Little Rock Cardiology Clinic v. Baptist Health ( 2009 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 08-3158/09-1786
___________
Little Rock Cardiology Clinic PA, et al., *
*
Plaintiffs—Appellants, *
*
v. *
*
Baptist Health; Baptist Medical *
System HMO, Inc., * Appeals from the United States
* District Court for the
Defendants—Appellees, * Eastern District of Arkansas.
*
Arkansas Blue Cross and Blue Shield; *
USAble Corporation; *
HMO Partners, Inc., *
*
Defendants. *
___________
Submitted: September 21, 2009
Filed: December 29, 2009 (corrected 1/08/10)
___________
Before MELLOY, BEAM, and GRUENDER, Circuit Judges.
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MELLOY, Circuit Judge.
This is an antitrust case involving alleged violations of Sections 1 and 2 of the
Sherman Act, 15 U.S.C. §§ 1, 2. It comes to us after the district court1 granted
Appellee Blue Cross's motion to dismiss for failure to state a claim and denied Baptist
Health's motion to tax discovery-related copying costs. The principal issue on appeal
concerns the proper methodology for determining the relevant market in an antitrust
case. We also address whether the district court abused its discretion in declining to
tax costs. We affirm on both issues.
I. Background
Appellant Little Rock Cardiology Clinic PA ("LRCC") is a professional
association of cardiologists located in Little Rock, Arkansas, practicing in both
diagnostic and interventional cardiology procedures. Baptist Health is the largest
hospital company in Arkansas, operating five hospitals in the state, its largest being
a 585-bed facility in Little Rock. Blue Cross & Blue Shield of Arkansas ("Blue
Cross") is a health-insurance company headquartered in Little Rock.2 Beginning in
1975, LRCC and its cardiologists maintained clinical and staff privileges at Baptist
Health and were in Blue Cross's FirstSource network, a network of preferred providers
used by all of Blue Cross's health plans. This changed, however, with the opening of
the Arkansas Heart Hospital.
In 1997, LRCC developed Arkansas Heart Hospital, which specializes in
cardiology services and competes with Baptist Health. Prior to developing Arkansas
Heart, the LRCC cardiologists were on staff at Baptist Health, and participated in Blue
Cross's FirstSource network. Shortly after LRCC opened Arkansas Heart, Blue Cross
1
The Honorable J. Leon Holmes, Chief Judge, United States District Court for
the Eastern District of Arkansas.
2
Prior to oral argument, LRCC and Blue Cross settled their dispute. Blue Cross
is no longer a party to this appeal.
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terminated its network provider agreements with LRCC and LRCC's doctors. LRCC
alleges that Baptist Health effected this termination "in concert and in combination
with . . . Baptist Health to restrain and monopolize trade unlawfully, specifically, to
protect Baptist Health from competition in the relevant market." In 2003, Baptist
Health adopted an "Economic Credentialing Policy," which prohibited any doctor
from maintaining staff privileges at any Baptist Health facility if that doctor directly
or indirectly held an interest in a competing hospital. Recently, an Arkansas state
circuit court permanently enjoined enforcement of this policy.
LRCC initially filed this suit against Baptist Health in November 2006, alleging
that Baptist Health conspired with Blue Cross to restrain trade in, and monopolize the
market for, cardiology services for privately insured patients by: (1) forming a jointly
owned HMO, HMO Partners, Inc., with Blue Cross; (2) agreeing with Blue Cross that
Baptist Health would be the HMO's exclusive in-network facility; and (3) agreeing
with Blue Cross that Blue Cross would remove LRCC from Blue Cross's FirstSource
network. A month later, LRCC amended its complaint to add as plaintiffs a number
of individual cardiologists and each of their individual professional associations
through which they and LRCC provide cardiology services. Baptist Health then
moved to dismiss the complaint for failure to state a claim. The district court denied
the motion.
In December 2007, LRCC filed a second amended complaint, adding Blue
Cross as a defendant, as well as Blue Cross's and Baptist Health's individually owned
subsidiaries and their jointly owned subsidiary.3 All defendants then moved to
dismiss the second amended complaint for failure to state a claim. The district court
granted this motion on the grounds that, among other things, LRCC's complaint failed
to allege a proper relevant market. In doing so, the district court noted that the
3
For the purpose of this opinion, we refer to the parties as "Baptist Health" or
"Blue Cross." The identities of the subsidiaries are not material to our decision.
