[24 FSM R. 577]

CIVIL ACTION NO. 2020-3001

Decided: September 13, 2024

APPEARANCES:

For the Plaintiff:                             Daniel J. Berman, Esq.
                                                      111 Chalan Santo Papa, Suite 503
                                                      Hagatna, Guam 96910

For the Defendant:                         Marstella E. Jack, Esq.
 (vessel, Huang Shao Chou,          P.O. Box 1274
  & Capt. Chern Her Tyan)             Colonia, Yap FM 96943

For the Defendant:                         Stephen V. Finnen, Esq.
 (Liancheng Overseas Fishery)      P.O. Box 1450
                                                       Kolonia, Pohnpei FM 96941

HEADNOTES

Costs – Allowed

An attorney's expenses to travel to the case's venue are usually allowed as costs when there has been a showing that there are no local attorneys or law firm available. This sound principle has been followed in awarding class action expenses. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 579 (Yap 2024).

Costs – Allowed

An award of costs depends upon a finding of reasonableness by the court. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 579 n.1 (Yap 2024).

Costs – Allowed; Costs – Disallowed

When an ocean-view room, as opposed to a room facing the road or the mountains, was not necessary to case or trial preparation and is thus an otherwise frivolous luxury, and therefore not reasonable, the court will allow an award at the lower, road-facing or mountain view rate as a recoverable expanse. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 580 (Yap 2024).

Costs – Disallowed

Alcoholic drinks will not be awarded as a cost or as an expense even when non-taxable costs can be awarded as expenses. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 580 (Yap 2024).

Costs – Allowed

A hotel charge for plaintiff's counsel's one dive on the reef damage site when the defense expert witness was also then diving there for trial preparation will be allowed as a cost. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 580 (Yap 2024).

Costs – Disallowed

Unexplained, and fairly obviously not case-related, charges during counsel's hotel stay are disallowed. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 580 (Yap 2024).

Costs – Allowed

Although, absent a statute or contract, expert witness fees and research expenses are not taxable costs, successful litigants may be awarded their out-of-pocket expenses for an expert witness when the expert witness was an indispensable part of the trial and was crucial to the ultimate resolution of the issues and the costs were appropriate and not excessive, but when an expert's research and testimony went to support claims that the court rejected, that expert's research expenses for those claims are disallowed. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 580-81 (Yap 2024).

Costs – Allowed

The expense of a trial transcript is taxable when that transcript is necessarily obtained for use in a trial, particularly when the trial is long and the issues are complex. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 581 (Yap 2024).

Costs – Allowed; Costs – Disallowed

Service costs are generally allowed to a prevailing party and should be taxed if proven, but certain other expenses, such as phone calls, postage, and in-house copying, are generally not allowed. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 581 (Yap 2024).

Costs – Disallowed

Postage is considered overhead and expenses for postage and delivery services are generally disallowed as costs. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 581 (Yap 2024).

Costs – Allowed; Costs – Disallowed

Photocopying costs are disallowed unless it can be shown that the photocopying was done outside of the law firm. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 581 (Yap 2024).

Costs – Disallowed

Temporary hotel office contract expenses will be disallowed as inadequately explained and as overhead. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 581-82 (Yap 2024).

Costs – Disallowed

Even when "expenses" are to be given a more expansive meaning than "costs," those "expenses" should not include normal office overhead costs within a law office. A law firm's overhead cannot be taxed as a cost. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 577, 582 (Yap 2024).

COURT'S OPINION

LARRY WENTWORTH, Associate Justice:

This is before the court on Plaintiffs' Counsel's Affidavit of Costs and Fees, filed August 2, 2024; defendant Liancheng Overseas Fishery (FSM) Co. Ltd.'s Opposition Re: Costs Submission by Plaintiff, filed August 12, 2024; and Plaintiffs' Reply to Opposition Re: Costs Submission by Plaintiffs, filed August 27, 2024. These filings were pursuant to the court's conclusion that the plaintiff class was a prevailing party, that would routinely be awarded costs that may be taxable and that class action counsel in common fund cases are entitled to reimbursement for expenses adequately documented and reasonably and appropriately incurred in the prosecution of the class action. People of Tomil ex rel. Mar v. F/V Hwa Gwo No. 6, 24 FSM R. 545, 551 (Yap 2024).

During the September 10, 2024 hearing, counsel submitted the matter of costs on the papers and without argument.

The plaintiffs ask that $12,387.07 in costs and expenses be taxed.

I. TRAVEL EXPENSES

These costs include $1,355.78 in airfare for plaintiffs' counsel to attend trial on two trips to Yap and $40 for departure fees from Yap. An attorney's expenses to travel to the case's venue are usually allowed as costs when there has been a showing that there were no local attorneys or law firm available. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 17 FSM R. 198, 206 (Yap 2010). That seems to be the case here. This sound principle has been followed in awarding class action expenses. Id. at 207. These $1,395.78 in travel expenses are therefore allowed.

