Kathleen Reger v. the Nemours Foundation, Inc

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
Nos. 08-2875, 09-2219
___________
KATHLEEN REGER; MICHAEL REGER, AS PARENTS
AND NATURAL GUARDIANS OF NICHOLAS REGER,
A MINOR, DECEASED,
Appellants at No. 08-2875
v.
THE NEMOURS FOUNDATION, INC; WILLIAM I.
NORWOOD, M.D. PH.D; CHRISTIAN PIZARRO, M.D.,
___________
DIANE WORKMAN; ROBERT WORKMAN, as
administrators of the estate of Ashley Workman, a minor,
deceased; DIANE WORKMAN; ROBERT WORKMAN,
individually and in their own right,
Appellants at No. 09-2219
v.
THE NEMOURS FOUNDATION; WILLIAM I.
NORWOOD, M.D., PH.D.
__________

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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Nos. 2-05-cv-00661, 2-06-cv-00743)
District Judge: The Honorable Berle M. Schiller
District Judge: The Honorable Gene E. K. Pratter
___________
Submitted Under Third Circuit LAR 34.1(a)
SEPTEMBER 29, 2009
BEFORE: McKEE, CHAGARES, and
NYGAARD, Circuit Judges.
(Filed: March 26, 2010)
___________
Brian E. Appel, Esq.
7848 Old York Road, Suite 200
Elkins Park, PA 19027
Theresa M. Blanco, Esq.
Eaton & McClellan
230 South Broad Street, Suite 230
Philadelphia, PA 19102
Counsel for Appellants
Matthew S. Heilman, Esq.
Sara L. Petrosky, Esq.
Suzanne N. Pritchard, Esq.

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McCann & Geschke
1800 John F. Kennedy Boulevard, Suite 801
Philadelphia, PA 19103
John M. Hudgins, IV, Esq.
Weinberg, Wheeler, Hudgins, Gunn & Dial
950 East Paces Ferry Road
Atlanta, GA 20236
Counsel for Appellees
___________
OPINION OF THE COURT
___________
NYGAARD, Circuit Judge.
We consolidated these appeals to decide questions raised
by the District Court’s application of Federal Rule of Civil
Procedure 54. Both appeals arise from medical malpractice
lawsuits filed against the Nemours Foundation and its
physicians. Appellants have suffered the utmost of tragedies:
the death of a child – the Regers, an infant son and the
Workmans, a two-year old daughter. They filed separate
medical malpractice suits against Appellee The Nemours
Foundation, which operates the A.I. Dupont Hospital for
Children in Wilmington, Delaware. Both families were
represented by Brian E. Appel, Esquire. The Regers’ case was
submitted to a jury which found in favor of the Foundation. The
Foundation was awarded summary judgment in the Workmans’

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case after the District Court found their complaint to have been
untimely filed. Both the Regers and the Workmans
unsuccessfully appealed to this Court. Afterward, the Clerk of
Court for the United States District Court for the Eastern District
Pennsylvania awarded the Foundation its costs in the amount of
$21,441.88 on the Reger case and $4,793.16 on the Workman
matter.
The Appellants appealed these awards to the District
Court. Although they did not contest the reasonableness of the
items claimed, the Appellants nonetheless asked the District
Court to decline to award costs based on the “enormous
disparity of financial resources” between themselves and the
Foundation. The Appellants also argued that they cannot afford
to pay the award of costs, which in the Regers’ case, amounted
to more than twenty percent of their annual income. They
submitted financial records and tax returns to bolster their
claims. Lastly, the Appellants maintained that any award of
costs in their case would have a chilling effect on other
individual plaintiffs who may have meritorious malpractice
claims against the Foundation and are contemplating litigation.
Two different judges of the District Court affirmed the awards
of costs to the Foundation without opinion. The Regers and
Workmans have timely appealed.
I.
The District Court properly exercised subject matter
jurisdiction in this case as a diversity action pursuant to 28
U.S.C. § 1332. We have jurisdiction over this matter pursuant to
28 U.S.C. § 1291. “In reviewing the District Court’s decision to

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impose costs in this case, we exercise plenary review as to legal
questions pertaining to Rule 54(d)(1). In reviewing the District
Court’s application of those legal precepts, we reverse only if
that application exceeded the bounds of discretion.” In re Paoli
R.R. Yard PCB Litig., 221 F.3d 449, 458 (3d Cir. 2000). Under
the procedures outlined in Fed.R.Civ.P. 54(d)(1), “the Clerk
taxes costs, and then, if there is an objection to the Clerk’s
action, the District Court reviews the Clerk’s award.” McKenna
v. City of Philadelphia, 582 F.3d 447, 454 (3d Cir. 2009).
II.
The Appellants’ first argument focuses on the District
Court’s failure to file an opinion when it approved the Clerk’s
award of costs over their objections. They ask us to remand this
matter and order the District Judges to write opinions detailing
their reasoning for approving the award of costs and for
rejecting their arguments.
The taxing of costs is governed by FED.R.CIV.P. 54(d)(1),
which provided in relevant part:
Except when express provision therefore 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 prevailing party unless
the court otherwise directs. Such costs may be
taxed by the clerk on one day's notice. On motion
served within 5 days thereafter, the action of the
clerk may be reviewed by the court.