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Supreme Court's recent decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544(2007), had created a higher pleading standard than the standard in Conley v. Gibson,
355 U.S. 41 (1957), the standard upon which the district court had relied in denying
Baptist Health's first motion to dismiss. The district court, however, granted LRCC
leave to amend its complaint one final time.
In March 2008, LRCC filed a third amended complaint, the complaint at issue
in this appeal, alleging six antitrust claims against Baptist Health.4 Count I alleges,
under § 1 of the Sherman Act, that Baptist Health and Blue Cross unlawfully
conspired to restrain trade in the market for services to cardiology patients. The
remaining counts allege violations of § 2 of the Sherman Act. Counts II and III allege
that Baptist Health conspired with Blue Cross to monopolize, and attempted to
monopolize, the market for cardiology procedures. Count IV alleges that Baptist
Health monopolized the market for cardiology procedures. Counts V and VI allege
that Baptist Health conspired with Blue Cross to monopolize, and aided in Blue
Cross's attempt to monopolize, the market for private health insurance.
The district court granted Baptist Health's motion to dismiss with prejudice,
finding that the alleged relevant market for Counts I–IV was legally flawed and
therefore Counts I–IV did not state a plausible antitrust claim. As to Counts V and VI,
the district court dismissed LRCC's claims against Baptist Health as barred by the
statute of limitations because LRCC failed to allege an overt act in furtherance of the
4
We note that the third amended complaint contains two additional counts,
Counts VII and VIII. Count VII alleges that Blue Cross monopolized the insurance
market. It does not name Baptist Health, and is not a subject of this appeal. Count
VIII seeks injunctive relief, which the district court rejected as barred by laches.
LRCC waived any review of this holding by not raising the issue in its appellate brief.
Ballard v. Heineman, 548 F.3d 1132, 1136 (8th Cir. 2008). Thus, these counts are
immaterial to our analysis.
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conspiracy or attempt to monopolize the private insurance market within the four-year
limitations period. See 15 U.S.C. § 15b.
After the district court dismissed LRCC's complaint, Baptist Health filed a bill
of costs under Federal Rule of Civil Procedure 54(d), seeking discovery-related costs
for transcription, in-house copying of documents, scanning documents produced in
discovery, and reproduction of Electronically Stored Information ("ESI"). The district
court declined to tax those costs against LRCC.
On appeal, we address two issues: (1) whether the district court erred in
dismissing Counts I-IV; and (2) whether the district court erred in declining to tax
Baptist Health's discovery-related costs. Because LRCC does not raise on appeal the
district court's dismissal, on limitations grounds, of Counts V and VI, we do not
address it here. See United States v. Azure, 539 F.3d 904, 912 (8th Cir. 2008).
II. Antitrust Claims
On appeal, we review de novo the district court's grant of a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6), "accepting the allegations contained
in the complaint as true and drawing all reasonable inferences in favor of the
nonmoving party." Express Scripts, Inc. v. Aegon Direct Mktg. Servs., Inc., 516 F.3d
695, 698 (8th Cir. 2008). This standard requires us to determine whether the
complaint "assert[s] facts that affirmatively and plausibly suggest that the pleader has
the right he claims . . . rather than facts that are merely consistent with such a right."
Stalley v. Catholic Health Initiatives, 509 F.3d 517, 521 (8th Cir. 2007).
The four counts at issue on appeal raise federal antitrust claims under Sections
1 and 2 of the Sherman Antitrust Act. Under that Act, it is unlawfu1 to contract or
form a conspiracy "in restraint of trade or commerce among the several States," 15
U.S.C. § 1, or to "monopolize or attempt to monopolize . . . any part of the trade or
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commerce among the several States," 15 U.S.C. § 2. The parties agree that LRCC has
not alleged a per se violation. LRCC therefore has the burden of alleging a relevant
market in order to state a plausible antitrust claim. Double D. Spotting Serv., Inc. v.
