Trial Transcripts           $51,871.05
    Fees for Witnesses                                   $42,759.48
    Costs for Duplication of Papers                      $30,380.52
    Costs Incident to Taking Depositions                 $62,649.44
    TOTAL COSTS TAXED                                   $187,660.49


IT IS SO ORDERED.

                                                 s/Thomas C. Wheeler
                                                 THOMAS C. WHEELER
                                                 Judge




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