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F ED.R.CIV.P. 54(d)(1) now provides that “[u]nless a1.
federal statute, these rules, or a court order provides otherwise,
costs – other than attorney’s fees — should be allowed to the
prevailing party. But, costs against the United States, its
officers, and its agencies may be imposed only to the extent
allowed by law. The Clerk may tax costs on 1 day’s notice. On
motion served within the next 5 days, the court may review the
clerk’s actions.” As the Advisory Committee note makes plain,
no substantive change was intended: “[t]he language of Rule 54
has been amended as part of the general restyling of the Civil
Rules to make them more easily understood and to make style
and terminology consistent throughout the rules. These changes
are intended to be stylistic only.” Although the Regers
submitted their Bill of Costs before the amendment and the
Workmans did so afterward, the result here is the same.
28 U.S.C. § 1920 provides that “[a] judge or clerk of2.
any court 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; (5) Docket fees under section 1923
of this title; (6) Compensation of court appointed experts,
compensation of interpreters, and salaries, fees, expenses, and
(continued...)
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FED.R.CIV.P. 54(d)(1). The Rule limits the reimbursable costs1
to those enumerated in 28 U.S.C. § 1920. The Clerk of Court2

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(...continued)2.
costs of special interpretation services under section 1828 of this
title. A bill of costs shall be filed in the case and, upon
allowance, included in the judgment or decree.”
We have stated that a district court may consider the3.
following factors in reviewing a clerk's award of costs: “(1) the
prevailing party's unclean hands, bad faith, dilatory tactics, or
failures to comply with process during the course of the instant
litigation or the costs award proceedings; and (2) each of the
losing parties' potential indigency or inability to pay the full
measure of a costs award levied against them.” In re Paoli, 221
F.3d at 468. In contrast, however, a district court may not
consider “(1) the losing parties’ good faith in pursuing the
instant litigation (although a finding of bad faith on their part
would be a reason not to reduce costs); (2) the complexity or
closeness of the issues-in and of themselves-in the underlying
litigation; or (3) the relative disparities in wealth between the
(continued...)
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is charged with taxing costs under Rule 54, but “the [district]
court may review the clerk’s action.” FED.R.CIV.P. 54(d)(1). A
district court’s review of the clerk’s determination of costs is de
novo. In re Paoli, 221 F.3d at 461. However, there is a “strong
presumption” that costs are to be awarded to the prevailing
party. Id. at 462. “Only if the losing party can introduce
evidence, and the district court can articulate reasons within the
bounds of its equitable power, should costs be reduced or denied
to the prevailing party.” Id. at 462-63, 468. Thus, if a district3

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(...continued)3.
parties.” Id. at 462.
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court, within its discretion, denies or reduces a prevailing party’s
award of costs, it must articulate its reasons for doing so. In re
Paoli, 221 F.3d at 468; see also Mathews v. Crosby, 480 F.3d
1265, 1276 (11 Cir. 2007). This is so because the denial ofth
such costs is akin to a penalty. ADM Corp. v. Speedmaster
Packaging Corp., 525 F.2d 662, 665 (3d Cir. 1975) (quoting
Chicago Sugar Co. v. American Sugar Refining Co., 179 F.2d
1, 11 (7th Cir. 1949), cert. denied, 338 U.S. 948 (1950)).
However, we have never required, nor does FED.R.CIV.P.
54(d)(1) mandate, a district court to write an opinion when it
affirms a Clerk of Court’s award of litigation costs to a
prevailing party. This is in line with the strong presumption in
favor of such an award. In re: Paoli, 221 F.3d at 458, 462.
Therefore, neither District Judge here erred by failing to write
an opinion explaining his or her reasons for approving the
Clerk’s award of costs.
The Appellants next ask us to undertake a broader review
of our decision in Smith v. SEPTA, 47 F.3d 97 (3d Cir. 1995).
In Smith, we held that “[i]f the losing party can afford to pay, the
financial disparity in the parties’ financial resources seems to us
to be irrelevant for purposes of Rule 54(d).” Id. at 99. They
argue, correctly, that Smith has effectively eliminated a party’s
relative ability to pay as a consideration a district court may use
in denying or reducing an award of costs. Citing a note from the
Boston University Law Review, they argue that our holding in
Smith is “out of step” with legal scholarship and should be

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overruled. See Note: A Practice in Search of a Policy:
Considerations of the Relative Financial Standing in Cost
Awards Under Federal Rule of Civil Procedure 54(d)(1), 75
B.U.L.Rev. 1541 (Nov., 1995). Appellants also assert that our
holding in Smith permits the Appellee to impose a “chilling
effect” on personal injury and malpractice litigation by
implementing a policy to seek costs in all such litigation brought
against it.
Even were we in a position to overrule our decision in
Smith, which of course we are not, see Mariana v. Fisher, 338
F.3d 189, 201 (3d Cir. 2003) (“[N]o subsequent panel overrules
the holding in a precedential opinion of a previous panel. Court
en banc consideration is required to do so.”) (quoting Third
Circuit Internal Operating Procedure 9.1), we see no reason to
revisit our decision. We reaffirmed Smith’s central tenets in In
re Paoli, supra., rejecting the Appellants’ argument that
disparity of wealth should be considered in imposing costs. In
re Paoli, 221 F.3d at 456-85, 462-68.
Appellants’ arguments concerning a “chilling effect” on
litigation are unpersuasive. The fact that a prevailing party
prosecutes its rights under the Federal Rules of Civil Procedure
to an award of costs cannot be seen as chilling the flow of
litigation. Indeed, the very possibility that a losing party will be
required to reimburse the prevailing party for its costs should
cause parties to litigation to pause and calculate the risks of
pursuing meritless or marginal claims. After all, the Rules
presume that the prevailing party is entitled to costs. It is
incumbent on an attorney to explain the risks of litigation to his
or her client — including the risk that under Rule 54(d)(1) they

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may have to pay costs should their litigation ultimately prove
unsuccessful.
III.
The District Court did not abuse its discretion in
awarding costs to the Foundation pursuant to Fed.R.Civ.P.
54(d)(1) nor by failing to file an explanatory opinion. We will
affirm the orders of the District Court in both cases.

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