Supervalu, Inc., 136 F.3d 554, 560 (8th Cir. 1998). Without a well-defined relevant
market, a court cannot determine the effect that an allegedly illegal act has on
competition. See FTC v. Freeman Hosp., 69 F.3d 260, 270–71 (8th Cir. 1995). Thus,
as we have stated, "Antitrust claims often rise or fall on the definition of the relevant
market." Bathke v. Casey's Gen. Stores, Inc., 64 F.3d 340, 345 (8th Cir. 1995). A
relevant market consists of both a product market and a geographic market. Id. We
proceed by analyzing each of these required components.
A. Product Market
A court's determination of the limits of a relevant product market requires
inquiry into the choices available to consumers. Craftsmen Limousine, Inc. v. Ford
Motor Co., 491 F.3d 380, 388 (8th Cir. 2007). The focus is on how "consumers will
shift from one product to the other in response to changes in their relative costs."
SuperTurf, Inc. v. Monsanto Co., 660 F.2d 1275, 1278 (8th Cir. 1981). The relevant
product market should include "products that have reasonable interchangeability for
the purpose for which they are produced." United States v. E.I. du Pont de Nemours
& Co., 351 U.S. 377, 404 (1956). The district court found that Appellant's third
amended complaint failed to allege a relevant product market because, among other
reasons, the complaint erroneously defined the product market by how consumers pay
for cardiology services. We agree.
The parties extensively brief the issue of what LRCC alleges to be the relevant
product market. The complaint first states, "The relevant product is those medical
services that cardiology patients receive exclusively in a hospital from a cardiologist."
It also states, however, that "cardiology services and hospital services are not distinct
products for the purposes of antitrust analysis." Finally, it states that the relevant
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product market is "the market for cardiology procedures obtained in hospitals by
patients covered by private insurance." Thus, it is unclear whether LRCC is alleging
a market in which there is a single, conjoined service—cardiology services obtained
in hospitals—or a market in which there are two distinct and complementary
services—hospital services and cardiology services. One issue on which the parties
agree, however, is that the product market LRCC alleges is limited to patients covered
by private insurance. We base our affirmance of the district court's product-market
holding on this undisputed limitation.
LRCC proposes a market limited by how consumers pay for cardiology
procedures. This theory lacks support in both logic and law. As stated above, the
general issue when determining the relevant product market concerns the choices
available to consumers. Craftsmen Limousine, 491 F.3d at 388. In this case—an
exclusive-dealing case involving shut-out cardiologists—the relevant inquiry is
whether there are alternative patients available to the cardiologists. See Campfield v.
State Farm Mut. Auto. Ins. Co., 532 F.3d 1111, 1119 (10th Cir. 2008) ("When there
are numerous sources of interchangeable demand, the plaintiff cannot circumscribe
the market to a few buyers in an effort to manipulate those buyers' market share.");
Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield of R. I., 373 F.3d 57, 67
(1st Cir. 2004) ("[T]he concern in an ordinary exclusive dealing claim by a shut-out
supplier is with the available market for the supplier."); Brokerage Concepts, Inc. v.
U.S. Healthcare, Inc., 140 F.3d 494, 514 (3d Cir. 1998) (stating the "logical
assumption that [a pharmacy] considers members of other prescription plans, or
uninsured persons, completely interchangeable with [privately insured] members.").
Thus, LRCC must look to alternative patients who are able to pay the required fees,
not just those who pay using private insurance.
LRCC argues that the product market should be limited to patients using private
insurance because private insurance and government insurance—the other primary
method of payment—are not reasonably interchangeable. The trouble with this theory
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is that it analyzes the issue from the wrong side of the transaction. It may be true that,
from the patient's perspective, private insurance and Medicare/Medicaid are not
reasonably interchangeable. For a variety of reasons, including age and financial
considerations, a person with private insurance may not qualify for these government
programs. But this lawsuit is not about the options available to patients, it is about the
options available to shut-out cardiologists. LRCC's claims boil down to the allegation
that, due to Baptist Health's allegedly unlawful actions, LRCC has access to fewer
patients. The relevant question, then, is to whom might the cardiologists at LRCC
potentially provide medical service? LRCC's complaint provides the answer: LRCC
can provide service to "patients . . . from either a government program such as
Medicare or Medicaid, or from a private insurer." (emphasis added). Patients able to
pay their medical bill, regardless of the method of payment, are reasonably
interchangeable from the cardiologist's perspective—the correct perspective from
which to analyze the issue in this case.
