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On October 9, 2012, the U.S. Court of Appeals for the 7th Circuit affirmed the District Court's decision ordering Jack and Renee Beam (the plaintiffs/appellants) to pay $8,300 to the Commission for litigation costs resulting from the Beams' lawsuit against the Commission.
In 2005, the U.S. Department of Justice began an investigation into whether individuals connected with the law firm of Fieger, Fieger, Kenney, Johnson & Giroux, P.C. had violated the Federal Election Campaign Act (the Act) by reimbursing law firm employees and family members who made contributions to the John Edwards 2004 Presidential campaign. Jack Beam was “Of Counsel” to the law firm. In September 2006, the Commission notified the plaintiffs that the Commission had found reason to believe that they had committed civil violations of the Act by being part of the contribution reimbursement scheme. The Commission ultimately entered into a Conciliation Agreement with the Fieger law firm, but took no further action against any of the alleged conduits .
In 2007, the Beams filed a complaint in district court against the Commission and the Department of Justice which was dismissed and amended twice. The final amended complaint alleged in part that the Commission had obtained information about the Beams in violation of the Right to Financial Privacy Act of 1976, 12 U.S.C. 3401-22 (the RFPA). The plaintiffs contended that the Department of Justice had transferred their banking records to the Commission without the certifications required by the RFPA. All other claims the Beams made in the case were dismissed.
During a discovery deposition, a Commission attorney indicated that he had seen the Beams’ financial information on a compact disc that the Department of Justice had provided to the Commission. Later, the attorney discovered the error and explained the mistake. Following a bench trial on plaintiffs’ RFPA claim, the district court judge decided in favor of the Commission, and the plaintiffs did not appeal that decision.
The Commission sought an award of litigation costs pursuant to 28 U.S.C. 1920 and Federal Rule of Civil Procedure 54(d)(1). The district court awarded the Commission $8,300.64 in costs. The plaintiffs appealed the award of costs.
The appellate court affirmed the district court’s decision, holding that the district court did not abuse its discretion in awarding costs to the Commission. Federal Rule of Civil Procedure 54(d)(1) presumptively gives the prevailing party the right to recover its costs. The court stated that the prevailing party is the party that obtains a favorable judgment, which in this case was the Commission.
The court also upheld the district court’s decision that the Commission did not engage in any litigation misconduct that would justify a denial of an award of costs. The court held that the district court judge’s determination that the Commission attorney had simply made an honest mistake was not clearly erroneous. The court stated that since the plaintiffs apparently never had a solid basis to believe that the Commission had received their financial records without the certifications required by the RFPA, the plaintiffs must bear responsibility for the unnecessary litigation they pursued, and it was within the district court’s discretion to require them to pay the Commission’s litigation costs.