Case Name:   People of the State of California vs. Atlantic Richfield Company, et al.

Case No.:       1-00-CV-788657

 

This is an action by a group of governmental entities acting on behalf of the People of the State of California (the “People”) seeking to hold certain lead paint manufacturers responsible for the lead paint contained in private and public homes, buildings, and properties throughout the State of California.  The governmental entities include the Counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano, and Ventura, and the Cities of Oakland, San Diego, and San Francisco (collectively the “Public Entities”).  The defendants include Atlantic Richfield Company (“ARCO”), Conagra Grocery Products Company (“Conagra”), E.I. DuPont De Nemours and Company (“DuPont”), NL Industries, Inc. (“NL”), and The Sherwin-Williams Company (“Sherwin-Williams”) (collectively “Defendants”).

 

The matter came on for a bench trial in July and August, 2013 in Department 1, the Honorable James P. Kleinberg presiding.  On January 27, 2014, the Court ordered judgment in favor of the People against ConAgra, NL, and Sherwin-Williams, jointly and severally, and ordered abatement through the establishment of a fund to be administered by the State of California.  The Court ordered a judgment of dismissal in favor of ARCO and DuPont.

 

On February 11, 2014, DuPont filed its memorandum of costs in the total amount of $392,578.43.

 

The People now move to tax DuPont’s memorandum of costs.[1]

 

Legal Standards – Motion to Tax Costs

 

“Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.”  (Cal. Code Civ. Proc. §1032, subd. (b).)  Under Code of Civil Procedure section 1032, subd. (4), the definition of “prevailing party” includes “a defendant in whose favor a dismissal is entered.”  Items explicitly allowed as costs are set forth in Code of Civil Procedure section 1033.5 subdivision (a).  Items explicitly disallowed as costs are set forth in section 1033.5 subdivision (b).  “Any award of costs shall be subject to the following: [¶] (1) Costs are allowable if incurred, whether or not paid. [¶] (2) Allowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation. [¶] (3) Allowable costs shall be reasonable in amount. [¶] (4) Items not mentioned in this section and items assessed upon application may be allowed or denied in the court’s discretion.”  (Cal. Code Civ. Proc., § 1033.5, subd. (c)(1)-(4).)

 

A party seeking costs need only submit a memorandum of costs with a statement by the attorney verifying that, to the best of his or her knowledge, the costs claimed are correct and were necessarily incurred in the case.  (See Cal. Rule of Court 3.1700(a)(1).)  The party need not attach copies of bills, invoices, and so forth.  (See Jones v. Dumrichob (1998) 63 Cal. App. 4th 1258, 1267.)  “[T]he verified memorandum of costs is prima facie evidence of their propriety, and the burden is on the party seeking to tax costs to show they were not reasonable or necessary.”  (Jones, supra, 63 Cal.App.4th at p. 1266.)

 

“[T]he mere filing of a motion to tax costs may be a ‘proper objection’ to an item, the necessity of which appears doubtful, or which does not appear to be proper on its face.  [Citation.]  However, ‘[i]f the items appear to be proper charges the verified memorandum is prima facie evidence that the costs, expenses and services therein listed were necessarily incurred by the defendant [citations], and the burden of showing that an item is not properly chargeable or is unreasonable is upon the [objecting party].’  [Citations.]  [¶]  The court’s first determination, therefore, is whether the statute expressly allows the particular item, and whether it appears proper on its face.  [Citation.]  If so, the burden is on the objecting party to show them to be unnecessary or unreasonable.  [Citation.]”  (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131.)

 

DuPont

 

There is no dispute that DuPont is a prevailing party as a defendant in whose favor a dismissal was entered.  (See Cal. Code Civ. Proc., § 1032, subd. (4).)  Nor is there any dispute that DuPont’s memorandum of costs complies with Cal. Rules of Court, rule 3.1700(a)(1).

 

Deposition Costs

 

The People move to tax DuPont’s share of $19,329.05 in costs to video record 121 depositions.  The People argue that video recording was unnecessary because the credibility of material witnesses was not at issue, and Defendants knew this would be a bench trial and the Court would allow the use of deposition transcripts in lieu of live testimony.  The People ask the Court to tax half of the video recording costs in the amount of $9,664.53.

 

Costs for “[t]aking, video recording, and transcribing necessary depositions” are statutorily allowable under Code of Civil Procedure section 1033.5, subdivision (a)(3).  The People do not argue that any of the depositions were unnecessary.  Nor do the People challenge the video recording costs as excessive for what was received.  The People cite no authority for the position that the necessity or reasonableness of video recording a deposition hinges on whether their credibility is at issue.  DuPont demonstrates that many of the video-recorded deponents were knowledgeable on pertinent issues in the litigation, and it was reasonable for DuPont to choose to video record these depositions.  The motion to tax video recording costs is DENIED.