In reaching this conclusion we do not, as LRCC argues, disregard the well-
pleaded allegations in the complaint. LRCC has made no allegation that private
insurance is the only method of payment it can accept. Quite the opposite, LRCC's
complaint states both that it can and that it does accept payment from sources other
than private insurers. Our conclusion does not challenge LRCC's factual allegations,
but rather its legal theory, to which we owe no deference. Wiles v. Capitol Indem.
Corp., 280 F.3d 868, 870 (8th Cir. 2002). Nor, as LRCC contends, does our decision
in F.T.C. v. Tenet Health Care Corp., 186 F.3d 1045 (8th Cir. 1999), endorse LRCC's
proposed market. Tenet was a monopolization case brought under § 7 of the Clayton
Act, 15 U.S.C. § 18, in which we addressed the bounds of a relevant geographic
market. Tenet, 186 F.3d at 1051–52. In so doing, we found only that the locations
where a patient with private insurance could reasonably turn (a key inquiry in
geographic-market analysis) were constrained by whether the patient's insurance
covered the hospital in the relevant location. Id. at 1055. This does not address the
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inquiry in the case of a shut-out supplier: to whom can the supplier sell? Thus, Tenet
is inapposite to our decision on the relevant product market in this case.
We conclude that, as a matter of law, in an antitrust claim brought by a seller,
a product market cannot be limited to a single method of payment when there are
other methods of payment that are acceptable to the seller. We also analyze LRCC's
alleged relevant geographic market as an alternative ground on which to affirm the
district court's dismissal.
B. Geographic Market
LRCC's failure to allege a coherent relevant geographic market provides an
adequate and independent means of affirming the district court's dismissal. Properly
defined, a geographic market is a geographic area "in which the seller operates, and
to which . . . purchaser[s] can practicably turn for supplies." Tampa Elec. Co. v.
Nashville Coal Co., 365 U.S. 320, 327 (1961); accord Morgenstern v. Wilson, 29 F.3d
1291, 1296 (8th Cir. 1994). Broken down, the test requires a court to first determine
whether a plaintiff has alleged a geographic market that includes the area in which a
defendant supplier draws a sufficiently large percentage of its business—"the market
area in which the seller operates," its trade area. See Morgenstern, 29 F.3d at 1296
(citation omitted); Double D, 136 F.3d at 560; Bathke, 64 F.3d at 345. A court must
then determine whether a plaintiff has alleged a geographic market in which only a
small percentage of purchasers have alternative suppliers to whom they could
practicably turn in the event that a defendant supplier's anticompetitive actions result
in a price increase. See, e.g., Morgenstern, 29 F.3d at 1296. The end goal in this
analysis is to delineate a geographic area where, in the medical setting, "'few' patients
leave . . . and 'few' patients enter." United States v. Rockford Mem'l Corp., 717 F.
Supp. 1251, 1267 (N.D. Ill. 1989), aff'd, 898 F.2d 1278 (7th Cir. 1990). The district
court held that LRCC's alleged geographic market, Little Rock, was overly narrow
because the complaint contains no allegations that Little Rock, by itself, made up
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Baptist Health's trade area. As with the product market, we agree with the district
court.
LRCC's complaint alleges that Baptist Health operates and competes in an area
well beyond the city of Little Rock. The complaint alleges that Baptist Health serves
"a large percentage of residents from around the state who need cardiology services
in hospitals." More specifically, the complaint alleges that, in addition to Little Rock,
Baptist Health operates in Hot Springs, Pine Bluff, Conway, Searcy, and El Dorado.
Despite these allegations detailing the apparently broad reach of Baptist Health's
cardiology services, LRCC's complaint seeks to limit the relevant geographic market
to "the cities of Little Rock and North Little Rock." The geographic market is defined
as such, LRCC contends, because cardiology patients in Little Rock and patients from
hospitals in surrounding areas "overwhelmingly" go to Little Rock for cardiology
procedures.5 The reason for this migration to Little Rock, LRCC alleges, is that the
cardiology procedures are "not practicably available in hospitals in surrounding
cities." In short, LRCC's argument is that Little Rock is the relevant geographic
market because it is the location to which would-be cardiology patients must travel.
