USA Law and Practice Contributed by: Courtney Scobie and Jack Edwards, Ajamie LLP
by the prevailing party. If a prevailing party seeks to recover its attorney’s fees and costs, the opposing party can challenge the amount and reasonableness of those fees and costs. Sometimes, if the prevailing party seeks to recover costs such as court fees and expenses, a process known as “taxation of costs” occurs. The court assesses whether the costs claimed by the prevailing party are recoverable under applica- ble rules. 11.2 Factors Considered When Awarding Costs The court considers the following factors when award- ing costs. • Statutory provisions – the court examines relevant federal statutes that may authorise the award of costs in specific types of cases, such as civil rights cases, antitrust cases, or certain consumer protec- tion cases. • FRCP 54 (d) – FRCP 54 (d) provides a general framework for awarding costs to the prevailing party. It states that costs should be allowed to the prevailing party unless a federal statute, rule, or court order provides otherwise. The court will consider FRCP 54 (d) as the default rule for award- ing costs. • Reasonableness – the court assesses the rea- sonableness of the costs sought by the prevail- ing party. This includes determining whether the costs are necessary for the litigation and whether the amounts are reasonable in light of prevailing market rates. • Non-taxable costs – some costs may be non-taxa- ble, meaning they are not recoverable under FRCP 54 (d). By way of example, the costs of experts, certain transcripts, and deposition transcripts may not be recoverable as a matter of right and may require a specific showing of necessity. • Objections – the court considers any objections raised by the opposing party to the award of costs. The opposing party may challenge the necessity or reasonableness of the costs claimed. • Equity and discretion – courts have some discre- tion in awarding costs and may consider the equi- ties of the case. This can involve weighing the rela- tive success of the parties, the complexity of the case, and the overall fairness of awarding costs.
• Settlement agreements – if the parties reach a set- tlement agreement that includes provisions for cost allocation, the court will consider the terms of the settlement agreement when determining costs and likely give substantial deference to any settlement agreement between parties. 11.3 Interest Awarded on Costs In federal courts in the USA, interest is generally not awarded on costs. Costs are typically considered as fixed amounts associated with litigation expenses, and they do not accrue interest. Instead, interest is primarily awarded on judgments, which represent the final amount of money a party is required to pay as a result of the court’s decision. 12. Alternative Dispute Resolution (ADR) 12.1 Views of ADR Within the Country Alternative dispute resolution is viewed favourably within the US legal system as a means of resolving disputes efficiently and cost-effectively, and with more flexibility than traditional litigation. ADR methods are encouraged and often required by courts as a way to reduce the caseload and promote the resolution of disputes. Some popular ADR methods include media- tion, arbitration, and settlement conferences. • Mediation – mediation is widely used and is highly regarded. It is a voluntary process in which a neutral third party, the mediator, assists the par- ties in reaching a mutually agreeable resolution. It is non-binding, meaning that the parties are not required to accept the mediator’s recommenda- tions, and they retain the ability to pursue litigation if no agreement is reached. • Arbitration – arbitration is another popular ADR method, particularly in cases involving arbitration agreements, such as those found in employment contracts, consumer agreements, and commer- cial contracts. In arbitration, a neutral arbitrator or panel of arbitrators makes a binding decision to resolve the dispute. The Federal Arbitration Act (FAA) governs arbitration agreements and awards in federal court. The FAA emphasises the enforce-
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