 

Travel Costs

 

The People also move to tax DuPont’s deposition-related travel costs.  Attachment 4e sets forth the details of these costs.  The People contend that DuPont seeks costs of $1,667.50 for attending the deposition of Alicia Goldstein even though there is no record in Ms. Goldstein’s deposition transcripts that DuPont attended either of her two depositions.  The People further contend that DuPont improperly seeks $3,940.61 in travel expenses for the deposition of Marcia Williams even though the deposition transcript shows that DuPont’s counsel attended the deposition by telephone.  Finally, the People contend that DuPont’s travels to Los Angeles for depositions should be limited to $1,063.67, which was the cost for travel to Los Angeles for the deposition of Diem Tran.

 

“[T]ravel expenses to attend depositions” are statutorily allowable under Code of Civil Procedure section 1033.5, subdivision (a)(3).  However, DuPont concedes that travel costs for the Goldstein and Williams depositions should be deleted.  Thus, the People’s motion to tax is GRANTED in the amount of $5,608.11.

 

DuPont further concedes minor calculation errors in the travel costs for attending the depositions of four other individuals: Cossette Strassburg, Lyndon Ong Yiu, Joe Padilla, and Letecia Saenz.  According to DuPont, the travel expenses for Strassburg should be $1,986.73, not $3,409.53, and the travel expenses for the other three depositions should be reduced from $834.37 to $750.65 each.

 

Regarding Los Angeles travel expenses, DuPont’s point is well-taken that the Code of Civil Procedure section 1033.5 subdivision (c)(1) allows for recovery of costs actually incurred, and variances in airfare and hotel charges are beyond DuPont’s control.  Thus, the Court will not limit DuPont’s Los Angeles travel costs to $1,063.67, as requested.

 

The People also move to tax DuPont’s non-deposition-related travel expenses for hearings ($53,639.97), mediation ($3,131.55), and trial ($61,421.95).  These costs are neither expressly allowed nor prohibited by statute, and therefore may be allowed in the Court’s discretion.  (Cal. Code Civ. Proc., § 1033.5, subd. (c)(4).)   In Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 775-776, the appellate court held that “[r]outine expenses for local travel by attorneys or other firm employees are not reasonably necessary to the conduct of litigation.”  “These items included parking fees, cab fares and ‘mileage/parking’ fees for attorneys and paralegals, during 1989-1992.”  (Id. at p. 775.)  Although some members of DuPont’s team of attorneys are not local, DuPont’s Attachment 13a seems to contain local counsel’s routine expenses for appearance at hearings,[2] which Ladas specifically prohibits.  Furthermore, several of the hearings involved routine matters like case management conferences where telephonic appearances or appearances by local counsel could have sufficed, in which case, personal appearances by DuPont’s out-of-town counsel were more of a benefit to DuPont than a necessity.  Thus, the People’s motion to tax is a proper objection to these travel costs, and DuPont does not sufficiently demonstrate that the travel costs incurred for DuPont’s counsel to personally appear at these hearings were reasonably necessary.

 

Mediation has been held to be a necessary and fundamental part of litigation.  (See Gibson v. Bobroff (1996) 49 Cal.App.4th 1202, 1209 [affirming award of costs for court-ordered mediation expenses].)  Accordingly, the personal appearance of DuPont’s counsel at mediation was reasonably necessary to the conduct of the litigation.  Likewise, the personal appearance of DuPont’s counsel at trial was necessary to the conduct of the litigation.  The People do not challenge these costs as unreasonable in amount.  The Court exercises its discretion to award these costs.

 

For these reasons, the People’s motion to tax DuPont’s travel expenses for hearings is GRANTED in the amount of $53,639.97, but DENIED as to the travel expenses for mediation and trial.

 

RASSCLE and CLPP Production Costs

 

The People move to tax DuPont’s share of costs related to RASSCLE and CLPPP production.  According to Attachment 13 to DuPont’s memorandum of costs, DuPont’s share of RASSCLE-related costs was: $26,620.45 for notice, $7,000.00 for subpoena costs to CDPH, $21,857.70 for vendor costs,[3] and $6,053.93 for redaction of Los Angeles County CLPPP case files.

 

RASSCLE refers to the “Response and Surveillance System for Childhood Lead Exposure” database owned by the California Department of Public Health (“CDPH”), a non-party in this matter.  The State of California requires that the Childhood Lead Poisoning Prevention Program (“CLPPP”) in each county maintain RASSCLE case files on each child eligible for its services, and this information is confidential.  During this litigation, the Discovery Referee ordered the Public Entities to produce the RASSCLE information to Defendants, and the Court adopted the recommended order and further ordered publication notice to the children and their families whose information was contained in the RASSCLE database.

