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California Judges Get More Power Over Trial Lawyers’ Case Costs

Jan. 13, 2022, 9:21 PM

A party may recover costs only at a trial judge’s discretion for preparing multiple sets of exhibits and closing slides that weren’t used at a trial, a unanimous California Supreme Court ruled Thursday.

The justices, resolving a split among the intermediate appellate courts, unanimously ruled that the winning party’s costs aren’t categorically recoverable and must be “reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.”

“The Legislature could have spelled out a categorical prohibition against shifting costs for inadmissible exhibits, but did not,” Chief Justice Tani Cantil-Sakauye wrote. “In the absence of such a bar, these are the type of costs that may be awarded in the trial court’s discretion, and the Court of Appeal properly held that the trial court did not abuse its discretion by doing so in this case.”.

The underlying case was a fraud claim alleging sports shoe giant ASICS America and its Japanese parent ASICS Corp. deliberately withheld promised inventory and marketing support from 13 retail stores.

Investors in the U.S. licensee who sued allege that ASICS tried to drive the licensee out of business to acquire the outlets on the cheap. Size It LLC and Mickey Segal lost and the fight morphed into one over recovering $385,000 for such expenses as exhibits, copying, and trial interpreter fees for a Japanese speaker.

Jurors found for ASICS and the trial allowed the company to recover costs for exhibit binders and other materials.

Size It and Segal counsel Greenspoon Marder LLP argued that the appeals court, by upholding the trial court judgment, “inherently approved litigation over-lawyering by shifting certain costs to plaintiffs and blessing those tactics and accommodations borne out of convenience rather than necessity,” which are required by the California Code of Civil Procedure.

“The most natural reading” of the law, the high court said, is that the “‘reasonably helpful to aid the trier of fact’ clause was not meant to capture all exhibit-related costs that were in some way helpful to the orderly and efficient conduct of the litigation” but was instead “more narrowly focused on the helpfulness of the demonstratives and photocopied exhibits to the adjudication of factual issues by the trier of fact.”

Justices rejected arguments by ASICS counsel with Sidley Austin LLP that the statute requires only that the method of preparing and displaying exhibits, such as models, enlargements, or photocopies, must be “reasonably helpful.”

The case is Segal v. ASICS Am. Corp., Cal., No. S263569, opinion 1/13/22.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

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