Accepting the allegations as true and reading them in the light most favorable to
LRCC, as we must, Express Scripts, 516 F.3d at 698, we cannot find that LRCC's
complaint alleges a plausible relevant geographic market.
This case presents an unusual question. Our cases typically have addressed
disputes raising the issue of where a consumer can practicably turn in the event of a
defendant's anticompetitive price increase—the second prong in our two-prong
5
LRCC's complaint alleges that "99.5% of privately insured cardiology patients
from the area code with zip codes beginning with the three digits 722, which is Little
Rock proper, use hospitals within Little Rock." Further, "[o]f the privately insured
cardiology patients who reside in Little Rock and its surrounding areas, which are
covered by zip codes that begin with 722 and 721, 84.7% use hospitals in Little Rock.
The remaining 15.3% of cardiology patients in these zip codes use hospitals in North
Little Rock and Conway."
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geographic-market analysis. See, e.g., Minn. Ass'n of Nurse Anesthetists v. Unity
Hosp., 208 F.3d 655, 662 (8th Cir. 2000); Tenet, 186 F.3d at 1054; Double D, 136
F.3d at 560–61; Bathke, 64 F.3d at 344–47; Morgenstern, 29 F.3d at 1296. Here,
however, LRCC's complaint contains allegations concerning the geographic areas
where customers could turn for cardiology procedures, but fails to do so from the
starting point of Baptist Health's trade area. In other words, LRCC's complaint alleges
that a low percentage of patients leave its proposed geographic market, but does not
allege that a low percentage of its patients enter its proposed geographic market.
Without the necessary allegations, we cannot find that LRCC has stated a plausible
antitrust claim. By limiting the geographic market in this way, LRCC is able to
gerrymander the relevant market to an artificially narrow location, the location where
cardiology procedures take place. As the Supreme Court has stated, Tampa, 365 U.S.
at 327, and as we have echoed, Double D, 136 F.3d at 560, this is an impermissible
limitation. An antitrust plaintiff must allege a geographic market in which the
defendant supplier draws a sufficiently large percentage of its business. This crucial
first step serves as a limitation, preventing antitrust plaintiffs from delineating
arbitrarily narrow geographic markets. It is on this first step that LRCC's complaint
stumbles.
Adopting LRCC's theory of a geographic market has the potential to create
problems in antitrust cases where the product or service at issue requires the consumer
to travel to a specified location. It would, as the district court stated, allow antitrust
plaintiffs to "define a market by identifying a small area around the defendant's
location in which nearly all potential customers patronize the defendant." Using
LRCC's logic, we could delineate the relevant geographic market as the square mile
surrounding a hospital, the block on which a hospital sits, or even a hospital building
where the relevant procedure takes place. Surely a sufficiently large percentage of
people in this area use the hospital's services. These "geographic markets," however,
are obviously too narrow.
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LRCC next argues that relevant case law does not permit us to hold that a single
city is not a relevant market. This argument is problematic for two reasons. First,
although we find that the geographic market in this case is implausibly narrow, our
opinion should not be read to reject the notion that a city by itself could, in a different
case, be a relevant geographic market. The boundaries of a relevant market will turn
on the factual allegations presented in any given case. Tenet, 186 F.3d at 1052. We
hold only that in this case, the theory upon which LRCC relies to reach the conclusion
that a single city is the relevant geographic market is legally flawed.
Second, the cases from the Seventh Circuit, which LRCC cites in support of its
position, are not contrary to our ruling in this case. The first case, United States v.
Rockford Memorial Corp., 898 F.2d 1278 (7th Cir. 1990), is in fact similar to our
holding in regard to its analysis of the relevant product market, and does not support
LRCC's argument. In Rockford, the Seventh Circuit noted first that the district court
found that 87 percent of defendants' patients came from "an area surrounding
Rockford and consisting of the rest of Winnebago County (the county in which
Rockford is located) and pieces of several other counties." Id. at 1284. Thus,
Rockford first noted the defendant's trade area. The court then moved to the second
prong of the analysis, stating that patients within this market were unlikely to seek out
other hospitals in the event of anticompetitive pricing and therefore upheld it as the
relevant geographic market. Id. at 1285. This is not analogous to LRCC's case.
