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Common Fund Required for Incentive Award

The Sixth Circuit Court of Appeals
held a named class representative may not receive an incentive award unless a common fund is established. Prisoner C. Pepper Moore, who was named a class representative in 1988 in Hadix v. Johnson, which was a class action suit challenging conditions of confinement at the State Prison of Southern Michigan, filed a pro se motion seeking an incentive award and costs. In 1988 the district court awarded attorney fees to the class' counsel, and it largely terminated the consent decree in 2001, which was entered in 1985 and did not award damages, incentive awards, or costs to any of the individual plaintiffs. The district court denied Moore's motion, and he appealed.

Incentive awards are typically awards to class representatives for their often-extensive involvement with a lawsuit. However, the Sixth Circuit held an incentive award cannot be awarded unless a common fund exists. A common fund exists when class action litigation has created a communal pool of funds to be distributed to the class members. Although Moore was a class representative who had extensive involvement in the case, he could not receive an incentive award because no common fund was created by the consent decree in this case. Forcing the defendants to pay an incentive award where no financial obligations were provided in the consent decree is impermissible, as it is an additional expense not bargained for. In damage cases where a common fund exists, incentive awards are permissible to encourage members of a class to become class representatives and rewarding individual efforts taken on behalf of the class.

Finally, the court held Moore's claimed costs do not fit within the meaning of 28 U.S.C. § 1920, which allows reimbursement for any court fees, docket fees, special interpretation costs, or for compensation of experts. Moore's lost wages, copying costs, word processors and repairs, supplies, storage lockers, and postage are not costs within the meaning of the rule. The district court's order was affirmed. See: Hadix v. Johnson, 342 F.3d 895 (6th Cir. 2003).g

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Related legal case

Hadix v. Johnson

FN1. We note that we approved something similar to an incentive award in Thornton v. East Texas Motor Freight, 497 F.2d 416, 420 (6th Cir.1974). In Thornton, the East Texas Motor Freight Company had denied black drivers the opportunity to be promoted from one position to another. This court affirmed a consent decree which gave heightened seniority to black city-drivers who had filed charges with the EEOC, which helped to bring the issue to the Commission's attention. Some district courts in this circuit had construed Thornton as suggesting that incentive awards are proper in some circumstances. See Brotherton v. Cleveland, 141 F.Supp.2d 907, 913 (S.D.Ohio 2001); In re S. Ohio Corr. Facility, 175 F.R.D. 270, 272 (S.D.Ohio 1997). Yet, in an unpublished opinion, a panel of this court explained that Thornton did not involve incentive awards, because the preferential treatment given to the drivers who filed with the EEOC was due to their actions before the litigation began, rather than their actions during the litigation. See In re S. Ohio Corr. Facility, 24 Fed. Appx. 520, 527 n. 3, 2001 WL 1667267, at *5 (6th Cir. Dec.26, 2001). We note that in Thornton we approved the district court's award of "earlier seniority for those drivers who actively sought an end to the company's ... policy" because they "should benefit more than those who were merely passive" and because they "protest[ed] and help[ed] to bring rights to a group of employees who have been the victims of discrimination." Thornton, 497 F.2d at 420. We need not decide here whether Thornton involved a typical incentive award.
Although we think there may be circumstances where incentive awards are appropriate, we need not resolve the difficult issue of detailing precisely when they are appropriate-for this case is clearly not a case where an incentive award is proper. As both the district court and the defendants note, incentive awards are usually viewed as extensions of the common-fund doctrine, a doctrine that holds that a litigant who recovers a common fund for the benefit of persons other than himself is entitled to recover some of his litigation expenses from the fund as a whole. See Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980) (describing the common-fund doctrine); In re S. Ohio Corr. Facility, 175 F.R.D. 270, 273 & n. 3 (S.D.Ohio 1997) (listing cases where incentive awards have been taken out of a common settlement fund). Thus, when a class-action litigation has created a communal pool of funds to be distributed to the class members, courts have approved incentive awards to be drawn out of that common pool. See Enter. Energy Corp., 137 F.R.D. at 251 (approving incentive awards of $50,000 to each of the class representatives out of a settlement fund of $56.6 million); In re Dun & Bradstreet Credit Servs. Customer Litig., 130 F.R.D. at 373-74 (approving incentive awards ranging from $35,000 to $55,000 out of a $18 million settlement fund); Brotherton, 141 F.Supp.2d at 913-14 (granting a $50,000 incentive award out of a $5.25 million fund). Without a common fund, however, there is no place from which to draw an incentive award. Unsurprisingly, we are unable to find any case where a claim for an incentive award that is not authorized in a settlement agreement has been granted in the absence of a common fund.

