Costs Case Analysis

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Although the court rejected the city of Chicago’s argument that the indigence exception to FRCP 54(d)(1) should be abolished, the court makes it decidedly more difficult for losing parties claiming indigence to avoid the imposition of costs.

The opinion requires the court to find, not only that the losing party is unable to pay costs, but that it will be unable to pay in the future.

In doing so, the court cited with approval, and compared, two unpublished district court opinions: Den-son v. Northeast Illinois Regional Commuter Railroad Corp., 2003 WL 21506946 (N.D.Ill. June 27, 2003); and Cross v. Roadway Express, 1994 WL 592168 (N.D.Ill. Oct. 26, 1994).

In Denson, the losing party was unemployed, had no savings, and supported two children and a grandchild on supplemental security income benefits. While that scenario may seem a slam dunk for invoking the indigence exception and not awarding costs, the district court awarded costs, although it stayed execution of the judgment until the plaintiff’s circumstances changed.

In Cross, the losing party was an unemployed single parent to three children, who suffered from mental health issues, and lived on Social Security benefits. There, the district court found that the plaintiff met the burden of showing both present indigence and no future ability to pay, and denied costs.

The majority of losing parties who seek to avoid the imposition costs fall far closer to Denson than to Cross. In light of this decision, prevailing parties have a good argument that costs should be imposed in many such cases, even if the judgment is stayed indefinitely, and even in perpetuity.

As a final matter, it should be noted that there never was even any persuasive authority to support the city’s argument, something the court failed to recognize.

	Related Article Indigency excuses payment of costs

The court cites the Sixth Circuit case of McDonald v. Petree, 409 F.3d 724 (6th Cir. 2005), as holding that districts courts are expressly prohibited from considering a losing party’s indigence when awarding costs in that circuit.

However, what McDonald, and previous Sixth Circuit cases, such as White & White, Inc., v. American Hosp. Supply Corp., 786 F.2d 728 (6th Cir. 1986), actually hold, is something different. They hold that "the ability of the prevailing party to pay his or her costs" is an inappropriate factor to consider (emphasis added). White, 786 F.2d at 730; McDonald, 409 F.3d at 732.

So, notwithstanding the lead opinion’s assumption, and Judge Easterbrook’s lengthy concurrence as to why the non-prevailing party’s indigence should be irrelevant, there is not actually an intercircuit split of authority on this issue.

Thus, any attorney thinking that there may be a basis for the U.S. Supreme Court to grant review on this issue will have to find another reason to justify certiorari.

– David Ziemer

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David Ziemer can be reached by email.