Rather than arguing that the vast majority of Baptist Health's patients come from Little
Rock, which would be analogous to Rockford, LRCC supports its geographic market
with the allegation that the vast majority of cardiology patients go to hospitals in Little
Rock. The distinction between these two scenarios is not without a difference. As
stated above, were we to adopt LRCC's logic, we would be opening the door to
creation of geographic markets with narrowness limited only by antitrust plaintiffs'
imagination. We refuse to do this.
The second case on which LRCC relies, Hospital Corp. of America v. F.T.C.,
807 F.2d 1381 (7th Cir. 1986), is equally unavailing. Because market definition was
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not at issue in that case, see id. at 1388, it stands for no more than that a city could,
given the right allegations, be a relevant geographic market.6 We do not dispute this
conclusion, nor does it affect our analysis in this case.
Moreover, we do not mean to endorse the idea that a firm's trade area is
equivalent to a relevant geographic market. There is voluminous case law cautioning
against such a holding. See, e.g., Bathke, 64 F.3d at 346; Unity Hosp., 208 F.3d at
662; Gordon v. Lewistown Hosp., 423 F.3d 184, 212 (3d Cir. 2005); Surgical Care
Ctr. of Hammond, L.C. v. Hosp. Serv. Dist. No. 1 of Tangipahoa Parish, 309 F.3d
836, 840 (5th Cir. 2002); see also Herbert Hovenkamp, Federal Antitrust Policy, §
3.6d, at 119 (3d ed. 2005) ("'trade area' and the 'relevant market' are precisely reverse
concepts"). Because plaintiffs must identify consumers' alternatives, the relevant
geographic market will often be larger than a firm's trade area. This well-established
principle does not alter our holding. We hold only that where, as here, an antitrust
plaintiff alleges that a firm competes in and draws its customers from a specified
geographic area, it cannot then limit the relevant geographic market to a location
smaller than that area based solely on the fact that consumers must travel to that
smaller area to obtain the relevant service or product. To do so would allow antitrust
plaintiffs to gerrymander the relevant geographic markets into artificially narrow
locations, as LRCC has attempted to do here.
6
In addition, LRCC cites a series of district court cases in support of their
relevant geographic market. See United States v. Long Island Jewish Med. Ctr., 983
F. Supp. 121, 141–42 (E.D.N.Y. 1997); HTI Health Servs., Inc. v. Quorum Health
Group, Inc., 960 F. Supp. 1104, 1126 (S.D. Miss. 1997); Santa Cruz Med. Clinic v.
Dominican Santa Cruz Hosp., No. C93 20616 RMW, 1995 WL 853037, at *8–11
(N.D. Cal. Sept. 7, 1995). These cases stand only for the proposition that, given the
correct allegations, a small city area can constitute a relevant geographic market and
are therefore not helpful to LRCC. In fact, Santa Cruz Med., cuts against LRCC, as
it notes, "Ideally, an area should be defined where few patients leave an area and few
patients enter an area to obtain hospital services." Id. at *8 (emphasis added).
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We are well aware of our court's reluctance to dismiss antitrust complaints
before the parties have had an opportunity to fully conduct discovery. Huelsman v.
Civic Ctr. Corp., 873 F.2d 1171, 1174 (8th Cir. 1989) (stating that a "dismissal . . . on
the pleadings should be 'granted sparingly and with caution.'") (citation omitted).
However, more discovery in this case could not cure the defects in LRCC's legal
theory as to either the relevant product or geographic market. Without a showing as
to the proper relevant market, LRCC cannot establish the necessary predicate for their
antitrust claims. For this reason, we affirm the district court's dismissal of LRCC's
antitrust claims.
III. Costs Claim7
Rule 54(d) of the Federal Rules of Civil Procedure gives district courts the
power to tax costs in favor of a prevailing party. These awards, however, must fit
within 28 U.S.C. § 1920, which enumerates the costs that a district court may tax.
Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441–42 (1987). The section
at issue in this case, § 1920(4), states that a judge may tax "costs of making copies of
any materials where the copies are necessarily obtained for use in the case." District
courts have broad discretion over the award of costs to a prevailing party under §
1920, and we review such a decision for abuse of discretion. Zotos v. Lindbergh Sch.
Dist., 121 F.3d 356, 363 (8th Cir. 1997). "An abuse of discretion occurs where the
district court rests its conclusion on clearly erroneous factual findings or erroneous
7
On July 16, 2009, LRCC submitted to us, pursuant to Federal Rule of Civil
Procedure 28(j), a letter indicating that Baptist Health should be judicially estopped
from seeking discovery-related copying costs because it had previously argued that
such costs are not taxable. See Platte River Ins. Co. v. Baptist Heath, et al., No.
4:07cv0036 SWW, 2009 WL 2044610 (E.D. Ark. July 10, 2009). Because Baptist
Health’s previous position took place in an unrelated proceeding against a different
party, we find that Baptist Health is not estopped from taking its current position. See
Hossaini v. W. Mo. Med. Ctr., 140 F.3d 1140, 1142 (8th Cir. 1998) ("The doctrine of
judicial estoppel prohibits a party from taking inconsistent positions in the same or
related litigation.").
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legal conclusions." Lankford v. Sherman, 451 F.3d 496, 503–04 (8th Cir. 2006).
Here, the district court declined to tax as costs Baptist Health's expenses related to
copying documents to be produced in discovery. Baptist Health cross-appeals this
holding and, in the event we reverse the district court, argues that costs for scanning
documents and reproducing Electronically Stored Information ("ESI") fall within
"copies of any materials" as used in § 1920(4). Because there is no allegation of
erroneous factual findings, we address whether the district court's holding hinges on
erroneous legal conclusions.
The threshold issue here is whether the district court erred in declining to tax
discovery-related copying expenses. It is unclear whether the district court ruled as
a matter of law or as a matter of its discretion. We believe, however, that it is fair to
read the opinion as an exercise of the district court's discretion. Therefore, we confine
our holding to the conclusion that the district court did not abuse its discretion. We
reach this conclusion for two reasons.
First, Baptist Health does not cite, nor are we aware of, any decision that
requires a district court to tax discovery-related expenses. We note that there are
cases suggesting that a district court may tax costs for discovery-related copying.
See, e.g., Slagenweit v. Slagenweit, 63 F.3d 719, 721 (8th Cir. 1995) (per curiam)
(upholding award of costs for a deposition copy, despite the fact that the deposition
was not introduced at trial). These cases are at most permissive, and do not compel
the district court to tax such costs. Moreover, cases from other circuits that have
explicitly addressed discovery-related copying costs have done so only to the extent
that they have found a district court did not abuse its discretion in taxing such costs.
See, e.g., E.E.O.C. v. W&O, Inc., 213 F.3d 600, 623 (11th Cir. 2000); Illinois v.
Sangamo Const. Co., 657 F.2d 855, 867 (7th Cir. 1981).
Second, numerous district courts within the Eighth Circuit have refused to tax
discovery-related copying costs. See, e.g., Jones v. Nat'l Am. Univ., No. CIV. 06-
5075-KES, 2009 WL 2005293, at *6 (D.S.D. July 8, 2009) (stating that copies of
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papers "necessarily obtained for use in the case" covers only the "cost of actually
trying a case in the courtroom"); Moore v. DaimlerChrysler Corp., No. 4:06CV757
CDP, 2007 WL 1445591, at *1 (E.D. Mo. May 11, 2007) (same); Sphere Drake Ins.
PLC v. Trisko, 66 F. Supp. 2d 1088, 1093–94 (D. Minn. 1999) (same); Emmenegger
v. Bull Moose Tube Co., 33 F. Supp. 2d 1127, 1133–34 (E.D. Mo. 1998) (same).
Given this, we cannot find that the district court abused its discretion. Because we
affirm the district court on this threshold issue, we do not reach the issue of whether
costs for scanning documents and reproducing ESI are taxable under § 1920(4).
IV. Conclusion
For the foregoing reasons, we affirm the district court on both the antitrust and
costs claims.
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