II. HOTEL EXPENSES

The plaintiffs also seek an award of $4,881.11 for expenses incurred by their attorney at the Manta Ray Bay Resort where he was lodged during trial. Defendant Liancheng Overseas Fishery (FSM) Co. Ltd. ("Liancheng") asks that these hotel charges be reviewed to determine whether they are reasonable.1

These expenses include $2,253.90 for lodging in an ocean-view room at the rate of $140 plus 10% tax ($154) per night for 14 nights in February, 2023, plus $97.90 for late checkout charge made necessary by the United flight schedule. The same rate, $140 plus 10% tax ($154) per night was charged for October 7-9, 2023 ($462), plus October 10-13, 2023 (because United canceled the October 10/11 flight due to a typhoon in the Guam area) (presumably $616, but subsumed in total credit card payment including extras), and the $97.90 for the usual, necessary late checkout charge. Total room and late check out charges equal $3,429.80.

An ocean-view room, as opposed to a room facing the road or the mountains, was not necessary to case or trial preparation and is thus an otherwise frivolous luxury, and therefore not reasonable. The court will allow an award at the lower, road-facing or mountain view rate of $120 a night ($132 including tax). At that rate the total room charges would equal $2,772 plus two late check out charges of $97.90 each equals $2,967.80. The court will allow this amount as a recoverable expanse.

There were numerous Manta Ray charges (called "extras" on the hotel bill) for meals (and a few meal charges from other establishments). Liancheng objects to the parts of those charges that are for alcoholic drinks or for entertainment. Alcoholic drinks are a non-taxable cost and will not be awarded as an expense even when non-taxable costs can be awarded as expenses. See Lewis v. County of San Diego, 2018 WL 1071704 at *3 (S.D. Cal. 2018); Van Vessem v. Secretary of Health & Human Servs., 2018 WL 3989517 at *11 (Fed. Cl. Off. Spec. Masters 2018). Charges for alcoholic drinks will be deducted from otherwise allowed meal expenses.

The $446.25 in Manta Ray meal charges in February 2023 are therefore allowed. From the Manta Ray extras charges list for October 2023 there are $73.50 in meals charges, which are allowed, and $16 for [alcoholic] beverages, which are disallowed. Charged separately at Manta Ray is a dinner with two main courses, an appetizer, and four alcoholic drinks totaling $72.40. The $26.50 for the alcoholic beverages is disallowed and the remaining $45.90 is allowed. Another Manta Ray charge of $37.95 for two main courses and an appetizer is allowed. The $12.75 charge for a meal at the Pine Club is allowed. And, after deducting $16 for alcohol from the $55.90 restaurant charge at Pathways, the remaining $39.90 is allowed for two main courses and an appetizer is allowed.

Liancheng also objects to extra Manta Ray charges for dives and the like. The plaintiffs reply that "one (1) dive was charged to the Hotel for a dive study into Tomil waters to survey the damage site for this case. The diving was reasonable and relevant to the cause of action and damages." Pls.' Reply to Opp'n Re: Costs Submission by Pls. at 3 (Aug. 27, 2024). That being so, and since during the trial in February 2023, the defense expert witness dove the Tomil damage site for the first time and gathered evidence for use during trial, the $179 hotel charge on February 12, 2023 for "Dive and Gear Rental" is allowed.

However, the unexplained (and fairly obviously not case-related) charges during counsel's October 2023 stay of $60 for "Dive," $99 for "Dive and Gear Rental," and $20 for "Kayak Rent" are disallowed. Also disallowed is an unexplained $89 charge described as "Gift Shop" and an unexplained $33 "Laundry Service" charge from counsel's October stay. From counsel's earlier February hotel stay, charges of $54 for "Snorkeling/Gear Rental" and $89.40 for "Gift Shop" are also unexplained and disallowed. Phone calls totaling $1.91 are disallowed as unexplained and likely a disallowed overhead expense.

III. TRIAL PREPARATION AND TRIAL EXPENSES

The plaintiffs list $4,900 in checks issued to their expert witness, Dr. Robert Richmond, who testified by video-conference. They further state that the first check for $1,000 was issued as a retainer fee, which Dr. Richmond waived, so that the expense for this witness was actually only $3,900. Although, absent a statute or contract, expert witness fees and research expenses are not taxable costs, successful litigants may be awarded their out-of-pocket expenses for an expert witness when the expert witness was an indispensable part of the trial and was crucial to the ultimate resolution of the issues and the costs were appropriate and not excessive, but when an expert's research and testimony went to support claims that the court rejected, that expert's research expenses for those claims are disallowed. Pohnpei v. M/V Ping Da 7, 20 FSM R. 75, 79 (Pon. 2015); People of Rull ex rel. Ruepong v. M/V Kyowa Violet, 15 FSM R. 53, 75 (Yap 2007).

