Tuesday, April 22, 2014

FYI: 9th Cir Says FCRA Allows Recovery of Non-Taxable Litigation Expenses

Friday, May 28, 2010

The U.S. Court of Appeals for the Ninth Circuit recently held that district courts have the discretion to include non-taxable costs as part of "reasonable attorney's fees" in awardsto prevailing parties under the FCRA. 

Plaintiff brought a complaint in federal court against Wells Fargo after Wells Fargo refused to correct information it provided to credit reporting agencies stating that Plaintiff was delinquent on an automobile loan.  Under the settlement reached by the parties, Wells Fargo agreed to pay the Plaintiff $20,000 plus "recoverable attorney's fees."  The district court determined that Plaintiff was the prevailing party and was entitled to recover attorney's fees and costs.  The district court reduced the attorney's fees requested by the Plaintiff and, on procedural grounds, denied the Plaintiff's request for taxable costs, which are costs listed as "taxable" under 28 U.S.C. § 1920.  In addition, the district court concluded that it "lacked discretion to award non-taxable costs."

Absent a specific statutory provision, taxable costs under 28  U.S.C. § 1920 are the only costs of litigation recoverable by a prevailing party.  The expense shifting provision of the FCRA provides that a prevailing party can recover, "the costs of the action together with reasonable attorney's fees."  At issue on appeal was whether the fee shifting provision of the FCRA allows the prevailing party to recover non-taxable costs, in addition to taxable costs and attorney's fees.  

In this case, the Ninth Circuit held that FCRA's fee shifting provision allowed for recovery of non-taxable costs.  Relying on precedent from both its prior rulings and from the Supreme Court, the Court held that the phrase "reasonable attorney's fees" should be interpreted as "reasonable out-of-pocket litigation expenses that would normally be charged to a fee paying client."   Therefore, the Court went on to hold that, "because the FCRA provides for 'reasonable attorney's fees'… district courts have discretion to award non-taxable costs to prevailing parties[.]"  According to the Ninth Circuit, included in non-taxable costs are costs that it is the "prevailing practice in the given community" for lawyers to bill as separate from their hourly rates.  The Ninth Circuit thus reversed the district court's decision and remanded the case.

Eric Tsai
McGinnis Wutscher Beiramee LLP
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