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Stryker Corp. v. Ridgeway

United States District Court, W.D. Michigan

October 27, 2016

STRYKER CORPORATION, et al., Plaintiffs,
v.
CHRISTOPHER RIDGEWAY, et al., Defendants. and STONE SURGICAL, LLC, Plaintiff,
v.
STRYKER CORPORATION, et al., Defendants.

          OPINION

          ROBERT HOLMES BELL UNITED STATES DISTRICT JUDGE

         This matter involves two cases that were consolidated for a significant part of discovery and then for trial. In Case No. 1:13-cv-1066, Plaintiffs Stryker Corporation and Howmedica Osteonics Corp. (collectively, “Stryker”) sued a former employee, Defendant Christopher Ridgeway. In Case No. 1:14-cv-889, Stone Surgical, LLC (“Stone”), a company wholly owned by Ridgeway, sued Stryker. The two cases addressed related issues. Among other things, Stryker claimed that Ridgeway did not comply with the terms of his non-compete and confidentiality agreements, and breached his fiduciary duties to Stryker by: entering into an agreement to sell the products of Stryker's competitor, using Stryker's confidential pricing information to sell competing products to Stryker customers, and causing Stryker's customers to overstock Stryker products for his own benefit. Ridgeway counterclaimed that Stryker fraudulently represented that he was bound by a non-compete agreement, and made defamatory statements about him to his customers, which harmed his reputation. (See Counterclaim, ECF No. 76.) In its action, Stone claimed that Stryker committed fraud and engaged in unfair trade practices by representing that Ridgeway was a party to a non-compete agreement with Stryker, causing Stone to lose a distributorship arrangement with Stryker's competitor. Stryker obtained a jury verdict in its favor on its claims, but Ridgeway's counterclaims and Stone's claims were not successful. After judgment was entered, Ridgeway filed for bankruptcy, resulting in an automatic stay of further proceedings against him.

         Before the Court is Stryker's motion for a bill of costs against Stone (ECF No. 754), [1]and Stone's objections thereto (ECF No. 760). Stryker seeks costs in the amount of $143, 085.29 under Rule 54(d) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1920. These costs include: (1) $713.00 for service of summonses and subpoenas; (2) $43, 915.24 for depositions costs; (3) $3, 094.05 for hearing transcripts; (4) $480.42 for costs paid to witnesses to attend trial or depositions; (5) $34, 866.30 for exemplification and copying; and (6) $57, 972.50 for presentation of evidence at trial.

         I.

         Rule 54(d) provides that costs other than attorney's fees “should be allowed to the prevailing party” unless a federal statute, rule or court states otherwise. Fed.R.Civ.P. 54(d). The Rule “creates a presumption in favor of awarding costs, but allows denial of costs” in the court's discretion. Knology, Inc. v. Insight Commc'ns Co., 460 F.3d 722, 726 (6th Cir. 2006) (quoting Singleton v. Smith, 241 F.3d 534, 539 (6th Cir. 2001)). “Before the district court, ‘it is incumbent upon the unsuccessful party to show circumstances sufficient to overcome the presumption' favoring an award of costs to the prevailing party.” White & White, Inc. v. Am. Hosp. Supply Corp., 786 F.2d 728, 732 (6th Cir. 1986); (quoting Lichter Found., Inc. v. Welch, 269 F.2d 142, 146 (6th Cir. 1959)).

         “The court has broad discretion in allowing or disallowing the particular items listed in § 1920 as costs.” BDT Products, Inc. v. Lexmark Int'l, Inc., 405 F.3d 415, 419 (6th Cir. 2005), abrogated on other grounds in Taniguchi v. Kan. Pacific Saipan, Ltd., 132 S.Ct. 1997 (2012). “In reviewing a request for taxation of costs, a court must look ‘first to whether the expenses are allowable cost items and then to whether the amounts are reasonable and necessary.'” Whirlpool Corp. v. LG Electronics, Inc., 2007 WL 2462659, at *1 (W.D. Mich. Aug. 26, 2007) (quoting Jefferson v. Jefferson County Pub. Sch. Sys., 360 F.3d 583, 591 (6th Cir. 2004)). “The prevailing party has the burden of establishing that the expenses it seeks to have taxed as costs ‘are authorized by applicable federal law, including proof of necessity and reasonableness under 28 U.S.C. § 1920.'” Id. (quoting Berryman v. Hofbauer, 161 F.R.D. 341, 344 (E.D. Mich. 1995)). Once the prevailing party makes this showing, the burden shifts to the losing party to show the impropriety of taxing these costs. BDT Prods., 405 F.3d at 419-20.

         “The costs that courts may tax under Rule 54(d)(1) are confined to the costs itemized in 28 U.S.C. § 1920.” In re Cardizem CD Antitrust Litig., 481 F.3d 355, 359 (6th Cir. 2007). Section 1920 provides that a judge or any clerk of the United States may tax as costs the following: “(1) Fees of the clerk and marshal; (2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case; (3) Fees and disbursements for printing and witnesses; (4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; [and] (5) Docket fees . . . .” 28 U.S.C. § 1920. The Court has authority to act on a motion for costs where, as in this case, the clerk has not taken action on it. BDT Prods., 405 F.3d at 418-19.