Here there is neither authorization in the consent decree for this incentive award nor a common fund from which it could be drawn. As a result, it is plainly inappropriate to grant an incentive award. We also note that this result comports with our holdings on consent decrees generally. Moore here is essentially asking the defendants to take on the additional burden of an incentive award above and beyond the liabilities they had agreed to in the consent decree settling the lawsuit-for the absence of a common fund here means that Moore would have to obtain the incentive award not from a communal fund belonging to him and his fellow class members, *899 but from the defendants directly. Moore phrases it as merely forcing the defendants to reallocate some of the money from the implementation of the consent decree to his incentive award, but that misses the point. "A consent decree, although in effect a final judgment, is a contract founded on the agreement of the parties." Vogel v. City of Cincinnati, 959 F.2d 594, 598 (6th Cir.), cert. denied,506 U.S. 827, 113 S.Ct. 86, 121 L.Ed.2d 49 (1992). " 'It should [therefore] be construed to preserve the position for which the parties bargained.' " Gonzales v. Galvin, 151 F.3d 526, 531 (6th Cir.1998) (citation omitted). Forcing the defendants to pay the incentive award is certainly an additional expenditure, and it is therefore impermissible. See Lorain NAACP v. Lorain Bd. of Educ., 979 F.2d 1141, 1153 (6th Cir.1992) (holding that an increase of one party's "financial obligations under the consent decree beyond [the agreed-upon amount] constitutes an abuse of discretion and cannot stand"), cert. denied,509 U.S. 905, 113 S.Ct. 2998, 125 L.Ed.2d 691 (1993).
D. Costs

Moore's second claim is that he is entitled to costs. He includes as his "costs" his claims for lost wages, copying costs, word processors and repairs, supplies, storage lockers, and postage in the total amount of $30,955.04. The district court quickly resolved this claim, holding that no statute or case law allows Moore to recover these expenses without explicit authorization in the consent decree.

This decision is correct, but a little explanation is necessary. Prevailing parties are usually entitled to costs. SeeFed.R.Civ.P. 54(d) (noting that "costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs"). Although Rule 54(d) allows a party to be reimbursed for its "costs," this term is given a far narrower interpretation than its vernacular meaning might suggest. See10 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2666, at 202 (3d ed.1998) (noting that "[a]lthough 'costs' has an everyday meaning synonymous with 'expenses,' the concept of taxable costs under Rule 54(d) is more limited"). Taxable costs are listed in 28 U.S.C. § 1920. See Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 875 (6th Cir.2000) ("Title 28 U.S.C. § 1920 lists the items a court may tax as 'costs' to a prevailing party under Rule 54(d)."), cert. denied,532 U.S. 953, 121 S.Ct. 1428, 149 L.Ed.2d 367 (2001). Title 28 U.S.C. § 1920 lists six items:

(1) Fees of the clerk and marshal;

(2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;

(3) Fees and disbursements for printing and witnesses;

(4) Fees for exemplification and copies of papers 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 costs of special interpretation services under section 1828 of this title.
28 U.S.C. § 1920.

The "costs" that Moore lists do not qualify as costs within the meaning of this statute. Moore does not seek reimbursement for any court fees, docket fees, special interpretation costs, or for compensation of his experts. Moore instead seeks to label his general expenditures as "costs." This, however, is inconsistent *900 with the concept of costs articulated in § 1920. See10 Charles Alan Wright et al., Federal Practice and Procedure § 2666, at 204 (3d ed.1998) (stating that "items such as """ investigatory expenses will not qualify either as statutory fees or reimbursable costs" and that "[t]hese expenses must be borne by the litigants"). Moore's lost wages, copying costs, word processors and repairs, supplies, storage lockers, and postage simply are not costs within the meaning of the rule.


C. Pepper Moore incurred numerous expenses in working to inform his fellow inmates about the Hadix litigation. Nonetheless, for the reasons explained above, the district court properly denied his motion for an incentive award and costs. We AFFIRM the judgment of the district court.