Although the court rejected Dr. Richmond's ciguatera poisoning assertion, that assertion was only a passing mention or observation and not central to any claim. Furthermore, that the court adopted a different valuation figure than the one Dr. Richmond suggested, did not make him any less an indispensable part of the trial and or less crucial to the ultimate resolution of the issues. The amount does not seem excessive. The court will therefore allow the plaintiffs' $3.900 out-of-pocket expense for Dr. Richmond's expert witness fees as a taxable cost.

The court will also award as a taxable cost the $87.50 for "reef assessment work" by witness Anthony Yalon Lukagfinay, which apparently assisted Dr. Richmond's preparation.

The plaintiffs ask for $252.50, which was expended for a transcript of the trial testimony of defense expert witness Simon Charles Ellis. It was needed to prepare the plaintiffs' rebuttal reports. This amount will be allowed because the expense of a trial transcript is taxable when that transcript is necessarily obtained for use in a trial, particularly when the trial is long and the issues are complex. M/V Kyowa Violet, 15 FSM R. at 74.

The plaintiffs also ask that they be awarded $75 for the cost of service of trial witness subpoenas. Service costs are generally allowed to a prevailing party and should be taxed if proven, but certain other expenses, such as phone calls, postage, and in-house copying, are generally not allowed. George v. Sigrah, 19 FSM R. 210, 219 (App. 2013). This $75 in service costs is allowed.

IV. MISCELLANEOUS EXPENSES

The plaintiffs seek a cost award for their counsel's postage expenses of $85.79. Postage is considered overhead and generally not allowed as a cost so that expenses for postage and delivery services are disallowed. Andrew v. Heirs of Seymour, 19 FSM R. 451, 453 (App. 2014). These postage expenses are therefore disallowed. Also disallowed as overhead is a $12.72 charge at National Office Supply for mailing tubes.

The plaintiffs also ask for a total of $190.50 in copying expenses. Photocopying costs are disallowed unless it can be shown that the photocopying was done outside of the law firm. Carlos Etscheit Soap Co. v. McVey, 17 FSM R. 427, 441 (App. 2011). Here, the plaintiffs showed that these were expenses they incurred when they had needed copies made by commercial copy business (Copy Center and Fast Copy), which provided receipts for their charges. This $190.50 is therefore allowed, as is a $5 photocopying charge from Manta Ray on February 11, 2023.

The plaintiffs also ask that the court allow as an expense a $200 payment on a contract ostensibly for "(Services 10/7 to 10/14): Yap copying, delivery, file pick-up and communications)." Pls.' Counsel's Aff. of Costs & Fees at 5 (Aug. 2, 2024). Liancheng also objects to this as overhead and thus not taxable as a cost. The plaintiffs explain that since their counsel's law office was on Guam, he needed to "'create' and make a mobile law office in his hotel room," and that the $200 contract expense covered "the cost of the Yap office setup, boxing-up files and banker boxes, deliveries of messages, pick-up of papers, making copies, [and] communications and coordination with witnesses and clients." Pls.' Reply to Opp'n Re: Costs Submission by Pls. at 4 (Aug. 27, 2024).

This is not credible. There were no witnesses called during the October trial session. No receipts for copies are dated in that time period. No explanation is offered why this help was needed for setting up an office in October for the closing of trial, but not needed in February when many witnesses were called and all the copying charges were incurred. The court therefore disallows this $200 charge as inadequately explained and as overhead.

Even when "expenses" are to be given a more expansive meaning than "costs," those "expenses" should not include normal office overhead costs within a law office. FSM v. GMP Hawaii, Inc., 17 FSM R. 86, 90 (Pon. 2010). A law firm's overhead cannot be taxed as a cost. Bank of the FSM v. Truk Trading Co., 16 FSM R. 467, 471 (Chk. 2009).

V. EXPENSES TAXED AS COSTS

The costs allowed above total $9,635.83. These costs are awarded. All of the claimed expenses that the court did not either specifically allow or specifically disallow above are hereby disallowed either as inadequately explained or as overhead. The clerk shall amend the judgment accordingly.

Footnotes:

¹ While the court takes notice that the Manta Ray Bay Resort is the most expensive hotel on Yap, the court will not take that into its reasonableness consideration since Liancheng's counsel also lodged there. An award of costs depends upon a finding of reasonableness by the court. E.g., FSM Social Sec. Admin. v. Jonas, 13 FSM R. 171, 173 (Kos. 2005).