         II. A. General Objections

         1. Equity / Proportionality

         First, Stone generally objects on the basis that it would be inequitable to tax any costs because Stryker is a large corporation that “exceeded all bounds of proportionality in pursuing its Judgment of $745, 195 against Christopher Ridgeway, causing him to file for bankruptcy.” (Objections to Mot. for Bill of Costs 3, ECF No. 760.) This argument has no force because Stryker's motion seeks to tax Stone, not Ridgeway.

         2. Relationship to Stone's claims

         Second, Stone objects to certain costs because they are related to Stryker's claims against Ridgeway rather than Stone's claims against Stryker. For instance, Stryker seeks to recover costs to subpoena and execute service of summons on Ochsner Health Clinic (“Ochsner”). But Stone contends that the “sole issue” in its case was whether Ridgeway's non-compete agreement with Stryker was valid, and that discovery related to Ochsner had nothing to do with that issue. (Id. at 4.) Similarly, Stryker seeks deposition and subpoena costs for Our Lady of the Lake Regional Hospital (“OLOL”), but Stone claims that this discovery was solely related to Ridgeway's conduct and had nothing to do with the validity of the non-compete agreement. Stone raises similar objections about witness and deposition fees for Angela Barker, William Cruikshank, GoDaddy, Samuel McWilliams, Lindsey Lawson, Sheldon Green, Julie Winans, and Michael Carter. Stryker responds that the prosecution of its claims against Ridgeway and its defense against Stone's claims were intertwined. Stryker asserts that it seeks only those costs that were necessitated by the defense against the claims made by Stone, including Stone's claim that Stryker's conduct prevented Stone from conducting business with hospitals in the Louisiana market.

         Stone is correct that the primary focus of its lawsuit was the validity of the non-compete agreement between Stryker and Ridgeway. In order to show that Stryker improperly interfered with its business relationships with Stryker's competitor, Stone tried to show that Stryker had created a false non-compete agreement between Stryker and Ridgeway. But Stryker is also correct that the validity of the non-compete agreement was not the only area in which Stone's lawsuit against Stryker overlapped with Stryker's lawsuit against Ridgeway. Another area of overlap concerned the amount of damages that Stone allegedly sustained as a result of Stryker's conduct. Stone's damages expert, Harold Asher, made an estimate of the future revenue that Stone could have obtained in the Louisiana market if Stone had been able to continue selling the products of Stryker's competitor. In making his calculations, Asher treated Stone and Ridgeway as one in the same. (See Trial Tr. IX at 1544, ECF No. 772; Trial Tr. VIII at 200, ECF No. 771.) In other words, Stone's future revenues were dependent upon Ridgeway's ability to sell products to Louisiana hospitals. When criticizing Asher's calculations, Stryker's damages expert, Walter Bratic, speculated that Stone's ability to obtain new business in the future would be hampered by the reputational harm that Ridgeway suffered as a result of his conduct at OLOL and other hospitals in Louisiana. (Bratic Rebuttal Rep. 36-37, ECF No. 506-1.) Consequently, Ridgeway's conduct with Stryker customers like OLOL was relevant to Stryker's claims against Ridgeway, and to Stone's claim for damages against Stryker.

         On the other hand, as Stryker's motion implicitly recognizes, not all of the issues in the case against Ridgeway were relevant to the case filed by Stone. Consequently, not all of the costs that Stryker incurred in this litigation are related to Stone's claims or defenses. Stone should not be required to reimburse Stryker for costs related solely to the case involving Ridgeway. Thus, the Court will not tax costs against Stone to the extent that they apply solely to the lawsuit involving Ridgeway.

         Moreover, even where the costs incurred apply to Stone's lawsuit, the Court will not tax Stone for all of these costs. All of the issues at stake in Stone's lawsuit were also relevant to the lawsuit against Ridgeway. Ridgeway asserted many counterclaims against Stryker that were essentially the same as the claims that Stone asserted against Stryker. Thus, any costs that Stryker incurred defending against Stone's claims were also relevant to its defense against Ridgeway's counterclaims and to the issues at stake in its lawsuit against Ridgeway. Stone should not be required to shoulder the burden of all of these costs. Although Ridgeway and Stone are closely entwined, shared common interests, asserted parallel claims, and were treated as one and the same for purposes of Stone's claim for damages, they are legally distinct, and the Court will treat them as such when taxing costs. Thus, as a general matter, the Court will not tax more than half of the costs claimed by Stryker in its motion. When the stay is lifted, Stryker can seek the other half from Ridgeway.

         C. Fees for Service of Summonses/Subpoenas

         Stryker seeks $731.78 for fees to serve summonses and issue subpoenas on various witnesses and entities. Stone objects to the fees related to Ochsner, OLOL, William Cruikshank, GoDaddy, and Angela Barker. 1. Ochsner & OLOL Stone objects to costs related to Ochsner and OLOL, arguning that they are not related to Stone's lawsuit. As indicated above, witnesses for the Louisiana hospitals that Ridgeway serviced on behalf of Stryker, including Ochsner and OLOL, were relevant to defend Stone's claim for damages. Thus, Stryker is entitled to recover at least half of these fees from Stone.

         2. Willi ...


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