 

Costs related to discovery are neither expressly allowable nor prohibited by Code of Civil Procedure section 1033.5, and therefore may be allowed in the Court’s discretion.  Here, the RASSCLE production was unique in that it was a large and relevant set of information owned by a non-party (the CDPH) that implicated the privacy interests of other non-parties (children and families).  Furthermore, the subpoenas issued to the CDPH were subject to California Evidence Code section 1563, subdivision (b), which provides that “[a]ll reasonable costs incurred in a civil proceeding by any witness which is not a party with respect to the production of all or any part of business records the production of which is requested pursuant to a subpoena duces tecum may be charged against the party serving the subpoena duces tecum.”  Under these circumstances, the Court exercises its discretion to award reasonable and necessary costs related to the RASSCLE production.

 

With regard to RASSCLE notice costs, the People argue that DuPont is attempting to circumvent the Court’s May 23, 2012 Order requiring “Defendants” to bear the cost of this notice.  However, these court-ordered costs were not incurred for DuPont’s convenience or benefit, but for measures to protect the privacy of third parties.  The People do not challenge the publication costs as unreasonably expensive.  The Court finds that the RASSCLE notice costs were reasonably necessary to the conduct of litigation.

 

With regard to RASSCLE “costs incurred by vendor”, the People argue the reasonableness of these costs is not substantiated and therefore may include prohibited costs such as photocopying.  DuPont submits that after the court-ordered RASCCLE notice was complete, the State required Defendants to retain Gensa Corporation to process and redact the RASSCLE information to prepare it for production, and Gensa’s total costs of $100,788.50 were divided equally among the give Defendants with each responsible for $20,157.70.  The necessity of Gensa’s involvement in the RASSCLE production is not disputed, and the complexity and magnitude of Gensa’s undertaking was discussed in connection with prior motions regarding the production and timetable for completion and continuance of trial.[4]  Based on the record, the costs appear to be proper charges, and therefore DuPont’s verified memorandum is prima facie evidence that the costs were necessarily incurred.  (See Nelson, supra, 72 Cal.App.4th at p. 131.)  The People fail to demonstrate that these vendor costs were not reasonably and necessarily incurred or were unreasonable in amount.

 

With regard to subpoena costs, the People argue that it was Sherwin-Williams who served three subpoenas on CDPH, and DuPont is attempting to shift the subpoena charges initiated by a non-prevailing party onto the People.  According to DuPont, upon demand by the State under Evidence Code section 1563 subdivision (b),[5] Defendants paid $35,000 to the State for costs related to responding to Defendants’ subpoenas, including assistance in producing the RASSCLE data, and the three subpoenas were served by Sherwin-Williams for the benefit of all Defendants.  DuPont now seeks to recover its share of those costs in the amount of $7,000.00.  To the extent these subpoena costs were related to the production of RASSCLE data sought by all Defendants, they appear to be reasonably necessary to the conduct of the litigation, and the People do not demonstrate that the charges were unreasonable in amount.  The fact that Sherwin-Williams served the subpoenas does not prevent DuPont from recovering the share it actually paid of these reasonably necessary costs.

 

With regard to the costs for redaction of Los Angeles County’s CLPP files, DuPont argues the Discovery Referee found redaction to be necessary and ordered the parties to split the costs.  Defendants’ share was $30,269.66, which was divided evenly among the five Defendants with each responsible for $6,053.93.  These costs appear to be reasonably necessary to the conduct of the litigation, and DuPont only seeks to recover its share of the costs.  The People do not demonstrate that the charges were unreasonable in amount.

 

For all of these reasons, the People’s motion to tax DuPont’s share of costs related to RASSCLE and CLPPP production is DENIED.

 

[1] On February 12, 2014, ARCO filed a memorandum of costs in the total amount of $366,993.60, and the People moved to tax ARCO’s costs.  However, on August 12, 2014, the parties entered into a stipulation in which ARCO withdrew its pending request for costs and the People withdrew the motion to tax costs after the voluntarily dismissal of the People’s appeal of the judgment in favor of ARCO.  (See Stip. Between People and ARCO Re Dismissal of Appeal and Waiver of Costs and Fees, docket no. 3793.)

[2] See, e.g., Clement Glynn $18.75 transportation costs for 10/13/2011 hearing.

[3] However, in its opposition brief, DuPont $20,157.70 as the amount of costs to process and redact the State’s database.  (See DuPont’s Opp. at p. 10:17.)  This should be clarified.

[4] See, e.g., Oct. 24, 2012 Decl. Robert E. Lutolf ¶ 15 (docket no. 2512); Feb. 4, 2013 Decl. Lutolf ¶¶8-9 (docket no. 2784).

[5] The State initially demanded $140,203.60 for its costs to respond to Defendants’ discovery.  (See Exh. 9 to Decl. Steven Williams.)